Grade 10 Accounting Term 3 Case Study QP August 2026

Here are the adjustments for each point:

B. Stationery Purchase
The stationery was purchased but not yet delivered by the financial year-end (28 February 2026). This means it is an asset (Stationery Inventory) but not yet an expense for the current period. Assuming it was a credit purchase and not yet paid:

• Increase Stationery (Asset) by R5 400.
• Increase Creditors (Liability) by R5 400.

C. Water and Electricity Account
The water and electricity expense for February 2026 has been incurred but not yet paid or recorded. This is an accrued expense.

• Increase Water and Electricity Expense by R9 800.
• Increase Accrued Expenses (Liability) by R9 800.

D. Depreciation
Lucy calculated the total depreciation for the year.

• Increase Depreciation Expense by R110 200.
• Increase Accumulated Depreciation (Contra-asset) by R110 200.

E. Debtor Declared Insolvent
A debtor's account of R6 200 must be written off as irrecoverable. This is a bad debt.

• Increase Bad Debts Expense by R6 200.
• Decrease Debtors Control (Asset) by R6 200.

F. Physical Inventory
The physical inventory count at year-end is the correct closing inventory value.

• Total closing inventory = R43 200 (store shelves) + R123 600 (warehouse) = R166 800.
• This value will be shown as an asset in the Statement of Financial Position.

G. Bank Statement Transactions

• Bank Charges: These are expenses recorded by the bank but not yet by the business.
  • Increase Bank Charges Expense by R3 060.
  • Decrease Bank (Asset) by R3 060.
• Direct Deposit (Bad Debts Recovered): This is cash received from a debtor whose account was previously written off.
  • Increase Bank (Asset) by R5 480.
  • Increase Bad Debts Recovered (Income) by R5 480.

H. Additional Fire Insurance
An annual premium of R7 200 was paid on 1 November 2025. The financial year ends on 28 February 2026.

• The insurance covers 12 months from 1 November 2025 to 31 October 2026.
• Monthly premium = $\frac{\text{R}7\,200}{12} = \text{R}600$.
• Insurance expense for the current year (Nov 2025, Dec 2025, Jan 2026, Feb 2026) = $4 \text{ months} \times \text{R}600/\text{month} = \text{R}2\,400$.
• Prepaid insurance for the next financial year (March 2026 to October 2026) = $8 \text{ months} \times \text{R}600/\text{month} = \text{R}4\,800$.
• Assuming the full R7 200 was initially recorded as an expense:
  • Decrease Insurance Expense by R4 800.
  • Increase Prepaid Insurance (Asset) by R4 800.

I. Investment Interest
Zinjihva Suppliers invested R240 000 on 1 March 2024. Interest for the year ending 28 February 2026 was still owed.

• The interest rate is not provided, so the exact amount cannot be calculated.
• This represents accrued investment income.
• Adjustment: Increase Accrued Investment Income (Asset). Increase Investment Income (Revenue).

J. Loan Interest
The General Ledger showed R36 000 for interest on loan, which covered 9 months. The financial year ends 28 February 2026.

• Monthly interest = $\frac{\text{R}36\,000}{9 \text{ months}} = \text{R}4\,000 \text{ per month}$.
• Since the financial year is 12 months, there are $12 - 9 = 3$ months of interest still owing.
• Accrued interest = $3 \text{ months} \times \text{R}4\,000/\text{month} = \text{R}12\,000$.
• Increase Interest Expense by R12 000.
• Increase Accrued Expenses (Liability) by R12 000.

K. Rent Income
Rent increased by R3 000 per month from 1 January 2026. Rent for March 2026 has already been received.

• Assumption: The new monthly rent from 1 January 2026 is R3 000. (If it means an increase of R3 000, the original rent amount is missing, making the total March rent uncalculable).
• The rent received for March 2026 (R3 000) is for the next financial period, making it unearned income.
• Decrease Rent Income by R3 000.
• Increase Unearned Rent Income (Liability) by R3 000.