QUESTION $1(20$ Marks$)$

Throughout the month of January $2023,$ the sole trader, Mhlanga, undertook the following transactions:

$1.$ The owner contributed an additional R$50000$ in cash as capital.

$2.$ Purchased shelving on credit for R$30000$ from Shelving Master.

$3.$ The owner bought trading inventory worth R$20000$

$4.$ Telephone expenses of R$5000$ were incurred and paid in cash.

$5.$ Paid salaries to employees of R$15000$

$6.$ Cash sale of merchandise as per cash register tape, R$10000$

$7.$ Thirty pies $($costing R$20$ each$)$ were sold on credit basis to Ms Pillay.

$8.$ Ms Pillay returned three stale pies she previously bought $($see point $6$ above$)$

$9.$ Returned unsatisfactory merchandise from Shelving Master worth R$5000$

$10.$ The owner made a withdraw of cash of R$10000$

Required:

Analyse the above transactions of Mhlanga under the following headings:

No Name of Account in General Ledger Accounting Equation

Debited Credited A$=$ EQ $+$ L

QUESTION $2(20$ Marks$)$

The following is an extract from the Trial Balance of Bright Day $($Pty$)$ Ltd for the year ended $31$ December $2022.$

Debit Credit

Rent Received $22000$

Stationery $800$

Water and electricity $4500$

Sales $125000$

Commission received $11200$

Bad debts $750$

Cost of Sales $78000$

Accumulated depreciation $75000$

Accounts receivable $($Debtors$)250400$

Machinery $200000$

Interest on loan $?$

The following adjustments still need to be taken into account in the preparation of the financial statements:

$1.$ Only $10$ months$$ rent was received and included in the trial balance above

$2.$ Stationery unused on $31$ December $2022$ was valued at R$200$

$3.$ Commission amounting to R$1600$ was received in advance

$4.$ An additional amount of R$400$ must be written off as irrecoverable due to a debtor being declared insolvent

$5.$ An amount of R$12500$ must be raised as a provision for doubtful debts

$6.$ Depreciation on machinery that cost R$200000$ has been correctly calculated for the year as R$50000.$ No entries have been processed for this amount as yet

$7.$ The January invoice for water and electricity of R$550$ has still not been paid.

$8.$ Interest expense on bank loans is calculated at $15\%$ per annum. The loan was received on $31$ December $2018$ for an amount of R$10000.$ The interest was paid monthly. The capital repayment is only due on $31$ December $2022.$

Required

$2\mathrm{.}1$ Prepare the Statement of Comprehensive Income $($Profit or Loss Statement$)$ for the year ended $31$ December $2022.($Show all workings $($where necessary$)$ and present the answer in the correct and legible format$)$

$2\mathrm{.}2$ Indicate the balance $($amount$)$ for each of the following accounts as they would appear in the Statement of Financial Position$)$ as at $31$ December $2022.($Show ALL calculations performed to arrive at your final answer$)$

$(10$

marks$)$

$2\mathrm{.}2\mathrm{.}1$ Debtors $(2$

marks$)$

$2\mathrm{.}2\mathrm{.}2$ Stationery on hand $(2$

marks$)$

$2\mathrm{.}2\mathrm{.}3$ Accrued income $(2$

marks$)$

$2\mathrm{.}2\mathrm{.}4$ Machinery $(2$

marks$)$

$2\mathrm{.}2\mathrm{.}5$ Accrued expenses $(1$

marks$)$

$2\mathrm{.}2\mathrm{.}6$ Income received in advance $(1$

marks$)$

QUESTION $3(20$ Marks$)$

John & Sons and Spencer$$s are companies in wholesalers of clothing. Below are their financial statements

Statement of Comprehensive Income for the year ended $31$ December $2022$

John & Sons

Sales

Cost of Sales

R$\text{'}000$

$1200$

$900$

Spencer$$s

R$\text{'}000$

$1800$

$1300$

Gross Profit $300500$

Wages and overhead $180293$

Operating profit

$120$

$207$

Interest $207$

Net profit $100200$

Dividend $60100$

Retained profit $40100$

Statement of Financial Position as at $31$ December $2022$

Fixed Assets Buildings Equipment

John & Sons

R$\text{'}000$

$120$

$50$

Spencer's

R$\text{'}000$

$200$

$100$

$170300$

Current assets

Inventory $180250$

Debtors $200300$

Bank $1200$

$500550$

Current Liabilities

Creditors $100210$

Bank o$/$d $040$

Dividend $60100$

$140350$

Net current asset

$360$

$200$

Fixed assets plus net current assets

$530$

$500$

Loans $($@$10\%)20070$

Net asset $330430$

Shareholders funds $($Equity$)$

Share capital $($all shares at R$1$ each$)230180$

Reserves $100250$

$330430$

Required

Calculate and briefly report on the ratios for the two companies above:

$1.$ Current ratio $(2$ marks$)$

$2.$ Acid test ratio $(2$ marks$)$

$3.$ Debtors collection period $($in days$)(2$ marks$)$

$4.$ Creditors payment period $($Use the cost of sales figure$)(2$ marks$)$

$5.$ Stock turnover $(2$ marks$)$

$6.$ Return on equity $($ROCE$)(2$ marks$)$

$7.$ Asset turnover $($Total assets$)(2$ marks$)$

$8.$ Which company would you prefer to invest in$,$ and give a reason? $(6$ marks$)$

QUESTION $4(20$ MARKS$)$

Halmart manufactures two products $$ Product A and Product B$.$ The following details relate to the two products.

Product A Product B

Direct materials cost per unit R$20$ R$30$

Direct labour cost per unit R$28$ R$20$

Variable overhead cost per unit R$20$ R$18$

Total fixed cost R$30000$ R$28000$

Selling price per unit R$82$ R$80$

Number of units sold $60005000$

Required

$1.$ Calculate the marginal income ratio for Product A and Product B $(4$ marks$)$