Prepare the Statement of Comprehensive Income of Royal Traders for the year ended 28 February 2021. (20 Marks) I

INFORMATION The trial balance, adjustments and additional information given below were extracted from the accounting records of Royal Traders on 28 February 2021, the end of the financial year.

ROYAL TRADERS

PRE-ADJUSTMENT TRIAL BALANCE AS AT 28 FEBRUARY 2021

	Debit (R)	Credit (R)
Balance sheet accounts section
Capital		301 000
Drawings	134 720
Vehicles at cost	360 000
Equipment at cost	240 000
Accumulated depreciation on vehicles		186 000
Accumulated depreciation on equipment		62 000
Trading inventory	140 000
Debtors control	62 000
Provision for bad debts		8 000
Bank	42 800
Cash float	1 000
Creditors control		82 800
Mortgage loan: Leo Bank (18% p.a.)		160 000
Nominal accounts section
Sales		1 000 000
Cost of sales	480 000
Sales returns	8 000
Salaries and wages	178 000
Bad debts	2 000
Stationery	4 000
Rent expense	42 880
Motor expenses	34 000
Bad debts recovered		2 000
Telephone	14 000
Electricity and water	24 000
Bank charges	6 000
Insurance	12 000
Interest on mortgage loan	26 400
Commission income		10 000
	1 811 800	1 811 800

Adjustments and additional information

1. According to the physical stocktaking completed on 28 February 2021, the following inventories were on hand:

1.1 Trading inventory, R136 000

1.2 Stationery, R600.

2. An account received from Airtel Fitters on 28 February 2021 for the installation of an air conditioning unit in one of the vehicles was debited to the motor expenses account in error, R6 000.

3. No entry has been made for interest at 12% p.a. that was charged for two months on the overdue account of a debtor who owed R6 000.

4. An electronic funds transfer for R1 330 was made to Royal Traders on 28 February 2021 from a debtor, after a settlement discount of 5% was deducted. No entries have been made for this transaction.

5. The provision for bad debts must be decreased to R3 000.

6. The telephone account for February 2021 was due to be paid on 02 March 2021, R1 400.

7. Rent expense has been paid up to 31 March 2021. Note: The rental was increased by 10% with effect from 01 December 2020. Make the necessary adjustment.

8. Interest on loan for February 2021 has not been paid,

9. The insurance total includes an annual premium of R4 800 that was paid for the period 01 June 2020 to 31 May 2021.

10. Cash deposit fees of R600 that appeared in the February 2021 bank statement were left out in error when the cash journals for February 2021 were prepared and posted.

11. Provide for depreciation as follows:

11.1 On equipment at 10% per annum on cost.

Note: Equipment that cost R20 000 was purchased on 01 September 2020. The purchase has been recorded.

11.2 On vehicles at 20% per annum on the diminishing balance.