Prepare the Statement of Financial Position as at 31 December 2020. The notes to the financial statements are not required. Show workings in the spaces provided.

INFORMATION

The information given below was extracted from the accounting records of Merewent Ltd on 31 December 2020 (the end of the financial year).

MEREWENT LTD

PRE-ADJUSTMENT TRIAL BALANCE AS AT 31 DECEMBER 2020

Balance Sheet Accounts Section	Debit (R)	Credit (R)
Ordinary share capital		320 000
Retained earnings		40 000
Land and buildings	540 000
Vehicles (cost)	130 000
Equipment (cost)	100 000
Accumulated depreciation on vehicles		50 000
Accumulated depreciation on equipment		40 000
Debentures (10% p.a.)		260 000
Debtors control	36 000
Provision for bad debts		2 000
Bank	23 000
Creditors control		93 000
South African Revenue Services (Company tax)	29 000
Nominal accounts section
Sales		757 000
Opening inventor	110 000
Purchases	411 000
Sales returns	5 000
Purchases returns		33 000
Carriage on purchases	8 000
Maintenance	7 000
Municipal rates	5 000
Carriage on sales	10 000
Wages and salaries	80 000
Stationery	1 000
Bad debts	2 000
Sundry expenses	7 000
Insurance	3 000
Telephone	7 000
Water and electricity	8 000
Directors’ fees	48 000
Auditor’s fees	5 000
Ordinary share dividends	20 000
	1 595 000	1 595 000

Adjustments and additional information

1. Physical stocktaking on 28 February 31 December 2020 revealed the following inventories:

1.1 Trading inventory, R90 000

1.2 Stationery, R200.

2. A notice from the municipality reflected an amount of R200 that was paid for municipal rates for the next financial year.

3. Depreciation must be provided for as follows:

3.1 On vehicles, R16 000.

3.2 On equipment, R10 000.

4. A debtor, who owed R1 000, was declared insolvent. Received R400 of the amount owing from his insolvent estate. The balance of his account must now be written off. No entries were made for these transactions.

5. The insurance total includes a premium of R100 that was paid for January 2021.

6. An amount of R2 000 was due to be paid for audit fees on 02 January 2021.

7. The provision for bad debts must be increased to R2 200.

8. Provide for interest on debentures that is yet to be paid, R26 000.

9. The company tax for the year amounted to R33 000. The profit after tax AFTER taking the above information into account was R75 700.

10. The final dividend declared on 31 December 2020 amounted to R50 000.

Answer rating: 100% (QA)

Merewent Ltd Statement of financial position as at 31 December 2020 Assets Non Current assets Land a... View the full answer