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FAC512S- FINANCIAL ACCOUNTING 102- 1ST OPP- NOV 2023 |
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nAmI BI AunIVE RSITY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF COMMERCE, HUMAN SCIENCESAND EDUCATION
DEPARTMENTOF ACCOUNTING,ECONOMICSAND FINANCE
QUALIFICATION : BACHELOROF ACCOUNTING
QUALIFICATION CODE: 07BOAC
LEVEL: 5
COURSE: FINANCIALACCOUNTING102
COURSE CODE: FAC512S
DATE: NOVEMBER 2023
DURATION: 3 HOURS
SESSION: THEORYAND APPLICATION
MARKS: 100
FIRST OPPORTUNITY EXAMINATION
FIRST EXAMINER: Ms. H. Kangala, Ms. Y. Andrew, Mr. J Chikambi & Ms. M. Amakali
MODERATOR:
Mr. C. Mahindi
INSTRUCTIONS
1. This question paper is made up of FIVE{5} questions.
2. Answer All the questions and in blue or black ink.
3. You are advised to pay due attention to expression and presentation. Failure to do so will
cost you marks.
4. Start each question on a new page in your answer booklet and show all your workings.
5. Questions relating to this 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 and any assumption made by the candidate should be clearly stated.
PERMISSIBLE MATERIALS
Non-programmable calculator/financial calculator
THIS QUESTION PAPER CONSISTS OF 7 PAGES (Excluding this front page)
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QUESTION 1
22 Marks
Flexi cc is a business that buys and sells fitness supplies. The following transactions took
place during December 2022:
Purchases of merchandise on credit
Purchases of merchandise for cash
Purchases of equipment on credit
Salesof merchandise on credit
Salesof merchandise for cash
Salesof equipment on credit
Returns inwards
Returns out wards
Settlement discount granted
Settlement discount received
Cash received from accounts receivable
Payment to accounts payable
Credit losses written off
Dishonoured payment originally received from a receivable
Settlement discount on dishonoured payment above
Journal debits
- Accounts receivable ledger
- Accounts payable ledger
Journal credits
- Accounts receivable ledger
- Accounts payable ledger
Reversal of credit balance in accounts receivable ledger to increase
payments in accounts payable ledger
N$
25 000
28 000
17 500
78 500
25 500
24000
500
300
450
800
54000
79 000
250
1500
100
200
100
180
160
250
Additional information:
The accounts receivable control at 1 December 2022 contained the following balances:
Debit
N$ 34 750
Credit
N$ 50
The accounts payable control at 1 December 2022 contained the following balances:
Debit
Credit
N$ 200
N$ 31800
On 31 December 2022 there was a credit balance of N$ 500 in the accounts receivable
ledger.
REQUIRED
a) Prepare an accounts payable control account for December 2022.
(10)
b) Prepare an accounts receivable control account for December 2022.
(12)
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Question 2
15 Marks
The bank ledger account of Etameko Ltd shows a favouable balance of N$3 500 on 31
December 2022 while the bank statement shows a balance of N$4 669.85 on the same date.
You identified the following reconciling items:
1. A deposit of N$1 600 made on 31 December 2022 is not shown in the bank statement.
2. The bank has erroneously debited a debit order for N$1 000 drawn by Blue cc against
the account of Etameko Ltd.
3. The following payments were made by the company during December 2022 but do
not reflect in the bank statement:
Payment number:
N$
637
2 086.00
638
319.50
639
830.00
640
203.15
641
458.50
4. The bank has collected N$2 114 from an account receivable (AB Aldo). This transaction
has not yet been recorded in the company's cash book.
5. A deposit of N$1 500 was correctly recorded in the cash book but recorded as a credit
of N$150 in the bank statement.
6. The Bank credited N$280.00 interest to the company's account.
7. Payment number 633 for N$360 to JD Limited was recorded as N$630 in the
company's cash book.
8. Bank charges for March 2023 amount to N$145.
9. A corrected payment for N$52.00 (paid to A Wilson) only appears in the bank
statement.
Required
a) Prepare the adjusted bank account of Etameko Ltd to correct the balance in the bank
account.
7 Marks
b) Prepare a bank reconciliation statement at 31 December 2022, starting with the
balance per bank statement.
8 Marks
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Question 3
35 Marks
Purple Ltd is a key supplier of medical equipment to hospitals and other health facilities.
Purple Ltd was incorporated under the Companies Act of 2004 in 2019 and is a registered VAT
vendor. All its suppliers are also registered VAT vendors. VAT is calculated at a standard rate
of 15%.
The following trial balance was prepared by an inexperienced accountant, with information
that was extracted from the computer records of Purple Ltd for the reporting period ended
31 March 2022.
Sales
Purchases
Dividend income from subsidiary
Management fee from subsidiary
Interest income
Rental Income
Salaries and benefits
Finance costs
Sales returns
Purchases returns
Auditors' remuneration
Other expenses
Property, plant, and equipment
Accumulated depreciation {01 April 2021)
Investment in subsidiary
Trade receivables
Inventory at 01/04/2021
Inventories at 31/03/2022
Cash and cash equivalents
Trade and other payables
Namibia Revenue Agency VAT outstanding
Long term borrowings
Share capital
Retained earnings {01 April 2021)
Note
1
2.
2.
3.
4.
5.
6.
7.
Dr
7 011500
1700000
210 000
15 000
780 000
250 000
9 351 000
4 230 000
5 670 000
1200000
2 578 000
8 244 000
195 000
Cr
12 505 000
500 000
115 000
280 000
130 000
1500
5 480 000
2 535 000
1900 000
12 000 000
3 214 000
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The following transactions have not been recorded:
1. Rental Income
• Rental income relates to extra storage space to a local carpenter for N$10,000 per
month.
2. Property, plant, and equipment
• A plant with a carrying value of N$2 800 000 was discovered to have a recoverable
amount of N$2 000 000 after an impairment test was carried out.
• Total depreciation for the current reporting period was correctly calculated as
N$1 205 000 (plant N$900 000 and vehicles N$305 000).
• A vehicle with a cost of N$400 000 and accumulated depreciation of N$145 000 (up to
the date of the theft) was stolen during the year. The insurer paid a VAT inclusive
amount of N$368 000 on the claim.
• Purple Ltd sold another vehicle with a carrying value of N$325 000 to a secondhand
car dealer for N$345 000 (including VAT).
3. Trade receivables
• Wheeler cc, a receivable was deemed insolvent. The Finance director of Purple Ltd
authorized the action to write off the total balance of N$75 785 owed by Wheeler cc
as irrecoverable.
• Furthermore, after a review of the remainder of the account receivables, an increase
in allowance for doubtful debts by N$200 000 was authorized.
4. Inventories
• A review of the market on 31 March 2022 revealed that Product X, which has a cost
value of N$500 000, had a net realizable value of N$380 000. The cost of this item was
counted with the rest of inventory on stock-taking.
• It was also discovered that inventory with a total cost of N$85 000 was missing. Only
a Dr to other expenses account was accounted for regarding this lost inventory.
5. Cash and cash equivalents
• The bank statement for March 2022 was received on 1 April 2022 which reflected bank
charges of N$1 725 and interest income of N$2 400 still had to be recorded.
6. Long term borrowings
• The accountant of Purple Ltd prepared the following amortization table for a loan that
was obtained from Greenish Bank during the year.
Date
01 April 2020
31 March 2021
31 March 2022
31 March 2023
31 March 2024
31 March 2025
Instalment
N$
475 867
475 867
475 867
475 867
475 867
Interest 8%
N$
152 000
126 091
98108
67 888
35 249
Amortised cost
N$
1900 000
1576133
1 226 356
848 597
440 618
0
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The loan attracts interest at 8% per annum and is secured by a building with a carrying value
of N$2 100 000. The instalment due on 31 March 2022 has been paid on time. This finance
cost is not included in the amount provided in the trial balance above.
7. Share capital
• The issued share capital comprises 100 000 ordinary shares issued at N$120 each and
200 000 5% preference shares issued at N$10 per share.
• On 1 October 2021, an additional 120 000 ordinary shares were issued at N$125 each
and were paid for on the same date. On the same date, an additional 100 000 5%
preference shares were issued at N$10 per share. Payment was received on the same
day.
• A dividend of 50 cents per ordinary share was declared on 31 March 2022.
8. Income tax
Purple Ltd applies the Namibian income tax rate at 32%.
Required
a) Present the statement of profit or loss for the reporting period ended 31 March 2022
using the function method in compliance with IFRS.
30 Marks
b) Calculate dividends per ordinary share. Show all your workings.
5 Marks
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Question 4
20 Marks
Chaptersand Novels in Africa (CNA)is a partnership between Chikambi and Nellie. They both
love reading and decided to start CNA,a businessthat sells books and stationery to clients
across Namibia.
The following draft balances in the records of CNAas at 31 October 2023:
Details
Property plant and equipment
Inventories 31 October 2023
Prepaid Income tax
Trade receivables
Trade payables
Bank overdraft
Drawings-Chikambi
Drawings- Nellie
Capital - Chikambi
Capital - Nellie
Current account - Chikambi
Current Account - Nellie
Profit for the year (before appropriation)
DEBIT
1200000
75 000
25 000
100 000
150 000
140 000
150 000
1840 000
CREDIT
250 000
15 000
500 000
600 000
275 000
200 000
1840 000
The partnership agreement of CNA made provision for the following:
1. Capital will remain unchanged, namely:
Chikambi N$ 500 000
Nellie N$ 600 000
2. At the end of each year the partners are burdened with interest on drawings. The
interest on drawings is calculated at 7% per annum.
3. Each partner receives interest oh his/her capital at 3% per annum.
4. Chikambi and Nellie both receive salaries of N$20 000 per annum, and Nellie will
receive a bonus of 1.25% of the profit, after all interest and salaries have been taken
into the account.
5. The rest of the profit should be divided between the partners in the ratio 39:11
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Required:
Prepare the statement of changes in equity of CNAfor the year ended 31 October 2023 (20)
Note: Clearly show and your calculations. Round of all amounts to the nearest Namibian dollar.
Question 5
8 Marks
4.1. Provide explanations for the application of the following internal controls over cash
receipts and payments.
2 Marks
a) Division of duties (1)
b) Electronic payments controls (1)
4.2. Answer the following questions:
i. Explain the qualitative characteristic of relevance.
ii. Explain the objective of general purpose of financial statements.
iii. Explain the accrual basis concept.
2 Marks
2 Marks
2 Marks
END OF EXAMINATION
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