QUESTION 1
Mthethwa Traders uses the perpetual inventory system with a mark-up of 25% on
sales, and the following transactions were concluded by Mthethwa Traders during
January 2021.
1. The owner contributed R10 000 to the business and this was deposited in the
bank account.
2. Sold goods for cash 12 000.
3. Paid ABC Wholesalers via Electronic funds transfer (EFT), R4 150.
4. Mthethwa Traders took goods for his own use, R 630.
5. Rent for the business premises paid, R9 600.
6. Issued an invoice to Buthelezi T, for goods sold on credit, R13 500.
7. Purchased equipment on credit from Khumalo T, R56 000.
8. Debtor, Mabasa T.J. returned damaged goods, R400.
9. Issued a receipt to Moala C.M.for rent, R2 500.
10.The owner transferred the ownership of his vehicle, worth R70 000, into the
business name.
11.Returned damaged equipment to Khumalo T, R26 000.
You are required to: Show the effect of the above transactions on the accounting
equation.
SOURCE
DOCUMENT
ACCOUNT
DEBITED
ACCOUNT
CREDITED
ASSET
S
6. DUPLICATE
SALES INVOICE
DEBTORS
CONTROL
COST OF
SALES
SALES
+R13
500
-R10
125
8.DUPLICATE
CREDIT NOTE
SALES
RETURN
TRADING
INVENTOR
Y
11.ORIGINAL
CREDITOR
CREDIT
S
NOTE/DUPLICAT CONTROL
E DEBIT NOTE
TRADING
INVENTOR
Y
DEBTORS
CONTROL
COST OF
SALES
EQUIPMEN
T
OWNER
S
EQUITY
+R13
500
-R10 125
LAIBILITIE
S
-R400
-R400
0
+R300
+R300
0
-R26
000
0
-R26 000
0
0
QUESTION 2-MARK-UP,VAT AMOUNT,VAT EXCLUSIVE,VAT INCLUSIVE
NO. COST
PRICE
EXCLUSIVE
AMOUNT
1
R12 300
2
D.R17 550
3
4
G.R10 580
R10 500
5
R25 600
MARK-UP %
30% ON
SALES
25% ON
SALES
20% ON COST
J.32% ON
SALES/PROFIT
MARGIN
M.38%
SELLING
PRICE(SALES)
EXCLUSIVE
AMOUNT
A.17 571
VAT
AMOUNT
ON
SALES
B.R2 635
SELLING
PRICE
INCLUSIVE
AMOUNT
C.R20 207
R23 400
E.R3 510
F.R26 910
H.R12 696
R15 500
I.R1 094
K.R2 325
R14 600
L.R17 825
R35 400
N.R5 310
O.R40 710
MARK-UP SOLUTION
1.A STEP 1= SP=100
CP=(70)
MU=30
30/100 ON SALES
DOWN=SUBTRACT
UP=ADD
STEP = UNKNOWN/KNOWNX GIVEN AMOUNT
=100/70XR12 300
SELLING PRICE =R17 571(EXCL)
1.B. VAT AMOUNT=R17 571X15/100(AMOUNT USED THERE IS NO VAT)
=R2 636
1.C. SELLING PRICE+VAT AMOUNT
=SELLING PRICE INCLUSIVE
R17 571+R2 636
=R20 207
OR
R17 571X115/100=R20 207
2.D. STEP 1=SP-100
CP-(75)
MU-25
25/100 ON SALES
STEP 2=75/100XR23 400
=R17 550
2.E. VAT AMOUNT=15/100XR23 400
=R3 510
2.F. R23 400+R3 510=R26 910
OR R23 400X115/100=R26 910
3.G.R12 696X100/120
=R10 580
MARK UP+COST=SELLING PRICE
20+100=120
H.R14 600-R1 904
=R12 696
OR
R14 600X100/115
=R12 696
I.R14 600X15/115
=R1 904
100/115=EXCLUDE
115/100=INCLUDE
15/100=VAT AMOUNT
15/115=VAT AMOUNT
4.J.SELLING PRICE-COST PRICE
=R15 500-R10 500
MARK-UP/GROSS PROFIT=R5 000
R5 000/R15 500X100/1= 32%
4.K. R15 500X15/100
=R2 325
4.L.R15 500(SP)+R2 325(VA)=R17 825
OR
R15 500X115/100=R17 825
5.M.R35 400-R25 600=R9 800/R25 600X100/1=38%
5.N.R35 400X15/100=R5 310
5.O.R35 400+R5 310=R40 710
OR
R35 400X115/100=R40 710