Cost of sales 480 000 Adjustments and additional information 1. According to the physical stocktaking completed on 28 February 2021, the following inventories were on hand: Sales returns 8 000 1.1 Trading inventory, R136 000 Salaries and wages 178 000 12 Stationery, R600 Bad debts 2 000 2. An account received from Airtel Fitters on 28 February 2021 for the installation of an air conditioning unit in one of the vehicles was debited to the motor expenses account in error, R6 000 Stationery 4000 3. No entry has been made for interest at 12% p.a. that was charged for two months on the overdue account of a debtor who owed R6 000 Rent expense 42 880 4 An electronic funds transfer for R1 330 was made to Royal Traders on 28 February 2021 from a debtor, after a settlement discount of 5% was deducted. No entries have been made for this transaction Motor expenses 34 000 5. The provision for bad debts must be decreased to R3 000 Bad debts recovered 2000 6. The telephone account for February 2021 was due to be paid on 02 March 2021, R1 400. Telephone 14 000 7. Rent expense has been paid up to 31 March 2021. Note: The rental was increased by 10% with effect from 01 December 2020. Make the necessary adjustment Electricity and water 24 000 8. Interest on loan for February 2021 has not been paid, 9. Bank charges 6 000 The insurance total includes an annual premium of R4 800 that was paid for the period 01 June 2020 to 31 May 2021 Insurance 12 000 10 Cash deposit fees of R600 that appeared in the February 2021 bank statement were left out in error when the cash journals for February 2021 were prepared and posted. Interest on mortgage loan 26 400 11. Provide for depreciation as follows: 11.1 On equipment at 10% per annum on cost. Commission income 10 000 Note: Equipment that cost R20 000 was purchased on 01 September 2020. The purchase has been recorded 1 811 800 1 811 800 11.2 On vehicles at 20% per annum on the diminishing balance (20 Marks) QUESTION 1 Prepare the Statement of Comprehensive Income of Royal Traders for the year ended 28 February 2021. Accumulated depreciation on vehicles 186 000 Accumulated depreciation on equipment 62 000 INFORMATION Trading inventory 140 000 The trial balance, adjustments and additional information given below were extracted from the accounting records of Royal Traders on 28 February 2021, the end of the financial year. Debtors control 62 000 Provision for bad debts 8 000 ROYAL TRADERS Bank PRE-ADJUSTMENT TRIAL BALANCE AS AT 28 FEBRUARY 2021 42 800 Cash float 1 000 Debit (R) Credit (R) Balance sheet accounts section Capital 301 000 Drawings 134 720 Creditors control 82 800 Vehicles at cost 360 000 Mortgage loan: Leo Bank (18% p.a.) 160 000 Equipment at cost 240 000 Nominal accounts section Sales 1 000 000 Cost of sales 480 000 Adjustments and additional information 1. According to the physical stocktaking completed on 28 February 2021, the following inventories were on hand: Sales returns 8 000 1.1 Trading inventory, R136 000 Salaries and wages 178 000 12 Stationery, R600 Bad debts 2 000 2. An account received from Airtel Fitters on 28 February 2021 for the installation of an air conditioning unit in one of the vehicles was debited to the motor expenses account in error, R6 000 Stationery 4000 3. No entry has been made for interest at 12% p.a. that was charged for two months on the overdue account of a debtor who owed R6 000 Rent expense 42 880 4 An electronic funds transfer for R1 330 was made to Royal Traders on 28 February 2021 from a debtor, after a settlement discount of 5% was deducted. No entries have been made for this transaction Motor expenses 34 000 5. The provision for bad debts must be decreased to R3 000 Bad debts recovered 2000 6. The telephone account for February 2021 was due to be paid on 02 March 2021, R1 400. Telephone 14 000 7. Rent expense has been paid up to 31 March 2021. Note: The rental was increased by 10% with effect from 01 December 2020. Make the necessary adjustment Electricity and water 24 000 8. Interest on loan for February 2021 has not been paid, 9. Bank charges 6 000 The insurance total includes an annual premium of R4 800 that was paid for the period 01 June 2020 to 31 May 2021 Insurance 12 000 10 Cash deposit fees of R600 that appeared in the February 2021 bank statement were left out in error when the cash journals for February 2021 were prepared and posted. Interest on mortgage loan 26 400 11. Provide for depreciation as follows: 11.1 On equipment at 10% per annum on cost. Commission income 10 000 Note: Equipment that cost R20 000 was purchased on 01 September 2020. The purchase has been recorded 1 811 800 1 811 800 11.2 On vehicles at 20% per annum on the diminishing balance (20 Marks) QUESTION 1 Prepare the Statement of Comprehensive Income of Royal Traders for the year ended 28 February 2021. Accumulated depreciation on vehicles 186 000 Accumulated depreciation on equipment 62 000 INFORMATION Trading inventory 140 000 The trial balance, adjustments and additional information given below were extracted from the accounting records of Royal Traders on 28 February 2021, the end of the financial year. Debtors control 62 000 Provision for bad debts 8 000 ROYAL TRADERS Bank PRE-ADJUSTMENT TRIAL BALANCE AS AT 28 FEBRUARY 2021 42 800 Cash float 1 000 Debit (R) Credit (R) Balance sheet accounts section Capital 301 000 Drawings 134 720 Creditors control 82 800 Vehicles at cost 360 000 Mortgage loan: Leo Bank (18% p.a.) 160 000 Equipment at cost 240 000 Nominal accounts section Sales 1 000 000