QUESTION ONE

$[25]$

Versatile $($Pty$)$ Ltd operates a business that trades in specialised machinery used in clothing manufacturing factories. The company also repairs clothing machinery for their regular customers on a cash basis only. The following information was extracted from the accounting records for the financial year ended $30$ June $2024.$ :

Extracted from the Pre$-$adjustment trial balance at $30$ June $2024$: Accounts: R

Equipment at cost: $($used for business activities$)$ Accumulated depreciation: Equipment at $1$ July $2023$

$2688007\%$ per year Fixed deposit $($matures on $1$ April $2027)156000$ Inventory Trade goods $($as per ledger account balance$)193000$ Long term borrowing : Kaya Mali $263760$ Sales of trade goods $337440$ Cost of sales $2016000$ Settlement discounts granted $1260000$ Service fee income $($in respective of repairs$)20400$ Rent income $356568$ Interest income $126000$ Salaries and wages $13510$ Audit fees $356568$ Directors fees $36000$ Consumable expenses $276000$ Bank charges $61320$ Travel and entertainment $-$ Directors $6288$

ADDITIONAL INFORMATION:

The internal auditors have identified the following errors and omissions:

The physical stock$-$count at $30$ June $2024$ revealed the following:

Trade Goods were valued at R$242400.$ Note that the Perpetual Inventory Method is used to record transactions for trade goods.

$2.$ Bank charges of R$372$ reflected on the June $2024$ bank statement have not yet been recorded in the above accounting records.

$3.$ Auditors are owed a further R$33600$ for audit fees that needs to be recorded.

$4.$ The physical stock$-$take on $30$ June $2024$ also revealed that there was stock of consumables which were valued at R$1080.$

$5.$ The company has a tenant occupying part of their building. The tenant has already paid the monthly rent for July $2024$ and August $2024$ and is included in the Rent income account. An adjustment is required for the rent received in advance. The monthly rent was increased by R$840$ on $1$ January $2024.$

$6.$ Provide for depreciation on Equipment at $10\%$ per year on the diminishing balance method. It was also noted that Equipment costing R$36000$ was purchased on $31$ December $2023$ and recorded correctly. $7.$ Interest on the Long term borrowing was capitalised by Kaya Mali but not yet recorded by Versatile $($Pty$)$ Ltd$.$ Summary of the loan is as follows: Kaya Mali: Loan statement as at $30$ June $2024$ Balance at $1$ July $2023$ R $399360$ Add: Interest capitalised for the year $??$ Less: Monthly instalments of R$5160$ x $12$ payments R $61920$ Balance at $30$ June $2024$ R $391200$

$8.$ A credit note for R$648$ was issued to a customer, B Star, on $28$ June $2024$ but not recorded. The credit note was a price reduction for unsatisfactory repair of the customer$$s equipment. A refund was paid out in July$2024.$

$9.$ Assume that all income and expenses are subject to Company Tax at $30\%.$

Required : Prepare a Statement of profit or loss and other comprehensive income for the year ended $30$ June $2024$ in compliance with Internal Financial Reporting Standards appropriate to Versatile $($Pty$)$ Ltd$$s business activities. Show all workings.