Zozi and Sethu are the partners of Zethu Jewelleries and the following information is presented for you to assist in the preparation of the financial statements for the year ended 28 February 20.2.

1.        Terms of the partnership agreement:

1.1      The partners are entitled to a salary of R18 000 each per month.

1.2      Zozi and Sethu share profits in the ratio of 1:1 respectively.

2.         Year-end adjustments:

2.1      An outstanding debt of R2 200 is irrecoverable and must be written off. The allowance for credit losses must be increased to R6 500.

2.2      An amount of R4 500 owed by a debtor was written off as irrecoverable during the year ended 29 February 20.1. The debtor has settled the amount previously written off in full on 25 February 20.2. This transaction is still to be recorded in the books of the business.

2.3      Depreciation for the year must still be provided as follows:

• Office equipment: 20% according to diminishing balance method.
• Vehicles: 15% according to straight-line method and have a R15 000 residual value.

2.4      Inventories on hand on 28 February 20.1:

• Merchandise             R45 100

2.5      Only 65% of salaries were paid to partners during the year and the amount paid is included in the salaries and wages figure above.

2.6      On 1 November 20.1 a delivery vehicle was sold for R26 000, on the date of the sale, it’s cost price and accumulated depreciation (on 1 March 20.1) was R66 000 and R43 000 respectively. The bookkeeper forgot to record the transaction. The depreciation for the sold vehicle is correctly calculated at R1 500 for the year.

2.7      Included in the office equipment above is office equipment purchased on 1 December 20.1 for R45 000.

QUESTION

Which one of the following alternatives represents the correct amount that must be disclosed as revenue in the statement of profit or loss and other comprehensive income of Zethu Jewelleries for the year ended 28 February 20.2?

• A. 1 697 510
• B. 1 198 720
• C. 2 138 870
• D. 1 007 330
• E.     846 500
• F. 1 426 480

Transcribed Image Text:

ZETHU JEWELLERIES EXTRACT OF FINANCIAL INFORMATION AT 28 FEBRUARY 20.2: Note R Capital: Zozi Capital: Sethu Current account: Zozi (1 March 20.1) Cr Current account: Sethu (1 March 20.1) Dr Long-term loan from Zozi Land and buildings Trade receivables control Office equipment at cost Vehicle at cost Accumulated depreciation: Office equipment (1 March 20.1) Accumulated depreciation: Vehicles (1 March 20.1) Allowance for credit losses Allowance for settlement Inventory Purchases Interest expense on long-term loan Carriage on purchases Carriage on sales Settlement discount received Sales Settlement discount granted Salaries and wages Advertising expense Stationery expenses Water and electricity 546 000 824 500 42 000 52 800 Zoom to Selection 63 400 855 000 90 300 494 010 669 620 60 180 165 280 7 160 8 000 264 470 1 033 700 10 940 6 120 7 590 15 190 2 160 380 21 510 1 313 930 16 210 18 980 62 970 ZETHU JEWELLERIES EXTRACT OF FINANCIAL INFORMATION AT 28 FEBRUARY 20.2: Note R Capital: Zozi Capital: Sethu Current account: Zozi (1 March 20.1) Cr Current account: Sethu (1 March 20.1) Dr Long-term loan from Zozi Land and buildings Trade receivables control Office equipment at cost Vehicle at cost Accumulated depreciation: Office equipment (1 March 20.1) Accumulated depreciation: Vehicles (1 March 20.1) Allowance for credit losses Allowance for settlement Inventory Purchases Interest expense on long-term loan Carriage on purchases Carriage on sales Settlement discount received Sales Settlement discount granted Salaries and wages Advertising expense Stationery expenses Water and electricity 546 000 824 500 42 000 52 800 Zoom to Selection 63 400 855 000 90 300 494 010 669 620 60 180 165 280 7 160 8 000 264 470 1 033 700 10 940 6 120 7 590 15 190 2 160 380 21 510 1 313 930 16 210 18 980 62 970

Answer rating: 100% (QA)

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