Accounting Grade 10 Step Ahead Solutions

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CURRICULUM GRADE 10 -12 DIRECTORATE
STEP AHEAD SUPPORT DOCUMENT

SOLUTIONS
GRADE 10
ACCOUNTING
2021
Downloaded from Stanmorephysics.com
GRADE 10 STEP AHEAD SOLUTIONS – 2021

SALARIES AND WAGES
Activity A1
1.1.1 J
1.1.2 F
1.1.3. C
1.1.4 H
1.1.5 B
1.1.6 D
1.1.7 A
1.1.8 I
1.1.9 G
1.1.10 E
1.2.1 45 x 50 = 2 250
1.2.2 45 x 50 + 10 x 75 = 3 000
Activity A2
2.1
Employees Deductions Contributions
Gross Pension Medical PAYE UIF Total Net Pension UIF Medical
salary fund aid salary fund aid
C Can 10 200 816 2000 1500 102 4 418 5 782 1020 102 4 000
B Breeze 10000 800 1000 1250 100 1350 6850 1000 100 2000
D Dan 12000 1200 500 1800 120 338 8620 1200 120 1000
2.2 How much did it cost AM service station in total to employ D. Dan for the month of April
2019?
R12000 + R1200 + R120 + R1000 = 14320
2.3 What is J. Jerry’s monthly starting salary?
R288 000 /12 = R24000

Activity A3
MABHELE TRADERS
SALARIES JOURNAL FOR MAY 2020
Employee Gross Deductions Net salary
salary
PAYE Medical Aid Pension UIF Total
Fund
T. Rama 15 200 2 736 1 200 1 140 152 5 228 9 972
J. Xaba 29 600 7 400 2 600 2 220 376 12 596 17 004
T. Vilakazi 11 800 1 950 1 600 885 118 4 553 7 247
Employee Contributions Total
Medical Aid Fund Pension Fund UIF
T. Rama 2 400 1 52 152 4 072
J. Xaba 5 200 2 960 376 8 536
T. Vilakazi 3 200 1 180 118 4 498

Activity A4
Dlangezwa Cash and Carry

WAGES JOURNAL FOR 14 OCTOBER 2020
Basic wage Overtime
Gross Wage
Name
Amount
Amount
Hours
Hours
Rate
Rate
S. Phakathi 40 30 1200 5 45 225 1425
T. Nyawo 40 30 1200 10 45 450 1650
N. Smith 38 17 646 - - - 646
O. Chetty 35 18 630 - - - 630
Deductions (Employee)
Net Wage
Pension
Medica
Name
TOTAL
Union
PAYE
l Aid
Fund
UIF
SA
S. Phakathi 125 130 96 14 20 385 1040
T. Nyawo 125 109 96 17 20 367 1283
N. Smith 88 101 52 6 20 267 379
O. Chetty 88 101 50 6 20 265 365

Contributions (Employer)
Medical
Chequ
n Fund
Pensio
Name
Skills
e No
Total
/Ref
levy
Aid
UIF
S. Phakathi C13 14 250 120 14 398
T. Nyawo C14 17 250 120 17 404
N. Smith C15 6 176 65 6 253
O. Chetty C16 6 176 63 6 251
Activity A5
5.1 Differentiate between a salary and a wage. (4)
SALARY - is paid to employees normally on monthly basis, and is fixed.
WAGE – is paid to employees normally on weekly basis, and it varies according to the
number of hours worked or work done.
5.2 Wages journal of Sigqamise Traders for week ended 30 June 2020
Employee Basic Wages (Normal Time) Overtime Gross
Hours Rate Amount Hours Rate Amount Wage
T. Mbhele 40 60 2 400 12 90 1 080 3 480
K. Fakude 25 60 1 500 - - - 1 500
M. Khanye 40 60 2 400 8 90 720 3 120
Employee Deductions Net

Medical Aid Pension UIF PAYE Total Wage
Fund Fund
T. Mbhele 210 180 20 626,40 1 036,40 2 443,60
K. Fakude 120 112,50 20 270 522,50 977,50
M. Khanye 120 180 20 561,60 881,60 2 238,40
Medical Aid Fund Pension
Fund
T. Mbhele 420 252 672
K. Fakude 240 157,50 397,50
M. Khanye 240 252 492
Activity A6
6.1 Wages Journal of “Sicelo’s Soccer School” for the week ended 15 June 2020 WJ6
Basic Wage (Coaching) Overtime (Matches) Gross Wage

Employee
Hours Rate Amount Hours Rate Amount
D Dumisa 4.5 100 450 4 150 600 1 050
M Msomi 3 80 240 0 0 0 240

Deductions Net
Employee Wage
Medical Aid Pension
UIF PAYE Total
Fund Fund
D Dumisa 40 45 10.50 50 145.50 904,50
M Msomi 15 24 2,40 20 61,40 178,60
Contributions
Employee
Medical Aid Pension
UIF Total
Fund Fund
D Dumisa 80 45 10.50 135.50
M Msomi 30 24 2.40 56.40
6.2.1 General Ledger of Cindy’s Clocks

Balance Sheet Section
Pension Fund B10
2020 31 2020 31
Bank CPJ 87 500 Salaries SJ 35 000
May May
Pension Fund
SJ 52 500
Contribution
87 500 87 500
Activity A7
7.1.1 SALARIES JOURNAL OF COVID TRADERS ON 15 JUNE 2020
Employee Basic Salary Overtime Gross
Salary
Amount Amount Amount
Sabelo Phakathi 12 800 2 400 15 200
Veli Shabangu 12 800 6 150 18 950
Shukela Gumede 12 800 3 750 16 550

Employee Deductions Net
Medical Pension UIF PAYE Total Salary

Aid Fund
Fund
Sabelo Phakathi 900 960 128 3 344 5 332 9 868
Veli Shabangu 900 960 128 4 169 6 157 12 793
Shukela Gumede 900 960 128 3 641 5 629 10 921
Medical Aid Pension

Fund
Fund UIF
Sabelo Phakathi 2 250 1 344 128 3 722
Veli Shabangu 2 250 1 344 128 3 722
Shukela Gumede 2 250 1 344 128 3 722
7.1.2 You have been appointed as an internal auditor of the business.

What concern would you have with regards to salaries and give ONE point of advice. (5)
Workers may abuse working overtime and working on Sundays for better pay month end.
Advise: Must be related to concern above.
Strictly monitor and supervise working during normal working hours.
6.2.2 Creditors for Salaries B11
2013 31 2013 31
Bank CPJ 57 300 Salaries SJ 57 300
May May
7.2 ANALYSIS OF TRANSACTIONS AND EFFECTS IN THE ACCOUNTING EQUATION
General Ledger AMOUNT A O L
Account DR Account CR
Trading stock Creditors control 26 500 + 0 +
Wages Creditors for wages 57 850 0 - +
Wages Pension Fund 11 800 0 - +
Wages SARS (PAYE) 29 850 0 - +
Pension Fund Contribution Pension Fund 17 700 0 - +
B. Year-End Accounting Procedure

ACTIVITY B1
Trial Balance of TTS Traders for the period ending 28 February 2020.
Balance sheet accounts section Debit Credit

Capital 791 400
Drawings 34 200
Trading stock 62 450

Equipment 55 500
Debtors Control 36 660
Creditors Control 28 360
Creditors for salaries 12 150
SARS:PAYE 1 550
Bank 12 710
Petty Cash 400
Fixed deposit 30 000
Mortgage loan 80 000
Land and building 711 400
Vehicles 100 000
Medical aid fund 1 700
Nominal account section
Sales 510 000
Cost of sales 245 700
Debtors allowances 3 300
Salaries 136 000
Pension Contributions 4 000
Rent Income 26 600
Packing Materials 1 470
Insurance 2 700
Electricity 2 350
Repairs 520
Bad debts 250
Interest on loan 14150
Interest on fixed deposit 2000
1 453 760 1 453 760
ACTIVITY B2
2.1. GAAP PRINCIPLES

2.1.1 Historical Cost Concept
2.1.2 Matching Concept
2.1.3 Materiality Concept
2.1.4 Business Entity Rule
GENERAL LEDGER OF AMABHELE TRADERS ON 29 FEBRUARY 2020

TRADING ACCOUNT
2020 Cost of sales(500 000 2020 Sales (875 000 –
Feb 28 + 3 000) 503 000 Feb 28 12 600 + 5 000) 867 400
Profit and loss 364 400
867 400 867 400
PROFIT AND LOSS ACCOUNT

2020 Salaries and wages 2020
Feb 28 (96 750 -14 400) GJ 82 350 Feb 28 Trading Account GJ 364 400
Fee income
Discount allowed GJ 800 (8 400+4 000) GJ 12 400
Insurance Rent income
(9 800-1 620) GJ 8 180 (41 100-3 300) GJ 37 800
Bank charges GJ 1 210 Discount received GJ 880

Stock surplus
Bad debts (16300-
(5 200+720) GJ 5 920 3 000-15 500) GJ 2 200
Telephone Interest on fixed
(12 560+450) GJ 13 010 deposit GJ 2 200
Water and electricity GJ 14 200
Stationery
(10 800-460) GJ 10 340
Interest on loan
(13 500+4 500) GJ 18 000
Sundry expense GJ 5 400
Depreciation GJ 17 600
Capital Account GJ 242 870
419 880 419 880
ACTIVITY B3
3.1. Calculate the Capital balance at the end 2020 (7)
Balance at the beginning of the year 435 875
Add: Net profit as per profit and loss account see 3.3 257 452
Less: Drawings (17 685+500) must be in brackets or subtracted (18 185)
Balance at the end of the year 675 142
GENERAL LEDGER OF PONGOLA TRADERS ON 29 FEBRUARY 2020

3.2. TRADING ACCOUNT
2020 Cost of sales 2020 Sales
Feb 28 (346 350-2 000) 344 350 Feb 28 (679 200-1 875-2 400) 674 925
Profit and Loss 330 575
674 925 674 925
3.3. PROFIT AND LOSS ACCOUNT
Salaries and wage

2020 (54 000+18 000 2020
Feb 28 +720+180) 72 900 Feb 28 Trading account see 3.2 344 350
Bad debts (975+1 350) 2 325 Rent (40 000-3 200) 36 800
Stationery (8 400-270- Bad debts recovered
540) 7 630 (16 335+1 500) 17 835
Water and electricity
(4 395+465) 4 860 Interest on fixed deposit 12 300
Discount allowed 675 Discount received 270
Trading stock deficit
(34 600+2 000-33 600)
see 3.2 3 050 Commission income 12 000
Interest on overdraft
(2 250+2 750) 5 000
Depreciation (16 020 -
10 680+14 460+13 200)
5 340 33 000
Bank charges 5 40
Interest on loan
(103 500+25 000-
125 340) 3 160
Insurance (10 128-3 675) 6 453
Capital account 257 452

394 995 394 995
ACTIVITY B4
4.1 INCOME STATEMENT OF AMABHELE TRADERS FOR THE YEAR ENDED 28 FEBRUARY
2020
Sales (6 500 000 - 13 000+ 9 000) 6 496 000

Cost of sales (2 263 000+ 6 000) (2 269 000)
Gross profit operation 8 4 227 000
Other operating income one part correct 316 000

Discount received 30 000
Commission income 42 000
Rent income( 288 000–44 000) or (-40 000 – 4 000) one mark each 244 000
Gross operating income 5 4 543 000

Operating expenses operation  (1 984 000)
Salaries and wages 980 000
Bad debts 17 000
Discount allowed 20 000
Bank charges 55 000
Telephone 165 000
Packing materials (45 000 – 10 000) 35 000
Insurance (98 000– 15 000) one part correct 83 000
Water and electricity (180 000 + 1 000) 181 000
Sundry expenses(240 000 + 50 000) 290 000
Trading stock deficit (284 000 – 6 000 – 272 500) one part correct 5 500
Depreciation (60 000 + 80 000 + 12 500) or 92 500 2 Marks
one part correct 152 500
Operating profit operation 22 2 559 000

Interest income (18 000 + 3 600) 21 600
Profit before interest expense 2 580 600
Interest expense (28 000+ 50 000) operation (78 000)
Net profit for the year operation 8 2 502 600
Foreign items -1 max 2
Land & buildings Vehicles Equipment

4.2. FIXED/TANGIBLE ASSETS
Carrying value at beginning of year 4 580 000 400 000 450 000
Cost 4 580 000 650 000 600 000
Accumulated depreciation 0 (250 000) (150 000)
Movements
Additions at cost 420 000 250 000 0
Disposals at carrying value 0 0 0
(92 500)
0 (60 000)
Depreciation See 1.1
Carrying value at end of year
5 000 000# 557 500# 390 000#
Operation
Cost 5 000 000 900 000 600 000

(342 500) ( 210 000 )
0
Accumulated depreciation operation operation
ACTIVITY B5
ANDREWS TRADERS
INCOME STATEMENT FOR THE YEAR ENDED 28 FEBRUARY 2020
Sales (1 280 000 – 12 400 – 3 000 ) 1 264 600
Cost of Sales ( 640 000 – 2 000 ) (638 000)
GROSS PROFIT 6 626 600
OPERATING INCOME 145 600
Discount Received 3 100
Rent Income (154 900 – 13 300 ) 141 600
Bad Debts Recovered 900
GROSS OPERATING INCOME 7 772 200

OPERATING EXPENSES (424 900)
Water and electricity 35 400
Advertising 30 000
Bad Debts (11 300 + 800) 12 100
Salaries and wages (184 000 +19 000 + 3 000) 206 000
Telephone (17 500 + 2 200) 19 700
Stationery (23 200 – 1 400) 21 800
Insurance (44 000 – 4 200) 39 800
Discount Allowed (3 800 – 300) 3 500
Bank charges (2 300 + 400) 2 700
Trading Stock Deficit
6 400
(123 400+ 2 000– 119 000)
Depreciation 23 47 500
OPERATING PROFIT 347 300
Interest Income (4 200 + 1 400 5 600
PROFIT BEFORE INTEREST EXPENSE 352 900
Interest Expense 12 600 + 10 500 or 14 000 + 9 100
(23 100)
Or 21 000 + 2 100
NET PROFIT 9 329 800
ACTIVITY B6
6.1 LINCON TRADERS

INCOME STATEMENT FOR THE YEAR ENDED 28 FEBRUARY 2019
Sales (1 398 608 - 9 550) 1 389 058
Cost of Sales ( 978 590 )
Gross Profit One part correct 4 410 468
Other Operating Income One part correct 77 200
Rent Income ( 81 600 – 6 900 ) One part correct 74 700
Discount received 2 500
Gross Operating Income Check operation 8 487 668
Operating Expenses Check operation (247 437)
Stationery ( 7 800– 3 250) 4 550
Sundry Expenses 4 800
Rates and Taxes 13 740
Discount Allowed 8 450
Insurance (12 500 - 1500) One part correct 11 000
Bad debt ( 8 180 + 585) One part correct 8 765
Trading Stock Deficit ( 120 485 – 119 025) 1 460
Water and Electricity (21 400 + 632 ) 22 032
Depreciation ( 16 200+ 9 000+ 4 750) One part correct 29 950
Salaries ( 110 550 + 16 000 ) 126 550
Pension Contributions ( 8 800 + 760 ) 9 560
Packing material 6 580
Operating Profit Check operation 29 240 231
Interest Income 2 545
Profit before Interest Expense Check operation 242 776
Interest Expense (6 865 + 6 000) One part correct 12 865
Net Profit for the year Check operation 7 229 911
6.2 Owners' Equity

Balance [01/03/2018] 658 590
Net Profit for the year Check 1.1(I/S) 229 911
Check operation 888 501
Less: Drawings (131 258)
Balance [28 / 02 / 2019] Check operation 757 243
6.3 BALANCE SHEET AS AT 28 FEBRUARY 2019
EQUITY and LIABILITIES Notes R
EQUITY and LIABILITIES

Owners’ Equity 7 757 243
See 1.2 above
Non –Current Liabilities 78 000

Long-term Loan (93 000 – 15 000) One part correct 78 000
Current Liabilities Check operation 62 722

Trade and other Payables 8 47 722
Short term loan Check amount deducted 15 000
TOTAL EQUITY AND LIABILITIES Check operation 897 965

ACTIVITY B7
7.1 MANCHESTER TRADERS
BALANCE SHEET AS AT 28 FEBRUARY 2018
ASSETS Note
Non – Current Assets 3 270 000
Fixed/Tangible assets (1 250 000+350 000+1 520 000) see 1.2 3 120 000
Financial assets ( 250 000 – 100 000) 150 000
Current Assets 455 700

Inventory ( 180 000-8 000 + 8 600) 4 180 600
Trade and other Receivables( 142 500+20 000+9 000) 5 171 500
Cash and Cash Equivalents ( 2 000+1 600+100 000) 6 103 600
TOTAL ASSETS 3 725 700
EQUITY AND LIABILITIES

Owners’ Equity 2 110 700
(1 101 300+8 000) one mark each
Capital ( 1 420 000+1 800 000-1 109 300) 7 2 110 700
Non - Current Liabilities 350 000

Loan ( 400 000 – 50 000) 350 000
Current Liabilities 1 265 000

Trade and other Payables (111 800+31 000+4 200+6 000+17 400) 8 170 400
Current portion 50 000
Bank overdraft 1 044 600
TOTAL EQUITY AND LIABILITIES 3 725 700
Foreign entries -1 Max 3 for $ means check operation # means operation one part correct
No penalties for misplaced items i.e. Balance sheet items
Misplaced items mark workings in brackets and mark the final figure wrong
7.2 . FIXED/TANGIBLE ASSETS Land &

Equipment Vehicles
buildings
Carrying value at beginning of year
750 000 370 000 1 384 000
operation
Cost 750 000 535 000 1 466 000
(165 000) (82 000)
0
Accumulated depreciation operation operation
Movements
Additions at cost 500 000 15 000 184 000
Disposals at carrying value 0 0 0
(35 000)
0 (48 000)
Depreciation
Carrying value at end of year
1 250 000 350 000 1 520 000
Operation
Cost 1 250 000 550 000 1 650 000

Accumulated depreciation 0 (200 000) ( 130 000 )
# Cost – Acc Dep
ACTIVITY B8
8.1 MZALA NXUMALO TRADERS
BALANCE SHEET AS AT 29 FEBRUARY 2020
ASSETS Note
Non – Current Assets operation 926 600
906 600
Fixed/Tangible assets( 940 000 – 24 500 – 8 900)
Financial assets:
Fixed deposit( 35 000 – 15 000) 20 000
Current Assets operation 170 345
96 500
Inventory ( 97 500 – 2 000 – 500 + 1 500) or Operation one
(95 000 + 1 500) 4 part correct
Trade and other receivables check 1.2 below 5 55 345
18 500
Cash and cash equivalents(1 500 + 2 000 + 15 000) 6
TOTAL ASSETS Operation TA=TL 1 096 945
EQUITY AND LIABILITIES

Owners’ Equity operation 901 875
Capital (735 000 + 198 875 – 32 000) 7 901 875
Non - Current Liabilities operation 85 000

Loan ( 105 000 – 20 000) 85 000
Current Liabilities operation 110 070

Trade and other payables check 1.3 below 8 60 475
Current portion of loan transfer from NCL 20 000
Bank overdraft ( 30 095 – 500) 29 595
TOTAL EQUITY AND LIABILITIES Operation TA=TL 1 096 945
8.2 TRADE AND OTHER RECEIVABLES

(-500-1 500) 52 800

Trade Debtors( 53 200 + 1 600 – 2 000) Operation one part
correct
Prepaid expense (1 045 + 800) 1 845
Accrued income 700
Operation one part correct 55 345
8.3 TRADE AND OTHER PAYABLES

Trade Creditors 46 000
Deferred income 1 375
Accrued expense 800
SARS: PAYE 8 800
Pension Fund 3 500
Operation one part correct 60 475
C. ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS OF A SOLE TRADER.
ACTIVITY C1 (FINANCIAL INDICATORS)
1.1 Solvency ratio

1.2 % Mark-up OR % Gross profit on cost of sales
1.3 Return on equity (% Net profit of average Equity)
1.4 % Operating expenses on net profit
1.5 Acid test ratio (alternative method to calculate this ratio)
ACTIVITY C 2 (PROFITABILITY AND OPERATING EFFICIENCY CALCULATIONS)

2.1 Percentage gross profit on turnover (sales)

Workings Answer
800 000 x 100

66.6%
1200 000 1
2.2 Percentage gross profit on cost of sales

Workings Answer
400 000 x 100

50%
800 000 1
2.3 Percentage operating expenses on turnover

Workings Answer
200 000 x 100

16.6%
1200 000 1
2.4 Percentage operating profit on sales

Workings Answer
300 000 x 100

1 200 000 1 25%
2.5 Percentage net profit on sales

Workings Answer
160 000 x 100

1 200 000 1 13.3%
ACTIVITY C3 RATIO CALCULATIONS

3.1 Current ratio

Workings Answer
400 000 : 240 000 1,67:1
3.2 Acid-test /quick ratio

Workings Answer
400 000-210 000 = 190 000

0,79:1
190 000: 240 000
3.3 Solvency ratio

Workings Answer
400 000+2100 000

250 000: 2 760 000 0.09:1
3.4 Percentage return on average owners’ equity

Workings Answer
160 000 x 100

½ ( 400 000+900 000) 1
24.6%
160 000 x 100
650 000 1
ACTIVITY C4 RATIO CALCULATIONS
4.1.1 Current Ratio
Current ratio = Current Assets: Current Liabilities

221 000 : 108 750
2:1
4.1.2 Acid Test Ratio
Acid test ratio= Current Assets-Inventory : Current Liabilities

(221 000-89 000) : 108 750
132 000 : 108 750
1,2 : 1
4.1.3 Solvency Ratio
Solvency ratio= Total Assets : Total Liabilities

(475 550+221 000) : (120 000+108 750)
696 550: 228 750
3,1 : 1
4.1.4. Operating Expenses on Sales
Operating expenses on sales= Operating expenses x 100

Sales
245 000 x 100
1 200 000
20,4%
4.1.5. Return on Average Owners’ Equity
Return on owners’ equity = Net Profit x 100

Average equity
375 850 x 100
( 843 000+627 000)/2
375 850 x 100
735 000
51,1%
ACTIVITY C 5 (ANALYSIS AND INTERPRETATIONS)

5.1 Calculate the following for 2020 and comment on the financial indicators:
• Percentage net profit on turnover
• Percentage operating expenses on turnover
5.1.1 Percentage net profit on turnover

91 780 x 100
214 000 1
42,9 %
Comment
The percentage net profit on turnover increased from 42,7 % to 42,9%.
5.1.2 Percentage operating expenses on turnover.

46 800 x 100
214 000 1
21.9 %
Comment
The percentage operating expenses on turnover increased from 17,8% to 21,9%.
5.2 Calculate the following for 2020.

• Current ratio
• Acid test ratio
5.2.1 Current ratio

70 000 : 33 300
2,1:1
5.2.2 Acid test ratio
70 200 – 18 300 : 33 300
1,6:1
5.3 Can the business pay its short-term debts? Briefly explain.
The current ratio stayed the same as last year as it is still 2.1:1 and the acid test ratio also stayed
the same as it is still 1, 6:1. This is above the acceptable norm of 2:1 and 1:1 respectively. This
means that the business can pay its short term debts.
5.4 Calculate the Solvency ratio for 2020.

Solvency ratio= Total Assets : Total Liabilities
366 520 : 83 300
4,4 : 1
5.5 Calculate the percentage return on average owners’ equity. Comment on the
percentage.
Return on owners’ equity = Net Profit x 100
Average equity 1
91 780 x 100
½ (200 740+283 220) 1
91 780 x 100
241 980 1
= 37,9%
Comment
It is a good return because the owner will get 37, 9% as a return compared to 6% interest he
would get from other financial institutions.
5.6 Name two stakeholders who would be interested in the Financial Statements of
Bulwer Traders.
• Management
• Investors and/or prospective investors
• Banks
• SARS
• Trade unions
• Competitors
ACTIVITY C6 ANALYSIS AND INTERPRETATIONS

6.1 The manager feels that the liquidity position of the business has improved. Quote TWO
relevant financial indicators with figures to support his opinion. Comment also on the
trends. (6)
Current ratio – improved from 2:1 to 3,2:1
Acid test ratio – improved from 0,9: 1 to 1,8:1
6.2 Comment on the degree of solvency of the business. Quote the relevant financial
indicator with figures indicating the trend. (3)
Solvency ratio – increased from 3,6:1 to 5,1:1
6.3 The manager is satisfied with operating efficiency of the business, Quote TWO relevant
financial indicators with figures to support his opinion. Comment also, on the trends. (6)
Operating expenses on sales – decreased from 17% to 15,4%
Operating profit on sales – increased from 27% to 31,2%
6.4. The business targeted mark-up on cost is 90%. Comment on the mark-up achieved by
the business in 2020 and EXPLAIN to the manager, why the business could not achieve this
by giving him ONE possible reason. (5)
Gross profit on cost – increased from 75% to 80%, below the targeted mark-up of 90%.
Explanation
Discounted sales
Errors in marking up goods
Trade discounts to customers
Seasonal sales offered
ACTIVITY C 7 INTERPRETATION OF FINANCIAL INFORMATION

7.1 The manager of Hlophe Traders feels that they are in better liquidity position than Choboza
Stores.
• Do you agree?
• Explain by quoting TWO relevant financial indicators. Quote figures from both
businesses to support her opinion. (7)
Current ratio – 2,2:1 Hlophe Traders is in better liquidity position

Hlophe Traders
Acid test ratio – 1,4:1 and they do not have too much stock on
hand.
Current ratio – 1,6:1

Choboza Stores
Acid test ratio – 0,3: 1
7.2 One of the businesses is experiencing solvency problems:

• Identify this business
• Quote a relevant financial indicator with figures to support this.
Compare both businesses. (4)
Hlophe Traders
Hlophe Traders Solvency ratio – 0,9:1
7.3 The manager of Choboza Stores is satisfied with the operating efficiency of her business compared
to that of Hlophe Traders.
Quote any TWO relevant financial indicators for both businesses with figures to support her
opinion. (6)
Operating expenses on sales – 17%

Hlophe Traders
Operating profit on sales – 13%
Operating expenses on sales – 14%

Choboza Stores
Operating profit on sales – 19%
7.4 Your friend, S. Sosibo wants to buy one of these businesses.

o Which business will you invest in?
o Explain by quoting ONE financial indicator for both businesses. Also quote figures to
support your answer. (4)
Choboza Stores
Return is above interest rate on fixed deposit
Hlophe Traders Return on equity – 10,5%
at 12%
OR
Not to invest in HlopheTraders
Return is below interest rate on fixed deposit
Choboza Stores Return on equity – 17,5% at 12%
VALUE ADDED TAX - Activity D1
1.1. VAT STATEMENTS

INDICATE WHETHER THE FOLLOWING STATEMENTS ARE TRUE OR FALSE. ANSWER
1.1.1 VAT liability is payable to SARS. True
1.1.2 The current standard rate for VAT in RSA is at 14% False
1.1.3 Any business with sales of more than R200 000 must register as a VAT vendor. False
1.1.4 Certain basic foods and essential items are zero-rated to assist the poor. True
1.1.5 Most businesses mark their stock with the selling price including VAT. True
1.1.6 Maize meal is one the example for VAT Exempted item. False
VAT ANALYSIS
1.2
ANALYSE THE FOLLOWING ITEMS BY MAKING A CROSS (X) IN THE APPROPRIATE COLUMN.
GOODS / SERVICES 15% VAT 0% VAT VAT EXEMPTS
1.2.1 Petrol ✓
1.2.2 New cash register ✓
1.2.3 Brown bread ✓
1.2.4 School fees of public school ✓
1.2.5 Salary of hotel manager ✓
1.2.6 Tinned sardines ✓
1.2.7 Purchase of a personal computer ✓
(7)
ACTIVITY D2
2.1.1 Value Added Tax
2.1.2 15%
2.1.3 0% or Zero
2.1.4 (A) – PAYE
(B) – Salaries or Wages
(C) – All Individuals or Businesses
(D) – Indirect
2.1.5. A Shady, owner of Shady Stores, is not registered for VAT. However, he charges VAT to all his
customers and he does not pay the VAT over to SARS. Comment on his practice and state what
consequences he could be faced with if he is reported to SARS.
COMMENT: One valid explanation
This practice is unethical since his business is not a registered vat vendor.
COMMENTS FOR one MARKS

Unethical / illegal
CONSEQUENCES: One valid explanation
Shady and his business may face charges for fraud by SARS
CONSEQUENCES FOR one MARKS
Arrested/ charged/ jailed
Activity D3
3.1 Differentiate between zero rated supplies and exempts supplies. (4)
Zero rated-goods the government doesn’t charge tax its sale but allows credits for the Vat paid
on inputs.
Exempt-the government doesn’t tax the sale of the good, but producers cannot claim a credit for
the Vat they pay on inputs to produce it.
3.2. Distinguish between the tax evasion and tax avoidance (4)
Tax evasion- Is taking illegal steps to avoid paying tax.eg not declaring income to the taxman.
Tax avoidance- Is defined as legal measures to use the tax regime to find ways to paying the
lowest rate of tax.
• Brown bread
• Maize products
3.2 Give TWO types of Zero rated supplies. (4)
3.3 Provide the missing figures indicated by A to E.
Amount exclusive VAT amount Amount inclusive

700 105 A = 805
B = 2 500 C = 375 2875
D = 5 200 780 E = 5 980
3.4 Calculate the VAT payable at the end of the month if:
Total purchases for the month was R120 000 (exclusive of VAT)
Total sales for the month were R161 000 (inclusive of VAT)
Input vat = 120 000 x 15/100
= 18 000
Output Vat = 161 000 x 15/115
= 21 000
21 000 – 18 000 = R 3 000 (payables)
COST ACCOUNTING (MANUFACTURING)

Activity E1:
Multiple Choice Question: Basic concepts: Identifying cost concepts
1. C
2. D
3. A
4. B
5. B
6. B
7. B
8. A
9. C
10. C
Activity E2:
Cost Accounting (Manufacturing) Ethics and Internal
Consider the following actions or decisions and state whether falls under ethics or internal control
of factories
No. Action or Decisions Answer
1. Fair wages to the labours Ethics
2. Foreman of a factory closely supervising the Internal control

production process
3. Environmental regulations are being adhered to Ethics

by the factory
4. Producing healthy and safe product Ethics
5. Improving security measures on stock of raw Internal control

material, work-in-process and finished goods
6. Employing correct strategies to minimise Internal control

wastage in the production line
Activity E3:
Cost Accounting (Manufacturing) Basic cost calculations
Direct material cost = wood + screws
R50 000 +( R10 x 12 screws x 50 desks)
R50 000 + R6 000 = R56 000
1. Direct labour cost = wages (Khetha)
R1 000 x 50 desks = R50 000
2. Prime cost = direct material cost + direct labour cost
R56 000 + R50 000 = R106 000
3. Factory overheads cost = indirect mat cost + salary (Phindile) + rent
R1 500 + R19 000 + R3 000 = R23 500
4. Total cost of production = prime cost + factory overhead cost
R106 000 + R23 500 = R129 500
5. Unit cost of a desk = total prod cost ÷ total number of units produced
R129 500÷ 50 desks = R2 590
6. Selling price per desk. Nina uses a profit mark-up of 50% on cost.
= Cost price + profit mark-up
R2 590 + (R2 590 x 50%)

R2 590 + R1 295 = R3 885
BUDGETING
ACTIVITY F1
1. A budget is a detailed plan for acquiring and using cash and physical resources over a
specified of time so as to achieve the goals of the organisation/individuals.
2. It assists in making provisions for the future, in terms of allocation of cash resources.
3. Budget should be drawn up at the beginning of the financial year
4. CASH BUDGET: A cash budget is a forecast of business activities, specifically relating to cash
transactions.
PERSONAL BUDGET: All individuals and households have to plan well in advance to provide
sufficiently for daily needs and visions for the future.
BUSINESS BUDGET: Business also prepare cash budgets, primarily as an instrument of
control. All firms aims to maintain perpetual liquidity.
INCREMENTAL BUDGET: The traditional approach to budgeting for the current year is to
start with the previous year’s budget. This is known as an INCREMENTAL BUDGET where
the previous budget is taken as a baseline.
ZERO BASED BUDGETING: Zero based budgeting is an alternative. It is drawn up from
scratch, with little or no reference to any previous budget estimates.
CAPITAL BUDGET: The term “capital budgeting” refers to outlay of funds for large projects
e.g. open a new branch, install a new computer programme to handle customer billing
system, improve security within the undertaking, purchase a new delivery van
ACTIVITY F2
2.1 A budget is…
• A financial plan of expected receipts and payments
• Planning the receipts and payments for a period in the future
• Assessing expected receipts and payments and managing cash.

2.2.1 Total expected receipts (before calculating contributions of players)
R1 000 x16 = R16 000 + R5 000

R21 000
2.2.2 Total expected payments

PAYMENT ITEM: WORKINGS AMOUNT
Transport 3 000 + (850 x 2) 4 700
Accommodation 1 120 x 4 x 3 13 440
Insurance R15 x 18 270
Meals 400 x 18 7 200
Kit
7 390
33 000
TOTAL
2.2.3 The total cost to be covered by players.

R12 000
33 000 - 21 000
2.2.4 The amount that EACH PLAYER has to contribute to the tour.
R750
12 000 ÷ 16
2.3 The tour organising committee expects certain key players to have difficulty in
affording the minimum amount payable by each player. Suggest TWO possible
methods to acquire additional funds to support these players.
Any TWO valid suggestions
Possible responses:
• Sell raffle tickets
• Collection list that players can use to collect money from friends/family
• Fundraising event(s) at school / in the community
• Sell food (hotdogs)
• Work in a restaurant and earn commission / tips
• Coaches could contribute towards some of the cost items
ACTIVITY F3
3.1.1 D
3.1.2 C
3.1.3 A
3.1.4 E
3.1.5 B
ACTIVITY F4
1. Zero-Based budget
2. Capital budget
3. Cash budget
4. Incremental budget
5. Budget

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CURRICULUM GRADE 10 -12 DIRECTORATE

STEP AHEAD SUPPORT DOCUMENT

GRADE 10 STEP AHEAD SOLUTIONS – 2021

2.3 What is J. Jerry’s monthly starting salary?

R288 000 /12 = R24000

T. Rama 15 200 2 736 1 200 1 140 152 5 228 9 972

J. Xaba 29 600 7 400 2 600 2 220 376 12 596 17 004

T. Vilakazi 11 800 1 950 1 600 885 118 4 553 7 247

Employee Contributions Total

Medical Aid Fund Pension Fund UIF

T. Rama 2 400 1 52 152 4 072

J. Xaba 5 200 2 960 376 8 536

T. Vilakazi 3 200 1 180 118 4 498

Dlangezwa Cash and Carry

T. Nyawo 40 30 1200 10 45 450 1650

N. Smith 38 17 646 - - - 646

O. Chetty 35 18 630 - - - 630

S. Phakathi 125 130 96 14 20 385 1040

T. Nyawo 125 109 96 17 20 367 1283

N. Smith 88 101 52 6 20 267 379

O. Chetty 88 101 50 6 20 265 365

T. Nyawo C14 17 250 120 17 404

N. Smith C15 6 176 65 6 253

O. Chetty C16 6 176 63 6 251

5.1 Differentiate between a salary and a wage. (4)

SALARY - is paid to employees normally on monthly basis, and is fixed.

Employee Deductions Net

Employee Contributions Total

Medical Aid Fund Pension

T. Mbhele 420 252 672

K. Fakude 240 157,50 397,50

M. Khanye 240 252 492

Basic Wage (Coaching) Overtime (Matches) Gross Wage

D Dumisa 4.5 100 450 4 150 600 1 050

M Msomi 3 80 240 0 0 0 240

D Dumisa 40 45 10.50 50 145.50 904,50

M Msomi 15 24 2,40 20 61,40 178,60

D Dumisa 80 45 10.50 135.50

M Msomi 30 24 2.40 56.40

6.2.1 General Ledger of Cindy’s Clocks

7.1.1 SALARIES JOURNAL OF COVID TRADERS ON 15 JUNE 2020

Employee Basic Salary Overtime Gross

Amount Amount Amount

Sabelo Phakathi 12 800 2 400 15 200

Veli Shabangu 12 800 6 150 18 950

Shukela Gumede 12 800 3 750 16 550

Employee Deductions Net

Medical Pension UIF PAYE Total Salary

Sabelo Phakathi 900 960 128 3 344 5 332 9 868

Veli Shabangu 900 960 128 4 169 6 157 12 793

Shukela Gumede 900 960 128 3 641 5 629 10 921

Employee Contributions Total

Medical Aid Pension

Sabelo Phakathi 2 250 1 344 128 3 722

Veli Shabangu 2 250 1 344 128 3 722

Shukela Gumede 2 250 1 344 128 3 722

7.1.2 You have been appointed as an internal auditor of the business.