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ACCOUNTING GRADE 12 QUESTIONS - NSC PAST PAPERS AND MEMOS NOVEMBER 2017

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ACCOUNTING
GRADE 12
NOVEMBER 2017
NATIONAL SENIOR CERTIFICATE
GRADE 12

INSTRUCTIONS AND INFORMATION
Read the following instructions carefully and follow them precisely.

  1. Answer ALL the questions.
  2. A special ANSWER BOOK is provided in which to answer ALL the questions.
  3. Show ALL workings to earn part-marks.
  4. You may use a non-programmable calculator.
  5. You may use a dark pencil or blue/black ink to answer the questions.
  6. Where applicable, show all calculations to ONE decimal point.
  7. Write neatly and legibly.
  8. Use the information in the table below as a guide when answering the question paper. Try NOT to deviate from it.
QUESTION 1: 30 marks; 20 minutes  
Topic:  This question integrates: 
Bank Reconciliation and Internal Control  Financial accounting
Reconciling Bank Account with Statement
Managing resources
Internal control 
QUESTION 2: 55 marks; 30 minutes  
Manufacturing  Managerial accounting
Production Cost Statement
Profit/Loss calculations
Managing resources
Analysing break-even and unit costs
QUESTION 3: 65 marks; 40 minutes 
Fixed Assets, Balance Sheet and Audit Report  Financial accounting
Balance Sheet
Audit report
Managing resources
Calculations: Fixed assets
QUESTION 4: 85 marks; 50 minutes 
Cash Flow Statement and Interpretation Financial accounting
Concepts
Cash Flow Statement
Interpretation of financial information
QUESTION 5: 35 marks; 20 minutes
Inventory Valuation Managerial accounting
Concepts
Inventory valuation calculations
Managing resources
Internal control
QUESTION 6: 30 marks; 20 minutes
Budgets Managerial accounting
Cash Budget
Calculations
Problem-solving


QUESTION 1: BANK RECONCILIATION AND INTERNAL CONTROL(30 marks; 20 minutes)
1.1Indicate whether the following statements are TRUE or FALSE. Write only 'true' or 'false' next to the question number (1.1.1–1.1.3) in the ANSWER BOOK.
1.1.1 A favourable balance on the Bank Statement is indicated as a debit.
1.1.2 A post-dated cheque received must be entered on the date received.
1.1.3 An issued cheque that has been lost must be cancelled in the CRJ.
(3 x 1) (3)
1.2 MENZIES TRADERS
The given information relates to Menzies Traders for June 2017.
REQUIRED:
1.2.1 Calculate the following on 30 June 2017:

  • Correct totals for the CRJ and CPJ
  • Bank account balance (14)

1.2.2 Prepare the Bank Reconciliation Statement on 30 June 2017. (9)
1.2.3 Explain the problem relating to deposits. Quote evidence. Explain TWO strategies to prevent this in future. (4)
INFORMATION:

  1. The Bank Reconciliation Statement on 31 May 2017 showed the following:
    Unfavourable balance on the Bank Statement  R1 450 
    Outstanding deposits:   
    • 17 May 2017  30 000
    • 31 May 2017  16 200 
    Outstanding cheques:   
    • 605 (dated 16 December 2016)  9 750 
    • 812 (dated 10 April 2017)  8 550 
    • 816 (dated 25 May 2017)  13 590
    • 819 (dated 15 August 2017) 7 650
    • 823 (dated 31 May 2017) 2 900
    Unfavourable balance on the Bank account in the Ledger R5 210
  2. Provisional Cash Journal totals on 30 June 2017:
    • Cash Receipts Journal: R90 500
    • Cash Payments Journal: R85 920
  3. Entries in the Cash Journals for June 2017 that do not agree with the June Bank Statement:
    JOURNAL  DOCUMENT  DATE  DETAILS AMOUNT 
    CRJ  EFT 19   11 Paintco  R5 500
    Deposit slip   25 Cash sales R40 500 

    NOTE: EFT 19 was incorrectly entered in the CRJ instead of the CPJ.

    JOURNAL  DOCUMENT  DATE  DETAILS  AMOUNT 
    CPJ   Cheque 870   25 VN Ltd  R16 800 
    EFT 21   30 SJ Stores R2 250 
  4. Items on the Bank Statement dated 30 June 2017 that do not agree with the June Cash Journals:
    DATE  DETAILS  DEBIT CREDIT 
     02 Deposit (17/5)    30 000 
     05 Cheque 812  8 550  
     09 Debit order (insurance)  2 290   
     11 Direct transfer to Paintco (EFT 19)  5 500   
     12 Cheque 816  13 590   
     16 Deposit (31/5)    16 200 
     18 Direct transfer from S Smit (rent)    16 500 
     22 Cheque 823 (see note below) 9 200  
     23 Unpaid cheque
    (B Blast settled his debt, R795)
    750  
     24 Service fee 1 220  
    NOTE:
    • Cheque 823: Bank Statement figure is correct.
    • Service fees were overstated by R900. The bank will rectify the problem next month.
  5. The Bank Statement on 30 June 2017 reflected a balance of R?.30


QUESTION 2: MANUFACTURING (55 marks; 30 minutes)
2.1 GEVEN MANUFACTURERS
The business produces wooden tables.
REQUIRED:
Prepare the following for the year ended 28 February 2017:
2.1.1 Production Cost Statement(14)
2.1.2 Abridged Income Statement (14)
INFORMATION:

  1. Stock on hand:
      28 FEBRUARY 2017  1 MARCH 2016
    Work-in-process   ? R160 000 
    Finished goods  400 tables,
    valued using
    FIFO method
    1 200 tables at R280
    = R336 000
  2. Production and sales for the year:
    • 7 200 tables were produced at a unit cost of R330 each.
    • 8 000 tables were sold for R4 080 000.
  3. Costs (before adjustments):
    Administration  R148 400 
    Factory overheads R487 200 
    Direct materials  R1 050 000 
    Direct labour   ?
    Selling and distribution  R422 000 

    Adjustments:

    • Payment to EZ Transport, R102 000, was incorrectly allocated to Selling and Distribution. This was actually meant for delivering wood to the factory.
    • The cleaning contract for the year, R126 000, was shared between Factory and Administration in the ratio 2 : 1. However, 80% should have been allocated to Factory.
  4. Prime cost: R1 800 000 (after adjustments)

2.2 GYMWEAR MANUFACTURERS
Gymwear Manufacturers is owned by Jan Fiks. They produce shoes and shirts for gym training. Jan requires assistance in interpreting his 2017 results. Note that one pair of shoes comprises one unit.
REQUIRED:
2.2.1 Shirts:

  • Calculate the break-even point for shirts. (4)
  • Jan is not satisfied with the variable costs per unit, even though the total variable costs per unit decreased by R6.
    • Identify ONE variable cost (with figures) that has not been well controlled. Give TWO possible reasons for this problem.(4)
    • Explain why Jan might be concerned about the large decreases in the other TWO variable costs. (4)
  • Jan does not understand why the unit cost of production has increased when neither his fixed costs nor the variable costs have increased. Explain why this is so. State ONE point (with figures). (4)

2.2.2 Shoes:

  • Calculate the % increase in the selling price of shoes. (3)
  • Jan decided to improve the quality of the shoes and to export them. Explain how the direct material costs and the selling and distribution costs were affected by this decision. Provide figures. (4)
  • Jan was concerned that the increase in price would have a negative impact on the business. Explain whether his concern was justified. State TWO points.(4)

INFORMATION:

   SHIRTS   SHOES  
2017  2016  2017  2016 
Break-even point    11 522  3 842  4 317 
Units produced and sold  16 100  25 000  7 750  6 500 
Net profit  R500 400  R620 000  R2 379 750  R1 183 000 
Selling price per unit  R302  R290  R1 640 R1 260 
Selling price of competitors  R310 R290  R1 100  R1 250 
Total fixed costs (factory overhead and administration) R530 000 R530 000  R2 340 000  R2 340 000 
Total fixed cost per unit ? ? R302 R360
Total variable costs per unit R238 R244 R1 031 R718
Direct material costs per unit R92 R116 R456 R330
Direct labour costs per unit R131 R100 R381 R360
Selling and distribution costs per unit R15 R28 R194 R28
Unit cost of production R242 R228 R1 100 R1 004

(55)

QUESTION 3: FIXED ASSETS, BALANCE SHEET AND AUDIT REPORT(65 marks; 40 minutes)
The following information relates to Odette Ltd. The financial year ended on 28 February 2017.
REQUIRED:
3.1 Refer to Information B.
Calculate the missing amounts denoted by (a) to (e). (22)
3.2 Complete the Balance Sheet (Statement of Financial Position) on 28 February 2017. Show workings. (37)
INFORMATION:

  • Amounts extracted from the records on 28 February 2017:
    Balance Sheet accounts section  R
    Ordinary share capital  ?
    Retained income (28 February 2017)  520 000 
    Fixed assets (carrying value)  ?
    Loan from Beque Bank 284 000 
    Trading stock  408 880 
    Net trade debtors  67 200 
    Fixed deposit: Elze Bank  ?
    Bank (favourable) ?
    SARS: Income tax (provisional payments) 209 000
    Creditors' control 184 000
    Nominal accounts section (pre-adjustment amounts)  
    Insurance 30 200
    Rent income 108 450
    Electricity 42 000
  • Fixed assets:
      LAND AND BUILDINGS VEHICLES EQUIPMENT  TOTAL 
    Cost    350 000  460 000   
    Accumulated depreciation    (315 000)    
    Carrying value (01/03/2016)   (a) 35 000    
    Movements:         
    Additions  325 000 422 550  0  
    Disposals   0  0  (d)  
    Depreciation     (b) (13 766)   
    Carrying value (28/02/2017) 2 550 000 (c) 50 994 (e)
    Cost   772 550 340 000  
    Accumulated depreciation        
    • Depreciation on vehicles is calculated at 20% p.a. on cost.
    • The company has two vehicles on 28 February 2017. One of these vehicles was purchased on 1 September 2016.
    • Extract from the Fixed Assets Register in respect of equipment sold:
      Fridge (Model X3)
      Date purchased: 1 March 2014
      Date sold: 31 December 2016 Sold for: R81 250
      Depreciation rate: 10% p.a. (diminishing-balance method)    
        COST  DEPRECIATION  BOOK VALUE 
      28 February 2015  R120 000  R12 000  R108 000 
      29 February 2016     ?  ?
      31 December 2016     ?  ?
  • The electricity account for February 2017, R5 600, was still outstanding.
  • The provision for bad debts must be increased by R270.

  • An additional insurance policy was taken out on 1 November 2016. The annual premium of R10 200 was paid and recorded.

  • The rent for February 2017 has not been received yet. The rent increased by 15% on 1 July 2016.

  • Net profit after tax, R518 000, was calculated after taking into account all the adjustments above. Income tax is 30% of the net profit.

  • 75% of the authorised share capital of 900 000 shares was in issue. The directors declared a final dividend of 24 cents per share on 28 February 2017.

  • Extract from Beque Bank loan statement:

    Balance on 1 March 2016  R376 000 
    Instalments (including interest)  R92 000
    Interest capitalised  R48 000 
    Balance on 28 February 2017  ?
    NOTE:
    • Interest has not been entered in the books.
    • R50 000 of the loan balance will be settled in the next financial year.
  • The net asset value per share on 28 February 2017 is 620 cents.

  • The current ratio is 2,1 : 1 on 28 February 2017.

     

3.3 AUDIT REPORT
An extract of the independent audit report of Karin Ltd for the financial year ended on 28 February 2017 is provided.
REQUIRED:
As a shareholder, what concerns would you have regarding this audit report? Explain THREE points. (6)
INFORMATION:

EXTRACT FROM THE AUDIT REPORT OF KARIN LTD
We have audited the annual financial statements of Karin Ltd for the year ended 28 February 2017. These financial statements are the responsibility of the company's directors.
Basis for Disclaimer of Opinion
In the course of our audit we established that bonuses paid to directors, amounting to R9,8 million, had not been authorised by the Remunerations Committee.
Audit Opinion
Because of the significance of the matters described above, we have not been able to obtain sufficient audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on the financial statements of Karin Ltd for the year ended 28 February 2017.
Bongani and Botha, Chartered Accountants (SA) 

(65)

QUESTION 4: CASH FLOW STATEMENT AND INTERPRETATION(85 marks; 50 minutes)
4.1 Choose a term to complete each of the following statements. Write only the term next to the question number (4.1.1–4.1.4) in the ANSWER BOOK.
shareholder(s); external auditor(s); director(s); internal auditor(s)
4.1.1 … are appointed by the shareholders to manage the company.
4.1.2 The ... is employed by the company to set up functional internal control processes.
4.1.3 A … is a person who invests in a company by buying shares.
4.1.4 … are appointed by shareholders to give an unbiased opinion on the financial statements. (4 x 1) (4)
4.2 SO-FINE LTD
The given information relates to So-Fine Ltd for the financial year ended 31 August 2017.
REQUIRED:
4.2.1 Prepare the following notes to the Balance Sheet on 31 August 2017:

  • Ordinary share capital(7)
  • Retained income(9)

4.2.2 Complete the Cash Flow Statement by inserting only the details and figures indicated by a question mark (?). (19)
4.2.3 Calculate the following financial indicators on 31 August 2017:

  • Percentage operating profit on sales(3)
  • Debt-equity ratio(4)

4.2.4 Calculate the dividends per share (DPS) of a shareholder who owned the same number of shares for the entire financial period. (4)
INFORMATION:

  1. Information from the Income Statement for the financial year ended 31 August 2017:
    Sales  R8 652 000 
    Operating expenses  1 760 000 
    Depreciation  320 000 
    Interest expense 86 100 
    Operating profit  697 000 
    Income tax  187 770
    Net profit after income tax  438 130 
  2. Information from the Balance Sheet on 31 August:
      2017
    (R) 
    2016
    (R) 
    Fixed assets (carrying value)  6 177 000  4 975 000 
    Fixed deposits  220 000  300 000 
    Loan: Dolphin Bank  985 000  450 000 
    Current assets  619 600  663 300 
    Current liabilities  490 000 614 300 
    Shareholders' equity  ? ?
    Ordinary share capital 5 292 000  ?
    Retained income ? 147 370
    Cash and cash equivalents 23 400 2 500
    Bank overdraft - 65 100
    Shareholders for dividends 168 000 120 000
    SARS: Income tax 11 800 (Cr) 2 400 (Dr)
  3. Share capital and dividends
    • The authorised share capital comprises 1 200 000 ordinary shares.
    • 900 000 ordinary shares were in issue on 1 September 2016.
    • The company issued 150 000 ordinary shares at R6,30 per share on 1 May 2017.
    • 70 000 ordinary shares were repurchased from shareholders on 30 August 2017. A cheque for R437 500 was issued for these shares. These shareholders qualify for final dividends.
    • An interim dividend of 12 cents per share was paid on 1 February 2017.
    • A final dividend was declared on 30 August 2017.
  4. Fixed assets: Transactions during the current financial year.
    • Old equipment was sold for cash at the carrying value of R324 000.
    • Additional equipment and delivery vehicles were purchased.
      (See QUESTION 4.3 on the next page.)

4.3 CASTRO LTD AND RONKI LTD
You are provided with information relating to two companies.
BACKGROUND INFORMATION:

  • Henry Harries owns 300 000 shares in each company.
  • Castro Ltd issued 200 000 new shares only to existing shareholders at the average issue price (R9,10). These funds were used to establish a new branch. No new loans were raised.
  • Ronki Ltd paid R4 800 000 to repurchase 320 000 shares.

REQUIRED:
NOTE: Where comments or explanations are required, quote financial indicators and figures to support your answer.
CASTRO LTD
4.3.1 Comment on the price of R9,10 charged by Castro Ltd for the new shares issued.(3)
4.3.2 Explain how the issue of new shares has affected the financial gearing and risk of Castro Ltd. Quote TWO financial indicators. (6)
4.3.3 Henry had the option to buy some of the new shares issued by Castro Ltd. He had saved sufficient funds (interest rate 5% p.a.) for this purpose.

  • If Henry wanted to retain his 60% shareholding in the company, how many shares would he have had to buy and how much would he have had to pay?(5)
  • Henry decided NOT to buy these shares. Apart from the % shareholding, explain TWO reasons why he has made a mistake by not taking up this option.(6)

RONKI LTD
4.3.4 Comment on the liquidity of Ronki Ltd. Quote TWO financial indicators. (6)
4.3.5 Comment on the price paid by Ronki Ltd for the repurchase (buy-back) of shares. (3)
4.3.6 Explain THREE ways in which Henry has benefited from the repurchase of the shares by Ronki Ltd. (6)
ADDITIONAL INFORMATION:
Financial indicators and additional information from annual reports:

  CASTRO LTD    RONKI LTD 
   2017  2016  2017  2016
Debt-equity ratio   0,5 : 1  0,8 : 1    
Current ratio      1,9 : 1  3,5 : 1 
Acid-test ratio       1,1 : 1 1,7 : 1
Stock-holding period       54 days  54 days
Number of shares in issue  700 000  500 000  580 000  900 000
Average share issue price  R9,10    R10,20   
Price paid for share repurchase     R15,00  
Price of share on JSE R12,00   R15,00  
Net asset value per share R10,73 R11,38 R13,30 R13,22
% return on shareholders' equity 23% 17% 16% 13%
% return on total capital employed 20% 15%    
Earnings per share 140 cents 196 cents 266 cents 171 cents
Total dividends R357 000 R325 000 R928 000 R928 000
Dividends per share 51 cents 65 cents 160 cents 103 cents

(85)

QUESTION 5: INVENTORY VALUATION (35 marks; 20 minutes)
5.1 CONCEPTS
Choose the correct word(s) from those given in brackets. Write only the word(s) next to the question number (5.1.1–5.1.4) in the ANSWER BOOK.
5.1.1 The (specific identification/weighted-average) stock valuation method is best suited for products of similar value purchased in large quantities.
5.1.2 Cost of sales is determined at the point of sale in the (perpetual/ periodic) inventory system.
5.1.3 Stock valued according to the (first-in-first-out/weighted-average) method determines stock on hand by recording the cost prices of the most recent stock purchases.
5.1.4 In the periodic inventory system, carriage on goods purchased is recorded as an (expense/asset) to the business. (4 x 1) (4)
5.2 HOT-WHEELS (PTY) LTD
You are provided with information relating to Hot-Wheels (Pty) Ltd for the three months ending 30 September 2017. The business trades in motorbikes and helmets.
Mike, the owner, wants to assess his stock records before any price increases during the year.
REQUIRED:
Motorbikes:
5.2.1 Calculate the value of the closing stock on 30 September 2017 using the specific identification method. (7)
5.2.2 Mike requires your advice on the three different models of motorbikes in which he is trading. Explain TWO points of advice. (4)
Helmets:
5.2.3 Calculate the value of the closing stock on 30 September 2017 using the weighted-average method. (9)
5.2.4 Is the weighted-average method appropriate to value the helmets? Explain ONE point. (3)
5.2.5 Mike suspects that helmets are being stolen from the shop despite security cameras being installed.

  • Provide a calculation to verify his suspicion. (5)
  • What can Mike do to improve the internal control of stock? State THREE points.(3)

INFORMATION:

  1. Motorbikes:
    Information for three months ended 30 September 2017:
    Stock on 1 July 2017:
    MODEL  UNITS  COST PRICE PER UNIT (R)  TOTAL (R)
    AO2  12  24 300 291 600

    Total purchases:

    MODEL  UNITS  COST PRICE PER UNIT (R)  TOTAL (R) 
    AO2   6  24 300  145 800
     AO3  15  27 400  411 000
     AO4  18  31 600  568 800
       39    1 125 600

    Sales:

    MODEL  UNITS SOLD  TOTAL SALES AMOUNT(R) 
    AO2   8  311 040
    AO3   11  482 240
    AO4   10  505 600
       29  1 298 880
  2. Helmets:

    Information for three months ended 30 September 2017:
    Stock balances according to physical count:

      UNITS  COST PRICE PER UNIT (R)  TOTAL (R) 
    1 July 2017   30 R500  R15 000
    30 September 2017   12    ?

    Purchases:

    DATE  UNITS PURCHASED  COST PRICE PER UNIT (R)  TOTAL (R) 
    20 July 2017   25  R510  R12 750
    20 August 2017   30  R525  R15 750
    20 September 2017   20  R540  R10 800
    TOTAL   75    R39 300

    Returns: Five defective helmets from the purchases in August 2017 were returned to suppliers for a full refund.
    Sales: 85 helmets were sold at R600 each.
    (35)

QUESTION 6: BUDGETS (30 marks; 20 minutes)
You are provided with information relating to Lamba Traders, a business owned by Larry Lamba. The business sells cleaning materials for cash and on credit. They deliver goods free of charge to local customers.
REQUIRED:
6.1 Explain the main purpose of a Cash Budget and a Projected Income Statement. (2)
6.2 Debtors:
Refer to Information A and Information B.
The credit terms allow debtors to settle accounts by the end of the month following the sales transaction month. No discount is allowed. However, based on past experience, Larry expects debtors to pay according to the Debtors' Collection Schedule.
6.2.1 Use the November figures to calculate the following:

  • % of debtors that are expected to comply with the credit terms
  • % of bad debts expected (9)

6.2.2 Larry does not believe that his debtors' control clerk, Shirley, deserves a bonus on 31 October 2017. Provide evidence to support his opinion. Offer Larry advice to improve debtors' collections (TWO points). (4)
6.3 Projected Income Statement:
Refer to Information C and Information D.
6.3.1 Calculate:

  • The fixed % of sales used by Larry to budget for delivery expenses(2)
  • The amount of the loan to be repaid on 31 December 2017(4)

6.3.2 Refer to variances in Information D.
Explain why Larry would feel that all these variances are problems for his business. (9)

  1. INFORMATION:
    Debtors' Collection Schedule for the period ending 28 February 2018:
      CREDIT SALES (R)  COLLECTIONS    
        NOV. 2017(R)  DEC. 2017(R)  JAN. 2018(R)  FEB. 2018(R) 
    September  112 000   16 800      
    October  134 400   75 264  20 160    
    November   224 000  56 000  125 440  33 600  
    December   358 400    89 600  200 704  53 760
    January   179 200      44 800  100 352
    February   112 000        28 000
        148 064 235 200 279 104 182 112
  2. The debtors' clerk presented the following age analysis at the end of October 2017:
    TOTAL  CURRENT MONTH  1 MONTH  2 MONTHS  3 MONTHS + 
    100%   18%  40%  23%  19%
  3. Extract from the Projected Income Statement:
      NOV. 2017  DEC. 2017  JAN. 2018 FEB. 2018 
    Interest on loan (rate 8,5% p.a.)   R2 975  R2 975  R2 465  R2 465
  4. Figures provided by the accountant on 31 October 2017:
      PROJECTED  ACTUAL  VARIANCE 
    Total sales  320 000  290 000  –30 000 
    Cash sales   96 000 50 000   –46 000
     Credit sales  224 000  240 000  +16 000
     Advertising  5 000  1 000  –4 000
    Packing material 4 800 4 800 0
    Delivery expenses 12 800 12 500 –300
    (30)

TOTAL:300

Last modified on Friday, 23 July 2021 06:52