QUESTION $1$

Lorey One $($Pty$)$ Ltd $(\text{'}$Lorey One'$)$ is a company based in Durban, selling gold plated

jewellery. Lorey One has a financial year$-$end of $30$ April.

You have been provided with the following trial balance for Lorey One $($Pty$)$ Ltd for the

period $1$ May $2023$ up until $31$ March $2024$:The following transactions took place during the month of April $2024$ and have not

been recorded in the books of Lorey One $($Pty$)$ Ltd:

The existing insurance contract came to an end on $31$ March $2024.$ All premiums

have been paid and accounted for up until $31$ March $2024.$ Lorey One started using

a new insurance company from $1$ April $2024,$ when the new contract was signed.

Lorey One had to pay the premiums for the first $6$ months, to the value of R$30000,$

in advance which Lorey One then paid in cash on $1$ April $2024.$

The water and electricity bill for April $2024$ were received on $30$ April $2024.$ The

amount of R$7800$ is still outstanding at the end of the financial year. Lorey One

has an arrangement with the municipality to pay outstanding balances on the $2^{nd}$

of each month.

Salaries and wages to the amount of R$25000$ were paid in cash on $25$ April $2024.$

Jewellery to the amount of R$120000$ were sold during the month of April $2024.$ The

cost price of the jewellery sold was R$75000.$

On $1$ April $2024,75\%$ of trade receivables paid their outstanding debt. Lorey One

decided that the remainder of the debt, all owed by JW Dewling, should be written

off.

The company has a policy to account for depreciation and interest on loans on the

last day of the year. This has not yet been accounted for regarding the current

financial year.

Additional information:

All sales are made in cash, unless otherwise specified.

The vehicle has a useful life of $5$ years.

The loan from ABC Bank was received on $1$ August $2023$ and will be repaid in

annual instalments starting $1$ August $2024.$REQUIRED:

$1\mathrm{.}1$ Prepare the general journal entries to record transactions $1-5$ for Lorey One

$($Pty$)$ Ltd for the financial year ending $30$ April $2024.$

Please note that specific dates and detailed narrations are not necessary.

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Ignore Value Added Tax $($VAT$).$

Please use the following format to present your answer:

$(15$ marks$)$

$1\mathrm{.}2$ Name and describe the accounting principle used to account for transaction $1.$

$(2$ marks$)$

$1\mathrm{.}3$ Prepare the Statement of Profit or Loss and Other Comprehensive Income

for Lorey One $($Pty$)$ Ltd for the financial year ended $30$ April $2024.$

Include all necessary headings and sub$-$headings in your statement.

Ignore taxation.

Provide workings where necessary.

Assume that there were no other transactions for the year.

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