The trial balance and addtional Information given below were extracted from the accountingrecords of Warrlor Traders as at 28 February 2021, the end of the financal year.Warrlor TradersPre-adjusted trial balance on 28 February 2021Debit (R) Credit (R)162 000CapitalDrawings70 000Vehicles at oost180 000Equipment at cost120 000Accumulated depredation on vehicles90 000Accumulated depredation on equipment38 000Trading Inventory70000Debtors control32 000Provision for bad debts4 000Bank22 000Cash float2000Creditors control40 000Mortgage loan: Aries Bank (16% p.a)80 000Sales485 000Cost of sales240 000Sales retums5 000Salarles and wages84 000Bad debts5 000Consumable stores2000Rent expenseMotor expenses28 00015 000Bad debts recovered2 000Telephone7 000Electricity and water11 000Bank charges3 000Insurance4 000Interest on mortgage loan6 000Commission Income5 000906 000906 000 Adjustments and additional Information:1. According to physical stocktaking done on 28 February 2021, trading Inventory onhand amounted to RE8 D00.2 Consumable stores used during the financial year amounted to R1 800.3. No entry has been made for a commission of 10% eamed bit not recelved on 500Items that were sold for R60 each.4. Recelved a cheque for RE00 from an Insolvent debtor, J Marsh, who was only able topay 30% of her deot. The balance of his account must now be written off.5. The provision for bad debts must be decreased to R1 500.6. The telephone account for February 2021 has not yet been paid, R700.7. The rental agreements signed with the lessor were as follows:• R30 000 for the perlod 01 January 2020 to 31 December 2020• R36 000 for the perlod 01 January 2021 to 31 December 20218. The loan trom Arles Bank was obtalned on 01 September 2020. Provide for theoutstanding Interest.9. The Insurance total indudes an annual premlum of R1 800 that was paid for theperod 01 June 2020 to 31 May 2021.10. The bank statement for February 2021 refected bank charges of R180 that have notyet been recorded.11. The electricty and water account was debited with an amount of R1 000 for personalelectricity account of the proprietor, that was pald with a business cheque12. Provide for depreciation as follows:• On equlpment at 15% per annum on cost• On vehicies at 25% per annum on the diminishing balance method13. An account recelved from Heldi Motors to replace two tyres on the dellvery vehlcle ofthe business R2 000, has not been recorded.Required:Prepare the following for Warrior Traders for the financial year ended 28 February 20213.1The statement of proft or loss and other comprehensive Income; and

Profit and loss Account The purpose of preparing the profit and loss account to know the actual net…

10. The bank statement for February 2021 refected bank charges of R180 that have not yet been recorded. 11. The electriaty and water account was debited with an amount of R1 000 for personal electricity account of the proprietor, that was paid with a business cheque 12. Provide for depreciation as folows: • On equipment at 15% per annum on cost • on vehicies at 25% per annum on the diminishing balanoe method 13. An account recelved from Heidi Motors to replace two tyres on the delivery vehicie of the business R2 000, has not been recorded. Required: Prepare the folowing for Warrior Tradens for the financial year ended 28 February 2021 3.1 The statement of proft or loss and other comprehensive income; and

10. The bank statement for February 2021 refected bank charges of R180 that have not yet been recorded. 11. The electriaty and water account was debited with an amount of R1 000 for personal electricity account of the proprietor, that was paid with a business cheque 12. Provide for depreciation as folows: • On equipment at 15% per annum on cost • on vehicies at 25% per annum on the diminishing balanoe method 13. An account recelved from Heidi Motors to replace two tyres on the delivery vehicie of the business R2 000, has not been recorded. Required: Prepare the folowing for Warrior Tradens for the financial year ended 28 February 2021 3.1 The statement of proft or loss and other comprehensive income; and

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Bad Debts

At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.

Accounts Receivable

The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.

Question

The trial balance and addtional Information given below were extracted from the accounting
records of Warrlor Traders as at 28 February 2021, the end of the financal year.
Warrlor Traders
Pre-adjusted trial balance on 28 February 2021
Debit (R) Credit (R)
162 000
Capital
Drawings
70 000
Vehicles at oost
180 000
Equipment at cost
120 000
Accumulated depredation on vehicles
90 000
Accumulated depredation on equipment
38 000
Trading Inventory
70000
Debtors control
32 000
Provision for bad debts
4 000
Bank
22 000
Cash float
2000
Creditors control
40 000
Mortgage loan: Aries Bank (16% p.a)
80 000
Sales
485 000
Cost of sales
240 000
Sales retums
5 000
Salarles and wages
84 000
Bad debts
5 000
Consumable stores
2000
Rent expense
Motor expenses
28 000
15 000
Bad debts recovered
2 000
Telephone
7 000
Electricity and water
11 000
Bank charges
3 000
Insurance
4 000
Interest on mortgage loan
6 000
Commission Income
5 000
906 000
906 000

Adjustments and additional Information:
1. According to physical stocktaking done on 28 February 2021, trading Inventory on
hand amounted to RE8 D00.
2 Consumable stores used during the financial year amounted to R1 800.
3. No entry has been made for a commission of 10% eamed bit not recelved on 500
Items that were sold for R60 each.
4. Recelved a cheque for RE00 from an Insolvent debtor, J Marsh, who was only able to
pay 30% of her deot. The balance of his account must now be written off.
5. The provision for bad debts must be decreased to R1 500.
6. The telephone account for February 2021 has not yet been paid, R700.
7. The rental agreements signed with the lessor were as follows:
• R30 000 for the perlod 01 January 2020 to 31 December 2020
• R36 000 for the perlod 01 January 2021 to 31 December 2021
8. The loan trom Arles Bank was obtalned on 01 September 2020. Provide for the
outstanding Interest.
9. The Insurance total indudes an annual premlum of R1 800 that was paid for the
perod 01 June 2020 to 31 May 2021.
10. The bank statement for February 2021 refected bank charges of R180 that have not
yet been recorded.
11. The electricty and water account was debited with an amount of R1 000 for personal
electricity account of the proprietor, that was pald with a business cheque
12. Provide for depreciation as follows:
• On equlpment at 15% per annum on cost
• On vehicies at 25% per annum on the diminishing balance method
13. An account recelved from Heldi Motors to replace two tyres on the dellvery vehlcle of
the business R2 000, has not been recorded.
Required:
Prepare the following for Warrior Traders for the financial year ended 28 February 2021
3.1
The statement of proft or loss and other comprehensive Income; and

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