Question

QUESTION 2 DISPOSAL OF PROPERTY, PLANT AND EQUIPMENT;
CREDITORS CONTROL [20 MARKS]

2.1 REQUIRED
Use the information provided below to prepare the Fixed Asset Realisation account in the General Ledger of Karridene Traders. (5)

INFORMATION

1. On 01 March 2015, the following balances appeared, amongst others, in the books of Karridene Traders:

   Vehicles (at cost) R500 000

   Accumulated depreciation on vehicles R220 000

2. On 31 May 2015, an old vehicle that cost R200 000 was sold for cash to J. Jones for R50 000. The

   accumulated depreciation on the vehicle sold amounted to R150 000 on 01 March 2015.

3. Depreciation is calculated at 20% p.a. on cost. The financial year ends on the last day of February

   each year.

2.2 The information given below was extracted from the records of Salmo Traders for May 2016:

REQUIRED

1. 2.2.1 Prepare the correct Creditors Control account for May 2016. Balance the account. (9)

2. 2.2.2 Prepare the correct Creditors List as at 31 May 2016. (6)

   INFORMATION

   The following Creditors Control account and Creditors List appeared in the books of Salmo Traders before the additional information provided below was considered:

DR CREDITORS CONTROL CR

2016 May 01

31

Bank and discount Purchases returns Interest expense Balance

71 350 840 30 31 280

2016 May 31

CPJ4 PRJ4 GJ4 c/d

Balance Purchases Equipment

SRJ4 PJ4 GJ4

28 500 73 400 1 600

103 500

103 500

00 5

Jun 01 Balance b/d 31 280

Creditors List as at 31 May 2016

Creditor

Miller Traders Engin Enterprises Rio Traders Mega Suppliers Riptide Stores

Debit

Credit

4 600

7 020 18 800 3 400

300

300

33 820

Additional information not yet recorded:

1. One entry appears on the wrong side of the Creditors control account.

2. The credit balance of R300 in the account of Miller Traders in the Debtors Ledger must be transferred

   to their account in the Creditors ledger.

3. An invoice for goods purchased from Miller Traders was entered in the Purchases journal as R3 240

   instead of R2 340.

4. A return of goods for R1 530 to Rio Traders was correctly recorded in the Purchases Returns Journal

   but was posted to their account as R1 350 in the Creditors ledger.

5. An electronic payment to Engin Enterprises in part payment of account was not recorded in the Cash

   Payments Journal, R700.

6. A cheque to Mega Suppliers for R2 000 was recorded in the Cash Payments Journal but not posted

   to their account in the Creditors ledger.

Answer 1

2.1 DEposal ob pooperty plant Seaupment Asset AlC Amdwt Farticulars 21/5/2015 bal bol> 500oto By cach Al> 50000 esale) TO poofit sloss-NO 10,000 By-Aceumalatad Amount Farticulas 8/2015 BeprAlC->160,000 [nliN.4 ] Bay Bak.Cld > 300000 Total 510000 Total 5i9000 Accumulated Depreciation-AK Farticulare |-Atrout Farticulars 3/5/2015 TO AssefA(> 160000 Amount 3)2015 bal bld-> 220,000 By 2 02/2016 By Depaiciation -ŘC (W.N.2]g000 TO Bal cld > 130000 Total 290 000 Total ২৭০০0

Depaeciation Acceunt. Farticulare -Ampunit partiaularsAnount LE/2/2016 25/2/2016 TO ACcumulated DepT-AlK >70,000 Bep poofit & Poss AIL> 70000 Tetal 70,000 Tetal porfit and loss Accocunt FarticularsArromnt fantieulars -ameunt 70000 TO Depaeciati on-Al( s 70,000 TO N.P -total By less Alc -10tal 60000 7,0000 70,000

Working Note=>@ pering Depttiation tn fold Assel = Depaitiation -fos 118/2015to 31(5/20152 OGO 200000X 3M x201- 150000 10,000 clesiy pockit on sale Of Asset WD. V= Cest - Depseciation = 200000 -150000-1000 =4000. poobet on sale = sale valie ż wD.V >-Accumulated Depo-> 160000 =50000-1opo0=19007O nlesking NAe z: Depreciadion n sotoo0 fos 3Menfhs 8 30000 fo 1& Mónths ]+(3000x80 12 10000+60000 =70000