 |
FAC512S - FINANCIAL ACCOUNTING 102 - 2ND OPP - JAN 2020 |
|
|
1 Page 1 |
▲back to top |
NAMIBIA UNIVERSITY
OF SCIENCE AND TECHNOLOGY
FACULTY OF MANAGEMENT SCIENCES
DEPARTMENT OF ACCOUNTING, ECONOMICS AND FINANCE
QUALIFICATION: BACHELOR OF ACCOUNTING
QUALIFICATION CODE: 07BOAC
LEVEL: 5
COURSE CODE: FAC512S
COURSE NAME: FINANCIAL ACCOUNTING 102
SESSION: JANUARY 2020
PAPER: THEORY AND APPLICATION
DURATION: 3 HOURS
MARKS: 100
EXAMINER(S)
SECOND OPPORTUNITY EXAMINATION QUESTION PAPER
Mr. K Tjondu, Ms. L George and Ms. G Mwenyo
MopeRATOR: | Ms. J van Wyk
INSTRUCTIONS
This question paper is made up of five (5) questions.
Answer ALL the questions and in blue or black ink.
Start each question on a new page in your answer booklet.
Questions relating to this examination may be raised in the initial 30 minutes after the start of
the paper. Thereafter, candidates must use their initiative to deal with any perceived error or
ambiguities & any assumption made by the candidate should be clearly stated.
THIS QUESTION PAPER CONSISTS OF 9 PAGES (Including this front page)
|
|
2 Page 2 |
▲back to top |
QUESTION 1
(25 marks)
Lasertec Ltd is a company incorporated under the Companies Act of 2004 in 2012. They specialize in
the manufacture of Laser Technology goods.
Below is a summary of balances from their Trial Balance as at 31 March 2019. The Trial balance was
prepared by an inexperienced accountant and some balances have been credited or debited in error.
Debit
Credit
Sales
Purchases
‘Dividend income fromsubsidiary = =
Managfeeefrm omseubsniditary =
Pleast tinecre ccsaaceanen
5,650,000.00
|. 2,200,000.00
|
266000
176000
|
Salariesandwages
Insurance
Electricty
General administration costs.
Baddebs
Finance costs _
Inventories (01/04/2018) _
1150,000.00,
889,000.00
414,000.00
ee
a
s—~—S
111,000. 00
_
«88,000.00
79,000.00
_
| 858, 000. 00 |
5% Debentures _
| 3,000,000.00_
Vehicles_
___1,125,000.00 _
Furniture and Fittings =
960,000.00.
‘Accumulated depreciation : Vehciles
478,000.00
Accumulated depreciation: Furniture and Fittings | ____ 398,000.00 |
‘Trade receivables
|_ 533,000.00 |
‘Trade payables
|
i
___
312,000.00.
‘Allowa nce for bad debts
‘Retained Earnings (01/04/2018)
|
29,000.00 -
824,500
Additional information:
1. Depreciation is calculated as follows:
e 20% per annum on vehicles on straight line basis
e 10% on furniture and fittings
2. During the year they sold a vehicle worth for N$195 000. The vehicle originally cost NS 350 000,
three years ago. The accountant has processed this entry incorrectly by only taking crediting
Vehicles at cost and Bank (with the amount received) and debiting Accumulated depreciation on
vehicles.
3. Astock count on 31 March 2019 showed the value of stock on hand amounted to NS 918 000.
|
|
3 Page 3 |
▲back to top |
4. Costs between head office and the distribution center are split as follows:
a. Office rental is split 60% distribution center and 40% head office.
Salaries of head office staff amount to NS795 800
Insurance is apportioned 30% distribution center and 70% head office
Electricity is apportioned equally between the two departments
All other expenses relate to head office
The sllowanes for bad debts must be increased by N$55 000
5. The income tax expense for the year ended 31 March 2019 is NS507 000. This expense has not yet
been recorded.
6. To purchase a new laser machine, they took out a loan from ZED Bank Ltd in 2017. The annual
instalments on the loan amount to NS 450 000 and they paid N$185 000 in interest during the year.
This has not been taken account in preparation of the trial balance. The accountant did not take
the finance costs for this instalment into account when preparing the trial balance.
Required:
a) Prepare a statement of profit or loss for the period ended 31 March 2019. Show all workings
clearly.
(22 marks)
Fireballs Limited is a company incorporated under the Companies Act of 2004 since 2017. The directors
would like to declare an ordinary dividend for this financial year. Below are balances as they appear on
the Statement of Financial Position as at 31 March 2019.
Non-current assets
Current assets*
Total assets
N$
321000
115000
436000
Equity
98000
Non-current liabilities
Current liabilities
Total equity and liabilities
79500
258500
436000
Required:
b) Confirm whether the directors can proceed with the dividend declaration.
(3 marks)
|
|
4 Page 4 |
▲back to top |
QUESTION 2
(25 marks)
PART A: Suspense and errors, control accounts
The trial balance of Paloma Limited, a company involved in the manufacturing sector, had a
balance in a suspense account of N$15 991 at its year-end of 31 December 2018.
The main shareholder and bookkeeper, Mrs. Victoria, has identified the following issues:
Ls The balance of NS871 on the telephone expense account has been omitted from the trial
balance.
The total of the purchases daybook has been carried forward as NS$5,126 whereas the correct
amount was N$5,621. The correct amount has been posted to the relevant trade payable.
3. Capital introduced by Mrs. Victoria of NS$3,500 had been entered correctly to the bank but had
been debited to Sales.
4. Additions to Property, Plant & Equipment purchased and paid for on the 1 September 2018 had
been expensed to the repairs and maintenance account amounting to N$12,000 (excluding VAT).
Victoria Limited’s depreciation policy is to depreciate on a proportionate basis from the date of
acquisition and at the rate of 5% per annum.
5. AVAT credit of NS1,200 on motor expenses had been incorrectly claimed.
6. An unaccounted statement for municipality rates amounting to NS$610 had been discovered in
the waste basket.
7. Discount received of NS463 in December 2018 had been for as a discount allowed.
8. A rent expense of NS2,450 paid during the year was recorded by debiting the rates account.
Victoria Limited is showing a profit of NS41,825 before accounting for the above issues.
Required:
a) Prepare general journal entries for Victoria Limited to record and correct relevant transactions
from the above information for the financial statements for the year-ending 31 December 2018.
(21 marks)
|
|
5 Page 5 |
▲back to top |
PART B
(4 marks)
LG Hair and Beauty, a registered VAT vendor situated in Windhoek, is an upmarket hair salon and
beauty salon. They also sell high end hair products. All suppliers of LG Hair and Beauty are registered
VAT vendors.
LG Hair and Beauty makes use of a perpetual inventory system. A VAT rate of 15% is applicable.
Organics Ltd is a major supplier of LG Hair and Beauty. The normal credit terms of Organics are 30
days. The terms of the supply of Organics are to offer settlement discount of 10% to those customers
who pay their debt within a period of 10 days from the date of the invoice. LG Hair and Beauty has a
history of taking advantage of the settlement discount.
On 1 October 2018 the purchase manager of Luca’s Fashion Boutique placed an order with My
Republic to buy merchandise which consisted of all the latest fashion styles and trends. The
merchandise together with an invoice was delivered to the premises of Luca’s Fashion Boutique on the
18 October 2018. The invoice amount of NS 1 140 000 is payable on or before 18 November 2018.
Rose, the accountant of LG Hair and Beauty, studied accounting many years ago and has no knowledge
of discounts or the recording thereof.
Rose processed the following journal on 18 November 2018:
2018
Dr
Cr
18
Trading inventory (SFP)
991 304
November
Vat Input (SFP)
148 696
Payable (SFP)
1 140 000
Recognise trading inventory and payable
Required:
Assist the accountant Rose, by providing explanations as to whether she has processed the entry
correctly as it relates to:
(i) trading inventory;
(ii) settlement discounts and
(iii) trade payable should be accounted for, at initial recognition.
(1 mark)
(2 marks)
(1 mark)
|
|
6 Page 6 |
▲back to top |
QUESTION 3
(25 marks)
Martin Shaanika is a sole trader with a small business. He is a registered VAT vendor. Below is an
extract from the records of Martin Shaanika:
1. Bank Reconciliation on 30 September 2019
NS
Balance as per cash book
Add: Outstanding cheques: 131
159
780.00
1,050.00
178
2,340.00
Less: Deposit not credited
Balance as per bank statement
2. Bank Statement
Bank of Africa Limited
Bank Statement of Martin Shaanika
NS
88,580.00
4,170.00
92,750.00
(15,000.00)
77,750.00
Date
30-Sept
1-Oct
3-Oct
5-Oct
5-Oct
7-Oct
8-Oct
8-Oct
12-Oct
13-Oct
18-Oct
19-Oct
20-Oct
23-Oct
25-Oct
27-Oct
27-Oct
Transaction details
Opening balance
Deposit-Jason
Cheque-159
Cheque-131
Cheque-201
Deposit-Ismael
Cheque-202
Cheque-204
Cheque-203
Deposit-Romanus
Debit Orders
Cheque-205
Deposit-Peter
Cheque-206
Cheque-207
Cheque-209
Credit
Memorandum
| Debit (NS) |
1,050.00
870.00
2,500.00
4,180.00
1,800.00
3,460.00
1,050.00
14,800.00
50,000.00
25,600.00
12,750.00
Credit (NS)
77,750.00
15,000.00
12,340.00
13,860.00
12,750.00
49,500.00
Balance (NS)
77,750.00
92,750.00
91,700.00
90,830.00
88,330.00
100,670.00
96,490.00
94,690.00
91,230.00
105,090.00
104,040.00
89,240.00
101,990.00
51,990.00
26,390.00
13,640.00
63,140.00
3. Extract from Cash Book for 31 October 2019
Date
Details
Amount(NS$) | Date
6-Oct
Deposit-
12,340.00
3-Oct
Ismael
Details
Cheque-201
Amount(NS)
2,500.00
|
|
7 Page 7 |
▲back to top |
14-Oct
18-Oct
31-Oct
Deposit-Alex 16,380.00
Deposit-Peter | 12,750.00
Deposit-
5,850.00
Felicia
47,320.00
6-Oct
7-Oct
10-Oct
15-Oct
20-Oct
22-Oct
25-Oct
26-Oct
Cheque-202
Cheque-203
Cheque-204
Cheque-205
Cheque-206
Cheque-207
Cheque-208
Cheque-209
4,180.00
3,460.00
5,800.00
14,800.00
50,000.00
25,600.00
5,100.00
2,750.00
114,190.00
Additional Information
1. The following vouchers were included in the bank statement:
e Debit Orders-Insurance: N$1,050.00
e Credit Memorandum-Deposit by a receivable: NS49,500.00
2. The following cheques were included in the bank statement:
Cheque no
131
159
201
202
203
204
205
206
207
209
Amount (NS)
780.00
1,050.00
2,500.00
4,180.00
3,460.00
1,800.00
14,800.00
50,000.00
25,600.00
12,750.00
3. According to the duplicate deposit slip, NS13,860.00 was deposited by Alex on 14 October 2019
4. Cheque no 131 of NS780.00 was drawn to pay rent
5. The debit order of NS1,050.00 was for insurance
6. Cheque no 209 of NS2,750.00 was drawn to pay salaries
7. Cheque no 204 was drawn for N$1,800.00 in favour of a payable, T Ashipala
Required:
a) 1. Prepare the supplementary Cash Book for October 2019.
b) 2. Prepare a bank reconciliation statement for 31 October 2019.
c) 3. Explain any three internal controls over cash.
(12 Marks)
(7 Marks)
(6 Marks)
|
|
8 Page 8 |
▲back to top |
QUESTION 4
(25 marks)
The committee of the Rundu Netbal club presents you with the following information of the club’s
activities during the year ended 31 December 2018
Receipts and Payments Account of Rundu Netbal Club for year ended 31 December 2018
Receipts
Bank Current Account
Interest from 4%
Investments
Bar Sales
Catering Receipts
Subscriptions
Annual Sponsorship
Sale of Equipment
(Cost NS72,000)
Amount (NS)
Payments
20,520.00 | Bar Purchases
27,000.00 | Sundry Expenses
1,332,000.00 | Repayment
of
NS540,000.00 loan on
30/9/2018 with 15
months interest
228,600.00 | Equipment
1,512,000.00 | Catering Costs
135,000.00 | Prize Bonds
45,000.00 | Coaching lessons
Travel expenses
Balance
bank
31/12/2018
3,300,120.00
Amount(NS)
693,000.00
432,000.00
611,280.00
144,000.00
284,400.00
79,200.00
63,000.00
180,000.00
813,240.00
3,300,120.00
The following information and instruction are to be taken into account:
i) Bar Inventory on 31/12/2018 was N$239,400
ii) Included among assets and liabilities of the Rundu Netbal club on 1/1/2018 were the following:
e Clubhouse and court -N$4,500,000.00
e Equipment- 1,350,000
e Bar Inventory 1/1/2018-N$270,000.00
e Wages Prepaid-NS$7,200.00
e Subscription due-N$9,000.00
e Debtors NS5,400 (2017: NS23,040)
e Creditors N$154,800 (2017: NS151,200)
iii) Subscriptions include:
e Subscription for 2019 amounting to N$5,400.00
e Levy for 2018 of N$1,800 each on 200 members
e Levy of N$1,800 on 8 members for 2017
iv) Investment interest due on 31/12/2018 was N$9,000
v) Equipment to be depreciated at the rate of 25% on cost and Clubhouse and courts to be
depreciated by 2% of cost.
|
|
9 Page 9 |
▲back to top |
Required:
a) Prepare a statement of profit or loss for the year ended 31 December 2018. The club is not
registered for VAT purpose.
(19 marks)
PART B
b) Stella and Cristella are sisters who have been in the hospitality industry for 5 years. They are
considering opening up a company, they want to know the difference between a Partnership
and a Close Corporation. In a tabular form, list the differences between a Close Corporation and
a Partnership.
(6 marks)
END OF EXAMINATION
|
|
10 Page 10 |
▲back to top |
