EXERCISE 3.6 3.6 Napoleon Traders bought motor-cars as follows: 1 January 210 6 motor-cars for R10 560 each 1 July 2010 1 motor-car for R14 800 1 October 2010 1 motor-car R15 200 1 April 2011 1 motor-car for R16 400 The firm's financial year-end is 30 June. Depreciation is provided on the motor-cars at the rate of 20% per annum on cost. The following transactions occurred during its financial year ended 30 June 2013. 1 April 2013 Traded the motor-car purchased on 1 October 2010 in for a new vehicle costing R20 000. Napoleon Traders paid an additional R12 000 by cheque to meet the purchase price of the new vehicle. Profits and losses on non-current assets are recognised on the date of disposal. REQUIRED: (a) Calculate the opening balances (at 1 July 2012) of the "Motor vehicles" account and the "Accumulated depreciation: Motor vehicles" account. Show all workings. (b) Calculate the profit or loss on disposal of the motor vehicles on 1 April 2013. Show all workings. EXERCISE 5.2 5.2 The trial balance of Happy Hunting Traders at 31 March 2013 was as follows: DR R 41 500 Accounts payable Accounts receivable 14 000 14 170 Accumulated depreciation - Furniture & equipment (01.04.2012) Accumulated depreciation - Motor vehicles (01.04.2012) 30 000 Administrative expenses 9310 Allowance for credit losses (01.04.2012) 2 025 Bad debts expense 2 000 Bank 26 530 Capital (01.04.2012) 87 000 Transport expense 400 Drawings Furniture & equipment, at cost Insurance expense 5 000 77 500 3660 6 875 25 000 1000 Interest expense Inventory (01.04.2012) Inventory loss 15% Loan 50 000 Motor vehicle, at cost 84 000 9 000 Profit/loss on disposal of motor vehicles Purchases 96 200 Purchases returns 1800 11 120 Rent expense Sales 130 000 Sales returns 2 900 R365 495 R365 495 ADDITIONAL INFORMATION: (1) Rent is R800 per month, payable quarterly in advance on 1 February. 1 May. 1 August and 1 November each year. On 1 August 2012 the rent was increased to R880 per month. (2) The allowance for credit losses at 31 March 2013 is to be equal to R1 400. (3) Inventory which had cost R1 000 was stolen from one of the firm's delivery vehicles. The following entry had been recorded: 1.000 Inventory loss Sales 1000 An examination of insurance policies showed two policies as follows: DATE OF INCEPTION LIFE OF POLICY ANNUAL POLICY PREMIUM 1 April 1, 2010 3 years 1 year R1 440 R2 220 2 October 1, 2012 Annual premiums are paid in advance on the anniversary of inception of the policy. CR R (5) On 30 September 2012 Happy Hunting Traders sold a motor vehicle for R9 000. This motor vehicle was purchased on 31 March 2010 for R20 000. The only entry made by the accountant was: Dr Bank 9 000 CR Profit/loss on disposal of motor vehicles 9 000 No other vehicles were purchased or sold during the current year. Non-current assets are depreciated as follows: Motor vehicles 20% per annum on cost. Furniture and equipment 10% per annum on the reducing balance. The loan bears interest at 15% per annum payable quarterly in arrears on 1 March, 1 June, 1 September and 1 December and is repayable in full on 1 September 2017. All interest payments were made and correctly recorded during the current year. (8) Inventory on hand at 31 March 2013 amounts to R32 000. REQUIRED: (a) Prepare journal entries required in terms of the information included in 1-7. Ignore narrations. (b) Prepare closing journal entries. (c) Prepare the Statement of Financial Position and Notes to the Statement of Financial Position of Happy Hunting Traders at 31 March 2013. (The worksheet is optional, but if used should be handed in as part of your workings.) (6) WORKSHEET Accounts payable Accounts receivable Accumulated depreciation - Furniture and equipment (1/4/2012) Accumulated depreciation - Motor vehicles (1/4/2012) Administrative expenses Allowance for credit losses (1/4/2012) Bad debts expense Bank Capital (1/4/2012) Carriage inwards Carriage outwards Drawings Furniture and equipment, at cost Insurance expense Interest expense Inventory (1/4/2012) Inventory loss 15% Loan Motor vehicles, at cost Profitloss on disposal of motor vehicles Purchases Purchases returns Rent expense Sales Sales retums HAPPY HUNTING TRADERS TRIAL BALANCE 31/3/2013 DR CR 14 000 9310 2 000 26 530 1200 400 5 000 77 500 3660 6 875 25 000 1000 84 000 95 000 11 120 2900 R365 495 41 500 14 170 30 000 2025 87 000 50 000 9 000 1800 130 000 R365 495 ADJUSTMENTS DR CR 5.2 ADJUSTED TRIAL BALANCE DR CR