Reference no: EM132257571

ASSIGNMENT QUESTIONS

Pre-adjustment trial balance of The DJ Traders for the year ended 31 March 2017

	Debit (R)	Credit (R)
Capital - 1 April 2016		325 000.00
Drawings	1 625.00
Land and buildings	438 750.00
Furniture and equipment	146 250.00
Motor vehicles	152 750.00
Accumulated depreciation: Furniture and equipment - 1 April 2016		23 400.00
Accumulated depreciation: Motor vehicles - 1 April 2016		21 385.00
Fixed deposit (Havana)	39 000.00
Bank	8 450.00
Debtors control	14 625.00
Allowance for credit losses - 1 April 2016		438.75
Allowance for settlement discount granted - 1 April 2016		175.50
Petty cash	1 787.50
Trading inventory	8 937.50
Mortgage loan		162 500.00
Creditors control		17 225.00
Cash float	4 387.50
Rent deposit	16 250.00
Credit card account		46 637.50
SARS (UIF/SDL/PAYE)		11 862.50
Sales		599 657.50
Sales returns	26 422.50
Cost of Sales	289 181.75
Service income		36 562.50
Interest on fixed deposit		11 375.00
Rent income		28 112.50
Interest on debtors accounts		5 362.50
Credit losses recovered		2 762.50
Electricity	11 635.00
Credit losses	3 965.00
Fuel	7 085.00
Postage and stationery	1 755.00
Cleaning materials	3 152.50
Insurance	6 922.50
Advertising expenses	9 327.50
Interest on creditors accounts	2 827.50
Rent expense	5 005.00
Bank charges	1 495.00
Repairs and maintenance	5 330.00
Wages and salaries	85 540.00
	1 292 456.75	1 292 456.75

Additional information and adjustments as at 31 March 2017:

1. Provide for depreciation as follows:

– On furniture and equipment: 16% per annum on cost. Note that a new equipment costing R22 500.00, was bought on July 1, 2016. This has been properly recorded.
– On motor vehicles: 14% per annum on the reducing balance method.

2. A debtor, R. Todd, who owed R658.13, has been declared insolvent. The business received 45 cents in the rand from the insolvent estate. This transaction must still be recorded. Write the rest of the debt off as irrecoverable.

3. An allowance for credit losses of 2.50% of trade receivables should be maintained. Adjust the allowance for settlement discount granted to 3.50% of good book debtors.

4. R207.03 has been recovered in cash from a debtor whose account had previously been written off as irrecoverable. No entry has been made as yet.

5. The electricity expense for March 2017 has not yet been paid, R1 057.73.

6. Insurance for April 2017 has been prepaid, R532.50.

7. Service income has not been received for March 2017, R3 323.86.

8. The rent income for April 2017 has been received already, R2 162.50.

9. An invoice for R564.00 has been received from Tele-Advertising for advertising expenses. This transaction has not yet been recorded.

10. An amount of R541.00 was paid to Moray Garage for delivery (by rail) of trading inventory to the business. This was debited to the fuel account in error (which has not yet been corrected). The inventory to which the railage applies has not yet been sold.

11. The owner took trading inventory for personal use. The selling price was R812.00 (VAT is not applicable). The mark up is 45% on cost price. The transaction must still be processed.

12. The stock take revealed the following items on hand:
– Trading inventory - R7 937.47
– Postage and stationery - R912.60
– Cleaning materials - R1 733.88

13. Provide for the interest on the mortgage loan. Interest is calculated at 13% per annum. The liability was re-paid (redeemed) by R40 000.00 on December 1, 2016. There were no other additional loans or repayments during the financial year, but twelve end-of month instalments of R1 489.58 each are due to be repaid on the loan, starting at the end of April 2017.

You are required to:

a) Prepare the Statement of Profit or Loss and Other Comprehensive Income for DJ Traders for the year ended 31 March 2017. (41)

b) Draft the Statement of Financial Position for DJ Traders as at 31 March 2017. (59) NB: Show all workings.