MAY-JUNE 2020 Solutions PDF

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M A Y - J U N E 2 0 2 0 S O L U T I O N SQuestion 1 of 20 3 PointsThe pre-adjustment trial balance of PMT Traders as at 28 February 2019, reflected the following balances:Trading inventory R9 770 Office supplies R1 121 Cleaning material R Packaging material R2 670A physical inventory count conducted...

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MAY MAY-J -J -JUNE UNE 202 020 0 SOL SOLUT UT UTIO IO IONS NS

2 Question 1 of 20

3 Points

The pre-adjustment trial balance of PMT Traders as at 28 February 2019, reflected the following balances: Trading inventory

R9 770

Office supplies

R1 121

Cleaning material Packaging material

R740 R2 670

A physical inventory count conducted at year-end, revealed the following inventory were on hand: Trading inventory, R9 560 Office supplies, R230 Cleaning material, R121 Packaging material, R926

No adjustment journal entries have been processed as yet in the accounting books of PMT Traders regarding the inventory count. Con Consu su sumab mab mable le st stor or ores es inc incre re rease ase the va value lue of In Inven ven vento to tory(a ry(a ry(ass ss sset et et)) the theyy red reduce uce the val value ue of expe xpens ns nses es an and d incr increas eas ease e pr profi ofi ofitt (eq (equit uit uity) y) The effect that the adjustment journal entries for consumables stores on hand will have on the basic accounting equation of PNT Traders for the year ended 28 February 2019 will be …? A. Assets will increase by R1 277; equity will increase by R1 277 and liabilities will not be affected. B. Assets will increase by R1 047; equity will decrease by R1 047 and liabilities will not be affected. C. Assets will decrease by R1 487; equity will decrease by R1 487 and liabilities will not be affected. D. Assets will not be affected; equity will increase by R1 047 and liabilities will decrease by R1 047. E. Assets will increase by R1 487; equity will increase by R1 487 and liabilities will not be affected.

Question 2 of 20

3 Points

MIYO MIYOLA LA TRA RADE DE DERS RS Not Notes es to th the e fi financ nanc nancial ial s tat tatem em ement ent ents s for the finan inancial cial y ear ende nded d 30 Ju June ne 20 2020 20 Pro Prope pe perty rty rty,, pla plant nt an and d equ equipm ipm ipment ent Carrying amount: Beginning of the year

Vehicles 84 800

Cost

172 000

Accumulated depreciation

(87 200)

Additions Depreciation Disposals Cost Accumulated depreciation

58 000 (12 240) ? 21 600 ?

3 Carrying amount: End of the year Cost Accumulated depreciation

Addi Additio tio tional nal i nfo nforma rma rmatio tio tion n a. The vehicle that was sold was an old Jeep bakkie that was bought on 1 January 2017 for R21 600. (cost pric price) e) On 31 March 2020 the Jeep was sold for R5 000 cash s elli elling ng pr price ice . b. Vehicles are depreciated at 20% per annum on the straight-line method.

The profit/loss on the sale of the Jeep bakkie will be? In or order der to det deter er ermin min mine e pro profit fit / l os oss, s, yo you u nee need d to co compa mpa mpare re the CAR CARRY RY RYING ING an and d the SE SELL LL LLING ING PR PRICE ICE ICE.. We ar are e give given n th the e cos costt pr price ice b ut the ac accum cum cumula ula ulated ted d epr epreci eci eciati ati ation on is not g ive iven. n. So, we ne need ed to calc calculat ulat ulate e th the e acc accumu umu umulat lat lated ed dep deprec rec reciat iat iation ion usin sing g the co cost st p ri rice ce and th the e to total tal numb umber er of m ont onths hs tha hatt thi this s veh vehicl icl icle e had. We nee need d cou count nt m ont onths hs fro rom m th the e DAY IT WA WAS S BOU BOUGHT GHT U NTI NTIL L TH THE E LAST D AY OF EX EXIS IS ISTEN TEN TENCE CE Fro From m 1 Janu Januar ar aryy 2017 un until til 3 1 Marc March h 2020 1 Jan Januar uar uaryy 2017 – 3 0 Jun June e 201 2017 7 = 6 mo month nth nths s 1 Jul Julyy 201 2017 7 to 3 0 Jun June e 291 2918= 8= 12 m on onths ths 1 Jul Julyy 201 2018 8 to 3 0 Jun June e 201 2019 9 = 12 m ont onths hs 1 Jul Julyy 201 2019 9 to 3 1 Mar March ch 202 2020= 0= 9 m ont onths hs To Total tal numb umber er of mo month nth nths s = 3 9 mon month th ths s R21 R21600 600 600X39 X39 X39/1 /1 /12X20 2X20 2X20%= %= %=R14 R14 R14040 040 A ccum ccumul ul ulate ate ated d depr deprec ec eciat iat iation ion Cos Costt p rice rice-- Ac Accum cum cumula ula ulated ted d epr epreci eci eciati ati ation on = C arr arryin yin ying g valu value e R21 R21600 600 600-R -R -R140 140 14040= 40= 40=R75 R75 R7560 60 It was s old for R5 R5000 000 and it its s va value lue i d R7 R7560 560 IF THE CA CARR RR RRYIN YIN YING G VA VALUE LUE IS GRE REAT AT ATER ER THAN SELL ELLING ING P RI RICE= CE= LO LOSS SS IF TH THE E SE SELL LL LLING ING PR PRIC IC ICE E IS GRE REATE ATE ATER R THAN C ARR ARRYIN YIN YING G VA VALU LU LUE= E= PR PRO OFIT A. B. C. D. E.

Profit on sale of vehicle of R9 040 Profit on sale of vehicle of R21 500 Loss on sale of vehicle of R2 560 No profit or loss on sale of vehicle Profit on sale of vehicle of R16 600

4 Question 3 of 20

3 Points

CAAT Traders acquired machinery on 1 July 2018 for an amount of R175 300. This machinery was only available for use from 1 September 2018 due to testing that needed to be performed first. CAAT Traders’ current financial period ends on 31 May 2019. According the CAAT Traders’ accounting policy, depreciation on machinery is provided using the unit of production method over the useful life of 5 years according to the following production schedule: UNI UNIT T PR PROD OD ODUC UC UCED ED D UR URING ING THE YEAR EAR// EXPE XPECT CT CTED ED NUMB UMBER ER OF UNI UNITSX TSX TSXCO CO COST ST P RIC RICE E 900 9000/6 0/6 0/60000 0000 0000XR XR XR175 175 175300= 300= 300=R2 R2 R2629 629 6295 5

Expected units of production Actual units produced

Yea Yearr 1 15 000 9 000

Yea Yearr 2

Yea Yearr 3

Yea Yearr 4

Yea Yearr 5

13 000

11 000

10 500

10 500

N/A

N/A

N/A

N/A

The amount for depreciation expenses to be shown in the statement of profit or loss and other comprehensive income for the year ended 31 May 2019 will be …? (round off your final answer to the nearest Rand). A. R26 295 B. R21 193 C. R19 721 D. R35 060 E. R105 180 Question 4 of 20

3 Points

JFK Traders deposits R120 000 into a fixed deposit with Tyra Bank on 1 May 2020, at an interest rate of 12% per annum. 10% of the fixed deposit amount can be withdrawn at any time with a 24-hour notice to the bank. Th The e amo amount unt of th the e fix fixed ed de depos pos posit it s ho hould uld be redu educed ced with the am amoun oun ountt th that at m atu atures res wit ith h a year year// tha thatt can be wi withd thd thdraw raw rawn n wit within hin a sho short rt p erio eriod d of ti time me be becau cau cause se th that at po porti rti rtion on be becom com comes es a cur curre re rent nt ass asset et How will the fixed deposit amount be disclosed in the statement of financial position as at 30 June 2020? A. Non-current assets: Fixed deposit R120 000; Current assets: Current portion of Fixed deposit R12 000 B. Non-current assets: Fixed deposit R120 000 C. Non-current assets: Fixed deposit R108 000; Current assets: Current portion of Fixed deposit R12 000 D. Non-current assets: Fixed deposit R108 000 E. Non-current liabilities: Fixed deposit R120 000

5 Question 5 of 20

3 Points

MR Kleaners acquired a new industrial washing machine, the list price of which was R52 000. The (re (reduc duc duces es the va value) lue) off the list price. On delivery, the cost of supplier allowed a trade discount of R4000(re installing the machine in its desired location was R950. (add (adds s valu value) e)  R52 R52000 000 000-R -R -R400 400 4000+R 0+R 0+R95 95 950 0 What is the cost if the machine to be capitalised in the machinery account? A. R56 950 B. R52 950 C. R52 000 D. R48 950 E. R48 000

Question 6 of 20

3 Points

Zayola has prepared his financial statements for the year ended 31 March 2020, which show a profit for the year of R30 000, current assets of R234 400 and total assets figure of R710 500. He has since discovered that the inventory figure he used was understated as he left out closing inventory valued at R10 100 from his workings. If th closin was left left out, out, it m ean the e valu value e of closin sing g sto stock ck was eans s cos costt of sa sales les amou mount nt is m ore and yet the pro profi fi fitt is les less. s. Clos Closin in ing g st stock ock redu educes ces the va value lue of cos ostt of s ales (exp expens ens ense) e) e).. If we rect ectify ify this erro rror, r, the pr prof of ofit it sh shou ou ould ld inc increas reas rease e by the valu value e of clos losing ing s to tock ck (10 (10100 100 100). ). It’ It’s s th the e ver veryy sam same e pr princi inci inciple ple wi with th co cons ns nsuma uma umable ble s tor tores es on han hand d Ope Openin nin ning g Inv Invent ent entory ory + Pur Purchas chas chases es + Car Carria ria riage ge cos costt -C -Clos los losing ing In Inven ven ventor tor toryy = Cos Costt of s ale ales s Sale Sales s – co cost st of sa sales les = Gro ross ss pr prof of ofit it Which one of the following statements is tru rue e regarding the correction of the error that was made? A. B. C. D. E.

The revised current assets figure will be R224 300 (30000+ 00+ 10 10100 100 100)) The revised profit for the year should be R40100 (300 The revised total assets figure will be R740 500 The value of the closing inventory does not affect the profit for the year or the net assets. The revised non-current assets should be R476 100

6 Question 7 of 20

2 Points

The bookkeeper of Barney Traders did not enter a sales invoice of R900 in the sales journal but posted the R900 to the personal account of D Donnie.

 Sale Sales s is an incom income e ac accou cou count nt an and d sh shoul oul ould d be cr credit edit edited ed  Sale Sales s is debit debited ed to th the e Tr Trade ade an and d ot other her rece eceiva iva ivable ble bles s acc accou ou ount nt  To rect ectif if ifyy th this is om omis is issi si sion on on,, we ne need ed to deb debit it trad rade e and ot othe he herr re recei cei ceivab vab vables les and cr credi edi editt sa sales les Which one of the following represents the corr orrect ect ge gener ner neral al le ledge dge dgerr ent entri ri ries es in th the e bo books oks of Bar Barney ney Tr Trader ader aders s to rectify the error made? A.

General ledger Account debited

Account credited

Sales

Trade payables control

Amount 900

B.

General ledger Account debited

Account credited

Trade receivables control

Sales returns

Amount 900

C.

General ledger Account debited Trade receivables control

Account credited Sales

Amount 900

D.

General ledger Account debited Sales

Account credited Trade receivables control

Amount 900

E.

General ledger Account debited Account credited Sales

Sales returns

Amount 900

7 Question 8 of 20

2 Points

The total of the trade receivables column in the sales returns journal of Nelly Stores is R100 000. In the process of reconciling the balance on the trade receivables control account with the list of balances as per trade receivables ledger, it was noted that the sales returns overcast by R1000.

 Sale Sales s re retu tu turn rn rns s is ex expe pe pens ns nse e and shou hould ld be de debit bit bited ed  Sale Sales s retu eturn rn rns s is pos oste te ted d to the cr credi edi editt si side de of Tra rade de an and d oth other er rece eceiva iva ivable ble bles s be becaus caus cause e it re reduc duc duces es the val value ue of Tr Trade ade an and d ot other her rec eceiv eiv eivabl abl ables es  If Sa Sales les retu return rn rns s was ove verca rca rcast st sted ed it mea eans ns the va value lue of Tr Trade ade and ot othe he herr rec receiv eiv eivabl abl ables es dec decre re rease ase ased d  To rect ectif if ifyy th this is er erro ro ror, r, w e ne need ed to rev evers ers erse e this ent ntry ry by de debit bit bitin in ing g Tr Trade ade an and d oth other er rec receiv eiv eivabl abl ables es and cr credi edi editt Sal Sales es ret eturn urn urns s Which one of the following represents the corr orrect ect ge gener ner neral al le ledge dge dgerr ent entri ri ries es in th the e bo books oks of Nel Nelly ly St Stor or ores es to rectify the sales returns journal total? A.

General ledger Account debited Account credited Sales

Sales returns

Amount 1 000

B.

General ledger Account debited

Account credited

Sales returns

Trade payables control

Amount 1 000

C.

General ledger Account debited

Account credited

Trade receivables control

Sales returns

Amount 1 000

D.

General ledger Account debited Sales returns

Account credited Trade receivables control

Amount 1 000

E.

General ledger Account debited Trade payables control

Account credited Sales

Amount 1 000

8 Question 9 of 20

2 Points

Majozi, the owner of MAJOZI Traders keep records of the business transaction. The following information is available: MOJ MOJOZ OZ OZII TRA TRADE DE DERS RS Bala Balance nce nces s as at 30 Ju June ne 2 019:

2 018 28 800

2 019 28 800

Furniture and equipment at cost

26 500

26 500

Inventory

21 770

Trade receivables control Bank (favourable)

8 870 25 000

12 350 20 000

Long-term borrowings

3 000

15 000

Trade payables control

9 500

12 700

Accrued expenses Prepaid expenses

3 400 360

2 300 365

Vehicles at cost

?

Addi Additio tio tional nal i nfo nforma rma rmatio tio tion: n: A physical inventory count revealed that the following was on hand on 30 June 2019:

Inventory Stationery Packing materials

27 699 625 150

The total amount of trading inventory for Majozi Traders as at 30 June 2019 will be …? This req requi ui uires res us to s ho how w the amou mount nt of Inve nvento nto ntory ry oh hand. Be care arefu fu full beca because use y ou ar are e not req requi ui uired red to sho show w th the e valu value e of Inv Invent ent entor or oryy tha thatt will b e sho shown wn un under der the St State ate ateme me ment nt of Finan inancia cia ciall pos posit it ition ion A. R26 894 B. R27 669 C. R27 819 D. R21 770 E. R28 294

9 Question 10 of 20

2 Points

In the process of reconciling the balance on the trade payables control account with the list of balances as per trade payables ledger, it was noted that certain accounts with credit balances of R1 000 need to be orderr to tran ransf sf sfer er a cre credit dit transferred from the trade receivables ledger to the trade payables ledger. In orde bal balance ance from trade rece eceiva iva ivable ble bles, s, we nee eed d to fir first st D EB EBIT IT it and th this is am amoun oun ountt wil willl be CRE CREDI DI DITE TE TED D on the Tr Trade ade and oth ther er pay payabl abl ables es De Debit bit Tra rade de an and d oth other er rece eceiva iva ivables bles bles(de (de (debt bt btors ors ors)) Cre Credit dit Tr Trade ade and oth ther er p ayab ayables les (c (cred red redito ito itors rs rs)) Which one of the following represents the corr orrect ect ge gener ner neral al le ledge dge dgerr ent entri ri ries es in th the e bo books oks of Pam Tr Trader ader aders s to reco ecord rd the abo above ve tr trans ans ansact act action ion ions? s? A.

General ledger Account debited

Account credited

Trade payables control

Purchases

Amount 1 000

B.

General ledger Account debited

Account credited

Purchases

Trade payables control

Amount 1 000

C.

General ledger Account debited

Account credited

Trade receivables control

Sales

Amount 1 000

D.

General ledger Account debited Trade receivables control

Account credited Trade payables control

Amount 1 000

E.

General ledger Account debited Trade payables control

Account credited Trade receivables control

Amount 1 000

9 Question 11 of 20

2

MIYO MIYOLA LA TRA RADE DE DERS RS Not Notes es to th the e fi financ nanc nancial ial s tat tatem em ement ent ents s for the finan inancial cial y ear ende nded d 30 Ju June ne 20 2020 20 Pro Prope pe perty rty rty,, pla plant nt an and d equ equipm ipm ipment ent

Land and Buildings 292 500

Carrying amount: Beginning of the year Cost Accumulated depreciation Additions

450 000 (157 500)

Depreciation Disposals

(22 500) -

Cost Accumulated depreciation Carrying amount: End of the year Cost Accumulated depreciation

?

Addi Additio tio tional nal i nfo nforma rma rmatio tio tion n Buildings are depreciated at 5% per annum on the straight-line method. What will the carrying amount for land and buildings of Miyola Traders for the year ended 30 June 2020 be? Car Carryi ryi rying ng val value ue at the end is cal calcul cul culate ate ated d as foll ollows ows ows:: Car Carryi ryi rying ng val value ue at the be begin gin ginning ning + Addi Additio tio tions ns - dis dispo po posal sal at car carryi ryi rying ng va value lue - De Depre pre preciat ciat ciation ion  R29 R29250 250 250000-R22 R22 R22500 500 A. B. C. D. E.

R450 000 R157 500 R427 500 R270 000 R292 000

10 Question 12 of 20

2

Ex Extr tr tract act of th the e pr preee-clo clo closin sin sing g tr trial ial ba balan lan lance ce of T HC T rad rader er ers s as at 30 Se Septe pte ptemb mb mber er 2019 De Debit bit Cre Credit dit Plant and machinery (cost) 120 000 Accumulated depreciation: plant and machinery Equipment (cost)

41 750 90 000

Accumulated depreciation: equipment Land and buildings (cost)

180 000

Fixed deposit (@ 7.5% p.a.)

100 000

Depreciation Loss on sale of equipment

38 367 1 500

Interest on fixed deposit

17 100

7 500

The amounts that will be disclosed in the statement of profit or loss and other comprehensive income of uesti ti tion on THC Traders for the year ended 30 September 2019 relating to non-current assets are: This ques req requi ui uires res us to me menti nti ntion on ac accou cou count nt nts s th that at ar are e de deriv riv rived ed fr from om th the e Non Non-c -c -curr urr urrent ent as asse se sets ts an and d rec record ord orded ed in th the e Stat Statem em emen en entt of pr profi ofi ofitt or los loss s . Depr Depreci eci eciati ati ation on is an ex expe pe pense nse that i s der derived ived from nonon-cur cur curre re rent nt as asset set sets, s, L os oss s on sa sale le of eq equip uip uipme me ment nt is al also so an ex expe pe pense nse that i s gen generat erat erated ed th thro ro rough ugh s elli elling ng no non-c n-c n-curr urr urrent ent ass ssets ets an and d int inter er erest est on fix fixed ed de depos pos posit it i s an in incom com come e th that at is g ene enerat rat rated ed...