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Grade 12 Accounting Term 3 Case Study 2022 | Grade 12 Accounting Term 3 Case Study Budgeting and Internal Controls 2022 Memorandum

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Grade 12 Accounting Term 3 Case Study 

This is your year to pass with distinction!!!

Your meory plays a very importantpart in the learning process. In order for information to be stored in long-termmemory, it first needs to pass through your short-term or working memory. This stage of memory is limited in the amount of information it can retain. Information you receive in class must be written down or you will forget it. When revising from your textbooks, seek out the important information and write it down. Organise it logically. Reduce it to key terms or a form that is easy to remember.

We have organised all grade 12 resourcesfor you so that youdont struggle. Check below very usefull resources for your studies even beyond Grade 12:

Term 1 Topics to cover

Financial accounting of companies: Accounting concepts and unique ledger accounts

  • Accounting concepts and unique ledger accounts
  • GAAP principles
  • Bookkeeping of companies

Term 2 Topics to cover

  • Ethics Fixed Assets
  • Close Corporations Internal Control
  • Inventory System
  • Reconciliations
  • Value Added Tax
  • Term 2 Revision
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Term 3 Topics to cover

  • Cost Accounting
  • Budgeting
  • Term 3 Revision

Term 4 Topics to cover

  • Annual reporting and published financial statements.
  • Exams


The information relates to John’s Delivery Services for the budget period July – September 2022.
John Dew, the owner, started the business on 1 July 2022, after he was retrenched from his previous employment at a large delivery service company.

John’s investment (capital contribution) in the business comprises:

  • His retrenchment package which amounted to R580 000.
  • The following fixed assets, at carrying value on 1 July 2022.
Description of Asset Date of purchase Carrying value on 1 July 2022 Depreciation policy that he used to calculate the carrying value
Delivery truck 1 July 2019 R84 000 20% on cost
Maintenance equipment 1 July 2020 R162 000 10% (on diminishing balance)
Office furniture 1 January 2021 R116 250 R22 500 per annum

To supplement his capital contribution, he has negotiated, and received a loan from Plus Bank for R240 000. The money was deposited into the business bank account on 1 July 2022. The terms of the loan are as follows:

  • R6 000 to be paid at the end of each month, commencing on 31 July 2022
  • Interest at 14% p.a. payable on the last day of each month (not capitalised).

John also has a fixed deposit that will mature on 31 July 2022. This earns interest at 8,5% p.a. (not capitalised). He intends to use this money and the interest, for business purposes.
On 1 July 2022, John purchased a used bakkie for R165 000 in the name of the business, and uses the same depreciation policy for both business vehicles. He employed his cousin, Vinny, to drive this bakkie, making deliveries to clients. Vinny earns a monthly salary of R16 000.
John runs the business from premises that he rented from the inception of the business, and pays a fixed monthly rental of R5 500. The premises has a garage for the vehicles, a workshop and an office. He employs his friend as the maintenance and general handyman, who earns R6 000 per month, and a receptionist who manages the clients and the general office administration duties. She is paid R1 120 per week (5 days per week; 4 weeks per month; 7 hours per day).
Delivery services are offered to cash and credit customers. Fee income from cash customers accounts for 30% of the budgeted total fee income. Although credit terms are 30 days, John expects 45% of outstanding accounts to be settled in the month of services rendered and 55% to be received in the month following the month of services being rendered.
Packing material and other consumable stores are related to the provision of services and is budgeted at 25% of the total fee income.

  • 60% of these supplies are purchased on credit.
  • Creditors are paid in the month following the month of purchases, to receive the 5% early-payment discount.

The receptionist requested that John reduce her terms of employment as she wants to take up another part-time job opportunity as a tutor for evening class learners, commencing on 1 September 2022.
John agreed to this proposal as the receptionist is mainly needed in the mornings. As from 1 September, she will work for only 4 hours per day (instead of the 7 hours) and her pay will be adjusted accordingly.
Extract from the Cash Budget for the Budget period:

Cash Fee income from delivery services ? 108000 114000
Receipts from debtors ? 240450 ?
Loan: Plus Bank 240000
Fixed deposit ?
Interest on fixed deposit 850
Cash purchases of packing material and other consumables 33 000 36 000 ?
Payment to creditors 47 025 ?
Salaries and wages 26 480 26 480 ?
Drawings (John’s remuneration) 22 000 25 000 25 000
Deposit on bakkie 24 750
Monthly instalment on bakkie 5 850 5 850
Rent for the premises 5 500 5 500 5 500
Advertising 13 200 13 500 13 800
Fuel 66 000 72 000 76 000
Sundry expenses 34 000 34 000 34 000
Instalment on loan 6 000 6 000 6 000
Interest on loan 2 800 2 730 ?



Incomplete Debtors Collection Schedule:

July 231 000 127 050
August 252 000 113 400 ?
September ? ?

Comparison of PROJECTED figures and ACTUAL figures for July 2022:

  Projected Actual 
Fee income 330 000 280 500
Advertising 13 200 12 800
Packing material 82 500 70 125
Fuel 66 000 79 200