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za/matric

NATIONAL
SENIOR CERTIFICATE

GRADE 12

ACCOUNTING

FEBRUARY/MARCH 2014

MARKS: 300

TIME: 3 hours

This question paper consists of 24 pages and an 18-page answer book.

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Accounting 2 DBE/Feb.–Mar. 2014

NSC

INSTRUCTIONS AND INFORMATION

Read the following instructions carefully and follow them precisely.

1. Answer ALL the questions.

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

3. Workings must be shown in order to achieve part-marks.

4. Non-programmable calculators may be used.

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

6. Calculate to ONE decimal point.

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Accounting 3 DBE/Feb.–Mar. 2014

NSC

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

QUESTION 1: 30 marks: 18 minutes

Topic of the question: Learning outcomes covered:
LO1 Financial accounting
AS1 Concepts
AS7 Apply principles of VAT
Concepts, inventory valuation
LO3 Managing resources
and VAT
AS4 Validate and calculate inventories – FIFO and
weighted average
AS6 Apply internal control

QUESTION 2: 35 marks; 21 minutes

Topic of the question: Learning outcomes covered:
LO1 Financial accounting
Bank Reconciliation, internal AS4 Reconciliation and interpretation
control and Debtors' Age Analysis LO3 Managing resources
AS6 Apply internal control and audit processes

QUESTION 3: 75 marks; 45 minutes

Topic of the question: Learning outcomes covered:
LO2 Managerial accounting
AS5 Financial statements
Income Statement and notes to
AS5 Notes to financial statements
the Balance Sheet
LO3 Managing resources
AS3 Asset disposal

QUESTION 4: 70 marks; 42 minutes

Topic of the question: Learning outcomes covered:
LO1 Financial accounting
Cash Flow Statement,
AS1 Concepts
interpretation and audit report
AS5 Financial statements

QUESTION 5: 50 marks; 30 minutes

Topic of the question: Learning outcomes covered:
LO2 Managerial accounting
AS1 Concepts
AS2 Production Cost Statement
Manufacturing
Unit costs and break-even point
LO3 Managing resources
AS6 Apply internal control and audit processes

QUESTION 6: 40 marks; 24 minutes

Topic of the question: Learning outcomes covered:
LO2 Financial accounting
AS3 Analyse and interpret a Cash Budget and
Cash Budget, Projected Income
Projected Income Statement
Statement and internal control
LO3 Managing resources
AS6 Apply internal control

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Accounting 4 DBE/Feb.–Mar. 2014

NSC

QUESTION 1: CONCEPTS, INVENTORY VALUATION AND VAT

(30 marks; 18 minutes)

1.1 CONCEPTS

Give ONE word/term for each of the following descriptions by choosing a

word/term from the list below. Write only the word/term next to the question
number (1.1.1–1.1.3) in the ANSWER BOOK.

perpetual inventory system; periodic inventory system; VAT exempt;

zero-rated VAT; VAT vendor; first in first out

1.1.1 Cost of sale is determined at the point of sale. (2)

1.1.2 VAT cannot be charged on an item as per government legislation,

for example interest is not subject to VAT. (2)

1.1.3 VAT is not charged on these products but can be introduced by the
Minister of Finance, if necessary, for example brown bread, fruit
and vegetables. (2)

1.2 INVENTORY VALUATION

You are provided with information relating to All-Bright Traders. The business
is owned by Jakob Mthemba. He sells a single brand of washing powder in
boxes. The financial year ends on 31 May 2013. The weighted-average
method is used to value stock.

REQUIRED

1.2.1 Calculate the following on 31 May 2013:

• Weighted-average value per box (5)

• Value of the closing stock (3)
• Number of boxes of washing powder missing (4)

1.2.2 Jakob has determined that the missing items have been stolen by
the clerk who places the orders and receives the goods from
suppliers. Jakob has dismissed this employee.

• Division of duties plays an important part in preventing this

problem. Explain how Jakob should implement this in the
business with regard to stock. (2)

• Name ONE other strategy he could use and explain how he

should implement this strategy. (2)

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Accounting 5 DBE/Feb.–Mar. 2014

NSC

INFORMATION FOR THE YEAR ENDED 31 MAY 2013:

CARRIAGE
NUMBER VALUE TOTAL
ON
OF ITEMS PER ITEM VALUE
PURCHASES
Stock on hand on 1 June 2012 3 800 R107 500
Purchases: 19 250 R768 400
14 August 2012 5 750 R35 R3 750 R205 000
10 December 2012 7 500 R42 R4 400 R319 400
22 March 2013 6 000 R40 R4 000 R244 000

Sales 18 800 R60 R1 128 000

Stock on hand on 31 May 2013 3 350 ?

1.3 VAT

The following information was extracted from the accounting records of

Manhattan Traders. All goods bought and sold are subject to the standard
rate of VAT (14%). Manhattan Traders is registered for VAT on the invoice
basis.

REQUIRED

1.3.1 Choose the correct answer in brackets.

If VAT input is greater than VAT output, SARS for VAT will be
shown in the financial statements as a Trade and Other
(Payable/Receivable). (2)

1.3.2 The credit sales for October 2013 amounted to R120 000
(excluding VAT). Calculate the amount of VAT on the credit sales. (2)

1.3.3 The total of the debit notes issued to suppliers for merchandise
returned to creditors indicates VAT of R1 120. Determine the VAT-
exclusive amount that must be posted to the Trading Stock
Account. (2)

1.3.4 Calculate the VAT paid if the total cash purchases for
October 2013 was R159 600 (including VAT). (2)

30

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Accounting 6 DBE/Feb.–Mar. 2014

NSC

QUESTION 2: BANK RECONCILIATION STATEMENT, INTERNAL CONTROL

AND DEBTORS' AGE ANALYSIS
(35 marks; 21 minutes)

2.1 BANK RECONCILIATION STATEMENT AND INTERNAL CONTROL

You are provided with information relating to Remington Traders.

The financial year ends on 31 August 2013. All monies received are
deposited by Angel Workright. Angel has been in charge of daily deposits for
the past four years.

REQUIRED

2.1.1 Identify the items and the amounts that must be entered in the
Cash Receipts Journal (CRJ) and the Cash Payments Journal
(CPJ) for August 2013. List only the item number and the amount.
Do NOT give totals for each journal. (10)

2.1.2 Prepare the Bank Reconciliation Statement on 31 August 2013. (13)

2.1.3 It is clear that the business is not controlling its cash properly. What
specific problems will the internal auditor include in his report?
Explain TWO of these problems, providing figures to support your
explanation, and give a possible solution for each. Dismissal of
employees is not an option at this stage. (6)

INFORMATION

1. The following items appeared in the Bank Reconciliation Statement on

31 July 2013, the end of the previous month:

Favourable balance as per Bank Statement 74 000

Outstanding deposits:
• Dated 16 July 2013 21 500
• Dated 27 July 2013 34 800
Outstanding cheques:
• 1034 (dated 17 February 2013) 2 000
• 2372 (dated 31 July 2013) 56 000
• 2395 (dated 14 August 2013) 15 000
Favourable balance as per bank account 57 300

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Accounting 7 DBE/Feb.–Mar. 2014

NSC

2. On comparing the August 2013 Bank Statement received from

Star Bank with the relevant accounting records of the business, the following
were noted:
Item 1 The outstanding deposit of R34 800 (dated 27 July 2013)
appeared on the Bank Statement for August 2013.

Item 2 Angel Workright informed the business that she had been robbed
on her way to the bank with a deposit of R21 500 (dated
16 July 2013). The matter was referred to the local police. None of
the funds have been recovered.

Item 3 Of the outstanding cheques on the July Bank Reconciliation

Statement, only cheque No. 2372 appears on the Bank Statement
for August 2013. Cheque No. 1034 was issued as a donation.

Item 4 Bank charges of R620 appeared on the Bank Statement for

August 2013 but not in the journals.

Item 5 The Bank Statement for August 2013 reflected a dishonoured

cheque of R8 000. This cheque was originally received from
F Frost, a debtor, in settlement of his account of R8 150.

Item 6 Interest of R540 was credited on the Bank Statement for

August 2013. It has not been entered in the relevant journal.

Item 7 Commission income of R14 000 was deposited directly into the
current banking account of Remington Traders by Cute Cellulites.
It appeared on the Bank Statement for August 2013 but not in
the journals.

Item 8 Cheque No. 2412 was issued in favour of Redbro Suppliers, a

creditor, during August 2013. It appeared correctly on the Bank
Statement for August 2013 as R16 200. It was recorded incorrectly
in the journal as R12 600.

Item 9 A sundry debit entry of R300 appeared on the Bank Statement on

21 August 2013. This item was queried at the bank. Remington
Traders was informed by the bank that this was a mistake and
they would reverse this item on the September 2013 Bank
Statement.

Item 10 The following cheques appeared in the August 2013 CPJ but not
on the August 2013 Bank Statement:
• Cheque No. 2418 (dated 25 August 2013), R8 450
• Cheque No. 2420 (dated 28 October 2013), R12 000

Item 11 Two deposits appear only in the Cash Receipts Journal and not on
the Bank Statement:
• A deposit of R15 600, dated 26 August 2013
• A deposit of R18 000, dated 28 August 2013

Item 12 The Bank Statement closed off with a favourable balance of

R42 000 on 31 August 2013.
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Accounting 8 DBE/Feb.–Mar. 2014

NSC

2.2 DEBTORS' AGE ANALYSIS

Anna's Fashion Boutique sells 80% of their ladies' fashion wear on credit.
Their credit terms are strictly 30 days. The business pays cash for its stock.
Study the information given below and answer the questions that follow.

INFORMATION

The age analysis of debtors extracted at the end of January 2014 showed
the following:

More than
60 days 30 days Current month
60 days
R28 200 R42 300 R14 100 R9 400
30% 45% 15% 10%

REQUIRED

2.2.1 The business is not controlling its debtors effectively. Give ONE
reason why you would agree with this statement. Refer to figures in
your answer. (2)

2.2.2 Anna is of the opinion that her debtors' clerk does not screen
(check) customers properly before they start buying on credit from
her business.

Give TWO strategies that the debtors' clerk should follow before
allowing customers to open accounts. (4)

35

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Accounting 9 DBE/Feb.–Mar. 2014

NSC

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Accounting 10 DBE/Feb.–Mar. 2014

NSC

QUESTION 3: INCOME STATEMENT AND NOTES TO THE BALANCE SHEET

(75 marks; 45 minutes)

You are provided with information relating to Pearl Limited for the financial year ended
31 December 2013. Pearl Limited buys and sells ornaments and flower vases.

REQUIRED

3.1 Complete the Income Statement for the year ended 31 December 2013. (46)

3.2 Complete the Fixed Assets note (Vehicles only) to the Balance Sheet on
31 December 2013. (5)

3.3 Prepare the note for Trade and Other Payables on 31 December 2013. (24)

INFORMATION

EXTRACT FROM THE TRIAL BALANCE ON 31 DECEMBER 2013

Balance sheet accounts section R
Ordinary share capital (R2,00 par value) 3 000 000
Retained income (1 January 2013) 314 000
Loan: Helpu Bank 270 400
Vehicle 407 000
Equipment 616 000
Accumulated depreciation: Vehicle 147 400
Accumulated depreciation: Equipment 341 000
Debtors' control 63 190
Creditors' control 43 400
Provision for bad debts 3 450
Trading stock 138 000
SARS: Income tax (Dr) 224 000
SARS: PAYE 14 100
Unemployment insurance fund (UIF) 1 300
Pension fund 14 500
Nominal accounts section
Sales 4 220 700
Cost of sales 1 100 720
Profit on sale of asset 12 500
Sundry expenses ?
Bank charges 6 000
Audit fees 45 000
Directors' fees 432 000
Salaries and wages 940 000
Employer's contribution (for UIF and pension fund) 103 400
Rent expense 63 360
Interest on current account 680
Bad debts 2 790
Depreciation (on vehicle sold) 13 750
Ordinary share dividends (interim) 96 000
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Accounting 11 DBE/Feb.–Mar. 2014

NSC

ADJUSTMENTS AND ADDITIONAL INFORMATION

1. On 28 December 2013 L Payne, a debtor, returned damaged ornaments.

The selling price was R850 and the mark-up was 25% on cost price.
The goods were immediately sent to the supplier, who issued a credit note.
No entries have been made in the books.

2. The insolvent estate of L Nkosi paid out 40 cents in the rand and
transferred R360 directly into the bank account of Pearl Ltd on
5 December 2013. This has been recorded. The rest of his outstanding
balance must be written off and the provision for bad debts must be adjusted
to R3 090.

3. Trading stock comprises ornaments and vases. On 31 December 2013

a physical count revealed stock of ornaments on hand valued at R82 000.

The physical count revealed 90 vases on hand. Vases are valued on the
FIFO method. You are provided with the following information:

Total Cost price

vases per vase
Opening stock 40 vases R545
Purchases:
31 May 2013 160 vases R550
30 November 2013 72 vases R525
Closing stock 90 vases

4. The company has paid their TWO directors up to 30 June 2013. Both earn
the same fees. A THIRD director was appointed on 1 October 2013 on
the same monthly rate as the other two directors. His director's fees have
not been paid yet. Provide for the total outstanding directors' fees.

5. An employee was left out of the Salaries Journal for December 2013.
The details on his payslip were as follows:

Gross Deductions Contribution Net

Salary PAYE UIF Pension UIF Pension salary
fund fund
? 1 600 90 630 90 ? R6 680

The employees contribute 7% of their gross salary to the pension fund and
the employer 10%. The UIF deduction is 1% of their gross salary.

6. Interest on a loan was capitalised but has not yet been entered. The loan
statement from Helpu Bank on 31 December 2013 reflects the following:

HELPU BANK: Loan statement on 31 December 2013

Balance on 1 January 2013 R320 800
Interest charged ?
Repayments to Helpu Bank during the year R50 400
Balance on 31 December 2013 R310 000

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Accounting 12 DBE/Feb.–Mar. 2014

NSC

7. Rent expense was increased by 10% on 1 December 2013. The rent for
January 2014 has already been paid.

8. On 31 October 2013 an old vehicle was sold for R48 250 in cash. All details
relating to the asset sold have been properly entered in the books. The details
from the Fixed Asset Register are as follows:

• Cost price, R82 500

• Accumulated depreciation at date of sale, R46 750

Provide for depreciation as follows:

• On equipment, at 10% p.a. on the diminishing-balance method. Take

into account that new equipment was bought for R90 000 on
1 September 2013. This transaction was recorded properly.
• The depreciation on the remaining vehicle amounts to R81 400 on
31 December 2013.

9. 300 000 new shares were issued and recorded on 1 December 2013. These
shares do not qualify for dividends in 2013. Final dividends of 7c per share
were declared by the directors at year end.

10. Income tax for the year amounts to R240 000. This is 30% of the net profit
before tax.

11. Note that the sundry expenses amount is the missing figure in the Income
Statement.

75

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Accounting 13 DBE/Feb.–Mar. 2014

NSC

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Accounting 14 DBE/Feb.–Mar. 2014

NSC

QUESTION 4: CASH FLOW STATEMENT, INTERPRETATION AND AUDIT REPORT

(70 marks; 42 minutes)
4.1 Indicate whether the following statements are TRUE or FALSE. Write only
'true' or 'false' next to the question number (4.1.1–4.1.4) in the ANSWER
BOOK.
4.1.1 The directors are responsible for preparing the financial statements
of a company. (2)
4.1.2 Depreciation is added back into the Cash Flow Statement, as it is
regarded as a 'non-cash' expense. (2)
4.1.3 The creditors' payment period is an example of a financial indicator
affecting liquidity. (2)
4.1.4 The external auditor prepares relevant control measures for
accounting procedures and ensures that they are followed. (2)
4.2 You are provided with information relating to Bongi Limited, a public company.
REQUIRED
4.2.1 Complete the note to show the cash generated from operations. (8)
4.2.2 Calculate the following amounts that will appear in the Cash Flow
Statement for the year ended 30 June 2013:
• Taxation paid (4)
• Dividends paid (4)
• Fixed assets purchased (5)
4.2.3 Calculate the following financial indicators on 30 June 2013:
• Solvency ratio (5)
• Acid test ratio (4)
• Return on average capital employed (ROTCE; use net profit
before tax in your calculation.) (5)
4.2.4 The CEO, Gus Logie, currently owns 45% of the issued shares.
The board of directors has decided to issue all the unissued shares
in July 2013.
• Calculate the minimum number of shares Gus must buy in
July 2013 to gain control of the company. (4)
• Gus wants to purchase the additional shares at R8,00 without
advertising the shares to the public. Give TWO reasons why you
would not approve of this arrangement. (4)
4.2.5 One of the directors believes that the company should also make
use of loans in the new financial year. Quote TWO financial
indicators (with figures) and explain each indicator to support her
opinion. (4)
4.2.6 The directors are of the opinion that the liquidity has deteriorated.
Quote THREE financial indicators (with figures) to support this
opinion. (6)
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Accounting 15 DBE/Feb.–Mar. 2014

NSC

INFORMATION

1. Information extracted from the Income Statement on 30 June 2013:

Depreciation 200 000
Interest on loan 36 000
Net profit before tax 980 000
Income tax 294 000

2. Information from the Balance Sheet on 30 June 2013:

Notes 2013 2012
Fixed assets (at carrying value) 3 350 000 2 000 000

Current assets 458 400 588 000

Inventories 316 900 239 100
Trade and other receivables 1 137 500 194 900
Cash and cash equivalents 4 000 154 000

3 808 400 2 588 000

Shareholders' equity 2 904 000 1 630 000

Ordinary share capital 1 200 000 1 000 000
Share premium 850 000 250 000
Retained income 854 000 380 000

Loan: Star Bank (9% p.a.) 400 000 560 000

Current liabilities 504 400 398 000

Trade and other payables 2 390 400 398 000
Bank overdraft 114 000 -

3 808 400 2 588 000

Note 1: Trade and other receivables 2013 2012

Trade debtors 137 000 186 000
Income receivable 500 –
SARS: Income tax – 8 900
137 500 194 900

Note 2: Trade and other payables 2013 2012

Trade creditors 246 000 325 000
Expenses payable – 3 000
SARS: Income tax 12 400 –
Shareholders for dividends 132 000 70 000
390 400 398 000

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Accounting 16 DBE/Feb.–Mar. 2014

NSC

3. Additional information

• The company is registered as a public company with an authorised

share capital of 450 000 ordinary shares at par value of R5,00 each.

• New shares were issued on 1 February 2013.

• Dividends were as follows:

Final dividend on 30 June 2012 35 cents per share

Interim dividend on 31 December 2012 40 cents per share
Final dividend on 30 June 2013 55 cents per share

• Fixed assets were sold for cash at carrying value of R165 000
during the financial year. Fixed assets were also purchased during
the financial year.

4. The following financial indicators were calculated for the past two
financial years:

2013 2012
Solvency ratio ? 2,7 : 1
Current ratio 0,9 : 1 1,5 : 1
Acid test ratio ? 0,9 : 1
Debtors' collection period 21 days 28 days
Creditors' payment period 30 days 30 days
Stock turnover rate 8 times 15 times
Debt-equity ratio 0,1 : 1 0,3 : 1
Return on average capital employed (ROTCE) ? 22%
Net asset value per share (NAV) 1 210 cents 815 cents
Earnings per share (EPS) 286 cents 234 cents
Market price 1 450 cents 1 230 cents
Current rate of borrowing 9% 9%
Current rate of investing 6% 6%

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Accounting 17 DBE/Feb.–Mar. 2014

NSC

4.3 AUDIT REPORT

The following audit report was issued by the auditors of Bongi Limited for the
financial year ending 30 June 2012:

Audit opinion

In our opinion, the financial statements fairly present, in all material respects,
the financial position of the company at 30 June 2012 and the results of their
operations and cash flow for the year ended in accordance with International
Financial Reporting Standards, and in the manner required by the Companies
Act of South Africa.

Tshabalala & Associates

Chartered accountants (SA)
Registered accountants and auditors

31 October 2012

REQUIRED:

4.3.1 Is the audit report presented by Tshabalala & Associates regarded

as a qualified report, a disclaimer of opinion report or an
unqualified report? Give ONE reason. (2)

4.3.2 Explain why the Companies Act makes it a requirement for public
companies to be audited by an independent auditor. Give ONE
reason. (2)

4.3.3 To whom is this audit report addressed? Give ONE reason. (2)

4.3.4 Senzo Tshabalala, a senior partner in Tshabalala & Associates,

wants to purchase shares in Bongi Limited, as he regards it as an
excellent investment opportunity. What advice would you offer
Senzo? Explain. (3)

70

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Accounting 18 DBE/Feb.–Mar. 2014

NSC

QUESTION 5: MANUFACTURING (50 marks; 30 minutes)

5.1 COST CONCEPTS

REQUIRED

Choose an item from COLUMN B that matches the term in COLUMN A. Write
only the letter (A–D) next to the question number (5.1.1–5.1.3) in the
ANSWER BOOK.

COLUMN A COLUMN B
5.1.1 Indirect labour A cleaning detergents used in the factory

5.1.2 Indirect material B raw material stock issued to the factory

to be used in production
5.1.3 Direct material
C stationery used in the office

D salary paid to the factory foreman (6)

5.2 PRODUCTION COST STATEMENT

You are provided with information relating to Mountain View Manufacturers for
the financial year ended 30 June 2013. The business produces sports bags
and sells them at a mark-up of 40% on cost.
REQUIRED

5.2.1 Complete the note for Factory Overhead Costs. (12)

5.2.2 Prepare the Production Cost Statement for the year ended
30 June 2013. Where notes are not required, provide workings in
brackets. (17)

INFORMATION

1. Stock balances: 30 June 2013 1 July 2012

Raw material stock 56 700 42 400
Work-in-process stock 33 000 43 300

2. Transactions during the year

Raw materials purchased (cash and credit) 1 182 500
Cost of transporting raw materials to the factory 24 100
Unsatisfactory raw materials returned to suppliers 32 800
Water and electricity paid 137 000
Rent expense paid 296 000
Advertising expense 25 500
Insurance paid 30 000
Maintenance on factory plant and machinery 19 404
Depreciation on factory plant and machinery 32 390
Salaries and wages (See Information 4 below) ?
Commission paid to sales staff 57 550

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Accounting 19 DBE/Feb.–Mar. 2014

NSC

3. Additional Information

• Factory indirect materials were bought for R35 360. Of this amount,
R35 730 was used in the factory.

• Water and electricity must be split between the factory and the sales
department in the ratio 3 : 1.

• 70% of the insurance expense relates to factory plant and

equipment.

• Rent expense is allocated across the various departments

according to floor space. The floor space is as follows:

Factory 1 800 square metres

Sales department 900 square metres
Office block 300 square metres

4. Salaries and wages

Salary and wages must be allocated to the Cost Account applicable to

the specific employees. All employees are paid for 12 months or
52 weeks.

EMPLOYEES IN FACTORY
FACTORY OFFICE
EMPLOYEES PRODUCTION CLEANING
FOREMAN CLERK
PROCESS STAFF
Number of
7 1 1 1
employees
R5 500
Basic salary/wage R6 400 R9 500 per R950
per
per employee per month month per week
month
Overtime hours
worked by each 130 hours
employee in the year
Overtime rate per
R57 per hour
hour

10% of basic
Bonus 13th cheque 13th cheque
annual wage

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Accounting 20 DBE/Feb.–Mar. 2014

NSC

5.3 UNIT COSTS AND BREAK-EVEN POINT

Stormers Manufacturers is a small business that manufactures rugby shirts

which are sold to supporters. Their financial year ended on 31 August 2013.

REQUIRED:

5.3.1 Calculate the following:

• Direct material cost per unit, indicated by (a) in the table in

Information 3 below (2)
• Factory overhead cost, indicated by (b) in the table in Information 3
below (2)

5.3.2 Other than price changes, give a possible reason for the change in unit
costs in each of the following cases:

• Direct material cost per unit (2)

• Factory overhead cost per unit (2)

5.3.3 Calculate the break-even point for the year ended 31 August 2013.
The break-even point for the previous year was 23 064 units. (4)

5.3.4 Explain whether the business should be satisfied with the level of
production achieved. Mention the break-even point in your explanation. (3)

INFORMATION:

1. During the financial year ended 31 August 2013, the business made and
sold 42 000 shirts. Shirts are sold at a fixed price of R60,00 each.

2. All the shirts were sold. There was no work-in-process at the beginning or
end of the financial year.

3. The following costs were identified. Some unit costs are also given.

Year ended 31 August 2013 31 August 2012

Units produced and sold 42 000 30 000
TOTAL UNIT UNIT
COSTS COSTS COSTS
Variable costs R1 722 000
Direct material R756 000 (a) R21,80
Direct labour R651 000 R15,50 R12,75
Selling and distribution R315 000 R7,50 R7,80

Fixed costs R567 000

Factory overheads (b) R9,00 R11,75
Administration ? R4,50 R4,70

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Accounting 21 DBE/Feb.–Mar. 2014

NSC

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Accounting 22 DBE/Feb.–Mar. 2014

NSC

QUESTION 6: CASH BUDGET, PROJECTED INCOME STATEMENT AND

INTERNAL CONTROL (40 marks; 24 minutes)
6.1 CASH BUDGET AND PROJECTED INCOME STATEMENT
You are provided with information relating to Busy Bazaar for the period
ending 31 May 2014.
Complete the table in the ANSWER BOOK by filling in only the amounts in
the appropriate columns.
EXAMPLE: The tenant will pay monthly rent of R6 000.
Amount in the Amount in the Projected
No. Cash Budget for May 2014 Income Statement for May 2014
RECEIPT PAYMENT INCOME EXPENSE
Example R6 000 R6 000
6.1.1 The expected monthly telephone cost is R1 800.

6.1.2 Depreciation for the 2014 financial year will be R7 800.

6.1.3 Expected cash sales for May 2014 amount to R52 000 (cost of
sales: R30 000).

6.1.4 Payments by cheque to creditors during May 2014 are expected to

be R34 000. Discount of R1 700 will be claimed. (8)

6.2 CASH BUDGET

Molly Pillay owns Flash Transport, a business which offers a delivery service
to various suppliers on the KwaZulu-Natal South Coast.
You are provided with an extract from the Cash Budget for the period
1 April 2014 to 31 May 2014.
REQUIRED
6.2.1 Complete the Debtors' Collection Schedule for May 2014. (5)
6.2.2 Refer to the Cash Budget in Information 1 below.
Calculate the following:
• The amounts indicated by A to D. (For A and B, refer to
Information 4 below.) (6)
• The amount of the loan on 1 April 2014 (3)
• The percentage increase in salaries on 1 May 2014 (3)
6.2.3 At the end of April 2014, the following actual figures were identified
and compared to the budgeted figures. Explain what you would
mention to Molly about each of the items listed below and give
ONE point of advice in each case.
APRIL 2014
BUDGETED ACTUAL
Fuel (petrol) 75 000 87 500
Collection from debtors 152 600 126 450
Advertising 250 250 (6)
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Accounting 23 DBE/Feb.–Mar. 2014

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INFORMATION

1. FLASH TRANSPORT
EXTRACT FROM THE CASH BUDGET FOR THE PERIOD
1 APRIL 2014 TO 31 MAY 2014

APRIL MAY
CASH RECEIPTS
Fee income from cash customers
Collection from debtors 152 600
Rent income 6 540 A
Commission income
Investment maturing on 2 April 2014 100 000 -
Interest on investment 6 000 -
TOTAL RECEIPTS 422 000 310 000

CASH PAYMENTS
Fuel (petrol) B 90 000
Insurance 6 400 8 500
Salaries 46 500 50 220
Telephone
Advertising 250 250
Purchase of vehicles (2 x R100 000) - 200 000
Drawings 15 000 15 000
Maintenance 17 800 19 135
Sundry expenses
Interest on loan (11% p.a.) 4 400 4 400
TOTAL PAYMENTS 195 300 418 200
SURPLUS/SHORTFALL 226 700 C
Cash at beginning of the month 53 300 ?
Cash at the end of the month 280 000 D

2. Molly does deliveries of parts to certain suppliers, on credit.

Services rendered to clients on credit are as follows:

March (actual) R140 000

April (budgeted) R200 000
May (budgeted) R280 000

3. Debtors are expected to pay as follows:

• 35% of debtors settle their accounts during the transaction month to

benefit from a 2% discount for prompt payment.
• 60% settle accounts in the month following the transaction month.
• 5% is written off thereafter.

4. With effect from 1 May 2014, the budget for rent income will increase
by 10% and that of fuel will increase by 20%.
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Accounting 24 DBE/Feb.–Mar. 2014

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6.3 INTERNAL CONTROL

Candice Booysen runs a tuck shop at a primary school. She employs learners
to assist her in serving at the tuck shop during breaks. Candice sells fruit
juice, chips and chocolates in her tuck shop.

REQUIRED

Identify a problem that Candice is experiencing concerning each of her

products. State a different problem for each product. You must quote figures
to support your answer. Give a suitable solution to each problem identified. (9)

INFORMATION FOR NOVEMBER 2013

FRUIT JUICE CHIPS CHOCOLATES

(500 mℓ) (30 g packets) (100 g bars)
Opening stock Nil 700 units 20 units
Number of items bought during
5 000 units 3 160 units 400 units
the month
Number of items sold during
4 935 units 3 100 units 335 units
the month
Closing stock per physical
62 units 758 units 30 units
count
Damaged stock written off 3 2 20
Selling price per unit R6,00 R11,00 R9,00
Cash collected R28 800 R34 100 R2 835
Mark-up percentage on cost 40% 75% 25%

40

TOTAL: 300

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