Answer book included

GRADE 12 ACCOUNTING COPYRIGHTS RESERVED CONTROL TEST QUESTION 1: GAAP CONCEPTS AND INCOME STATEMENT (45 marks) 1.1 Match each concept mentioned in COLUMN A with the description in (6x1=6) COLUMN B. Write the correct letter next to each number in the Answer Book COLUMNA COLUMN B 1.1.1 Business Entity Concept An insurance claim has been made this year. An estimate of R45 000 will be received only next year. 1.1.2 Historical Cost Concept B Interest on overdraft is shown as a separate amount in the income Statement 1.1.3 Going Concern Concept A director of a business wins R1 000 in a crossword competition This is not reflected in the Income Su of the busines 1.1.4 Matching Concept D Whenever a debtor settles an account, discounts should be recorded at the same time 1.1.5 Prudence Concept E Land and Buildings are recorded in the Balance sheet at R100 000 even though an estate agent says they could be sold for R170 000 1.1.6 Concept of Materiality F Trading Stock is shown in the Balance Sheet at R30 000 even though the business would only get R15 000 if the stock was sold one- bay 1.2 Prepare the Income Statement of Ranch Limited for the year ended 30 June 2017 (39) INFORMATION: Figures extracted from the Pre-Adjustment Trial Balance of Ranch Limited on 30 June 2017 Trading Stock 74 000 Debtors Control 17 000 Provision for bad debts (01 July 2016) 600 Fixed Deposit CTE Bank 140 000 Bank SARS: Income tax (Dr) Equipment at cost Accumulated depreciation on equipment Sales 15 900 35 000 75 000 30 500 700 000 Cost of Sales Debtors Allowances Sundry expenses Bad debts 320 000 10 000 5 300 1 000 Page 2 of 5 GRADE 12 ACCOUNTING CONTROL TEST COPYRIGHTS RESERVED Packing Material 1 200 Bank charges 400 Insurance 600 Salaries and wages 95 000 Director's fees 90 000 Depreciation ? Employers' contribution 20 000 Rent income 13 100 Repairs and maintenance 15 000 Interest on fixed deposit ? Ordinary share dividends (interim) 12 500 ADJUSTMENTS AND ADDITIONAL INFORMATION 1. The stock-take on the 30 June 2017 reflected the following items on hand: Trading stock of R71 000 Packing material of R1 000. 2. An amount of R250 received from a debtor T. Tanaka, whose account was previously written off as a bad debt was posted to the Debtors Control account in error 3. Provision for bad debts must be adjusted to 4% of book debts. 4. The company has two directors, and each director earns R4000 per month 5. Depreciation on equipment is at 10% on the diminishing balance method. 6. Rent has been received for 13 months. The rent increased by R10% on the 1 June 2017. 7. An EFT payment of R15 000 was made to Build IT for Roof tiles to repair a leak in the admin building. R5000 The construction of 5 carports, R10 000 The entire amount was debited to the repairs and maintenance account. 8. No entry has been made for the stock that was damaged by fire at the beginning of June 2017. The insurance company transferred R4 000 into the business account in respect of the claim. The claim approved amounted to 75% 9. Interest on the fixed deposit is calculated at 7.5% per annum straight line method. 10. Income tax for the year is calculated at 30% for the year. Round to one decimal place. Page 3 of 5 QUESTION 1: GAAP CONCEPTS AND ADJUSTING JOURNALS (45 marks) 1.1 Match each concept mentioned in COLUMN A with the description in COLUMN B. Write the correct letter next to each number in the Answer Book. (6x1=6) 1.1.1 1.1.2 1.1.3 1.1.4 1.1.5 1.1.6 (6) (39) 1.2 Prepare the income Statement of Ranch Limited for the year ended 30 June 2017 NAME OF BUSINESS INCOME STATEMENT (STATEMENT OF COMPREHENSIVE INCOME) FOR THE YEAR ENDED Note Sales Cost of sales Gross profit Other operating income Rent Income Bad Debts Recovered Gross operating income Operating expenses Packing Material Bank Charges Insurance Salaries and Wages Directors Fees Depreciation Provision for bad debt adjustment Repairs and Maintenance Trading Stock Deficit Consumable stores Operating profit Interest income Profit before interest expense Interest expense Net profit before tax Income tax Net profit after tax GRADE 12 ACCOUNTING COPYRIGHTS RESERVED CONTROL TEST QUESTION 1: GAAP CONCEPTS AND INCOME STATEMENT (45 marks) 1.1 Match each concept mentioned in COLUMN A with the description in (6x1=6) COLUMN B. Write the correct letter next to each number in the Answer Book COLUMNA COLUMN B 1.1.1 Business Entity Concept An insurance claim has been made this year. An estimate of R45 000 will be received only next year. 1.1.2 Historical Cost Concept B Interest on overdraft is shown as a separate amount in the income Statement 1.1.3 Going Concern Concept A director of a business wins R1 000 in a crossword competition This is not reflected in the Income Su of the busines 1.1.4 Matching Concept D Whenever a debtor settles an account, discounts should be recorded at the same time 1.1.5 Prudence Concept E Land and Buildings are recorded in the Balance sheet at R100 000 even though an estate agent says they could be sold for R170 000 1.1.6 Concept of Materiality F Trading Stock is shown in the Balance Sheet at R30 000 even though the business would only get R15 000 if the stock was sold one- bay 1.2 Prepare the Income Statement of Ranch Limited for the year ended 30 June 2017 (39) INFORMATION: Figures extracted from the Pre-Adjustment Trial Balance of Ranch Limited on 30 June 2017 Trading Stock 74 000 Debtors Control 17 000 Provision for bad debts (01 July 2016) 600 Fixed Deposit CTE Bank 140 000 Bank SARS: Income tax (Dr) Equipment at cost Accumulated depreciation on equipment Sales 15 900 35 000 75 000 30 500 700 000 Cost of Sales Debtors Allowances Sundry expenses Bad debts 320 000 10 000 5 300 1 000 Page 2 of 5 GRADE 12 ACCOUNTING CONTROL TEST COPYRIGHTS RESERVED Packing Material 1 200 Bank charges 400 Insurance 600 Salaries and wages 95 000 Director's fees 90 000 Depreciation ? Employers' contribution 20 000 Rent income 13 100 Repairs and maintenance 15 000 Interest on fixed deposit ? Ordinary share dividends (interim) 12 500 ADJUSTMENTS AND ADDITIONAL INFORMATION 1. The stock-take on the 30 June 2017 reflected the following items on hand: Trading stock of R71 000 Packing material of R1 000. 2. An amount of R250 received from a debtor T. Tanaka, whose account was previously written off as a bad debt was posted to the Debtors Control account in error 3. Provision for bad debts must be adjusted to 4% of book debts. 4. The company has two directors, and each director earns R4000 per month 5. Depreciation on equipment is at 10% on the diminishing balance method. 6. Rent has been received for 13 months. The rent increased by R10% on the 1 June 2017. 7. An EFT payment of R15 000 was made to Build IT for Roof tiles to repair a leak in the admin building. R5000 The construction of 5 carports, R10 000 The entire amount was debited to the repairs and maintenance account. 8. No entry has been made for the stock that was damaged by fire at the beginning of June 2017. The insurance company transferred R4 000 into the business account in respect of the claim. The claim approved amounted to 75% 9. Interest on the fixed deposit is calculated at 7.5% per annum straight line method. 10. Income tax for the year is calculated at 30% for the year. Round to one decimal place. Page 3 of 5 QUESTION 1: GAAP CONCEPTS AND ADJUSTING JOURNALS (45 marks) 1.1 Match each concept mentioned in COLUMN A with the description in COLUMN B. Write the correct letter next to each number in the Answer Book. (6x1=6) 1.1.1 1.1.2 1.1.3 1.1.4 1.1.5 1.1.6 (6) (39) 1.2 Prepare the income Statement of Ranch Limited for the year ended 30 June 2017 NAME OF BUSINESS INCOME STATEMENT (STATEMENT OF COMPREHENSIVE INCOME) FOR THE YEAR ENDED Note Sales Cost of sales Gross profit Other operating income Rent Income Bad Debts Recovered Gross operating income Operating expenses Packing Material Bank Charges Insurance Salaries and Wages Directors Fees Depreciation Provision for bad debt adjustment Repairs and Maintenance Trading Stock Deficit Consumable stores Operating profit Interest income Profit before interest expense Interest expense Net profit before tax Income tax Net profit after tax