Reference no: EM133206234

Local is Lekker is a general-purpose store. Items such as consumables, prepaid airtime, and stationery are used within the business to carry out their daily activities. Your very good friend, Amy Jones, is the bookkeeper for Local is Lekker, and requires your accounting expertise with regards to the correct accounting treatment of prepaid airtime and stationery.

Amy has provided you with the following figures for consumables, prepaid airtime, and stationery that were purchased and used during the financial year, ending 31 December 2022:

Item                                  Total amount purchased      Total amount used
Consumables                     R3 000                                R1 500
Prepaid airtime                   R4 000                                R2 750
Stationery                            R4 500                                R3 100

REQUIRED: 

Amy requires your assistance with the below regarding the December 2022 year-end:

• How she should record the prepaid airtime, and stationery upon initial purchase in accordance with definitions and recognition criteria as outlined in the elements of the financial statements. Remember to start your discussion with the section of the Act, its requirements/statements and thereafter apply this to the scenario above.

* Which line item in the financial statements will the prepaid airtime and stationery be recorded as

* Show all the general journal entries to account for the consumables, prepaid airtime, and stationery during the December 2022 year-end. Journal dates and narrations may be excluded.