Question 1
1.1 General Journal entries
1 March 2023 Insurance Expense 48 000
Cash and Bank 48 000
31 December 2023 Trade Receivable 8 000
Consulting Revenue 8 000
31 December 2023 Interest Receivable 2 500
Interest Revenue 2 500
31 December 2023 Inventory Write-down Expense (5000-1000) 4 000
Inventory 4 000
31 December 2023 Accumulated Depreciation - Office Equipment 5 000
Depreciation Expense 5 000
1.2 Statement of financial position
Assets
Non-Current Assets
Fixed Deposit Investment R500 000
Office Equipment at Cost R370 000
Less: Accumulated Depreciation (R75 000 - R5 000) (R70 000)
Net Office Equipment R300 000
Total Non-Current Assets R800 000
Current Assets
Cash and Bank (R125 000 - R48 000) R77 000
Trade Receivable (R175 000 + R8 000) R183 000
Inventory (R250 000 - R4 000) R246 000
Interest Receivable R2 500
Total Current Assets R508 500
Total Assets R1 308 500
Equity and Liabilities
Equity
Capital R200 000
Retained Earnings - 01 January 2023 R581 000
Net Profit for the Year R466 500
Less: Drawings (R31 000)
Total Equity R1 216 500
Liabilities
Current Liabilities
Trade Payables R100 000
Total Current Liabilities R100 000
Total Equity and Liabilities R1 316 500
Question 2
2.1
Debit (R) Credit (R)
Balance b/d 116 875
Nov 2023 9 000
Nov 2023 5 000
Nov 2023 8 000
Nov 2023 3 500
Nov 2023 2 000
Nov 2023 6 500
Nov 2023 4 000
Nov 2023 375
Balance 133 500
144 375 144 375
Balance c/d 133 500
2.2 Reconciliation Statement as at 30 November 2023
Particulars Amount (R)
Balance as per FF Ltd statement 144 000
Add:
Incorrect invoice amount (INV001) 9 000
Incorrect payment allocation 8 000
Goods received (not yet invoiced) 6 500
Timing differences (INV007) 4 000
Less:
Duplicate invoice (INV002 and INV003) (5 000)
Goods returned (CN004) (3 500)
Unrecorded credit note (CN005) (2 000)
Discount/Rebate (INV008) (375)
Balance as per USI records 160 625
2.3 Two purposes/benefits of preparing a creditors reconciliation statement
i. Accuracy of Financial Records. Reconciliation ensures that the accounts payable
ledger accurately reflects all transactions and this helps maintain accurate financial
records which are crucial for making informed business decisions.
ii. Fraud Prevention and Detection. Regular reconciliation can help detect and prevent
fraud and this enhances the overall integrity and reliability of the financial information.
Question 3
3.1 Machinery Cost Account
Date Particulars Debit (R) Date Particulars Credit (R)
01 Jan Balance b/d 800 000
02 Jan Purchase of new machinery 500 000
02 Jan Installation and 20 000
transportation
01 Jul Machine Disposal 180 000
01 Nov Purchase of new machinery 400 000 31 Dec Balance c/f 1540 000
1 720 000 172 000
31 Dec Balance c/d 1 540 000
3.2 Accumulated Depreciation of Machinery Account
Date Particulars Debit (R) Date Particulars Credit (R)
01 Jan Balance b/d 200 000
01 Jul Machine disposal 108 000
31 Dec Depreciation for new machinery 52 000
Balance c/f 147 333.33 31 Dec Depreciation for new machinery 3 333.33
31 Dec 255 333.33 255 333.33
Total 108 000 Balance b/d 147 333.33
Question 4
Cash Flows from Investing Activities
(R)
Sale of Property Plant and Equipment (PPE) 500 000
Sale of Long-Term Investments 1 400 000
Purchase of Intangible Assets (down payment) (200 000)
Maturity of Non-Trading Financial Asset 1 600 000
Net Cash Provided by Investing Activities 3 300 000
Cash Flows from Financing Activities
(R)
Repayment of Long-Term Debt (5 000 000)
Payment of Dividends (3 000 000)
Redemption of Bonds (4 000 000)
Decrease in Short-Term Borrowings (500 000)
Net Cash Used in Financing Activities (12 500 000)
