QUESTION $2(30$ MARKS$)(45$ MINUTES$)$ Z&Y Clothing Ltd manufactures and sells clothing$$s in Industria, Gauteng. The following balances were extracted from the trial balance of Z&Y Clothing Ltd for the reporting period ended $31$ March $2023$ before taking the additional information given below into account: Note R Revenue: Sales $14435550$ Dividend received $267500$ Rent received $66000$ Interest on bank overdraft $28400$ Cost of sales $3046644$ Salaries and wages $3772000$ Operating lease payments: Machinery $463000$ Depreciation $-$ manufacturing plant $5145000$ Bad debts $648435$ Distribution costs $278500$ Administrative costs $393850$ Profit before tax $($calculated by the junior accountant$)335240$ ADDITIONAL INFORMATION: $1.$ Clothing, with a cost of R$12355$ and a selling price of R$17915,$ were donated to the local orphanage. The junior accountant incorrectly included the donation as sales. $2.$ Z&Y Clothing received dividends were received from their investment of $22500$ ordinary shares in H&N Ltd $($total issued number of shares: $150000).$ The shares were purchased on $11$ August $2022$ for R$27$ per share. The closing price on $31$ March $2023$ was R$32$ per share. The investment were purchased with the intention of not being held for trading. The fair value adjustment has not yet been accounted for. The entity purchased R$10000012\%$ debentures at par in Lili Ltd on $1$ April $2022.$ Interest is receivable annually on $31$ March and the debentures mature on $31$ March $2025.$ The nominal interest is R$12000$ and the effective interest is R$10895$ on $31$ March $2023.$ Interest on the debentures was not taken into account in the profit before tax calculation. $3.$ Salaries and wages comprise: R Salaries: Managing director $185000$ Sales, administrative personnel and managers $548000$ Managing director$$s travel allowance $24000$ Payment to chairman of the board $15000772000$ Due to the good profit realised in the current year, the board of directors decided to award all employees $($not directors$)$ a bonus of $115\%$ of their monthly basic salary. One of the administrative personnel started working for the company on $1$ October $2022,$ and is entitled to a proportionate share of the bonus allocation. QUESTION $2($CONTINUED$)$

The basic salaries $($excluding the bonuses$)$ of the employees are as follows:

Type of work Basic salary per

employee per year

Number of

employees

R

Administrative personnel $660002$

Sales personnel $840002$

Managers $2480001$

$4.$ A machine used in the clothing manufacturing process was leased on $01$ April $2021$ for

a period of $5$ years. The lease payments are R$5250$ per month for the first $3$ years and

R$4500$ per month thereafter. The lease payments for the current year were expensed

in full.

$5.$ Included in bad debts is an amount of R$28725$ which was owed by Toys Ltd$.$ The

company was liquidated before the end of the financial year. The amount is considered

to be material.

$7.$ Assume a company tax rate of $28\%.$

REQUIRED:

$2\mathrm{.}1$ Calculate the correct profit before tax for Z&Y Clothing Ltd for the reporting period ended

$31$ March $2023.$

Note:

Start the calculation with the already correctly calculated profit before tax. $(5)$

$2\mathrm{.}2$ Prepare the statement of comprehensive income and the accompanying notes of Z&Y

Clothing Ltd for the reporting period ended $31$ March $2023$ according to the minimum

requirements of the Companies Act and IFRSs.

Note: The note for revenue is not required $(25)$

Note:

$$ The notes on accounting policy are not required.

$$ Comparative figures are not required.

$$ Ignore VAT.

$$ Round off all amounts to the nearest Rand