P. Gumede is the proprietor of PG Stores. He commenced trading on 01 March 2017. At the end of the second year of trading, his bookkeeper resigned unexpectedly and Mr Gumede found that the financial statements for the year ended 28 February 2019 were incomplete. He requires your assistance in completing them. The pre-adjustment trial balance, adjustments and additional information that were extracted from the accounting records as at 28 February 2019 are presented below. REQUIRED Complete the financial statements (that appear after the adjustments and additional information) with the missing amounts and details. The entire statements must be submitted. Where applicable, show your workings in brackets. Note: The notes to the financial statements and Statement Of Changes In Equity are not required. ADJUSTMENTS AND ADDITIONAL INFORMATION
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
P. Gumede is the proprietor of PG Stores. He commenced trading on 01 March 2017. At the end of the second year of trading, his bookkeeper resigned unexpectedly and Mr Gumede found that the financial statements for the year ended 28 February 2019 were incomplete.
He requires your assistance in completing them. The pre-adjustment
REQUIRED
Complete the financial statements (that appear after the adjustments and additional information) with the missing amounts and details. The entire statements must be submitted. Where applicable, show your workings in brackets.
Note: The notes to the financial statements and Statement Of Changes In Equity are not required.
ADJUSTMENTS AND ADDITIONAL INFORMATION
1. No entry was made for trading inventory that was taken by the proprietor for his personal use, R2 000.
2. Inventories on 28 February 2019 according to physical stocktaking were as follows:
2.1 Trading inventory R135 000
2.2 Stationery R2 000
3. The telephone account of R1 000 for February 2019 was erroneously paid twice, on 25
February 2019 and 27 February 2019.
4. Rent has been received up to 31 January 2019.
5. A debtor, P. Peter, was declared insolvent. On 28 February 2019, his insolvent estate paid a first and final dividend of 60 cents in the Rand. An amount of R1 800 was received and recorded. The balance of his account must now be written off.
6. The provision for
7. The insurance total includes an amount of R7 200 that was paid for the period 01 November 2018 to 31 October 2019.
8. Interest on loan for February 2019 has not yet been paid. Interest is not capitalised.
Note: A repayment of R18 000 (excluding interest) is expected to be made in March 2019 to reduce the loan balance.
9.
9.1 On vehicles at 20% per annum using the diminishing balance method.
9.2 On equipment at 15% per annum on cost. Note: Equipment with a cost price of R20 000 was purchased and recorded on 01 December 2018.
REFER TO THE INCOMPLETE FINANCIAL STATEMENTS THAT FOLLOW AND FILL IN THE MISSING AMOUNTS AND DETAILS. WHERE APPLICABLE, SHOW YOUR WORKINGS IN BRACKETS.
HIGHLIGHT YOUR ANSWERS FOR THE MISSING AMOUNTS OR SHOW THEM IN BOLD PRINT.
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