Module 10

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Module 10
business Administration (Gateway ICT Polytechnic, Saapade)
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MODULE 10
FINAL ACCOUNTS
Prior
learning Drawing up simple income statement and balance sheets, statements of net worth from
spreadsheet; calculating profit for entrepreneurial activity in the GET phase.
Note to the Teacher:

Module 10 constitutes a large part of the syllabus and will be expanded on as the learners move into grades
11 and 12. Therefore the principles taught now are very important and determine how successful the learn-
ers are in the final results. It is very important that they learn why they are doing the various steps and try to
break away from rote learning.
The bookkeeping cycle that has been studied up to now is the recording process. All these records are be-
ing kept for a reason, i.e. to work out the profit or loss made by the business and to determine its financial
position. Hence the General Ledger, which is summarised into a trial balance, is used to draw up the Income
Statement and Balance Sheet.
In the accounting cycle, final accounts should be completed first and then re-written in a user friendly format
i.e. the Income Statement. However as the learners will have been exposed to the income statement in
grade 9, this is a good starting point to re-enforce the reason for drawing up the document.
Constantly ensure that all the time the learners understand why they are doing what they are doing. While
there are acceptable methods of setting out the information allow the learners time to understand why previ-
ously they got bogged down with the standard layout. This is just to ensure standards and to be able to
compare statements from different businesses and in different years.
TASK 10.1  Hlope Traders: Financial statements, Theory

10.1.1
HLOPE TRADERS
INCOME STATEMENT FOR YEAR ENDED 28 FEBRUARY 20.8
Sales 648 000
Cost of sales 360 000
Gross profit 288 000
Other income 91 600
Rent income 66 000
Commission income 25 600
Gross operating income 379 600
Operating expenses (228 700)
Salaries and wages 180 000
Vehicle expenses 17 000
Advertising 6 500
Stationery 4 100
Water & electricity 4 800
Sundry expenses 16 300
Operating profit 150 900
Interest income 2 100
Profit before interest expense 153 000
Interest expense (39 200)
Net profit 113 800
New Era Accounting: Grade 10 211 Teacher’s Guide

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HLOPE TRADERS
BALANCE SHEET ON 28 FEBRUARY 20.8
ASSETS
Non-current assets 1 100 000
Land and buildings 610 000
Vehicles 320 000
Equipment 170 000
Current assets 181 800
Trading stock 90 000
Accounts receivable (Debtors) 33 000
Savings account 30 000
Bank 25 800
Cash float 3 000
TOTAL ASSETS 1 281 800
EQUITY AND LIABILITIES

Owner's equity 941 800
Capital at beginning of year 900 000
Add: Net profit 113 800
1 013 800
Less: Drawings (72 000)
Non-current liabilities 280 000
Loan from Ace Bank 280 000
Current liabilities 60 000
Accounts payable (Creditors) 60 000
TOTAL EQUITY AND LIABILITIES 1 281 800
10.1.2
(a) Assets e.g. Land & buildings, Vehicles, Equipment, Trading stock, Debtors control, Savings account,
Bank, Cash Float. Liabilities e.g. Loan: Nedbank, Creditors. Income e.g. Sales, Rent income. Ex-
pense e.g. Cost of sales, Salaries & wages, Water & electricity, Trading licence, Fuel, Stationery, Con-
sumable stores, Advertising.
(b) The Balance Sheet section of the trial balance includes Assets, Liabilities, Capital and Drawings.
(c) The Nominal section of the trial balance contains Income and Expenses.
(d) These items are placed in different sections in the trial balance to make it easier to draw up the Income
Statement and Balance Sheet.
(e) It is necessary to draw up the trial balance as well as the financial statements because they serve dif-
ferent purposes. The trial balance is used by the bookkeeper to help him/her check if any errors are
made in the ledger – if the totals of the trial balance do not agree, this will mean that an error has oc-
curred. The financial statements are used by other people and must be drawn up in a more professional
manner to reflect the gross profit, operating profit, net profit, non-current liabilities, current liabilities,
non-current assets, current assets and owner’s equity at the end of the year as all these different cate-
gories are needed for the users to analyse and to make decisions about the business.
TASK 10.2 Malange Sport: Financial statements, Presentation

Allow the learners time to work on this case study in-groups. They can draw on any prior knowledge plus
applying some thinking skills to solve a problem. The method of setting out the work is not important at this
stage but the fact that they can divide the figures into an Income Statement and Balance Sheet. (The interest
does not have to be separated at this stage – it can be treated as an expense).
The solutions are given as guides only at this stage.

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10.2.1 MALANGE SPORTS

INCOME STATEMENT FOR THE YEAR ENDED 30 APRIL 20.7
Turnover (2 300 000 – 60 000) 2 240 000
Cost of sales (1 848 950)
GROSS PROFIT 391 050
OPERATING INCOME
Rent income 6 400
OPERATING EXPENSES (217 900)
Water and electricity 12 300
Trading licence 600
Fuel 8 000
Stationery 1 000
Telephone 5 100
Consumable stores 3 800
Advertising 7 100
OPERATING PROFIT 179 550
Interest income 0
PROFIT BEFORE INTEREST EXPENSE 179 550
Interest expense 0
NET PROFIT 179 550
BALANCE SHEET AS AT 30 APRIL 20.7

ASSETS
FIXED ASSETS 720 000
Equipment 100 000
Vehicles 90 000
CURRENT ASSETS 159 550
Debtors 65 000
Bank 18 000
Petty cash 1 000
Cash float 550
Total assets 879 550
EQUITY 819 550
Capital 700 000
Add Net profit 179 550
Less Drawings (60 000)
NON CURRENT LIABILITIES 10 000
Loan: Nedbank 10 000
CURRENT LIABILITIES 50 000
Creditors 50 000
Total equity and liabilities 879 550
10.2.2 Allow the learners to work on their statements already drawn up. They need to discuss if they think
the information should be recorded and if so, how. It is not important what they call the new entries –
the concept of making a double entry is what is important. Names can be sorted out later. The re-
port back is very important as this encourages the learners to consolidate and explain their reason-
ing. The following are for your guide only.

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10.2.3 INCOME STATEMENT OF MALANGE SPORTS FOR THE YEAR ENDED 30 APRIL 20.7
Turnover [2 300 000 – 60 000] 2 240 000
Cost of sales [1 848 950]
GROSS PROFIT 391 050
OPERATING INCOME
Rent income [6 400 + 800] 7 200
OPERATING EXPENSES (217 320)
Trading licence 600
Fuel 8 000
Stationery [1 000 – 300] 700
Telephone [5 100 + 520] 5 620
Advertising [7 100 – 800] 6 300
OPERATING PROFIT 180 930
Interest income 0
PROFIT BEFORE INTEREST EXPENSE 180 930
Interest expense [1 125]
NET PROFIT 179 805
BALANCE SHEET OF MALANGE SPORTS AS AT 30 APRIL 20.7

ASSETS
FIXED ASSETS 720 000
Equipment 100 000
Vehicles 90 000
CURRENT ASSETS 161 450
Debtors 65 000
Bank 18 000
Petty cash 1 000
Cash float 550
Rent income owing 800
Stationery on hand 300
Advertising paid in advance 800
Total assets 881 450
EQUITY 819 805
Capital 700 000
Add Net profit 179 805
Less Drawings (60 000)
NON CURRENT LIABILITIES 11 125
Loan: Nedbank [10 000 + 1 125] 11 125
CURRENT LIABILITIES 50 520
Creditors 50 000
Telephone owing 520
Total equity and liabilities 881 450
Note:
 The increase in the value of land and buildings is not shown. If it is shown, this will result in an income
which results in an increase in profit. Tax is paid on the profit but remember that the business is not sell-
ing this asset, therefore tax is not payable. Capital gains tax also has a bearing on this calculation. Use
this example when you introduce the historical cost and prudence concepts later.
 Calculation of interest on loan = 10 000 x 15% x /12 = R1 125 (the loan was only taken out on the 01
9
August 20.6 so interest must only be charged for 9 months). R1 125 is charged to the loan account:
Loan increases; Interest on loan increases.

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 Rent must be added on for April and is, therefore, money owing to the business.
 Telephone might not have been paid but it has been used – this is an expense for the year.
 The R300 stationery has not been used this year but will be used next year – this is an expense for next
year.
 The R800 advertising is for next year, so must be deducted to work out this year’s profit.
10.2.4 Presentation.
TASK 10.3  Accounting principles

Encourage the learners to conduct this research so that they can realise that what we are doing is not just
because it appears in a textbook but occurs in reality. The sharing amongst the learners will further enhance
this understanding.
Role-play is another method of assessing the learners and allows different expressions of thinking and ac-
commodates different intelligence (multi-intelligence). Allow the learners time to prepare and present a short
role play to depict the principles of GAAP.
TASK 10.4  Matching columns: GAAP

Appropriate principle
Example of year-end adjustment
applied
A. Damages payable to a client will be finalised next year. An estimated
Prudence concept
amount of R9 000 is recorded this year.
B. Interest on overdraft is shown as a separate amount to Interest on loan. Concept of materiality
C. An owner owes his sister R5 000 for costs incurred on holiday. This is
Business entity rule
not reflected in the financial statements of the business.
D. When a debtor settles his account, the discount granted must be rec-
Matching principle
orded at the same time.
E. Land and buildings are shown in the financial statements as R400 000
even though an estate agent says the property is worth twice that Historical cost concept
amount.
F. Trading stock is still shown at the cost price of R20 000 even though it
Going concern principle
would be sold for R15 000 in a flea market or auction immediately.
TASK 10.5  Accounting principles and concepts

10.5.1 Concept of materiality
10.5.2 Matching concept
10.5.3 Business entity rule
10.5.4 Historical cost principle
10.5.6 Going concern principle
10.5.8 Prudence concept
TASK 10.6 Research

10.6.1 – 10.6.6: The purpose of these tasks is to allow the learners the opportunity to discover for them-
selves that the price of old cars are less than new ones. They decrease in value. While
generally motor cars decrease in value, it must be noted that in some instances, e.g. vin-
tage cars, they can increase in value.
10.6.7 Vehicle (Asset) must be decreased and an expense (depreciation) increased [we will later learn that
the actual entry is to Debit Depreciation & Credit Accumulated depreciation on vehicle].
10.6.8 Assets would decrease; Owner’s equity would decrease (expense).
10.6.9 Prudence.

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TASK 10.7  Two methods of depreciation

10.7.1
Rate of deprecia- Accumulated Carrying
Year Cost price Depreciation
tion depreciation (book) value
28:02:20.6 65 000 15% p.a. on cost 9 750 9 750 55 250
28:02:20.7 65 000 15% p.a. on cost 9 750 19 500 45 500
28:02:20.8 65 000 15% p.a. on cost 9 750 29 250 35 750
28:02:20.9 65 000 15% p.a. on cost 9 750 39 000 26 000
10.7.2
Rate of deprecia- Accumulated Carrying
Year Cost price Depreciation
tion depreciation (book) value
15% p.a. on dimin-
28:02:20.6 65 000 9 750 9 750 55 250
ishing balance
15% p.a. on dimin-
28:02:20.7 65 000 8 288 18 038 46 962
ishing balance
15% p.a. on dimin-
28:02:20.8 65 000 7 044 25 082 39 918
ishing balance
15% p.a. on dimin-
28:02:20.9 65 000 5 988 31 070 33 930
ishing balance
TASK 10.8  Salso Traders: Calculating and processing deprecia-

tion
10.8.1
GENERAL JOURNAL OF SALSO TRADERS – FEBRUARY 20.3 GJ
Debtors Creditors
J/V D Details Fol Debit Credit control control
Debit Credit Debit Credit
1 28 Depreciation N 136 000
Accumulated depreciation on vehicles B 105 000
Accumulated depreciation on equipment B 31 000
Depreciation on vehicles at 25% p.a. and
on equipment at 15% p.a. on straight line
method.
10.8.2 GENERAL LEDGER OF SALSO TRADERS

BALANCE SHEET ACCOUNTS SECTION
Dr VEHICLES B Cr
20.2
Mar 1 Bank CPJ 420 000
EQUIPMENT B
20.2
Mar 1 Bank CPJ 310 000
ACCUMULATED DEPRECIATION ON VEHICLES B

20.3
Feb 28 Depreciation GJ 105 000
ACCUMULATED DEPRECIATION ON EQUIPMENT B

20.3

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NOMINAL ACCOUNTS SECTION

Dr DEPRECIATION N Cr
20.3
Feb 28 Accumulated depre-
GJ2 105 000
ciation on vehicles
Accumulated depre-
GJ2 31 000
ciation on equipment
10.8.3 Effect on the Accounting Equation

ASSETS OWNER’S EQUITY LIABILITIES
–136 000 –136 000 0
TASK 10.9 Ramba Traders: Calculating and processing deprecia-

tion
10.9.1 GENERAL JOURNAL OF RAMBA TRADERS – FEBRUARY 20.8 GJ
Debtors Creditors
Depreciation written off at 25% on vehicles
on straight line method and at 15% on
equipment on diminishing balance method.
10.9.2 GENERAL LEDGER OF RAMBA TRADERS

Dr VEHICLES B Cr
20.7
Aug 31 Bank CPJ 340 000
EQUIPMENT B
20.7
Mar 1 Balance b/d 200 000

20.8

20.7
20.8

DEPRECIATION N
20.8
GJ2 42 500
ciation on vehicles
Accumulated depre-
GJ2 24 300
ciation on equipment

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–66 800 –66 800 0
TASK 10.10 Timba Traders: Calculating and processing deprecia-

tion
10.10.1 GENERAL JOURNAL OF TIMBA TRADERS – FEBRUARY 20.9 GJ2
Debtors Creditors
Depreciation written off at 10% p.a. on
equipment on diminishing balance method
and at 20% p.a. on vehicles on straight-
line method.
10.10.2 GENERAL LEDGER OF TIMBA TRADERS

Dr VEHICLES B Cr
20.8
Dec 31 Bank CPJ 160 000
EQUIPMENT B
20.8
Aug 31 Bank CPJ 140 000

20.8
20.9
Feb 28 Depreciation GJ2 86 000

20.8
20.9

DEPRECIATION N
20.9
GJ2 86 000
ciation on vehicles
Accumulated depre-
ciation on equip- GJ2 10 206
ment

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–96 206 –96 206 0
TASK 10.11  Toppel Dealers: Adjustments to income

10.11.1 GENERAL JOURNAL OF TOPPEL DEALERS – JUNE 20.5 GJ
Debtors Creditors
01 30 Income receivable/Accrued income 1 350
Interest on fixed deposit 1 350
Interest on fixed deposit still owing for 3
months
02 Rent income 1 200
Commission income 280
Income received in advance/Deferred
income 1 480
Rent and commission received in advance
10.11.2 GENERAL LEDGER OF TOPPEL DEALERS

BALANCE SHEET SECTION
Dr INCOME RECEIVABLE / ACCRUED INCOME B Cr
20.5
June 30 Interest on fixed de- GJ 1 350
posit
INCOME RECEIVED IN ADVANCE / DEFERRED INCOME B

20.5
June 30 Rent Income GJ 1 200
Commission income GJ 280
NOMINAL SECTION
INTEREST ON FIXED DEPOSIT B
20.5
June 30 Total b/f 4 050
Income receivable / GJ 1 350
Accrued income
RENT INCOME B
20.5 20.5
June 30 Income received in GJ 1 200 June 30 Total b/f 8 400
advance / Deferred
income
COMMISSION INCOME B
20.5 20.5
June 30 Income received in GJ 280 June 30 Total b/f 24 540
advance/Deferred
income
10.11.3 Fixed deposit amount: 5 400 = 11.25%

5 400
/11.25 x 100 = R48 000

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Note:
 The rent amount must be divided by 7. Rent has been received since 01 January plus one extra month.
 Interest on fixed deposit for 3 months is owing. Although the fixed deposit has been invested since Jan-
uary 20.3, only the income earned in the current financial year is considered.
TASK 10.12 Pelham Suppliers: Depreciation & adjustments to in-

come
10.12.1 Pelham Suppliers
Owner's
No. Account debit Account credit Assets Liabilities
Equity
(i) Fixed deposit Interest on fixed deposit +1 875 +1 875
(ii) Rent Income Income received in advance* -1 970 +1 970
(iii) Commission income Income received in advance* -1 410 +1 410
(iv) Depreciation Acc dep on vehicles -45 000 -45 000
Depreciation Acc dep on equipment -9 500 -9 500
*Or Deferred income
Note:
 The second investment was only made on the 31 December 20.1 and therefore has not earned any in-
terest.
 The other investment of R30 000 has only been invested for 6 months.
 Due to the increase you cannot divide by 7. An extra R150 was received in December and January =
R300. Subtract this from the rent income of R13 040 (R13 040 - 300 = R12 740) and then divide by 7 to
12 740
determine the amount received in advance ( /7 = R1 820) plus add back the R150 increase in rent for
January = R1 820 + 150 = R1 970.
 Depreciation on vehicles: 25% x R180 000 = R45 000.
 Depreciation on equipment: (20% x R40 000) + (25% x R10 000 x 9/12) = R8 000 + R1 500 = R9 500.
10.12.2
POST ADJUSTMENT TRIAL BALANCE AS AT 31 DECEMBER 20.1 (EXTRACT)
Nominal section Debit Credit
Rent income [13 040 – 1 820] 11 070
Commission income [45 000 – 1410] 43 590
Depreciation [45 000 + 9 500] 54 500
10.12.3 (12.5% of R60 000) + (12,5% of R1 875) = R7 500 + R 234,38 = R7 734,38.
TASK 10.13  Optel Dealers: Adjustments to income and expenses

10.13.1 GENERAL JOURNAL OF OPTEL DEALERS – FEBRUARY 20.3 GJ
Debtors Creditors
01 28 Prepaid expenses 1 930
Insurance 1 770
Stationery 160
Expenses paid in advance
02 Vehicle expenses 980
Accrued expenses/Expenses paya- 980
ble
Vehicle expenses owing
03 Interest on loan 12 800
Loan from WapBank 12 800
Interest for the year charged to loan
account

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10.13.2 GENERAL LEDGER OF OPTEL DEALERS

Dr LOAN FROM WAPBANK B Cr
20.3
Feb 28 Balance b/d 80 000
Interest on loan GJ 12 800
ACCRUED EXPENSES / PAYABLE B

20.3
Feb 28 Vehicle expenses GJ 980
PREPAID EXPENSES B
20.3
Feb 28 Insurance GJ 1 770
Stationery GJ 160
NOMINAL SECTION
INSURANCE N
20.3 20.3
Feb 28 Total b/f 15 670 Feb 28 Prepaid expenses GJ 1 770
STATIONERY N
20.3 20.3
Feb 28 Total b/f 3 210 Feb 28 Prepaid expenses GJ 160
INTEREST ON LOAN N
20.3
Feb 28 Loan from WapBank GJ 12 800
VEHICLE EXPENSES N
20.3
Feb 28 Total b/f 5 670
Accrued expenses / GJ 980
Expenses payable
Note:
 R1 530 for insurance is an annual (12 months) premium which expires on 30 June. As the financial pe-
riod ends in February, 4 months are prepaid.
 The vehicle expenses have not been paid but are an expense for this year.
 R160 stationery will only be used next year. This can be regarded as expenses prepaid or consumable
stores on hand.
 As the loan is in existence for the entire year, Optel Dealers has incurred an expense of 16% p.a. of
R80 000 = R12 800. This amount (R12 800) should have been added to the loan account as the interest
is capitalized in this case.
10.13.3
Owner's
No. Account debit Account credit Assets Liabilities
Equity
(i) Prepaid expenses Insurance +1 770 +1 770
(ii) Vehicle expenses Accrued expenses -980 +980
(iii) Prepaid expenses Stationery +160 +160
(iv) Interest on loan Loan from WapBank -12 800 +12 800

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TASK 10.14 Littletop Dealers: Adjustments to income & expenses

10.14.1 GENERAL JOURNAL OF LITTLETOP DEALERS – DECEMBER 20.6 GJ
Debtors Creditors
01 31 Salaries and wages 4 100
Accrued expenses/Expenses paya- 4 100
ble
Salary still owing
02 Prepaid expenses 1 760
Rent expense 1 760
Rent paid in advance for 2 months
03 Income receivable/Accrued income 3 200
Interest on fixed deposit outstanding
04 Commission income 2 000
Income received in ad- 2 000
vance/Deferred income
Commission received in advance
05 Depreciation 90 000
Acc. dep. on vehicles 90 000
Depreciation at 20% p.a. on the
straight line method
Loan from BestBank 19 600
Interest on loan owing
Note:
 Deduct the R80 x 2 = R160 to cancel the increase in rent before you divide by 14 (2 months paid in ad-
vance). The rent paid in advance is at the new rate i.e. R800 + R80 = R880
 As the R20 000 fixed deposit has been recorded, you need to divide into 2 fixed deposits i.e. R80 000 for
the year and R20 000 for 6 months i.e. 9 600 + 1 200 = R10 800. Since interest earned is not capital-
ised, the Income receivable/accrued account is debited (asset increases) and the Interest on fixed de-
posit account is credited (income increases).
10.14.2 EXTRACT FROM THE POST-ADJUSTMENT FIGURES ON 31 DECEMBER 20.6

Balance Sheet accounts section Debit Credit
Fixed deposit with BestBank (12% p.a.) 100 000
Vehicles 450 000
Accumulated depreciation on vehicles [120 000 + 90 000] 210 000
Loan from BestBank (16% p.a.) [160 000 + 19 600] 179 600
Accrued expenses/Expenses payable 4 100
Prepaid expenses 1 760
Accrued income/Income receivable 3 200
Income received in advance/Deferred income 2 000
Nominal accounts section
Salaries and wages [97 120 + 4 100] 101 220
Stationery 6 780
Commission income [35 000 – 2 000] 33 000
Interest on loan 19600
Interest on fixed deposit [7 600 + 3 200] 10 800
Rent expense [11 360 – 1 760] 9 600
Depreciation 90 000

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TASK 10.15  Wrigley Bros: Adjustments to income & expenses

10.15.1 Wrigley Bros.
NO. ASSETS EXPENSES DRAWINGS CAPITAL LIABILITIES INCOME
(i) +1 610 - 1 610
(ii) +9 375 +9 375
(iii) +2 300 +2 300
(iv) +540 +540
(v) +430 -430
(vi) ±120 000
(vii) -1 000 -1 000
(viii) +4 200 +4 200
(ix) -50 000 +50 000
(x) -25 500 +25 500
10.15.2 EXTRACT FROM THE POST ADJUSTMENT TRIAL BALANCE AS AT 30 JUNE 20.6
Nominal accounts section Debit Credit
Stationery 2 340
Bad debts 4 520
Commission income [14 560 + 2 300] 16 860
Interest on loan 4 200
Rent income [20 930 – 1 610] 19 320
Electricity and water [8 760 + 540] 9 300
Consumable stores [2 130 – 430] 1 700
Depreciation [50 000 + 25 500] 75 500

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TASK 10.16  Teltop Centre: Consolidation of year-end adjust-

ments
SPREADSHEET: 28 FEBRUARY 20.9
Pre-adjustment Post-adjustment
Adjustments
amount amount
Balance Sheet accounts section Debit Credit Debit Credit Debit Credit
Capital 90 000 90 000
Vehicles at cost 140 000 140 000
Equipment at cost 75 000 75 000
Acc depreciation on vehicles 60 000 28 000 88 000
Acc depreciation on equipment 25 000 7 500 32 500
Fixed deposit 45 000 45 000
Trading stock 31 326 31 326
Debtors control 14 504 14 504
Creditors control 11 350 11 350
Bank 25 010 25 010
Mortgage loan 80 000 12 800 92 800
Accrued expenses 560 560
Accrued income 1 350 1 350
[1]
Prepaid expenses 1 390 1 390
Income received in advance 2 100 2 100
Sales 260 000 260 000
Cost of sales 140 000 140 000
Salaries and wages 50 000 50 000
Consumable stores 4 560 510 4 050
Advertising 2 310 560 2 870
Bad debts 700 700
Rent income 9 450 2 100 7 350
Insurance 11 440 880 10 560
[2]
Interest on fixed deposit 4 050 1 350 5 400
Interest on loan 12 800 12 800
Depreciation 35 500 35 500
539 850 539 850 53 700 53 700 590 060 590 060
[1] [2]
510 + 880 4 050 ÷ 3 = R1 350
TASK 10.17 AMABOKKE TRADERS: Valuing trading stock correct-

ly
10.17.1 GENERAL LEDGER OF AMABOKKE TRADERS
Dr TRADING STOCK B6 Cr
20.7 20.7
June 1 Balance b/d 28 700 June 30 Bank CRJ 400
30 Bank CPJ 14 222 Cost of sales CRJ 8 660
Creditors control CJ 14 000 Cost of sales DJ 4 500
Cost of sales DAJ 1 277 Creditors control CAJ 2 444
Drawings GJ 1 000
Balance c/d 41 195
58 199 58 199
July 1 Balance b/d 41 195

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10.17.2
Date Detail Amount Transaction
01 Balance 28 700 Amount of trading stock on hand
30 Bank 14 222 Trading stock bought for cash
Creditors control 14 000 Trading stock bought on credit
Cost of sales 1 277 Cost price of goods returned by debtors
Bank 400 Refund from stock returned
Cost of sales 8 660 Cost price of goods sold for cash
Cost of sales 4 500 Cost price of goods sold on credit
Creditors control 2 444 Cost price of goods returned to creditors
Drawings 1 000 Trading stock taken by owner at cost price
Balance 41 195 Closing balance of trading stock
9.17.3 Amount of trading stock on hand at the end of the month.

9.17.4 A physical stock taking.
9.17.5 Stock has been lost worth R1 195. Credit trading stock and Debit stock losses (at this stage the
learners do not know the name trading stock deficit, so accept any expense account)
9.17.6 Goods were stolen, damaged, errors made, etc.
9.17.7 You would have gained trading stock worth R805. Debit trading stock and credit trading stock gain
(surplus).
9.17.8 Errors.
TASK 10.18  Eppy Stores: Trading stock deficit

10.18.1 GENERAL JOURNAL OF EPPY STORES – FEBRUARY 20.1 GJ
Debtors Creditors
J/V D Details Fol Debit Credit Control Control
01 28 Trading stock deficit N 580
Trading stock B 580
Trading stock deficit as identified
by physical count
10.18.2 GENERAL LEDGER OF EPPY STORES

Dr TRADING STOCK B Cr
20.1 20.1
Feb 28 Balance b/d 35 120 Feb 28 Trading stock deficit GJ 580
Balance c/d 34 540
35 120 35 120

TRADING STOCK DEFICIT N
20.1
Feb 28 Trading stock GJ 580
10.18.3
ASSETS = OWNER’S EQUITY + LIABILITIES
- 580 -580 0

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TASK 10.19 Capcon Retailers: Trading stock deficit

10.19.1 GENERAL LEDGER OF CAPCON RETAILERS
20.8 20.8
Dec 31 Balance b/d 15 210 Dec 31 Trading stock deficit GJ 1 700
Creditors control CJ 3 410 Balance c/d 16 920
18 620 18 620
Jan 1 Balance b/d 16 920

TRADING STOCK DEFICIT N
20.8
Dec 31 Total b/f 510
Trading stock GJ 1 700
10.19.2 Various answers amongst others:

 Stock checks when goods are delivered.
 Control when goods are taken from stock room.
 Security on the shop floor.
 Security at exit points.
 Regular stock taking.
 Division of duties.
 Etc.
TASK 10.20  Kiona Traders: Trading stock & Consumable stores

10.20.1 GENERAL JOURNAL OF KIONA TRADERS – FEBRUARY 20.6 GJ
Debtors Creditors
01 28 Trading stock deficit N 2 760
Trading stock B 2 760
Trading stock deficit as identified by phys-
ical count
02 28 Consumable stores on hand B 1 540
Consumable stores N 1 540
Packing materials on hand
10.20.2 GENERAL LEDGER OF KIONA TRADERS

20.6 20.6
Feb 28 Balance b/d 67 870 Feb 28 Trading stock deficit GJ 2 760
Balance c/d 65 110
67 870 67 870
CONSUMABLE STORES ON HAND B

20.6
Feb 28 Consumable stores GJ 1 540

lOMoARcPSD|40826057

Dr TRADING STOCK DEFICIT N Cr
20.6
Feb 28 Trading stock GJ 2 760
CONSUMABLE STORES N
20.6 20.6
Feb 28 Total b/f 13 450 Feb 28 Consumable stores GJ 1 540
on hand
10.20.3
ASSETS = OWNER’S EQUITY + LIABILITIES
- 2 760 -2 760
+1 540 +1 540
TASK 10.21 Rifruff Retailers: Trading stock & Consumable stores

10.21.1 GENERAL LEDGER OF RIFRUFF RETAILERS
Dr TRADING STOCK B7 Cr
20.8 20.8
Feb 28 Balance b/d 46 660 Feb 28 Cost of sales DJ 880
Cost of sales DAJ 260 Balance c/d 49 670
Creditors control CJ 2 130
Trading stock sur- GJ 1 500
plus
50 550 50 550
10.21.2 POST ADJUSTMENT TRIAL BALANCE AS AT 28 FEBRUARY 20.8

Consumable stores on hand 460
Sales [90 000 + 1 320] 91 320
Cost of sales [58 000 - 260 + 880] 58 620
Note:
 A credit note for R330 will appear in the Debtors Allowances account.
 Consumable stores used amounted to R3 980, therefore R460 is still on hand.
10.21.3 Error in calculation of cost of sales.

Received more goods than what is actually recorded in the account.
Goods sold but the customer forgot to take them, etc.
10.21.4 Increase owner’s equity.
10.21.5 The selling price of the goods has been decreased and the customer does not have the original
invoice.
Debtor has taken very long to return the goods so we are not prepared to refund the full amount.
Etc.

lOMoARcPSD|40826057
TASK 10.22  Caxio Supplies: Adjustments and the Post-Adjustment

Trial Balance
10.22.1
Effect on Account-
No. Account debit Account credit Amount ing Equation
A= OE + L
Accumulated depreciation on
1. Depreciation R8 000 – – 0
equipment
Accumulated depreciation on
2. Depreciation R21 000 – – 0
vehicle
3. Income receivable Commission income R3 000 + + 0
4. Rent income Deferred income R4 000 0 – +
5. Water & electricity Expenses payable R520 0 – +
6. Expenses prepaid Advertising R1 000 + + 0
7. Trading stock deficit Trading stock R5 000 – – 0
8. Consumable stores on hand Consumable stores R800 + + 0
9.. Bank charges Sundry expenses R430 0 0 0
10.22.2 POST-ADJUSTMENT TRIAL BALANCE ON 28 FEBRUARY 20.2

Balance Sheet accounts section Fol. Debit Credit
Capital 700 000
Drawings 110 000
Loan from Beta Bank 350 000
Equipment 140 000
Accumulated depreciation on equipment (60 000 + 8 000) 68 000
Vehicle 210 000
Accumulated depreciation on vehicle 21 000
Trading stock (135 000 - 5 000) 130 000
Debtors control 42 000
Creditors control 63 200
Fixed deposit at Beta Bank 40 000
Bank 36 600
Cash float 2 000
Income receivable 3 000
Income received in advance / Deferred income 4000
Expenses accrued / payable 520
Expenses prepaid 1 000
Sales (750 000 – 15 000) 735 000
Rent income (52 000 – 4 000) 48 000
Commission income (22 000 + 3 000) 25 000
Consumable stores (6 200 - 800) 5 400
Advertising (4 200 - 1 000) 3 200
Bank charges (3 900 + 430) 4 330
Telephone 3 600
Water and electricity (5 100 + 520) 5 620
Interest expense 42 000
Sundry expenses (12 000 – 430) 11 570
Depreciation (8 000 + 21 000) 29 000
Trading stock deficit 5 000
2 017 120 2 017 120

lOMoARcPSD|40826057
TASK 10.23 Novak Clothing: Adjustments and the Post-

Adjustment Trial Balance
10.23.1
Effect on Account-
No. Account debit Account credit Amount ing Equation
A= OE + L
1. Drawings Trading stock R4 500 – – 0
2. Trading stock deficit Trading stock R13 900 – – 0
3. Income receivable Rent income R6 000 + + 0
4. Interest income Deferred income R1 200 0 – +
5. Expenses prepaid Insurance R550 + + 0
6. Consumable stores on hand Cleaning materials R1 050 + + 0
7. Salaries & wages Expenses payable R2 500 0 – +
8. Motor vehicle expenses Sundry expenses R2 700 0 0 0
9. Depreciation Acc. dep. on vehicle R32 500 – – 0
10. Depreciation Acc. dep. on equipment R20 700 – – 0

Balance Sheet accounts section Fol. Debit Credit
Capital 900 000
Drawings (240 000 + 4 500) 244 500
Loan from Munibank 600 000
Vehicles 220 000
Acc depreciation on vehicles (90 000 + 32 500) 122 500
Equipment 207 000
Acc depreciation on equipment (133 000 + 20 700) 153 700
Trading stock (178 400 - 4 500 – 13 900) 160 000
Fixed deposit at Munibank (6% p.a.) 80 000
Bank 31 100
Cash float 3 000
Income receivable / accrued 6 000
Deferred income / received in advance 1 200
Expenses prepaid 550
Consumable stores on hand 1 050
Expenses payable / accrued 2 500
Sales (1 200 000 – 7 200) 1 192 800
Salaries and wages (233 000 + 2 500) 235 500
Rent income (66 000 + 6 000) 72 000
Vehicle expenses (11 200 + 2 700) 13 900
Cleaning materials (8 800 - 1 050) 7 750
Advertising 15 000
Bank charges 5 200
Insurance (7 150 - 550) 6 600
Telephone 5 700
Interest income (6 000 - 1 200) 4 800
Sundry expenses (13 600 - 2 700) 10 900
Depreciation (32 500 + 20 700) 53 200
3 152 650 3 152 650

lOMoARcPSD|40826057
TASK 10.24 Entro Suppliers: Adjustments and the Post-

Adjustment Trial Balance
10.24.1 GENERAL JOURNAL OF ENTRO SUPPLIES – JUNE 20.3 GJ
Debtors Creditors
01 30 Income receivable/Accrued income 3 000
Rent income 3 000
Rent owing for one month
02 Repairs and maintenance 2 500
Income receivable/Accrued in- 2 500
come
Repairs paid by tenant to be offset
against rent owing
03 Bank charges 350
Interest on overdraft 350
Correction of error
04 Bad debts 1 672
Debtor 1 672 1 672
Bad debt written off
05 Debtor 150 150
Interest on overdue account 150
Debtor charged interest at 15% p.a.
for 6 months
06 Prepaid expenses 560
Advertising 560
Advertising paid in advance
Loss due to theft/Stock written off 1 340
Trading stock 6 700
Stock stolen; insurance company
will pay out 80% of the claim
08 Trading stock deficit 1 250
Trading stock 1 250
Trading stock written off
09 Consumable stores on hand 320
Consumable stores 320
Consumable stores on hand
Mortgage loan 16 400
Interest on loan brought into a/c
Interest still owing
12 Commission income 350
Income received in ad- 350
vance/Deferred income
Commission received in advance
13 Drawings 650
Cell-phone charges 650
Correction of error

lOMoARcPSD|40826057
GENERAL JOURNAL OF ENTRO SUPPLIES – JUNE 20.3 (Contd)

Debtors Creditors
Acc depreciation on vehicles 24 800
Acc depreciation on equipment 4 350
Depreciation written off vehicles
20% p.a. on cost and equipment
15% on diminishing balance
Note: Cash entries are not recorded in the General Journal. These are recorded in the CRJ (refer to ad-
justment (iii) – R228 and (iv) – R150.
10.24.2 ENTRO SUPPLIERS

POST-ADJUSTMENT TRIAL BALANCE ON 30 JUNE 20.3
Capital 300 000
Drawings 650
Vehicles at cost 124 000
Equipment at cost 60 000
Accumulated depreciation on vehicles [67 000 + 24 800] 91 800
Accumulated depreciation on equipment [31 000 + 4 350] 35 350
Fixed deposit 45 000
Trading stock [21 450 – 6 700 – 1250] 13 500
Debtors control [45 670 – 1 900 + 150] 43 920
Bank [21 110 – 228 - 150] 20 732
Cash float 1 000
Mortgage loan [90 000 + 16 400] 106 400
Prepaid expenses 560
Income receivable/Accrued income [3 000 – 2 500 + 5 360 + 2 700] 8 560
Income received in advance/Deferred income 350
Sales 245 120
Debtors allowances 4 230
Bad debts [2 340 + 1 672] 4 012
Advertising [12 490 – 560] 11 930
Motor expenses 10 120
Commission income [5 000 - 350] 4 650
Maintenance and repairs [7 610 + 2 500] 10 110
Cell-phone charges [7 400 – 650] 6 750
Interest on fixed deposit [2 700 + 2 700] 5 400
Electricity and water 6 790
Bank charges [7 100 + 350] 7 450
Interest on overdraft [7 650 - 350] 7 300
Insurance 15 870
Rent income [24 000 + 3 000] 27 000
Interest on loan 16 400
Bad debts recovered 150
Interest on overdue account 150
Loss due to theft/Trading stock loss 1 340
Depreciation [24 800 + 4 350] 29 150
869 662 869 662

lOMoARcPSD|40826057
10.24.3
NO. ASSETS OWNERS EQUITY LIABILITIES
1. +3 000 +3 000
-2 500 -2 500
2. ±350
3. -1 900 -1 672 -228
4. +150 -150
5. +150 +150
6. +560 +560
7. -6 700 -1 340
+5 360
8. -1 250 -1 250
+320 +320
9. -16 400 +16 400
10. +2 700 +2 700
11. -350 +350
12. ±650
13. -24 800 -24 800
-4 350 -4 350
TASK 10.25  Format of different Trial Balances

Various answers for this task acceptable. Ensure that the learners understand why some entries appear
only in the post-adjustment trial balance and not in the pre-adjustment trial balance.
Suggested answers:
Pre-Adjustment Trial Balance Post-Adjustment Trial Balance
All assets, expenses, drawings, capital, liabili- All assets, expenses, drawings, capital, liabili-
ties and income ties and income
Expenses prepaid
Expenses payable / Accrued
Income receivable / Accrued
Deferred income / Income received in advance
Depreciation
Consumable stores on hand
Plus any other accounts that only arise due to
an adjustment entry.
TASK 10.26  Question and answer

10.26.1 No. They are carried through to next year.
10.26.2 Matching the expenses and income to the correct financial year so that an accurate profit or loss
can be calculated.
10.26.3 Income earned for the period minus expenses for the period.
10.26.4 No. They are written off the profit for that year. (Reversals are to be introduced later).
10.26.5 Owner
10.26.6 Capital + Net profit – Drawings.

lOMoARcPSD|40826057
TASK 10.27  Caxio Supplies: Final accounts & Post-Closing Trial

Balance
10.27.1 GENERAL LEDGER OF CAXIO SUPPLIES
FINAL ACCOUNTS SECTION
Dr TRADING ACCOUNT F1 Cr
20.2 20.2
Feb 28 Cost of sales 420 000 Feb 28 Sales 735 000
Profit and loss a/c 315 000 [750 000 – 15 000]
735 000 735 000
PROFIT AND LOSS ACCOUNT F2

20.2 20.2
Feb 28 Salaries and wages 233 000 Feb 28 Trading account 315 000
Vehicle expenses 9 000 Rent income 48 000
Consumable stores 5 400 Commission income 25 000
Advertising 3 200 Interest income 2 400
Bank charges 4 330
Telephone 3 600
Depreciation 29 000
Capital (net profit) 38 680
390 400 390 400
10.27.2 POST-CLOSING TRIAL BALANCE ON 28 FEBRUARY 20.2

Balance Sheet accounts section Fol Debit Credit
Capital [700 000 + 38 680 – 110 000] 628 680
Loan from Beta Bank 350 000
Equipment 140 000
Accumulated depreciation on equipment 68 000
Vehicle 210 000
Accumulated depreciation on vehicle 21 000
Fixed deposit at Beta Bank 40 000
Bank 36 600
Cash float 2 000
Income receivable 3 000
Income received in advance / Deferred income 4000
Expenses accrued / payable 520
Expenses prepaid 1 000
1 135 400 1 135 400

lOMoARcPSD|40826057
TASK 10.28 Novak Clothing: Final accounts & Post-Closing Trial

Balance
10.28.1 GENERAL LEDGER OF NOVAK CLOTHING
20.6 20.6
Feb 28 Cost of sales 710 000 Feb 28 Sales 1 192 800
Profit and loss a/c 482 800 [1 200 000 – 7 200]
1 192 800 1 192 800

20.6 20.6
Feb 28 Salaries and wages 235 500 Feb 28 Trading account 482 800
Vehicle expenses 13 900 Rent income 72 000
Cleaning materials 7 750 Commission income 41 150
Advertising 15 000 Interest income 4 800
Bank charges 5 200
Insurance 6 600
Telephone 5 700
Depreciation 53 200
Capital (net profit) 144 300
600 750 600 750

Capital [900 000 + 144 300 – 244 500] 799 800
Loan from Munibank 600 000
Vehicles 220 000
Accumulated depreciation on vehicles 122 500
Equipment 207 000
Fixed deposit at Munibank (6% p.a.) 80 000
Bank 31 100
Cash float 3 000
Income receivable / accrued 6 000
Deferred income / received in advance 1 200
Expenses prepaid 550
Expenses payable / accrued 2 500
1 741 700 1 741 700

lOMoARcPSD|40826057
TASK 10.29  Singh Traders: Final accounts & Post-Closing Trial

Balance
10.29.1 GENERAL JOURNAL OF SINGH TRADERS – FEBRUARY 20.7 GJ
Debtors Creditors
01 28 Bad debts 400
Debtor 400 400
Further bad debts written off
02 Rent income 15 000
Deferred income/Income re- 15 000
ceived in advance
Amount received in advance
03 Repairs & maintenance 450
Accrued expenses/Expenses 450
payable
Account not yet paid
04 Accrued income/Income receivable 3 000
Amount still owing at year-end
05 Accrued income/Income receivable 800
Interest income 800
Amount still owing at year-end
Loan from American Bank 2 400
Interest on loan capitalised
07 Trading stock deficit 15 000
Stock deficit as per stock-take
Amount unused at year-end
08 Telephone 1 400
Error corrected
09 Prepaid expenses 4 400
Insurance 4 400
Insurance paid in advance
Acc. dep. on equipment 28 000
Depreciation at 10% p.a. on dimin-
ishing balance
0 400 - -

lOMoARcPSD|40826057

Capital 1 214 000
Drawings 168 000
Land & buildings 1 300 000
Accum. depreciation on equipment [120 000 + 28 000] 148 000
Loan from American Bank [820 000 + 2 400] 822 400
Fixed deposit at Swiss Bank 160 000
Trading stock [260 000 – 15 000] 245 000
Debtors control [86 000 – 400] 85 600
Bank 64 000
Petty cash 5 000
Cash float 5 000
Deferred income/Income received in advance 15 000
Accrued expenses/Expenses payable 450
Accrued income/Income receivable [3 000 + 800] 3 800
Sales 1 840 000
Cost of sales 1 200 000
Rent income [105 000 – 15 000] 90 000
Commission income [132 400 + 3 000] 135 400
Interest income [12 000 + 800] 12 800
Discount received 600
Interest expense [98 000 + 2 400] 100 400
Salaries & wages 404 000
Printing & stationery 16 800
Telephone [28 000 + 1 400] 29 400
Insurance [57 200 – 4 400] 52 800
Repairs & maintenance [24 000 + 450] 24 450
Consumable stores [16 000 – 1 800] 14 200
Bad debts [2 100 + 400] 2 500
Discount allowed 500
Sundry expenses [23 400 – 1 400] 22 000
Depreciation 28 000
4 428 650 4 428 650
10.29.3 GENERAL JOURNAL OF SINGH TRADERS – FEBRUARY 20.7

CLOSING TRANSFERS GJ
Debtors Creditors
28 Sales 40 000
Transfer of debtors allowances to sales
Trading account F1 1 200 000
Cost of sales 1 200 000
Closing transfer
Sales 1 800 000
Trading account F1 1 800 000
Closing transfer

lOMoARcPSD|40826057
GENERAL JOURNAL OF SINGH TRADERS (Contd)

Debtors Creditors
28 Trading account F1 600 000
Profit and Loss account F2 600 000
Gross profit transferred to Profit and
Loss account
Rent income 90 000
Discount received 600
Closing transfer
Salaries & wages 404 000
Printing & stationery 16 800
Telephone 29 400
Insurance 52 800
Repairs & maintenance 24 450
Bad debts 2 500
Discount allowed 500
Depreciation 28 000
Closing transfer
Profit and loss account F2 92 750
Capital 92 750
Net profit transferred to Capital account
Capital 168 000
Drawings 168 000
Drawings transferred to Capital account
10.29.4 GENERAL LEDGER OF TEVO TRADERS

20.7 20.7
Feb 28 Cost of sales GJ 1 200 000 Feb 28 Sales GJ 1 800 000
Profit and loss a/c GJ 600 000
1 800 000 1 800 000

lOMoARcPSD|40826057
Dr PROFIT AND LOSS ACCOUNT F2 Cr

20.7 20.7
Feb 28 Interest expense GJ 100 400 Feb 28 Trading account GJ 600 000
Salaries & wages GJ 404 000 Rent income GJ 90 000
Water & electricity GJ 36 000 Commission income GJ 135 400
Printing & stationery GJ 16 800 Interest income GJ 12 800
Telephone GJ 29 400 Discount received GJ 600
Insurance GJ 52 800
Repairs & maintenance GJ 24 450
Consumable stores GJ 14 200
Bad debts GJ 2 500
Discount allowed GJ 500
Sundry expenses GJ 22 000
Trading stock deficit GJ 15 000
Depreciation GJ 28 000
Capital (net profit) GJ 92 750
838 800 838 800

Capital [1 214 000 + 92 750 – 168 000] 1 138 750
Land & buildings 1 300 000
Loan from American Bank 822 400
Fixed deposit at Swiss Bank 160 000
Bank 64 000
Petty cash 5 000
Cash float 5 000
Deferred income/Income received in advance 15 000
Accrued expenses/Expenses payable 450
Accrued income/Income receivable 3 800
2 274 600 2 274 600
10.29.6 Entries that need to be reversed: 02, 03, 04, 05, 07 (consumable stores on hand), 09.
The matching principle will have to be complied with. Income and expenses need to be matched in
the correct time period in order to produce reliable results.
10.29.7 No. The amount lost is too high and results in a loss of profit. This needs to be investigated. In-
ternal control measures need to be put in place in order to curb stock losses.
TASK 10.30 Sadeck Stores: Consolidated task: Adjustments,

Closing transfers & Final accounts
10.30.1/10.30.3 GENERAL LEDGER OF SADECK STORES
Dr CAPITAL B1 Cr
20.7 20.7
Feb 28 Drawings GJ1 51 640 Feb 28 Balance b/d 150 000
Balance c/d 163 660 Profit and loss GJ1 65 300
215 300 215 300

lOMoARcPSD|40826057
Dr DRAWINGS B2 Cr
20.7 20.7
Feb 28 Balance b/d 51 640 Feb 28 Capital GJ1 51 640
LAND AND BUILDINGS B3

20.7
VEHICLES B4
20.7
EQUIPMENT B5
20.7
ACCUMULATED DEPRECIATION ON VEHICLES B6

20.7 20.6
Feb 28 Balance c/d 86 000 Mar 1 Balance b/d 62 000
20.7
86 000 86 000
ACCUMULATED DEPRECIATION ON EQUIPMENT B7

20.7 20.6
Feb 28 Balance c/d 32 600 Mar 1 Balance b/d 26 000
20.7
32 600 32 600
FIXED DEPOSIT B8
20.7
TRADING STOCK B9
20.7 20.7
Feb 28 Balance b/d 45 110 Feb 28 Trading stock deficit GJ1 880
Balance c/d 44 230
45 110 45 110
DEBTORS CONTROL B10

20.7 20.7
Feb 28 Balance b/d 49 990 Feb 28 Sundry accounts GJ1 180
Bank (R/D) CPJ 1 200 Balance c/d 51 090
Sundry accounts GJ1 80
51 270 51 270

lOMoARcPSD|40826057
Dr BANK B11 Cr
20.7 20.7
Feb 28 Balance b/d 20 170 Feb 28 Debtors control CPJ 1 200
Bad debts recovered CRJ 290 Balance c/d 19 260
20 460 20 460
PETTY CASH B12

20.7
CASH FLOAT B13

20.7
CREDITORS CONTROL B14

20.7 20.7
Feb 28 Balance c/d 340 540 Feb 28 Balance b/d 340 090
Consumable stores GJ1 450
340 540 340 540
MORTGAGE LOAN B15

20.7 20.7
Interest on loan GJ1 9 000
69 000 69 000
DEFERRED INCOME/INCOME RECEIVED IN ADVANCE B16

20.7
Feb 28 Rent income GJ1 5 000
PREPAID EXPENSES B17

20.7
Feb 28 Insurance GJ1 800
INCOME RECEIVABLE/ACCRUED INCOME B18

20.7
Feb 28 Interest on fixed dep. GJ1 4 500
CONSUMABLE STORES ON HAND B19

20.7
Feb 28 Consumable stores GJ1 1 420

lOMoARcPSD|40826057

Dr SALES N1 Cr
20.7 20.7
Feb 28 Debtors allowances GJ1 3 600 Feb 28 Total b/f 300 000
Trading account GJ1 296 400
300 000 300 000
COST OF SALES N2
20.7 20.7
Feb 28 Total b/f 112 000 Feb 28 Trading account GJ1 112 000
DEBTORS ALLOWANCES N3
20.7 20.7
Feb 28 Total b/f 3 600 Feb 28 Sales GJ1 3 600
SALARIES AND WAGES N4

20.7 20.7
Feb 28 Total b/f 97 000 Feb 28 Profit and loss GJ1 97 000
CELL-PHONE CHARGES N5
20.7 20.7
BAD DEBTS N6
20.7 20.7
Debtors control GJ1 180
1 630 1 630
BAD DEBTS RECOVERED N7

20.7 20.7
Feb 28 Profit and loss GJ1 2 290 Feb 28 Total b/f 2 000
Bank CRJ 290
2 290 2 290
CONSUMABLE STORES N8
20.7 20.7
Feb 28 Total b/f 5 440 Feb 28 Cons. stores on hand GJ1 1 420
Creditors control GJ1 450 Profit and loss GJ1 4 470
5 890 5 890
COMMISSION INCOME N9
20.7 20.7

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Dr ADVERTISING N10 Cr
20.7 20.7
INTEREST ON FIXED DEPOSIT N11

20.7 20.7
Income receivable GJ1 4 500
12 000 12 000
MOTOR EXPENSES N12

20.7 20.7
MAINTENANCE AND REPAIRS N13

20.7 20.7
DISCOUNT ALLOWED N14

20.7 20.7
Feb 28 Total b/f 1 500 Feb 28 Debtors control GJ1 80
Profit and loss GJ1 1 420
1 500 1 500
TELEPHONE N15
20.7 20.7
MUNICIPAL CHARGES N16

20.7 20.7
BANK CHARGES N17

20.7 20.7
INSURANCE N18
20.7 20.7
Feb 28 Total b/f 9 060 Feb 28 Prepaid expenses GJ1 800
9 060 9 060

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Dr RENT INCOME N19 Cr

20.7 20.7
Feb 28 Deferred income GJ1 5 000 Feb 28 Total b/f 35 000
35 000 35 000
INTEREST ON LOAN N20

20.7 20.7
Feb 28 Mortgage loan GJ1 9 000 Feb 28 Profit and loss GJ1 9 000
TRADING STOCK DEFICIT N21

20.7 20.7
Feb 28 Trading stock GJ1 880 Feb 28 Profit and loss GJ1 880
DEPRECIATION N22
20.7 20.7
Feb 28 Acc dep on vehicles GJ1 24 000 Feb 28 Profit and loss GJ1 30 600
Acc dep on equip. GJ1 6 600
30 600 30 600

TRADING ACCOUNT F1
20.7 20.7
Feb 28 Cost of sales GJ1 112 000 Feb 28 Sales GJ1 296 400
296 400 296 400

20.7 20.7
Feb 28 Salaries and wages GJ1 97 000 Feb 28 Trading account GJ1 184 400
Cell-phone charges GJ1 6 700 Bad debts recovered GJ1 2 290
Bad debts GJ1 1 630 Commission income GJ1 60 000
Consumable stores GJ1 4 470 Int. on fixed deposit GJ1 12 000
Advertising GJ1 24 610 Rent income GJ1 30 000
Motor expenses GJ1 14 390
Maint. and repairs GJ1 9 780
Discount allowed GJ1 1 420
Telephone GJ1 4 500
Municipal charges GJ1 5 700
Bank charges GJ1 4 450
Insurance GJ1 8 260
Trading stock deficit GJ1 880
Depreciation GJ1 30 600
Capital (net profit) GJ1 65 300
288 690 288 690

lOMoARcPSD|40826057
10.30.2 GENERAL JOURNAL – 28 FEBRUARY 20.7 GJ1

Debtors Creditors
01 28 Interest on loan N20 9 000
Mortgage loan B15 9 000
Interest on loan outstanding
02 Rent income N19 5 000
Deferred income/Income received in B16 5 000
[1]
advance
Rent received in advance
[2]
03 Prepaid expenses B17 800
Insurance N18 800
Amount paid in advance
04 Bad debts N6 180
Debtor DL 180 180
Additional bad debts written off
05 Debtor DL 80 80
Discount allowed N14 80
Discount on r/d cheque cancelled
[3]
06 Income receivable/Accrued income B18 4 500
Interest on fixed deposit N11 4 500
Interest on fixed deposit outstanding
07 Consumable stores N8 450
Creditors control/Expenses payable B14 450
Additional consumables bought on
credit
[4]
08 Trading stock deficit N21 880
Trading stock B9 880
Stock deficit as per stock taking
Consumable stores on hand B19 1 420
Consumable stores N8 1 420
Consumables on hand as per stock-
take
09 Depreciation N22 30 600
Accumulated depreciation on vehi- B6 24 000
[5]
cles
Accumulated depreciation on equip- B7 6 600
[6]
ment
Depreciation on vehicles at 20% p.a.
and on equipment at 15% p.a.
80 180 - -
B10 B10
[1]
35 000 ÷ 14 x 2
[2]
2 400 ÷ 12 x 4
[3]
100 000 x 12% = R12 000
12 000 – 7 500 = R4 500
[4]
45 110 - 44 230
[5]
120 000 x 20%
[6]
70 000 x 15%

lOMoARcPSD|40826057

Capital B1 150 000
Drawings B2 51 640
Land and buildings B3 280 000
Vehicles at cost B4 120 000
Equipment at cost B5 70 000
Accumulated depreciation on vehicles B6 86 000
Accumulated depreciation on equipment B7 32 600
Fixed deposit B8 100 000
Trading stock B9 44 230
Debtors control B10 51 090
Bank B11 19 260
Petty cash B12 3 500
Cash float B13 2 000
Creditors control B14 340 540
Deferred income/Income received in advance B16 5 000
Prepaid expenses B17 800
Income receivable/Accrued income B18 4 500
Sales N1 300 000
Cost of sales N2 112 000
Debtors allowances N3 3 600
Salaries and wages N4 97 000
Cell-phone charges N5 6 700
Bad debts N6 1 630
Bad debts recovered N7 2 290
Commission income N9 60 000
Advertising N10 24 610
Motor expenses N12 14 390
Maintenance and repairs N13 9 780
Discount allowed N14 1 420
Telephone N15 4 500
Municipal charges N16 5 700
Bank charges N17 4 450
Insurance N18 8 260
Rent income N19 30 000
Interest on loan N20 9 000
Trading stock deficit N21 880
Depreciation N22 30 600
1 087 430 1 087 430

lOMoARcPSD|40826057
10.30.5 GENERAL JOURNAL – 28 FEBRUARY 20.7 GJ1

CLOSING ENTRIES
Debtors Creditors
28 Sales N1 3 600
Closing entry
Trading account F1 112 000
Closing entry
Sales N1 296 400
Closing entry
Gross profit transferred to Profit
and Loss account
Bad debts recovered N7 2 290
Commission income N9 60 000
Closing entry
Cell-phone charges N5 6 700
Bad debts N6 1 630
Advertising N10 24 610
Motor expenses N12 14 390
Maintenance and repairs N13 9 780
Telephone N15 4 500
Municipal charges N16 5 700
Insurance N18 8 260
Trading stock deficit N21 880
Closing entry
Capital B1 65 300
Net profit transferred to capital ac-
count
Capital B1 51 640
Drawings B2 51 640
Drawings transferred to capital

lOMoARcPSD|40826057

Capital B1 163 660
Vehicles at cost B4 120 000
Equipment at cost B5 70 000
Fixed deposit B8 100 000
Bank B11 19 260
Petty cash B12 3 500
696 800 696 800
10.30.7
Post-Adjustment Trial Balance:
This is the Trial Balance that is drawn up after all the adjustments have been considered. It consists of Bal-
ance Sheet and Nominal accounts.
Post-Closing Trial Balance:
This Trial Balance consists only of the Balance Sheet accounts. The nominal accounts have been closed off
to the Final accounts.

lOMoARcPSD|40826057
TASK 10.31 Scampy Stores: Consolidation of Trial Balances

SCAMPY STORES
SPREADSHEET FOR THE YEAR ENDED 30 JUNE 20.5
Pre-Adjustment fig- Post-Adjustment
Adjustments Post-Closing figures
ures figures
Debit Credit Debit Credit Debit Credit Debit Credit
Balance Sheet section
Capital 620 000 620 000 473 009
Drawings 80 000 1 233 81 233 -
Land and buildings 256 000 256 000 256 000
Vehicles at cost 190 600 190 600 190 600
Equipment at cost 94 000 94 000 94 000
Acc dep on vehicles 64 616 38 120 102 736 102 736
Acc dep on equipment 27 600 9 960 37 560 37 560
Fixed deposit 60 000 5 000 65 000 65 000
Trading stock 78 210 6 812 71 398 71 398
Debtors control 59 870 1 320 2 800 58 390 58 390
Bank 16 605 980 1 887 17 512 17 512
Savings account 15 000 59 15 059 15 059
Petty cash 3 000 3 000 3 000
Cash float 5 000 5 000 5 000
Creditors control 44 323 44 323 44 323
Loan from VG Finance Co. 80 000 12 750 92 750 92 750
Accrued income 5 900 5 900 5 900
Accrued expenses 2 274 2 274 2 274
Consum. stores on hand 7 244 7 244 7 244
Income recd. in advance 2 311 2 311 2 311
Prepaid expenses 884 884 884
Nominal section
Sales 280 000 280 000
Cost of sales 120 000 120 000
Debtors allowances 8 904 8 904
Salaries and wages 98 763 98 763
Advertising 21 997 884 21 113
Rent income 60 000 2 000 62 000
Bad debts 42 133 1 820 43 953
Interest on savings 1 203 59 1 262
Consumable stores 25 693 8 444 17 249
Commission income 55 441 2 311 53 130
Bank charges 7 117 389 7 506
Interest on overdraft 2 984 218 3 202
Motor expenses 8 743 1 233 7 510
Maintenance and repairs 7 568 7 568
Discount allowed 2 111 40 2 071
Discount received 2 033 2 033
Telephone 16 327 698 17 025
Water and electricity 12 125 576 12 701
Interest on overdue debtors 324 324
Insurance 36 000 1 000 37 000
Depreciation 48 080 48 080
Interest on loan 12 750 12 750
Loss due to theft 1 300 1 300
Trading stock deficit 2 812 2 812
Interest on fixed deposit 5 000 5 000
1 252 145 1 252 145 94 574 94 574 1 323 215 1 323 215 772 475 772 475

lOMoARcPSD|40826057
Explanation:
(i) Expenses: 317 + 72 + 218 – 40 (discount allowed cancelled)
Increase Debtors by R1 280 + R40 = R1 320
Bank: 317 + 72 + 218 + 1 280 = R1 877
(ii) Vehicles: 190 600 x 20% = R38 120
Equipment: [94 000 – 27 600] x 15% = R9 960
Total: 38 120 + 9 960 = R48 080
(iii) Interest on loan
01:07:20.4 – 31:12:20.4:
6
90 000 x 15% x /12 = 6 750
01:01:20.5 – 30:06:20.5:
6
80 000 x 15% x /12 = 6 000
R12 750
R13 500 – 6 000 = R7 500
65
(iv) Bad debts: 980 x /35 = R1 820. Reduce Debtors by R980 + R 1820 = R2 800.
(v) 60 000  12 = R5 000
[5 000 x 8 = R40 000] + [5 000 + 10% x 4 = R22 000]
Total rent = 40 000 + 22 000
= R62 000
Amount owing = 62 000 – 60 000
= R2 000
(vi) Insurance = [3 000 x 10 = R30 000] + [42 000  12 x 2 = R7 000]
= R37 000
Amount owing = 37 000 – 36 000
= R1 000
(viii) Stock deceases by R4 000; Consumable stores (expense) decreases by R1 200; Expenses de-
crease by the total loss, i.e. R5 200.
Insurance claim: 75% x 5 200 = R3 900: Income receivable (asset) increases by R3 900; Expenses
increase by R3 900.
(x) Stock deficit: 78 210 – 4 000 – 71 398 = R2 812
(xi) Interest on fixed deposit
60 000 – 20 000 x 10% x /12 =
6 6
R2 000 + [60 000 x 10% x /12]
6
60 000 x 10% x /12 = R3 000
Total interest receivable = R5 000
(xiii) No entry as this has been recorded.
(xv) Advertising R1 326  3 x 2 = R884
Note to Teacher:
 Net loss is R65 758 (expenses minus income). Add up the debits and credits of the Nominal accounts
section. The difference represents a net loss of R65 758 as the debits (expenses) are greater than the
credits (income).
 The Capital balance in the Post-Closing Trial Balance is calculated as follows:
620 000 (Capital balance) – 65 758 (Net loss) - 81 233 (Drawings) = R473 009.
TASK 10.32  Timing differences

10.32.1 Insurance has been paid in advance – for the next financial period.
10.32.2 The next financial period, i.e. 01 March 20.3 – 28 February 20.4.
10.32.3 This amount must be brought back into the account next year so that it reflects the correct insur-
ance for next year.
10.32.4 Reverse (close up) the Prepaid expenses account and transfer back to the Insurance account.
10.32.5 Expenses payable/Accrued expenses and Advertising.
Income received in advance/Deferred income and Rent income.
Income receivable/Accrued income and Interest on fixed deposit.
Consumable stores on hand and Consumable stores.
10.32.6 The General Journal – does not fit into any other journal.

lOMoARcPSD|40826057
TASK 10.33  Reversal entries

10.33.1 GENERAL JOURNAL – MARCH 20.3 GJ3
Debtors Creditors
01 1 Expenses payable/Accrued expenses B15 300
Advertising N7 300
Reversal entry
02 Income received in advance/Deferred income B16 2 000
Reversal entry
03 Insurance N14 3 450
Prepaid expenses B17 3 450
Reversal entry
04 Interest on fixed deposit N11 150
Income receivable/Accrued income B18 150
Reversal entry
05 Consumable stores N6 560
Consumable stores on hand B19 560
Reversal entry
10.33.2 GENERAL LEDGER

Dr EXPENSES PAYABLE / ACCRUED EXPENSES B15 Cr
20.3 20.3
Mar 1 Advertising GJ3 300 Feb 28 Advertising GJ2 300
DEFERRED INCOME/ INCOME RECEIVED IN ADVANCE B16

20.3 20.3
Mar 1 Rent income GJ3 2 000 Feb 28 Rent income GJ2 2 000

20.3 20.3
Feb 28 Insurance GJ2 3 450 Mar 1 Insurance GJ3 3 450
INCOME RECEIVABLE / ACCRUED INCOME B18

20.3 20.3
Feb 28 Interest on fixed dep. GJ2 150 Mar 1 Interest on fixed dep. GJ3 150

20.3 20.3
Feb 28 Consumable stores GJ2 560 Mar 1 Consumable stores GJ3 560

lOMoARcPSD|40826057

Dr CONSUMABLE STORES N6 Cr
20.3 20.3
Feb 28 Total b/f 4 560 Feb 28 Consumable stores GJ2 560
on hand
Profit and Loss a/c GJ2 4 000
4 560 4 560
Mar 1 Consumable stores
on hand GJ3 560
ADVERTISING N7
20.3 20.3
Feb 28 Total b/f 11 900 Feb 28 Profit and Loss a/c GJ2 12 200
Expenses payable / GJ2 300
Accrued expenses
12 200 12 200
Mar 1 Expenses payable / GJ3 300
Accrued expenses

20.3 20.3
Feb 28 Profit and Loss a/c GJ2 2 550 Feb 28 Total b/f 2 400
Income receivable / GJ2 150
Accrued income
2 550 2 550
Mar 1 Income receivable / GJ3 150
Accrued income
INSURANCE N14
20.3 20.3
Feb 28 Total b/f 12 980 Feb 28 Prepaid expenses GJ2 3 450
12 980 12 980
Mar 1 Prepaid expenses GJ3 3 450
RENT INCOME N15

20.3 20.3
Feb 28 Deferred income / GJ2 2 000 Feb 28 Total b/f 26 000
Income received in
advance
26 000 26 000
Mar 1 Deferred income / GJ3 2 000
Income received in
advance

lOMoARcPSD|40826057
TASK 10.34  Revision of Accounting principles and equation

Effect on equation
required YES/NO)
GAAP principle
Reversal entry
Owner’s equity
No. Account debit Account credit
Expenses
Liabilities
Income
Assets
1. Depreciation Acc dep on equipment Prudence - + No
Income receivable/ Interest on fixed de-
2. Matching + + Yes
Accrued income posit
3. Bad debts Debtors control Prudence - + No
4. Prepaid expenses Rates Matching + - Yes
Income received in
5. Commission income advance/Deferred in- Matching + - Yes
come
6. Debtors control Interest on overdue a/c + + No
7. Interest expense Creditors control + + No
Consumable stores on
8. Consumable stores Matching + - Yes
hand
Accrued expenses/
9. Telephone Matching + + Yes
Expenses payable
10. Bank Bad debts recovered + + No
11. Trading stock deficit Trading stock Prudence - + No
12. Bank charges Bank - + No
13. Debtors control Bank ± No
14. Debtors control Discount allowed + - No
15. Drawings Trading stock Bus entity - - No
16. Stationery Trading stock - + No

lOMoARcPSD|40826057
TASK 10.35  Reversal entries

10.35.1/10.35.3 GENERAL LEDGER OF RT SERVICE CENTRE
20.8 20.8
Feb 28 Consumable stores GJ2 1 200 Mar 1 Consumable stores GJ3 1 200

20.8 20.8
Feb 28 Fee income GJ2 5 120 Mar 1 Fee Income GJ3 5 120

20.8 20.8
Mar 1 Rent income GJ3 1 450 Feb 28 Rent income GJ2 1 450
EXPENSES PAYABLE/ACCRUED EXPENSES B14

20.8 20.8
Mar 1 Advertising GJ3 670 Feb 28 Advertising GJ2 670

20.8 20.8
Feb 28 Insurance GJ2 2 120 Mar 1 Insurance GJ3 2 120

Debtors Creditors
01 1 Consumable stores 1 200 1 200
Consumable stores on hand B11
Reversal entry
02 Fee income 5 120
Income receivable/Accrued in- B12 5 120
come
Reversal entry
03 Deferred income/Income received B13 1 450
in advance
Rent income 1 450
Reversal entry
04 Expenses payable / Accrued ex- B14 670
penses
Advertisements 670
Reversal entry
05 Insurance 2 120
Prepaid expenses B15 2 120
Reversal entry
10.35.4 (a) So that the accounts can reflect the correct information for next year.
(b) Depreciation, bad debts, charging interest. Various answers are acceptable.
(c) They are records for this year.

lOMoARcPSD|40826057
TASK 10.36 Zack Traders: Adjustments & reversals

10.36.1 / 10.36.3 / 10.36.5 GENERAL LEDGER OF ZACK TRADERS
Dr EQUIPMENT B5 Cr
20.7

20.7 20.7
27 900 27 900
TRADING STOCK B7
20.7
DEBTORS CONTROL B8
20.7
20.7
LOAN B10
20.7 20.7
30 680 30 680

20.7 20.7
Mar 1 Telephone GJ3 470 Feb 28 Telephone GJ2 470

20.7 20.7
Mar 1 Rent Income GJ3 1 660 Feb 28 Rent income GJ2 1 660

20.7 20.7
Feb 28 Fee income GJ2 2 100 Mar 1 Fee income GJ3 2 100

lOMoARcPSD|40826057
Dr PREPAID EXPENSES B14 Cr

20.7 20.7
Feb 28 Repairs GJ2 540 Mar 1 Repairs GJ3 540

20.7 20.7
Feb 28 Consumable stores GJ2 1 960 Mar 1 Consumable stores GJ3 1 960
NOMINAL SECTION
CONSUMABLE STORES N5
20.7 20.7
Feb 28 Total b/f 9 860 Feb 28 Con. stores on hand GJ2 1 960
Profit and Loss GJ2 7 900
9 860 9 860
Mar 1 Consumable stores GJ3 1 960
on hand
FEE INCOME N6
20.7 20.7
Income receivable / GJ2 2 100
Accrued income
17 000 17 000
Mar 1 Income receivable / GJ3 2 100
Accrued income
RENT INCOME N7
20.7 20.7
Feb 28 Deferred Income / GJ2 1 660 Feb 28 Total b/f 21 580
Income received in
advance
21 580 21 580
Mar 1 Deferred Income / GJ3 1 660
Income received in
advance
REPAIRS N10
20.7 20.7
Feb 28 Total b/f 4 550 Feb 28 Prepaid expenses GJ2 540
4 550 4 550
Mar 1 Prepaid expenses GJ3 540
TELEPHONE N11
20.7 20.7
Expenses payable / GJ2 470
Accrued expenses
6 080 6 080
Mar 1 Expenses payable / GJ3 470
Accrued expenses

lOMoARcPSD|40826057
Dr INTEREST ON LOAN N12 Cr

20.7 20.7
Feb 28 Loan GJ2 4 680 Feb 28 Profit and loss GJ2 4 680
DEPRECIATION N13
20.7 20.7
Feb 28 Acc dep on equip- GJ2 3 900 Feb 28 Profit and loss GJ2 3 900
ment
10.36.2 GENERAL JOURNAL – FEBRUARY 20.7 GJ2

Debtors Creditors
01 28 Interest on loan N12 4 680
Loan B10 4 680
Interest for the year brought into ac-
count at year-end
02 Rent income N7 1 660
Deferred income/Income received in B12 1 660
advance
Rent paid in advance
03 Income receivable/Accrued income B13 2 100
Fee income N5 2 100
Fee income still owing
04 Telephone N11 470
Expenses payable/Accrued expenses B11 470
Telephone account not yet paid
05 Prepaid expenses B14 540
Repairs N10 540
Amount for painting paid in advance
06 Consumable stores on hand B15 1 960
Consumable stores as per physical
stock-taking.
07 Depreciation N13 3 900
Accumulated depreciation on equip- B6 3 900
ment
Depreciation on equipment at 15% p.a.
on diminishing balance
ii. R21 580 13 = R1 660

vii. R50 000 – 24 000 x 15% = R3 900

lOMoARcPSD|40826057

Equipment B5 50 000
Loan B10 30 680
Fee income N6 17 000
Repairs N10 4 010
Telephone N11 6 080

Debtors Creditors
D Details Fol Debit Credit control control
08 1 Deferred income/Income received B12 1 660
in advance
Reversal entry
09 Fee Income N6 2 100
Income receivable/Accrued in- B13 2 100
come
Reversal entry
10 Expenses payable/Accrued ex- B11 470
penses
Telephone N11 470
Reversal entry
11 Repairs N10 540
Reversal entry
12 Consumable stores N5 1 960
Reversal entry
10.36.6
(a) 1 660 x 3 = 4 980
1 909 x 9 = 17 181
22 161
(b) Dr Prepaid expenses; Cr Consumable stores
(c) Only pay after the job is completed or pay only a part up-front and the balance after completion of the
job.

lOMoARcPSD|40826057
TASK 10.37 Abcon Stores: Consolidation of year-end procedures

10.37.1 /10.37.2 /10.37.4 GENERAL LEDGER OF ABCON STORES
Dr CAPITAL B1 Cr
20.8 20.8
Dec 31 Drawings GJ 90 000 Dec 31 Balance b/d 250 000
Balance c/d 258 072 Profit and loss a/c GJ 98 072
348 072 348 072
20.9
DRAWINGS B2
20.8 20.8
Dec 31 Balance b/d 90 000 Dec 31 Capital GJ 90 000
LAND AND BUILDINGS B3

20.8 20.8
Dec 31 Balance b/d 200 000 Dec 31 Repairs & mainten. GJ 5 000
Balance c/d 195 000
200 000 200 000
20.9
VEHICLES B4
20.8
Dec 31 Balance b/d 95 000
ACCUMULATED DEPRECIATION ON VEHICLES B5

20.8 20.8
Dec 31 Balance c/d 94 999 Jan 1 Balance b/d 83 000
20.8
Dec 31 Depreciation* GJ *11 999
94 999 94 999
20.9
*Note: The asset cannot be depreciated below a book value of R1

EQUIPMENT B6
20.8

20.8 20.8
Dec 31 Balance c/d 31 200 Jan 1 Balance b/d 24 000
20.8
Dec 31 Depreciation GJ 7 200
31 200 31 200
20.9

lOMoARcPSD|40826057
Dr FIXED DEPOSIT AT ZUMA BANK B8 Cr

20.8 20.8
Dec 31 Balance b/d 35 000 Dec 31 Balance c/d 36 183
Interest on fixed dep. GJ 1 183
36 183 36 183
20.9
BANK B9
20.8 20.8
Dec 31 Balance c/d 8 092 Dec 31 Balance b/d 5 680
Bank charges CPJ 375
Interest on o/d CPJ 600
Debtors control CPJ 1 437
8 092 8 092
20.9
LOAN: QUICKCASH LOANS B10

20.8 20.8
Dec 31 Balance c/d 56 125 Dec 31 Balance b/d 50 000
Interest on loan GJ 6 125
56 125 56 125
20.9
TRADING STOCK B11

20.8 20.8
Dec 31 Balance b/d 45 560 Dec 31 Creditors control GJ 840
Cost of sales GJ 840 Trading stock deficit GJ 1 260
Balance c/d 44 300
46 400 46 400
20.9
DEBTORS CONTROL B12

20.8 20.8
Dec 31 Balance b/d 38 280 Dec 31 Sundry accounts GJ 315
Bank (r/d) CPJ 1 437 Debtors allowances GJ 1 470
Discount allowed GJ 63 Balance c/d 37 995
39 780 39 780
20.9
PETTY CASH B13

20.8 20.8
Dec 31 Balance b/d 800 Dec 31 Fee income PCJ 130
Balance c/d 670
800 800
20.9
Jan 1 Balance b/d 670

lOMoARcPSD|40826057
Dr CASH FLOAT B14 Cr

20.8

20.8 20.8
Dec 31 Trading stock GJ 840 Dec 31 Balance b/d 25 200
Balance c/d 24 360
25 200 25 200
20.9

20.8 20.9
Dec 31 Stationery GJ 520 Jan 1 Stationery GJ1 520

20.9 20.8
Jan 1 Telephone GJ1 610 Dec 31 Telephone GJ 610

20.8 20.9
[2]
Dec 31 Rent income GJ 200 Jan 1 Rent income GJ1 200

20.9 20.8
Jan 1 Fee income GJ1 320 Dec 31 Fee income GJ 320
CONSUMABLE STORES (STATIONERY) ON HAND B20

20.8 20.9
Dec 31 Stationery GJ 1 910 Jan 1 Stationery GJ1 1 910

SALES N1
20.8 20.8
Dec 31 Debtors allowances GJ1 17 440 Dec 31 Total b/f 610 000
610 000 610 000
DEBTORS ALLOWANCES N2
20.8 20.8
Dec 31 Total b/f 15 970 Dec 31 Sales GJ1 17 440
Debtors control GJ 1 470
17 440 17 440

lOMoARcPSD|40826057
Dr COST OF SALES N3 Cr
20.8 20.8
Dec 31 Total b/f 370 000 Dec 31 Trading stock GJ 840
Trading account GJ1 369 160
370 000 370 000
SALARIES AND WAGES N4

20.8 20.8
Dec 31 Total b/f 150 000 Dec 31 Profit and loss GJ1 150 000
FEE INCOME N5
20.8 20.8
Dec 31 Petty cash PCJ 130 Dec 31 Total b/f 68 000
Deferred income / GJ 320
Income received in
advance
68 000 68 000
20.9
Jan 1 Deferred income / GJ1 320
Income received in
advance
RENT INCOME N6
20.8 20.8
Dec 31 Profit and loss GJ1 24 200 Dec 31 Total b/f 24 000
Income receivable / GJ 200
Accrued income
24 200 24 200
20.9
Jan 1 Income receivable / GJ1 200
Accrued income
DISCOUNT ALLOWED N7
20.8 20.8
Dec 31 Total b/f 3 200 Dec 31 Debtors control GJ 63
3 200 3 200
DISCOUNT RECEIVED N8
20.8 20.8
Dec 31 Profit and loss GJ1 2 980 Dec 31 Total b/f 2 980
BAD DEBTS N9
20.8 20.8
Debtors control GJ 315
3 305 3 305

lOMoARcPSD|40826057
Dr BANK CHARGES N10 Cr

20.8 20.8
Bank CPJ 375
2 445 2 445
INTEREST ON OVERDRAFT N11

20.8 20.8
Bank CPJ 600
2 820 2 820
STATIONERY N12
20.8 20.8
Dec 31 Total b/f 5 600 Dec 31 Prepaid expenses GJ 520
Cons. stores on hand GJ 1 910
5 600 5 600
20.9
Jan 1 Cons. stores on hand GJ1 1 910
SUNDRY EXPENSES N13

20.8 20.8
TELEPHONE N14
20.8 20.8
Expenses payable / GJ 610
Accrued expenses
12 010 12 010
20.9
Jan 1 Expenses payable / GJ1 610
Accrued expenses
REPAIRS AND MAINTENANCE N15

20.8 20.8
Land and buildings GJ 5 000
11 000 11 000

20.8 20.8
Dec 31 Profit and loss GJ1 1 183 Dec 31 Fixed deposit GJ 1 183
INTEREST ON LOAN N17

20.8 20.8
Dec 31 Loan GJ 6 125 Dec 31 Profit and loss GJ1 6 125

lOMoARcPSD|40826057
Dr DEPRECIATION N18 Cr
20.8 20.8
Dec 31 Acc dep on vehicles GJ 11 999 Dec 31 Profit and loss GJ1 19 199
[1]
Acc dep on equip. GJ 7 200
19 199 19 199
TRADING STOCK DEFICIT N19

20.8 20.8
Dec 31 Trading stock GJ 1 260 Dec 31 Profit and loss GJ1 1 260

TRADING ACCOUNT F1
20.8 20.8
Dec 31 Cost of sales GJ1 369 160 Dec 31 Sales GJ1 592 560
592 560 592 560

20.8 20.8
Dec 31 Salaries and wages GJ1 150 000 Dec 31 Trading account GJ1 223 400
Discount allowed GJ1 3 137 Fee income GJ1 67 550
Bad debts GJ1 3 305 Rent income GJ1 24 200
Bank charges GJ1 2 445 Discount received GJ1 2 980
Interest on overdraft GJ1 2 820 Int. on fixed deposit GJ1 1 183
Stationery GJ1 3 170
Sundry expenses GJ1 6 770
Telephone GJ1 12 010
Repairs & mainten. GJ1 11 000
Trading stock deficit GJ1 1 260
Capital (net profit) GJ1 98 072
319 313 319 313
60 000 – 24 000 x 20%

[1]
= R7 200 Depreciation
[2]
[2 000 x 11] + [2 000 + 10%] = R24 200 Rent
Amount owing = 24 200 – 24 000 = R200

lOMoARcPSD|40826057
10.37.3 POST-ADJUSTMENT TRIAL BALANCE ON 31 DECEMBER 20.8

Capital B1 250 000
Drawings B2 90 000
Vehicle at cost B4 95 000
Equipment B6 60 000
Fixed Deposit at Zuma Bank B8 36 183
Bank B9 8 092
Loan: QuickCash Loans B10 56 125
Petty cash B13 670
Deferred income/Income received in advance B19 320
Sales N1 610 000
Discount received N8 2 980
Bad debts N9 3 305
Interest on overdraft N11 2 820
Stationery N12 3 170
Sundry expenses N13 6 770
Telephone N14 12 010
Repairs and maintenance N15 11 000
Trading stock deficit N19 1 260
1 171 619 1 171 619
10.37.4 GENERAL JOURNAL – DECEMBER 20.8 GJ1

CLOSING ENTRIES
Debtors Creditors
31 Sales N1 17 440
Closing entry
Closing entry
Sales N1 592 560
Closing entry

lOMoARcPSD|40826057
CLOSING ENTRIES (Contd)

Debtors Creditors
31 Profit and loss account F2 223 400
Gross profit transferred to Profit and Loss
account
Discount received N8 2 980
Closing entry
Bad debts N9 3 305
Interest on overdraft N11 2 820
Sundry expenses N13 6 770
Telephone N14 12 010
Repairs and maintenance N15 11 000
Trading stock deficit N19 1 260
Closing entry
Capital B1 98 072
Net profit transferred to capital account
Capital B1 90 000
Drawings B2 90 000
Drawings transferred to capital
10.37.5 POST-CLOSING TRIAL BALANCE AS AT 31 DECEMBER 20.8

Capital B1 258 072
Vehicle at cost B4 95 000
Equipment B6 60 000
Fixed Deposit at Zuma Bank B8 36 183
Bank B9 8 092
Loan: QuickCash Loans B10 56 125
Petty cash B13 670
Deferred income/Income received in advance B19 320
473 778 473 778

lOMoARcPSD|40826057
10.37.6 GENERAL JOURNAL GJ1

REVERSALS: 1 JANUARY 20.9
Debtors Creditors
1 Rent income N8 200
Income receivable / Accrued in- B16 200
come
Reversal entry
Stationery N14 520
Reversal entry
Expenses payable / Accrued ex- B18 610
penses
Telephone N16 610
Reversal entry
Fee income 320
Deferred income/Income received B19 320
in advance
Reversal entry
Reversal entry
10.37.7
(a) Yes. Carrying (book) value is only R1 (95 000 – 94 999); any other valid reason.
(b) 223 400 x 100 = 61%
369 160 1
(c) 14% below the target mark-up. Probable causes: theft, too many discounts, inaccurate mark-up cal-
culations, etc.
(d) Provide incentives for prompt settlement; effective screening of prospective debtors is advisable;
send out reminders; etc.
NOTE TO TEACHER:
Task 10.37 consolidates all aspects of year-end procedures. If you, as the teacher, wish to focus on any one
aspect, learners need not complete all seven parts of this task. For example, preparation of the final
accounts (10.37.4) would also involve understanding of the year-end adjustments.
Teachers might also require learners to revise adjusting journal entries using this task. For your assistance,
a summary of the adjusting journal entries follows.
Teachers might also want learners to use Task 10.37 to proceed toward completing the Balance Sheet, after
they have covered Module 10. Teachers may provide generic formats of the financial statements in this
case. In order to provide learners with the necessary information regarding Balance Sheet adjustments, this
information has been included in Task 10.37, e.g. Additional information no. 3 (increase in capital), no. 5
(maturing of fixed deposit), no. 8 (current portion of loan).

lOMoARcPSD|40826057
SUMMARY OF ADJUSTING ENTRIES – TASK 10.37
NO. DEBIT CREDIT AMOUNT

1. Repairs & maintenance Land & buildings 5 000
2. Bank charges Bank 375
Interest on overdraft Bank 600
Debtors control Bank 1 437
Debtors control Discount allowed 63
3. No general journal entry – Balance Sheet adjustment only
4. Debtors allowances Petty cash 130
5. Fixed deposit Interest income 1 183
No general journal entry for current portion – Balance Sheet adjustment only
6. Expenses prepaid Stationery 520
7. Telephone Expenses payable 610
8. Interest on loan Loan 6 125
No general journal entry for current portion – Balance Sheet adjustment only
9. Bad debts Debtors control 315
10. Depreciation Accumulated depreciation on vehicles 11 999
Depreciation Accumulated depreciation on equipment 7 200
11. Debtors allowances Debtors control 1 470
Trading stock Cost of sales 840
Creditors control Trading stock 840
12. Income receivable/accrued Rent income 200
13. Fee income Deferred income/received in advance 320
14. Trading stock deficit Trading stock 1 260
Consumable stores on hand Stationery 1 910
TASK 10.38  Ethical & internal control scenarios relating to final

accounts
Before undertaking this task, it is advisable to inform the learners about what is meant by internal control
(you may refer to Module 14).
10.38.1 Pre-adjustment Trial Balance – provides assurance that the double entries in the books have
been properly done.
10.38.2 Post-adjustment Trial Balance – provides assurance that the double entries for adjustments have
been properly done.
10.38.3 Post-closing Trial Balance – provides assurance that the double entries for closing transfers have
been properly done.
10.38.4 Explain how the following amounts in the post-closing Trial Balance can easily be checked:
Fixed assets – check to Fixed Assets Register and check by physical inspection .
Financial assets – check to statements from financial institutions.
Trading stock – check to evidence of physical count and stock records.
Debtors control – check to debtors’ list from debtors’ ledger.
Cash at bank – check to bank reconciliation statement.
Creditors control – check to debtors’ list from debtors’ ledger.
Loan from a bank – check to loan statement.
10.38.5 Explain how the following amounts in the final accounts can easily be checked:
Rent expense – check by calculation of monthly rent X number of months.
Interest income – check calculation to statement from financial institution.
Depreciation – check to calculations in fixed assets register.
Trading stock deficit – check to evidence of physical count and stock records.

lOMoARcPSD|40826057
CHECKLIST
Requires
Yes –
Skills more Complete
proficient
attention
Understand and apply the GAAP principles.
Calculate and record depreciation.
Calculate and record income receivable.
Calculate and record income received in advance.
Calculate and record expenses payable.
Calculate and record expenses prepaid.
Calculate and record trading stock deficit / surplus.
Calculate and record consumable stores on hand.
Correct errors or omissions through year-end adjustments
Journalise and post closing transfer entries.
Journalise and post reversal entries.
Prepare final accounts.
Analyse adjustment entries in the accounting equation.
Analyse ethical & internal control scenarios relating to final
accounts


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business Administration (Gateway ICT Polytechnic, Saapade)

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Note to the Teacher:

TASK 10.1  Hlope Traders: Financial statements, Theory

New Era Accounting: Grade 10 211 Teacher’s Guide

EQUITY AND LIABILITIES

TASK 10.2 Malange Sport: Financial statements, Presentation

The solutions are given as guides only at this stage.

New Era Accounting: Grade 10 212 Teacher’s Guide

10.2.1 MALANGE SPORTS

BALANCE SHEET AS AT 30 APRIL 20.7

New Era Accounting: Grade 10 213 Teacher’s Guide

BALANCE SHEET OF MALANGE SPORTS AS AT 30 APRIL 20.7

New Era Accounting: Grade 10 214 Teacher’s Guide

TASK 10.3  Accounting principles

TASK 10.4  Matching columns: GAAP

TASK 10.5  Accounting principles and concepts

TASK 10.6 Research

New Era Accounting: Grade 10 215 Teacher’s Guide

TASK 10.7  Two methods of depreciation

TASK 10.8  Salso Traders: Calculating and processing deprecia-

10.8.2 GENERAL LEDGER OF SALSO TRADERS

ACCUMULATED DEPRECIATION ON VEHICLES B

ACCUMULATED DEPRECIATION ON EQUIPMENT B

New Era Accounting: Grade 10 216 Teacher’s Guide

NOMINAL ACCOUNTS SECTION

10.8.3 Effect on the Accounting Equation

TASK 10.9 Ramba Traders: Calculating and processing deprecia-

10.9.2 GENERAL LEDGER OF RAMBA TRADERS

ACCUMULATED DEPRECIATION ON VEHICLES B

ACCUMULATED DEPRECIATION ON EQUIPMENT B

NOMINAL ACCOUNTS SECTION

New Era Accounting: Grade 10 217 Teacher’s Guide

10.9.3 Effect on the Accounting Equation

TASK 10.10 Timba Traders: Calculating and processing deprecia-

10.10.2 GENERAL LEDGER OF TIMBA TRADERS

ACCUMULATED DEPRECIATION ON VEHICLES B

ACCUMULATED DEPRECIATION ON EQUIPMENT B

NOMINAL ACCOUNTS SECTION

New Era Accounting: Grade 10 218 Teacher’s Guide

10.10.3 Effect on the Accounting Equation

TASK 10.11  Toppel Dealers: Adjustments to income

10.11.2 GENERAL LEDGER OF TOPPEL DEALERS

INCOME RECEIVED IN ADVANCE / DEFERRED INCOME B

10.11.3 Fixed deposit amount: 5 400 = 11.25%

New Era Accounting: Grade 10 219 Teacher’s Guide

TASK 10.12 Pelham Suppliers: Depreciation & adjustments to in-

10.12.3 (12.5% of R60 000) + (12,5% of R1 875) = R7 500 + R 234,38 = R7 734,38.

TASK 10.13  Optel Dealers: Adjustments to income and expenses

New Era Accounting: Grade 10 220 Teacher’s Guide

10.13.2 GENERAL LEDGER OF OPTEL DEALERS

ACCRUED EXPENSES / PAYABLE B

New Era Accounting: Grade 10 221 Teacher’s Guide

TASK 10.14 Littletop Dealers: Adjustments to income & expenses

10.14.2 EXTRACT FROM THE POST-ADJUSTMENT FIGURES ON 31 DECEMBER 20.6

New Era Accounting: Grade 10 222 Teacher’s Guide

TASK 10.15  Wrigley Bros: Adjustments to income & expenses