Accounting Nov 2017 QP and MEMO

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NATIONAL
SENIOR CERTIFICATE
GRADE 12
ACCOUNTING
NOVEMBER 2017
MARKS: 300
TIME: 3 hours
This question paper consists of 21 pages and a 17-page answer book.
Copyright reserved Please turn over

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Accounting 2 DBE/November 2017
NSC
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 blue/black ink to answer the questions.
6. Where applicable, show all calculations to ONE decimal point.
7. Write neatly and legibly.

NSC
8. Use the information in the table below as a guide when answering the question
paper. Try NOT to deviate from it.
QUESTION 1: 30 marks; 20 minutes

Topic: This question integrates:
Financial accounting
Bank Reconciliation and Reconciling Bank Account with Statement
Internal Control Managing resources
Internal control

Managerial accounting
Production Cost Statement
Manufacturing Profit/Loss calculations
Managing resources
Analysing break-even and unit costs

Balance Sheet
Fixed Assets, Balance Sheet
Audit report
and Audit Report
Managing resources
Calculations: Fixed assets

Cash Flow Statement and Concepts
Interpretation Cash Flow Statement
Interpretation of financial information

Concepts
Inventory Valuation Inventory valuation calculations
Managing resources
Internal control

Cash Budget
Budgets
Calculations
Problem-solving

NSC
QUESTION 1: BANK RECONCILIATION AND INTERNAL CONTROL

(30 marks; 20 minutes)
1.1 Indicate whether the following statements are TRUE or FALSE. Write
only 'true' or 'false' next to the question number (1.1.1–1.1.3) in the
ANSWER BOOK.
1.1.1 A favourable balance on the Bank Statement is indicated as a debit.
1.1.2 A post-dated cheque received must be entered on the date received.
1.1.3 An issued cheque that has been lost must be cancelled in the CRJ.
(3 x 1) (3)
1.2 MENZIES TRADERS
The given information relates to Menzies Traders for June 2017.
REQUIRED:
1.2.1 Calculate the following on 30 June 2017:

• Correct totals for the CRJ and CPJ
• Bank account balance (14)
1.2.2 Prepare the Bank Reconciliation Statement on 30 June 2017. (9)
1.2.3 Explain the problem relating to deposits. Quote evidence.

Explain TWO strategies to prevent this in future. (4)
INFORMATION:
A. The Bank Reconciliation Statement on 31 May 2017 showed the

following:
Unfavourable balance on the Bank Statement R1 450
Outstanding deposits:
• 17 May 2017 30 000
• 31 May 2017 16 200
Outstanding cheques:
• 605 (dated 16 December 2016) 9 750
• 812 (dated 10 April 2017) 8 550
• 816 (dated 25 May 2017) 13 590
• 819 (dated 15 August 2017) 7 650
• 823 (dated 31 May 2017) 2 900
Unfavourable balance on the Bank account in the Ledger R5 210

NSC
B. Provisional Cash Journal totals on 30 June 2017:
• Cash Receipts Journal: R90 500

• Cash Payments Journal: R85 920
C. Entries in the Cash Journals for June 2017 that do not agree with the
June Bank Statement:
JOURNAL DOCUMENT DATE DETAILS AMOUNT

EFT 19 11 Paintco R5 500
CRJ
Deposit slip 451 25 Cash sales R40 500
NOTE: EFT 19 was incorrectly entered in the CRJ instead of the CPJ.
JOURNAL DOCUMENT DATE DETAILS AMOUNT

Cheque 870 25 VN Ltd R16 800
CPJ
EFT 21 30 SJ Stores R2 250
D. Items on the Bank Statement dated 30 June 2017 that do not agree with
the June Cash Journals:
DATE DETAILS DEBIT CREDIT

02 Deposit (17/5) 30 000
05 Cheque 812 8 550
09 Debit order (insurance) 2 290
11 Direct transfer to Paintco (EFT 19) 5 500
12 Cheque 816 13 590
16 Deposit (31/5) 16 200
18 Direct transfer from S Smit (rent) 16 500
22 Cheque 823 (see note below) 9 200
Unpaid cheque
23 750
(B Blast settled his debt, R795)
24 Service fee 1 220
NOTE:
• Cheque 823: Bank Statement figure is correct.
• Service fees were overstated by R900. The bank will rectify the
problem next month.
E. The Bank Statement on 30 June 2017 reflected a balance of R?.
30

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QUESTION 2: MANUFACTURING (55 marks; 30 minutes)
2.1 GEVEN MANUFACTURERS
The business produces wooden tables.
REQUIRED:
Prepare the following for the year ended 28 February 2017:
2.1.1 Production Cost Statement (14)
2.1.2 Abridged Income Statement (14)
INFORMATION:
A. Stock on hand:
28 FEBRUARY 2017 1 MARCH 2016

Work-in-process ? R160 000
400 tables,
1 200 tables at R280
Finished goods valued using
= R336 000
FIFO method
B. Production and sales for the year:
• 7 200 tables were produced at a unit cost of R330 each.

• 8 000 tables were sold for R4 080 000.
C. Costs (before adjustments):
Administration R148 400

Factory overheads R487 200
Direct materials R1 050 000
Direct labour ?
Selling and distribution R422 000
Adjustments:
• Payment to EZ Transport, R102 000, was incorrectly allocated to

Selling and Distribution. This was actually meant for delivering
wood to the factory.
• The cleaning contract for the year, R126 000, was shared
between Factory and Administration in the ratio 2 : 1. However,
80% should have been allocated to Factory.
D. Prime cost: R1 800 000 (after adjustments)

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LEAVE THIS PAGE BLANK.

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2.2 GYMWEAR MANUFACTURERS
Gymwear Manufacturers is owned by Jan Fiks. They produce shoes and

shirts for gym training. Jan requires assistance in interpreting his 2017 results.
Note that one pair of shoes comprises one unit.
REQUIRED:
2.2.1 Shirts:
• Calculate the break-even point for shirts. (4)
• Jan is not satisfied with the variable costs per unit, even though
the total variable costs per unit decreased by R6.
- Identify ONE variable cost (with figures) that has not been
well controlled. Give TWO possible reasons for this problem. (4)
- Explain why Jan might be concerned about the large

decreases in the other TWO variable costs. (4)
• Jan does not understand why the unit cost of production has
increased when neither his fixed costs nor the variable costs
have increased. Explain why this is so. State ONE point (with
figures). (4)
2.2.2 Shoes:
• Calculate the % increase in the selling price of shoes. (3)
• Jan decided to improve the quality of the shoes and to export

them. Explain how the direct material costs and the selling and
distribution costs were affected by this decision. Provide figures. (4)
• Jan was concerned that the increase in price would have a

negative impact on the business. Explain whether his concern
was justified. State TWO points. (4)

NSC
INFORMATION:
SHIRTS SHOES
2017 2016 2017 2016
Break-even point ? 11 522 3 842 4 317
Units produced and sold 16 100 25 000 7 750 6 500
Net profit R500 400 R620 000 R2 379 750 R1 183 000
Selling price per unit R302 R290 R1 640 R1 260
Selling price of competitors R310 R290 R1 100 R1 250
Total fixed costs (factory
R530 000 R530 000 R2 340 000 R2 340 000
overhead and administration)
Total fixed cost per unit ? ? R302 R360
Total variable costs per unit R238 R244 R1 031 R718
Direct material costs per
R92 R116 R456 R330
unit
Direct labour costs per unit R131 R100 R381 R360
Selling and distribution
R15 R28 R194 R28
costs per unit
Unit cost of production R242 R228 R1 100 R1 004
55

NSC
QUESTION 3: FIXED ASSETS, BALANCE SHEET AND AUDIT REPORT

The following information relates to Odette Ltd. The financial year ended on
28 February 2017.
REQUIRED:
3.1 Refer to Information B.
Calculate the missing amounts denoted by (a) to (e). (22)
3.2 Complete the Balance Sheet (Statement of Financial Position) on

28 February 2017. Show workings. (37)
INFORMATION:
A. Amounts extracted from the records on 28 February 2017:
Balance Sheet accounts section R

Ordinary share capital ?
Retained income (28 February 2017) 520 000
Fixed assets (carrying value) ?
Loan from Beque Bank 284 000
Trading stock 408 880
Net trade debtors 67 200
Fixed deposit: Elze Bank ?
Bank (favourable) ?
SARS: Income tax (provisional payments) 209 000
Creditors' control 184 000
Nominal accounts section (pre-adjustment amounts)
Insurance 30 200
Rent income 108 450
Electricity 42 000
B. Fixed assets:
LAND AND
VEHICLES EQUIPMENT TOTAL
BUILDINGS
Cost 350 000 460 000
Accumulated depreciation (315 000)
Carrying value (01/03/2016) (a) 35 000
Movements:
Additions 325 000 422 550 0
Disposals 0 0 (d)
Depreciation (b) (13 766)
Carrying value (28/02/2017) 2 550 000 (c) 50 994 (e)
Cost 772 550 340 000
Accumulated depreciation

NSC
• Depreciation on vehicles is calculated at 20% p.a. on cost.
• The company has two vehicles on 28 February 2017. One of these vehicles
was purchased on 1 September 2016.
• Extract from the Fixed Assets Register in respect of equipment sold:
Fridge (Model X3)

Date purchased: 1 March 2014
Date sold: 31 December 2016 Sold for: R81 250
Depreciation rate: 10% p.a. (diminishing-balance method)

COST DEPRECIATION BOOK VALUE
28 February 2015 R120 000 R12 000 R108 000
29 February 2016 ? ?
31 December 2016 ? ?
C. The electricity account for February 2017, R5 600, was still outstanding.
D. The provision for bad debts must be increased by R270.
E. An additional insurance policy was taken out on 1 November 2016. The annual
premium of R10 200 was paid and recorded.
F. The rent for February 2017 has not been received yet. The rent increased by 15%
on 1 July 2016.
G. Net profit after tax, R518 000, was calculated after taking into account all the
adjustments above. Income tax is 30% of the net profit.
H. 75% of the authorised share capital of 900 000 shares was in issue. The directors
declared a final dividend of 24 cents per share on 28 February 2017.
I. Extract from Beque Bank loan statement:
Balance on 1 March 2016 R376 000

Instalments (including interest) R92 000
Interest capitalised R48 000
Balance on 28 February 2017 ?
NOTE:
• Interest has not been entered in the books.
• R50 000 of the loan balance will be settled in the next financial year.
J. The net asset value per share on 28 February 2017 is 620 cents.
K. The current ratio is 2,1 : 1 on 28 February 2017.

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3.3 AUDIT REPORT
An extract of the independent audit report of Karin Ltd for the financial year
ended on 28 February 2017 is provided.
REQUIRED:
As a shareholder, what concerns would you have regarding this audit report?
Explain THREE points. (6)
INFORMATION:
EXTRACT FROM THE AUDIT REPORT OF KARIN LTD
We have audited the annual financial statements of Karin Ltd for the year
ended 28 February 2017. These financial statements are the responsibility of
the company's directors.
Basis for Disclaimer of Opinion

In the course of our audit we established that bonuses paid to directors,
amounting to R9,8 million, had not been authorised by the Remunerations
Committee.
Audit Opinion
Because of the significance of the matters described above, we have not
been able to obtain sufficient audit evidence to provide a basis for an audit
opinion. Accordingly, we do not express an opinion on the financial
statements of Karin Ltd for the year ended 28 February 2017.
Bongani and Botha, Chartered Accountants (SA)
65

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LEAVE THIS PAGE BLANK.

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QUESTION 4: CASH FLOW STATEMENT AND INTERPRETATION

4.1 Choose a term to complete each of the following statements. Write only the
term next to the question number (4.1.1–4.1.4) in the ANSWER BOOK.
shareholder(s); external auditor(s); director(s); internal auditor(s)
4.1.1 … are appointed by the shareholders to manage the company.
4.1.2 The ... is employed by the company to set up functional internal

control processes.
4.1.3 A … is a person who invests in a company by buying shares.
4.1.4 … are appointed by shareholders to give an unbiased opinion on the

financial statements. (4 x 1) (4)
4.2 SO-FINE LTD
The given information relates to So-Fine Ltd for the financial year ended
31 August 2017.
REQUIRED:
4.2.1 Prepare the following notes to the Balance Sheet on 31 August 2017:
• Ordinary share capital (7)
• Retained income (9)
4.2.2 Complete the Cash Flow Statement by inserting only the details and
figures indicated by a question mark (?). (19)
4.2.3 Calculate the following financial indicators on 31 August 2017:

• Percentage operating profit on sales (3)
• Debt-equity ratio (4)
4.2.4 Calculate the dividends per share (DPS) of a shareholder who

owned the same number of shares for the entire financial period. (4)
INFORMATION:
A. Information from the Income Statement for the financial year ended
31 August 2017:
Sales R8 652 000

Operating expenses 1 760 000
Depreciation 320 000
Interest expense 86 100
Operating profit 697 000
Income tax 187 770
Net profit after income tax 438 130

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B. Information from the Balance Sheet on 31 August:
2017 2016
(R) (R)
Fixed assets (carrying value) 6 177 000 4 975 000
Fixed deposits 220 000 300 000
Loan: Dolphin Bank 985 000 450 000
Current assets 619 600 663 300
Current liabilities 490 000 614 300
Shareholders' equity ? ?
Ordinary share capital 5 292 000 ?
Retained income ? 147 370
Cash and cash equivalents 23 400 2 500
Bank overdraft - 65 100
Shareholders for dividends 168 000 120 000
SARS: Income tax 11 800 (Cr) 2 400 (Dr)
C. Share capital and dividends
• The authorised share capital comprises 1 200 000 ordinary shares.
• 900 000 ordinary shares were in issue on 1 September 2016.
• The company issued 150 000 ordinary shares at R6,30 per share on
1 May 2017.
• 70 000 ordinary shares were repurchased from shareholders on

30 August 2017. A cheque for R437 500 was issued for these
shares. These shareholders qualify for final dividends.
• An interim dividend of 12 cents per share was paid on

1 February 2017.
• A final dividend was declared on 30 August 2017.
D. Fixed assets: Transactions during the current financial year.
• Old equipment was sold for cash at the carrying value of R324 000.
• Additional equipment and delivery vehicles were purchased.
(See QUESTION 4.3 on the next page.)

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4.3 CASTRO LTD AND RONKI LTD
You are provided with information relating to two companies.
BACKGROUND INFORMATION:
• Henry Harries owns 300 000 shares in each company.
• Castro Ltd issued 200 000 new shares only to existing shareholders at
the average issue price (R9,10). These funds were used to establish
a new branch. No new loans were raised.
• Ronki Ltd paid R4 800 000 to repurchase 320 000 shares.
REQUIRED:
NOTE: Where comments or explanations are required, quote financial

indicators and figures to support your answer.
CASTRO LTD
4.3.1 Comment on the price of R9,10 charged by Castro Ltd for the new
shares issued. (3)
4.3.2 Explain how the issue of new shares has affected the financial
gearing and risk of Castro Ltd. Quote TWO financial indicators. (6)
4.3.3 Henry had the option to buy some of the new shares issued by
Castro Ltd. He had saved sufficient funds (interest rate 5% p.a.) for
this purpose.
• If Henry wanted to retain his 60% shareholding in the company,

how many shares would he have had to buy and how much
would he have had to pay? (5)
• Henry decided NOT to buy these shares. Apart from the

% shareholding, explain TWO reasons why he has made a
mistake by not taking up this option. (6)
RONKI LTD
4.3.4 Comment on the liquidity of Ronki Ltd. Quote TWO financial

indicators. (6)
4.3.5 Comment on the price paid by Ronki Ltd for the repurchase
(buy-back) of shares. (3)
4.3.6 Explain THREE ways in which Henry has benefited from the
repurchase of the shares by Ronki Ltd. (6)

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ADDITIONAL INFORMATION:
Financial indicators and additional information from annual reports:

CASTRO LTD RONKI LTD
2017 2016 2017 2016
Debt-equity ratio 0,5 : 1 0,8 : 1
Current ratio 1,9 : 1 3,5 : 1
Acid-test ratio 1,1 : 1 1,7 : 1
Stock-holding period 54 days 54 days
Number of shares in issue 700 000 500 000 580 000 900 000
Average share issue price R9,10 R10,20
Price paid for share repurchase R15,00
Price of share on JSE R12,00 R15,00
Net asset value per share R10,73 R11,38 R13,30 R13,22
% return on shareholders' equity 23% 17% 16% 13%
% return on total capital employed 20% 15%
Earnings per share 140 cents 196 cents 266 cents 171 cents
Total dividends R357 000 R325 000 R928 000 R928 000
Dividends per share 51 cents 65 cents 160 cents 103 cents
85

NSC
QUESTION 5: INVENTORY VALUATION (35 marks; 20 minutes)
5.1 CONCEPTS
Choose the correct word(s) from those given in brackets. Write only the
word(s) next to the question number (5.1.1–5.1.4) in the ANSWER BOOK.
5.1.1 The (specific identification/weighted-average) stock valuation

method is best suited for products of similar value purchased in
large quantities.
5.1.2 Cost of sales is determined at the point of sale in the (perpetual/

periodic) inventory system.
5.1.3 Stock valued according to the (first-in-first-out/weighted-average)

method determines stock on hand by recording the cost prices of the
most recent stock purchases.
5.1.4 In the periodic inventory system, carriage on goods purchased is

recorded as an (expense/asset) to the business. (4 x 1) (4)
5.2 HOT-WHEELS (PTY) LTD
You are provided with information relating to Hot-Wheels (Pty) Ltd for the
three months ending 30 September 2017. The business trades in motorbikes
and helmets.
Mike, the owner, wants to assess his stock records before any price increases
during the year.
REQUIRED:
Motorbikes:
5.2.1 Calculate the value of the closing stock on 30 September 2017

using the specific identification method. (7)
5.2.2 Mike requires your advice on the three different models of

motorbikes in which he is trading. Explain TWO points of advice. (4)
Helmets:
5.2.3 Calculate the value of the closing stock on 30 September 2017

using the weighted-average method. (9)
5.2.4 Is the weighted-average method appropriate to value the helmets?

Explain ONE point. (3)
5.2.5 Mike suspects that helmets are being stolen from the shop despite
security cameras being installed.
• Provide a calculation to verify his suspicion. (5)
• What can Mike do to improve the internal control of stock?
State THREE points. (3)

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INFORMATION:
A. Motorbikes:
Information for three months ended 30 September 2017:
Stock on 1 July 2017:
COST PRICE
MODEL UNITS TOTAL (R)
PER UNIT (R)
AO2 12 24 300 291 600
Total purchases:
COST PRICE
MODEL UNITS TOTAL (R)
PER UNIT (R)
AO2 6 24 300 145 800
AO3 15 27 400 411 000
AO4 18 31 600 568 800
39 1 125 600
Sales:
TOTAL SALES AMOUNT
MODEL UNITS SOLD
(R)
AO2 8 311 040
AO3 11 482 240
AO4 10 505 600
29 1 298 880
B. Helmets:
Information for three months ended 30 September 2017:
Stock balances according to physical count:
COST PRICE
UNITS TOTAL (R)
PER UNIT (R)
1 July 2017 30 R500 R15 000
30 September 2017 12 ?
Purchases:
UNITS COST PRICE
DATE TOTAL (R)
PURCHASED PER UNIT (R)
20 July 2017 25 R510 R12 750
20 August 2017 30 R525 R15 750
20 September 2017 20 R540 R10 800
TOTAL 75 R39 300
Returns: Five defective helmets from the purchases in August 2017

were returned to suppliers for a full refund.
Sales: 85 helmets were sold at R600 each.
35

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QUESTION 6: BUDGETS (30 marks; 20 minutes)
You are provided with information relating to Lamba Traders, a business owned
by Larry Lamba. The business sells cleaning materials for cash and on credit.
They deliver goods free of charge to local customers.
REQUIRED:
6.1 Explain the main purpose of a Cash Budget and a Projected Income
Statement. (2)
6.2 Debtors:
Refer to Information A and Information B.
The credit terms allow debtors to settle accounts by the end of the month
following the sales transaction month. No discount is allowed. However,
based on past experience, Larry expects debtors to pay according to the
Debtors' Collection Schedule.
6.2.1 Use the November figures to calculate the following:
• % of debtors that are expected to comply with the credit terms

• % of bad debts expected (9)
6.2.2 Larry does not believe that his debtors' control clerk, Shirley,
deserves a bonus on 31 October 2017. Provide evidence to support
his opinion. Offer Larry advice to improve debtors' collections
(TWO points). (4)
6.3 Projected Income Statement:
Refer to Information C and Information D.
6.3.1 Calculate:
• The fixed % of sales used by Larry to budget for delivery

expenses (2)
• The amount of the loan to be repaid on 31 December 2017 (4)
6.3.2 Refer to variances in Information D.
Explain why Larry would feel that all these variances are problems
for his business. (9)

NSC
INFORMATION:
A. Debtors' Collection Schedule for the period ending 28 February 2018:
CREDIT COLLECTIONS
SALES NOV. 2017 DEC. 2017 JAN. 2018 FEB. 2018
R R R R R
September 112 000 16 800
October 134 400 75 264 20 160
November 224 000 56 000 125 440 33 600
December 358 400 89 600 200 704 53 760
January 179 200 44 800 100 352
February 112 000 28 000
148 064 235 200 279 104 182 112
B. The debtors' clerk presented the following age analysis at the end
of October 2017:
CURRENT
TOTAL 1 MONTH 2 MONTHS 3 MONTHS +
MONTH
100% 18% 40% 23% 19%
C. Extract from the Projected Income Statement:
NOV. 2017 DEC. 2017 JAN. 2018 FEB. 2018

Interest on loan
R2 975 R2 975 R2 465 R2 465
(rate 8,5% p.a.)
D. Figures provided by the accountant on 31 October 2017:
PROJECTED ACTUAL VARIANCE

Total sales 320 000 290 000 –30 000
Cash sales 96 000 50 000 –46 000
Credit sales 224 000 240 000 +16 000
Advertising 5 000 1 000 –4 000
Packing material 4 800 4 800 0
Delivery expenses 12 800 12 500 –300
30
TOTAL: 300
Copyright reserved
STICKER
CENTRE NUMBER
EXAMINATION NUMBER
NATIONAL SENIOR CERTIFICATE
ACCOUNTING
GRADE 12
NOVEMBER 2017
SPECIAL ANSWER BOOK
QUESTION MARKS INITIAL MOD.

1
2
3
4
5
6
TOTAL
This answer book consists of 17 pages.

NSC – Answer Book
QUESTION 1
1.1
1.1.1
1.1.2
1.1.3
3
1.2.1
Calculation of CRJ total Calculation of CPJ total
90 500 85 920
Bank account balance:
14
1.2.2 Bank Reconciliation Statement on 30 June 2017

NSC – Answer Book
Explain TWO strategies to prevent this in future.
Strategy 1:
Strategy 2:
TOTAL MARKS
30

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QUESTION 2
2.1.1 PRODUCTION COST STATEMENT

FOR THE YEAR ENDED 28 FEBRUARY 2017
Direct material cost
Direct labour cost
Prime cost
Factory overhead cost
Total cost of production

14
2.1.2 ABRIDGED INCOME STATEMENT

FOR YEAR ENDED 28 FEBRUARY 2017
Sales
Cost of sales
Gross profit
Administration cost
Selling and distribution cost
Net profit
14

NSC – Answer Book
2.2.1 Shirts:
Calculate the break-even point for shirts.
4
Identify ONE variable cost (with figures) that has not been well
controlled. Give TWO possible reasons for this problem.
ONE VARIABLE
REASONS
COST WITH FIGURES
Reason 1:
Reason 2:
4
Explain why Jan might be concerned about the large decreases in the
other TWO variable costs.
4
Jan does not understand why the unit cost of production has increased
when neither his fixed costs nor the variable costs have increased.
Explain why this is so. State ONE point (with figures).

NSC – Answer Book
2.2.2 Shoes:
Calculate the % increase in the selling price of shoes.
3
Jan decided to improve the quality of the shoes and to export them.
Explain how the direct material costs and the selling and distribution
costs were affected by this decision. Provide figures.
4
Jan was concerned that the increase in price would have a negative
impact on the business. Explain whether his concern was justified. State
TWO points.
Point 1:
Point 2:
TOTAL MARKS
55

NSC – Answer Book
QUESTION 3
3.1
(a) Calculate the carrying value of Land and Buildings on 1 March 2016.
2
(b) Calculate the total depreciation on Vehicles on 28 February 2017.
6
(c) Calculate the carrying value of Vehicles on 28 February 2017.
4
(d) Calculate the carrying value of Equipment sold on 31 December 2016.
6
(e) Calculate the total carrying value of Fixed Assets on 28 February 2017.

NSC – Answer Book
3.2 BALANCE SHEET OF ODETTE LTD ON 28 FEBRUARY 2017
ASSETS
NON-CURRENT ASSETS
CURRENT ASSETS
Inventory 408 880
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Ordinary share capital
Retained income 520 000
NON-CURRENT LIABILITIES
CURRENT LIABILITIES
TOTAL EQUITY AND LIABILITIES 37

NSC – Answer Book
3.3 AUDIT REPORT
As a shareholder, what concerns would you have regarding this audit

report? Explain THREE points.
Point 1:
Point 2:
Point 3:
TOTAL MARKS
65

NSC – Answer Book
QUESTION 4
4.1
4.1.1
4.1.2
4.1.3
4.1.4
4
4.2 SO-FINE LTD
4.2.1 ORDINARY SHARE CAPITAL
AUTHORISED SHARE CAPITAL

1 200 000 ordinary shares
ISSUED SHARE CAPITAL

900 000 Ordinary shares on 1 September 2016
Ordinary shares on 31 August 2017 5 292 000 7
RETAINED INCOME
Balance on 1 September 2016 147 370
Ordinary share dividends
Balance on 31 August 2017 9

NSC – Answer Book
4.2.2 SO-FINE LTD
CASH FLOW STATEMENT FOR THE YEAR ENDED 31 AUGUST 2017
CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations
Interest paid
Dividends paid
Income tax paid ?
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of fixed assets ?
? ?
Change in investments
CASH FLOWS FROM FINANCING ACTIVITIES
? ?
? ?
Change in non-current liabilities
Net change in cash and cash equivalents ?

Cash and cash equivalents – opening balance ?
Cash and cash equivalents – closing balance ? 19
4.2.3 Calculate the percentage operating profit on sales.
3
Calculate the debt-equity ratio.
4.2.4 Calculate the dividends per share (DPS) of a shareholder who owned
the same number of shares for the entire financial period.

NSC – Answer Book
4.3 CASTRO LTD
4.3.1 Comment on the price of R9,10 charged by Castro Ltd for the new
shares issued.
4.3.2 Explain how the issue of new shares has affected the financial gearing
and risk of Castro Ltd. Quote TWO financial indicators.
4.3.3 If Henry wanted to retain his 60% shareholding in the company, how
many shares would he have had to buy?
3
How much would he have had to pay?
2
Henry decided NOT to buy these shares. Apart from the
% shareholding, explain TWO reasons why he has made a mistake by
not taking up this option.
Reason 1:
Reason 2:

NSC – Answer Book
RONKI LTD

indicators.
4.3.5 Comment on the price paid by Ronki Ltd for the repurchase (buy-back)
of shares.
repurchase of the shares by Ronki Ltd.
Point 1:
Point 2:
Point 3:
TOTAL MARKS
85

NSC – Answer Book
QUESTION 5
5.1 CONCEPTS
5.1.1
5.1.2
5.1.3
5.1.4 4
Motorbikes:
5.2.1 Calculate the value of the closing stock on 30 September 2017 using
the specific identification method.
5.2.2 Mike requires your advice on the three different models of motorbikes
in which he is trading. Explain TWO points of advice.
Point 1:
Point 2:

NSC – Answer Book
Helmets:
the weighted-average method.

Explain ONE point.
security cameras being installed. Provide a calculation to verify his
suspicion.
5
What can Mike do to improve the internal control of stock?
State THREE points.
Point 1:
Point 2:
Point 3:
TOTAL MARKS
35

NSC – Answer Book
QUESTION 6
6.1 Explain the main purpose of a Cash Budget.
Explain the main purpose of a Projected Income Statement.
6.2.1 Larry expects debtors to settle accounts by the end of the month
following the sales transaction month.
Use the November figures to calculate the % of debtors that are

expected to comply with the credit terms.
Use the November figures to calculate the % of bad debts expected.
6.2.2 Larry does not believe that his debtors' control clerk, Shirley, deserves
a bonus on 31 October 2017.
Provide evidence to support his opinion.
Offer Larry advice to improve debtors' collections (TWO points).
Point 1:
Point 2:

NSC – Answer Book
6.3.1 Calculate the fixed % of sales used by Larry to budget for delivery
expenses.
Calculate the amount of the loan to be repaid on 31 December 2017.
6.3.2 Refer to variances in Information D. Explain why Larry would feel that
all these variances are problems for his business.
COMMENT ON VARIANCES
Sales
Advertising
Packing
materials
Delivery
expenses
TOTAL MARKS
30
TOTAL: 300
Copyright reserved
NATIONAL
SENIOR CERTIFICATE
GRADE 12
ACCOUNTING
NOVEMBER 2017
MARKING GUIDELINES
MARKS: 300
MARKING PRINCIPLES:
1. Unless otherwise stated in the marking guideline, penalties for foreign items are applied only if the
candidate is not losing marks elsewhere in the question for that item (no penalty for misplaced item).
No double penalty applied.
2. Penalties for placement or poor presentation (e.g. details) are applied only if the candidate is earning
marks on the figures for that item.
3. Full marks for correct answer. If answer incorrect, mark the workings provided.
4. If a pre-adjustment figure is shown as a final figure, allocate the part-mark for the working for that
figure (not the method mark for the answer). Note: if figures are stipulated in memo for components of
workings, these do not carry the method mark for final answer as well.
5. Unless otherwise indicated, the positive or negative effect of any figure must be considered to award
the mark. If no + or – sign or bracket is provided, assume that the figure is positive.
6. Where indicated, part-marks may be awarded to differentiate between differing qualities of answers
from candidates.
7. This memorandum is not for public distribution, as certain items might imply incorrect treatment. The
adjustments made are due to nuances in certain questions.
8. Where penalties are applied, the marks for that section of the question cannot be a final negative.
9. Where method marks are awarded for operation, the marker must inspect the reasonableness of the
answer and at least one part must be correct before awarding the mark.
10. Operation means 'check operation'. 'One part correct' means operation and one part correct. Note:
check operation must be +, -, x, ÷, or per memo.
11. In calculations, do not award marks for workings if numerator & denominator are swapped – this also
applies to ratios.
12. In awarding method marks, ensure that candidates do not get full marks for any item that is incorrect
at least in part. Indicate with a .
13. Be aware of candidates who provide valid alternatives beyond the marking guideline.
14. Codes: f = foreign item; p = placement/presentation.
These marking guidelines consist of 17 pages.
NSC – Marking Guidelines
QUESTION 1
1.1
1.1.1 False 
1.1.2 False 
1.1.3 True 
3
1.2.1
Calculation of CRJ total Calculation of CPJ total
90 500 85 920
9 750 
2 900 in CRJ and 6 300
9 200 in CPJ
OR 9 200 
Both for two marks
(2 900)
(5 500) in CRJ one mark 11 000
5 500 in CPJ one mark or 5 500 & 5 500 
one mark each
16 500  2 290 
750 
May be combined as R320
900  OR R1 220-R900 in CPJ 1 220 
for two marks
117 650 107 480

Foreign entries -1 e.g. 8 550; 13 590; 16 200; 30 000
Be aware of other foreign entries that are incorrectly duplicated in journals and/or reconciliation.
Bank account balance:
May prepare a ledger account
–5 210  + 117 650  – 107 480  = R4 960 

see CRJ +ve see CPJ -ve if one mark allocated in workings
14
1.2.2 Bank Reconciliation Statement on 30 June 2017

One-
May start with ledger balance DEBIT CREDIT column
method
Balance per Bank Statement 9 740
Do not accept
9 740
check balancing figure R1 450
Outstanding deposits 40 500  40 500
Outstanding cheques
• 819 7 650  (7 650)
• 870 16 800  (16 800)
Outstanding EFT 2 250  (2 250)
Credit incorrect bank charges 900  900
Balance per bank account 4 960 4 960
see 1.2.1
41 400 41 400
Foreign entries -1 e.g. 8 550; 13 590; 16 200; 30 000
-1 incorrect / no details Foreign items -1
For 2-column method with brackets used, do not accept brackets/negatives in any column. 9


Valid explanation  Evidence 
Expected responses:
Deposits are not being done promptly / Late deposits (leads to cash flow
problems)
OR
Rolling of cash / could indicate theft
Evidence: Dates or figures

• Deposit of R30 000 / 17 May / approx. 16 days was outstanding at month
end
• Deposit of R16 200 / 31 May / approx. 16 days only reflected on statement
on 16 June
• Deposit of Slip 451 /R40 500 / 25 June outstanding at month-end
Explain TWO strategies to prevent this in future.
TWO valid points   accept short explanations; may be phrased differently

• Division of duties: The person receiving the money and issuing receipts
should be different from the person completing the deposit slip and
another person should deposit the money at the bank so that one can
serve as a check on the other.
• Senior personnel should check via internet banking / deposit slips
that deposits reflected daily.
• Request SMS from bank for all transactions.
• Use a security company to collect the deposits on a daily/regular basis.
• Encourage debtors to make direct transfers (EFT).
4
TOTAL MARKS
30

QUESTION 2
2.1.1 PRODUCTION COST STATEMENT

FOR THE YEAR ENDED 28 FEBRUARY 2017
Direct material cost (1 050 000 + 102 000)  1 152 000
Direct labour cost Prime cost – DMC  648 000
Prime cost  1 800 000
(– 84 000 one mark +100 800 one mark)  504 000
Factory overhead cost (487 200 + 16 800) operation; one part correct
operation Prime + FOHC  2 304 000
Work-in process (beginning)  160 000
2 464 000
Work-in process (end) operation TCP – subtotal above
Check that is deducted; ignore brackets  (88 000)
do not accept 160 000 or 0
Total cost of production 7 200 x R330 No part marks  2 376 000
14
2.1.2 ABRIDGED INCOME STATEMENT

FOR YEAR ENDED 28 FEBRUARY 2017
Sales  4 080 000

See TCP 2.1.1 400 x R330
Cost of sales (336 000 + 2 376 000  – 132 000 )
OR 8 000–1 200 no part marks  (2 580 000)
(1 200 x R280) + (6 800 x R330) Could do FGS account Ignore brackets
one mark two marks one mark
Gross profit Sales – COS  1 500 000

20% x 126 000
126 000–100 800  (131 600)
(– 42 000 + 25 200 one method mark) one part correct
Ignore brackets
Administration cost (148 400 – 16 800  see 2.1.1)
Selling and distribution cost (422 000 – 102 000)  (320 000)
One part correct Ignore brackets
Net profit operation (subtract AC & SDC) one part correct  1 048 400
14

2.2.1 Shirts:
Calculate the break-even point for shirts.
64 two marks
530 000 ÷ (302 – 238) = 8 281,25 / 8 282 / 8 281 / 8281,3
    one part correct; do not accept R or c
4
Identify ONE variable cost (with figures) that has not been well
controlled. Give TWO possible reasons for this problem.
ONE VARIABLE
COST WITH FIGURES REASONS
 
Variable cost  Any two different reasons
Figures 
Expected responses:
• Negotiated wage increase / applied minimum
wage / inflation / increased salary scales (for
qualifications)
• Paid bonuses to some workers
• Excessive overtime
Direct labour cost
• Lack of productivity (inefficiency) of workers
Increased by R31 • Inexperienced / poorly trained workers
(31%) • High staff turnover rate
(from R100 to R131) • Old equipment affects productivity
• Work hours lost due to training time (workers paid
for training) / due to load-shedding (power-cuts) /
due to paid sick leave
• Errors in calculation of wages (over-paid)
Do not accept: More workers; Absent workers; Poor budgeting
4
Explain why Jan might be concerned about the large decreases in the other
TWO variable costs.
Explanations on the two VC’s State or imply what the concern is
   
Using cheaper material Inferior quality.
Comment
Economising on material May affect the quality of the
on DMC
product
Reduced advertising or May cause sales to drop / may
reduced commission / reduced demotivate salespersons
remuneration of salespersons
Comment Reduced distances for Leads to loss of customers
on S&DC deliveries / discontinuing the
service in certain areas
Out-sourcing / using cheaper Might be inferior and negatively
service providers affect business in future 4
Jan does not understand why the unit cost of production has increased when
neither his fixed costs nor the variable costs have increased. Explain why this
is so. State ONE point (with figures).
Any one explanation  Figures 
Expected responses: Part-marks for unclear/incomplete explanation
• No economies of scale / decrease in production by 8 900 units (25 000 to 16 100)
• Lower production increased FC per unit by R11,72 or 55,2% (R21,20 to R32,92) 4

2.2.2 Shoes:
Calculate the % increase in the selling price of shoes.

1 640–1 260
380  x 100 OR 130,2% -100%= 30,2%
1 260  1
= 30,2%  one part correct; accept 30% or 30,15%; 3

Jan decided to improve the quality of the shoes and to export them.
Explain how the direct material costs and the selling and distribution
costs were affected by this decision. Provide figures.
• DMC increased from R330 to R456 (by R126/by 38%/38,2%) 

• S&DC increased from R28 to R194 (by R166/by 593%/592,8%) 4
Jan was concerned that the increase in price would have a negative
impact on the business. Explain whether his concern was justified. State
TWO points.
Figures are not needed, but may be used to make a point about the concern.
Reasons (any two)   State NO concern OR imply NO concern

in explanation or by using figures  
• Sales increased (by 1 250 units) / customers still supported the
business (despite increase in price)
• Net profit increased (by R1 196 750) / price did not negatively affect
sales)
• BEP decreased (due to increased contribution per unit) by 475 units
/ The business now exceeds BEP by bigger margin (3 908 units). 4
TOTAL MARKS
55

QUESTION 3
3.1
(a) Calculate the carrying value of Land and Buildings on 1 March 2016.
2 550 000 – 325 000 = 2 225 000  no part marks

2
(b) Calculate the total depreciation on vehicles on 28 February 2017.
Allocate the marks to correct workings even if subtotals not shown.
New:
422 550 x 20/100 x 6/12 = 42 255 
Old: one mark
350 000 x 20/100 = 70 000 but can only write off R34 999 
(350 000 – 315 000) = 35 000–1 = 34 999
42 255 + 34 999 = 77 254  one part correct
6
(c) Calculate the carrying value of Vehicles on 28 February 2017.
Note: Apply Marking Principle10
Mark one line only – choose line to benefit candidate
see (b) above one part correct

35 000  + 422 550  – 77 254  = 380 296 
OR
one mark one mark one method mark one method mark
772 550 – (315 000 + 77 254 see (b) above = 380 296
392 254 two marks
4
(d) Calculate the carrying value of Equipment sold on 31 December 2016.
30 900 four marks 18 900 three marks

22 800 two marks
120 000  – (12 000 + 10 800  + 8 100 ) = 89 100  one part correct
108 000 two marks
OR
one mark one mark one mark two marks one method mark
120 000 – 12 000 – 10 800 – 8 100 = 89 100
6
(e) Calculate the total carrying value of fixed assets on 28 February 2017.
see (c) above one part correct

2 550 000  + 380 296  + 50 994  = 2 981 290 
4

3.2 BALANCE SHEET OF ODETTE LTD ON 28 FEBRUARY 2017

Placement presentation – 1 if marks earned in each case
ASSETS
NON CURRENT ASSETS (TA – CA) 4 010 940 
Fixed assets See (3.1 e) 2 981 290 
3 Financial assets (Fixed Deposit) 1 029 650 
Non-current assets – Fixed assets
CURRENT ASSETS CL X 2,1 870 660 

Inventory 408 880
Trade and other receivables 84 080 *
67 200  – 270  + 6 800 +10 350 
Cash and cash equivalents 377 700 
CA – Inv – T & OR
12 TOTAL ASSETS SHE + L 4 881 600 
EQUITY AND LIABILITIES

SHAREHOLDERS EQUITY 675 000  x 620 c  4 185 000 
900 000 x 75%
Ordinary share capital SE – 520 000 3 665 000 

4 Retained income 520 000
NON-CURRENT LIABILITIES 282 000

Loan: Beque Bank
376 000–92 000
4    282 000 *
284 000 + 48 000 – 50 000
332 000 two marks
CURRENT LIABILITIES 414 600 *

# Trade and other payables 184 000 + 5 600 189 600 *
## SARS: Income tax 222 000  – 209 000  13 000 *
518 000 x 30/70
See no. of shares in SHE
Shareholders for dividends (675 000  x 0,24) 162 000 *
Current portion of loan 50 000 
14 TOTAL EQUITY AND LIABILITIES 4 881 600 * 37
*one part correct
#Trade and other payables can combine the other elements under current liabilities. Allocate the part-marks accordingly.
If SARS and S/Hs for divs are included in T&OP, award one method mark in each case for workings included.
## Inspect treatment of SARS (income tax) to check if candidate deducts interest from net profit to calculate tax

3.3 AUDIT REPORT
As a shareholder, what concerns would you have regarding this audit

report? Explain THREE points.
Any three different valid points   

Part-marks for unclear/incomplete explanation
Note: Candidates should not restrict responses to the commenting on the two specific points in the audit report as
there would be several concerns arising from those two points.
Expected responses:
• This is a disclaimer report (no audit opinion).
• It will have a negative effect on the company e.g. reputation / share price
/ demand for shares / bad publicity / potential investors lose confidence in
the company.
• The corporate governance of the company is compromised /not in line
with King Code.
• The correct procedure of approving directors' fees / bonuses was not
followed.
• The directors have abused their position.
• The huge amount paid to directors could negatively affect the financial
results/liquidity and solvency/profitability of the company.
• Insufficient audit evidence.
6
TOTAL MARKS
65

QUESTION 4
4.1
4.1.1 Directors 
4.1.2 Internal auditor 
4.1.3 Shareholder 
4.1.4 External auditors 
4
4.2 SO-FINE LTD
4.2.1 ORDINARY SHARE CAPITAL
AUTHORISED SHARE CAPITAL

1 200 000 ordinary shares
ISSUED SHARE CAPITAL

Ordinary shares on 1 September 2016
900 000 Balancing figure; 4 725 000 
check that repurchase added back and issue deducted back

150 000 Issued on 1 May 2016 at R6,30 each 945 000 
(378 000)
Re-purchased 30 August 2017 one part correct
(70 000) i.e.70 000 or R5,40; 
(ASP: R5,40) 5 292 000/980 000 no part marks do not accept 437 500
as final answer
980 000  Ordinary shares on 31 August 2017 5 292 000 7
RETAINED INCOME
Balance on 1 September 2016 147 370
Shares repurchased (437 500  – 378 000 )
70 000 x 0,85 Or 70 000 x (6,25 – ASP) OSC above (59 500) *
437 500/70 000
Ordinary share dividends one part correct (276 000) *
• Interim dividends (900 000  x 0,12) one part correct 108 000 

• Final dividends 168 000 
`
Balance on 31 August 2017 one part correct;

250 000 *
*both figures must be subtracted 9

4.2.2 SO-FINE LTD: CASH FLOW STATEMENT FOR YEAR ENDED 31 AUGUST 2017
If a working is shown as a final answer, award working mark only if brackets correctly applied for that item
If item is incorrectly placed, award no marks for details or figures
# Signs may be reversed; apply consistently; mark one line only to benefit candidate
## If workings not shown but figure is correct without brackets, award marks to cover workings and penalise on
answer
Correct use of brackets to earn the
CASH FLOWS FROM OPERATING ACTIVITIES mark on the final answer for each
item in this column
*one part correct and correct use
Cash generated from operations of brackets
Interest paid
Dividends paid
Income tax paid #–2 400  + 187 770  – 11 800 
? ## (173 570) *
4 OR 2 400 – 187 770 + 11 800
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of fixed assets
# 6 177 000  + 320 000  + 324 000  – 4 975 000  ? ## (1 846 000) *
–6 177 000 – 320 000 – 324 000 + 4 975 000
?  Proceeds from sale of fixed assets ? 324 000 
7 Change in investments
CASH FLOWS FROM FINANCING ACTIVITIES
?  Proceeds from issue of share capital see 4.2.1 ? 945 000 
?  Repurchase of shares ? (437 500) 
4 Change in non-current liabilities
Net change in cash and cash equivalents ? 86 000 *

Cash and cash equivalents – opening balance ? (62 600) 
(2 500 – 65 100)
4 Cash and cash equivalents – closing balance ? 23 400  19
4.2.3 Calculate the percentage operating profit on sales.

697 000  x 100 = 8,1%  one part correct % sign not necessary
8 652 000  3
Calculate the debt-equity ratio.
5 542 000 two marks See 4.2.1
985 000  : (5 292 000  + 250 000 ) = 0,2 : 1 one part correct
if superfluous items added in workings, but answer is still the same, penalise on answer 4
4.2.4 Calculate the dividends per share (DPS) of a shareholder who owned the
same number of shares for the entire financial period.
900 000 + 150 000
(168 000 /1 050 000  x 100) + 12 cents  = 28 cents  one part correct
16 cents two marks
4

4.3 CASTRO LTD
4.3.1 Comment on the price of R9,10 charged by Castro Ltd for the new shares
issued.
Compare issue price to market price or NAV  Part-marks for partial or incomplete explanation
Figures R12,00 or R10,73  Could quote differences e.g. R2,90 or R1,63
Expected responses:
• The shares were issued at the average share issue price.
The existing shareholders are being rewarded as the price is lower than the
R12,00 charged on the JSE and the NAV of R10,73.
• The shares could have been issued at the market price of R12,00 or the NAV
of R10,73 (they have diluted the value of the shares). 3
4.3.2 Explain how the issue of new shares has affected the financial gearing and
risk of Castro Ltd. Quote TWO financial indicators.
Explanation   Financial indicators   Figures  
Superfluous indicators (i.e. more than two indicators) -1 max
Expected responses:
one mark
• Gearing has improved – less risk (as there was an issue of new shares)
one mark one mark
debt-equity ratio decreased from 0,8 : 1 to 0,5 : 1 (by 0,3 : 1)
one mark one mark
• ROTCE improved (due to increased efficiency / profits on new branch)
one mark
from 15 % to 20 % (by 5% or 33,3%)
Candidates may also compare ROTCE to their estimate of current interest rate 6
4.3.3 If Henry wanted to retain his 60% shareholding in the company, how many
shares would he have had to buy?
   one part correct
(700 000 x 60%) – (500 000 x 60%) = 120 000
420 000 300 000
OR two marks one method mark (if x 60%)
200 000 x 60% = 120 000 3

How much would he have had to pay?
120 000 shares at R9,10 each = R1 092 000  If = no.shares (above) x R9,10 2
Henry decided NOT to buy these shares. Apart from the
% shareholding, explain TWO reasons why he has made a mistake by not
taking up this option.
Explanation   Figures  
Part-marks for partial or incomplete explanation
Expected responses: Any two

• His dividends would have increased by R61 200 (51c x 120 000 shares). This
is more than the interest he earned on the savings account R54 600
(1 092 000 see above x 5%)
• He could buy the shares for capital growth - bought the shares for R9,10 and
then could sell them on the JSE for R12,00 / total profit could have been
R348 000 / would be a good buy as R12,00 exceeds NAV R10,73
• He would have earned more dividends on bigger investment (51c/910c =
5,6%)
• ROSHE would be 23% on a bigger investment.
• He would lose 120 000 votes at the AGM. 6
RONKI LTD

indicators.
Explanation:  Superfluous indicators (i.e. more than two indicators) -1
The liquidity situation has improved / is able to meet current debts / liquidity
ratios have decreased / liquidity ratios are more efficient
Financial indicators any two   Figures  
• Current ratio has improved/decreased (from 3,5 : 1) to 1,9 : 1
• Acid-test ratio has improved/decreased (from 1,7 : 1) to 1,1 : 1
• Stock-holding period appears to be efficient at 54 days (less than 2
months) 6
4.3.5 Comment on the price paid by Ronki Ltd for the repurchase (buy-back)
of shares.
Expected response:  Part-marks for partial or incomplete explanation

The company is paying a premium above the average share price in order
to entice shareholders to give up their shares / they wanted to increase
returns by decreasing equity / this is a fair value same as the price on the
JSE.
Compare price paid (R15,00) to Any one figure 
• market value R15,00
• net asset value R13,30
• average issue price of shares R10,20 3
repurchase of the shares by Ronki Ltd.
Explanation    Figures   
Expected responses: Three different responses

• He has now become a majority shareholder. His 300 000 shares are
51,7% of the total shares (33,3% before the share buy-back)
• Due to the reduced number of shares, his return has improved i.e. EPS
has increased by 95c / from 171c to 266c / ROSHE increased from 13%
to 16%. (NOTE: EPS and ROSHE reinforce the same point).
• The reduced number of shares could have contributed to an increase in
the DPS by 57c / by 55,3% / from 103c to 160c (Directors may have
maintained the dividend pay-out policy). 6
TOTAL MARKS
85

QUESTION 5
5.1 CONCEPTS
5.1.1 Weighted average / WA 

5.1.2 Perpetual 
5.1.3 First-in-first-out / FIFO 
5.1.4 Expense  4
Motorbikes:
the specific identification method.
243 000  + 109 600  + 252 800  = 605 400  one part correct
18 – 8 15 – 11 18 – 10
(10 x 24 300) + (4 x 27 400) + (8 x 31 600)
OR
OS +P – COS = CS
one mark one mark four marks one method mark
291 600 + 1 125 600 – 811 800 = 605 400
316 000 + 301 400 + 194 400 7
5.2.2 Mike requires your advice on the three different models of motorbikes
in which he is trading. Explain TWO points of advice.
Any TWO valid points of advice  

Expected responses:
• Reduce the price of AO2 to increase sales / A lower mark-up% will help
in reducing stock levels.
• Discontinue / decrease the AO2 product and look at stocking alternative
later model products.
• Stock more AO3 products as they seem to be more popular and in an
affordable range.
• Stock more of the AO4 model because gross profit per unit is the biggest
on the item. 4

Helmets:
the weighted-average method.
51 675 four marks

54 300 two marks (5 x 525) two marks
15 000  + 39 300  – 2 625  x 12  = 6 201  one part correct; must x12
30  + 75  – 5 
105 two marks 100 three marks
(517 x 12)
OR 516,75 x 12 = 6 201 or 6 204 (weighted-average rounded off)
seven marks 9

Explain ONE point.
Yes/No  Explanation  Part-marks for unclear/incomplete explanation
Explanation for yes:

• These are low cost compared to the other products Mike sells.
• The items are of similar value.
Explanation for no:
• Helmets are only demanded by a select few bike enthusiasts.
• The business does not buy very large quantities.
• The prices are always increasing so the later model will be more
expensive. 3
using security cameras. Provide a calculation to verify his suspicion.
(30 + 75 – 5)
100  – 12  – 85  = 3 helmets missing  One part correct
One part correct 5
What can Mike do to improve the internal control of stock?
State THREE points.
Three valid points   
Expected responses:
• Do regular physical stock counts
• Place tracking devices on the products / security price tags
• Provide secure display cabinets for the stock
• Improve security at the gates / inspect items and check to sales slip
• Division of duties (if staff is suspected)
• Buy in smaller quantities / more regularly
Do NOT accept security cameras / CCTV 3
TOTAL MARKS
35

QUESTION 6
6.1 Explain the main purpose of a Cash Budget.
Explanation 
To predict the cash balances / cash flow for a period
To project / plan / forecast receipts and payments.
Explain the main purpose of a Projected Income Statement.

Explanation 
To predict the profit that will be earned for a period
To plan / forecast income and expenses. 2
6.2.1 Larry expects debtors to settle accounts by the end of the month following
the sales transaction month.
Use the November figures to calculate the % of debtors that are expected to
comply with the credit terms.
181 440 two marks one part correct

  
56 000 + 125 440 x 100 = 81%
224 000 
two marks* one mark one method mark *allocate two marks to the first correct % calculation
OR 25% + 56% = 81%
Use the November figures to calculate the % of bad debts expected.

8 960 three marks
-181 440 one mark
 (  )   one part correct
224 000 – 56 000 –125 440 – 33 600 x 100 = 4%
224 000 
one mark one mark one mark one mark one method mark
OR 100% – 25% – 56% – 15% = 4% 9
6.2.2 Larry does not believe that his debtors' control clerk, Shirley, deserves
a bonus on 31 October 2017.
Provide evidence to support his opinion.
Explanation (calculation / figures) from the Age Analysis  Figure 
58% of the amounts owed are still within the credit terms
OR
42% of the amounts owed are not complying with terms
Offer Larry advice to improve debtors' collections (TWO points).
Two valid points  
Expected responses:
• Contact debtors through statements / phone calls / SMS / reminders
• Offer discounts for prompt payments.
• Give her a bonus if she collects the outstanding amounts
• Charge interest
• Refuse to sell to debtors who are not compliant
• Improve screening process (so that bad debtors do not open accounts).
Note: Do not accept implement screening of debtors (i.e. already debtors) 4
6.3.1 Calculate the fixed % of sales used by Larry to budget for delivery
expenses.
4%  % sign not needed
Calculate the amount of the loan to be repaid on 31 December 2017.

    One part correct
510 x 12 ÷ 0,085 = R72 000
2 975 – 2 465
OR
one mark one mark one mark one method mark
510 x 12 x 100 = R72 000
2 975 – 2 465 8,5
OR two marks one mark one method mark; one part correct
(2 975 x 12 ÷ 0,085) – (2 465 x 12 ÷ 0,085) = 72 000
420 000 348 000
OR two marks one mark one method mark; one part correct
420 000 348 000
1 200 x 2 975 – 1 200 x 2 465 = 72 000
8,5 8,5 6
6.3.2 Refer to variances in Information D. Explain why Larry would feel that
all these variances are problems for his business.
Figures not required
COMMENT ON VARIANCES
Cash sales are under budget, while credit sales are

Sales over budget. This will contribute to cash flow problem of
the business. 
The full advertising budget was not used (under-spent)

Advertising
which could have led to the decline in sales. 
Packing There was no saving in packing materials (misuse of

materials packing materials)  despite the decline in sales. 
There should have been a bigger saving in delivery

Delivery expenses as sales decreased by 9,4%, while delivery
expenses expenses decreased by only 2,3%. / 4,3% of total sales
while budget was 4%.
9
TOTAL MARKS
30
TOTAL: 300
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This question paper consists of 21 pages and a 17-page answer book.

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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.

6. Where applicable, show all calculations to ONE decimal point.

7. Write neatly and legibly.

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QUESTION 1: 30 marks; 20 minutes

QUESTION 2: 55 marks; 30 minutes

QUESTION 3: 65 marks; 40 minutes

QUESTION 4: 85 marks; 50 minutes

QUESTION 5: 35 marks; 20 minutes

QUESTION 6: 30 marks; 20 minutes

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QUESTION 1: BANK RECONCILIATION AND INTERNAL CONTROL

1.1.1 A favourable balance on the Bank Statement is indicated as a debit.

1.1.2 A post-dated cheque received must be entered on the date received.

1.2 MENZIES TRADERS

The given information relates to Menzies Traders for June 2017.

1.2.1 Calculate the following on 30 June 2017:

1.2.2 Prepare the Bank Reconciliation Statement on 30 June 2017. (9)

1.2.3 Explain the problem relating to deposits. Quote evidence.

A. The Bank Reconciliation Statement on 31 May 2017 showed the

Unfavourable balance on the Bank Statement R1 450

Unfavourable balance on the Bank account in the Ledger R5 210

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B. Provisional Cash Journal totals on 30 June 2017:

• Cash Receipts Journal: R90 500

JOURNAL DOCUMENT DATE DETAILS AMOUNT

JOURNAL DOCUMENT DATE DETAILS AMOUNT

DATE DETAILS DEBIT CREDIT

E. The Bank Statement on 30 June 2017 reflected a balance of R?.

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QUESTION 2: MANUFACTURING (55 marks; 30 minutes)

2.1 GEVEN MANUFACTURERS

The business produces wooden tables.

Prepare the following for the year ended 28 February 2017:

2.1.1 Production Cost Statement (14)

2.1.2 Abridged Income Statement (14)

28 FEBRUARY 2017 1 MARCH 2016

B. Production and sales for the year:

• 7 200 tables were produced at a unit cost of R330 each.

C. Costs (before adjustments):

Administration R148 400

• Payment to EZ Transport, R102 000, was incorrectly allocated to

D. Prime cost: R1 800 000 (after adjustments)

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2.2 GYMWEAR MANUFACTURERS

Gymwear Manufacturers is owned by Jan Fiks. They produce shoes and

• Calculate the break-even point for shirts. (4)

- Explain why Jan might be concerned about the large