AFAC: PARTICIPATION ACTIVITY

A company trading as a retailer has the following information relating to their year- end 30 June 2021.

Extract from the trial balance:

Statement of financial position section

Inventory (30 June 2021) - R120000

Trade receivables- R205000

Allowance for bad debts/credit losses- R8 200

Statement of comprehensive income section

Sales- R910000

Rent paid- R63000

Water and electricity- R34650

Additional information for the year ended 30 June 2021.

1. Included in the sales received of R910000 is an amount of R17000 which was an invoice dated 1 July 2021 for items sold on that date.

2. The business had an existing rental contract since 01 July 2020. The business had paid rent for July and August 2021.

3. The company received a water and electricity bill from the municipality for the month of June. The total amount was R1550.

4. The company had a stocktake at the year end and according to the stocktake report, the stock on hand on 30 June 2021 amounted to R115000.

5. The director went through the list of receivables at year-end and identified debtors with a collective value of R15000 who would not be able to pay as they had gone bankrupt.

6. It is the policy of the business to maintain allowance for bad debts (credit losses) at 4% of debtors.

Required

1. Show the journal year-end adjustments for the information provided. (the general journal format is supplied below)

• Ignore narrations and VAT.

Format of general journal

Number	Details	Folio	Debit	Credit

.