SBJ Distributors had the following balances in their records at the end of their reporting period, 28 February 20.24.
Adjustment no.
Debit
R Credit
R
Land and Buildings 750 000
Investments 100 000
Furniture at carrying amount 1 80 000
Receivables 25 000
Bank 73 000
Capital 689 000
Sales 508 000
Purchases 132 400
Sales Returns 12 000
Rent income 7 168 000
Wages & Salaries 6 124 600
Cleaning materials 3 8 000
Sundry expenses 9 000
Interest income 2 18 000
Insurance expense 4 9 000
Inventories 01/03/20.23 5 50 000
Drawings 10 000
1 383 000 1 383 000
Additional information:
1. No depreciation has yet been written of for the year. It is the entity’s policy to write off depreciation on furniture at 20% per annum on the diminishing balance method.
2. The investment was made for a full year, but interest was received for only nine months.
3. Cleaning materials worth R5 000 were on hand 28 February 20.24.
4. At the end of the period R 1 000 was owed on insurance premiums.
5. Inventory on 28 February 20.24 amounted to R 39 000.
6. Wages and salaries include an amount of R 4 000 which was lent to an employee. The amount will be repaid during March 20.24.
7. Rent Income, R 168 000, includes R 24 000 for the first two months of the next financial period (February 20.25).
8. Ignore Value Added Tax (VAT) for the question.
REQUIRED:
a) The statement of profit or loss for the year ending 28 February 20.24
b) The statement of changes in equity for the year ended 28 February 20.24
c) The statement of financial position as at 28 February 20.24
a) Statement of profit or loss for the year ending 28 February 20.24
Sales: 508 000
Less: Sales Returns: (12 000)
Net Sales: 496 000
Rent Income: 168 000
Interest Income: 18 000
Total Income: 682 000
Purchases: (132 400)
Cleaning materials: (8 000)
Insurance expense: (9 000)
Wages & Salaries: (124 600)
Sundry expenses: (9 000)
Depreciation: (14 400)
Total Expenses: (297 400)
Net Profit: 384 600
b) Statement of changes in equity for the year ended 28 February 20.24
Capital at beginning: 689 000
Add: Net Profit for the year: 384 600
Less: Drawings: (10 000)
Capital at end: 1 063 600
c) Statement of financial position as at 28 February 20.24
Assets:
Land and Buildings: 750 000
Investments: 100 000
Furniture at carrying amount: 83 200 (80 000 + 20% depreciation)
Receivables: 25 000
Bank: 73 000
Cleaning Materials: 3 000 (8 000 - 5 000)
Inventory: 39 000
Total Assets: 1 073 200
Equity and Liabilities:
Capital: 1 063 600
Insurance Expense (Accrued): 1 000
Total Equity: 1 064 600
Rent Income (Received in advance): 24 000
Total Equity and Liabilities: 1 073 200