1.1.1 

Cash Receipts Journal (CRJ) ✔

1.1.2 

Debit ✔

1.1.3 

Credit note ✔

1.1.4 

Cash discount ✔     (4)

Calculate the correct Debtors Control balance on 30 June 2017. 

• 74 600 – 3 500 ✔ + 4 500 ✔✔ = 75 600 ? one part correct 
                             ^{(4 230 + 270)} 

(4)

Pillai 21 600 ✔ – 1 600 ✔✔ + 4 500 ? 1.2.1 

24 500 ?*

Tele 24 900 ✔ – 2 500 ✔ 

22 400 ?*

Botha 11 100 ✔✔ + 2 700 ✔ 

13 800 ?*

 Calculate the percentage of debtors that are not complying with the  30 days credit terms.   
   _{36 400 ✔} 
28 000 + 8 400 x 100 = 52% ? one part correct 
      70 000 ✔

(3)

Explain TWO internal control measures that JT Traders can use to  ensure that only reliable clients are granted credit. 
Any TWO control measures ✔✔ ✔✔ 

• Perform credit checks (references / listing / credit bureau) to check credit worthiness.
• Check employment history and salary advice to check if they can afford it.
• Contact details (residential/postal address and contact numbers) to get in touch with  them if necessary.

(4)

NO.

CREDITOR’S LEDGER  
ACCOUNT BALANCE 

STATEMENT BALANCE

Balance 

35 000 

38 420

(i) 

2 970 
7 740 – 4 770✔✔

(ii) 

(750) ✔✔

(iii) 

1 000 ✔✔

(iv) 

(1 960) 
980 + 980 (1 mark each)✔✔

(v) 

(3 860) ✔✔

(vi) 

7 120 ✔✔

TOTAL 

38 970 ? for both totals

38 970

(13)

Q1:  
TOTAL MARKS 

2.1.1 

Weighted average ✔

2.1.2 

FIFO ✔

2.1.3 

Perpetual ✔

2.1.4 

Periodic ✔

2.1.5 

Specific identification ✔

(5)

Calculate the selling price per unit for tracksuits. 

296 125 = R575 ✔✔               (2 marks or 0) 
   515  

(2)

Calculate the cost of sales of tracksuits using the FIFO method. 

                                                                      33 570              (2 marks) one part correct 
40 000 ✔ + 170 450 ✔– 3 500 ✔ – (31 500 ✔ + 2 070 ?✔) = 173 380 ? one part correct 
                                                           ^{90 x 350   6 x 345}

 (7)

Calculate the stock turnover rate of tracksuits (use the average stock). 

                             _2.2.2 
                       173 380 ?                 = 4,71 / 4,7 times ? one part correct 
½ ✔(40 000 ✔ + 33 570 ?)2.2.2 
                   ^{36 785} (three marks) 

(5)

It was discovered that vests were missing from the June 2016 delivery.  Calculate the number and value of the vests missing. 
NUMBER MISSING:  
(160 ✔ + 340 ✔) – 298 ✔ – 186 ✔ = 16 ? one part correct 

VALUE:  
16 x R92 ✔ = R1 472 ? one part correct 

(7)

Calculate the Gross Profit made by the vests department.
Note that this  department uses the weighted average method to value stock.

 *one part correct

(8)

PROBLEM 
Problem identified ✔ ✔ Figure ✔ ✔

SOLUTION ✔ / ADVICE ✔ 

Problem 1: 
Days worked (172/264)

• Investigate the reason for the low  number of days worked.
• Monitor opening and closing times  and the employees’ leave-taking.
• Do cost-benefit analysis to  determine whether to keep this  department.
• Pay workers only for days worked.

Problem 2: 
Stock turnover rate (2 times)
OR 
Lower sales (298/500 units)
OR 
Stockpiling (186 units on hand)

• Use an ordering system and buy  according to orders.
• Sacrifice profit (lower mark-up) to  increase sales.

(6)

Q2:  
TOTAL MARKS 

3.1.1 

B ✔

3.1.2 

C ✔

3.1.3 

A ✔

(3)

Balance on 1 March 2016 (7 480 ✔ + 50 000 ?#) 

57 480?one part  

correct

Funds used to repurchase shares (40 000 x 1,25) 

(50 000) #✔✔

Net profit after income tax 

681 720 ✔

Ordinary share dividends 

(389 200) ✔

ASSETS

Non-current assets operation 

4 310 545 ✔

Loan: Dube Bank (831 800 ✔?* – 124 770 ?) 
           (920 000 – 153 600 + 65 400) see CL 

5 200 000 

(26)

Do a calculation to show the number of shares that Bakkies must buy  to gain control of the company. 

800 000 x 50% + 1 = 400 001 or (50% + 100 = 400 100) ✔✔ 
                                                                              Shares are normally sold in batches (lots) of 100.
600 000 x 42% = 252 000 ✔✔ 
Bakkies must buy 148 001 / 148 100 shares ? one part correct  

• Accept: 800 000 x 51% = 408 000 (in this case Bakkies must buy 156 000 shares) 

(5) 

Bakkies wants to buy the shares at the current net asset value without  advertising them to the public. As an existing shareholder, why would  you not be satisfied with this arrangement? Explain. Provide TWO  points. 
TWO valid points ✔✔ 

• It is illegal and unethical to act against the law as prescribed by the Companies  Act.
• Companies Act requires that shares be advertised to the public (prospectus).
• He wants to pay less than the market price – this would disadvantage the  company (investors are willing to pay more).  

(4)

Ruhi Ltd is planning to spend R300 000 on staff development and  training over the next two years. How will this expense be explained  (disclosed) in the published annual report? Give TWO points. 
TWO valid points ✔ ✔  

• The directors will include this in the directors’ report stating the company’s  commitment to community/employee skills development.
• This will form part of their corporate social responsibilities. 
• It will highlight the company’s compliance with the King Code.
• Emphasis on the triple bottom line.

(2)

Q3:  
TOTAL MARKS 

4.1.1 

D ✔

4.1.2 

B ✔

4.1.3 

A ✔

(3)

800 000 

Ordinary shares on 1 July 2016 

7 600 000 ?*

200 000 ?* 

Shares issued at R9,80 each 

1 960 000 ✔✔

(120 000) ✔ 

Shares repurchased (ASP: R9,56 ✔✔) 

(1 147 200) ? 

880 000 ✔ 

Ordinary shares on 30 June 2017 

WORKINGS 

ANSWER

Dividends paid 
320 000 ✔ + 514 000 ✔ – 264 000 ✔ 

Or 320 000 (one mark) + 250 000 (two marks) 
Accept alternative presentations (signs reversed or GL)

(570 000) ? 
one part correct and  outflow

Income tax paid 
31 000 ✔ + 22 300 ✔ – 314 400 ✔ 
Accept alternative presentations (signs reversed or GL)

(261 100) ? 
one part correct and  outflow 

Change in investment 
120 000 – 80 000 

40 000 ✔? 
one part correct and inflow

Change in loans 
1 250 000 – 950 000 

300 000 ✔? 
one part correct and inflow

 Calculate the cost of the additional equipment purchased. 
                                                                                                                one part correct
9 806 000 ✔+ 440 400 ✔+ 510 000 ✔– 8 410 800 ✔– 1 800 000 ✔ = 545 600 ? 
–9 806 000 ✔– 440 400 ✔– 510 000 ✔+ 8 410 800 ✔+ 1 800 000 ✔ = –545 600 ?
Accept alternative presentation of information such as signs reversed, ledger accounts etc.  

(6)

(62 800) ?*

(5)

Calculate the gross profit percentage (mark-up percentage). 
  4 290 000   ✔ x 100 = 60% ? one part correct 
7 150 000 ✔✔ 

(4)

Calculate the net asset value per share (NAV). 
8 801 400 ✔ x 100 = 1 000 cents ? one part correct 
  880 000 ✔

(3)

Calculate the return on average shareholders’ equity. 
              _{733 600} 
     (1 048 000 – 314 400)       ✔✔ x 100 = 8,8% ? one part correct  ½ ✔
(7 821 800 ✔ + 8 801 400 ✔) 
             ^{8 311 600} 

(6)

Were the directors justified in increasing the loan? Explain. Quote TWO  relevant financial indicators (with figures) in your answer. 
YES or NO: ✔ 

Financial Indicators: ✔✔ ✔✔ 

• Debt/Equity ratio : consistent over the year at 0,1 : 1
• ROTCE: increase from 11,3% to 12,5% 

Explanation: ✔✔ 

• The company is lowly geared (using more own capital than borrowed capital).
• The return on capital employed however shows that the company is negatively  geared (earning less than the interest rate of 13%). 

(7)

Explain why the shareholders are not satisfied with the dividend pay out policy and their return earned. Quote financial indicators (with  figures) in your explanation. 
Dividend pay-out policy: 

• 2016: 75/78 = 96,1% ✔✔
• 2017: 55/80 = 68,8% ✔✔ 

Return earned: 

• ROSHE increased from 7,9% to 8,8% (refer 4.2.5) ✔✔ 

Explanation: ✔✔ 

• The shareholders may be dissatisfied with their dividends as the company decided  to retain a larger percentage of the earnings than last year (last year distributed  96% of EPS compared to 69% this year). The directors may have explained their  strategy in the annual reports.
• Although their return on investment increased, it is still below the return on  alternative investments. 

(8) 

Comment on the price paid to repurchase the shares on 31 March 2017.  Quote TWO financial indicators (with figures) in your comments. 
Financial indicators ✔✔ figures ✔✔ comment ✔✔ 
NAV: R9,78 at the beginning of the year. 
Market price was R11,00 on 1 July 2016 and shows an upward trend (R11,20). The company paid R10,00. 
The price paid was therefore fair.  
It did not compromise the company or the shareholders. 

(6)

Q4:  
TOTAL MARKS 

5.1.1 

True ✔

5.1.2 

False ✔

5.1.3 

False ✔

(3)

Direct labour cost 
Normal time 5 x 1 800 x R70                630 000 ✔?* 
Overtime 660 x R112 ✔✔                      73 920 ?* 
Contributions 630 000 x 9%                  56 700 ? (9% of normal time)
                                                             760 620 ?* 
                                                                              *one part correct 

(7)

WORKINGS 

ANSWER

(a) 

6 500 ✔ + 2 500 ✔✔ 

9 000 ?

(b)

            _{420 000 + 76 000 – 436 000} 
SOLD: 60 000 ✔✔ x 15% x 8/12 = 6 000 ?
NEW: 76 000 x 15% x 3/12 = 2 850 ✔✔
OLD: (420 000 ✔ – 60 000 ?) x 15% = 54 000 ?

62 850 ?

Indirect labour 

300 000 ✔

Indirect material 

52 750 ✔

Water and electricity 98 700 x 2/3 

65 800 ✔?*

Insurance (32 300 ✔ – 2 800 ✔✔) x 60% 

17 700 ?*

Rent expense 102 000 x 5/8 

63 750 ✔?*

Depreciation See 5.2.2 (b) 

62 850 ?

Factory sundry expenses 

19 150

Calculate: Cost of sales 
                                            _{29 500 x R60} 
Cost of sales: 46 000 ✔ + 1 770 000 ✔✔ – 41 000 ✔ = 1 775 000 ? 
                                                                                                      one part correct
Accept alternative calculations including the Finished Goods Stock Account. 

(5) 

Do a calculation to prove that the break-even point for jackets in 2017  is correct.
          _{618 000}  
41,20 ✔ x 15 000 ✔ = 14 714/14 715 units 
   115 ✔ – 73 ✔ 
              ⁴² 

(4)

Jackets: 

                               Comment: ✔ figures ✔ 

• The BEP shows an increasing trend (10 362 to 14 715 units) whilst  the level of production remains constant (15 000 units). Decrease in profitability.

Caps: 

            Comment: ✔ figures ✔ 

• The level of production is constant at 9 500 units but the BEP  dropped from 9 500 units to 7 134 units.
• No profit was made in 2016. 2017 showed a profit.

(4)

Calculate the percentage increase in the selling price. 

        _13,50 ✔✔ 
67,50 – 54,00 x 100 = 25% ? one part correct 
     54,00 ✔ 

 (4)

Provide ONE reason why the owner felt it necessary to increase the  selling price. 
One valid reason ✔✔ 

• He did not make a profit or loss in 2016 (broke even; units produced equal  to the BEP)
• An increase in selling price would invariably lead to a lower BEP if costs stays the same. 

(2)

COST IDENTIFIED 
(with figures) 
✔✔ ✔✔

ADVICE OR SOLUTION
One valid point per cost item 
✔ ✔ 

Jackets

Cost: 

• Direct material cost increased by 25%  (from R32 to R40 per unit)

Look for cheaper suppliers. 

• Take advantage of bulk discounts. Investigate wastage – train staff.

Caps

Cost: 

• Direct labour cost increased by 24%  (from 12,50 to 15,50)
  Or
• Selling and distribution increased by  29% (from 7,20 to 9,30)

Control overtime. 

• Train staff to be more efficient.
• Give sales persons commission. Identify costs and monitor use.
• Reduce advertising.
• Maintain this strategy.
  *The above may have contributed to the  better profits

Q5:  
TOTAL MARKS 

Depreciation and bad debts will not appear in a Cash Budget.
Any valid explanation ✔✔ 

• Non-cash items are not included in a cash budget.
• A cash budget would only include cash receipts and cash payments.

(2)

A cash budget is different from a Projected Income Statement. 
Any valid explanation ✔✔ 

• A cash budget includes receipts and payments and shows plans for cash  management. It shows the surplus/deficit and the bank balance.
• The PIS shows income and expenses (including non-cash items) and projects the  profit or loss per month (for the budget period). 

(2)

MONTHS 

CREDIT SALES 

NOVEMBER 

DECEMBER

September 

180 000 

32 400 ✔✔

October 

186 000 

55 800 

33 480 ✔✔

November 

195 000 ✔✔ 

92 625 

58 500 ??
^{30% of 195 000} 

December 

210 000 

99 750 ✔✔

Total collection from debtors 

180 825 ✔ 

191 730 ?

WORKINGS 

ANSWER

(i) 

Cash sales for December: 
210 000 x 40/60 

140 000 ✔✔ 

(ii) 

Rent income amount for November: 
19 710 ✔ x 100/108 ✔ 

18 250 ? 
 one part correct 

(iii) 

Payments to creditors for November: 
186 000 x 100/60 = 310 000 ✔✔ 
310 000 x 100/125 = 248 000 ✔✔ 
                                       248 000 x 80% ✔

198 400 ? 
 one part correct

(iv) 

Salaries and wages for December: 
180 600 ✔ – 35 600 ✔ – 35 600 ✔ 

109 400 ? 

 one part correct 

(v) 

Loan instalment (including interest) for December: 
                                        _{138 000} ✔? ✔
(13 625 – 1 625) + (150 000 – 12 000) x 13% x 1/12 
         ^{12 000} ✔                                     1 495 (three marks) 

13 495 ? 
 one part correct 

Comment on the internal controls regarding the collection from debtors  and the payment to creditors. Provide TWO points. 
Any TWO valid points ✔✔ ✔✔ 

• Only 50% of the debtors comply with the credit terms.
• The cash from debtors do not cover the payments to creditors (per month).
• 80% of stock is bought on credit / only 20% cash purchases of stock. 
• As cash
• Sales is a greater percentage of total sales, it may be wise to increase the percentage of cash purchases.
• Taking advantage of short-term credit is only beneficial if it eases cash-flow  problems. 

(4)

Q6:  
TOTAL MARKS