23 2023

MODULE NAME: MODULE CODE:

ACCOUNTING 1B ACBP5122/d/w

ASSESSMENT TYPE: ASSIGNMENT 1 (PAPER ONLY)

TOTAL MARK ALLOCATION: 100 MARKS

TOTAL HOURS: 10 HOURS

By submitting this assignment, you acknowledge that you have read and understood all the rules
as per the terms in the registration contract, in particular the assignment and assessment rules in
The IIE Assessment Strategy and Policy (IIE009), the intellectual integrity and plagiarism rules in the
Intellectual Integrity Policy (IIE023), as well as any rules and regulations published in the student
portal.

INSTRUCTIONS:

1. No material may be copied from original sources, even if referenced correctly, unless it is a
direct quote indicated with quotation marks. No more than 10% of the assignment may
consist of direct quotes.
2. Any assignment with a similarity index of more than 25% will be scrutinised for
plagiarism. Please ensure that you submit your assignment through SafeAssign.
3. Save a copy of your assignment before submitting it.
4. Assignments must be typed unless otherwise specified.
5. All work must be adequately and correctly referenced.
6. Begin each section on a new page.
7. This is an individual assignment.

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Question 1 (Marks: 10)

Q.1.1 For each of the following statements indicate if the statement is true or false. In (5)
your answer book you need only write the number of the question and then state
true or false e.g., Q.1.1.6 – True. Questions where more than one answer are given
will not be marked.

TRUE FALSE
Q.1.1.1 Direct deposits are an
example of an adjusting
difference
Q.1.1.2 Bank charges are an example
of a timing difference
Q.1.1.3 Interest on overdraft is an
example of a timing
difference
Q.1.1.4 Debit order is an example of
an adjusting difference
Q.1.1.5 Bank understates a deposit on
the bank statement is an
example of a timing
difference

Q.1.2 Stella owns a retail shop called Stella’s General Dealers. She sells goods mostly for (5)
cash and two of her cash customers are Galaxy Stores and Milkway Dealers. She
also sells goods on credit to Apollo Stores. Stella’s General Dealers also purchases
goods for cash and on credit from only one supplier called Concorde Stores.

Match the term in column A with the correct statement in column B.

In your answer booklet you need only write the number of the question from
Column A and the letter of the correct answer from Column B. e.g. Q.1.2.6 - J

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Column A Column B
Q.1.2.1 Creditors/Accounts payable control A. Concorde Stores

Q.1.2.2 Creditor B. Apollo Stores

Q.1.2.3 Debtors List C. General ledger

account that provides
us with an exact
amount of how much
is being owed to us
from credit sales

Q.1.2.4 Debtor D. General ledger

account that provides
us with an exact
amount of how much
we owe from credit
purchases

Q.1.2.5 Debtors/Accounts receivable control E. The list that is totalled

and compared with
the balance of the
debtor’s control
account at the end of
each month

F. Galaxy Stores

G. Milkyway Dealers

H. Subsidiary ledger that

details the outstanding
amount that a
company or an
organization owes
(payable to) its
vendors or suppliers,
complete with all the
balance and account
information.

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Question 2 (Marks: 50)

Q.2.1 Stella a friend of yours recently started her own business. She was told that she
needs to perform a bank reconciliation every month, but she does not understand
what this entails.

Q.2.1.1 Briefly explain to Stella the bank reconciliation process (6)

Q.2.1.2 Stella has heard that there are 2 types of awareness differences, she would like to (2)
know what they are. Provide the 2 classifications of awareness differences
Q.2.1.3 Explain to Stella why there would be differences between the transactions (4)
recorded by the business and the bank
Q.2.1.4 Provide 1 example of each of the following: (4)
1. Error committed by the bank
2. Error committed by the business
3. Adjusting differences where the business is not aware of a particular
transaction
4. Adjusting differences where the bank is not aware of a particular
transaction

Q.2.1.5 Explain to Stella the difference between a stop order and debit order (6)

Q.2.2 You have been provided with the following summary of cashbook receipts and
cashbook payments for December 2022 before any adjustments have been made:

SUMMARY OF CASH BOOK RECEIPTS FOR DECEMBER 2022

Day Details Amount
(R)
Dec 3 Cash 3 000
Dec 9 Azara Stores 3 000
Dec 12 Cash 1 850
Dec 17 Pieces Traders 1 000
Dec 31 Mr Zodiac 1 300

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SUMMARY OF CASH BOOK PAYMENTS FOR DECEMBER 2022

Day Details Amount
(R)
Dec 3 Jhb City Council (EFT) 1 500
Dec 5 Cash 4 100
Dec 9 Mr Scorpio (EFT) 1 750
Dec 16 Cash 1 300
Dec 31 Miss Hermes (EFT) 2 100

In addition you have received the following bank statement at 31 December 2022:

BANK STATEMENT FOR THE MONTH OF DECEMBER 2022

DATE DETAILS WITHDRAWALS DEPOSITS BALANCE
Dec 1 Balance (favourable 5 200
balance)
Dec 3 Cash 300 5 500
Dec 5 EFT Jhb City Council 1 500 4 000

Dec 5 Cash 1 400 2 600

Dec 10 Azara Stores 3 000 5 600
Dec 11 EFT Mr Scorpio 1 750 3 850
Dec 14 Cash 1 850 5 700
Dec 19 Cash 1 300 4 400
Dec 29 EFT Mr Apollo 8 500 12 900
Dec 30 Bank charges 500 12 400
Dec 30 Debit order 4 000 8 400

Additional Information
• The cash deposit made on the 3rd of December was correctly recorded in the cash book
• The cash payment made on the 5th of December was correctly recorded by the bank
• Opening favourable balance of Bank Account at 1 December 2022: R3 700

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Required:
Q.2.2.1 From the information provided above calculate the corrected cashbook receipts (10)
and cashbook payments totals after taking into account all the adjustments
required.
Show all your workings.

Q.2.2.2 Using the amounts obtained in Q.2.2.1 above post to the bank account in the (6)
general ledger.
Balance the Bank general ledger account.
Q.2.2.3 Prepare a bank reconciliation statement as at 31 December 2022. (12)

Question 3 (Marks: 40)

Steven owns and runs a store called Zodiac General Dealer. He allows goods to be sold on
credit. Zodiac's year-end is 28 February.
Steven went over all information pertaining to debtors to find out why the Debtors Control
balance was not the same as the total of the Debtors List.
He discovered the following:
1. Invoice 209 for R4 270 made out to B Baker was entered into the account of C
Baker in error.
2. The Debtors Allowances column in the Debtors Allowances Journal was added
incorrectly as R21 790. The correct amount was R24 790.
3. An invoice made out to Mr Asher was incorrectly recorded as R16 840 in the Debtors
Journal. The invoice was for R16 480. The incorrect amount was also posted to the
Debtors ledger.
4. Interest of R270 should have been added to Miss Capricorn’s account. The
bookkeeper had forgotten to do this and had not made any entries for this.
5. Connor Davis paid R4 950 after receiving a 10% settlement discount. These
transactions were correctly recorded in the cashbook receipts and general journal
respectively. The bookkeeper posted the general journal entries to the general
ledger, but not to the individual account of Connor Davis in the debtors ledger.
6. On the 25 February 2023 Zodiac received R8 300 from Michaela Walsh. Michaela
Walsh’s account was previously written off as a bad debt in December 2022. The

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receipt now received was entered into the Debtors Control column in the Cashbook
receipts. The total of the debtors control column was posted to the debtors control
general ledger account.
7. The Debtors control balance on 28th February 2023: R42 640
8. The Debtors List Balance on 28th February 2023: R48 490

Zodiac sent the following statement of account to a debtor, Antares Stores:

ZODIAC GENERAL DEALERS
TO: Antares Stores
DATE: 28 February 2023
STATEMENT NO: 2/2023
DATE TRANSACTIONS DR CR BALANCE
1/11/2022 Balance 15 700
10/11/2022 Invoice 16 16 680 32 380
2/12/2022 Invoice 28 12 560 44 940
3/12/2022 Credit note 12 1 230 43 710
4/1/2023 Invoice 46 9 780 53 490
5/1/2023 EFT 9 291 44 199
Discount 489 43 710
31/1/2023 Interest 118 43 828
19/2/2023 Invoice 65 15 620 59 448
28/2/2023 Interest 647.60 60 095.60
TERMS:
• 5% discount granted if paid within 30 days of statement date.
• Debt must be paid within 60 days of statement date.
• Interest charged at 2% per month on balances 90 days overdue.
AGE ANALYSIS
90 DAYS 60 DAYS 30 DAYS CURRENT
32 380 11 330 118 16 267.60

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Required:
Q.3.1 On 28 February 2023 Steven noticed that the balance in the Debtors Control (3)
account was different to the total of the Debtors List.
Explain why the balance of the Debtors Control account and the total of the
Debtors List should balance.

Q.3.2 Prepare the general journal entry required to correct the mistake noted in 1 (5)
above.
Journal narration is required. You may ignore the Document number and folio
columns.

Q.3.3 Reconcile the debtors control account to the debtor’s list by making the (11)
corrections and adjustment for the items listed 2 to 6 above. Enter the adjustment
correction amount in the appropriate column in the table below. Total the
columns as marks will be awarded to the totals:

DEBTORS CONTROL DEBTORS LIST

Incorrect balance on
28 February
2.

3.

4.

5.

6.

TOTAL

Q.3.4 In your own words explain what you understand by a debtors age analysis. (3)

Q.3.5 Prepare the journal entry to record the settlement discount granted, should (5)
Antares Stores pay the R16 268 current amount owing within 30 days.
Journal narration is not required. You may ignore the Document number and
folio columns.

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Q.3.6 Prepare the journal entry to record the interest receivable, should Antares Stores (4)
fail to pay the 90 days outstanding debt of R32 380.

Q.3.7 There is an error on the statement of account of Antaras Stores sent by Zodiac (2)
General Dealers above. Identify the error and explain why it is an error.

Q.3.8 Antares Stores complained that they paid another R10 000 in cash towards their (1)
debt so they should not have been charged interest. This payment was not
reflecting on their statement. Steven found that his bookkeeper forgot to deposit
the cash and enter it in the records. The cash was deposited on the 15th of March
2023.
Explain to Antares Stores when this amount will appear on their statement.

Q.3.9 Write down in which column on the bank statement (debit/credit) the R10 000 (1)
will appear once it has been deposited.

Q.3.10 In which journal will the R10 000 be recorded? (1)

Q.3.11 Zodiac General Dealers has come to the realisation that interest is not an (4)
effective way of getting their debtors to pay.
• Do you agree or disagree that this has been an effective method to get
debtors to pay on time?
• Provide 2 reasons as to why you agree or disagree
• Provide 1 alternative method Zodiac General Dealers could use to ensure
that Antares Stores pays within 60 days of the statement date.

[TOTAL MARKS: 100]

END OF PAPER

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