# Accounting English Paper 2 2015 Questions and Answers Part 2

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Question 2:

Inventory Valuation and Internal Control (35 marks; 20 minutes)

Jankjies Electronics sells LCD flat-screen television sets. The business is owned by Jane Jankjies. As she has other businesses to run, she cannot be at the shop very often. She employs Marlan Miller to run the shop for her. The business uses the periodic inventory system and the first-in-first-out (FIFO) method to value the stock. The financial year-end is 28 February 2015.

## Required

Calculate the value of the closing stock of 145 television sets on 28 February 2015 using the FIFO method.

Calculate the following:

• Cost of sales
• Average mark-up % achieved for the year

Refer to Information D.

• Provide a calculation to prove whether the information given by the cleaner is true or not.
• Jane is concerned that the final stock of 145 television sets is not appropriate for her business. Provide a calculation or figures to support her opinion and explain.
• Jane has adjusted the selling prices during the year to attract new customers. Comment on whether or not this strategy has benefitted the business. Provide figures to support your answer.
• Provide two points to assist Jane in improving internal control in her business.

## Information

### Stock Balances

 Number of Units Unit Price (including carriage) Total 1 March 2014 (inclusive of transport costs) 70 5 500 385 000 28 February 2015 145 ? ?

### Purchases of Television Sets During the Financial Year Ended 28 February 2015

 Number of Units Unit Price Carriage Total May 2014 150 R5 000 R18 750 R768 750 August 2014 120 R4 750 R15 000 R585 000 December 2014 90 R4 450 R11 250 R411 750 Total 360 R45 000 R1 765 500

### Returns to Suppliers

• Three television sets from the August 2014 purchases were damaged.
• The television sets were returned to the suppliers. The suppliers also reversed the carriage on these items.

### Possible Theft of Television Sets

Jane has been informed by a cleaner that he suspects Marlan of giving away television sets to his family members and friends.

### Sales for the Year Were as Follows

 Selling price Quantity Total March to July 2014 R9 100 80 units R728 000 August to November 2014 R9 800 30 units R294 000 December 2014 R7 500 150 units R1 125 000 January to February 2015 R9 800 16 units R156 800 276 units R2 303 800

Question 3

Financial Statements: Balance Sheet and Notes, Audit (75 marks; 45 minutes)

Choose a description from Column B that matches a term/concept in Column A. Write only the letter (A – E) next to the question number (3.1. 1 – 3.1. 5) in the Answer Book.

 Column A Column B A. Companies and Intellectual Property Commission 1. A guidelines for the preparation of financial statements to ensure consistency B. Director 2. responsible for maintaining records and control of new and existing companies C. IFRS 3. The business is responsible for its own debts and the liability of owners islimited to the amounts they invested D. Limited liability 4. Responsible for expressing an opinion on the financial statements of a company E. Independent auditor 5. E an elected member of the board responsible for running the business and implementing policy

Bargain Traders Ltd is a public company listed on the JSE. The business has an authorised share capital of 1 000 000 ordinary shares.

## Required

Prepare the following notes to the Balance Sheet:

1. Ordinary share capital

2. Retained income