Question 1 [37 Marks]

A trial balance of Vuyo Limited for May 2024 was extracted. Upon investigation it was discovered that the trial balance did not balance.

Upon further investigation, the following errors were discovered:

1. The difference of R3 946.50 was entered on the debit side of a suspense account.
2. A payment in respect of rent had been posted to the Rent account as R5 828.10. The electronic transfer was made out for R5 282.10 and entered correctly in the cash payments journal.
3. Stationery purchased from Uptown Traders for R1 430 was incorrectly posted to the purchases account.
4. An amount of R180 in respect of discount received has erroneously been posted to the debit side of the discount allowed account but correctly recorded in the cash payments journal.
5. S Nandipha owes Vuyo Limited R3 750. His account has been outstanding for 6 months. Charge his account with interest at 15% per annum.
6. An amount of R1 095 in respect of bad debts/credit losses was correctly posted to the Trade receivables control account but was not posted to the bad debts/ credit losses account.
7. An amount of R3 225 received for cash sales was entered in the cash receipts journal but not posted to the sales account.
8. Inkosana Stores charged the overdue account of Vuyo Limited with 12% interest per annum for 4 months. The amount overdue is R7 800
9. A payment of R6 900 in respect of telephone has been entered in the Cash payment journal but has not been posted to the telephone account.
10. Bank charges amounting to R538.5 were posted as R456 in the general ledger. The entry in the cash payments journal is correct.

REQUIRED:
Record the necessary journal entries of Vuyo Limited to correct all the errors. Use the transaction number as the date. Journal narrations are not required.
(29)

Post the relevant entries to the Suspense account in the general ledger and balance the account as at 31 May 2024.  (8)

Question 2 [23 Marks]
On 31 August 2024, a comparison of the bank statements with the cash journals of Spencer Traders reflected the following:

1. The bank account in the general ledger reflected a favourable balance of R30 500 on 1 August 2024.
2. The bank statement showed a credit balance of R79 036 on 31 August 2024.
3. Totals of the cash journals at 31 August 2024:
   • Cash receipts journal R64 200
   • Cash payments journal R30 254
4. A Deposit amounting to R5 500 entered in the cash receipts journal on 31 August 2024 has not been credited on the bank statement.
5. The following cheques have not been presented for payment:

386 R4 200
387 R2 180
389 R3 000
249 R2 200 (This cheque was drawn on 31 January 2024)

6. A stop order of R500 for Motor Vehicle insurance appeared on the bank statement but had not yet been entered in the Cash Journal.
7. A Debtor, Mr Kemp, paid his account of R6 000 directly into the bank account, but this amount had not yet been recorded in the cash journal.
8. A cheque for R440 received from a debtor on his account of R480 and deposited was marked R/D on the bank statement.
9. There appeared a debit of R1 200 on the bank statement. This amount was actually for Spender Traders.
10. Service charges of R100 and bank interest earned of R250 appeared on the bank statement.
11. A deposit of R5 000, appearing on the bank statement, was reflected in the Cash journal as R500.

REQUIRED:

Prepare the adjusted bank account, as it would appear in the General Ledger of Spencer Traders for the month ended 31 August 2024. (Your adjustments can be made directly into the bank account).   (13)

Prepare the bank reconciliation statement at 31 August 2024.    (10)

Question 3 [40 Marks]
Speed Services (Pty) Ltd had the following totals in their journals at the end of June and July 2024:

Cash receipts journal

Cash payments journal

Sales Journal

Sales Return Journal

Purchases Journal

Purchases Return Journal

Petty Cash Journal

REQUIRED:
Post the relevant entries to the Input VAT and Output VAT accounts in the General Ledger of Speed Services for the two periods ending 30 June 2024 and 31 July 2024, respectively.
These entries include the VAT elements in discount allowed and received.
(30)

Close off the Input VAT and Output VAT accounts as at 31 July 2024 to the VAT Control account.  (10)

Answers to Above Questions on Financial Accounting

Answer 1: The necessary journal entries of Vuyo Limited to correct all the errors are recorded as follows:

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