Question

QUESTION 2

REQUIRED
Use the trial balance, adjustments and additional information given below to prepare the Statement
of Comprehensive Income of Groutville Traders for the year ended 28 February 2019.
GROUTVILLE TRADERS PRE-ADJUSTMENT TRIAL BALANCE AS AT 28 FEBRUARY 2019
Debit (R) Credit (R) Balance sheet accounts section Capital 289 000 Drawings 89 000 Vehicles at cost 370 000 Equipment at cost 280 000 Accumulated depreciation on vehicles 160 000 Accumulated depreciation on equipment 100 000 Fixed deposit: Sim Bank (10% p.a.) 60 000 Trading inventory 32 000 Debtors control 30 000 Bank 20 000 Petty cash 1 000 Creditors control 54 000 Mortgage loan: Sim Bank (18% p.a.) 100 000 Nominal accounts section Sales 828 000 Cost of sales 330 000 Sales returns 14 000 Salaries and wages 180 000 Bad debts recovered 1 000 Commission income 52 000 Rent expense 65 000 Motor expenses 39 000 Advertising 25 000 Telephone 17 000 Electricity and water 19 000 Bank charges 3 000 Insurance 4 000 Interest on fixed deposit 3 000 Stationery 9 000 1 587 000 1 587 000



Adjustments and additional information
1. On 28 February 2019 an amount of R5 000 was received from Stardom Manufacturers for
commission on goods sold for them. No entry has been made for this transaction.
2. Trading inventory on hand according to stocktaking on 28 February 2019 amounted to
R29 000.
3. Stationery unused according to stocktaking amounted to R2 000.
4. Provide for interest on fixed deposit of R3 000 that has not been received for the last six
months of the financial year.
5. Provide for interest on mortgage loan for February 2019. The loan was obtained from Sim
Bank on 01 February 2019.
6. Included in the insurance total is an amount of R800 that was paid for the next accounting
period.
7. The telephone account for February 2019, R1 800, was due to be paid on 03 March 2019.
8. Rent has been paid until 31 March 2019.
9. The bank statement for February 2019 reflected an amount of R400 for bank charges. No
entry has been made for this.
10. No entry has been made for an account received for an advertisement placed in a local
newspaper, R1 300.
11. Write off the account of debtor, P. Stanton, who owed R3 200.
12. Provide for depreciation as follows:
12.1 On vehicles at 20% per annum using the diminishing balance method.
12.2 On equipment at 10% per annum on cost.

Answer 1

Comprehensive Income Statement for the year ended 28, February 2019

Particular	Amount	Particular	Amount
Cost of Sale	$330,000	Sales $828,000 Less: sale return $14,000	$814,000
Salaries and wages	$180,000	Ending inventory	$29,000
Depreciation
Vehicle ($370,000 * 20%)	$74,000
Equipment ($280,000 * 10%)	$28,000
Stationery $9,000 Add: outstanding $2,000	$11,000	Accrued interest on Fixed deposit	$3,000
		Commission income	$52,000
Accumulated depreciation on vehicle	$160,000	Bad debts recovered	$1,000
Accumulated depreciation on vehicle	$100,000	Commission on sale	$5,000
Interest on mortgage loan ($100,000 * 18%) for 1 month	$1,500
Bad debts	$3,200
Insurance $4,000 Less: prepaid insurance 800	$3,200
Bank charges $3,000 Add; outstanding charges $400	$3,400
Electricity and water	$19,000
Rent expenses $65,000 less: prepaid rent $5,000 (paid up to 31, march so 1 month is prepaid $65,000 / 13 month)	$60,000
Motor expenses	$39,000
Advertisement $25,000 Add: outstanding $1,300	$26,300
Telephone charges $17,000 Add: outstanding charges $1,800	$18,800
		Net Loss (Balance)	$153,400
Total	$1,057,400	Total	$1,057,400

Working:

-Depreciation is calculated on both vehicle and on th equipment

-Sale return is deducted from the sales

-Outstanding telephone charges , advertisement, stationery, bank charges are added to their respective expenses

-Prepaid rent, and prepaid insurance is deducted