The following information relates to Promo CC: 1. Trial balance on 31 December 2004: Dr. Cr R

Fantastic news! We've Found the answer you've been seeking!

Question:

The following information relates to Promo CC:

1. Trial balance on 31 December 2004:

Dr. Cr

R R Land and buildings at cost 95 000

Furniture and equipment at a cost 33 000

Vehicles at a cost 21 000

Accumulated depreciation:

Furniture and equipment 6 700

Vehicles 8 400 Inventory: 31 December 2003 54 600 15% long-term secured by first mortgage bond over land and buildings 50 000

Trade accounts receivable 20 500

Provision for bad debts: 31 December 2003 955

Cash in bank 24 000

Trade accounts payable 37 100

Provisional tax paid 6 900

Sales 321 500

Purchases 224 700

Import duty on purchases 1 550

Railage on purchases 2 500

Repairs and maintenance 1 315

Assessment rates 710

Commission on sales 1 500

Delivery expenses 650

Discount allowed 1 350

Salaries and wages 35 615

Stationery 520

Bad debts 460

Loss on sale of non-current assets 220

Insurance 475

Water and electricity 2 100

Dividends received 450

Investment: 10 000 shares in Vicks Limited at a cost 11 000 Loans from members: A Adam 10 000 C Charles 8 000 Interest paid 9 660 Members’ contributions: A Adam 40 000 B Ben 35 000 C Charles 25 000 Accumulated profits: 31 December 2003 6 220 549 325 549 325 2.

Additional information:

(a) Included in salaries and wages is an amount of R10 000 which was paid to member B Ben as remuneration for his special contribution to the management of the enterprise.

(b) Interest paid includes R2 160, which represents 12% interest, paid to A Adam and C Charles in respect of the loans they made to the close corporation.

(c) Provision for depreciation of R1 650 on furniture and equipment and R2 050 on vehicles must still be made. (d) The provision for bad debts must be adjusted to 5% of the outstanding trade accounts receivable.

(e) Inventory on hand on 31 December 2004 amounted to R58 300.

(f) The income tax provision for the year amounted to R17 125.

(g) A profit distribution of R20 000 must be made to the members.

Required:

(1) Prepare the income statement of Promo CC for the year ended 31 December 2004.

(2) Prepare the statement of changes in equity of Promo CC for the year ended 31 December 2004.

(3) Prepare the balance sheet of Promo CC on 31 December 2004.

(4) Prepare the notes to the financial statements of Promo CC for the year ended 31 December 2004. Your answer must include the required analysis of transactions with members.