QUESTION 2 [20 MARKS] UPhongolo Limited Trial Balance as at 30 June 2020.

Debit (R) Credit (R)

Balance Sheet Accounts Section

Ordinary share capital 800 000

Retained earnings 864 000

Land and buildings 1 983 200

Vehicles (cost) 160 000

Equipment (cost) 300 000

Accumulated depreciation on vehicles 28 000

Accumulated depreciation on equipment 56 000

Long-term loan: Box Bank (14% p.a.) 528 000

Debentures (13% p.a.) 400 000

Investment in Vac (Pty) Ltd 96 000

Inventory (01 July 2019) 224 000

Debtors control 256 000

Provision for bad debts 5 120

Bank 228 520

Creditors control 108 520

SARS: Company tax 70 000

Nominal accounts Section

Sales 2 110 160

Purchases 916 000

Sales returns 20 000

Purchases returns 24 000

Customs duty 21 600

Carriage on purchases 70 000

Carriage on sales 12 000

Sundry expenses 59 480

Salaries 256 000

Motor expenses 7 200

Interest on loan 73 920

Discount allowed 7 760

Commission income 72 200

Directors fees 120 000

Auditors fee 24 000

Ordinary share dividends (interim) 32 000

Repairs 58 320

4 996 000 4 996 000

Additional information

1. The provision for bad debts must be increased by R3 680.

2. Trading inventory according to stocktaking on 30 June 2020 amounted to R192 000.

3. Capital repayments totalling R48 000 are payable on the unsecured loan from Box Bank in the next financial year.

4. Depreciation must be provided for as follows: a. On vehicles at 20% on cost b. On equipment at 28% on cost

5. A dividend of 20% of the investment value has been declared by Vac (Pty) Ltd. The dividend has not yet been received.

6. The authorised share capital consists of 500 000 ordinary shares.

7. Note: On 01 July 2019, the company increased the ordinary share capital by issuing 100 000 shares at R2 each.

8. A non-distributable asset replacement reserve of R200 000 must be created.

9. Debentures consist of 20 000 13% debentures of R20 each, issued on 01 July 2019 and redeemable on 30 June 2024. The debentures are secured by a first mortgage bond over land. Provision must be made for the current years interest.

10. The company tax for the year amounted to R124 800.

11. The directors declared a final dividend of 16 cents per share.

Required:

2.1 Prepare the Statement of comprehensive income for UPhongolo Ltd. (13 Marks)

2.2 Prepare the Statement of changes in equity for UPhongolo Ltd. (7 Marks)