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Directorate: Curriculum FETTELEMATICS 2015ACCOUNTINGGrade 12 (Term 1)

Dear Grade 12 Accounting learnerWelcome to the Telematics project. This programme will support your revision and studyprogramme in preparation for your final Grade 12 Accounting examination.This is an opportunity for you to consolidate what you have been taught in class. Pleasemake use of this opportunity by attending each session. The presenters will not necessarilyaddress all the content areas – they will however focus on more challenging topics in thecurriculum in order to improve your understanding thereof.Tips for success in AccountingIn order to succeed in Accounting you need to take heed of the following: Start working from day 1 Pay careful attention in class to ensure that you understand Complete Accounting homework/exercises dailyPRACTICE PRACTICE PRACTICE Work neatly and accurately Show calculations in brackets Read instructions to questions/activities carefully to ensure you know what is beingasked Complete tasks and assessment activities including tests diligently as if preparingfor your final examination Use past examination papers and tests for revision Refine your examination technique: when you revise, choose questions that willextend you in your weaker areas. Use the time allocations provided in the questionto judge whether you are completing the question in the time available.All the best with your Grade 12 school year.Glynis SchreuderSenior Curriculum Planner: Accounting2

TELEMATICS TEACHING - 2015ACCOUNTING TIME TABLE – GRADE 12 (Term 1)DateTopicMonday23 February16:00 – 17:00CompaniesPreparation of financialstatements Income Statement Balance SheetBy the end of this lesson you should know: Thursday19 March16:00 – 17:00CompaniesPreparation of financialstatements Cash FlowStatement 3The purpose of preparing financialstatementsThe format of the Income Statement of acompanyThe format of the Balance Sheet of acompanyHow to prepare an Income StatementHow to prepare a Balance SheetThe purpose of preparing a Cash FlowStatementWhere to find the information in order toprepare a Cash Flow StatementThe three types of activities reflected in aCash Flow StatementHow to prepare sections of a Cash FlowStatement

TELEMATICS TEACHING 2015COMPANIESThe purpose ofpreparing an IncomeStatementThe purpose ofpreparing a BalanceSheetThe purpose ofpreparing a CashFlow StatementThe three types ofactivities reflected ina Cash FlowStatement4

Activity 11.1Give ONE word/term for each of the following descriptions by choosing a word/termfrom the list below. Write only the word/term next to the question number(1.1.1–1.1.4) in the ANSWER BOOK.current asset; non-current asset; income; expense;current liability; non-current liability1.21.1.1Profit on the sale of an asset is a/an .1.1.2The portion of a loan that will have to be repaid within a year is a/an .1.1.3Consumable stores on hand are a/an .1.1.4Interest on a bank overdraft is a/an .SELATI LIMITEDYou are provided with information for the financial year ended 30 June 2013.REQUIRED:1.2.1Complete the Income Statement.1.2.2Prepare the note for Retained Income.INFORMATION:EXTRACT FROM THE TRIAL BALANCE ON 30 JUNE 2013:Balance Sheet Accounts SectionOrdinary share capitalRetained income (1 July 2012)Trading stockDebtors' controlProvision for bad debtsCreditors' controlLoan: Puma BankBank (Dr)SARS: Income tax (Dr)Pension fundUnemployment Insurance Fund (UIF)Fixed deposit: Sharp BankR5 605 000735 0001 534 000521 30022 000471 800630 000129 400260 00015 8002 300450 0005

Nominal Accounts SectionSalesCost of salesSalaries and wagesDirectors' feesAudit feesEmployer's contribution (Pension and UIF)Bank chargesSundry expensesBad debtsRent incomeInterest on fixed depositRepairs and maintenancePacking materialOrdinary share dividends (interim)R?8 200 000788 0001 840 00088 00081 00031 00089 73012 10069 16027 000125 60043 900?ADJUSTMENTS AND ADDITIONAL INFORMATION:1.The auditors are owed a further R7 500.2.Goods are sold at a mark-up of 60% on cost price. The company held discountedcash sales during the year to clear excess stock. The total of trade discount givento customers was R702 000.3.Packing material to the value of R41 000 was used during the year ended30 June 2013.4.Interest on the bank overdraft, R2 800, is included in the bank charges.5.No entries have been made for stock stolen at the beginning of June 2013. Theinsurance company has informed Selati Ltd that they have transferred R32 000into the business' bank account in respect of the insurance claim. Selati Ltdbears 20% of any stock loss.6.A physical stocktaking on 30 June 2013 reflected that stock to the value ofR1 475 500 was on hand.7.An amount of R1 700 received from M Mpoani had been credited to theDebtors' Control Account in June 2013. The account of M Mpoani was writtenoff as a bad debt during May 2013.The provision for bad debts must be adjusted to 4% of outstanding debtors.6

8.One employee was omitted from the Salaries Journal for June 2013. His salarydetails are:Deductions2 020Employer's Contribution1 610Net salary4 9809.EZ Builders was paid R105 000 for the construction of a storeroom (R80 000)and repairs to paving (R25 000). The entire amount was debited to Land andBuildings in error.10.The loan statement from Puma Bank on 30 June 2013 reflected:Balance at beginning of financial yearRepayments during the yearInterest capitalisedBalance at end of financial yearR1 470 000840 000?750 00011.Rent income for July 2013 has already been received. The monthly rent wasincreased by 10% on 1 May 2013.12.Depreciation is the missing figure in the Income Statement.13.Net profit and tax: 14.Shares: 15.After taking all adjustments into account, the correct net profit after tax isR588 000.The income tax rate is 30% of net income before tax.The ordinary share capital on 1 July 2012 consisted of 1 500 000 ordinaryshares which were issued at R2,60 per share.500 000 shares were issued on 1 January 2013 at R4,00 per share. Thiswas properly recorded.On 28 February 2013 the directors repurchased 100 000 shares from theestate of a deceased shareholder at a price of R4,50 per share. This hasnot yet been recorded.Dividends: Interim dividends of 14 cents per share were declared and paid on31 December 2012.Final dividends of 10 cents per share were declared on 30 June 2013.7

Activity 2You are presented with information from the records of Vijay Limited. The financial year-end is28 February 2014.REQUIRED:2.1Prepare the following notes to the Balance Sheet:2.1.12.1.22.2Share capitalRetained incomePrepare the Balance Sheet (Statement of Financial Position) on 28 February 2014.Where notes are not required, show ALL workings in brackets.INFORMATION:A.The authorised share capital consists of 750 000 ordinary shares.On 1 March 2013, only 60% of the shares were in issue.B.The following amounts were extracted from the records:28 Feb. 201428 Feb. 2013Ordinary share capitalRetained income?3 215 000322 500Total ordinary shareholders' equityFixed assets (carrying value)Fixed deposit: Sam BankLoan: William BankInventoriesDebtors' ControlCreditors' ControlCash in the bank and petty cashIncome received in advance (Rent)Prepaid expenses (Insurance)Provisional income tax paymentsInterim dividends?3 537 500650 000482 600275 400243 50062 460336 60012 1207 600299 980270 0008

C.On 1 November 2013, the company issued a further 80 000 shares at R9,50 pershare.D.On 28 February 2014, the directors decided to repurchase 75 000 ordinary sharesfrom the estate of a shareholder who had died. This shareholder had originallypurchased his shares on the JSE at various times and at different prices. Arepurchase price of R10,40 was accepted as being a fair price.E.On 27 February 2014, a final dividend of 40 cents per share was declared.All shares, including the new shares issued and repurchased, qualify for finaldividends.F.The loan statement from William Bank received on 28 February 2014 reflected interestcapitalisedatR81 400.Thiswasnotrecordedinthebooks.The business expects to settle 20% of the outstanding balance in the next financialyear.G.After all the above adjustments were taken into account the net profit before tax wascalculated to be R1 161 000. The income tax is calculated at 30% of net incomebefore tax.9

Activity 3You are provided with information relating to Derby Ltd.REQUIRED:3.1Complete the note for reconciliation between profit before taxation and cashgenerated from operations.3.2Complete the Cash Flow Statement for the year ended 31 December 2013INFORMATION:DERBY LTDBALANCE SHEET ON 31 DECEMBER 2013ASSETS20132012Non-current assets4 140 0002 760 000Fixed assets3 552 0002 532 000588 000228 0001 740 0001 804 8001 094 4001 392 000Trade and other receivables156 000324 000Cash and cash equivalents489 60088 8005 880 0004 564 8003 993 6002 142 800Ordinary share capital2556 0001 440 000Retained income1 437 600702 800804 000960 000804 000960 0001 082 4001 432 0001 082 4001 432 0005 880 0004 564 800Financial assetsCurrent assetsInventoriesTOTAL ASSETSSHAREHOLDERS’ EQUITY AND LIABILITIESOrdinary shareholders’ equityNon-current liabilitiesLoan from Hero BankCurrent liabilitiesTrade and other payablesTOTAL EQUITY AND LIABILITIES10

NOTES TO FINANCIAL STATEMENTS1.TRADE AND OTHER RECEIVABLES2013Trade debtors2.121 200312 000Income receivable4 80012 000SARS (Income tax)30 0000156 000324 000453 60072 800Cash float24 00016 000Petty cash12 0000489 60088 800310 800778 000Income received in advance18 00084 000Shareholders for dividends753 600432 0000168 0001 082 4001 462 000CASH AND CASH EQUIVALENTSCash in bank3.2012TRADE AND OTHER PAYABLESTrade creditorsSARS (Income tax)Additional information1.The net profit before tax is R2 480 160.2.Income tax for the year amounted to R692 0003.Dividends for the 2013 financial year consisted of: Interim dividendsR263 760 Final dividendsR753 6004.Depreciation for the year as in the Income Statement5.Derby Ltd paid R27 360 per month to Club Bank which included interest and loanrepayments. Interest is capitalised to the loan.6.A vehicle was sold at book value: Cost price Accumulated depreciation7.R348 000R226 000R152 000Details of share capital The authorised share capital comprised of 3 000 000 shares On 1 January 2013 there were 360 000 ordinary shares in issue. On this same daythe directors decided to repurchase 36 000 ordinary shares from a disgruntledshareholder at a price of 500 cents per share. On 31 December 2013 the company issued 150 000 new shares at a price of 840cents each.11

Activity 4You are provided with information relating to Meteor Supermarkets Limited, a public company.The financial year-end is 28 February 2014.REQUIRED:4.1Refer to Information E:Calculate the missing amounts (indicated by a, b and c) in the Fixed/Tangible AssetNote for the year ended 28 February 2014.4.2Complete the Cash Flow Statement for the year ended 28 February 2014. Some ofthe details and figures have been entered in the ANSWER BOOK. Show workings inbrackets.4.3At the AGM, a shareholder stated that the Cash Flow Statement reflects poordecisions by the directors.Explain TWO points, with relevant figures, to support his opinion.INFORMATION:A.Extract from the Income Statement for the year ended 28 February 2014:Interest on loan (all capitalised)88 500Net profit before tax1 575 000Income tax441 00012

B.Extract from the Balance Sheet as at:28 Feb. 20143 337 30028 Feb. 20134 641 000InventoriesTrade debtorsSARS: Income taxCash and cash equivalents818 2002 377 600128 00013 500641 0001 512 0002 488 000Shareholders' equity8 839 0007 400 000Ordinary share capitalRetained income8 700 000139 0006 600 000800 000908 000508 0002 063 7001 302 000678 700870 000515 000-700 000480 000122 000Current assetsMortgage loan: Excel Bank(interest rate: 12,5% p.a.)Current liabilitiesTrade creditorsShareholders for dividendsBank overdraftSARS: Income taxC.Shareholders' register:DATEDETAILS1 March 20131 200 000 shares in issue31 March 2013300 000 shares issued at R8 each31 December 2013The company bought back 50 000 shares from adissatisfied shareholder, S Smit, at R9,50 each.The average price of all shares issued to datewas R6 per share.28 February 20141 450 000 shares in issueD.Dividends for the financial year ending 28 February 2014:Interim dividends paid on 31 August 2013Final dividends declared on 28 February 201413R750 000R870 000

E.Fixed/Tangible assets:LAND ANDBUILDINGS2 689 000Carrying value at the beginning ofthe financial yearCostAccumulated depreciationVEHICLES2 689 000-1 880 0003 250 000(1 370 000)Movementsa-Additions at costDisposals at carrying valueDepreciationCarrying value at the end of thefinancial year330 000bc6 740 000CostAccumulated depreciation6 740 000-3 440 000Additional information in respect of fixed/tangible assets:(i)A vehicle was sold for cash at its carrying value on 31 May 2013. The followingextract of the vehicle sold was taken from the Fixed Assets Register:Cost price: R140 000Date purchased: 1 March 2012Rate of depreciation: 20% p.a. on the diminishing-balance methodFINANCIAL YEAR ENDDEPRECIATION28 February 201331 May 2013(ii)(iii)(iv)28 0005 600ACCUMULATEDDEPRECIATION28 00033 600A new vehicle, costing R330 000, was purchased and paid for by cheque on1 January 2014.Vehicles are depreciated at 20% p.a. on the diminishing balance method.New premises (land and buildings) were acquired during the financial year.14

FORMATS OF FINANCIAL STATEMENTS . LIMITEDINCOME STATEMENT FOR THE YEAR ENDED .NoteSalesCost of salesGross profitOther operating incomeFee incomeOperating expensesOperating profit (loss)Interest income1Interest expense2Profit (loss) before taxIncome taxNet profit (loss) after tax915R

. LIMITEDBALANCE SHEET AT NoteASSETSNON-CURRENT ASSETSFixed / Tangible assets3Financial assetsCURRENT ASSETSInventories4Trade & other receivables5Cash & cash equivalents6TOTAL ASSETSEQUITY & LIABILITIESSHAREHOLDERS' EQUITYOrdinary share capital7Retained income8NON-CURRENT LIABILITIESLoan fromLoan fromCURRENT LIABILITIESTrade & other payables9Bank overdraftCurrent portion of loan (NB could be placed in Note 9)TOTAL EQUITY & LIABILITIES16R

LIMITEDNOTES TO THE FINANCIAL STATEMENTS AT .1INTEREST INCOMEOn fixed depositOn savings accountOn current bank accountOn overdue debtors2INTEREST EXPENSEOn loan from3FIXED ASSETSLand &buildingsCarrying value at beginning of yearCostAccumulated depreciationMovementsAdditionsDisposals at carrying valueDepreciationCarrying value at end of yearCostAccumulated depreciation4INVENTORIESTrading stockConsumable stores on hand5TRADE & OTHER RECEIVABLESTrade debtorsProvision for bad debtsNet trade debtorsSARS (Income tax)Expenses prepaidIncome accrued (receivable)17VehiclesEquipmentTotal

6CASH & CASH EQUIVALENTSFixed deposit (maturing within 12 months)Savings accountBankCash floatPetty cash7ORDINARY SHARE CAPITALAUTHORISEDNumber of authorised ordinary shares: XXX ordinary sharesISSUEDXXX ordinary shares in issue at beginning of yearXXX additional shares issued during the financial yearXXX ordinary shares repurchased (average price of RXXX)XXX ordinary shares in issue at end of the year8RETAINED INCOMEBalance at beginning of yearNet profit (loss) after tax for theyearShares repurchasedDividends on ordinary sharesPaidRecommendedBalance at end of year9TRADE & OTHER PAYABLESTrade creditorsExpenses accrued (payable)Income received in advance (deferred)Shareholders for dividendsSA Revenue Services (Income tax)Creditors for salariesUnemployment Insurance FundPension FundMedical Aid Fund18

. LIMITEDCASH FLOW STATEMENT FOR THE YEAR ENDED NoteRCash effects of operating activitiesCash generated (utilised) from operations1Interest paidDividends paid3Income tax paid4Cash effects of investing activitiesPurchase of fixed assets5Proceeds from sale of fixed assetsInvestments matured / placedCash effects of financing activitiesProceeds of shares issuedShares repurchasedLong-term loans received / repaidNet change in cash & cash equivalents2Cash & cash equivalents at beginning of year2Cash & cash equivalents at end of year2NOTES TO THE CASH FLOW STATEMENT FOR YEAR ENDED .1RECONCILIATION BETWEEN NET PROFIT BEFORE TAX AND CASHGENERATED FROM OPERATIONSNet profit before taxationAdjustments in respect of:DepreciationInterest expenseOperating profit before changes in working capitalCash effects of changes in working capitalChange in inventoryChange in receivablesChange in payablesCash generated from operations19

2CASH & CASH EQUIVALENTSNet changeBankCash floatPetty cash3DIVIDENDS PAIDDividends for year as reflected in financial statementsBalance at beginning of yearBalance at end of year4INCOME TAX PAIDIncome tax for year as reflected in financial statementsBalance at beginning of yearBalance at end of year5FIXED ASSETS PURCHASEDLand & buildingsVehiclesEquipmentWORKINGSStartAdd: BuyLess: SellLess: DeprFA at Net Book Value End20Year 2Year 1

Dear Grade 12 Accounting learner Welcome to the Telematics project. This programme will support your revision and study programme in preparation for your final Grade 12 Accounting examination. This is an opportunity for you to consolidate what you have been taught in class. Please make use of this opportunity by attending each session.