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Fac1502 assignment 2 semester 1 expected questions and solutions 2023
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Stuvia.com - The Marketplace to Buy and Sell your Study MaterialQuestion 1
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Please choose the correct option for the given scenario.
Transactions in the cash receipts journal will be ticked off with items in the … of the ... credit column; bank statement
Interest on an overdrawn bank balance will reflect in the … of the … debit column; bank statement
Transactions in the cash payments journal will be ticked off with items in the … of the ... debit column; bank statement
Direct deposits made by a client will reflect in the … of the ... credit column; bank statement
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Question 2
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Fatima, the owner of Fatima Traders keeps incomplete records of the business transactions. The following information is available.
FATIMA TRADERS
Balances as at 28 February 20.1:
20.0 20.1
R R
Vehicles at cost………………………………………………… 28 800 28 800
Furniture and equipment at cost…………………………....... 26 500 26 500
Inventory…………………………………………….................. 21 770 ?
Trade receivables control……..……………………………..... 8 870 12 350
Bank (favourable)…………………………………………........ 25 000 20 000
Long-term borrowings……….……………………………........ 30 000 15 000
Trade payables control………..……………………………….. 9 500 12 700
Accrued expenses……………………..…………………......... 3 400 2 300
Prepaid expenses………………………………………………. 360 365
Additional information:
A physical inventory count revealed that the following was on hand on 28 February 20.1:
R
Inventory 28 669
Stationery 625
Packing materials 150
The total amount for inventories to be disclosed in the statement of financial position of Fatima Traders as at 28 February 20.1 will be?
NB: Instructions
1. Use a full stop to indicate any decimals (eg: 1000.01)
2. Only show the amount, do not show the R (eg: 12141.72)
Answer: 29444.00
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Question 3
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The inexperienced accounting clerk wrongfully entered the manager's salary of R11 000 into the insurance account. Ignore any VAT implications for this
transaction.
The correct journal entry of the correction of the error will be …
NB: Instructions
1. Use a full stop to indicate any decimals (eg: 1000.01)
2. Only show the amount, do not show the R (eg: 12141.72)
3. Round the amount of to the nearest Rand (eg: 12141.72 will be 12142)
GENERAL JOURNAL - MAY 20.2 GJ1
Date Details Fol Debit Credit
R R
31 Salaries 11000.00
Insurance 11000.00
Question 4
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On 1 May 20.18 Venus Traders entered into a new two-year advertising agreement with Tino Advertising Agency. The advertising agreement was effective with
immediate effect and stipulated that Venus Traders would pay R2 750 per month to Tino Advertising Agency for advertising services that would be provided by
Tino Advertising Agency on a monthly basis. Tino Advertising Agency has performed all the necessary advertising services that was required from them since
the effective date of the advertising agreement for the current financial period (the current financial period ends on 28 February 20.19).
The pre-adjustment trial balance for the year ended 28 February 20.19 reflected advertising expenses for an amount of R18 720 as well as accrued advertising
expenses of R4 170 on 1 March 20.18 (the beginning of the current financial period). On 20 April 20.18 Venus Traders paid the advertising expenses that was
outstanding from the previous financial period. The outstanding advertising expenses for the current financial period must still be provided for.
The advertising expenses amount to be disclosed in the statement of profit or loss and other comprehensive income for the year ended
28 February 20.19 will be:
Instructions:
1. Use a full stop to indicate any decimals (eg: 1000.01)
2. Round off to the nearest Rand (eg: 50.56 is 51)
3. Only show the amount, do not show the R (eg: 12141.72)
Answer: 24300.00
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Question 5
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Bright Traders leased a portion of it's factory to Faith Traders at the beginning of the current financial year for a period of 12 months (the current financial
period ends on 28 February 20.19). Bright Traders received rent to the amount of R30 696 from Faith Traders, which covers the rent amount for the
current financial period. On 1 September 20.18, Bright Traders notified Faith Traders that from 1 October 20.18 to 28 February 20.19, Bright Traders will
be renovating the entire factory building. Therefore, Bright Traders requested Faith Traders to vacate the factory building during the renovation period.
Bright Traders and Faith Traders reached an agreement that the rent already paid for the renovation period will be utilised in the next financial period when
renovations are completed. No adjustment journal entry has been processed by Bright Traders regarding the above agreement.
The effect that the adjustment journal entry will have on the basic accounting equation of Bright Traders for the year ended 28 February 20.19
will be …
Instructions:
1. Use a full stop to indicate any decimals (eg: 1000.01)
2. Round off your final answer to the nearest Rand (eg: 50.56 is 51)
BRIGHT TRADERS
Adjustment journal – 28 February 20.19
Account to be debited Element of Account to be credited Element of
the account the account Amount Assets Equity
to be debited to be credited
R
Rent income Income Income received in advance Liabilities 12790.00 Nothing recorded Decrease
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Question 6
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The owner of Pet Spa provided you with the following information for the year ended 28 February 20.2.
R
Equipment………………………………………………………….. 200 000
Trade receivables control………………………………………… 20 000
Bank………………………………………………………………… 10 000
Water and electricity: Deposit................................................... 2 350
Rent income deposit................................................................. 10 500
Trade payables control…………………………………………… 30 000
The correct calculation of Pet Spa's equity on 28 February 20.2 will be ...
Instructions:
Drag the correct answer into the correct space (cell phone click on the answer and click on the place where you want to place the amount - also keep your cell
phone horizontal when doing the question).
An option can be used more than once.
212 850 242 850 30 000
212 850 242 850 30 000 191 850 40 500 230 000 232 350 200 000
Question 7
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Indicate whether the following statement is true or false regarding the statement of profit or loss and other comprehensive income:
Gross profit is income before adding other income and deducting operating expenses.
Select one:
True
False
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Question 8
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The bookkeeper of Dumisani Traders did not enter a sales invoice of R1 840 in the sales journal but posted the R1 840 to the personal account of L Letwaba.
Dumisani Traders is a registered VAT vendor and the tax rate applicable is 15%.
What will the correct general ledger entries of Dumisani Traders be to record the sales invoice?
Instructions:
Drag the correct answer into the correct space.
An option can be used more than once.
Vat account to be done last.
If an option has been provided and it is not applicable to the specific question, please put N/A in the account column and a 0 in the amounts column.
Trade receivables control 1 840 Sales 1 600
N/A 0 VAT output 240
Trade receivables control VAT input VAT output N/A Sales
240 276 1 564 1 600 1 840 0
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Question 9
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The pre-adjustment trial balance of JAM Traders as at 28 February 20.19, reflected an allowance for credit losses that amounts to R990 and credit losses
amounting to R345 (credit losses were written off using method 1 although they were not aware of these two methods as explained below). The financial
manager of JAM Traders determined that the allowance for credit losses for the current financial year ended 28 February 20.19 must be R1 435 and credit
losses that must still be written off amounts to R780.
The financial manager, after having a discussion with the bookkeeper of JAM Traders, learned that there are two methods that can be used to write off the
above credit losses of R780. Under method 1, credit losses are written off against the allowance for credit losses account; by debiting the allowance for credit
losses and crediting the trade receivables control account and the debtor's personal account. Under method 2, credit losses are written off by debiting the
credit losses and crediting the trade receivables control account and the debtor's personal account (while the allowance for credit losses remain unchanged).
Is the following statement true or false regarding the balance on the allowance for credit losses and the amount for credit losses that needs to be disclosed in
the statement of profit or loss and other comprehensive income for the year ended 28 February 20.19, if one of the methods is followed by JAM Traders.
Irrespective of which method is used, the balance on the allowance for credit losses will be R1 435 , and the amount for credit losses to be disclosed in the
statement of profit or loss and other comprehensive income for the year ended 28 February 20.19 will amount to R1 570.
Select one:
True
False
Question 10
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Isolation Traders paid an insurance premium of R10 824 on 1 March 20.19 for 12 months. Upon the inspection of the pre-adjustment trial balance for the year
ended 31 May 20.19, the bookkeeper noticed that insurance premiums amounting to R7 380 for the period starting 1 June 20.18 until 28 February 20.19, were
paid in the previous financial period. The bookkeeper also noticed that, the insurance premium paid on 1 March 20.19 has not yet been recorded in the books,
and no adjustment has been processed and no reversal has been processed relating to insurance premium paid in the previous financial period.
The amount for insurance expense to be shown in the statement of profit or loss and other comprehensive income for the year ended 31 May 20.19
will be:
NB: Instructions
1. Use a full stop to indicate any decimals (eg: 1000.01)
2. Only show the amount, do not show the R (eg: 12141.72)
3. Round the amount of to the nearest R (eg: 12141.72 will be 12142)
Answer: 15498.00
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Question 11
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Indicate whether the following statement is true or false regarding the statement of financial position:
Distribution, administrative and other expenses for the year are disclosed in this statement.
Select one:
True
False
Question 12
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Indicate by choosing the correct option whether the following statement is true or false:
The entries in the adjustment journal always affects the trading account or the profit or loss account as well as a statement of financial position account.
Select one:
True
False
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Question 13
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The pre-adjustment trial balance of Platform Traders for the year ended 28 February 20.19 reflected the following balances:
Trading inventory R16 502
Cleaning materials R550
Packaging materials R2 980
Stationery R740
During the physical inventory count, which was held on the 27 and 28 February 20.19 the following inventory was on hand: trading inventory to the amount of
R14 184, cleaning materials to the amount of R420, packaging materials to the amount of R332 and stationery to the amount of R248.
The business makes use of the perpetual inventory system.
The correct adjustment journal entries that need to be processed, to ensure that the inventory amounts to be disclosed in the statement of profit
or loss and other comprehensive income and in the statement of financial position as at 28 February 20.19 is correct?
Instructions:
Drag the correct answer into the correct space.
An option can be used more than once.
Keep the sequence according to the transactions given in the additional information.
Trading inventory deficit 2 318
Inventory 2 318
Trading account 3 270
130
Cleaning materials
2 648
Packing materials
492
Stationery
Profit or loss account Stationery Packing materials Trading inventory surplus Inventory
Trading inventory deficit Consumable stores on hand Cleaning materials Trading account
2 648 248 550 3 270 14 184 2 980 492 2 790 420 1 000 740 2 318 332 16 502 130
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Question 14
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Indicate whether the following statement is true or false:
When the perpetual inventory system is used, carriage on purchases, is credited to the asset account, inventory, since the cost of sales must be brought into
account with each sales transaction and carriage on purchases constitutes an integral part of the cost per unit.
Select one:
True
False
Question 15
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Indicate whether the following statement is true or false:
The balance of equity at the beginning of the financial year in the statement of changes in equity is not disclosed in the statement of financial position.
Select one:
True
False
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