QUESTION 1(20 MARKS)

P. Gumede is the proprietor of PG Stores.He commenced trading on 01 March 2017.At the end of

the second year of trading, his bookkeeper resigned unexpectedly and Mr Gumede found that the

financial statements for the year ended 28 February 2019 were incomplete.

He requires your assistance in completing them.The pre-adjustment trial balance, adjustments and

additional information that were extracted from the accounting records as at 28 February 2019 are

presented below.

REQUIRED

Complete the financial statements (that appear after the adjustments and additional information)

with the missing amounts and details.The entire statements must be submitted.Where applicable,

show your workings in brackets.

Note:The notes to the financial statements and Statement Of Changes In Equity are not required.

INFORMATION

PG STORES

PRE-ADJUSTMENT TRIAL BALANCE AS AT 28 FEBRUARY 2019

Debit (R) Credit (R) Balance sheet accounts sectionCapital870 700 Drawings 234 000Land and buildings 608 700Vehicles at cost 275 000Equipment at cost 203 000Accumulated depreciation on vehicles94 000 Accumulated depreciation on equipment70 000 Trading inventory 140 000Debtors control 103 000Provision for bad debts5 000 Bank 4 000Cash float 1 500Petty cash 500Creditors control60 000 Loan: Tek Bank (12% p.a.)96 000Nominal accounts sectionSales1 277 000 Cost of sales 700 000Sales returns 15 000Wages 123 000Bank charges 4 000Rent income66 000 Packing materials 37 000Advertising 18 000Rates 7 000Bad debts 2 000Discount allowed 1 000Discount received2 000 Stationery 20 000Interest on loan 10 000Water and electricity 9 000Insurance 16 000Telephone 9 0002 540 700 2 540 700

ADJUSTMENTS AND ADDITIONAL INFORMATION

1. No entry was made for trading inventory that was taken by the proprietor for his personal use,

R2 000.

2. Inventories on 28 February 2019 according to physical stocktaking were as follows:

2.1 Trading inventory R135 000

2.2 Stationery R2 000

3. The telephone account of R1 000 for February 2019 was erroneously paid twice, on 25

February 2019 and 27 February 2019.

4. Rent has been received up to 31 January 2019.

5. A debtor, P. Peter, was declared insolvent.On 28 February 2019, his insolvent estate paid a

first and final dividend of 60 cents in the Rand.An amount of R1 800 was received and

recorded.The balance of his account must now be written off.

6. The provision for bad debts must be increased by R1 000.

7. The insurance total includes an amount of R7 200 that was paid for the period 01 November

2018 to 31 October 2019.

8. Interest on loan for February 2019 has not yet been paid.Interest is not capitalised.

Note:A repayment of R18 000 (excluding interest) is expected to be made in March 2019 to

reduce the loan balance.

9. Depreciation must be brought into account each year as follows:

9.1 On vehicles at 20% per annum using the diminishing balance method.

9.2 On equipment at 15% per annum on cost.Note:Equipment with a cost price of R20 000 was

purchased and recorded on 01 December 2018.

REFER TO THE INCOMPLETE FINANCIAL STATEMENTS THAT FOLLOW AND FILL IN THE MISSING

AMOUNTS AND DETAILS.WHERE APPLICABLE, SHOW YOUR WORKINGS IN BRACKETS.

HIGHLIGHT YOUR ANSWERS FOR THE MISSING AMOUNTS OR SHOW THEM IN BOLD PRINT.

PG STORES

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 28 FEBRUARY 2019

R

Sales ?

Cost of sales (700 000)

Gross profit ?

Other operating income ?

Rent income ?

Discount received 2 000

Gross operating income ?

Operating expenses ?

Wages 123 000

Bank charges 4 000

Packing materials 37 000

Advertising 18 000

Rates 7 000

Bad debts ?

Discount allowed 1 000

Stationery ?

Water and electricity 9 000

Insurance ?

Telephone ?

?

?

?

?

Operating profit ?

Interest income 0

Interest expense ?

Net profit for the year ?

PG STORES

STATEMENT OF FINANCIAL POSITION AS AT 28 FEBRUARY 2019

ASSETS R

Non-current assets ?

Property, plant and equipment ?

Current assets ?

Inventories ?

Trade and other receivables ?

Trade debtors ?

Provision for bad debts ?

Prepaid expenses ?

Accrued income ?

Cash and cash equivalents 6 000

Bank 4 000

Cash float 1 500

Petty cash 500

Total assets ?

EQUITY AND LIABILITIES

Equity

Capital ?

Non-current liabilities ?

Loan: Tek Bank ?

Current liabilities ?

Trade and other payables ?

Creditors control 60 000

Income received in advance ?

Accrued expenses ?

?

Total equity and liabilities ?