ANNEXURE I: FORMATIVE ASSESSMENT 2 93 HFAC231-1-Jan-June2023-FA2-TD-V2-15122022 QUESTION 2 (27 marks) Timely (Pty) Ltd is a sports watch manufacturer and distributor. Timely (Pty) Ltd distributes new sports watches as well as second-hand sports watches that customers trade in for later versions. The company has a 30 June year-end. Below is an extract from the trial balance of Timely (Pty) Ltd for the 30 June 2023 yearend which the entity is in the process of finalising. R Sales 5 725 000 Purchases raw materials (components) 875 000 Purchases second-hand watches 277 347 Labour costs hourly paid employees Factory staff 210 000 Administration and selling staff 180 000 Salaries and commissions Factory staff 110 000 Administrative and sales staff 240 000 Depreciation plant and machinery 40 000 Depreciation office equipment 5 655 Interest paid 9 817 Interest received 10 487 Dividends received 5 000 Other expenses 87 900 Retained earnings as at 1 July 2022 230 000 Normal capacity at the factory of Timely (Pty) Ltd is 12 000 sports watches per year. Recent power outages have negatively affected the production at Timely (Pty) Ltds factory, reducing the actual production for the year to 85% of normal production levels.