Western Cape Education Department

Curriculum (FET)

ACCOUNTING
GRADE 12

REVISION 2024

TERM 2
(Revised in 2021; Cheques removed)

Activities

Term 2 Revision:
• Inventory valuations (Pg 4 -7)
• Fixed Assets (Pg 8 - 12)
• Cost Accounting/Manufacturing (Pg 13- 16)
• Reconciliations (Pg 17 - 20)

This revision program is designed to assist you in revising the critical content and skills covered
during the 2nd term. The purpose is to prepare you to understand the key concepts and to
provide you with an opportunity to establish the required standard and the application of the
knowledge necessary to succeed in the NCS examination.
Revision Activities (Revised 2021) Accounting Term 2, 2024

STUDY TIPS IN ACCOUNTING

1. TAKE CONTROL of your own learning time. Provide time for school work and household chores.
2. EVERY MINUTE is precious. USE learning time at school and at home EFFECTIVELY.
3. Support class mates where possible with learning and motivate each other to make the best of each
minute
4. KEEP to a ROUTINE! It will help you to calm down and focus on your school work.
5. Draw up a STUDY TIMETABLE and stick to it. It will help to allocate time to ALL your subjects.
6. ORGANISE your workspace - it will help you feel in control. You will be able to concentrate on what is
important and things that you can change to be successful.
7. Know the formats or layouts of the: (for the topics in this book)
- Gr 11 Cost ledger accounts ledger - it help with cost calculations
- Production Cost Statement
- General Ledger accounts, e.g. Asset Disposal, Bank, Debtors & Creditors control, etc.
- Bank Reconciliation Statement
8. UNDERSTAND and KNOW:
- basic Accounting concepts, e.g. income, expenses, assets, liabilities, etc.
- rules for AOL (to help you in your thinking process)
- basic calculations, e.g. interest on loan/investment, depreciation, etc.
9. Work through as many past examination papers and other resources (e.g. Telematics material) as
you can. Do it over and over.
10. Work on your OWN and against TIME to get into the habit of managing limited exam times.
11. Pay careful attention in class to ensure that you understand the work.
12. ALWAYS use your OWN CALCULATOR to know exactly how it works. It should not let you down in a test
or exam.
13. The topics in this revision material are 'easy scoring' as you earn marks for basic calculations (+, -, x,
÷) and applying Gr 10 and 11-knowledge and skills. REVISE these topics thoroughly.
14. The basic concepts and calculations (listed with each topic in this material) are explained in your textbook
and in the Gr 12 2020 Revision PACK (issued to schools and teachers in January 2020 covering all the
topics for the year)

Two-paper classification of questions and/or Solutions:

subquestions https://wcedeportal.co.za/eresource/113701

  /
Can be included in
Paper 1 Paper 2
both papers

2
Revision Activities (Revised 2021) Accounting Term 2, 2024

Test your knowledge (Pre-Test)

(Check your basic knowledge before and after completing the activities provided)
INVENTORY VALUATION
1. Indicate the valuation method most likely applicable to the following:
1.1 An evening wear designer using a computerised data base to record the cost price of each
stock item.
1.2 CompTIA Ltd calculate the value of their computers on hand by allocating the most recent
purchasing prices to the number of computers on hand.
1.3 The stock on hand value of Sweets-for-All cannot be based on current cost prices only due
to huge cost increases during the lock-down period.
2 Show a calculation to determine the number of items missing from the shop (no amounts required)
3 Write down the formulae for calculating:
3.1 the stock turnover rate: (3.2) % mark-up: (10)

FIXED ASSETS
1. A company owns land and buildings. In the Balance Sheet the value is reflected at the cost price
of R1m even though the market value is estimated at R2m. The GAAP principle of ..... applies.
2. The carrying value of Equipment equals ......(1)............. less .....(2).................
3. The basic layout of the Fixed Asset note is: (show 'plus (+) or minus (-))
Carrying value (beginning of the year) ...(1)... Additions ..(2)... Disposals ..(3).. Depreciation for the year
= Carrying value (end of year)
4. The Fixed Asset ..... is a list of asset items and is maintained to keep track of the book value
(carrying value) of each item. It also allows the easy identification of each item for internal
control purposes. (7)

MANUFACTURING
Indicate whether the following statements are TRUE or FALSE. Indicate with a tick () in the T or F
column. REWRITE the 'false' statements so that they are true.
1.1 Wages of factory cleaners is a direct labour cost.
1.2 Delivery costs of finished goods to retailers are a selling and distribution cost.
1.3 Depreciation on office equipment is an administration cost.
1.4 Factory overheads is a direct cost.
1.5 The breakeven point is the amount of net profit a factory will generate in a financial year. (8)

RECONCILIATIONS
1. The balance of the Debtors' ...(1)... must be equal to the total of the Debtors' ..(2).. at the end of
every month.
2. Creditors reconciliation involves the comparison of the internal Creditor's ..(1).. with the external
Creditor's ..(2)..
3. A bank statement will reflect an unfavourable bank balance in the ..... column. (5)

TOTAL: 30

3
Revision Activities (Revised 2021) Accounting Term 2, 2024

INVENTORY VALUATIONS
Know the following on Inventory valuation
Continuous & Periodic inventory systems | Valuation methods | Specific Identification | FIFO
Basic
Weighted Average | opening stock | closing stock | financial indicators | profit margin | GAAP-
concepts
principles | historic cost | prudence | internal stock control measures
Value of stock by means of 3 valuation methods | Cost of sales | Gross Profit | Stolen or wasted
Calculations items (or rand value) | mark-up % | stock turn over rate | Period for when enough stock is on hand
(stock holding period)

EC Sep 2019
ACTIVITY 1: INVENTORY VALUATION  (35 marks; 25 minutes)

Alpha Electronics is a business that sells televisions. The business is owned by John Fortune. They
make use of the WEIGHTED AVERAGE method for stock valuation and use the periodic inventory
system. The financial year ended on 28 February 2019. The mark-up is 25% on cost price.

REQUIRED:
1.1 Calculate the following on 28 February 2019:
1.1.1 Value of the closing stock. (10)
1.1.2. Gross profit for the year ended (5)

1.2 The owner and the accountant disagree on the method of stock valuation. The
accountant wants to use the FIFO method.
1.2.1 Calculate the stock value on 28 February 2019 using the FIFO method. (7)
1.2.2 Explain the effect on gross profit if the FIFO method is used. (2)
1.2.3 As an internal auditor, explain the benefits of using the FIFO method to the
owner and the accountant. State TWO points. (4)
1.3 John Fortune feels that he was not able to achieve his targeted mark-up % for 2019.

• Do a calculation to confirm whether he is correct. (3)

• Provide TWO suggestions that can be implemented to improve profitability. (4)

INFORMATION:

A. Stock of television sets:

Date Details Total

1 March 2018 49 units R195 424
28 February 2019 220 units ?

4
Revision Activities (Revised 2021) Accounting Term 2, 2024

B. Purchases and returns of television sets during the year.

No of units Total
Purchases:
July 2018 200 units @ R4 680 each R936 000
Oct 2018 388 units @ R5 145 each 1 996 260
Jan 2019 200 units @ R5 512 each 1 102 400
788 units in total 4 034 660
Returns:
7 units from the January 2019 purchases.

C. Sales for the year, R3 450 300 35

NSC Nov 2019

ACTIVITY 2: INVENTORY VALUATION  (45 marks; 35 minutes)

George Grande is the majority shareholder and CEO of Grande Ltd. The company supplies
hotels with cabinets and lamps. The periodic system is used.
The year-end is 30 September 2019.

REQUIRED:
CABINETS
2.1 Calculate the value of closing stock for cabinets on 30 September 2019 using the first-
in first-out method. (6)

2.2 In 2019, the company decided to extend the target market and to grant trade discounts
to increase sales.
2.2.1 Calculate the % mark-up achieved in 2019. (4)
2.2.2 Provide TWO points (with figures) to prove that this decision achieved its aims. (4)
2.2.3 The CEO feels that this decision also negatively affected the company.
• Provide TWO points (with figures) to support his opinion. (4)
• Give the directors advice to solve this problem. Explain TWO points. (2)

LAMPS
2.3 Calculate the stockholding period for lamps (use closing stock). (3)
2.4 George is concerned about the control of lamps. An investigation revealed that the store
manager was supplying local boarding houses with lamps without documentation.
• Calculate the number of missing lamps. (5)
• Give TWO suggestions to solve this problem. (4)

5
Revision Activities (Revised 2021) Accounting Term 2, 2024

TELEVISION SETS
2.5 During April 2019, while George was in hospital, Bruce Swann (the chief financial
officer) decided to include television sets in their product range. He was able to secure
bulk discounts from Roseway on two TV set models, namely LYN and KYA.
Calculate the value of the closing stock of TV sets on 30 September 2019 using the
specific identification method. (7)

2.6 An employee of Roseway told George that Bruce received a 10% 'commission' from
Roseway for buying excess stock. George wants to discuss this at the next board
meeting.
Explain THREE different concerns that George would have about this problem. (6)

INFORMATION:
A. Stock records of cabinets and lamps:

CABINETS LAMPS
UNIT
UNITS TOTAL UNITS TOTAL
PRICE
Stock balances
1 Oct. 2018 370 R800 R296 000 600 R108 000
30 Sep. 2019 280 ? 265 R59 625
Purchases: 2019
January 800 R920 R736 000 1 200 R240 000
April 1 200 R990 R1 188 000 1 800 R432 000
July 250 R1 100 R275 000 800 R210 000
Total 2 250 R2 199 000 3 800 R882 000
Returns 20 R1 100
Sales 3 675
Cost of sales R930 375

B. Information relating to cabinets:

2019 2018
Sales R3 480 000 R3 375 000
Cost of sales R2 170 500 R1 950 000
Units sold 2 320 2 500
Selling price per unit R1 500 R1 400
% mark-up achieved ? 73%
Customers on record 37 26

6
Revision Activities (Revised 2021) Accounting Term 2, 2024

C. Stock records of television sets:

MODELS UNITS UNIT PRICE TOTAL

Purchases
May 2019 LYN 800 R6 000 R4 800 000
KYA 950 R7 200 R6 840 000
July 2019 LYN 500 R6 000 R3 000 000
KYA 500 R7 200 R3 600 000
TOTAL 2 750 R18 240 000
Sales LYN 430 R8 400 R3 612 000
KYA 540 R10 080 R5 443 200
45
PROBLEM SOLVING

FS Sep 2019
ACTIVITY 3: INVENTORY VALUATION  (8 marks; 7 minutes)

PROBLEM SOLVING
Ben G Mobile Traders has two branches in two different towns selling laptops. Ben, the owner, is
concerned about the performance of each branch and has decided to investigate. Information for the
two branches for March 2019 is presented below:

REQUIRED:
3.1 Identify ONE problem in relation to each branch. Quote relevant figures to support your
answer. In each case, offer Ben advice on how to solve the problem. (8)

INFORMATION:
A. General information for both branches (per month)

Normal time Monday to Fridays 8:30–16:30 160 hours

Mondays to Fridays 16:30–18:30 40 hours
Overtime Saturdays 9:30–12:30 12 hours
Total 52 hours

B. Overtime salary/wage is 1½ times the normal rate.

Other information:
C.
MSB BRANCH APB BRANCH
Stock on hand (1 March 2019) 80 units 80 units
Selling price per unit R5 800 R5 800
Units sold 58 47
Units returned by customers 3 8
Credit sales R191 400 R104 400
Cash received and deposited from cash sales R120 000 R121 800
Hours worked (normal time) 156 hours 120 hours
Overtime hours 10 hours 50 hours
Rent expense per month R8 000 R8 000
8

7
Revision Activities (Revised 2021) Accounting Term 2, 2024

FIXED ASSETS
KNOW the following on Fixed Assets
GAAP-principles | historic cost | prudence | matching concept | asset disposal | carrying value |
Basic
depreciation | accumulated depreciation | profit/loss with sale of asset | residual value | lifespan of
concepts
assets | replacement value
depreciation at % cost price | depreciation at % carrying value | profit OR loss with sale (alienation)
Calculations
of asset-item | carrying or book value | total purchase (or sales) of assets in the cash flow statement

MEED, June 2015

ACTIVITY 1 FIXED ASSETS - control and management  (25 marks; 20 minutes)

You are provided with information relating to Eastend Shop for the year ending 28 February 2019.
Mike East is the owner and Milly West the manager of the shop.

REQUIRED:
1.1 Refer to information A:
Prepare the Asset Disposal account on 20 April 2018 for the stolen computers.
Properly close off the account. Show workings to earn part marks. (12)
1.2 Show the double entry in the general ledger for the replacement of the computers on
30 April 2018. Indicate the correct amount. (3)
1.3 Explain how a fixed asset register will assist the internal auditor in controlling fixed
assets. (2)
1.4 Explain why an asset item may be shown at a carrying value of R1 in the Statement of
Financial Position. (3)
1.5 One of the office employees, Gill, knows that the insurance policy only covers theft if
there is evidence of forced entry. She also saw Mike breaking the security gate of the
office to make the incident look like forced entry. Gill is not sure whether Milly knows
about this. What advice would you give Gill? (3)
1.6 In order to solve their cash flow problems, Mike wants to sell a portion of the premises
at cost price. Milly disagrees with him on this. Give one reason why you would support
Milly in this regard. (2)

INFORMATION:
A. Equipment and disposals
Equipment includes computers used in the office. Six office computers were stolen on
20 April 2018. These 6 computers were originally bought at a cost of R13 200 each. Sosure,
the insurance company, paid out R5 000 for each computer. The six stolen computers were
replaced on 30 April 2018 with new ones, bought on credit from Office Smart at R8 000 each.

8
Revision Activities (Revised 2021) Accounting Term 2, 2024

B. Fixed Assets note for the year ended 28 February 2018

Fixed Assets Land and Buildings Equipment
Carrying value (1 March 2014) 1 200 000 630 000
Cost 1 200 000 980 000
Accumulated depreciation (350 000)
Movements: (700 000) 19 560
Additions 240 000
Disposals at carrying value (700 000) (63 360)
Depreciation (157 080)
Carrying value (28 February 2015) 500 000 649 560
Cost 500 000 1 140 800
Accumulated depreciation (491 240)
25

Extract from Fin. Statements-question

FS Sept 2019
ACTIVITY 2: FIXED ASSETS  (17 marks; 13 minutes)

You are provided with information from the records of Moonlight Ltd for the financial year
ended 28 February 2019.

REQUIRED:
2.1 Calculate the profit or loss on disposal of the computer on 31 August 2018. (6)
2.2 Calculate the total depreciation for the year. (9)
2.3 Suggest ONE internal control measure that the internal auditor can perform to verify
the tangible assets figure in the Statement of Financial Position (Balance Sheet). (2)

INFORMATION:
A. The following balances/totals, amongst others, appeared in the books on
28 February 2019:

R
Vehicles 1 520 000
Equipment 660 000
Accumulated depreciation on vehicles (1 March 2018) 484 500
Accumulated depreciation on equipment (1 March 2018) 178 000

9
Revision Activities (Revised 2021) Accounting Term 2, 2024

B. Some of the adjustments and additional information

Vehicles
• Included in the vehicle account is R950 000 for a delivery van which was
purchased on the 1 December 2018.
• Vehicles are depreciated at 20% p.a. on cost.
Equipment
• On 31 August 2018, a computer was taken over by Paul Cluver one of the
directors, for personal use for R8 000 cash. The relevant page from the Fixed
Asset Register is provided below. No entries have been made in respect of the
disposal of this asset.
• Equipment is depreciated at 20% p.a. on the diminishing balance method.

FIXED ASSET REGISTER (Page 22)

Item: Aider computer
Date purchased: 1 June 2015 Cost price: R30 000
Depreciation policy: 20% on diminishing method
CURRENT ACCUMULATED
DATE
DEPRECIATION DEPRECIATION
28 February 2016 R4 500 R4 500
28 February 2017 R5 100 R9 600
28 February 2018 R4 080 R13 680
31 August 2018 ? ?

17
From a Cash Flow Statement question

FS Sep 2019
ACTIVITY 3: FIXED ASSETS  (6 marks; 5 minutes)

PHILA LTD
You are provided with information relating to Phila Ltd for the financial year ended 31 March 2019.
The company is registered with an authorised share capital of 2 000 000 ordinary shares.

REQUIRED:
3.1 Calculate the cost of new delivery vehicles purchased for the Cash Flow Statement (6)
INFORMATION:
A Information from the Income Statement for the financial year ended 31 March:
2019 2018
Net profit before taxation 1 240 000 931 000
Net profit after taxation 892 800 651 700
Interest on loan 211 000
Depreciation 425 000

10
Revision Activities (Revised 2021) Accounting Term 2, 2024

B Extract from the Balance Sheet on 31 March:

2019 2018
Fixed assets 10 152 700 7 915 400
Fixed deposit: SSB BANK 250 000 400 000
Shareholders' equity 9 209 000 6 458 200

C Fixed Assets
• Old equipment valued at R389 500 was sold at carrying value.
• Extensions to land and buildings costing R2 250 000 were completed during the
financial year.
• Additional delivery vehicles were also purchased.
6

From a Statement of Fin. Position- Know Asset disposal format and

question depreciation calculations

NSC Nov 2019

ACTIVITY 4: FIXED ASSETS  (11 marks; 8 minutes)
VISIV LTD
The financial year ended on 28 February 2019.
REQUIRED:
4.1 Calculate:
• Amounts for (i) and (ii) in the Fixed Assets Register (5)
• Profit/Loss on sale of asset (2)
• Fixed assets carrying value on 28 February 2019 (4)

11
Revision Activities (Revised 2021) Accounting Term 2, 2024

INFORMATION:
A. Fixed assets:
A delivery vehicle was sold on 31 October 2018 but no entries were made to record this
transaction.
Details of vehicle sold:

Delivery Vehicle X43

Date purchased: 1 March 2016
Date sold: 31 October 2018 Sold for: R195 000 (cash)
Depreciation rate: 25% p.a. (diminishing-balance method)
CARRYING
COST DEPRECIATION
VALUE
28 February 2017 R400 000 R100 000 R300 000
28 February 2018 75 000 225 000
31 October 2018 (i) (ii)

B. List of balances/totals on 28 February 2019

Ordinary share capital R8 152 000

Retained income (1 March 2018) 865 300
Fixed assets (carrying value) 10 190 000
11

Under insured:
Asset(s) is insured for
less than book value
and will be reimbursed
pro-rata for damages
Eg. 10% under insured
= 90% reimbursed

Gr 11-paper
ACTIVITY 5: FIXED ASSETS  (23 marks; (18 minutes)
A delivery vehicle owned by Universal Traders was stolen on 1 September 2019.
According to the monthly premiums on insurance it was determined that Universal Traders
are 10% under insured. Their financial year ends 28 February every year.
REQUIRED:
5.1 Complete the page in the asset register to cancel the vehicle from the records. (16)
(see the page in the Workbook)
5.2 Calculate the amount that the insurance company will pay out. (3)
5.3 Give two security measures which Universal Traders can install to prevent theft of
assets. (4)
23

12
Revision Activities (Revised 2021) Accounting Term 2, 2024

MANUFACTURING (Cost Accounting)

KNOW the following on Manufacturing
Direct material cost (DMC) | direct labour cost (DLC) | factory overhead cost (FOC) | unit cost
Basic indirect cost | fixed cost | variable cost | administrative cost | selling and distribution cost | finished
concepts goods | work-in-process | total production cost | break-even point | Production cost statement
Abridged income statement
DMC | DMC per unit | DLC | DLC per unit | factory overhead cost (or indirect cost) | total cost of
Calculations
production (= cost of sales) | break-even point (BEP)

NSC Nov 2019

ACTIVITY 1: MANUFACTURING  (40 marks; 30 minutes)

Sihle Sangweni owns two separate factories that manufacture products according to orders received.
There is no work-in-progress stock. The year-end is 28 February.
1.1 DESKS FACTORY
REQUIRED:
1.1.1 Complete the Factory Overhead Cost Note. (8)
1.1.2 Calculate the total cost of production of finished goods. (6)
1.1.3 Sihle wants to produce an additional 1 500 desks, while maintaining the selling
price and costs. Calculate the additional profit he can expect. (6)
1.2 CHAIRS FACTORY
REQUIRED:
1.2.1 Provide a calculation to confirm the break-even point for 2019. (4)
1.2.2 Comment on the break-even point and the production level achieved. Quote
figures. (4)
1.2.3 Raw material consists of wood only. In 2019 the cost is R120 per square metre
(m2) and 1,2 m2 of wood is needed to make one chair.
During the year, 22 000 m2 wood was dispatched to the factory. Sihle feels that
the wood raw material was not well controlled.
• Provide a calculation to support his opinion. (4)
• Identify TWO possible causes of this problem. Provide a solution for EACH. (4)
1.2.4
Give TWO reasons for the increase in direct labour cost. Provide a solution for
EACH. Note that wages and salaries increased by 5% in the current financial
year. (4)
INFORMATION:
A. DESKS FACTORY
Extract of pre-adjustment amounts on 28 February 2019
R
Indirect labour 296 500
Depreciation of factory plant 166 000
Advertising 24 500
Water and electricity 248 000
Rent expense 345 600
Insurance allocated to sales department 12 600
Factory sundry expenses 107 700

13
Revision Activities (Revised 2021) Accounting Term 2, 2024

Adjustments to factory overheads for desks:

• Water and electricity for February 2019, R18 000, must be taken into account.
80% is allocated to the factory. The balance is an administration cost.
• Rent must be allocated according to floor area:
Factory: 810 m2 Office: 180 m2 Sales department: 90 m2
• 75% of insurance must be allocated to the factory. The balance applies to the
sales department.
B. INFORMATION FOR BOTH FACTORIES
DESKS CHAIRS
COSTS 2019 (Unit costs)
Amount Per unit 2019 2018
Direct material R3 060 000 R340 R165 R124
Direct labour ? R160 R90 R70
Variable
Selling and distribution R720 000 R80 R50 R60
Total variable costs R580 R305 R250
Factory overheads R76 R75
Fixed
Administration R360 000 R40 R20 R18

SELLING PRICES
Per unit R750 R390 R370

UNITS
Produced and sold 9 000 16 000 15 000
Break-even point 8 471 18 071 12 400

40

FS Sep 2019
ACTIVITY 2: MANUFACTURING  (40 marks; 30 minutes)
2.1 NGUBENI MANUFACTURERS
The business manufactures blankets. The financial year-end is 30 June 2019.
REQUIRED:
2.1.1 Calculate the direct material cost (7)
2.1.2 Complete the note for factory overhead costs (15)
2.1.3 Prepare the Production Cost Statement on 30 June 2019. (8)

INFORMATION:
A. Stock on hand:
30 June 2019 1 July 2018
Work-in-process ? R181 410

14
Revision Activities (Revised 2021) Accounting Term 2, 2024

B. Raw materials (fabric):

TOTAL AMOUNT
R
Stock on 1 July 2018 72 500
Purchases: 1 618 300
24 August 2018 530 000
15 December 2018 405 300
26 June 2019 683 000
Returns: 17 000
Stock on 30 June 2019 52 700
C. The following items were calculated before the adjustments below:
• Direct labour cost R465 000
• Factory overhead cost R536 025
D. The following items were not taken into account in calculating the factory
overhead cost:
R
Cleaning materials 28 800
Water and electricity 46 000
Rent expense 126 500

• The factory used twice as much cleaning material as the sales

department.
• 75% of water and electricity are related to the factory. The balance is used
by the sales and administration departments.
• Rent was not increased during the current financial year. Rent for June
2019 has not yet been paid. The rent is allocated according to the floor
space in the ratio 3:1:2 for the factory, sales and office respectively.
• Salaries and wages of factory employees:
Fabrics foreman Cleaning staff
Number of employees 1 3
Basic salary/wage R15 200 per month R975 per week, paid for
per employee the whole year
Annual bonus 13th month salary paid in 20% of the basic wage
December
The above figures include all employer contributions.
E. The business produced 12 950 blankets at a unit cost of R245.
2.2 FRAGILE MANUFACTURERS
Fragile Manufacturers produces ceramic floor tiles (each box contains 15 tiles).
REQUIRED:
2.2.1 Explain to the owner why it is important to calculate the break-even point each
year. Provide TWO reasons. (4)
2.2.2 Provide workings to show that the break-even point of 1 912 units on
28 February 2019 was correctly calculated. (3)
2.2.3 Explain why Zonke should not be concerned over the break-even point for
2019. Quote figures to support your answer. (3)

15
Revision Activities (Revised 2021) Accounting Term 2, 2024

INFORMATION ON 28 FEBRUARY:

2019 2018
TOTAL COST PER UNIT PER UNIT
Total fixed costs R219 880 R54,97 R52,50
Total variable costs R240 000 R60,00 R50,00
Selling price per box R175,00 R140,00
Number of boxes produced and sold 4 000 units 3 000 units
Break-even point 1 912 units 1 750 units

40

GP Sep 2019
ACTIVITY 3: MANUFACTURING  (25 marks; 20 minutes)
KLEMISH MANUFACTURERS
The business produces study desks.
REQUIRED:
Prepare the following for the financial year ended 28 February 2019:
3.1 Production Cost Statement (13)
3.2 Abridged Statement of Comprehensive Income (Income Statement) (12)
INFORMATION:
A Stock on hand:
28 February 2019 28 February 2018
Work-in-progress ? R500 800
Finished goods R18 000 R672 000

B • 10 800 tables were produced at a unit cost of R495 each.

• Sales of 16 000 tables amounted to R8 160 000.
C Prime cost: R4 600 000 (after adjustments)
D The bookkeeper calculated the following costs before taking into account the adjustments below:
Administration R296 800
Factory overheads R974 400
Direct materials R3 100 000
Direct labour ?
Selling and distribution R844 000
• An amount of R204 000 for raw materials, purchased on credit, was not taken into
account.
• Stationery valued at R1 000, purchased for the Administration department was
incorrectly allocated to the Selling and Distribution department.
• Rent Expense, R252 000, was shared between the Factory and Selling and
Distribution department in the ratio of 2:1.
85% should have been allocated to the Factory. Correct the error.
25

16
Revision Activities (Revised 2021) Accounting Term 2, 2024

RECONCILIATIONS
Debtors’ control account | debtors’ list | debtors’ age analysis | credit terms | credit limit | current |
discount allowed | bad debts | bad debts recovered | creditors’ control account | creditors’ list |
Basic creditor’s monthly statement | discount received | trade discount | returns (received or sent) | bank
concepts reconciliation statement | bank overdraft | favourable or unfavourable bank balance | stop order |
debit order | EFT | direct deposit | interest on current account | interest on bank overdraft | bank
statement
Interest on debtors' or creditors' accounts in arrears | pro-rata amount received (or written off) from
Calculations insolvent estates | balancing figure in Bank reconciliation statement | closing balance for Bank,
debtors’ and/or creditors’ control accounts

DEBTORS
MEED June 2015
ACTIVITY 1 Debtors / Creditors Reconciliations  (25 marks, 20 minutes)
The Debtors age analysis and Creditors list were taken from the records of Nissen Traders on
31 May 2019, the end of their financial year.
REQUIRED:
1.1 State the balance of the Debtors Control account on 31 May 2019. (2)
1.2 Which debtor in the age analysis may receive discount? Motivate your answer with one
reason. (3)
1.3 Explain the term 'Credit Limit' used in the age analysis. (2)
1.4 S. Solly and P. Peter are not honouring the credit terms for debtors. Suggest ONE
internal control measure to address this situation. (2)
1.5 The Provision for Bad debts account showed a credit balance of R1 400 on
1 June 2018. Provision for Bad Debts must be adjusted to 5% of the debtors. Calculate
the amount for Provision for Bad Debts on 31 May 2019. (3)
1.6 Record the following errors and omissions directly into the Creditors List. Show
workings in brackets in the creditors list to earn part marks. (9)
• Damaged goods were returned to Mjila Wholesalers, R850
• An invoice for goods purchased on credit from Stan Stores were not entered,
R1 260.
• A payment of R3 000 was made to Mjila Wholesalers. Cash discount of 3% was
received on this payment. No entries were made.
• Goods not according to order were returned to Stan Stores, R280. This was
entered in the Creditors Ledger account as purchases.

1.7 What is your opinion about the credit terms Nissen Traders allows to debtors with (4)
regards to the terms they are allowed by their creditors? Make one recommendation in
this regard.

17
Revision Activities (Revised 2021) Accounting Term 2, 2024

INFORMATION
A. Debtors
• Debtors are entitled to 2% discount if they settle their accounts within 30 days.
• Debtors are usually allowed to settle their accounts within 60 days.
• Nissen Traders pay their creditors within 30 days in order to receive 3% cash discount.
Debtors Age Analysis on 31 May 2019
Debtor Credit limit TOTAL 1-30 days 31-60 days 61-90 days 90+ days
S.Solly R4 000 R14 000 3 000 8 000 2 000 1 000
V. Veejay R5 000 R 2 500 2 500
P. Peter R3 000 R 8 000 4 000 4 000
R24 500 R9 500 R8 000 R2 000 R5 000

B. Creditors
Creditors List on 31 May 2019
Mjila Wholesalers R5 450
Stan Stores R2 800
25

CREDITORS RECONCILIATION
FS Sep 2019
ACTIVITY 2: CREDITORS RECONCILIATION  (20 marks; 15 minutes)

The information below relates to Busby Stores for September 2018.

REQUIRED:
2.1 Provide TWO reasons why it is important for the business to prepare a monthly
Creditors' Reconciliation Statement. (4)
2.2 Calculate the correct Creditors' Control Account balance after taking into account the
relevant errors and omissions. (6)

2.3 Calculate the correct balances for creditors Zebo Suppliers and Leo Wholesalers, by
taking into account the errors and omissions. (10)
INFORMATION
A Balance and totals on 30 September 2018 (before errors and omissions).
Creditors control account in the General Ledger R87 690
Creditor's list: (before errors and omissions)
Zebo Suppliers R16 580
Leo Wholesalers R29 520

B ERRORS AND OMISSIONS

(a) The Creditors control was under-cast by R5 020.
(b) A credit invoice for trading stock purchased from Zebo Suppliers for R12 800 on
28 September 2018 was not recorded at all.

18
Revision Activities (Revised 2021) Accounting Term 2, 2024

(c) A payment of R3 150 to Leo Wholesalers was posted as an invoice in the

Creditors' ledger. The CPJ was correct.
(d) A debit note of R1 280 for goods returned to Zebo Suppliers was recorded in the
Creditors' Journal in error and posted to the General Ledger accordingly. Posting
to the Creditors' ledger was correctly done from the document.
(e) VAT of R1 720 was omitted from an invoice from Zebo Suppliers.
(f) Equipment purchased on credit from Blackwood Manufacturers, R4 900, was
incorrectly posted to the account of Leo Wholesalers.
(g) An invoice for R3 575 from Zebo Suppliers was incorrectly posted as R3 375 to
their account in the Creditors' Ledger only.
20

GP Sep 2019
ACTIVITY 3: CREDITORS’ RECONCILIATION  (9 marks; 7 minutes)

The information relates to Kirsten Traders for August 2019. Kirsten Traders buys goods
on credit from Amla Suppliers.
REQUIRED:
Use the table provided to indicate the changes that must be made:
• In the Creditors' Ledger Account in the books of Kirsten Traders
• In the Creditors' Reconciliation Statement on 31 August 2019 (9)
INFORMATION:
The following differences were discovered when comparing the account in the Creditors'
Ledger with the statement received from Amla Suppliers:
A An invoice for R14 800 was recorded incorrectly as R1 480 on the statement
received from the creditor.
B The bookkeeper of Kirsten Traders recorded an invoice for R1 350 as a credit note.
C The discount of R850 was in error, overstated by R350 in the Creditors’ Ledger.
D A payment for R7 200 by Kirsten Traders did not appear on the statement due to the
statement been processed early.
E Goods for R2 700, returned by Kirsten Traders, was not recorded.
9

BANK RECONCILIATION
ACTIVITY 4: BANK RECONCILIATION (no cheques)  (30 marks, 20 minutes)

The information relates to Klonex Traders.

REQUIRED:
4.1 The owner, Ben Joseph, realises that many people are now using electronic funds transfers
(EFTs).
4.1.1 State THREE advantages of EFTs.
(3)
4.1.2 Janet, the bookkeeper, has been assigned the duty of processing and controlling all
EFTs. Explain TWO reasons why the internal auditor is concerned about this. (4)

19
Revision Activities (Revised 2021) Accounting Term 2, 2024

4.2 Show changes in the Cash Journals for June 2019. (11)
4.3 Calculate the correct Bank Account balance on 30 June 2019. (4)
4.4 Prepare the Bank Reconciliation Statement on 30 June 2019. (8)

INFORMATION:
A. Extract: Bank Reconciliation Statement on 31 May 2019
Outstanding deposit R9 500
Outstanding payment/EFT
No. Date
516 28 May 2019 R7 950
Favourable balance on Bank Account R9 200
NOTE:
• The outstanding deposit appeared on the June Bank Statement.
• EFT 516 appeared on the June Bank Statement with the correct amount of
R5 950.
B. Provisional totals in the Cash Journals on 30 June 2019 before receiving the
Bank Statement:
Cash Receipts Journal: R27 470
Cash Payments Journal: R32 400
C. Entries in the Cash Journals NOT on the June Bank Statement:
• Deposit, R9 675
• EFT 614 (30 June 2019), R3 800
• EFT 617 (2 August 2019), R4 580
D. Entries on the June 2019 Bank Statement NOT in the Cash Journals:
DATE DETAILS R
15 Debit order: Micro Insurance* 1 125
Debit order: Micro Insurance* 1 125
25 M Malan (EFT made by tenant) 2 800
30 Interest income 130
30 Service fees 175
*Insurance appeared twice in error. This will be rectified next month.
E. Bank Statement balance on 30 June 2019: …?
30

20