Question

1. Calculate Cost of sales

R
Inventory (1 July 20.7)...............................	150 000
Cash purchases Credit purchases…………… Purchases returns………	15 000 6 000 2 000
Freight inwards………………………… Freight outwards………………………… Settlement discount received….. Settlement discount granted………	1 200 1 800 1 700 2 500
Inventory (31 July 20.8)…………………….	120 000

Additional information:

The owner of Snow Plumbing Services donated taps and basins to the value of R1 000 to the local crèche on 16 June 20.7. No entries regarding this transaction was made in the accounting records of Snow Plumbing Services, yet.

The cost of sales is

(1)      47 500

(2)      17 300

(3)     10 300

(4)     19 000

(5)     18 000

2. Use the information provided below, for Summerhill Traders for the month of September 20.7, to answer questions 2

Additional information:

In addition to the errors made in the trade receivables control account above, you have listed the following errors and omissions made by the assistant:

• Miss T Luna’s attorneys declared a dividend of 30c in the rand from her insolvent estate. Miss T Luna owed Summerhill Traders R1 000 on 1 September 20.7. Her outstanding debt must be written off as irrecoverable.

What will be the general ledger entries be for the outstanding debt of Miss T Luna which must be written off as irrecoverable?

(1) The trade receivables control account in the general ledger will be debited with R700 and the credit losses account in the general ledger will be credited with R700.

(2) The trade receivables control account in the general ledger will be debited with R1 000 and the credit losses account in the general ledger will be credited with R1 000.

(3) The trade receivables control account in the general ledger will be debited with R300 and the credit losses account in the general ledger will be credited with R300.

(4) The credit losses account in the general ledger will be debited with R700 and the trade receivables control account in the general ledger will be credited with R700.

(5) The credit losses account in the general ledger will be debited with R1 000 and the trade receivables control account in the general ledger will be credited with R1 000.

3.

May 2006 to May 2007

Use the information provided below, for KA Furniture Stores for the month of May 20.7, to answer questions 3:

KA Furniture Stores is a furniture shop operating in Ivory Park. The following information appeared in the accounting records of the business and relates to the month of May 20.7.

i) On 30 November 20.6, Naidoo’s Catering Service provided a catering service to KA Furniture Stores. The bookkeeper issued cheque no 220 for R15 000 to Naidoo’s Catering Services on 30 November 20.6. The cheque has not yet been presented for payment.

Where would you record cheque no 220 which was not yet presented for payment? (refer to “i” in the above information provided to you)

(1) An entry will be made in the cash payments journal of R15 000 as a cancelled cheque.

(2) An entry will be made in the cash payments journal of R30 000 as a cancelled cheque.

(3) An entry will be made in the cash receipts journal of R30 000 as a cancelled cheque.

(4) A entry will be made on the credit side of the bank reconciliation statement with R15 000.

(5) An entry will be made in the cash receipts journal of R15 000 as a cancelled cheque.

Answer 1