QUESTION 2 [30 marks]
Marvel (Pty) Ltd (Marvel) is a company that prints maps and atlases of the world. The
financial accountant has recently resigned and the financial manager has requested
that you assist in the preparation of some sections of the financial statements for the
year ended 30 September 2024.
You have been provided with the following information:
1.Information specific to the income earned and expenses incurred during the 2024
financial year:
a. Profit before tax was correctly calculated as R4 285 500.
b.A ctual gross profit earned during the 2024 financial year amounted to R12 973 500.
This was R526 500 less than expected due to inventory stolen during the year. Marvel
expects to earn a consistent gross profit percentage on sales of 50%.
c. The only other income earned during the year was dividend income of R1 417 500.
d. Distribution, administration and operating expenses were split in the ratio 20%, 35%
and 45% respectively.
2. Revaluation of plant during the year
a. On 30 September 2024 plant with a carrying amount of R2 250 000 was revalued to
its fair value of R3 000 000. This will be realized through use over the plant’s remaining
useful life of 5 years.
b. This plant originally cost R3 600 000 when purchased on 1 October 2021.
3. The net deferred tax liability as at 30 September 2023 amounted to R115 500 and
it was made up as follows:
a.Property, plant and equipment R98 700 (Credit)
b.Provision for doubtful debts R33 600 (Debit)
c. Prepaid rent R50 400 (Credit)
Required:
Prepare the following sections of the financial statements for Marvel (Pty) Ltd for the year ended 30 September 2024:
1. Income Statement
2. Statement of Comprehensive Income
3. Statement of Financial Position
You are also required to provide the necessary workings to support your calculations. Show all workings clearly. (30 marks)
Note: Ignore taxation.