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(50 marks; 90 minutes) QUESTION 1 Ignore VAT Isipingo Traders TRIAL BALANCE AS AT 31 MAY 2020 Debit Rand Credit Rand 120 000 80 000 20 000 38 000 268 000 407 000 40 000 15 000 Factory building - at cost Equipment - at cost Accumulated depreciation - Factory building (1 June 2019) Accumulated depreciation - Equipment (1 June 2019) Purchases Sales Inventory (1 June 2019) Returns outwards Returns inwards Salaries and wages Bad debts Insurance expense Interest expense Operating expenses Accounts payable Accounts receivable Bank Stationery Drawings Allowance for doubtful debts (1 June 2019) Long-term loan (12% pa) Capital (1 June 2019) Totals 10 000 58 800 4 600 2 200 1 800 21 000 36 000 36 000 1 600 2 000 24 000 500 30 000 123 500 670 000 670 000 The following additional information as at 31 May 2020 is available: 1) Isipingo Traders uses a periodic system to record inventory and uses a gross margin of 40% to calculate selling prices. 2) A debtor returned inventory with a cost price of R3 780. 3) Inventory was purchased for cash on 01 May 2020, amounting to R24 000. Transport of R2 380 was paid for the inventory to be delivered. This transaction was not recorded. 4) Stationery was purchased amounting to R2 300, of which R250 was for the owner's son. 5) Wages and salaries for May 2020 to the amount of R800, was unpaid as at 31 May 2020. 6) The owner purchased equipment on 01 January 2020 on behalf of the business, R20 000. The bookkeeper omitted this transaction. 7) The allowance for doubtful debts is to be adjusted so that it is 2% of accounts receivable at the end of the period. 8) The insurance premium is R200 per month. The premiums are sometimes paid in arrears. 9) The long-term loan was taken out on 1 October 2019 at an interest rate of 12% p.a. and the interest is paid quarterly in arrears. 10) Depreciation for the period ended 31 May 2020 has still to be provided for as follows: Factory building: Useful life of 20 years using the straight-line method Equipment: 25% per annum using the reducing balance method. 11) A stock-take at year end revealed the following: Inventory on hand, R44 000 Stationery on hand, 800 You are required to: a) Prepare the general journal entries for the transactions above. (24 % marks) b) Prepare the Statement of Profit or Loss, Statement of Changes in Equity and the Statement of Financial Position of Isipingo Traders for the year ended 31 May 2020. (25 % marks) (50 marks; 90 minutes) QUESTION 1 Ignore VAT Isipingo Traders TRIAL BALANCE AS AT 31 MAY 2020 Debit Rand Credit Rand 120 000 80 000 20 000 38 000 268 000 407 000 40 000 15 000 Factory building - at cost Equipment - at cost Accumulated depreciation - Factory building (1 June 2019) Accumulated depreciation - Equipment (1 June 2019) Purchases Sales Inventory (1 June 2019) Returns outwards Returns inwards Salaries and wages Bad debts Insurance expense Interest expense Operating expenses Accounts payable Accounts receivable Bank Stationery Drawings Allowance for doubtful debts (1 June 2019) Long-term loan (12% pa) Capital (1 June 2019) Totals 10 000 58 800 4 600 2 200 1 800 21 000 36 000 36 000 1 600 2 000 24 000 500 30 000 123 500 670 000 670 000 The following additional information as at 31 May 2020 is available: 1) Isipingo Traders uses a periodic system to record inventory and uses a gross margin of 40% to calculate selling prices. 2) A debtor returned inventory with a cost price of R3 780. 3) Inventory was purchased for cash on 01 May 2020, amounting to R24 000. Transport of R2 380 was paid for the inventory to be delivered. This transaction was not recorded. 4) Stationery was purchased amounting to R2 300, of which R250 was for the owner's son. 5) Wages and salaries for May 2020 to the amount of R800, was unpaid as at 31 May 2020. 6) The owner purchased equipment on 01 January 2020 on behalf of the business, R20 000. The bookkeeper omitted this transaction. 7) The allowance for doubtful debts is to be adjusted so that it is 2% of accounts receivable at the end of the period. 8) The insurance premium is R200 per month. The premiums are sometimes paid in arrears. 9) The long-term loan was taken out on 1 October 2019 at an interest rate of 12% p.a. and the interest is paid quarterly in arrears. 10) Depreciation for the period ended 31 May 2020 has still to be provided for as follows: Factory building: Useful life of 20 years using the straight-line method Equipment: 25% per annum using the reducing balance method. 11) A stock-take at year end revealed the following: Inventory on hand, R44 000 Stationery on hand, 800 You are required to: a) Prepare the general journal entries for the transactions above. (24 % marks) b) Prepare the Statement of Profit or Loss, Statement of Changes in Equity and the Statement of Financial Position of Isipingo Traders for the year ended 31 May 2020. (25 % marks)
