Make use of the information below and draw up the following:

PRE-ADJUSTMENT TRIAL

BALANCE ON 28 FEBRUARY

FOR ABC TRADERS 2019

Ordinary share capital (R1 ea) 280 000

Ordinary share premium 30 000

Retained Income 41 000

Loan from Umgeni Bank (15% p.a.) 27 000

Land and Buildings 360 000

Equipment 50 000

Accumulated depreciation on equipment 20 000

Inventory 82 000

Trade debtors 40 000

Allowance 1 500

Bank 16 300

Cash float 750

Petty cash 250

Trade creditors 12 800

SARS (Income tax) 7 000

Nominal accounts section

Sales 476 000

Sales returns 8 000

Cost of sales 208 000

Salaries and wages 90 000

Directors fees 17 000

Audit fees 4 000

Interest on loan 2 000

Credit losses 1 400

Rent income 9 900

Commission income 7 700

Packing material 2 600

Insurance 400

Sundry expenses 11 200

Dividends on ordinary shares (interim) 5 000

Adjustments to be effected on 28 February 2019

The following was found as per physical count.

1. 1. Trading Stock R80 300

1. 2. Packing Material R700

2. Depreciate equipment at 10% p.a. on the diminishing balance method.

3. Write of further credit losses of R2000.

4. Adjust allowance for credit losses to 5% of trade debtors.

5. Provide for the outstanding interest on loan.

6. Provide rates at 2% on value of land and buildings.

REQUIRED:

1.1. STATEMENT OF FINANCIAL POSITION for ABC Traders 28 Feb 2019 (15)

1.2 Notes to the statement of financial position, specifically the property, plant and equipment note

(15)

QUESTION TWO (30 MARKS)

REQUIRED:

List the different types and formulas for the following ratios:

2.1 Capital Structure (Leverage) Ratios (10)

2.2 Profitability Ratios (10)

2.3 Liquidity Ratios (10)

QUESTION THREE (30 MARKS)

Presented below are the financial statements of SIZANANI LIMITED:

SIZANANI LIMITED

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 28 FEBUARY 2019

R

Revenue from sales 1 040 900

Cost of sales (656 300)

Gross profit 384 600

Operating expenses (193 200)

Finance cost (37 600)

Profit before tax 153 800

Income tax expense (34 200)

Profit for the period 119 600

Other comprehensive income -

Total comprehensive income 119 600

SIZANANI LIMITED

STATEMENT OF FINANCIAL POSITION AT 28 FEBRUARY 2019

R

2011

R

2010

ASSETS

Non-current assets 445 000 412 000

Land & buildings at cost 362 500 300 000

Plant & equipment at cost

Accumulated depreciation on Plant & Equipment

265 500

(183 000)

252 000

(140 000)

Current assets 447 000 361 000

Accounts receivable 100 000 120 000

Inventory 180 000 220 000

Cash & cash equivalents 167 000 20 000

Prepaid expenses 600 1 000

TOTAL ASSETS 892 600 773 000

EQUITY & LIABILITIES

Capital & reserves 450 100 353 000

Share capital 237 500 200 000

Retained earnings 212 600 153 000

Non-current liabilities

Mortgage bond 322 500 280 000

Current liabilities 120 000 140 000

Accounts payable 64 000 97 000

SARS 26 000 18 000

Shareholders for dividends 30 000 25 000

TOTAL EQUITY & LIABILITIES 892 600 773 000

SIZANANI LIMITED

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 28 FEBRUARY 2019

SHARE CAPITAL

R

RETAINED

EARNINGS

R

TOTAL

R

Balance at 1 March 2010 200 000 153 000 353 000

Issue of shares 37 500 - 37 500

Profit for the period - 119 600 119 600

Dividends - (60 000) (60 000)

Balance at 28 February 2019 237 500 212 600 450 100

Additional information:

1. Plant & equipment which cost R 24 000 were sold and accumulated depreciation to the date

of sale amounted to R17 000.

2. An amount of R 20 000 was repaid on the mortgage bond.

3. Included in operating expenses are the following:

Depreciation expense R 60 000

Loss on disposal of plant & equipment R 4 000

Other distribution expenses R 129 200

REQUIRED:

Prepare, using direct method, the statement of cash flows of Sizanani Limited for the financial

year ended 28 February 2019.