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Gobabis Trading is a company that sells various consumer goods. The companys financial year ends at 31 December of each year. The following information relates

Gobabis Trading is a company that sells various consumer goods. The company’s financial year ends at 31 December of each year. The following information relates to the 2020 financial year.

Gobabis Trading Trial balance as at 31 December 2020

N$000

N$000

Revenue

59 200

Purchases

33 120

Inventory 1 January 2020

5 560

Distribution costs

4 320

Administration costs

5 840

Land at valuation (note (iv))

42 000

Property at cost (note (iii))

32 000

Property accumulated depreciation as at 1 January 2020

8 520

Plant and equipment at cost (note (iii))

51 200

Plant and equipment accumulated depreciation as at 01/01/2020

9 920

Trade receivables

16 480

Trade payables

8 960

Bank

640

Ordinary issued shares

72 000

Revaluation reserve as at 1 January 2020

12 000

Retained earnings as at 1 January 2020

12 560

8% loan redeemable 2030 (note (ii))

8 000

191 160

191 160

Note that figures in the above table are in N$000s - thousands)

Additional notes:

i) Inventory as at 31 December 2020 amounted to N$6 240 000 at cost. A review of inventory revealed the following:

a) Items costing N$320 000 that had been included in the inventory at 31 December 2020 were found to have deteriorated. Their normal selling price was N$480 000, but now be sold for N$280 000. Inventory is valued at the lower of cost price or market value.

b) Items sold on a sale or return basis had been omitted from the inventory as at 31 December 2020 and included in sales in December 2020. The cost of these items was N$64 000 and their sale price was N$96 000. All these items were returned in good condition to Gobabis Trading in January 2021.

ii) The interest on the loan has not been paid for the year ended 31 December 2020 and must be accrued.

iii) Depreciation is to be calculated for the year ended 31 December 2020 as follows:

a) Property 2% per annum on cost

b) Plant and equipment 15% per annum on cost

c) Depreciation calculated for the year is to be charged 80% cost of sales, 10% distribution costs and 10% administration costs.

iv) Land is to be revalued to N$48 000 000 as at 31 December 2020.

v) Tax for the year ended 31 December 2020 is chargeable at 25% of profits for the year before receiving or paying dividends.

vi) Adjustments for accruals and prepayments are required as follows:

Accruals

Prepayments

N$

N$

Distribution costs

76 000

48 000

Administration costs

28 000

24 000

Required

Prepare the Statement of profit or loss, Statement of changes in equity for the year ended 31 December 2020 and the Statement of financial position as at that date for Gobabis Trading.


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