EXERCISE 5.2 The trial balance of Happy Hunting Traders at 31 March 2013 was as follows: Accounts payable Accounts receivable Accumulated depreciation - Furniture & equipment (01.04.2012) Accumulated depreciation - Motor vehicles (01.04.2012) Administrative expenses Allowance for credit losses (01.04.2012) Bad debts expense Bank Capital (01.04.2012) Transport expense Drawings Furniture & equipment, at cost Insurance expense Interest expense 5.2 DR CR R R 41 500 14 000 14 170 30 000 9310 2025 2000 26 530 87 000 400 5 000 77 500 3 660 6 875 Inventory (01.04.2012) 25 000 Inventory loss 1000 15% Loan 50 000 Motor vehicle, at cost 84 000 Profit/loss on disposal of motor vehicles 9 000 Purchases 96 200 Purchases returns 1800 Rent expense 11 120 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: (4) Inventory loss Sales 1.000 1000 An examination of insurance policies showed two policies as follows: POLICY PREMIUM 2 DATE OF INCEPTION April 1, 2010 October 1, 2012 LIFE OF POLICY ANNUAL 3 years 1 year R1440 R2 220 Annual premiums are paid in advance on the anniversary of inception of the policy.