Use the Information provided below to prepare the statement of comprehensive income for the year ended 28 February 2022. The trial balance attached was extracted from the accounting records of whetstone stores on 28 February 2022 the end of the financial year. Adjustments and additional information: 1. According to stocktaking done on 28 February 2022, the following were on hand 1.1 Trading inventory R240 000 1.2 Stationery R6 000 2 . A debtor who was declared insolvent paid R4 200, which represented 60% of the amount owed, to Whetstone Stores. The amount that was received has been recorded but the rest of his account must now be written off. 3. The provision for bad debts must be adjusted to R20,000 4. Interest is outstanding on the investment, which was made on 01 February 2021. The maturity date is 31 July 2022. 5. The long-term loan from Med Bank was obtained on 01 March 2021. A repayment of R100 000 was made and recorded on 31 August 2021 Provide for the outstanding interest. Interest is not capitalised 6. An account for R2000 to replace broken window panes has been received. This has not been recorded and payment was due to be made during March 2022. 7. The advertising amount includes a contract for R30 000, in respect of monthly advertisements of equal value, that was taken for the period 01 December 2021 to 31 May 2022 8. Rent has been received for the penod 01 March 2021 to 31 March 2022 Note: Rent was increased by 10% with effect from 01 September 2021. 9. The telephone account for February 2022 was due to be paid on 02 March 2022, R10 000 10. Provide for depreciation as follows 10.1 On vehicles at 20% p.a. on the diminishing balance 10.2 On equipment at 10% p.a. on cost
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Use the Information provided below to prepare the statement of comprehensive income for the year ended 28 February 2022.
The
Adjustments and additional information:
1. According to stocktaking done on 28 February 2022, the following were on hand
1.1 Trading inventory R240 000
1.2 Stationery R6 000
2 . A debtor who was declared insolvent paid R4 200, which represented 60% of the amount owed, to Whetstone Stores. The amount that was received has been recorded but the rest of his account must now be written off.
3. The provision for
4. Interest is outstanding on the investment, which was made on 01 February 2021. The maturity date is 31 July 2022.
5. The long-term loan from Med Bank was obtained on 01 March 2021. A repayment of R100 000 was made and recorded on 31 August 2021 Provide for the outstanding interest. Interest is not capitalised
6. An account for R2000 to replace broken window panes has been received. This has not been recorded and payment was due to be made during March 2022.
7. The advertising amount includes a contract for R30 000, in respect of monthly advertisements of equal value, that was taken for the period 01 December 2021 to 31 May 2022
8. Rent has been received for the penod 01 March 2021 to 31 March 2022 Note: Rent was increased by 10% with effect from 01 September 2021.
9. The telephone account for February 2022 was due to be paid on 02 March 2022, R10 000
10. Provide for
10.1 On vehicles at 20% p.a. on the diminishing balance
10.2 On equipment at 10% p.a. on cost
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