Week 6
Week 6
Week 6
Please refer to your TEXTBOOK for more information about Financial Statements and the Notes to the
Financial Statements. KNOW the FORMATS (layout) of each statement and note very well.
The information below relates to RMR Stationery Dealers for the financial year ended
29 February 2020.
Prepare the Statement of Comprehensive Income for the year ended 29 February 2020.
ADJUSTMENTS:
1. Stationery was taken from the stock on the shop shelves for use in the office at cost, R7500.
2. According to the physical count, the following were on hand at year end:
Trading stock, R505 050; Stationery, R3 600
3. Advertising includes an amount of R27 000 paid for six advertisements in the Hermanus Times
newspaper. By 29 February 2020 only four of these advertisements had appeared in the newspaper.
4. Bad debts of R2180 must be written off.
5. Telephone account for February 2020 has not yet been paid, R7 350.
6. In terms of the loan agreement an instalment of R54 000 will be paid to Overberg Bank on 30 November
each year. The amount due was duly paid on 30 November 2019 and recorded in the firm’s books.
Provide for the outstanding interest on the loan. The interest rate on the loan is 12% p.a.
7. Rent income includes the rent for March 2020. Take into account that rent was increased by R1 575 per
month on 1 January 2020.
8. Received R525 from L. Deelman, whose account had previously been written off as irrecoverable on
20 February 2020. The amount was entered in the Debtors’ Control column in the Cash Journal. Correct
the error.
9. Insurance included an amount of R10 800 that was paid for the period 1 August 2019 to 31 July 2020.
10. The bank returned A. Lekay’s cheque of R3 100 marked “R/D”. This cheque was received earlier the
month from A. Lekay in settlement of his account of R3 250.
11. Replaced a broken window in the owner's private home, R1 590. This was accidentally debited against
the Repairs account. Correct the error.
12. Provide for depreciation as follows:
• Equipment: 10% p.a. on cost.
• Vehicles 15% p.a. on the carrying value. Take into account that a new vehicle, R410 000 was
purchased on 1 November 2019. It was correctly entered.
Operating income
cash and cash equivalents; current asset; non-current asset; income; net working capital;
expense; current liability; non-current liability
2.1.1 Interest on a bank overdraft is a(n) ...
2.1.2 Consumable stores on hand are a(n) ...
2.1.3 The portion of a loan to be paid during the next financial year is regarded as a(n) … in the
Statement of Financial Position.
2.1.4 The difference between current assets and current liabilities is known as …
2.2 NOTES TO FINACIAL STATEMENTS
The information below was taken from the books of Badela Traders, whose financial year ends
29 February 2020.
REQUIRED:
Prepare on 29 February 2020:
Notes to the Financial Statements:
2.2.1 Fixed assets (calculate amounts denoted by A-E)
2.2.2 Inventory
2.2.3 Trade and other receivables
2.2.4 Cash and Cash Equivalents
2.2.5 Capital
2.2.6 Complete the Equity and Liabilities section of the Statement of Financial Position.
NOTE: Show calculations between brackets where Notes are not required.
2.3 After extensions were made to the buildings, the land and buildings were valued at R2 000 000.
2.3.1 Indicate the amount for Land and Buildings in the financial statement on 29 February 2020.
2.3.2 Name the GAAP principle applied in Question 2.3.1
2.4 After the financial statements were prepared, it was found that fuel expenditure increased by 80 % from
the previous year. The driver who does deliveries, takes the vehicle home after work. Name TWO
internal control measures that the owner can introduce to prevent reduce the misuse of the vehicle by the
driver.
INFORMATION:
A. TRIAL BALANCE OF BADELA TRADERS – FEBRUARY 2020
Balance Sheet accounts section Debit Credit
Capital (1/3/2019) 954 000
Drawings 235 132
Land and Buildings 1 300 000
Equipment (cost price) 104 000
Vehicles (cost price) 950 000
Accumulated depreciation on equipment (1/3/2019) ?
Accumulated depreciation on vehicles( 1/3/2019) 244 400
Fixed Deposit : ABC Bank ?
Loan: DBD Bank 120 000
Additional information:
• During the year the building was extended. This transaction was recorded properly.
• During the year the owner increased his capital contribution with an additional R100 000. This has been
properly recorded.
• A new vehicle was bought on 1 September 2019 for R60 000. This transaction was recorded properly.
Depreciation on vehicles is calculated at 15% p.a. on the diminishing method.
• Badela Traders bought extra equipment on 27 February 2020 for R10 000 cash. This transaction was not
recorded.
• R25 000 of the Loan will be repaid during the next financial year.
• The net profit for the year amounted to R752 000.
2.2.2 Inventory
Capital
NON-CURRENT LIABILITIES
CURRENT LIABILITIES
2.3.1 Indicate the amount for Land and Buildings in the financial statement on 29 February 2020.
2.4 Name TWO internal control measures that the owner can put in place to reduce the misuse of the
vehicle by the driver.
Lesson Solutions:
https://wcedeportal.co.za/eresource/136266