On 1 January 2021, Packers Ltd. acquired 80% shareholding in BottlesRUs (Pty) Ltd (hereafter Bottles). Bottles manufactures plastic bottles in different sizes, ranging from 500 ml bottles to 100 liter containers. They also fill the bottles and containers with water and sell them to the public. On 31 January 2021, Packers purchased bottled water from Bottles at cost price plus 18%. Packers also hold the items in their books as inventory. Bottles is Packers only supplier of bottled water. On 31 January 2022 Packers had R190 500 worth of bottled water on hand. On 31 March 2022, Packers purchased more water bottles for R780 000 (this was the total purchases for the year). Bottles sold this at cost plus 18%. On 31 January 2023 Packers had R103 400 worth of bottle water on hand. On 1 May 2022 Bottles purchased 50 water tanks from Packers. Each water tank was sold for R25 000. Packers realised a total profit of R170 000 form this particular transaction. Bottles uses the tanks to store water before it goes through a purifying process and is classified as property, plant and equipment. Assume tax rate of 27% and ignore any VAT implications.

Depreciation on the water tanks is provided for on the straight line method at 10% per year where necessary.

Assume that SARS accepts the buyers cost price as the new tax cost.

REQUIRED Prepare the journal entries to correctly account for the above transactions in the consolidated group financial statements of Packers (Pty) Ltd on 31 January 2023. (25marks)

Please note

Journal narrations are required.

Round off answers to the nearest rand where necessary.