Question

QUESTION 3 The accountant hands to you the following pre-adjustment trial balance of JOU BOU ENTERPRISES: JOU BOU Trial balance on 28 February 20.4 Dr Cr R R Purchases 107 000 Administrative expenditure 28 400 Bank 101 500 Fuel 34 000 VAT input 5 000 VAT control 8 000 VAT output (VAT rate = 10%) 20 000 Debtors control 9 100 Land 150 000 Trademarks 20 000 Rental income 22 000 Capital ? 11 Drawings 30 500 Accrued depreciation – vehicle 21 000 Mortgage loan 120 000 Sales 200 000 Insurance 23 200 Vehicles 30 000 Inventory – 1/3/20.3 12 500 Allowance for credit losses 1 000 560 000 560 000 Additional information: 1. Allowance for credit losses must be adjusted to 10% of debtors. 2. Rental income amounts to R1 100 per month (VAT included). 3. The mortgage loan carries interest at a rate of 20%. The loan of R120 000 was made on 28 February 20.3 and must be repaid in equal capital instalments over six (6) years. The payment has already been made but no entries has been made. 4. After a stock-take was done, the following was found: Quantity Cost price 10kg Bags JOU BOU 100 R40 5kg Bags JOU BOU 100 R30 5. The entity has three (3) identical vehicles in use that were purchased on the same date. Depreciation is provided for on the straight line basis at 20% on the cost price. No depreciation has been provided yet, the current year. 6. One of the vehicles was hijacked in the city on the last day of the financial year. The insurance paid out R3 300, including 10% VAT. The transaction has not yet been accounted for. 7. Trademarks are written of on the straight line basis at R1 000 per annum. REQUIRED: Prepare the statement of financial position on 28 February 20.4 to comply with the requirements of IFRS and Companies Act. (notes are not required).

Answer 1

Balance sheet of jou as on 28 feb 20.4
Assets
Non Current Assets
Property , Plant and equipments	152000
Trade mark	19000
Investment
Current Assets
Inventories	7000
Trade Payable	8190
Cash & Cash Equivalents	60800
Total Assets	246990
Equity and Liabilities
Equity
Capita	159200
Drawing	-30500
retain earning	-14710
Total Equity	113990
Non Current Liabilities
Long term loan	100000
Total non current liabilities	100000
Current Liabilities:-
Accured rent income	10000
vat payable	23000
Total Current liabilities	33000
Total EQUITY & LIABILITIES	246990

if trial is

Trial Balance
Credit Losses	(1,000.00)
Opening Inventory	12,500.00
Vehicle	30,000.00
Insurance	23,200.00
Sales	(2,00,000.00)
Loan	(1,20,000.00)
Acumulated depreciation Vehicle	(21,000.00)
Drawing	30,500.00
purchase	1,07,000.00
Administratin expenses	28,400.00
Bank	1,01,500.00
Fuel	34,000.00
Vat Control	(8,000.00)
Vat Input	5,000.00
Vat Output	(20,000.00)
Debtors	9,100.00
land	1,50,000.00
Trade mark	20,000.00
rental income	(22,000.00)
Capital	(1,59,200.00)

3.

SALES	$	2,00,000
Rental Income		12,000
Profit from vehicle		2,300
Bad Debts written back		1,000
LESS:-COST OF SALES		1,12,500
GROSS PROFIT		1,02,800
OPERATING EXPENSES:
Administration Expenses		28,400
bad debtor		910
Insurance		23,200
fuel		34,000
Depreciation on vehicle		6,000
Amortisation on trade mark		1,000
Total Operating Expenses		93,510
OPERATING INCOME (LOSS)		9,290
INTEREST EXPENSE		24,000
NET INCOME BEFORE TAXES	-	14,710

4.

1.Calculation of cost of good sold
Particular	Amount
Opening Stock	12500
Add:- Purchase	107000
Less:-Closing Stock	7000
Cost of good sold	112500
2.Calculation of interest cost on loan
"=120000@20%
24000
3. calculation of bank balance as on 28 feb 20.4
Bank balance	101500
interest payment	-24000
loan installment payment	-20000
Insurance reciept	3300
	60800
4. calculation of closing stock value
jou bou 100 =	40+30
	70
5. Depreciation on vehicle
"=30000@20%
6000
6. loss on hijack on vehicle
Value of vehicle	10000
Accured depreciation	-7000
current year depreciation	-2000
VALUE AT THE END OF YEAR	1000
Value received from Insurace	3300
Profit from vehicle	2300
7. vat payable
Vat Control account	8000
add:= vat output	20000
less:- vat input	-5000
	23000