ACCOUNTING
GRADE 12 
NSC PAST PAPERS AND MEMOS
SEPTEMBER 2017

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. Show ALL workings to earn part-marks. 
4. You may use a non-programmable calculator.
5. You may use a dark pencil or black/blue ink to answer the questions.
6. Where applicable, show all calculations to ONE decimal place.
7. A breakdown of the questions is provided. You must attempt to comply with  the suggested time allocation for each question.

QUESTIONS

QUESTION 1: RECONCILIATIONS (40 marks; 25 minutes) 
1.1 Choose the correct answer from the words provided within brackets. Write only  the answer, next to each number (1.1.1–1.1.4) in the ANSWER BOOK. 

1.1.1 A stale cheque, one that is more than 6 months old, must be cancelled  in the (Cash Receipts Journal/Cash Payments Journal). 
1.1.2 A (debit/credit) balance on the bank statement indicates an overdraft.  
1.1.3 A (debit note/credit note) is the source document for goods returned  by a debtor. 
1.1.4 A (cash discount/trade discount) is offered when accounts are settled  within a certain time. (4) 

1.2 DEBTORS RECONCILIATION AND AGE ANALYSIS 
The information below, relates to JT Traders for June 2017. 
REQUIRED: 

1.2.1 Calculate the correct Debtors Control balance on 30 June 2017. (4) 
1.2.2 Calculate the correct balances for the debtors listed in the ANSWER  BOOK. (12) 
1.2.3 Refer to the Age Analysis (Information C): 

• • Calculate the percentage of debtors that are not complying with the  30 days credit terms. (3)
  • Explain TWO internal control measures that JT Traders can use to  ensure that only reliable clients are granted credit. (4) 

INFORMATION: 
A. Balances on 30 June 2017 (before errors and omissions): 

B. Errors and omissions discovered: 

1. The Debtors Journal was overcast by R3 500. 
2.  An allowance of R800 granted to Pillai for damaged goods  dispatched was entered in the wrong side of her account. 
3. Goods sold on credit to Botha for R6 300 was posted incorrectly to  his account as R3 600. Posting to the General Ledger was correct.
4. A cheque for R2 500 received from Tele was recorded in the  account of Bosman in error.
5. A cheque for R4 230 received from Pillai was returned by the bank  marked “R/D – insufficient funds”. A discount of R270 was granted  when this cheque was received. This has not yet been recorded.

C. DEBTORS AGE ANALYSIS 

Debtors are allowed 30 days to settle their accounts. 

1.3 CREDITORS RECONCILIATION 
Marge Traders buys goods on credit from Simpson Suppliers. The information  presented is for July 2017. 
REQUIRED: 

• Reconcile the Creditors Ledger account of Simpson Suppliers in the books of  Marge Traders with the statement received.
• Commence with the opening balances as provided in the ANSWER BOOK. (13)

INFORMATION: 
A. Creditors Ledger of Marge Traders 
Simpson Suppliers (CL6) 

B. Statement received from Simpson Suppliers 

C. Differences noted: 

1. Invoice No. 443 was recorded incorrectly in the creditors ledger. 
2. The statement did not reflect the discount for early payment on the  10th. This will be rectified on the next statement.
3. It was discovered that Invoice No. 568 on the statement included  goods valued at R1 000 ordered by the warehouse manager. The  manager is facing disciplinary action.
4. Goods valued at R980 were returned on the 18th. It is shown as a  debit entry in both the creditor’s ledger account as well as the  statement of account. 
5. Invoice No. 772 on the statement was for goods sold to a different business. This will be corrected on the next statement. 
6. The statement was received on 25 July 2017. 

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QUESTION 2: INVENTORY VALUATION (40 marks; 25 minutes) 
2.1 Choose the stock system/method from the list provided, that is best described by  each of the statements below. Write only the stock system/method next to each  number (2.1.1–2.1.5) in the ANSWER BOOK. 

2.1.1 Similar value, low cost stock items are valued by taking into account the  total cost of the items divided by the number of items available for sale. 
2.1.2 The closing stock value of goods is determined by assuming that the goods  bought first, are sold first. 
2.1.3 Cost of sales is recorded at the point of sale and stock records are adjusted  accordingly. 
2.1.4 The closing stock figure to be used to calculate the cost of sales, is  determined by a physical stock count at the end of an accounting period. 
2.1.5 Sales and cost of sales records are maintained for the individual items sold  due to these being high value goods. (5) 

2.2 COMRADES LTD 
Comrades Ltd sells sporting equipment. The information relates to the tracksuits  and vests departments for the financial year ended 30 April 2017. 

REQUIRED: 

2.2.1 Calculate the selling price per unit for tracksuits. (2)
2.2.2 Calculate the cost of sales of tracksuits using the FIFO method. (7)
2.2.3 Calculate the stock turnover rate of tracksuits (use the average stock). (5) 
2.2.4 It was discovered that vests were missing from the June 2016 delivery.  Calculate the number and value of the missing vests. (7) 
2.2.5 Calculate the Gross Profit made by the vests department. Note that this  department uses the weighted average method to value stock. (8) 
2.2.6 The owner is not satisfied with the performance of the vests department.  Identify TWO problems, other than the missing vests, in this department.  Quote figures. In each case, provide a solution to the problem. (6)

INFORMATION: 

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QUESTION 3: AUDIT REPORTS AND COMPANY FINANCIAL STATEMENTS  (50 marks; 30 minutes) 
3.1 AUDIT REPORTS 
Choose the audit opinion from COLUMN B that best describes the audit report in  COLUMN A. Write the letter only (A–C) next to the numbers (3.1.1–3.1.3) in the  ANSWER BOOK. (3) 

3.2 RUHI LTD 
Ruhi Ltd is a listed company with an authorised share capital of 800 000 ordinary  shares. The information provided is for the financial year ended 28 February 2017. 
REQUIRED: 

3.2.1 Prepare the Retained Income note to the Balance Sheet. (10) 
3.2.2 Complete the Balance Sheet on 28 February 2017. Show all workings in  brackets. Some amounts are provided in your ANSWER BOOK. (26) 
3.2.3 The CEO, Bakkies Spencer, owns 42% of the issued shares on  28 February 2017. The Board of Directors wants to issue the unissued  shares in the next financial year. 

• • Do a calculation to show the number of shares that Bakkies must buy  to gain control of the company. (5)
  • Bakkies wants to buy the shares at the current net asset value without  advertising them to the public. As an existing shareholder, why would  you not be satisfied with this arrangement? Explain. Provide TWO  points. (4) 

3.2.4 Ruhi Ltd is planning to spend R300 000 on staff development and training  over the next two years. How will this expense be explained (disclosed) in  the published annual report? Give ONE point. (2)

INFORMATION: 
A. The following balances/totals were extracted from the company records on  28 February 2017: 

B. Share Capital and Dividends: 

• On 1 March 2016, 80% of the authorised share capital was in issue.
• On 20 January 2017, the company repurchased 40 000 shares at R1,25 above the average share price of R6,00. This transaction was recorded.
• An interim dividend of R179 200 was paid on 30 August 2016.
• A final dividend of R210 000 was declared on 28 February 2017. 

C. Fixed Deposit: 

• R165 000 of the fixed deposit matures on 30 June 2017. The balance matures  in 2020. 

D. Loan: Dube Bank 
The loan statement received reflected the following: 

A portion of the loan will be settled during the next financial period.

E. Profit and tax: 

Related Items

• The net profit after tax amounted to R681 720. 
• Income tax is calculated at 31% of the net profit. 

F. Financial indicators on 28 February 2017: 

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QUESTION 4: FINANCIAL STATEMENTS, CASH FLOW AND INTERPRETATION (70 marks; 45 minutes) 
4.1 CONCEPTS: MATCHING 
Choose an accounting concept from COLUMN B that best matches the questions  in COLUMN A. Write only the letter (A–D) next to the number (4.1.1–4.1.3) in the  ANSWER BOOK. 

4.2 MANI LTD 
Information for the financial year ended 30 June 2017 is provided.  REQUIRED: 

4.2.1 Prepare the Share Capital note to the Balance Sheet on 30 June 2017. (10) 
4.2.2 Calculate the following amounts to be used in the Cash Flow Statement:
Use brackets to indicate amounts that represent an outflow of cash. 

• • Dividends paid (4)
  • Income tax paid (4)
  • Change in investment (2)
  • Change in loan (2) 

4.2.3 Calculate the cost of the additional equipment purchased. (6) 
4.2.4 Complete the net change in cash and cash equivalents section of the  Cash Flow Statement. (5) 
4.2.5 Calculate the following financial indicators on 30 June 2017:

• • Gross profit percentage (mark-up percentage) (4)
  • Net asset value per share (NAV) (3)
  • Return on average shareholders’ equity (6) 

4.2.6 Were the directors justified in increasing the loan? Explain. Quote TWO  financial indicators (with figures) in your answer. (7) 
4.2.7 Explain why the shareholders are not satisfied with: 

• • Dividend pay-out policy
  • Their return earned
    Quote financial indicators (with figures) in your explanation. (8) 

4.2.8 Comment on the price paid to re-purchase the shares on 31 March 2017. 
Quote TWO financial indicators (with figures) in your comments. (6)

INFORMATION: 
A. Extracts from the Income Statement on 30 June 2017: 

B. Extracts from the Balance Sheet on 30 June: 

C. Share Capital: 
The authorised share capital comprises 1 200 000 shares. 

D. Dividends: 

• Total dividends for the year amounted to R514 000. 
• An interim dividend was paid on 1 December 2016 and a final dividend was  declared on 30 June 2017. Only shareholders on the share register were  entitled to dividends. 

E. Fixed assets: 

• Extensions to the warehouse were completed at a cost of R1 800 000.
• Equipment at carrying value of R440 400 was disposed and new equipment  was purchased, to upgrade the present administration section.

F. The following financial indicators were calculated on 30 June: 

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QUESTION 5: COST ACCOUNTING AND FIXED ASSETS (60 marks; 30 minutes) 
5.1 Indicate whether the following statements are True or False. Write only the answer  next to the question numbers (5.1.1–5.1.3) in the ANSWER BOOK. (3) 

5.1.1 The salary of the factory cleaner is regarded as an indirect labour cost.
5.1.2 Depreciation on factory plant and equipment is a variable cost. 
5.1.3 Prime cost is calculated by adding direct material cost and indirect  material cost. 

5.2 TS FINE-WEAR 
Thandi and Sindy own TS Fine-wear, a clothing manufacturing business that  makes a single style winter jacket for schools.  
REQUIRED: 

5.2.1 Calculate the direct labour cost. (7) 
5.2.2 Refer to Information C: 
Calculate the amounts for (a) and (b) on the note for Factory Plant and  Equipment. (13) 
5.2.3 Prepare the Factory Overhead Cost note. (12)
5.2.4 Calculate the cost of sales for the year ended 31 December 2017. (5) INFORMATION: 

A. Stock balances: 

B. Details of factory personnel:

C. Factory Plant and Equipment 

• Old equipment were sold on 1 September 2017 for R6 500 cash,  resulting in a loss on sale of asset of R2 500. 
• New equipment were purchased on 1 October 2017 to replace the  equipment sold.
• Equipment is depreciated at 15% p.a. on cost. 

D. Factory consumables used amounted to R52 750. 
E. The following expenses (amongst others) appeared in the pre-adjustment  trial balance on 31 December 2017: 

• ²/₃ of the water and electricity expense relates to the factory.
• The insurance total includes an annual premium of R4 200 entered  into and paid in full on 1 September 2017. 
• 60% of the insurance must be allocated to the factory.
• Rent expense is shared by the factory, sales and office departments  in the ratio 5 : 2 : 1.  

F. The business produced 29 500 jackets at a cost of R60 each.

5.3 PASS MANUFACTURERS 
PASS Manufacturers makes a single brand sports jacket and caps. 
The owner requested a cost analysis for the last two financial years and was  presented with the information below. 
REQUIRED: 
5.3.1 Do a calculation to prove that the break-even point for jackets in 2017  is correct. (4) 
5.3.2 Comment on the break-even points and the level of production for both  products. (4) 
5.3.3 The owner decided to increase the selling price of caps in 2017.

• Calculate the percentage increase in the selling price. (4)
• Provide ONE reason why the owner felt it necessary to increase the  selling price. (2) 

5.3.4 Identify ONE variable cost for jackets and ONE variable cost for caps  that were not well controlled. Provide figures. In each case, provide a  solution/advice to address the problem. (6) 
INFORMATION: 

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QUESTION 6: BUDGETING (40 marks; 25 minutes)
6.1 Explain why: 

6.1.1 Depreciation and bad debts will not appear in a Cash Budget. (2)
6.1.2 A cash budget is different from a Projected Income Statement. (2) 

6.2 KWT DISTRIBUTORS LTD 
You are provided with information for the budget period November and  December 2017. 
REQUIRED: 

6.2.1 Complete the Debtors Collection Schedule. (12)
6.2.2 Calculate the missing amounts denoted by (i) to (v) on the Cash Budget. (20) 
6.2.3 Comment on the internal controls regarding the collection from debtors  and the payment to creditors. Provide TWO points. (4) 

INFORMATION: 

1. Cash sales amount to 40% of total sales.
   Goods are marked-up by 25% on cost. 
2. Debtors are granted credit terms of 30 days. The actual collection trend  revealed that: 
   • 50% of debtors pay in the month of sale to receive 5% discount. 
   • 30% is received in the month following the month of sales;
   • 18% is collected in the second month after the sale;
   • 2% of debtors is written off thereafter.
3. Stock is replaced in the month sold (a base stock is maintained)
4. Rent income will increase by 8% in December 2017.
5. 80% of stock is bought on credit. Creditors are paid in full in the month  following the month of purchases.
6. Salaries and wages are expected to remain the same for the budget period.  Staff members on leave in December will receive their pay, totalling  R35 600, during November. 
7. A loan will be received from a director, Thabo, on 1 November 2017 at  13%p.a. interest. Interest is not capitalised. A fixed monthly instalment and  interest will be paid at the end of each month. 
8. The company will pay interim dividends during December.
9. Incomplete Debtors Collection Schedule: 

   MONTH	CREDIT SALES	NOVEMBER	DECEMBER
   September	180 000	?
   October	186 000	55 800	?
   November	?	92 625	?
   December	210 000		?
   TOTAL		?	?

10. Information from the Projected Income Statement: 

    	NOVEMBER 2017
    Sales	325 000
    Cost of sales	260 000
    Commission income	24 800
    Depreciation	12 600
    Interest expense	1 625

11. Incomplete Cash Budget for 2017: 

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TOTAL: 300