Ms$.$ Smith opened a vibrant bookstore in September $2022,$ situated in the heart of

Cape Town, named "Smith's Reading Den". The bookstore has a financial yearend of

$31$ August.

You have been provided with a trial balance for Smith's Reading Den spanning from

$1$ September $2022$ up until $31$ July $2023.$

Smith's Reading Den Trial Balance as at $31$ July $2023$:

Account Debit

$($R$)$

Credit

$($R$)$

Bank $105000$

Inventory $($Books$)80000$

Accumulated Depreciation $–$ Fixtures and

Fittings $12000$

Office Supplies $($asset$)2500$

Fixtures and Fittings $50000$

Point$-$of$-$Sale $($POS$)$ System $($Asset$)30000$

Trade Receivables $35000$

Trade Payables $18000$

Accumulated Depreciation $–$ POS System $15000$

Sales $647500$

Cost of Goods Sold $314000$

Salaries Expense $132000$

Utility Bills $44000$

Capital $150000$

Drawings $50000$

Total $842500842500$

During the month of August, the following transactions took place and must still

be accounted for:

$•01$ August $2023$: Ms$.$ Smith deposited an additional R$100000$ into the business

bank account. On the same day, she secured a loan of R$80000$ from a local bank.

$•02$ August $2023$: Signed a two$-$year lease for the shop space, costing R$20000$ per

month. Ms$.$ Smith immediately paid the rent for August and an additional R$20000$ 

as a security deposit, totaling a payment of R$40000.$

$•03$ August $2023$: Ms$.$ Smith hired Mr$.$ Mkhize as the store manager, with an agreed

monthly salary of R$22000,$ which is due on the $25$th of every month.

$•05$ August $2023$: Purchased books for R$65000$ cash from "Literary Distributors

Inc."

$•06$ August $2023$: Obtained office supplies on credit, valued at R$4000,$ from "Office

Essentials Ltd$."$

$•07$ August $2023$: Ordered books from "Bookworld Ltd$"$ on credit. The total cost of

the books was R$95000.$

$•11$ August $2023$: Smith's Reading Den made a sale to "Elite Schools Ltd$."$ on credit,

invoicing them R$40000$ for books that originally cost the store R$28000.$

$•25$ August $2023$: Mr$.$ Mkhize's monthly salary of R$22000$ for August was disbursed.

$•31$ August $2023$: To enhance the customer checkout experience, a new point$-$ofsale system was purchased for R$45000.$ An upfront payment of R$20000$ was

made, with the remaining R$25000$ to be settled in four equal monthly instalments.

$•31$ August $2023$: The point$-$of$-$sales system showed a total amount of cash sales

achieved during the month amounting to R$33600.$ The books that were sold had

been initially acquired for R$24000.$

$•31$ August $2023$: Invested in the store's ambiance by buying bookshelves and

seating arrangements, which cost R$55000$ in cash.

$•31$ August $2023$: Utility bills for the month, amounting to R$4500,$ were paid.

$•31$ August $2023$: A debtor, "Elite Schools Ltd$.",$ made a payment, settling $80\%$ of

their outstanding credit amount.

$•31$ August $2023$: Smith's Reading Den made a payment of $75\%$ to "Bookworld Ltd$"$ 

as part$-$payment for the books that were previously purchased on credit.

$•31$ August $2023$: Smith's Reading Den had R$3500$ office supplies left that they

would use in the future. REQUIRED:

$1\mathrm{.}1$ Calculate the profit or loss for the month of August $2023.$

$(10$ marks$)$

$1\mathrm{.}2$ Assume a loss of R$27900$ was made during August $2023.$ Prepare the

Statement of Financial Position for Smith's Reading Den for the financial year

ending $31$ August $2023.$

Answer rating: 100% (QA)

Lets break down the calculations step by step 1 Calculate the profit or loss for the month of August 2023 First we need to calculate the total revenue and total expenses for August 2023 Total Revenue ... View the full answer