NATIONAL

SENIOR CERTIFICATE

GRADE 12

ACCOUNTING P2

NOVEMBER 2022

MARKS: 150

TIME: 2 hours

This question paper consists of 13 pages,

a formula sheet and a 10-page answer book.

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INSTRUCTIONS AND INFORMATION

Read the following instructions carefully and follow them precisely.

1. Answer ALL questions.

2. A special ANSWER BOOK is provided in which to answer ALL questions.

3. A Financial Indicator Formula Sheet is attached at the end of this question

paper.

4. Show ALL workings to earn part-marks.

5. You may use a non-programmable calculator.

6. You may use a dark pencil or blue/black ink to answer questions.

7. Where applicable, show ALL calculations to ONE decimal point.

8. Write neatly and legibly.

9. Use the information in the table below as a guide when answering the
question paper. Try NOT to deviate from it.

QUESTION TOPIC MARKS MINUTES

1 Cost Accounting 35 30

2 VAT and Inventory Valuation 45 35

3 Budgeting 45 35

4 Bank Reconciliation 25 20

TOTAL 150 120

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QUESTION 1: COST ACCOUNTING (35 marks; 30 minutes)

1.1 Choose an example from COLUMN B that matches a cost category in

COLUMN A. Write only the letter (A–E) next to the question numbers
(1.1.1 to 1.1.4) in the ANSWER BOOK, e.g. 1.1.5 F.

COLUMN A COLUMN B
1.1.1 Administration A carriage on raw material purchased

1.1.2 Direct material B salary of the factory foreman

1.1.3 Selling and distribution C rent expense for the office building

1.1.4 Factory overhead D workers in production

E commission paid to sales staff

(4 x 1) (4)

1.2 WEZA STITCHES

Weza Stitches, owned by Annie Brown, manufactures bathroom towel sets.

Anne buys fabric from local suppliers. The information relates to the financial
year ended 30 June 2022. Note that there were no work-in-progress stock
balances.

REQUIRED:

1.2.1 Calculate the following for the financial year ended 30 June 2022:

 Direct labour cost (7)

 Factory overhead cost (6)
 Total cost of production (4)

1.2.2 Annie is concerned that fixed costs increased to R806 400. Explain
why she should not be concerned. Provide TWO points. Quote
figures. (4)

1.2.3 Refer to Information C.

Comment on whether the production staff deserves the production

bonus that they received. Provide THREE points, with figures. (6)

1.2.4 Annie wants to improve her profit by R50 000 during the next financial
year while maintaining costs. Calculate the additional units that must
be produced to achieve this target. (4)

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INFORMATION:

A. Direct labour cost:

 Six workers were employed in production in 2021 and 2022.
 Each of them worked 1 840 hours normal time during the year at R40
per hour.
 The overtime register reflected a combined total of 230 hours worked
at 1,6 times the normal time rate.
 Production staff received a production bonus of 8% of the normal
time wages.

B. Factory overhead cost:

The bookkeeper calculated the factory overhead cost as R541 600.

However, he made the following errors, which must still be adjusted:
 He included the entire insurance expense of R32 500 to the factory
overhead cost, instead of only 60% of this expense.

 He allocated R54 000 to factory water and electricity using the

ratio 3 : 2 : 2 for factory, sales and office respectively. This expense
should have been split in the ratio 2 : 1 : 1.

C. Additional information: (after taking all corrections into account)

30 JUNE 2022 30 JUNE 2021
Total Per unit Total Per unit
Variable costs: R1 561 600 R244 R1 317 750 R251
Direct material R652 800 R102 R672 000 R128
Direct labour ? ? R498 750 R95
Selling and distribution R147 000 R28

Fixed costs: R806 400 R126 R792 750 R151

Factory overheads
Administration

Number of units
6 400 units 5 250 units
produced and sold
Break-even point 6 156 units 6 954 units

Selling price per unit R375 R365

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QUESTION 2: VAT AND INVENTORY VALUATION (45 marks; 35 minutes)

2.1 VAT

The information relates to Nomhle Traders. The business is registered for VAT.
The standard VAT rate is 15%. Nomhle also sells zero-rated goods.

REQUIRED:

Calculate the VAT amount that must be paid to SARS for the VAT period
ended 31 May 2022. (9)

INFORMATION:

A. Harry, the clerk, calculated the VAT amount due to SARS as R55 785.

However, he did not take the following into account:

(i) VAT on goods returned to suppliers R5 070

(ii) VAT on expenses paid R6 240
(iii) VAT on goods taken by Nomhle for personal use R5 400

B. VAT on discount allowed must also be taken into account. The total
discount allowed amounted to R18 860.

C. VAT on sales was incorrectly recorded. Certain goods with a selling

price of R31 200 (excluding VAT) should have been recorded as
zero-rated items.

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2.2 STOCK VALUATION

Pitten Sports Shop is owned by Milo Slav. The financial year ended on
28 February 2022.

The stock records of the following two products are provided:

 Mountain bikes
 Powdered energy drinks (1 kg tubs)

MOUNTAIN BIKES

The stock of mountain bikes is valued using the specific identification stock
valuation method.

REQUIRED:

2.2.1 Calculate the value of the closing stock on 28 February 2022, using
the specific identification method. (9)

2.2.2 A whistle-blower (informant) reported to Milo that he has evidence to

prove that the purchasing manager is stealing mountain bikes
purchased by the business.

An investigation revealed that 40 units of the King model, missing

from the stock records, was supplied to Easy Rides, a competitor.
There were no other stock shortages.

Explain TWO different examples of how the division of duties could

prevent an incident such as this from occurring again in the future. (4)

2.2.3 Provide TWO points that show that Milo and his customers are happy
with the quality of the Gama Bikes. Quote figures. (4)

INFORMATION:

Stock records of mountain bikes:

KING PALO GAMA

Units on hand: 1 March 2021 128 62 40
Units purchased during the year 400 250 220
Units returned to suppliers 54 2 0
Units sold 286 245 242
Units on hand: 28 February 2022 148 ? 18
Cost price per unit R4 500 R5 200 ?
Value of closing stock R666 000 ? ?

Selling price per unit R6 750 R7 800 R9 600

Total sales amount (in rands) R1 930 500 R1 911 000 R2 323 200
Mark-up % 50% 50% 60%

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POWDERED ENERGY DRINKS (1 kg TUBS)

The periodic inventory system and the first-in first-out (FIFO) stock valuation
method is applicable. These items have a shelf life of 66 days.

REQUIRED:

2.2.4 Calculate the value of the closing stock on 28 February 2022, using
the FIFO stock valuation method. (6)
2.2.5 Calculate the stockholding period (in days) on 28 February 2022. Use
the closing stock figure. (3)
2.2.6 Comment on your findings above. Provide TWO points, with figures.
Note that the stockholding period for 2021 was 58 days. (4)
2.2.7 Milo has noticed that some of the stock of energy drinks has
exceeded the shelf life (sell-by date). Identify the value of stock that
Milo is referring to. (2)

2.2.8 Milo wants to sell the outdated stock at half the cost price. What
advice would you offer him about this proposal? Provide TWO points. (4)
INFORMATION:
A. Stock of powdered energy drinks balances:

NUMBER OF TUBS
1 March 2021 130
28 February 2022 235

B. Purchases of powdered energy drinks during the financial year:

NUMBER UNIT PRICE CARRIAGE TOTAL
OF UNITS R R R
Apr.–Sept. 2021 550 420 4 400 235 400
Nov. 2021 330 460 2 640 154 440
Jan. 2022 180 475 1 440 86 940
TOTAL 1 060 8 480 476 780

C. Carriage on purchases:
The business pays MTY Transport a fixed rate of R8 per tub delivered to
the store.
D. Returns to suppliers:
30 damaged tubs from the January 2022 purchases were returned to the
supplier. The supplier reversed the total cost price paid, excluding
carriage on purchases.
E. Sales and cost of sales:
 925 units were sold.
 Cost of sales amounts to R404 140, after all adjustments were taken
into account.

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QUESTION 3: BUDGETING (45 marks; 35 minutes)

The information relates to JR Sanitisers (Pty) Ltd. The CEO is Juanita Rose.
James Peter is the bookkeeper.

REQUIRED:

3.1 Complete the Creditors' Payment Schedule for December 2022. (7)

3.2 Calculate missing figures (i) to (iii) in the Cash Budget. (10)

3.3 Refer to Information E and G.

3.3.1 Calculate the deposit that will be paid for the purchase of the
company vehicle during December 2022. (5)

3.3.2 Juanita is concerned about the cash position for December 2022.
She proposes moving the purchase of the vehicle to January 2023.

Use the table in the ANSWER BOOK to show the effect of this
proposal to the December 2022 Cash Budget. (6)

3.4 Refer to Information H.

Juanita is concerned about her decisions in October 2022 to adjust the

mark-up % and the amount actually spent on advertising. Provide TWO points
to indicate whether these were wise decisions or not. Quote figures and/or
calculations. (4)

3.5 Refer to Information H.

3.5.1 Explain why Juanita should be concerned about the actual amount
spent on repairs and maintenance during October 2022. Quote a
figure and/or a calculation. (2)

3.5.2 James feels that there has been a lack of control over the amounts
spent on delivery expenses and packing material. Explain whether
James' opinion is correct or not. Provide calculations. (8)

3.6 Juanita wants to use social media to create an on-line shopping platform to
increase her sales from January 2023. Name THREE additional payments that
must be included in the January 2023 budget. (3)

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INFORMATION:

A. Sales, cost of sales and debtors' collection:

OCTOBER NOVEMBER DECEMBER

Total sales R584 100 R643 500 R432 300
Cost of sales R354 000 R390 000 R262 000

 Cash sales comprise 30% of total sales.

 Debtors settle their accounts in the month following the month of sales.

B. Purchases of stock and payment to creditors:

 A base stock is maintained. Stock sold is replaced in the same month.
 Cash purchases comprise 15% of total purchases.
 Creditors are paid according to the following trend:
o 80% are paid in the month of purchases to receive a 5% discount.
o 20% are paid in the month after purchases.

C. Rent income:
 Storage space is rented at a fixed rate per square metre.
 An existing tenant occupies 60 m2. His lease expires on 30 June 2023.
 A new tenant has signed a lease agreement for the period 1 December 2022
to 30 November 2023. She will occupy a 75 m2 storage area.

D. Salaries:
 A new employee will be appointed from 1 December 2022. He will earn
R14 840 per month.
 All other employees will receive an increase of 4,5% p.a., effective from
1 December 2022.

E. Purchase of company vehicle for the CEO and insurance:

 A new company vehicle will be purchased on 1 December 2022. A deposit of
25% of the cost of the vehicle, excluding interest, will be paid on this date.
 The remaining balance will be paid in equal monthly instalments of R20 800
over 24 months, including interest, with effect from 31 December 2022.
 Interest calculated for the full two-year period is R45 600.
 The existing insurance premium will increase by the amount applicable to the
new company vehicle. It will also be payable at the end of each month, from
31 December 2022.

F. Delivery expenses:
Deliveries are outsourced to Aldo Deliveries. Delivery expenses are budgeted at a
fixed percentage of the monthly sales.

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G. Extract from Cash Budget:

NOV. 2022 DEC. 2022
RECEIPTS (R) (R)
Cash sales 193 050 129 690
Collections from debtors 408 870 (i)
Loan 400 000
Rent income 15 000 (ii)
TOTAL RECEIPTS
PAYMENTS
Cash purchase of stock 58 500 39 300
Payments to creditors 312 120 ?
Salaries (iii) 55 595
Purchase of vehicle: deposit - ?
Purchase of vehicle: monthly instalments - 20 800
Repairs and maintenance 30 000 30 000
Advertising 40 000 40 000
Delivery expenses (Aldo Deliveries) 38 610 25 938
Packing material 25 740 17 280
Insurance 6 500 9 700
Fuel for company vehicle - 7 500
Interest on loan 6 000 6 000
Dividends 190 000
Telephone, water and electricity
Sundry expenses
TOTAL PAYMENTS
CASH SURPLUS/DEFICIT 174 000 (120 000)
BANK (BEGINNING) (66 000) 108 000
BANK (END) 108 000 (12 000)

H. Budgeted and actual figures for October 2022:

BUDGET ACTUAL VARIANCE
Number of units sold 7 080 units 11 470 units + 4 390 units
Mark-up % 65% 45% -20%
Sales R584 100 R831 546 + R247 446
Cost of sales 354 000 573 480 + 219 480
Gross profit 230 100 258 066 + 27 966
Repairs and maintenance 30 000 8 000 – 22 000
Advertising 40 000 28 000 – 12 000
Delivery expenses (Aldo Deliveries) 35 046 42 896 + 7 850
Packing material 23 364 37 850 + 14 486

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QUESTION 4: BANK RECONCILIATION (25 marks, 20 minutes)

4.1 Indicate whether the following statements are TRUE or FALSE. Write only
'true' or 'false' next to the question numbers (4.1.1 to 4.1.3) in the ANSWER
BOOK.

4.1.1 Debit card fees form part of bank charges.

4.1.2 Interest on overdraft is recorded in the Cash Receipts Journal.

4.1.3 A debit balance on the Bank Statement reflects a favourable balance.

(3 x 1) (3)

4.2 BANK RECONCILIATION

The information provided relates to Surprise Stores. The business is owned by

Themba Zwane.
 Themba receives the official Bank Statement on the 26th day of each
month. He uses this to do the bank reconciliation.
 EFTs are renumbered according to date order.

REQUIRED:

4.2.1 Use the table provided in the ANSWER BOOK to calculate the final
totals of the Cash Journals on 31 July 2022. (10)

4.2.2 Calculate the correct bank balance in the ledger on 31 July 2022. (4)

4.2.3 Prepare the Bank Reconciliation Statement on 31 July 2022. (8)

INFORMATION:

A. On 1 July 2022, the Bank Account in the ledger reflected a favourable

balance of R53 800.

B. The Bank Reconciliation Statement prepared on 30 June 2022 showed

the following outstanding deposits and EFTs:

 Deposit dated 15 June 2022 R19 500

 Deposit dated 29 June 2022 R12 800
 EFT 297 R9 600
 EFT 298 R12 300

NOTE:
(i) The deposit on 15 June 2022 appeared on the July Bank
Statement as R15 500. An investigation revealed that the cashier
at that time has resigned. The outstanding amount must be written
off.
(ii) EFT 297 was correctly reflected as R6 900 on the July Bank
Statement.
(iii) The other outstanding amounts from the previous month appeared
on the July Bank Statement.

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C. Before receiving the July 2022 Bank Statement, the Cash Journals
reflected the following provisional totals:

CASH RECEIPTS JOURNAL CASH PAYMENTS JOURNAL

R101 200 R135 215

D. The following items on the July Bank Statement must still be recorded:

(i) A debit card payment of R1 400 for petrol for the business vehicle.
Themba neglected to submit the transaction document to the
bookkeeper.

(ii) The direct deposit received from debtor D Singwane, R5 800, in

settlement of his account of R6 000.

(iii) A debit order to Palm Insurers for the business insurance, R1 800.

(iv) A direct deposit of R72 000 from Unitech College. This is an error
on the statement as it does not apply to Surprise Stores. The bank
was notified of this error.

(v) Total bank charges, R825

(vi) Interest earned on savings account, R260

E. Entries in the Cash Journals after 26 July 2022:

 Deposit on 29 July 2022 R29 500

 EFT 350 to PN Stationers, dated 28 July 2022 R 4 200
 EFT 351 to PF Couriers, dated 30 July 2022 R 3 800

F. Bank Statement balance on 31 July 2022: R?

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TOTAL: 150

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GRADE 12 ACCOUNTING FINANCIAL INDICATOR FORMULA SHEET

Gross profit x 100 Gross profit x 100

Sales 1 Cost of sales 1

Net profit before tax x 100 Net profit after tax x 100
Sales 1 Sales 1

Operating expenses x 100 Operating profit x 100

Sales 1 Sales 1

Total assets : Total liabilities Current assets : Current liabilities

(Current assets – Inventories) : Current liabilities Non-current liabilities : Shareholders' equity

(Trade & other receivables + Cash & cash equivalents) : Current liabilities

Average trading stock x 365 Cost of sales .

Cost of sales 1 Average trading stock

Average debtors x 365 Average creditors x 365

Credit sales 1 Cost of sales 1

Net income after tax x 100

Net income after tax x 100 Number of issued shares 1
Average shareholders' equity 1
(*See note below)

Net income before tax + Interest on loans x 100

Average shareholders' equity + Average non-current liabilities 1

Shareholders' equity x 100 Dividends for the year x 100

Number of issued shares 1 Number of issued shares 1

Interim dividends x 100 Final dividends x 100

Number of issued shares 1 Number of issued shares 1

Dividends per share x 100 Dividends for the year x 100

Earnings per share 1 Net income after tax 1

Total fixed costs .

Selling price per unit – Variable costs per unit

NOTE:
* In this case, if there is a change in the number of issued shares during a financial year, the
weighted-average number of shares is used in practice.

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