QUESTION THREE [25]Pat Mendi owns Mobi Electronics which carry’s out repairs to all types of electronic devices and equipment. Pat provided the following list of selected account balances extracted from the pre-adjustment trial balance at 28 February 2021, the end of the current financial year:Selected accounts from the pre-adjustment trial balance at 28 February 2021.DebitRCreditR15% long term loan from Oval bankVehicles at costEquipmentAccumulated depreciation: equipment Services renderedConsumable material usedRent income – Shane Scott- George BambySettlement discounts grantedCredit lossesVehicle expensesInterest on Loan 276 000 140 000 251 357 3 310 2 350 14 160 8 250 60 000 97 200 745 200 144 000 141 900Additional information:1. Pat sub-let part of his premises which was rented out to the following two tenants:1.1 Tenant: Shane Scott: His tenancy agreement confirms that Shane took occupation of the premises on 1 June 2020. There was no provision for increase in rent until 1 June 2021. Shane has already paid his rent for the period 1 June 2020 to 31 May 2021.1.2 Tenant: George Bamby: His tenancy agreement confirms that he took occupation on1 March 2020. There was no provision for an increase in rent until 1 March 2021. George has paid his rent until 31 January 2021.2. A debtor owing R1 500 was declared insolvent. R900 was received and deposited but not recorded. The unpaid balance of the debtors account is considered to be irrecoverable and must be written off as a credit loss. 3. Repairs to Pats personal car to the value of R2 500 was erroneously debited to the Vehicle expenses account. A correction needs to be recorded.4. The interest on the loan from Oval Bank is still outstanding for February 2021. The loan was taken out on 1 April 2020 and is due to be paid on 31 March 2025.5. Depreciation on Vehicles must be provided at 20% per year on the diminishing balance method. No vehicles were bought or sold during the current year.6. All the equipment in use currently was bought on 1 March 2020. The estimated residual value of the equipment is R20 000. The equipment must be depreciated over the estimated useful life of 8 years using the fixed instalment method.7. On 10 January 2021, a customer was charged R600 for the repair of her cell phone. Pat gave her a cash discount of R100 and the customer paid an amount of R500. This transaction was erroneously recorded as follows and included in the above list of accounts:DR Bank R500DR Settlement discount granted R100 CR Other expenses R600 _____________________________Required:Prepare the following for Mobi Electronics for the year ended 21 February 2021:3.1 General journal entries to record the adjustments for additional informationNumber 1 to 7. Include a brief narration. (15)3.2 The statement of profit or loss and other comprehensive income for the year ended 28 February 2021. (10)
QUESTION THREE [25]
Pat Mendi owns Mobi Electronics which carry’s out repairs to all types of electronic
devices and equipment. Pat provided the following list of selected account balances
extracted from the pre-adjustment
current financial year:
Selected accounts from the pre-adjustment trial
balance at 28 February 2021.
Debit
R
Credit
R
15% long term loan from Oval bank
Vehicles at cost
Equipment
Accumulated
Services rendered
Consumable material used
Rent income – Shane Scott
- George Bamby
Settlement discounts granted
Credit losses
Vehicle expenses
Interest on Loan
276 000
140 000
251 357
3 310
2 350
14 160
8 250
60 000
97 200
745 200
144 000
141 900
Additional information:
1. Pat sub-let part of his premises which was rented out to the following two tenants:
1.1 Tenant: Shane Scott: His tenancy agreement confirms that Shane took
occupation of the premises on 1 June 2020. There was no provision for
increase in rent until 1 June 2021. Shane has already paid his rent for the
period 1 June 2020 to 31 May 2021.
1.2 Tenant: George Bamby: His tenancy agreement confirms that he took
occupation on1 March 2020. There was no provision for an increase in rent
until 1 March 2021. George has paid his rent until 31 January 2021.
2. A debtor owing R1 500 was declared insolvent. R900 was received and
deposited but not recorded. The unpaid balance of the debtors account is
considered to be irrecoverable and must be written off as a credit loss.
3. Repairs to Pats personal car to the value of R2 500 was erroneously debited to
the Vehicle expenses account. A correction needs to be recorded.
4. The interest on the loan from Oval Bank is still outstanding for February 2021.
The loan was taken out on 1 April 2020 and is due to be paid on 31 March 2025.
5. Depreciation on Vehicles must be provided at 20% per year on the diminishing
balance method. No vehicles were bought or sold during the current year.
6. All the equipment in use currently was bought on 1 March 2020. The estimated
residual value of the equipment is R20 000. The equipment must be depreciated
over the estimated useful life of 8 years using the fixed instalment method.
7. On 10 January 2021, a customer was charged R600 for the repair of her cell
phone. Pat gave her a cash discount of R100 and the customer paid an amount
of R500. This transaction was erroneously recorded as follows and included in
the above list of accounts:
DR Bank R500
DR Settlement discount granted R100
CR Other expenses R600
_____________________________
Required:
Prepare the following for Mobi Electronics for the year ended 21 February 2021:
3.1 General
Number 1 to 7. Include a brief narration. (15)
3.2 The statement of profit or loss and other comprehensive income for the year
ended 28 February 2021. (10)
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