The following trial balance of Princess Sekome, a general dealer, trading as Sekome Traders, was prepared...

  

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The following trial balance of Princess Sekome, a general dealer, trading as Sekome Traders, was prepared by the firm's bookkeeper on 31 December 2020, the financial year-end. Sekome Traders consistently marks up goods by 50% on cost. Capital: Princess Sekome (01 January 2020) Drawings Land, at cost 11% Mortgage loan: SHAI BANK Motor vehicles, at carrying amount Inventory (01 January 2020) Office supplies Accounts receivable Accounts payable Bank Sales Purchases Sales returns Transport costs Rent revenue Interest expense Insurance expense Salaries and wages expense 2. 3. 4. SEKOME TRADERS TRIAL BALANCE AT 31 DECEMBER 2020 5. DR R 58 000 270 000 Dr Capital 157 000 64 050 2640 19 200 Cr Sales 134 520 2080 2 200 11 550 4 800 161 700 R887 740 The following additional information must be taken into consideration: 1. The business insurance policy is paid annually on 31 July of each year. The payment was made and correctly recorded on 31 July 2020. 3 000 CR R 234 050 120 000 91 650 34 840 383 200 24 000 Office space has been let to a tenant since 1 January 2019 at a monthly rental of R2 500. Rent was increased by 15% on 1 October 2020. Rent payments received from the tenant are often irregular, due to the impact of lockdown restrictions on the business finances. R887 740 The mortgage loan had been obtained on 1 July 2019 and is repayable on 1 July of each year in five equal instalments. The first repayment was made and correctly recorded on 1 July 2020. Interest is payable quarterly in arrears on 1 July, 1 October, 1 January and 1 April An old delivery vehicle was purchased on 1 January 2019. A second delivery vehicle was purchased on credit on 31 October 2020 at a cost of R92 000. This purchase was correctly recorded by the bookkeeper. Depreciation on vehicles is recorded 20% on carrying amount. The owner, Princess Sekome, had taken inventory with a selling price of R3 000 for her personal use during December 2020. This transaction had been recorded as follows: 3 000 >) =) d) QUESTION 1 (continued) The bookkeeper did not know how to record settlement discounts received from suppliers of R400. so the amount was left out completely from the books of the business. 6. 7. 8. The bank statement was received after the trial balance had been prepared and it was noted that an EFT (Electronic Funds Transfer) from a debtor for R700 in settlement of her debt of R770 appeared on the bank statement. A physical count on 31 December 2020 revealed that all but R920 worth of the office supplies had been used up. Inventory of goods costing R38 600 was on hand at 31 December 2020. REQUIRED: Prepare general journal entries to record any adjustments or corrections which are necessary in terms of the information given in 1. to 8. above. Journal narrations and closing entries are not required. (17) Prepare and balance/close the ledger account for cost of sales as it would appear in the general ledger for the year ended 31 December 2020. Show as much detail insofar as the information provided allows (ignore folio numbers). (3) Prepare the Statement of Profit or Loss of Sekome Traders for the financial year ended 31 December 2020. (8) Refer to transaction 2 in the additional information. Based on this information, briefly discuss the potential financial implications for Sekome Traders. (2) Note: Show all workings clearly. Work to the nearest R1. The following trial balance of Princess Sekome, a general dealer, trading as Sekome Traders, was prepared by the firm's bookkeeper on 31 December 2020, the financial year-end. Sekome Traders consistently marks up goods by 50% on cost. Capital: Princess Sekome (01 January 2020) Drawings Land, at cost 11% Mortgage loan: SHAI BANK Motor vehicles, at carrying amount Inventory (01 January 2020) Office supplies Accounts receivable Accounts payable Bank Sales Purchases Sales returns Transport costs Rent revenue Interest expense Insurance expense Salaries and wages expense 2. 3. 4. SEKOME TRADERS TRIAL BALANCE AT 31 DECEMBER 2020 5. DR R 58 000 270 000 Dr Capital 157 000 64 050 2640 19 200 Cr Sales 134 520 2080 2 200 11 550 4 800 161 700 R887 740 The following additional information must be taken into consideration: 1. The business insurance policy is paid annually on 31 July of each year. The payment was made and correctly recorded on 31 July 2020. 3 000 CR R 234 050 120 000 91 650 34 840 383 200 24 000 Office space has been let to a tenant since 1 January 2019 at a monthly rental of R2 500. Rent was increased by 15% on 1 October 2020. Rent payments received from the tenant are often irregular, due to the impact of lockdown restrictions on the business finances. R887 740 The mortgage loan had been obtained on 1 July 2019 and is repayable on 1 July of each year in five equal instalments. The first repayment was made and correctly recorded on 1 July 2020. Interest is payable quarterly in arrears on 1 July, 1 October, 1 January and 1 April An old delivery vehicle was purchased on 1 January 2019. A second delivery vehicle was purchased on credit on 31 October 2020 at a cost of R92 000. This purchase was correctly recorded by the bookkeeper. Depreciation on vehicles is recorded 20% on carrying amount. The owner, Princess Sekome, had taken inventory with a selling price of R3 000 for her personal use during December 2020. This transaction had been recorded as follows: 3 000 >) =) d) QUESTION 1 (continued) The bookkeeper did not know how to record settlement discounts received from suppliers of R400. so the amount was left out completely from the books of the business. 6. 7. 8. The bank statement was received after the trial balance had been prepared and it was noted that an EFT (Electronic Funds Transfer) from a debtor for R700 in settlement of her debt of R770 appeared on the bank statement. A physical count on 31 December 2020 revealed that all but R920 worth of the office supplies had been used up. Inventory of goods costing R38 600 was on hand at 31 December 2020. REQUIRED: Prepare general journal entries to record any adjustments or corrections which are necessary in terms of the information given in 1. to 8. above. Journal narrations and closing entries are not required. (17) Prepare and balance/close the ledger account for cost of sales as it would appear in the general ledger for the year ended 31 December 2020. Show as much detail insofar as the information provided allows (ignore folio numbers). (3) Prepare the Statement of Profit or Loss of Sekome Traders for the financial year ended 31 December 2020. (8) Refer to transaction 2 in the additional information. Based on this information, briefly discuss the potential financial implications for Sekome Traders. (2) Note: Show all workings clearly. Work to the nearest R1.

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