QUESTION THREE

$[45]$

The pre$-$adjustment trial balance of XYZ Limited is presented as follows:

$\backslash$table$[[$Description$,$Debit,Credit$],[$Ordinary shares,,$200000],[7,5\%$ preference shares,,$150000],[$Retained earnings,,$147500],[$Trade creditors,,$54750],[$Plant and machinery,$352000,],[$Motor vehicles,$195000,],[$Office furniture,$25600,],[$Trade debtors,$42500,],[$Allowance for credit losses,,$1650],[\backslash$table$[[$Accumulated depreciation on plant and$],[$machinery$]],,56850],[$Accumulated depreciation on motor vehicles,,$34850],[$Accumulated depreciation on office furniture,,$4520],[$ABSA cheque account,$98523,],[$Petty cash,$3354,],[$Inventory$,6210,],[$Sale of goods,,$656974],[$Cost of sales,$268500,],[$Water and electricity,$12500,],[$Travelling and fuel,$8540,],[$Motor vehicle repairs and maintenance,$12580,],[$Telephone cost$,64850,],[$Salaries and wages,$198500,],[$Director$\text{'}$s training,$12400,],[$Cleaning and consumables,$3568,],[$Staff welfare,$1489,],[$Printing and stationery,$980,],[1307094,1307094]]$

$3$

Additional information:

$1.$ A customer returned defective goods of R$5750.$ VAT of $15\%$ is levied per the Value Added

Tax Act by XYZ Limited. The company has a $10\%$ markup rate.

$2.$ The municipal account amounting to R$1450$ was received on $14$ April $2023.$

$3.$ Repairs to the motor vehicle of R $3200$ was refunded through payroll and posted to the

salaries and wages account.

$4.$ XYZ Trading adopted the periodic inventory system to account for the consumables.

Consumables purchased during March $2023$ of R$5000$ was posted to the cost of sales

account by the bookkeeper. The stock count concluded on $31$ March $2023$ valued the

consumable inventory on R$4200.$

$5.$ Ordinary shares trades at R$2$ each. At reporting date, the shareholders declared a dividend

of $5$c$.$ A prospectus offering $50000$ R$2$ ordinary shares and $10000$ R$10$ preference shares

was advertised during March $2023.$ Mrs$.$ Flinch entered into an underwriter$$s agreement with

XYZ Limited for an agreed $3,5\%$ fee.

$6.$ The allowance for credit losses should equal $8\%$ of the debtor$$s book at reporting date.

Required:

$3\mathrm{.}1.$ Prepare the Statement of Comprehensive Income as at $31$ March $2023$ based on the reporting

requirements of the International Financial Reporting Standards. $(25)$

$3\mathrm{.}2$ Define with examples where applicable each of the following accounting concepts$/$terms:

$3\mathrm{.}2\mathrm{.}1$ Accounting $(2)$

$3\mathrm{.}2\mathrm{.}2$ Current liability $(3)$

$3\mathrm{.}2\mathrm{.}3$ Current asset $(3)$

$3\mathrm{.}2\mathrm{.}4$ Net asset value $(2)$

$3\mathrm{.}2\mathrm{.}5$ Accounting policy $(3)$

$3\mathrm{.}3$ Discuss the accounting cycle. $(7$