Harry Hands is the sole proprietor of a business entity involved in the repair and servicing...

  

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Harry Hands is the sole proprietor of a business entity involved in the repair and servicing of antique clocks. The entity trades under the name of The Grandfather Clock. . On 1 March 20X1 Harry Hands opened a bank account in the name of the business and deposited C50 000 into the bank account. . . . The equipment was purchased on 1 March 20X1. It is expected to have a useful life of ten years. There were no further additions or disposals of equipment during the year. Repairs and servicing are done both for cash and on credit. In addition, some collectors of antique clocks pay a set fee every six months in advance to cover all repairs and servicing. Cash received for fees received in advance are credited to the repair fees income account on receipt. All repair supplies are purchased on credit and the accounts payable relates only to repair supplies. The summarised bank account in the general ledger showing transactions until 28 February 20X2 and the statement of financial position at 28 February 20X2 are shown below: 1/3/01 Capital Interest income Repair fees income 1/3/02 Balance bid BANK 50 000 950 106 000 156 950 11 650 28/2/02 Equipment Accounts payable Rent Water & electricity Wages Distributions Balance c/d 36 000 42 800 15 000 8 800 32 700 10 000 11 650 156 950 STATEMENT OF FINANCIAL POSITION THE GRANDFATHER CLOCK AT 28 FEBRUARY 20X2 ASSETS Non-current assets Equipment Current assets Repair supplies Accounts receivable Rent paid in advance Interest receivable Bank EQUITY AND LIABILITIES Equity Current liabilities Accounts payable Fees received in advance Water & electricity payable C 32 400 40 300 14 050 11 450 3 000 150 11 650 72 700 56 550 16 150 8 300 7 250 600 72 700 An extract from the March 20X2 bank account showed the following transactions: Water and electricity paid of C1 250 Interest received of C240 ● You are required to: a. Prepare a statement of profit or loss of The Grandfather Clock for the year ended 28 February 20X2. b. Prepare a statement of changes in equity of The Grandfather Clock for the year ended 28 February 20X2. C. Journalise the closing entries at 28 February 20X2. d. Journalise the entries to record the payment of the water and electricity as well as the receipt of the interest during March 20X2. Harry Hands is the sole proprietor of a business entity involved in the repair and servicing of antique clocks. The entity trades under the name of The Grandfather Clock. . On 1 March 20X1 Harry Hands opened a bank account in the name of the business and deposited C50 000 into the bank account. . . . The equipment was purchased on 1 March 20X1. It is expected to have a useful life of ten years. There were no further additions or disposals of equipment during the year. Repairs and servicing are done both for cash and on credit. In addition, some collectors of antique clocks pay a set fee every six months in advance to cover all repairs and servicing. Cash received for fees received in advance are credited to the repair fees income account on receipt. All repair supplies are purchased on credit and the accounts payable relates only to repair supplies. The summarised bank account in the general ledger showing transactions until 28 February 20X2 and the statement of financial position at 28 February 20X2 are shown below: 1/3/01 Capital Interest income Repair fees income 1/3/02 Balance bid BANK 50 000 950 106 000 156 950 11 650 28/2/02 Equipment Accounts payable Rent Water & electricity Wages Distributions Balance c/d 36 000 42 800 15 000 8 800 32 700 10 000 11 650 156 950 STATEMENT OF FINANCIAL POSITION THE GRANDFATHER CLOCK AT 28 FEBRUARY 20X2 ASSETS Non-current assets Equipment Current assets Repair supplies Accounts receivable Rent paid in advance Interest receivable Bank EQUITY AND LIABILITIES Equity Current liabilities Accounts payable Fees received in advance Water & electricity payable C 32 400 40 300 14 050 11 450 3 000 150 11 650 72 700 56 550 16 150 8 300 7 250 600 72 700 An extract from the March 20X2 bank account showed the following transactions: Water and electricity paid of C1 250 Interest received of C240 ● You are required to: a. Prepare a statement of profit or loss of The Grandfather Clock for the year ended 28 February 20X2. b. Prepare a statement of changes in equity of The Grandfather Clock for the year ended 28 February 20X2. C. Journalise the closing entries at 28 February 20X2. d. Journalise the entries to record the payment of the water and electricity as well as the receipt of the interest during March 20X2.

Answer rating: 100% (QA)

SOLUTION a Statement of Profit or Loss of The Grandfather Clock for the year ended 28 February 20X2 ... View the full answer