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 $2024.$ :

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

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Accounts:

R

Equipment at cost:$($used for business activities$)$

Accumulated depreciation: Equipment at $1$ July $2023$

$268800$

$156000$

$7\%$ per year Fixed deposit $($matures on $1$ April $2027)$

$193000$

Inventory Trade goods $($as per ledger account balance$)$

$263760$

Long term borrowing : Kaya Mali

$337440$

Sales of trade goods

$2016000$

Cost of sales

$1260000$

Settlement discounts granted

$20400$

Service fee income$($in respective of repairs$)$

$356568$

Rent income

$126000$

Interest income$$

$13510$

Salaries and wages

$356568$

Audit fees

$36000$

Directors fees

$276000$

Consumable expenses

$61320$

Bank charges

$6288$

Travel and entertainment $-$ Directors

$19092$

$$

ADDITIONAL INFORMATION:

The internal auditors have identified the following errors and omissions:

$1.$ 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.

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

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

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$5.$ 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 $2024.$

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$6.$ 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.

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$7.$ 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 $2024$

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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 $391200$

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$8.$ 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$2024.$

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

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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.