Prepare the Statement of Comprehensive Income of Royal Traders for the year ended 28 February 2021. 

INFORMATION

The trial balance, adjustments and additional information given below were extracted from the accounting records of Royal Traders on 28 February 2021, the end of the financial year.

ROYAL TRADERS PRE-ADJUSTMENT TRIAL BALANCE AS AT 28 FEBRUARY 2021

Adjustments and additional information

1. According to the physical stocktaking completed on 28 February 2021, the following inventories were on hand: 1.1 Trading inventory, R136 000 1.2 Stationery, R600.

2. An account received from Airtel Fitters on 28 February 2021 for the installation of an air conditioning unit in one of the vehicles was debited to the motor expenses account in error, R6 000.

3. No entry has been made for interest at 12% p.a. that was charged for two months on the overdue account of a debtor who owed R6 000.

4. An electronic funds transfer for R1 330 was made to Royal Traders on 28 February 2021 from a debtor, after a settlement discount of 5% was deducted. No entries have been made for this transaction.

5. The provision for bad debts must be decreased to R3 000.

6. The telephone account for February 2021 was due to be paid on 02 March 2021, R1 400.

7. Rent expense has been paid up to 31 March 2021. Note: The rental was increased by 10% with effect from 01 December 2020. Make the necessary adjustment.

8. Interest on loan for February 2021 has not been paid,

9. The insurance total includes an annual premium of R4 800 that was paid for the period 01 June 2020 to 31 May 2021.

10. Cash deposit fees of R600 that appeared in the February 2021 bank statement were left out in error when the cash journals for February 2021 were prepared and posted.

11. Provide for depreciation as follows:

11.1 On equipment at 10% per annum on cost. Note: Equipment that cost R20 000 was purchased on 01 September 2020. The purchase has been recorded.

11.2 On vehicles at 20% per annum on the diminishing balance.

Transcribed Image Text:

Debit (R) Credit (R) Balance sheet accounts section Capital 301 000 Drawings 134 720 Vehicles at cost 360 000 Equipment at cost 240 000 Accumulated depreciation on vehicles 186 000 Accumulated depreciation on equipment 62 000 Trading inventory 140 000 Debtors control 62 000 Provision for bad debts 8 000 Bank 42 800 Cash float 1 000 Debit (R) Credit (R) Balance sheet accounts section Capital 301 000 Drawings 134 720 Vehicles at cost 360 000 Equipment at cost 240 000 Accumulated depreciation on vehicles 186 000 Accumulated depreciation on equipment 62 000 Trading inventory 140 000 Debtors control 62 000 Provision for bad debts 8 000 Bank 42 800 Cash float 1 000

Answer rating: 100% (QA)

Statement of Comprehensive Income Particulars Amount R Amount R Revenue Gross sales 100000000 Less sales returns 800000 Net sales R 99200000 Bad debts recovered point6 2000 Commission income 10000 Int... View the full answer