QUESTION 2 (20 MARKS) The trial balance and additional information given below were obtained from the records of Phewa Traders on 29 February 2016, the end of the financial year. REQUIRED Use the trial balance, adjustments and additional information to prepare the Statement of Comprehensive Income for the year ended 29 February 2016. Use the following format: Statement of Comprehensive Income format Sales Cost of sales Gross profit Other operating income Gross operating income Operating expenses Operating profit Interest income Interest expense Net profit for the year 4 && PHEWA TRADERS PRE-ADJUSTMENT TRIAL BALANCE AS AT 29 FEBRUARY 2016 Debit (R) Credit (R) Balance sheet accounts section Capital 290 854 Drawings 82 182 Land and buildings 190 000 Vehicles at cost 91 000 Equipment at cost 67 000 Accumulated depreciation on vehicles 31 000 Accumulated depreciation on equipment 23 800 Trading inventory 46 000 Debtors control 34 000 Provision for bad debts 1 900 Bank 2 230 Cash float 500 Petty cash 100 Creditors control 30 428 Loan: Met Bank (15%) 21 600 Nominal accounts section Sales 421 000 Cost of sales 233 000 Sales returns 5 000 Wages 41 000 Bank charges 2 300 Rent income 26 000 Packing materials 12 000 Advertising 6 000 Rates 2 600 Bad debts 900 Discount allowed 500 Discount received 700 Stationery 9 000 Interest on loan 2 970 Water and electricity 7 000 Insurance 5 000 Telephone 7 000 847 282 847 282 5 && Adjustments and additional information 1. A physical count revealed the following inventories on hand on 29 February 2016: Trading inventory Packing materials R44 000 R2 000 2. Received an account from Super Wheel Centre for replacing the tyres on the motor vehicle, R4 000. No entry has been made for this. 3. The account of debtor, L.K. Paton, who owed R1 000 must be written off as irrecoverable. 4. A debtor whose account of R2 400 was overdue for one month must be charged interest at a rate of 12% per annum. 5. The provision for bad debts must be reduced to R1 700. 6. The interest on loan for February 2016 has not yet been paid. 7. The telephone account for February 2016 will only be paid on 03 March 2016, R800. 8. The insurance account includes the annual building insurance premium that was paid for the period 01 September 2015 to 31 August 2016, R1 800. 9. The bookkeeper did not record an amount of R100 that was reflected on the March bank statement for service fees. 10 Rent has been received in advance for one month. 11. Provide for depreciation as follows: 11.1 On equipment at 10% per annum on cost. Note: Equipment with a cost price of R20 000 was purchased on 01 June 2015. The purchase has been recorded. 11.2 On vehicles at 20% per annum on the diminishing balance.