Question

QUESTION 5 FINANCIAL STATEMENTS (20)

The trial balance, adjustments and additional information given below were extracted from the accounting records of Concha Traders on 28 February 2017, the end of the financial year.

REQUIRED

Prepare the Statement of Financial Position of Concha Traders as at 28 February 2017. The notes to the financial statements are not required. Where applicable, show calculations in brackets.

INFORMATION

CONCHA TRADERS

PRE-ADJUSTMENT TRIAL BALANCE ON 28 FEBRUARY 2017

Debit (R)

Credit (R)

Balance sheet accounts section

Capital

162 000

Drawings

70 000

Vehicles at cost

180 000

Equipment at cost

120 000

Accumulated depreciation on vehicles

90 000

Accumulated depreciation on equipment

38 000

Trading inventory

70 000

Debtors control

32 000

Provision for bad debts

4 000

Bank

22 000

Cash float

2 000

Creditors control

40 000

Mortgage loan: Aries Bank (16% p.a.)

80 000

Nominal accounts section

Sales

485 000

Cost of sales

240 000

Sales returns

5 000

Salaries and wages

84 000

Bad debts

5 000

Consumable stores

2 000

Rent expense

28 000

Motor expenses

15 000

Bad debts recovered

2 000

Telephone

7 000

Electricity and water

11 000

Bank charges

3 000

Insurance

4 000

Interest on mortgage loan

6 000

Commission income

5 000

906 000

906 000

MANCOSA: BCOM (SUPPLY CHAIN MANAGEMENT) YEAR 1

PROGRAMME HANDBOOK: JANUARY 2018 INTAKE

72

72

Adjustments and additional information

The net profit according to the Statement of Comprehensive Income, after taking the following into account, was R38 970:

1.

According to physical stocktaking done on 28 February 2017, trading inventory on hand amounted to R68 000.

2.

Consumable stores used during the financial year amounted to R1 800, according to a physical count.

3.

No entry has been made for a commission of 10% earned but not received on 500 items that were sold for R60 each.

4.

No entry has been made for a cheque for R600 that was received from an insolvent debtor, J. Marsh, who was only able to pay 30% of her debt. The balance of her account must now be written off as well.

5.

The provision for bad debts must be decreased to R1 500.

6.

The telephone account for February 2017 has not yet been paid, R700.

7.

The rental agreements signed with the lessor (landlord) are as follows:

R30 000 for the period 01 January 2016 to 31 December 2016, and

R36 000 for the period 01 January 2017 to 31 December 2017.

Make the necessary adjustment.

8.

The loan from Aries Bank was obtained on 01 September 2016. Provide for the outstanding interest. (Interest is not capitalised.) R20 000 of the amount owing to Aries Bank will be repaid during the next financial year.

9.

The insurance total includes an annual premium of R1 800 that was paid for the period

01 June 2016 to 31 May 2017.

10.

The bank statement for February 2017 reflected bank charges of R180 that have not yet been recorded.

11.

The electricity and water account was debited with an amount of R1 000 for the personal electricity account of the proprietor, that was paid for with a business cheque.

12.

Provide for depreciation as follows:

12.1

On equipment at 15% per annum on cost.

12.2

On vehicles at 25% per annum on the diminishing balance.

13.

An account received from Heidi Motors to replace two tyres on the delivery vehicle of the business, R2 000, has not been recorded.

Answer 1

In the second problem I think the preadjusted Trial balance is not posted .So it is not done .Please post it in a second question to answer it .

CONCHA TRADERS
Income Statement
For the year ended February 28 2017
Sales	R 485,000.00
Less: Sales return	R      5,000.00
Net sales		R 480,000.00
Cost of Sales		R 240,000.00
Gross Profit		R 240,000.00
Operating Expenses
Salaroies and wages	R    84,000.00
Bad debts (Net)	R      3,000.00
Consumable stores	R      2,000.00
Rent expense	R    28,000.00
Motor Expense	R    15,000.00
Telephone expense	R      7,000.00
Electricity and Water	R    11,000.00
Bank Charges	R      3,000.00
Insurance	R      4,000.00
Total Operating Expenses		R 157,000.00
Operating income		R    83,000.00
Other Income and expenses
Interest Expense	R      6,000.00
Commission Income	R      5,000.00	R      1,000.00
Net Income		R    82,000.00

CONCHA TRADERS
Owner's Capital Account
as at 28 February 2017
Beginning balance of capital account	R 162,000.00
Add: Income during the year	R    82,000.00
Less: Drawings	R    70,000.00
Ending balance of capital account	R 174,000.00

CONCHA TRADERS
Statement of Financial Position
as at 28 February 2017
Assets
Inventory	R    70,000.00
Debtors (Net ) (32000-4000)	R    28,000.00
Bank	R    22,000.00
Cash Float	R      2,000.00
Total Current Assets		R 122,000.00
Other Assets
Vehicle	R 180,000.00
Less: Accumulated Depreciation	R    90,000.00	R    90,000.00
Equipment	R 120,000.00
Less: Accumulated Depreciation	R    38,000.00	R    82,000.00
Total Assets		R 294,000.00
Liabilities
Creditors	R    40,000.00
Mortgage Loan :Aries bank (16% pa)	R    80,000.00
Total Liabilities		R 120,000.00
Owner's Equity		R 174,000.00
Total Liabilities and Owner's Equity		R 294,000.00