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FAC511S - FINANCIAL ACCOUNTING 101 - 2ND OPP - JAN 2020 |
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NAMIBIA UNIVERSITY
OF SCIENCE AND TECHNOLOGY
FACULTY OF MANAGEMENT SCIENCES
DEPARTMENT OF ACCOUNTING, ECONOMICS AND FINANCE
QUALIFICATION: BACHELOR OF MARKETING, BACHELOR OF ACCOUNTING, BACHELOR OF
TRANSPORT MANAGEMENT, BACHELOR OF LOGISTICS AND SUPPLY CHAIN MANAGEMENT
QUALIFICATION CODE: 07BMAR/
O07MARB/ 07BOAC/ 07BLSC/
LEVEL: 5
07BTMM
COURSE CODE: FAC511S
COURSE NAME: FINANCIAL ACCOUNTING 101
SESSION: JANUARY 2020
PAPER: THEORY AND CALCULATIONS
DURATION: 3 HOURS
MARKS: 100
SECOND OPPORTUNITY EXAMINATION QUESTION PAPER
EXAMINER(S) | C. MAHINDI, V. MAHINDI AND D. NKALA
MODERATOR: | J. van WYK
INSTRUCTIONS
1. Answer ALL questions in blue or black ink only
2. Write clearly and neatly.
3. Start each question on a new page and number the answers
clearly.
4. No programmable calculators are allowed.
Questions relating to the paper 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.
. The names of people and businesses used throughout this exam
paper do not reflect reality and are purely coincidental.
. Show all workings!
THIS QUESTION PAPER CONSISTS OF 4 PAGES (Excluding the front page)
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QUESTION 1
(15 MARKS)
Your friend started studying accounting this year. He is new to the subject and asked for your
assistance by answering the following questions:
1. The framework for the Preparation and Presentation of Financial Statements includes an
underlying assumption. Name this underlying assumption and briefly explain it.
(3)
2. Briefly explain the term “recognition” in relation to the elements of financial statements. (2)
3. Briefly explain the term “measurement” in relation to the elements of financial statements.
(2)
4. State and briefly explain the fundamental qualitative characteristics as identified in the
Conceptual Framework.
(6)
5. What is the purpose of the Statement of financial position
(2)
QUESTION 2
(15 MARKS)
Scenario 1
On 1 Dec 2019 an item of Property Plant and Equipment (PPE) that originally cost NS299,600
(Accumulated depreciation at 1 April 2019 was NS78,400) was sold for NS265,000.The entry made in
the records to account for the sale was:
01-Dec-19
Debit NS
Cash
265,000
Property plant and equipment(at cost)
Entry to account for the sale of PPE
Credit NS
265,000
Property plant and equipment are depreciated on the straight line basis at 15% per annum.
Depreciation has yet to be provided for on PPE. The reporting date is 31 March.
REQUIRED
Prepare the journal entries to correctly account for the sale of the PPE.
(10)
Scenario 2
On 1 January 2019, a company which prepares financial statements for 31 December each year buys
an item of equipment for NS 20,000. Useful life is estimated to be six years and residual value is
expected to be approximately NS1500.
The company uses the reducing balance method of depreciation at a rate of 35 % per annum.
REQUIRED
To the nearest dollar, calculate the carrying amount of this item for the year 31 December 2020? (5)
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QUESTION 3
(35 marks)
You are the accountant of Chamwe Trading and have been provided the following trial balance as at
31 October 2019.
Land & buildings
150,000.00
Furniture
Accumulated depreciation: furniture
30,000.00
7,500.00
Vehicles
Accumulated depreciation: vehicles
Sales
45,000.00
12,000.00
750,000.00
Purchases
Inventories (1 November 2018)
Sales Returns
Commission on purchases
Credit losses
450,000.00
180,000.00
7,500.00
15,000.00
3,000.00
Drawings
Interest
Loan
Rent received
Salaries & wages
Sundry expenses
45,000.00
4,500.00
27,000.00
16,500.00
3,000.00
90,000.00
30,000.00
Accounts receivables
Accounts payables
Bank
Capital
76,500.00
12,000.00
1,062,000.00
54,000.00
115,500.00
1,062,000.00
Additional information:
1.
2.
Inventories on 31 October 2019 amount to N$195 000.
Interest on loan is calculated at 5% per year. The loan is repayable on 31 December 2020.
3.
Property, plant and equipment:
3.1 The buildings are occupied
for the
purposes
of the
activities
of the
entity
and
are
accounted for in terms of the cost model. The value of the buildings is NS45,000 and
the land NS105,000 at the date of purchase, 1 November 2018.
3.2 Depreciation for the year has to be provided for as follows
Buildings at 3% on per year on cost
Furniture at 6% per year on cost
Vehicles at 10% per year on the diminishing balance method.
4. NS7 500 of receivables must be written off as irrecoverable
REQUIRED:
Prepare the following components of financial statements:
a) Statement of profit or loss for the year ended 31 October 2019.
b) Statement of financial position as at 31 October 2019
(18.5)
(16.5)
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Question 4
(22 MARKS)
Booster Limited (Booster) is a registered VAT vendor with a 31 December year end. Booster specialises
in providing batteries and other electrical supplies.
On 1 April 2019, Booster ordered 60 generators worth N$1 437 500 (including VAT) from Powercom
Limited (Powercom) for purposes of resale. Booster is responsible for all delivery costs from the the
premises of Powercom to the premises of Booster. Van WyK transporters was contracted to transport
the generators, and they undertook this task on 15 April 2019 at a cost of NS$51 750 (including VAT) at
which point the risk and rewards of ownership transferred to Powercom. To ensure that the
generators were not damaged during transportation, Booster incurred a further NS7,500 (Including
VAT) in packaging costs. The transport and packaging costs were settled on 15 April 2019 via electronic
funds transfer (EFT)
The invoice amount of N$1,437,500 from Powercom was received together with the goods and
contain a stipulation that, if the invoice is paid before 30 April 2019, a settlement discount of 5% will
be granted. Booster’s payment history indicates that Booster always takes advantage of any discounts
granted.
On 28 April 2019, Booster paid the invoice price to Powercom by means of electronic funds transfer
(EFT).
REQUIRED:
a) Recognise the abovementioned transactions in the general ledger (T-accounts) of Booster
Limited for the reporting period ended 31 December 2019. Assume that Booster make use of
the perpetual inventory system.
(13)
b) Assuming that the Booster settled the outstanding amount to Powercom on 1 May 2019,
process the general journal entry to account for the payment in the records of Powercom.
(5)
PART B
Assume that each generator costs Booster N$20,000 (excluding VAT). Booster maintains a gross profit
margin of 35%. Calculate the gross profit and the selling price of each generator.
(4)
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QUESTION 5
(13 MARKS)
Samsung (Pty) Ltd’s current reporting period ends on 30 June 2019 and they use the periodic inventory
system.
On 10 June 2019 , Samsung (Pty) Ltd entered into a written agreement with a customer, CellShop (Pty)
Ltd. The contract was signed by both parties and stipulates, inter alia, the following:
e 300Samsung S4 cellphones will be delivered to CellShop (Pty) Ltd’s premises on the following
dates:
o 175 cellphones will be delivered on 20 June 2019; and
o 125cellphones will be delivered on 6 July 2019.
e The sales price of the 300 cellphones is NS862 500 (including VAT) and it is payable on 31 July
2019.
The sales price per cellphone is not influenced by the sales volume and the Samsung S4 cellphone is a
distinct product.
CellShop (Pty) Ltd has an excellent payment record and the expectation is that the outstanding amount
will be paid before the due date.
Both companies are registered as VAT vendors in accordance with the VAT Act. A VAT rate of 15% is
applicable.
YOU ARE REQUIRED TO:
Recognise the revenue (sales) by applying the 5-step model of IFRS 15. Assume that the requirements
of step 1 have been met. Show workings where applicable.
(13 marks)
END OF PAPER!
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