POLYTECHNIC OF NAMIBIA

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1 POLYTECHNIC OF NAMIBIA SCHOOL OF MANAGEMENT SCIENCES DEPARTMENT: ACCOUNTING, ECONOMICS & FINANCE BACHELOR OF ACCOUNTING FINANCIAL ACCOUNTING 102 (FAC 512S) SECOND OPPORTUNITY EXAMINATION QUESTION PAPER Date: Duration: June Hours Total marks: 100 INSTRUCTIONS I NOTES 1. This examination consists of four (4) questions. 2. Answer ALL the questions and in ink. 3. Start each question on a new page in your answer booklet & show all your workings. 4. Queries 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 & any assumption made by the candidate should be clearly stated. 5. This paper consists of 7 pages excluding the cover page. EXAMINERS: D Kamotho, C Mahindi and Ms Z Stellmacher MODERATOR: E Mushonga

2 @ 19,700 Question 1 (20 marks) The following information was extracted from the accounting records of A Fourie for the year ended 31 December 2014: Bl a ances as a t 1 J anuary 2014 Debit Credit N$ N$ Receivables balances 142,760 11,200 Payables balances 4, ,450 During the year 2014, the following transactions took place: セ N$ Credit sales 1,150,000 Cash sales 11,000 Sales returns (all on credit) 74,000 Credit purchases 942,070 Purchases return (50 /o credit, 50o/o cash) 80,600 Cash received from receivables 985,200 Cash paid to payables 888,410 Discounts received 23,600 Discounts allowed Interest charged by payables for overdue accounts 5,470 Dishonoured cheque (included in cash receipts above) 2,170 Irrecoverable debts 24,860 Irrecoverable debts recovered (original write off included in irrecoverable 3,420 debts above) Contra entry between receivables and payables 9,750 Refunds from payables 2,190 Refunds to receivables 3,330 The following additional information as at 31 December 2014 is available: The total credit balance in the receivables ledger is N$9, 100. The total debit balance in the payables ledger is N$3,320 You are required to: a) Prepare the payables and receivables control accounts for A Fourie, for the year ended 31 December (16 Marks) b) Explain, in a memo format to be issued to an organization, two reasons why control accounts should be prepared on a regular basis. (4 Marks) [Total 20 Marks] 1

3 Question 2 (20 marks) H. Hamtela is a sole trader with a small business. The trial balance extracted as at 31 December 2014 failed to agree. The difference of N$29,970 debit was entered in a suspense account. A detailed examination of the books was undertaken and the following matters were uncovered: 1. A sales return of N$4, 120 has been credited to the sales returns account as N$1,420, the corresponding entry 1n the customer's account was correctly treated; 2. A totaling error was discovered in the purchases day book. As a result of the totaling error, the postings to the ledger were overcast by N$81 0; 3. A telephone bill of N$740 for November and December 2014 was found in the filing tray of the receptionist. No entry had been made of this. 4. N$7,670 paid to a payable, S. Smith has been correctly treated in the cash book and credited to PJ. Smith's account as N$6, Fixtures and fittings valued at N$420 were purchased during 2014 by cheque. The entry was correctly treated in the bank account and N$420 was debited to purchases. 6. H. Hamtela has been carrying out business through two rented properties. Due to a reduction in business activity he decided to reduce this down to one property and sub let the second property. N$1 0,000 was received from the sub tenant made up of N$8,000 rent for 2014 and N$2,000 of a security deposit. The only entry made of the transaction was to credit the bank with N$1 0, During 2014 H. Hamtela was unable to secure a bank overdraft from his financial institution. As a result he was forced to introduce N$6,500 from his own private resources into the business and borrow N$5,000 from his in-laws (this is to be treated as an interest free loan to H. Hamtela's business). The following entries were made: N$6,500 was debited in the bank and credited as cash sales. N$5,000 was credited to the bank and debited as drawings. (Ignore depreciation) 2

4 You are required to: a) Prepare the journal entries, with the appropriate narratives, necessary to correct the above errors. 13 Marks b) Prepare a suspense account to clear the difference. 2 Marks c) Prepare a working showing the effect on proprietor's profit (if any) of correcting each of the above errors. The proprietors profit pre accounting for the above entries was N$1, Marks [Total 20 Marks] 3

5 Question 3 (30 marks) EL WOOD Limited is a manufacturing company with an authorised share capital of N$2,000,000 comprising of ordinary shares only. The following trial balance was extracted from the books and records of the company as at 31 December DR CR N$'000 N$'000 Ordinary shares (of N$0.50 each) /o debentures (repayable in 2020) 2,590 Retained earnings at 1 January Revaluation reserve 240 Land 800 Freehold premises 1,575 Freehold premises accumulated depreciation 345 Plant and equipment 980 Plant and equipment accumulated depreciation 420 Motor vehicles Motor vehicles accumulated depreciation 145 Investments (not for re-sale) 660 Goodwill 520 Inventory at 31 Decem_ber Trade receivables 960 Trade payables 565 Prepayments 185 Allowance for receivables@ 1 January Corporation tax 360 Accruals 290 Retained profit for year 440 Cash at bank 130 Short-term investments 230 Note that the above amounts are in thousands "000"

6 Question 3 (Cont.) The following additional information was also available: i. The above trial balance has been arrived at after charging depreciation for the year. ii. The land was revalued downwards by N$60,000 however this has not yet been provided for in the above trial balance. The land had previously been revalued upwards giving rise to the revaluation reserve as shown in the Trial Balance. iii. Expenses for the year include irrecoverable debts of N$25,000. Following a review of the receivables listing, the Finance director has recommended that a further N$20,000 of specific receivables should be written off. The general allowance for receivables should be set at 10 /o of the final receivables figure. iv. During the year the company disposed of a machine which had cost N$160,000 and had a net book value of N$80,000 at the date of sale. The sale proceeds of N$65,000 were received on the final day of the accounting period i.e. on 31/12/2013. No entries have been made to record this sale. Required: (a) Prepare, in a form suitable for publication, the Statement of Financial Position for Elwood Limited for the year ended 31 December (30 marks) N.B. You are NOT required to prepare a statement of profit or loss; or notes to the accounts; however you are required to submit your workings to show the make-up of the figures in the Statement of Financial Position. 5

7 Question 4 (30 marks) Sarah and Haibodi are in partnership as manufacturers of high quality wheel-barrows, Sarah being responsible for the factory and Haibodi for sales. Completed wheel-barrows are transferred from the factory to the warehouse at agreed prices. Sarah and Haibodi are credited with 1/3 of the manufacturing profits and 1 Oo/o of the trading gross profit respectively and the balance of the firm's profit being shared equally. All wheel-barrows are sold at N$680 each. No interest is charged or credited on capital or drawing accounts of the partners. The following trial balance was extracted on 31st December 2014 Debits Credits N$ N$ Capital Account - Sarah 482,000 - Haibodi 507,600 Drawings Account - Sarah 96,000 - Haibodi 87,400 Freehold property (including land N$300,000) 708,800 Provision for depreciation, Freehold property, January 1, ,040 Factory plant, at cost 326,400 Provision for depreciation, plant as at January 1, ,160 Delivery van, at cost 82,000 Provision for depreciation, Delivery van, as at January 1, ,400 Inventory as at 01 January 2014,- Raw material 42,000 -Work in progress 40,200 -Wheel -barrows N$400 each) 536,800 Sales 1,237,600 Sales Returns 13,600 Purchase of raw material 291,600 PAYE 8,800 Factory wages 165,400 Office wages 48,000 Factory expenses 126,800 Office expenses 143,400 Provision for unrealised profit on inventory in warehouse, Jan 1, 48, Provision for doubtful debts 19,200 Debtors I Creditors 217, ,200 Bank overdraft ,926,000 6

8 Question 4 Cont. Additional information 1. 1,540 wheel-barrows were transferred to the warehouse during the year at N$480 ii. iii. each Wheelbarrows in inventory, being balance of the current year production, were valued at agreed price of N$480 each. The inventory of raw material was N$ 34,000 and work in progress was valued at N$53,600 Accrued expenses on 31/12/2014 amounted to N$62,400 (including for office expenses of N$32,800) and prepaid rates N$3,200 (including for office expenses N$1,200) iv. Provision for depreciation is to be made as follows a. Factory buildings- 2 /o p.a b. Factory plant- 10 /o p.a c. Motor Vehicles- 25 /o p.a v. Provision for doubtful debts is to be maintained at 10 /o of the trade debtors Required: a) Prepare a manufacturing statement for the year ended 31st December 2014 (10 marks) b) A trading, profit or loss and statement of changes in equity for the year ended 31st December 2014 and (9 marks) c) The statement of financial position as at 31st December 2014 for the partnership. (11 marks) [Tota/30 marks] END OF QUESTION PAPER 7

POLYTECHNIC OF NAMIBIA FIRST OPPORTUNITY

POLYTECHNIC OF NAMIBIA FIRST OPPORTUNITY POLYTECHNIC OF NAMIBIA SCHOOL OF MANAGEMENT SCIENCES DEPARTMENT: ACCOUNTING, ECONOMICS & FINANCE BACHELOR OF ACCOUNTING FINANCIAL ACCOUNTING 102 (FAC 5125) FIRST OPPORTUNITY EXAMINATION QUESTION PAPER