FAC1502 Tutorial letter 102:3:2020-Financial Accounting Concepts Principles and Procedures

FAC1502 102/3/2020-Tutorial letter 102/3/2020-Financial Accounting Concepts Principles and Procedures/  QUESTION 4 (27 marks)(30 minutes) 1. The following is an extract from the general ledger of Smart Boutique for December 20.1: Dr Trade receivables control Cr 20.1 Dec 1 31 Balance (correct) b/d Bank (total: trade receivables column) Settlement discount granted Credit sales Drawings Purchases returns (credit purchases) R 15 670 45 495 685 48 165 150 2 131 20.1 Dec 31 Sales returns (credit sales) Bank (R/D cheque) Credit purchases Cash purchases Settlement discount received Bank (total: trade payables column) Balance c/d R 2 220 425 33 801 1 008 275 3 980 70 587 112 296 112 296 20.2 Jan 1 Balance b/d 70 587 2. Additional information 2.1 An inexperienced bookkeeper prepared the trade receivables control account. 2.2 In addition to the errors made in the trade receivables control account above, an investigation revealed the following:  The total of the trade receivables balances as per the list of trade receivables at 31 December 20.1 amounted to R16 060.  An amount of R115, which has been written off as credit losses, has erroneously been added to the credit sales amount of R48 165. This entry has been posted correctly to the applicable account in the trade receivables ledger.  The sales journal was overcast by R420.  Credit sales of R170 was posted correctly to the sales account and the trade receivables control account in the general ledger, but was not posted to the specific debtor’s account in the trade receivables ledger.  Credit note number 003 for R70 was recorded correctly in the sales returns journal but posted to the wrong side of the personal account of the debtor in the trade receivables ledger.  The trade receivables column in the cash receipts journal includes an amount of R195 being a cash settlement discount received from a creditor.  The purchases journal was under-cast by R718.  An account of R1 603 for freight on credit sales was received from Quick Transport. The cost of the freight must still be accounted for in the accounting records.  The R/D cheque of R425 was the cheque of a debtor in payment of his account. The cheque was returned because the debtor had insufficient funds to cover the cheque.  On 1 December 20.1, the balance of the trade payables control account amounted to R8 340. REQUIRED: Marks (a) Prepare the correct, properly balanced trade receivables and trade payables control accounts for Smart Boutique for December 20.1. (b) Prepare the reconciliation of the total of the list of trade receivables balances with the final balance of the trade receivables control account as calculated in question (a) above. 23 4 [27] FAC1502/102 11 QUESTION 5 (32 marks)(40 minutes) The following information pertains to the Sharks Diving Club: 1. Trail balance as at 31 March 20.1: Bar purchases ....................................................................................................................... Bar inventory - 1 April 20.0 .................................................................................................... Bar sales ............................................................................................................................... Bar wages ............................................................................................................................. Crockery and linen at cost - 1 April 20.0................................................................................ Furniture at cost price - 1 April 20.0....................................................................................... General expenses ................................................................................................................. Diving fees received .............................................................................................................. Equipment at cost.................................................................................................................. Vehicles at cost ..................................................................................................................... Accumulated depreciation -1 April 20.0 - Furniture.......................................................................................................................... - Equipment ....................................................................................................................... - Vehicles........................................................................................................................... Insurance in arrears - 1 April 20.0 ......................................................................................... Maintenance.......................................................................................................................... Salaries and wages ............................................................................................................... Stationery consumed............................................................................................................. Membership fees received .................................................................................................... Membership fees in arrears - 1 April 20.0.............................................................................. Membership fees prepaid - 1 April 20.0 ................................................................................. Donation received ................................................................................................................. R 60 000 5 000 100 000 15 000 10 000 30 000 8 200 33 900 24 000 35 000 9 000 4 800 5 000 600 20 100 48 000 6 000 101 000 15 000 20 000 2 000 2. Additional information 2.1 Bar inventory at 31 March 20.1 was R10 000. 2.2 At 31 March 20.1, the crockery and linen were valued at R3 000. 2.3 Furniture with a cost price of R5 000 and accumulated depreciation of R1 500 on 1 April 20.0 was sold for R3 000 on 30 June 20.0. This transaction must still be recorded in the accounting records. 2.4 Depreciation must be provided for as follows: Furniture at 10% per annum on the cost price. Equipment at 20% per annum on the diminishing balance method. Vehicles at 25% per annum on the diminishing balance method. 2.5 Insurance premiums to the amount of R2 600 was paid during the year and debited to the general expenses account. This included an amount of R1 000 in prepaid insurance premiums. 2.6 The club had 190 members during the current financial year. Membership fees amounts to R500 per member per annum. All of the members paid their membership fees for the current year. R7 500 of the membership fees that were in arrears of on 1 April 20.0, must be written off as irrecoverable. 2.7 During the current year, 20 new members joined the club. Each member paid their entrance fee of R50. However, the entrance fees received were erroneously included with the amount for membership fees received and recorded as such. According to the constitution of the club, entrance fees must be capitalised. The error must be corrected. 2.8 The salary of the club secretary for March 20.1 of R1 500 must still be paid and provided for.