Demonstrate an understanding of accounting principles

The purpose of an assignment is to ensure that the Learner is able to:

• Demonstrate an understanding of accounting principles.
• Systematically record the financial aspects of business transactions.
• Prepare financial statements to know the result of business operations for a particular period of time.
• To meet the financial information needs of the decision-makers and help them in rational decision-making.
• Report the results and position of business to “Users” of financial statements.
• Presenting ‘true and fair’ view of financial transactions.
• Show accurate calculations for all transactions.

The following balances appeared in the general Ledger of HC Agency on 28 February 2004 after the accounts had been balanced:

REQUIRED:

Prepare the Pre- Adjustment Trial Balance HC Agency on 28 February 2004.

QUESTION TWO (25 MARKS)

On August 2008, Lucas started a garden service business. The following is an extract of certain

Accounts from his trial balance on 31 August 2008:

• Prepaid Insurance R 1 500  Equipment R 8 000
• Loan (credit) R 10 000
• Fees earned R 2 000
• Fees received in advance R 1 500

The following information relates to the above accounts:

• The insurance premium was paid for the year ended 31 July 2009.
• Depreciation on equipment for August 2008 amounts to R 300.
• The loan was negotiated on 01 August 2008 at an interest rate of 15% per annum.
• A client paid R 1 500 on 01 August 2008, being the fee for the next for months. His garden was serviced during August.
• A client, who received valued at R 250 during August, has not yet paid for them. Lucas would like to prepare statement on a monthly basis.

REQUIRED:

Prepare the adjustment journal entries (general journal) as at 31 August 2008. Narrations are required Show all Calculations.

THREE (25

A comparison of the Receipts Journal and Cash Payments Journal of Halogen Limited with its bank statement at 30 June 2001 reveals the following:

Balances:

Bank account in the General Ledger (Debit) 01/06/20.11 R2 190

Bank statement (overdraft) 30/06/20.11 R540

Total 30/06/20.11:

Cash Receipts Journal R30 690

Cash Payment journal R32 400

Additional Information:

1. A debtor, A. Smith paid an amount of R750 directly into the bank account of Halogen Limited. 2. The bank erroneously debited Halogen Limited’s account with a cheque for R2 250 drawn by Palagan Limited.
2. According to the Bank statement a cheque for R285 received from D. Direct in settlement of his account of R300 was dishonoured and returned on 27 June 20.11.
3. Sundry bank debits and as per bank statement:

Interest R45

Service fees R69

Cheque book fees R6

5. A stop order for the annual fire insurance premium of R405, payable to Direct Insurance, appeared on the bank statement but not in the relevant cash journal.
6. A deposit of R1 170 on 30 June 20.11 in the cash receipts journal was in fact deposited on 1 July 2001.
7. Outstanding cheques not yet presented to the bank for payment amounted to R2475

REQUIRED:

• Prepare adjusted cash journals at 30 June 20.11. (9)
• Show the Bank account for June 2001 in the general ledger, properly balance (8)
• Prepare a Bank Reconciliation Statement as at June 20.11. (8) FOUR (25

The following information was obtained from the financial records of Fine Traders on 28 February 20.8:

ADDITIONAL INFORMATION:

1. The debtors column in the cash receipts journal was overcast by R1 000.
2. The creditors column in the purchases journal was overcast by R2 000.
3. A sales invoice for the amount of R600 was entered twice in the sales journal and posted twice to the personal account of B Broad.
4. Credit note No 31, for R500, was credited to the account of T Thin, but no other entry was made in the book.
5. An invoice for the amount of R50 was correctly entered in the purchases journal, but posted as

R150 the account of N Narrow

1. An invoice for the amount of R400 was correctly entered in the sales journal, but posted as R40 to the account of D Dandy.
2. A cheque for R900 received from debtor G Great was returned by the bank marked ‘’R/D’’.

The necessary entry was made in the cash payments journal, but no posting was made to the account of G Great

1. The balance of P Pauper’s account for R1 420 has still to be written off as irrecoverable.
2. It was determined that the allowance for credit losses account should amount to R538 at 28 February 20.8.

REQUIRED:

Prepare a properly balanced debtors control account for the month ending 20 February 20.8.