Adjustments and additional information:

1. It was ascertained that a credit sale of R1 800 (cost R1 200) had been omitted from the records and must now be entered.

2. The owner took some inventory for personal use, R550 and this transaction is still to be recorded.

3. The bank statement for December 20.2 was received after the trial balance had been drawn up.

The following still have to be taken into consideration:

3.1 a debtor paid an amount of R1 500 directly into the firms bank account.

3.2 A cheque of R400 previously received from another debtor has been dishonoured by the bank and must be cancelled. Discount of R20 was allowed to the debtor and this must be cancelled.

3.3 Bank charges amounted to R354 this amount includes R285 interest on overdraft.

4. An amount of R220 is to be written off trade debtors as irrecoverable.

5. Create a provision for bad debts equal to 4%.

6. Stocktaking at 31 December 20.2 revealed the following:

Inventory R72 000

Packing material (consumables stores) R560

7. The amount of commission as shown in the trial balance is for the period 1 July 20.2 to 28 February 20.3.

8. The December salary is owing to an employee who earns an annual salary of R18 000.

9. All the non- current assets were purchased when Nirwana Dealers started trading on 1 January 20.1.

Depreciation is to be written off as follows:

9.1 Vehicles on cost, consistent with the policy in the past.

9.2 Machinery on diminishing balance, consistent with the policy in the past.

10. The mortgage bond was registered on 1 January 20.1 when Niwarna Dealers purchased property, paying a

25% deposit and raising a mortgage bond for the remaining 75% (R90 000) of the value of the property.

Repayments are made off the capital amount of the bond at a rate of R5 000 every six months, commencing 30 June 20.1. Make provision for the full years interest on the bond. The bond rate was increased by 2% to 20% p.a. on 30 September 20.2.

11. The fixed deposit of R3 000 was invested on 1 January 20.2. This amount was increased by R3 000 on 1 July 20.2 and by a further R 3 000 on 1 October 20.2. Adjust for the full interest at 10% p.a. for the year.

12. Municipal rates owing for the year amounted to R4 312.

Exercise 10.15 (a) Prepare the Income statement of Nirwana Dealers at year-end; and (b) The balance sheet at the same date. Nirwana Dealers has been in business for two years since 1 January 20.1. You are presented with their final trial balance at 31 Decernber 20.2, together with additional information Exercise 10.15 (a) Prepare the Income statement of Nirwana Dealers at year-end; and (b) The balance sheet at the same date. Nirwana Dealers has been in business for two years since 1 January 20.1. You are presented with their final trial balance at 31 Decernber 20.2, together with additional information