SECOND SEMESTER 2015
FINANCIAL ACCOUNTING 101
FAC511S
ASSIGNMENT 2
FEEDBACK TUTORIAL
ASSIGNMENT-2
FINANCIAL ACCOUNTING 101 - FEEDBACK TUTORIAL
SEMESTER 2/2015
FAC511S
Dear Student
The marks obtained in assignment two showed a slight improvement compared to that of assignment
one. The average obtained for this assignment was 52%, meaning that the majority of you passed this
assignment.
However, it is still disappointing that some students don not attempt all questions. I continue to
emphasise that where you do not understand something in a particular question or assignment, feel free
to contact me, or raise it up in the face-face tutorial sessions.
I have highlighted a few areas of concern below:
Specific feedback
Question 1
Part A
This part of the assignment was well answered however students should learn to summarize important
points, providing long paragraphs for a few marks is time consuming and unnecessary.
Part B
Here students were meant to provide journal entries in the general journal. However as the requirement
was ambiguous, some provided entries in the various other books of prime entry. These were also
marked correct.
Whenever you have to provide journal entries in the general journal always provide journal narrations
unless stated otherwise.
For the VAT control account, marks were only awarded if the amount as well as the description of the
corresponding account was accurate.
Question 2
This question was well answered, especially the adjusting journals and the statement of profit or loss.
Most students did not obtain maximum marks for the statement of financial position as amounts were
presented under incorrect titles e.g. bank and petty cash should be presented as a single item called cash
and cash equivalents, this was not done.
Make sure you know where under which title items should appear in the statement of financial position.
Remember, financial accounting is concerned with the presentation of financial statements, thus marks
are awarded for correct presentation.
1
ASSIGNMENT-2
FINANCIAL ACCOUNTING 101 - FEEDBACK TUTORIAL
SEMESTER 2/2015
FAC511S
I urge you to use the information you have obtained from this feedback letter to help you in preparation for
the exams. Please make use of the e-learning platform to access prior tests and further exercises that will
aid you in your exam preparation.
Feel free to contact me where you have any problems
Good luck with the exams
Regards
Mr Mahindi
+264-61-207 2701
cmahindi@polytechnic.edu.na
FAC511S – MEMO
Assignment 2
Question 1
(30 marks)
Part A
1.
VAT is a consumption tax, i.e. an indirect tax on goods and services √
Added to the value of goods and services that are transferred or sold √
The excess of what a business charges to its customers in VAT over what the business is charged by
its suppliers in VAT is paid over to the Receiver of Revenue √
Total 3 Marks
2.
Input VAT
Tax on purchases √
Asset √
Output VAT
Tax on sales √
Liability √
Total 4 Marks
3.
Standard rated supply – goods and services supplied at a standard rate of 15% VAT
Zero rated supply – goods and services supplied at a VAT rate of 0%. Input VAT may be claimed on
purchases.
2
ASSIGNMENT-2
FINANCIAL ACCOUNTING 101 - FEEDBACK TUTORIAL
SEMESTER 2/2015
FAC511S
Exempt supply – Have no VAT consequences. i.e. No VAT is charged at all on these supplies
Examples
Standard rated
•
•
•
Non- current assets e.g. machinery, furniture, equipment and delivery vehicles
Current assets e.g. inventories
Expenses e.g. office supplies, water and electricity, telephone, insurance, rent of commercial
property, bank charges etc.
Zero rated
export of goods
supply of a business as a going concern
certain foodstuffs e.g. mahangu and maize meal and fuel
certain services supplied to non-residents
services physically rendered outside of Namibia
international transport of goods and passengers
supply of funeral undertaking services
supply of goods or services by a charitable organization, children's home, old age home or
orphanage
◦
◦
◦
◦
◦
◦
◦
◦
Exempt
◦
◦
◦
◦
◦
◦
supply of certain financial services e.g. interest income/expense
supply of residential accommodation
supply of educational services
supply of local public transport services
supply of goods or services as a fringe benefit to an employee
Payment of salaries and wages
(1 mark for explanation of each and 1 mark for each valid example. Total 6 Marks)
4.
Businesses may only charge VAT once registered for it. (1)
Compulsory registration if taxable supplies ≥ N$200 000 in a 12 month period (1)
Total 2 marks
Part B
General Journal of Exclusive Books (Pty) Ltd on 31 December 2013
i
Purchases/Inventory
VAT input
DR
CR
N$
N$
Marks
43,478.26
0.5
6,521.74
0.5
3
ASSIGNMENT-2
FINANCIAL ACCOUNTING 101 - FEEDBACK TUTORIAL
SEMESTER 2/2015
FAC511S
Cash/Bank
50,000.00
0.5
Cash purchases
Accounts Receivable: Rodney
Ii
35,000.00
VAT output
Sales
0.5
4,565.22
0.5
30,434.78
0.5
Credit sales
Accounts receivables
iii
12,500.00
Sales
0.5
12,500.00
0.5
Credit Sales
Export is zero rated
Rent
iv
VAT input
0.5
13,043.48
0.5
1,956.52
0.5
Bank
15,000.00
0.5
Rent paid by cheque
Cash
v
56,000.00
VAT Output
Sales
0.5
7,304.35
0.5
48,695.65
0.5
Cash sales
Salaries and wages
vi
97,000.00
Bank
0.5
97,000.00
0.5
Salaries paid by cheque
Salaries are exempt from VAT
Furniture and fittings
vi
VAT input
-
0.5
65,000.00
0.5
9,750.00
0.5
Accounts payable: Guild
74,750.00
0.5
Furniture bought by cheque
Repairs and maintenance
vii
3,000.00
Accounts payable: Shikongo consultants
0.5
3,000.00
0.5
Recognising repairs
No VAT charged by non-registered VAT vendor
0.5
12
Total 12, maximum 10 marks
4
ASSIGNMENT-2
FINANCIAL ACCOUNTING 101 - FEEDBACK TUTORIAL
SEMESTER 2/2015
FAC511S
Exclusive books, VAT control
account
Details
Amount
Marks
Cash/bank
0.50
Bank
Accounts payable:
Guild
6,521.74
1,956.53
0.50
9,750.00
0.50
18,228.27
0.50
Details
Accounts receivable:
Rodney
Amount
Marks
4,565.22
0.50
Cash
7,304.35
Balance c/d
6,358.70
0.50
18,228.27
0.50
0.5
Vat of N$6 358.7 is due from the receiver √
Total 5 marks
Question 2
(60 marks)
VAT Journals alternate answer
Debtors Journal of Exclusive books - December 2013
No.
Details
Debtors Control Output VAT Sales
ii
Rodney
35,000.00
4,565.22 30,434.78
iii
South African customer
12,500.00
12,500.00
Creditors Journal of Exclusive books - December 2013
Creditors Control Input VAT
Purchases Sundry
Details
No.
Details
vii
Guild furnitures
74,750.00
9,750.00
65,000.00 Office furniture purchased
viii
Shikongo Consultants
3,000.00
3,000.00 Air conditioner repairs
Cash receipts Journal of Exclusive books - December 2013
No.
Details
Bank
Output VAT Sales
v
Cash sales
56,000.00
7,304.35 48,695.65
Cash payments Journal of Exclusive books - December 2013
Purchases Sundry
No.
Details
Bank
Input VAT
i
Purchases
50,000.00
6,521.74 43,478.26
iv
Rent paid
15,000.00
1,956.52
13,043.48
vi
Salaries paid
97,000.00
97,000.00
5
ASSIGNMENT-2
FINANCIAL ACCOUNTING 101 - FEEDBACK TUTORIAL
SEMESTER 2/2015
FAC511S
Question 2
a)
General Journal of Disney retailers on 28 February 2015
DR
N$
Rent
2
1,800
Income received in advance
Recognising rent received in advance for March
2015
Sales returns
CR
N$
Workings
Mark
s
(23400/13)
1
1,800
340
1
(23400/13)
1
3
Accounts receivable
Recognising sales returns
4
340
1
Credit losses
300
(500*0.6)
1
Bank
200
(500*0.4)
1
Accounts receivables : B Mackey
Recognising bad debts
Allowance for credit losses
500
1
[1875- (16500-500340)*10%]
309
1
5
6
Credit losses
309
Adjusting allowance for credit losses to 10% of outstanding debtors
1
Depreciation
1
Accumulated depreciation: Furniture
8,438
(56250*0.15)
1
Accumulated depreciation: Vehicles
Recognising depreciation for the year
18,281
(97500-24375)*0.25
1
Prepaid expenses
7
8
26,719
225
Advertising
Advertising prepaid for next financial
year
Telephone
1
225
1
260
1
6
ASSIGNMENT-2
FINANCIAL ACCOUNTING 101 - FEEDBACK TUTORIAL
SEMESTER 2/2015
FAC511S
Accrued expenses
Telephone expenses accrued
Prepaid expenses
9
1
0
1
2
2,175
Insurance
Insurance prepaid for March to May
2015
Interest income
Accrued expenses
Interest payable on mortgage bond
(10875/15)*3
2,620
1
1
5620-(37500*8%)
1
2,620
1
5,500
Receiver of revenue (payables)
Income tax expense accrued for the
year
Interest on mortgage bond
1
2,175
Income received in advance
Interest accrued on fixed deposit
Income tax expense
1
1
260
1
5,500
6,750
1
(75000*12%*9/12)
1
6,750
1
24
Total 24, maximum 20 marks
7
ASSIGNMENT-2
FINANCIAL ACCOUNTING 101 - FEEDBACK TUTORIAL
SEMESTER 2/2015
FAC511S
b)
Disney Retailers
Statement of profit or loss
for the year ended 28 February 2015
N$
Sales
289,500
Sales returns (900+340)
(1,240)
Cost of sales
Opening Inventory
Purchases
Freight on purchases
Closing inventory
Expenses
Water and electricity
Credit losses (2325+300-309)
Telephone (13500+260)
Insurance (10875-2175)
Rent (30000-1800)
Salaries and wages
Advertising (9750-225)
Depreciation
Rates and taxes
Consumables
Settlement discount allowed
Stationery
Interest on mortgage bond
Profit before tax
Income tax expense
Net profit after tax
288,260
Marks
1
(72,245)
46,785
80,585
1,875
129,245
(57,000)
Gross profit
Other income
Rent received (23400-1800)
Settlement discount received
Interest received 5620-2620
N$
1
1
1
1
216,015
1
28,200
21,600
3,600
3,000
1
1
1
(179,650)
3,550
2,316
13,760
8,700
30,000
56,250
9,525
26,719
19,500
190
1,720
670
6,750
64,565
(5,500)
59,065
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
25
8
ASSIGNMENT-2
FINANCIAL ACCOUNTING 101 - FEEDBACK TUTORIAL
SEMESTER 2/2015
FAC511S
Disney Retailers
Statement of financial
as at 28 February 2015
Marks
Assets
Non-current assets
Property, plant and equipment
Fixed deposit: SME bank
N$
321,812
284,312
37,500
1
1
81,194
57,000
2,400
14,094
7,700
1
1
1
1
Total assets
403,006
1
Equity and liabilities
Equity
Capital (226000-16974+59065)
268,091
2
Non- current liabilities
Mortgage Bond: FNB 75000 - (75000/10)
67,500
1
Current liabilities
Current portion of mortgage bond
Accrued expenses (6750+260)
Income received in advance
Trade and other payables (42985+5500)
67,415
7,500
7,010
4,420
48,485
1
1
1
1
403,006
Total
1
15
Current Assets
Inventory
Prepaid expenses (225+2175)
Accounts receivable (16500-340-500-1566)
Cash & cash equivalents (7125+200+375)
Total equity and liabilities
Working 1
Property, Plant and Equipmnet
Cost
Accumulated depreciation
Depreciation for current year
Carrying amount
Vehicles
Furniture Land & Buildings Total
97,500
56,250
191,500
345,250
(24,375)
(9,844)
(34,219)
(8,438)
(18,281)
(26,719)
64,688
28,125
284,312
9