Question

QUESTION 1

MULTIPLE CHOICE

(20)

REQUIRED

For each of the following questions, write down only the letter of the correct answer e.g. 1.6 C. Do not show any calculations.

1.1

The accounting period of Meander Enterprises ends on the last day of February each year. On 28 February 2017, the total of the Rent expense account was R41 100. Rent was paid up to 31 March 2017. Note: Rent expense increased by 10% with effect from 01 September 2016. Which will be the correct journal entry to adjust the Rent expense account on

28 February 2017?

Account debit

Account credit

Amount

a)

Prepaid expenses

Rent expense

R3 161.54

b)

Prepaid expenses

Rent expense

R3 300

c)

Profit and loss

Rent expense

R40 800

d)

None of the above

(4)

1.2

The following information was extracted from the records of NWJ Traders for May 2017:

2017

May

Units of

inventory

Cost price

per unit

01

11

22

23

Inventory on hand

Purchased

Purchased

Returned to supplier

18 000

50 000

33 000

1 000

R10

R11

R12

R12

31

Sales for May 2017

80 000

?

The value of inventory on 31 May 2017, using the weighted average cost method, is _______.

a)

R222 800

b)

R220 000

c)

R240 000

d)

None of the above.

(4)

1.3

The following information was extracted from the records of Vondi’s Traders on 30 June 2017, the end of the financial year:

R

Opening inventory

600 000

Closing inventory

480 000

Purchases

1 476 000

Purchases returns

36 000

Cash sales

3 000 000

Credit sales

960 000

MANCOSA: BCOM (SUPPLY CHAIN MANAGEMENT) YEAR 1

PROGRAMME HANDBOOK: JANUARY 2018 INTAKE

68

68

Sales returns

360 000

Carriage on purchases

60 000

Carriage on sales

120 000

The gross profit for the financial year ended 30 June 2017 was ___________.

a)

R2 016 000

b)

R1 980 000

c)

R2 100 000

d)

None of the above. (4)

1.4

The following information was extracted from the records of Fego Stores on 31 May 2017:

R

Favourable balance according to the bank account (ledger)

Cheques issued but not yet presented to the bank for payment

Deposit made but not yet credited by the bank

88 800

34 000

28 800

The bank balance according to the bank statement received by Fego Stores on 31 May 2017 was ________.

a)

R94 000 (unfavourable)

b)

R83 600 (favourable)

c)

R94 000 (favourable)

d)

None of the above. (4)

1.5

The Statement of Changes in Equity of Ashleigh Stores, a partnership with Ash and Leigh as partners, reflected the following amounts on 28 February 2017, the end of the financial year:

R

Interest on capital: Ash

Interest on capital: Leigh

Salary: Ash

Salary: Leigh

Interest on drawings: Ash

Interest on drawings: Leigh

Remaining profit: Ash

Remaining profit: Leigh

48 000

72 000

288 000

168 000

1 200

800

R96 000

R96 000

The partnership net profit, according to the Profit and loss account, for the year ended

28 February 2017 was ____________.

a)

R766 000

b)

R770 000

c)

R768 000

d)

None of the above. (

Answer 1

1.1) OPTION " B" IS CORRECT
1.2) OPTION "D" IS CORRECT
1.3) OPTION "B" IS CORRECT
1.4) OPTION "C" IS CORRECT
EXPLANATIONS ARE AS FOLLOWS:
Rent from september 2016 onward will be 1.1x
total rent = march 2016 to aug 2016				6x
1.1)form sept to march 1.1x*7				7.7x
total rent paid				13.7x
x = 41100/13.7 = 3000
rent for march =1.1*3000 = 3300
therefore option "B" i.e. prepaid expenses rent expenses = $3300
1.2)
Particulars			units	cost per unit	Value	Weighted avg cost/unit
inventory on hand			18000	10	180000
purchased			50000	11	550000
purchased			33000	12	396000
average cost			101000		1126000	11.149
less: return			-1000	11.149	-11149
net inventory after return			100000		1114851
less: sales			-80000
closing inventory			20000	11.149	222980	11.149
as per the above calculation the option is "D" that is NONE OF THE ABOVE
1.3)
trading a/c
Particulars		amount	particulars		amount
opening inventory		600000	cash sale		3000000
purchase 1476000			credit sale		960000
less: purchase return 36000		1440000	less : return		-360000
Carriege on purchase		60000	net sale		3600000
gross profit ( sale - cost of goods sold)		1980000	closing inventory/stock		480000
total		4080000	total		4080000
GROSS PROFIT FOR THE YEAR IS 1980000 HENCE OPTION "B" IS CORRECT
1.4) Favourable balance		88800
Add: chq issued but not presented		34000
less: deposit made but not yet credited		-28800
Favourable balance received by fego stores		94000
hence opnton " C" is correct that is Favourable 94000
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