Directorate: Curriculum FET

TELEMATICS 2014
Grade 11

ACCOUNTING
Suggested answers
Gr 11 Bank recon 2014 (Act 1) https://wcedeportal.co.za/eresource/124206

Gr 11 Creditors Recon (Act 6) https://wcedeportal.co.za/eresource/124211

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Activity 1

1.1 Indicate whether the statements are TRUE OR FALSE.

1.1.1 True
1.1.2 True
1.1.3 True
1.1.4 False

1.2 Calculate the correct totals for the Cash Receipts Journal and Cash
Payments Journal for December 2013.
Calculation of Calculation of
CRJ total CPJ total
23 500 28 640
3 250 20 000
5 500 150
273 90
250
630
32 523 49 760

1.3 Prepare the Bank Reconciliation Statement on 31 December 2013.

Debit Credit
Balance as per bank statement 26 217
Outstanding deposits 13 500
Outstanding cheques
▪ 620 2 550
▪ 660 750
▪ 680 5 600
Credit incorrect cheque 300
Credit balance per bank account 21 317

35 117 35 117

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1.4 Refer to cheque no. 520 in the Bank Reconciliation Statement for
November 2013. How would this be recorded in the financial statements
for the year ending 31 December 2013? Give a reason.

Add to bank if Dr or subtract from bank if bank is overdraft

Add to Creditors or Trade and other payables

Reason
The money is still owed and the debt will only be settled on 30 April when the
cheque is due.

1.5 1.5.1 Which GAAP principle was applied in writing off this amount?

Principle of Prudence

1.5.2 How can a similar problem be avoided in the future?

▪ Division of duties: The person completing the deposit slip must

not be the same person depositing the money at the bank.

▪ Deposit slips must agree to total of the receipts and cash slips.

▪ Check via internet banking that deposits are reflected daily

(request the bank to send an sms each time a deposit is
made.)

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Activity 2

2.1 Identify the items and the amounts that must be entered in the
Cash Receipts Journal (CRJ) and the Cash Payments Journal
(CPJ) for August 2014. List only the item number and the
amount. Do NOT give totals for each journal.

Cash Receipts Journal Cash Payments Journal

(CRJ) (CPJ)
Item number Amount Item number Amount
3 R2 000 2 R21 500
6 R540 4 R620
7 R14 000 5 R8 000
8 R3 600

2.2 BANK RECONCILIATION STATEMENT ON 31 AUGUST 2014

Cr balance as per bank statement 42 000
Cr outstanding deposit 15 600
18 000
Cr amount wrongly debited 300
Dr outstanding cheques
2395 15 000
2418 8 450
2420 12 000
Dr balance as per bank account 40 450
75 900 75 900

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2.3 It is clear that the business is not controlling its cash properly. What
specific problems will the internal auditor include in his report?
Explain TWO of these problems, providing figures to support your
explanation, and give a possible solution for each. Dismissal of
employees is not an option at this stage.

Explanation Possible solution

(with figures)
The physical security of Use cash in transit
depositing cash, R21 500 service/two people to do
Problem 1 was stolen. the depositing/ ask
customers to use
EFTs/change depositing
routines
Rolling of cash, deposits of Internal auditor must
R34 800 (July) and R33 600 check that the cashier is
Problem 2 (August) are several days old depositing cash
and are still not deposited at daily/appoint a different
the end of each month. person to do the
depositing

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Activity 3

3.1 Explain why it is important for a business to prepare a Bank Reconciliation

Statement each month.

▪ Improves internal control – minimise fraud or error because records are

checked to an external source.

▪ To compare the books of the business with that of the bank in order to
detect errors and/or dishonesty at an early stage.

▪ To reconcile the bank statement balance with the bank account

balance.

3.2 Calculate the correct totals for the Cash Receipts Journal and the Cash
Payments Journal for May 2014.

CRJ Bank CPJ Bank

Provisional total 70 600 Provisional total 105 320
K Kwela 2 400 Bank charges 520
Interest on FD 700 Interest on O/D 810
Stale cheque 5 000 Insurance 660
M Maduna 6 200
Repairs 180

78 700 113 690

3.3 Calculate the Bank Balance on 31 May 2014. (You may prepare a ledger
account in order to do so.)

6 325 + 78 700 – 113 690 = 28 665

State whether this is a favourable or an unfavourable balance.

Unfavourable

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3.4 BANK RECONCILIATION STATEMENT ON 31 MAY 2014.

Debit Credit
Balance as per bank statement 34 720
(overdraft)
Outstanding deposits 20 295
Outstanding cheques:
No. 519 8 920
No. 654 2 800
No. 674 2 520
Balance as per bank account 28 665

48 960 48 960

3.5 The fixed deposit of R84 000 matures next month. What advice would you
offer the owner in this regard? Explain TWO points, quoting appropriate
figures to support your answer.

▪ Pay off the overdraft because the interest of 10% per month on the fixed
deposit is lower than the interest rate on a bank overdraft.

▪ Re-invest the difference (R84 000 – amount of overdraft calculated in 1.4)

in order to earn a return of 10% p.a. on a fixed deposit OR invest the
difference in the business in order to earn a bigger profit.

3.6 Explain why the internal auditor should be concerned about the outstanding
deposit of R20 295.

It should appear promptly on the Bank Statement.

Fraud could be involved e.g. rolling over of cash by the cashier.

Explain how cheque No. 674 should be dealt with when the financial
statements are prepared on 31 May 2014. Give a reason for your answer.

It should appear promptly on the Bank Statement.

Fraud could be involved e.g. rolling over of cash by the cashier.

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Activity 4

4.1.1 Calculate the bank account balance and state whether it is favourable
or unfavourable.

(8 000 + 13 000 ) – (2 200 + 10 000 + 4 300) = 4 500

Favourable

4.1.2 If cheque 1014 does not appear on the Bank Statement in March, what
action will have to be taken and why?

The cheque will be stale and will have to be cancelled in the CRJ

4.1.3 Name three items that could appear on the Bank Statement at the end
of the month, but do not appear in the Cash Journals.

▪ Interest on overdraft
▪ Bank charges
▪ stop orders and debit orders
▪ errors made by the bank
▪ interest earned on current account;
▪ direct deposits into the bank account
▪ dishonoured cheques

4.1.4 The internal auditor is concerned as there have been large amounts
outstanding for the last few months. What do you suspect the cashier
is doing illegally which is resulting in this very large outstanding
deposit?

Rolling Cash: cashier deposits this large cheque in her own bank
account to earn interest or use it, and then deposits
later into the business’s bank account.

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4. Use the information to reconcile the account of Zulu Suppliers in the ledger
2.1 of Blue Ray Traders with the statement of account received from Zulu
Suppliers.

Balance as per Statement of account 6 200

Discount not recorded on 4th February - 45

Error on Statement – cash refund to customer + 250

Error on Statement Invoice No. AA32 -1 340

Error on Statement Invoice No. AA38 (1 980 – 1 890) -90

Cheque No. 59 not recorded on statement of account -2 100

Invoice No. AA 51 not recorded on statement of account +770

Balance as per Creditors Ledger 3 645

4.2.2 What action can Blue Ray Traders take against their employees to avoid the
transactions that occurred on the Statement of Account on the 15 February
2014?

▪ Verbal/written warning
▪ Disciplinary action / hearing

4.2.3 Discuss by using three examples from Question1 Part A and Part B to
highlight the problems and offer suggestions as to what can be done in
future to prevent this from reoccurring.

▪ Large deposits ▪ division of duties – separate individuals

outstanding checking the deposits.
▪ Get customers to make direct deposits(EFT)
into business’s bank account
▪ Internal auditor doing regular spot checks on
deposit slips
▪ A sizable amount ▪ ensure that creditors are paid on time to make
outstanding to Zulu use of discounts
Suppliers
▪ Employees committing ▪ Apply division of duties in the bookkeeping
fraud by buying stock department over creditor i.e. one person
for personal use places the orders with the creditors another
person makes the payments
▪ Have strict controls over source documents
i.e. invoices

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Activity 5

Creditors’ Creditors’
Ledger reconciliation
Balance 38 390 37 200
A 550
B (800)
C (3 700)
D (9 600)
E 1 100
(1 800)
(4 600)
(460)
14 800

35 540 35 540

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Activity 6

6.1 Briefly explain why it is important that the balance of the Creditors'
Control Account should agree with the total in the Creditors' List.

▪ The control account is a summary of the creditors list therefore the two
have to agree otherwise there is an error
▪ To facilitate good internal control whereby one process serves as a
check on another (i.e. division of duties)
▪ To check that the recording and posting has been done correctly
▪ To detect and correct any omissions, errors and/or fraud
▪ To control the individual creditors accounts so that correct payments are
made to them
▪ To ensure correct information before making payment to creditors

6.2.1 List the corrections that the bookkeeper must make to the Creditors'
Control Account in the General Ledger. The first one has been done for
you as an example. If no entry is applicable, you must write 'NO ENTRY'.

Balance R61 417

A + R3 400
B +R7 200 – R7 200 OR
No entry OR 0
C + R258
D + R563
E –R8 350 – R8 350 OR
– R16 700
F No entry
G – R2 100
H No entry
I + R490
Final balance R47 328

6.2.2 CREDITORS' LIST ON 31 JULY 2014

Debit Credit
Khan Traders (Dr 563 - 563) NIL or 0
Thankful Stores 13 700
(30 560 – [8 350 + 8 350]  – 160 )
-16 700
Connel Ltd 21 748
(10 890 + 3 400 + 7 200 + 258 )
Yolisa Wholesalers 11 880
(18 500 – 7 200 + 90 + 490 )
47 328

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6.3 Provide THREE points for good internal control over creditors.

▪ Assess the efficiency of the creditors clerk in order to prevent

errors from occurring
▪ Ensure that creditors are paid on time to make use of discounts
▪ Make full use of credit terms to assist cash flow
▪ Division of duties amongst members of the accounting department
so that one person serves as a check on another
▪ Reconcile the balance on the creditors control account with the
total of creditors' list to ensure accuracy on a monthly basis
▪ The statement of account of individual creditors must be reconciled
(agreed) with their accounts in the creditors ledger
▪ Conduct internal audits to minimise the possibility of fraud or error /
Check documents (e.g. invoices and credit notes) to ensure
accuracy of calculations and entries
▪ Ensure that items ordered from creditors are correctly received
(i.e. quantities, condition, price)
▪ Ensure that all purchases are correctly authorized (i.e.
procurement policy)

Telematics 2014 Accounting Grade 11