BACHELOR OF COMMERCE LAW YEAR 1 - ACADEMIC AND ASSESBMENT CALENDAR - DIBTANCE 1.4 "A resource under the control of an entity arising from past events from which future economic benefits are expected to flow in to the entity" refers to which one of the following: A) Asset. B) Income. C) Liability. D) Expense. (1) 1.5 "A decrease in economic benefits that results in a decrease in the equity of an entity during a specific accounting period, except for distribution to owners", describes which one of the following: A) Asset. B) Income. C) Expense. D) Liability. (1) 1.6 Simphiwe, a student, bought 50 memory sticks at R40 each for cash. All the memory sticks were marked to sell at R80 each. The sticks were sold for cash within 10 days, as follows: 40 were sold at R80 each, 6 at R75 each and 4 at R70 each. The gross profit percentage on sales (calculated to the nearest 2 decimal places) is; A) 48,25%. B) 49,11%. C) 96,5%. D) 100% (2) 1.7 On 3 January 2019 Zandile's Boutique bought trade goods on credit from Nom's Wholesalers for R22 000, subject to a trade discount of 10%. A settlement discount of 5% is granted if the account is settled within 30 days from the date of purchase. If payment for this purchase is made on 1 March 2019, which one of the following is the amount that Zandile should pay Nom's Wholesalers in terms of the agreement of purchase and sale: (ignore VAT) A) R19 800 . B) R22 000 . C) R18 810 . D) R20 790 . (2) 1.8 Assume that Zandile's Boutique registered as a VAT vendor effective 1 March 2019. Zandile's Boutique had a VAT input total amount of R24 760 and a VAT output total amount of R37 860 at 31 March 2019. Which one of the following represents the balance of the VAT control account at 31 March 2019 ? A) R13 100 debit. B) R13 100 credit. C) R62 620 debit. D) R62 620 credit. (2) 1.9 Construction Boys CC, a registered VAT vendor, purchased equipment for R92 000 (inclusive of 15% VAT) on credit from Jayzi Ltd. Arrangements were made to settle the account over a six month period. Which of the following statements is correct when recording the purchase of the equipment in the accounting records of Construction Boys CC? A) Debit equipment account (R105 800), credit VAT output (R13 800), credit creditors control: Jayzi Ltd (R92 000). B) Debit equipment account (R92 000), debit VAT input (R13 800), credit creditors control: Jayzi Ltd (R105 800). C) Debit equipment account (R80 000), debit VAT input (R12 000), credit creditors control: Jayzi Ltd (R92 000). D) Debit equipment account (R92 000), credit VAT output (R12 000), credit creditors control: Jayzi Ltd (R80 000). (2) BACHELOR OF COMMERCE LAW YEAR 1 - ACADEMIC AND ASSESSMENT CALENDAR - DISTANCE 1.10 N Minajo received an electronic funds transfer (EFT) of R4 500 from A Grand, a debtor, in full settlement of her account of R5 000. Both Minajo and Grand are not registered as VAT vendors. Which of the following is the correct option to record the receipt in the accounting records of N Minajo? A) Debit bank account (R5 000), credit debtors' control (R4 500), and credit settlement discount granted account (R500). B) Debit bank account (R4 500), credit debtors control (R5 000), and debit settlement discount received account ( R500). C) Debit debtors' control (R5 000), credit bank account (R 4500), and credit settlement discount received account (R500). D) Debit bank account (R4 500), credit debtors' control account (R5 000), and debit settlement discount granted account (R500). QUESTION TWO [25] Peter Smart used to wash cars in the back yard of his home. He set up a car cleaning business and rented premises, hired 2 staff and moved personal equipment to his business premises where a small office was available. He kept very basic records and after 3 months provided you with the following balances at 1 April 2022: The following transactions took place for the month of April 2022: No. 1. Peter transferred R20 000 from his personal savings into the business bank account. Transferred personal vehicle valued at R66 000 for business use. 2.. Paid rent for April 2022 by stop order arranged with the bank, R3 200 . QUESTION THREE [20] The following list of account balances were extracted from the accounting records of Don's Electrical Services as at 28 February 2021: Additional information that needs to be taken into account: 1. Stock taking was done on 28 February 2021 and the consumable inventory on hand was valued at R32 700. 2. The advertising amount includes a contract for R2 400 that was taken for the period 1 January 2021 to 30 June 2021. 3. Don received an amount of R600 from an insolvent debtor which was correctly recorded. However this was only 25% of the total amount owed by the debtor. The outstanding balance must now be written off as irrecoverable. 4. The Allowance for credit losses must be increased by R250. 5. Communication costs include valid prepaid phone cards to the value of R1200. 6. Investment in the fixed deposit was made 31 March 2020 and matures on 31 May 2022. Record the outstanding interest on the fixed deposit. 7. Vehicles and Equipment must be depreciated as follows for the current year; - Vehicles at 20% on cost, and - Equipment at 15% using the diminishing balance method. No vehicles or equipment were bought or sold during the year. 8. The long term borrowing was taken on 31 July 2019 and the loan was to be settled by 4 equal annual instalments beginning 31 August 2020. Provide for the outstanding interest due for the current year. A statement dated 28 February 2021 from the creditor revealed the following: BACHELOR OF COMMERCE LAW YEAR 1 - ACADEMIC 10. Rent has been received for the period 1 March 2020 to 31 March 2021. Rent was increased by 10% with effect from 1 September 2020. Adjust the above records for the amount received in advance for March 2021. Required: Prepare the statement of profit or loss and other comprehensive income (SOCl) for the year ended 28 February 2021 to comply with the requirements of International Financial Reporting Standards (IFRS) appropriate to Don's Electrical Services. Round up all calculations to the nearest Rand. Show all workings. QUESTION FOUR [20] Mega Store (Pty) Ltd has a wholesale section that conducts some of their business on credit. Transactions are first recorded in specialised journals and the general journal on a real time basis. The accounting department uses clerks to post transactions recorded in the journals into Debtors accounts and Creditors' accounts in the subsidiary ledgers on a daily basis. Transactions from the journals are posted into the Debtors' Control account and the Creditor's Control account in the general ledger on a monthly basis. The following information was extracted from the accounting records of Mega Store (Pty) Ltd on 31 December 2021. Addiflonal linformatiom? The following has not been taken into account in aniving at the fleures above 1. An amount of Ro 902 owing by a debtor, I Ekelim, must be willen off ae irrecoverable, 2. The allowances for eredit losses mus be inereased by R2 960, 3. On 10 Deeember 2021 , goeds to the value of Ro 300 was purehased on eredii, bui was incomectly recorded in the Bales joumal. 4. The credit balanees in the debtors' ledger at I January 2021 must be transferred to the ereditors eontrol aceount Required: Prepare the following as they would appear in the general ledger of Mega Etore (P ty) I id for the year ended 31 December 2021 : 4.1 Debtors eontrol account 4.2 Creditors eontrol account. (i) ) NB: - The aceounte must be properly balaneed or olosed off. Each entry in the ledger aecount muet reflect the contra account. Folio numbere may be omilted. Record the dates for transactioner Marke will be deducted for recording entries that are unrelated to the control accounte. {20} QUESTION FIVE 5.1 Neil Brown is a busineseman who buys packages of goode and wholesales the package for cash. His businese is registered as a Vat Vendor. During March 2022 he purchased for cash a package of goode for R28 000 (exelusive of 15% Vat). Neil used a mark-up of 30% on the cost price and sold the package for R44 860 (Inclusive of 16% VAT). Neil uses the perpetual inventory system to keep recorde of his trading activitiee. Required: Record general journal entries for the purchase and sale of the package of goods. You do not have to record the dates but must include a brief narration appropriate for both the purchase and sale of the goods above. (8) 5.2 Mary has a general dealer business and uses the periodic inventory eystom to keep records of buying and selling goods. The following information was extracted from the accounting records for financial year ended 30 June 2020 . BACHESOR OF COMMERCE LAW YEAR1 - ACADEMIC AND ASSESSMEMT CALENOA?- DSTHMCE Additional information: 1. Trading inventory at 30 June 2021 was taken and valued at R203 400 . 2. Neil took inventory worth R18100 for his personal use. This has not been recorded in the above accounting records. 3. Insurance on goods transported from suppliers for R7400 is also not yet included in the above information. Required: Prepare only the trading section of the Statement of profit or loss and other comprehensive income for Mary/s General Dealers for the year ended 30 June 2021