MID-YEAR EXAMINATION [Marking Guidelines p260; Ans Bk p149]

Marks: 200 Time: 2 hours

INSTRUCTIONS AND INFORMATION:

1. This paper consists of five questions.

2. Answer ALL the questions in the Answer Book provided.
3. Show ALL workings in order to receive part marks.
4. Non-programmable calculators may be used.
5. You may use a black/blue pen or a dark pencil to answer the questions
6. Use the following table and time guide to assist with time management.

QUESTION 1: 40 marks; 20 minutes

TOPIC: ASPECT/SECTION COVERED:
Concepts and Cash Journals  Basic concepts.
 Preparation of the Cash Receipts Journal and Cash Payments
Journal

QUESTION 2: 45 marks; 30 minutes

TOPIC: ASPECT/SECTION COVERED:
General Journal and Subsidiary  Preparing General Journal entries
Ledgers  Completing debtors’ ledger and creditors ledger account
 Internal controls

QUESTION 3: 30 marks; 20 minutes

TOPIC: ASPECT/SECTION COVERED:
General ledger  Posting to specific accounts from journal totals

QUESTION 4: 30 marks; 15 minutes

TOPIC: ASPECT/SECTION COVERED:
Salaries  Interpreting and calculating from salary scale
 Preparing a salary advice

QUESTION 5: 55 marks; 35 minutes

TOPIC: ASPECT/SECTION COVERED:
Depreciation and short questions  Depreciation: calculations and posting.
 Closing transfers and the Trading Account
 VAT concepts and calculations

New Era Grade 10 June Exemplar paper

QUESTION 1: CONCEPTS AND CASH JOURNALS (40 marks; 20 minutes)

1.1 CONCEPTS [5]

Choose the correct term from the list that best describes the statements below. Write only the
answer next to the numbers (1.1.1 – 1.1.5) in the Answer Book.

Capital contribution; The double entry principle; Petty cash; Cash float;
Drawings; Liabilities; Fixed assets

1.1.1 For every debit entry there is a corresponding credit entry in the ledger.
1.1.2 Possessions of the business that have a life-span of more than one year.
1.1.3 Debts of a business.
1.1.4 The owner’s investment in a business
1.1.5 Money used to make small cash payments to avoid bank charges.

1.2 ROSE TRADERS [35]

The following transactions appeared in the books of Rose Traders for March 20.8.

REQUIRED:

Record the following transactions in the relevant Cash Journals for March 20.8. Insert your own
document numbers. Do not total the journals.

TRANSACTIONS DURING MARCH 20.8:

Date Transaction Amount

2 EFT payment to Telemix to pay the March 20.8 telephone account. R2 282

Namibia Bank transferred directly into the bank account a deposit being a loan
R90 000
that was negotiated during February 20.8 at 11% p.a. interest

4 Cash sales for the week. Goods are sold at a profit mark-up of 60% on cost. R12 800

Received an EFT payment from R Ridge for the March rent. R7 200

6 Took delivery of trading stock purchased from Milo Stores. Processed an EFT
R18 300
payment for the amount.

7 EFT payment to Star Transport who delivered the stock purchased above. R1 520

10 Paid Transkei Cash and Carry electronically for the following:

 Trading goods R8 400
 Computer for office use R9 500

12 Received an EFT payment from B. Lion (a debtor) in settlement of his account

R4 585
of R4 700.

15 Paid by EFT to Samsung Stores (a creditor) as part payment of our account.

R8 200
Received a 5% discount on this amount.

29 Bank statement from Rhemin Bank showed the following:

 Service fees R126; cash deposit fees R64; credit card levy R125; interest
on overdraft R356.
 Debit order payment to South West Insurers for the owner’s car. R1 350

New Era Grade 10 June Exemplar paper

QUESTION 2:
GENERAL JOURNAL AND SUBSIDIARY LEDGERS (45 marks; 30 minutes)

The incomplete Debtors Ledger account of S. Rugbar and the incomplete Creditors Ledger account of
Hoosain Suppliers taken from the books of Singh Traders are provided below:

REQUIRED:

2.1 Refer to Information B.

Prepare General Journal entries for the transactions listed. (15)
2.2 Complete the Debtors Ledger account and the Creditors Ledger account by filling in the
missing details, folios, amounts as well as the relevant transactions from the General
Journal. (20)
2.3 Joyce, the owner, wants to ensure that only reliable people are granted credit in her
business. What information should she obtain from applicants before allowing them to
open accounts? Provide THREE points and a reason in each case. (6)
2.4 State TWO internal control measures that Joyce can use to ensure that debtors pay
their accounts on time. (4)

INFORMATION:

A. DEBTORS LEDGER OF SINGH TRADERS

S. RUGBAR DL3
Date Details Fol Debit Credit Balance
20.8
Sept 1 Balance /Account rendered b/d 7 200
4 * CRJ 4 200 3 000
* * * * 2 790
12 Invoice No 122 * * * 5 430
15 * DAJ * * 5 298
18 Dishonoured cheque (R/D) CPJ * * *

 4th : Received a payment from S. Rugbar as a part-payment of his account. He was granted
a discount when he made this payment.
 15th : A 5% allowance on damaged goods sold on the 12th must be taken into account.
CREDITORS LEDGER OF SINGH TRADERS
HOOSAIN SUPPLIERS CL3
Date Details Fol Debit Credit Balance
20.8
Sept 1 Balance /Account Rendered b/d 18 450
5 Cheque No 431 * * * 13 200
15 Invoice No. 629 * * * 17 160
17 * CAJ * * 16 620

B. Additional information:

(i) The payment from S. Rugbar on 4th was not processed by the bank on the 18th due to insufficient
funds. This amount was recorded in the respective journal. The discount must still be cancelled.

(ii) Charged S. Rugbar interest on an overdue amount of R1 200 at 12,5% p.a. for two months.

(iii) Goods purchased from Hoosain Suppliers on the 24th was posted in error to the account of Hoose
Traders in the Creditor’s Ledger, R2 280.

New Era Grade 10 June Exemplar paper

 (iv) Debtor B. Mylie was declared insolvent. Received R945 from his insolvent estate. This was 60%
of his outstanding account. The balance must be written off as a bad debt.

QUESTION 3: POSTING TO THE GENERAL LEDGER (30 marks; 20 minutes)

3.1 CONCEPTS [5]

Choose the correct word from the alternatives within brackets. Write the word only next to the
numbers 3.1.1 – 3.1.5 in the Answer Book.

3.1.1 A (debtor / creditor) is a current liability to the business.

3.1.2 The source document for a debit order payment for advertising is a (cheque
counterfoil / bank statement).
3.1.3 The Bank total from the Cash Receipts Journal is recorded on the (debit / credit) side
of the Bank Account in the ledger.
3.1.4 Small cash payments to avoid bank charges is paid out of (cash float / petty cash).
3.1.5 Wages is an example of a (Statement of Financial Position account / Nominal
account).

3.2 TONY TRADERS [25]

The journal totals for March 20.8 are provided below.

REQUIRED:

Post to the following accounts in the General Ledger. Balance only the Trading stock account.
Mark-up is 60% on cost.

3.2.1 Trading stock (12)

3.2.2 Debtors control (7)
3.2.3 Creditors control (6)

INFORMATION:

A. Balances on 1 March 20.8:

Trading stock R43 210

Debtors control 23 280
Creditors control 32 170

B. Totals from the journals on 31 March 20.8

Cash Receipts Journal Cash Payments Journal

Bank R62 050 Bank R52 980
Sales 29 600 Trading stock (ii)
Cost of sales 18 500 Debtors control 3 120
Debtors: Receipts (i) Creditors: Payments 12 640
Debtors: Discount allowed 640 Creditors: Discount received 2 100
Sundry accounts 22 950 Sundry accounts 8 820

Creditors Journal Creditors Allowances Journal

Creditors control R (iii) Creditors control R4 810
Trading stock 19 750 Trading stock 3 770
Equipment 5 500 Equipment 350
Packing material 2 880 Packing material 200
Sundry accounts 1 950 Sundry accounts 490

New Era Grade 10 June Exemplar paper

 Debtors Journal Debtors Allowances Journal
Sales R19 840 Debtors allowances R3 630
Cost of sales (iv) Cost of sales 1 180

QUESTION 4: SALARIES (30 marks; 15 minutes)

4.1 SALARY SCALE [11]

W. Shange received her appointment letter from Marino Bazaar. She was given the following
salary scale.

135 000 x 14 640 – 178 920 x 16 920 – 229 680

4.1.1 Calculate Shange’s monthly salary in her first year of employment. (2)
4.1.2 What will her annual salary be in her fourth year of employment? (3)
4.1.3 What will her monthly increase be in her 6th year of employment? (2)
4.1.4 How many years would she work before she reaches R229 680 p.a.? (4)

4.2 SALARY ADVICE: CALCULATIONS [19]

Ms Wright is the Human Resources Manager at Berg Street Traders. Piet Mashanga has been
appointed as the Junior Clerk in the Purchasing Department. He commenced work on 1 January
20.7.

REQUIRED:

4.2.1 Complete the Salary Advice of Piet Mashanga on 31 October 20.7. (12)

4.2.2 Calculate the total salary expense of the business with regards to Piet Mashanga,
inclusive of all benefits, for October 20.7. (7)

INFORMATION:

 Piet earned R173 160 p.a. for the current year.

 All employees receive a production bonus of 30% of their basic salary during October each
year.

 Deductions/contributions:

Deductions From employee’s salary Employer’s contribution

R1,50 for every R1 contributed by the
Pension fund 8% of basic salary
employee.
SARS: PAYE 17% of taxable income (gross)
UIF 1% of basic salary 1% of basic salary
Medical aid R888 per month Rand-for-Rand

 The employer also contributes 1% of the employees’ basic salary to the Skills Development
Levy.

New Era Grade 10 June Exemplar paper

QUESTION 5: DEPRECIATION & SHORT QUESTIONS
(55 marks; 35 minutes)

5.1 GAAP [5]

Match the GAAP principles in Column A with the examples provided in Column B. Write only the
letter (A – E) next to the numbers (5.1.1 – 5.1.5) in the Answer Book.

COLUMN A COLUMN B
5.1.1 Matching A Business letterheads (stationery) are printed for three years in
advance and is recorded as stationery on hand.
5.1.2 Prudence B The owner’s personal cellphone bill is paid by the business but is
reflected as drawings.
5.1.3 Going concern C Insurance paid for the next financial year is recorded as a prepaid
expense.
5.1.4 Historical cost D Consumables stores amounting to R6 000 has to be written off as
it cannot be found.
5.1.5 Business entity E Property is recorded at R5 000 000 in the financial statements
although its market value is currently R8 000 000.

5.2 BONGI’S DELIVERY SERVICES [24]

Sarah Bongi owns Bongi’s Delivery Service. The information relates to the fixed assets of the
business for the financial year ended 28 February 20.8.

REQUIRED:

5.2.1 Briefly explain why fixed assets are depreciated. (2)

5.2.2 Calculate the depreciation on vehicles and on equipment for the financial year ended
28 February 20.8. (10)

5.2.3 Post to the following General Ledger accounts:

 Vehicles (Balance this account) (5)
 Depreciation (Do not balance/total) (3)

5.2.4 Sarah feels that the delivery vehicle expenses are higher than expected. Provide
TWO internal control measures that she can use to determine if she is correct or not. (4)

INFORMATION:

A. Balances and totals on 28 February:

20.8 20.7
Vehicles 552 000 384 000
Accumulated depreciated on vehicles ? 172 800
Equipment 288 000 288 000
Accumulated depreciation on equipment ? 135 750

B. A new vehicle was bought on credit on 1 November 20.7.

C. Vehicles are depreciated at 15% p.a. on cost and Equipment is depreciated at 20% on the
diminishing balance method.

New Era Grade 10 June Exemplar paper

5.3 SHORT QUESTIONS [26]

5.3.1 FINAL ACCOUNTS

The following balances relates of Playvin Traders on 30 April 20.8, the financial year end.

REQUIRED:

(i) Prepare ALL the closing transfer journal entries for the Trading account using the
information below. Narrations not required. (9)

(ii) Post to the Trading account in the General Ledger. (4)

INFORMATION:

Totals on 30 April 20.8, the financial year-end:

Sales R1 413 720

Cost of sales 1 020 750
Debtors allowances 17 970

5.3.2 VAT

(i) Indicate whether the following statements are True or False.

(a) All businesses must register as VAT vendors.

(b) Essential goods such as bread and milk are taxed at 0%.
(c) Tax is payable to the South African Reserve Bank. (3)

(ii) Choose the correct word/s from the alternatives within brackets.

(a) VAT is a (direct / indirect) tax.

(b) VAT received from sales is regarded as (Output VAT / Input VAT) (2)

(iii) Calculate the missing amounts on the table. Note that the current VAT rate is 15% and
is applicable to all the amounts on the table. (8)

Amount Amount
VAT
excluding including
amount
VAT VAT
Cash and credit purchases of stock R88 450 *
Cash received from customers * R87 400
Damaged goods returned by customers R15 480 *
VAT on expenses R66 540 * R76 521

New Era Grade 10 June Exemplar paper