On 28 February 20.
11, the last day of the accounting period, the following balances
appeared in the books of Swazi ONE Traders.
List of balances from the books of Swazi ONE Traders
Balance sheet (Real / Permanent) account section
Capital (20.10-03-01) 140 016
Drawings 46 920
Land and buildings 230 000
Vehicles (cost price) 35 000
Accumulated depreciation on vehicles 12 600
Trading stock (20.10-03-01) 39 960
Debtors control 19 480
Allowance for credit losses 1 170
Bank 4 710 CR
Petty cash 100
Cash float 400
Creditors control 29 564
SARS (VAT Control) (Vat Rate = 14%) 4 400 CR
Nominal (Temporary) accounts section
Sales 792 972
Purchases 520 000
Sales returns 8 520
Rates and taxes 8 020
Salaries 117 000
Bank charges 620
Rent income 7 692
Discount received 1 468
Discount allowed 1 740
Credit losses (Bad debts) 640
Stationery expense 3 364
Packing material 8 112
Telephone 3 044
Insurance 1 640
Water and electricity 4 838
Carriage on purchases 270
Adjustments and additional information
1. On 26 February 20.10 a debtor, A Molatse, returned merchandise with a sales price
(VAT included) of R821. This transaction has not yet been accounted for.
2. Closing inventories on 28 February 20.11:
Trading stock R40 000
Stationery R364
Packing material R112
3. An amount of R684 was received from a debtor whose account was previously
written off as bad. The accountant credited the debtors control account with this
amount. Correct this error.
4. Write off J Jim’s outstanding debt of R855, as irrecoverable.
5. Adjust the allowance for credit losses to 10% of outstanding trade debtors.
6. An insurance premium of R1 117 (including VAT) was paid on 1 December 20.10 for
the period 1 December 20.10 to 30 June 20.11.
Another annual insurance premium of R1 800 from an insurance firm who is not
registered for VAT, was payable on 1 February 20.11 for the period 1 February 20.11
to 31 January 20.12, but is not yet paid.
7. Rent income amounted R506 per month (VAT exclusive) until 31 August 20.10 when
the premium increased with 15%.
8. The bank statement was received on 28 February 20.11. The following items must
still be recorded:
Cost of cheque book R21
Transaction fees R95
Minimum service fees R55
Interest on overdraft R140
Monthly stop order of R400 in respect of the owner’s personal loan.
9. S Majola, the owner, contributes R3 000 into the business on 28 February 20.11.
This entry is not reflected in the books of Swazi ONE Traders yet.
10. Depreciation of R3 333 has been calculated correctly, but has not yet been
accounted for.
11. It is business policy to group all Creditors and accounts payable together by
disclosing it in a note to the statement of financial position.
12. It is also business policy to group all Debtors and accounts receivable together by
disclosing it in a note to the statement of financial position.
REQUIRED:
Use the given information to draw up the following:
a) Statement of Comprehensive Income for the year ended 28 February 20.11. (22.0)
b) ONLY the following NOTES to the Statement of Financial Position on 28 February
20.11:
i. Trade and other debtors (2.5)
ii. Trade and other creditors (4.5)
Please NOTE: Round ALL calculations to the nearest R1. The VAT Rate is where
applicable,
included at 14%.
