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,,$1650],[$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,$980,],[1307094,1307094]]$

$2$

Additional information:

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.

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

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

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$4200.$

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.

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.

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

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

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

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

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

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

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

$(7)$