FAC1503 EXAM PACK.

FAC1503 EXAM PACK. Financial Accounting Principles For Law Practitioners. Human resource management is a cycle that includes: ● The recruitment and hiring of new employees Law firms spend substantial amounts of money to recruit the best law students and other legal personnel such as legal secretaries, legal typists and legal assistants. Legal personnel are the people who bring in the business, do the legal work and represent the clients. ● Their training Training involves teaching basic practice skills that are critical to job performance. Included in the training process is orientation. The first day at a new job is the most important day of a person’s life in a law practice. ● Evaluation Evaluation of both law practitioners and staff should take place at some designated time after the legal employee has been hired. Thereafter regular evaluations of all personnel are of utmost importance. ● Feedback It is important to let employees know whether expectations have been met. The feedback should be given on a regular basis and include both positive and negative feedback. ● Compensation A fair workable compensation scheme should adequately reward everyone in the law firm for work done and provide incentives for the future. ● Benefits Benefits such as leave, medical aid, pension fund contributions, travelling costs, training, further education, housing subsidies, etc should form part of the total package offered to employees ● Promotion Personnel in a law practice should have the opportunity to be promoted and clear guidelines of the requirements for promotions and job descriptions should be available ● Retirement The conditions for retirement should be set and available to all employees. (any 4 x 2) (8) ALP101G_2009_TL_103_2_E.doc Page 31 of 136 email: Tel: 9 FAC1503 MAY/JUNE2009 This paper consists of 7 (seven) pages. PLEASE NOTE: 1. Ensure that you are writing the correct examination paper. 2. Ensure that you are handed the correct examination answer book (BLUE) by the invigilator. 3. This paper consists of 5 (FIVE) questions. 4. All questions must be answered. 5. Basic calculations, where applicable, must be shown. 6. Each question attempted must be commenced on a new (separate) page. 7. Please do not answer the paper in pencil. 8. PROPOSED TIMETABLE (try not to deviate from this) Question Subject Marks Time in minutes 1 Bank reconciliation 21 25 2 Ledger accounts 17 20 3 Ratio analysis 17 21 4 Accounting equation 21 25 5 Short questions and theory 24 29 Total 100 120 Page 32 of 136 email: Tel: 9 QUESTION 1 (21 marks) (25 minutes) The accountant of Wing Traders received the bank statement for the month ending 30 April 2009 and compared it with the bank reconciliation statement for March and the cash receipts and cash payments journals for April 2009. 1. Bank reconciliation statement as at 31 March 2009 Debit R Credit R Balance as per bank statement................................................... 8 559 Outstanding deposit .................................................................... 606 Outstanding cheques: 1909 ........................................................................ 1 404 1953 ........................................................................ 1 818 1961 ........................................................................ 195 1975 ........................................................................ 3 948 1980 ........................................................................ 264 Balance as per bank account ...................................................... 1 536 2. Totals of the cash journals at 30 April 2009 before any of the information with regards to the comparison of the bank statement with the cash journals (see no.3) were recorded: Cash receipts journal, R10 062 Cash payment journal, R12 570 3. Information obtained through comparing the bank statement for April 2009 with the cash journals for April 2009 and the bank reconciliation statement as at 31 March 2009: 3.1 Cheque no. 1909 was issued to RR School as a donation. The cheque must be cancelled because it was lost. 3.2 Cheque no. 1953 was issued to the Municipality to pay the water and electricity account for March 2009, but was incorrectly entered as R1 818 in the cash payments journal. It is correct on the bank statement as R1 980. 3.3 Cheque no. 1980 for R264 was issued to DR Transport for goods delivered. The cheque was stopped and must be cancelled because the goods were eventually transported with Wing Traders’ own truck. 3.4 A deposit of R1 038 made on 30 April 2009 only reflected on May’s bank statement. 3.5 The deposit of R606 as well as cheque no 1961 on the bank reconciliation statement as at 31 March 2009 appears on the bank statement for April 2009. 3.6 A tenant, T. Tate, deposited his rent of R2 550 for April directly into the current bank account of Wing Traders. Page 33 of 136 email: Tel: 9 QUESTION 1 (continued) 3.7 The following cheques, issued in April are not reflected on the bank statement for April 2009. Cheque no. 1988 for R4 290 to HG Stores. Cheque no. 2001 for R501 to Stationery Ltd. for the purchase of stationery. 3.8 A cheque for R540, received from a debtor R. Reid had been dishonoured by the bank. 3.9 Interest on fixed deposit of R700 was received from Zet Bank. The amount was deposited directly into Wing Traders account. 3.10 A debit order for R1 560 to NN Insurers for an insurance premium is shown on the bank statement but has not been recorded yet. 3.11 The following items only appeared on the bank statement: Interest on bank overdraft, R170 Service charges, R110 Cheque book, R44 Cash handling fees, R60 3.12 The bank statement showed a favourable balance of R9 001 on 30 April 2009. REQUIRED: 1.1 Use the information given above to prepare the bank account of Wing Traders at 30 April 2009. Balance the account at the end of the month. (15) 1.2 Prepare the bank reconciliation statement as at 30 April 2009. (6) Page 34 of 136 email: Tel: 9 QUESTION 2 (17 marks) (20 minutes) The following information for April 2009 was obtained from the accounting records of Fred Traders. 1 On 1 April 2009 the following balances appeared in the general ledger of Fred Traders R Debtors control 38 000 Creditors control 22 000 Purchases 54 000 Sales 97 000 2 The following totals, amongst others, appeared in the subsidiary journals of Fred Traders on 30 April 2009 R R Cash receipts journal (CRJ) Cash payments journal (CPJ) Bank 247 230 Bank 162 340 Sales 43 000 Purchases 28 200 Discount allowed 850 Discount received 1 240 Sundry debtors 51 500 Sundry creditors 37 600 Output VAT 7 280 Input VAT 5 430 Purchases journal (PJ) Purchases returns journal (PRJ) Total 71 300 Total 17 800 Purchases 39 300 Purchases returns 3 600 Computer equipment 19 350 Computer equipment 1 670 Input VAT 8 750 Input VAT 2 430 Sales journal (SJ) Sales returns journal (SRJ) Total 122 550 Total 27 930 Sales 107 500 Sales returns 24 500 Output VAT 15 050 Output VAT 3 430 REQUIRED: Use the information above to post to the debtors control, creditors control, purchases and sales accounts in the general ledger of Fred Traders for April 2009. Balance/total the accounts at the end of April 2009.