Financial Reporting and Analysis

QUESTION 1

P. Gumede is the proprietor of PG Stores. He commenced trading on 01 March 2017. At the end of the second year of trading, his bookkeeper resigned unexpectedly and Mr Gumede found that the financial statements for the year ended 28 February 2019 were incomplete. He requires your assistance in completing them. The pre-adjustment trial balance, adjustments and additional information that were extracted from the accounting records as at 28 February 2019 are presented below:

REQUIRED

Complete the financial statements (that appear after the adjustments and additional information) with the missing amounts and details. The entire statements must be submitted. Where applicable, show your workings in brackets. Note: The notes to the financial statements and Statement Of Changes In Equity are not required

INFORMATION

PG STORES

PRE-ADJUSTMENT TRIAL BALANCE AS AT 28 FEBRUARY 2019

Debit (R) Credit (R) Balance sheet accounts section Capital 870 700 Drawings 234 000 Land and buildings 608 700 Vehicles at cost 275 000 Equipment at cost 203 000 Accumulated depreciation on vehicles 94 000 Accumulated depreciation on equipment 70 000 Trading inventory 140 000 Debtors control 103 000 Provision for bad debts 5 000 Bank 4 000 Cash float 1 500 Petty cash 500 Creditors control 60 000 Loan: Tek Bank (12% p.a.) 96 000 Nominal accounts section Sales 1 277 000 Cost of sales 700 000 Sales returns 15 000 Wages 123 000 Bank charges 4 000 Rent income 66 000 Packing materials 37 000 Advertising 18 000 Rates 7 000 Bad debts 2 000 Discount allowed 1 000 Discount received 2 000 Stationery 20 000 Interest on loan 10 000 Water and electricity 9 000 Insurance 16 000 Telephone 9 000 2 540 700 2 540 700PG STORES STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 28 FEBRUARY 2019 R Sales ? Cost of sales (700 000) Gross profit Other operating income Rent income 2 Discount received 2 000 Gross operating income Operating expenses 2 Wages 123 000 Bank charges 4 000 Packing materials 37 000 Advertising 18 000 Rates 7 000 Bad debts Discount allowed 1 000 Stationery 2 Water and electricity 9 000 Insurance Telephone Operating profit Interest income Interest expense Net profit for the yearPG STORES STATEMENT OF FINANCIAL POSITION AS AT 28 FEBRUARY 2019 ASSETS R Non-current assets Property, plant and equipment Current assets Inventories Trade and other receivables Trade debtors Provision for bad debts Prepaid expenses ? Accrued income 2 Cash and cash equivalents 6 000 Bank 4 000 Cash float 1 500 Petty cash 500 Total assets EQUITY AND LIABILITIES Equity Capital Non-current liabilities Loan: Tek Bank Current liabilities Trade and other payables Creditors control 60 000 Income received in advance Accrued expenses Total equity and liabilities