The following information pertains to Wooden House Traders:
WOODEN HOUSE TRADERS
AN EXTRACT FROM THE TRIAL BALANCE AS AT 28 FEBRUARY 20.20
Debit
R
Credit
R
Capital (1/03/20.19)…..…………...…………………………………….......................…………
Drawings……………………………………………………………...….............................…………
Vehicles at cost price.………………………………………………………........................…….
Furniture and fittings at cost..………………………………………………...................……
Fixed deposit: Splinter Bank (1/03/20.19)………………………………...............……..
Inventory (wood) (1/03/20.19)………………………………….................……….…………
Trade receivables control…….................................................………......................…….
Accumulated depreciation: Vehicles (1/03/20.19)…………….........………………..
Accumulated depreciation: Furniture and fittings (1/03/20.19)………………..
Trade payables control.…………………………………………….........................……………
Bank (favourable)………………………………………………….………........................………
Long-term loan………….…………………………………………………........................………
Sales……………………..…………………………………………………..............................………
Sales returns…………………………………………………………………........................…….
Carriage on sales……………………………………………………………......................…….
Settlement discount granted……………………………………………..............………..
Rental expenses……..……………………………………………………......................………
Motor vehicle expenses……………………………………………………................……..
Interest expenses……………………………………………………………....................…….
Franchise fees………………………………………………………….......................………….
Uniforms..……………………………………………………………………........................…….
Water and electricity……………………………………………………….................………
Purchases (wood).…………………………………………………………....................……..
75 000
375 000
45 000
60 000
112 500
150 000
-
-
-
49 500
-
-
17 500
2 000
3 000
180 000
97 500
16 875
138 750
8 250
6 000
727 500
325 000
-
-
-
-
-
-
187 500
22 500
67 500
225 000
1 087 500
-
-
-
-
-
-
-
-
-
Additional information
(a) Interest on the long-term loan, at a rate of 10% per annum, is payable every three months. On 28 February 20.21 an amount of R25 000 is repayable on the loan.
(b) The inventory count revealed that 28 sheets of wood valued at R4 500 each were on hand on 28 February 20.20.
(c) During the year a debtor owing the business R7 500 was declared insolvent and his account was not written off immediately. Later during the current financial year R3 000 was received from the administrator of the debtor’s insolvent estate. It was decided to write off the balance of this debt as irrecoverable. These transactions must still be recorded in the accounting records of Wooden House Traders.
(d) It was decided that an allowance for credit losses to the amount of R1 050 needs to be created.
(e) Provision for depreciation must still be provided for on vehicles at 20% per annum on the diminishing balance method and on furniture and fittings at 10% per annum on the diminishing balance method. No assets were acquired or disposed of during the year.
(f) On 1 October 20.19 the owner deposited R50 000 cash into the bank account of the business. The bookkeeper was not sure of the accounts that will be affected by the transaction and he only recorded it in the bank account.
(g) Money was deposited in a fixed deposit account at Splinter Bank on 31 December 20.18 for only one year. On 31 December 20.19 when the investment matured only R40 000 was invested again for another year. The bookkeeper only made entries in the books of Wooden House Traders for the R40 000 that has been received and invested again. No other entries were made for the other R20 000 that was received but has not been invested again. Interest at a rate of 8% per annum must still be provided for on the fixed deposit.
The amount for Revenue in the statement of profit or loss and other comprehensive income of Wooden House Traders for the year ended 28 February 20.20 will be:
A.
R1 087 500
B.
R1 065 000
C.
R1 073 000
D.
R1 070 000
E.
R1 067 000
