Section A- Based on the information provided, answer the questions that follow (6)
1. Assume the following:
Quarter Units purchased Per unit cost (N$) Purchases (N$) Unit sales
I. 300 30 9 000 300
II. 400 35 14 000 300
III. 400 36 14 400 300
IV. 300 37 11 100 300
1 400 48 500 1 200
Inventory/stock at the beginning of quarter 1: 500 units at N$ 25 per unit = N$ 12 500. Inventory at end of quarter 4 is 700 units.
a) Using the FIFO method, the reported inventory at the end of the year is:
A. $23 000
B. $25 500
C. $35 500
D. $22 474
(3)
b) Using the LIFO method, the reported inventory at the end of the year is:
A. $25 500
B. $22 474
C. $23 000
D. $35 500
(3)
Section B - Based on the information provided, answer the questions that follow (36)
PART A
Sandile Traders with a February year end provided you with the following information from their financial records.
• Cost price of vehicles on 1 March 2008: N$250 000.
• Carrying value of vehicles on 1 March 2008: N$128 000.
• No entry had been made for an old vehicle which was sold on 1 September 2008. The details of this transaction are as follows:
- Cost price: N$98 000
- Carrying value on 1 March 2008: N$40 000
- Selling price: N$32 500
• A new vehicle will be purchased during March 2009 for N$135 000.
• The depreciation rate on vehicles is 20% p.a. according to the diminishing balance method.
1. Calculate the total accumulated depreciation on the vehicle sold on 1 September 2008. (2)
2. Calculate the profit or loss on the vehicle sold. (3)
3. Provide two possible reasons for disposing a fixed asset (2)
PART B
Prepare the following ledger accounts. Accounts must be balanced/closed off on 30 June 2009.
1. Equipment (9)
2. Accumulated depreciation on equipment (13)
3. Asset disposal (9)
INFORMATION:
Information from the accounting records:
Debit Credit
Equipment (1:07:2008) 150 000
Accumulated depreciation on
equipment (1:07:2008) 32 500
Note:
• Depreciation on equipment is calculated at 15% p.a. on cost (straight line)
• Old equipment was sold for N$3 000 cash on 28 February 2009. This equipment was originally purchased for N$9 800. The accumulated depreciation on this equipment on 1 July 2008 was N$5 100.
• More equipment costing N$25 000 was purchased for cash on 31 August 2008.
• Additional printing equipment was purchased on credit on 30 June 2009 for N$8 000.
Section C- Provide the answers to the questions below (25)
Mike opened a small printing shop just after he finished his studies. He did not manage to raise enough capital (cash) to purchase the third printer for N$ 10,000. He approached the bank and the bank advanced him the money over a period of six years.
The amortization schedule of the loan payment is provided.
Payment number Payment amount Interest Paid Principal paid Remaining Balance
0 0 0 0 N$ 10,000
1 N$ 1,845.98 N$ 300 N$ 1,545.98 N$ 8,454.02
2 N$ 1,845.98 N$ 253.62 N$ 1,592.36 N$ 6,861.66
3 N$ 1,845.98 N$ 205.85 N$ 1,640.13 N$ 5,221.53
4 N$ 1,845.98 N$ 156.65 N$ 1,689.33 N$ 3,532.20
5 N$ 1,845.98 N$ 105.97 N$ 1,740.01 N$ 1,792.19
6 N$ 1,845.98 N$ 53.79 N$ 1,792.19
Total ? ? ?
Based on the amortization table answer the following questions:
1) What is the total amount that Mike will pay at the end of six (6) years for this loan? (2)
2) What is the total interest paid for this loan over the six (6) year period? (2)
3) What is the total principal paid for this loan at the end of six (6) years? (2)
4) State whether the following statement is true or false. “The payment amount is made up of the interest and principal payment.” (1)
5) Show the following in the books of the lender for the first three (3) years in respect of the loan made out to Mike. The financial year end for the lender is December.
i. The loan receivable non-current balance in the balance sheet. (6)
ii. The loan receivable current balance in the balance sheet. (6)
iii. The interest income in the Profit and Loss account. (6)
Section D - Provide the answers to the questions below (13)
1) Name at least five (5) common things a business document should have. (5)
2) Name and explain three (3) types of accounting source documents. (6)
3) What is the difference between the statement of accounts and an invoice? (2)