Adjustments and additional information 1.Trading goods, cost R1 000, were donated to a school on 27 February 2021. This transaction has not yet been recorded. 2.A physical stocktaking on 28 February 2021 showed the following inventories on hand: 1.Trading inventory R148 000 2. Stationery R4 000 1. Write off the account of debtor, R. Brown, R2 000. 2. The provision for bad debts must be decreased to R9 000. 3. Rent income amounts to R13 200 per month. Make the necessary adjustment. 4. The water and electricity account for February 2021, R7 000, was due to be paid on 3 March 2021. 5. Rates and taxes include an amount of R15 000 that was paid for the period 1 January 2021 to 3 March 2021. 6. An amount of R500 appeared in the February 2021 bank statement for bank charges. This amount was not recorded. 7. The investment in fixed deposit was made on 1 March 2019. Provide for the outstanding interest. 8. Provide for the outstanding interest on loan, R3 700. 9. A payment of R3 000 for insurance was erroneously debited to the advertising account. 10.Provide depreciation as follows: 1.On equipment at 10%, using the fixed instalment method. 2.On vehicles at 20%, using the diminishing balance method.
Adjustments and additional information 1.Trading goods, cost R1 000, were donated to a school on 27 February 2021. This transaction has not yet been recorded. 2.A physical stocktaking on 28 February 2021 showed the following inventories on hand: 1.Trading inventory R148 000 2. Stationery R4 000 1. Write off the account of debtor, R. Brown, R2 000. 2. The provision for bad debts must be decreased to R9 000. 3. Rent income amounts to R13 200 per month. Make the necessary adjustment. 4. The water and electricity account for February 2021, R7 000, was due to be paid on 3 March 2021. 5. Rates and taxes include an amount of R15 000 that was paid for the period 1 January 2021 to 3 March 2021. 6. An amount of R500 appeared in the February 2021 bank statement for bank charges. This amount was not recorded. 7. The investment in fixed deposit was made on 1 March 2019. Provide for the outstanding interest. 8. Provide for the outstanding interest on loan, R3 700. 9. A payment of R3 000 for insurance was erroneously debited to the advertising account. 10.Provide depreciation as follows: 1.On equipment at 10%, using the fixed instalment method. 2.On vehicles at 20%, using the diminishing balance method.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
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
100%
Adjustments and additional information
1.Trading goods, cost R1 000, were donated to a school on 27 February 2021. This transaction has
not yet been recorded.
2.A physical stocktaking on 28 February 2021 showed the following inventories on hand:
1.Trading inventory R148 000
2. Stationery R4 000
1. Write off the account of debtor, R. Brown, R2 000.
2. The provision for bad debts must be decreased to R9 000.
3. Rent income amounts to R13 200 per month. Make the necessary adjustment.
4. The water and electricity account for February 2021, R7 000, was due to be paid on 3 March 2021.
5. Rates and taxes include an amount of R15 000 that was paid for the period 1 January 2021 to 3
March 2021.
6. An amount of R500 appeared in the February 2021 bank statement for bank charges. This amount
was not recorded.
7. The investment in fixed deposit was made on 1 March 2019. Provide for the outstanding interest.
8. Provide for the outstanding interest on loan, R3 700.
9. A payment of R3 000 for insurance was erroneously debited to the advertising account.
10.Provide depreciation as follows:
1.On equipment at 10%, using the fixed instalment method.
2.On vehicles at 20%, using the diminishing balance method.
Transcribed Image Text:Mortgage loan: Bob-bank (18% p.a.)
330 000
Nominal Accounts Section
Sales
2 075 000
Cost of sales
795 000
Sales returns
15 000
Salaries and wages
586 000
Bad debts
18 000
Stationary
30 000
Rates and taxes
58 000
Motor expenses
32 000
Advertising
23 000
Telephone
44 000
Electricity and water
66 000
Bank charges
8 000
Insurance
5 000
Interest on mortgage loan
26 000
Interest on fixed deposit
15 000
Transcribed Image Text:Question 2
Prepare the Statement of Comprehensive Income as at 28 February 2021.
Embassy Traders
Pre-adjustment Trial Balance as at: 28 February 2021
Debit
Credit
Balance Sheet Accounts Section
Capital
1 651 100
Drawings
132 900
Land and buildings
1 254 800
Vehicles at cost
925 000
Equipment
662 000
Accumulated depreciation on vehicles
528 000
Accumulated depreciation on equipment
369 000
Fixed deposit: Bob-bank (9% p.a.)
200 000
Trading inventory
152 000
Debtors control
174 800
Provision for bad debts
10 000
Bank
127 800
Creditors control
184 800
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