Exam Paper 1
Question 1: A company purchased office equipment costing R50,000. The equipment
has an estimated useful life of 5 years and a residual value of R5,000. Prepare the
journal entries for the purchase and the depreciation for the first year using the straight-
line method.
Answer 1:
• Purchase of equipment:
Dr Office Equipment 50,000
Cr Cash/Bank 50,000
Depreciation calculation:
Depreciation per year = (Cost – Residual Value) / Useful Life
= (50,000 – 5,000) / 5
= 45,
= 9,000
Depreciation journal entry:
Dr Depreciation Expense 9,000 Cr Accumulated Depreciation – Equipment 9,000
Question 2: The company received an invoice for R12,000 for electricity for December,
to be paid in January. Record the adjusting entry at year-end.
Answer 2:
• Accrual adjusting entry:
• Dr Electricity Expense 12,000
• Cr Accrued Expenses / Accounts Payable 12,000
•
Question 3: Prepare the trial balance from the following balances:
• Cash R15,000
• Accounts Receivable R20,000
• Accounts Payable R12,000
• Capital R30,000
• Drawings R5,000
, • Sales R50,000
• Purchases R25,000
• Rent Expense R8,000
Answer 3:
Account Debit (R) Credit (R)
Cash 15,000
Accounts Receivable 20,000
Accounts Payable 12,000
Capital 30,000
Drawings 5,000
Sales 50,000
Purchases 25,000
Rent Expense 8,000
Totals 73,000 92,000
Adjustments: The trial balance does not balance yet. Correct totals or identify missing
balances; this is an exercise in trial balance checking.
Question 4: A company paid R6,000 in advance for a 12-month insurance policy
starting 1 October. Prepare the adjusting journal entry for 31 December.
Answer 4:
• Monthly insurance expense: R6, = R500
• Insurance expense for 3 months (Oct–Dec): 3 × 500 = R1,500
Adjusting entry:
Dr Insurance Expense 1,500
Cr Prepaid Insurance 1,500
Question 5: The company’s inventory at year-end is R18,000. Purchases during the year
amounted to R60,000. Calculate the cost of goods sold if opening inventory was
R10,000.
Answer 5:
Question 1: A company purchased office equipment costing R50,000. The equipment
has an estimated useful life of 5 years and a residual value of R5,000. Prepare the
journal entries for the purchase and the depreciation for the first year using the straight-
line method.
Answer 1:
• Purchase of equipment:
Dr Office Equipment 50,000
Cr Cash/Bank 50,000
Depreciation calculation:
Depreciation per year = (Cost – Residual Value) / Useful Life
= (50,000 – 5,000) / 5
= 45,
= 9,000
Depreciation journal entry:
Dr Depreciation Expense 9,000 Cr Accumulated Depreciation – Equipment 9,000
Question 2: The company received an invoice for R12,000 for electricity for December,
to be paid in January. Record the adjusting entry at year-end.
Answer 2:
• Accrual adjusting entry:
• Dr Electricity Expense 12,000
• Cr Accrued Expenses / Accounts Payable 12,000
•
Question 3: Prepare the trial balance from the following balances:
• Cash R15,000
• Accounts Receivable R20,000
• Accounts Payable R12,000
• Capital R30,000
• Drawings R5,000
, • Sales R50,000
• Purchases R25,000
• Rent Expense R8,000
Answer 3:
Account Debit (R) Credit (R)
Cash 15,000
Accounts Receivable 20,000
Accounts Payable 12,000
Capital 30,000
Drawings 5,000
Sales 50,000
Purchases 25,000
Rent Expense 8,000
Totals 73,000 92,000
Adjustments: The trial balance does not balance yet. Correct totals or identify missing
balances; this is an exercise in trial balance checking.
Question 4: A company paid R6,000 in advance for a 12-month insurance policy
starting 1 October. Prepare the adjusting journal entry for 31 December.
Answer 4:
• Monthly insurance expense: R6, = R500
• Insurance expense for 3 months (Oct–Dec): 3 × 500 = R1,500
Adjusting entry:
Dr Insurance Expense 1,500
Cr Prepaid Insurance 1,500
Question 5: The company’s inventory at year-end is R18,000. Purchases during the year
amounted to R60,000. Calculate the cost of goods sold if opening inventory was
R10,000.
Answer 5:
