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Unformatted text preview: 1 UNIVERSITY OF CAPE TOWN DEPARTMENT OF ACCOUNTING FINANCIAL ACCOUNTING (ACC 1006F/1106F) 1½ HOURS 26 APRIL 2010 75 MARKS 1. Please do not open this paper until instructed to do so. 2. Answer each question on a separate page. Blue or black pen must be used for written answers. Workings may be done in pencil. 3. Show all your workings clearly. Marks are awarded for workings. 4. No student is to leave the test venue during the first 30 minutes or the last 20 minutes of the test. 5. No questions will be answered by the invigilators during the test. Make whatever assumptions you deem appropriate and clearly state these in your answer. Any reasonable assumption will be considered. 6. Any student who continues to write after the test period is guilty of cheating and will be subject to the relevant university disciplinary procedures . 7. Any student who is found cheating during the test will be awarded a zero mark for the test and be subject to the relevant university disciplinary procedures. Question Marks Suggested time 1 44 53 2 31 37 75 90 THIS TEST CONSISTS OF 6 PAGES, INCLUDING THE COVER SHEET. 2 Question 1 (44 Marks: 53 Minutes) Zuzu’s Petals is a garden nursery in Claremont which sells plants and garden equipment. The accountant resigned on 1 March 2010, and you have been approached by your friend the bookkeeper, George Bailey, to process the required accountant’s entries. George has given you an extract of the pre-adjustment trial balance for the year ended 31 March 2010. Zuzu’s Petals: pre-adjustment trial balance (extract) for the year ended 31 March 2010 DR CR Equipment 450 000 Accumulated depreciation – equipment (1/4/2009) 80 000 Trade receivables 340 000 Loan 150 000 Additional information 1. Reversing entries were processed by the accountant on 1 April 2009. 2. On 1 November 2009 new irrigation equipment needed to water the business’s plants inventory during the summer was purchased for R100 000 cash. Installation was complete and the system was ready for use on 1 December 2009. As there was an unusual amount of rain in December, the business did not use the new irrigation system until 1 January 2010. This irrigation system has an estimated useful life of 6 years, and a residual value of R10 000. All other equipment was purchased on 1 April 2007, when the business was started and had no residual value. This equipment was brought into use immediately. All equipment is used evenly over its estimated useful life. 3. In order to attract more customers, the business began selling on credit on 28 August 2009. On 1 March 2010, George received a cheque and a letter from a customer, Mrs Pennymoney, who had purchased flowers on credit for R12 000. The letter explained that she had been declared bankrupt, and that the enclosed cheque was a final payment, for only 20c in the Rand. George deposited the cheque, but was unsure how to account for Mrs Pennymoney’s news, so as at 31 March 2010 he had processed no journal entries to record this information. journal entries to record this information....
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