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FAC511S FINANCILA ACCOUNTING 101-1ST OPP- JUNE 2024 |
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nAmI BI A unIVER sITY
OF SCIEnCE TECHnOLOGY
FACULTYOF COMMERCE, HUMAN SCIENCESAND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATION: BACHELOROF ACCOUNTING AND BACHELOROF LOGISTICSAND SUPPLY
CHAIN MANAGEMENT
QUALIFICATION CODE: 07BGAC AND
07BLSC
LEVEL: 5
COURSE: FINANCIAL ACCOUNTING 101
COURSE CODE: FAC511S
SESSION: JUNE 2024
DURATION: 3 Hours
PAPER: THEORY & CALCULATIONS
MARKS: 100
FIRST OPPORTUNITY EXAMINATION QUESTION PAPER
EXAMINERS:
Ms. H Kangala, Mr. H Namwandi, J Chikambi, Ms Y. Odio & Mr P
Mbangula,
MODERATOR:
Mr C Mahindi
INSTRUCTIONS TO CANDIDATES
1. Answer all questions in blue or blackink.
2. Round off all amounts to the nearest Namibian Dollar, where applicable.
3. A non-programmable calculator is permissible.
4. Show all your workings (where applicable).
This Question paper is made up of 5 Pages (Excluding the front page)
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Question 1
54 Marks
Higo Enterprises had the following information at the end of the reporting period of 31
December 2022.
Details
Land
Buildings
Motor Vehicles (at cost)
Machinery (at cost)
Accumulated depreciation - Motor
Vehicles
Accumulated depreciation - Machinery
Accounts Receivables
Accounts Payables
Drawings
Capital
Cash and cash equivalents
Sales
Loan at X Bank
Rental Income
Advertising
Stationery
Carriage inwards
Investment at Capri Bank
Credit Losses
Donations
Rental expenses
Interest expenses
Salaries and Wages
Sales Return
Purchases Returns
Purchases
Insurance
Inventory {01/01/2022)
Commission Received
Debit N$
1,000,000
3,000,000
740,000
2,000,000
1,450,000
524,500
349,000
300,000
20,000
204,000
450,000
1,300
500
8,000
13,200
1,048,000
68,000
4,067,500
60,000
586,000
15,890,000
Credit N$
240,000
500,000
630,000
4,540,000
9,760,000
120,000
18,000
50,000
32,000
15,890,000
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Additional Information
l. Included in sales is N$32,000 in respect of a deposit paid by a client. The goods have
not yet been delivered.
2. The rental income relates to a sublet storeroom in the building for N$3,000 a month.
3. The Assistant Accountant received the telephone bill of N$4,000 for the year on 30
December 2022.
4. Higo Enterprises pays monthly rent of N$1,000 for equipment.
5. Higo Enterprises opened a 5% investment account with Capri Bank on 31 August 2022.
6. Physical stock count on 31 December 2022 revealed the following on hand:
• Inventory
N$400,000
• Stationery N$10,000
7. M Mbata, an accounts receivable with a balance of N$20,000 was declared as
insolvent.
8. The long-term loan of 10% was obtained on 01 October 2021.
9. The allowance for doubtful debts needs to be adjusted to 1% of outstanding
receivables. Higo Enterprises did not allow for doubtful debts in the past.
10. The business recorded 10 months' worth of commission received. Commission for the
last 2 months of the year is still outstanding.
11. Motor Vehicles are depreciated using the diminishing balance method, at a rate of
20%. Higo does not depreciate Land and Buildings.
12. The company sold one vehicle, for N$10,000 on 31 December 2022. The sold vehicle
cost Higo Enterprises N$53,100 (included in total cost of Motor Vehicles) and had an
accumulated depreciation amount of N$37,400 (included total accumulated
depreciation Motor Vehicles) at the beginning of the year on 01 January 2022.
13. Machinery is depreciated at 15% using the straight-line method. Higo Enterprises
anticipate a scrap value of N$100,000 for machinery at the end of useful life.
IGNOREVAT
Required:
a) Prepare adjusting journal entries for the year ended 31 December 2022 to incorporate
all the adjustments above. Ignore narrations.
35 Marks
b) Prepare the statement of profit or loss for the year ended 31 December 2022.
15 Marks
c) Prepare an Asset disposal account for the sold vehicle.
4 Marks
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Question 2
12 Marks
The following information was extracted from the books of JT Ltd for the year ended 31 July
2022.
1. As at 01/06/2021, the following balances were observed in the books of JT Ltd:
• Favourable account receivables: N$122,000
• Favourable account payables: N$50,000
• Unfavourable account receivables: N$4,000
• Unfavourable accounts payables N$500
2. Total sales for the period (50% relating to cash sales) amounted to N$2,000,000.
3. Returns Inwards (10% relating to credit transactions) N$5,000.
4. Returns outwards (20% relating to credit transactions) N$3,000.
5. JT received a total of N$1,000,000 for payments from credit customers.
6. JT had a total of N$150,000 of payments to credit suppliers.
7. Total discount allowed N$16,000.
8. Total discount received N$25,000.
9. Interest charged to credit customers on overdue accounts N$1,250.
10. Bounced (dishonored) payments from customers N$15,000.
11. Accounts written off as credit losses N$18,000.
12. Total balance for credit losses recovered N$20,000.
13. Contra entry between receivables and payables amounted to N$14,000 for the period.
14. Refunds made to receivables N$500.
15. Refunds from suppliers N$300.
REQUIRED:
Prepare the accounts receivables control account for JT Ltd for the year ended 31 July 2022.
12 Marks
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Question 3
16 Marks
Brown CC is a local business with annual taxable supplies of about N$ 1,030 500 in the
previous financial year. At the beginning of the current financial year, Brown CC became a
registered VAT vendor. The following transactions were recorded for the month of April, for
the tax period ended 30 April 2024. The applicable VAT rate is 15%. All amounts include VAT,
unless stated otherwise. Brown CC uses a perpetual inventory system.
1 April: Bought goods for resale N$127,650 (excl VAT) via EFT.
7 April: Bought a delivery Vehicle from VM Motors for N$283,500 on credit.
10 April: Some of the goods bought on April 1st, valued at N$57 000 (excl VAT)were defective
and were returned to the supplier.
12 April: Sold Goods for N$77,650 to ABC Traders on credit. Cost price of the units sold is
N$60,000.
19 April: ABC Traders returned goods to the value of N$ 17,650 bought on 12 April back to
Brown CC(cost price N$10,000).
30 April: Bought cakes, cookies, cool drinks, and snacks as refreshments for the customary
office practice of celebrating best employee of the month. A total amount of N$3,470 cash
was paid to Pick 'n Pay by Brown CC.
REQUIRED:
(a) What type of VAT registration does Brown CC qualify for? Give a reason for your
answer.
2 Marks
(b) Prepare the VAT Control Ledger account for the above transactions. Show all your
workings. For any transactions where VATis no applicable, provide a reason why in your
workings.
14 Marks
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Question 4
18 Marks
a) Answer the following questions:
i. On 30 January 2024, the owner of DJ Traders transferred N$15,000 to Jake
Wholesalers to settle their debts of N$10,000. The extra N$5,000 is paid for
inventory that DJ is planning to purchase later in February.
Use the definition of elements to explain why the N$5,000 paid in advance does not
qualify to be recognized as an expense in that period but as an asset.
3 Marks
ii. Discuss the difference between cash basis accounting and the accrual basis of
accounting.
3 Marks
iii. Using the definitions of the appropriate elements, discuss why income received in
advance should be recognized as a liability and not an asset.
4 marks
b) Explain the following features of general-purpose financial statements:
i. Materiality
ii. Comparability
iii. Prudence concept
iv. Going concern
2 Marks
2 Marks
2 Marks
2 Marks
END OF FIRST OPPORTUNITY EXAMINATION
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