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QUESTION 2 ( 3 0 MARKS ) ( 4 5 MINUTES ) Z&Y Clothing Ltd manufactures and sells clothing s in Industria, Gauteng. The following

QUESTION 2(30 MARKS)(45 MINUTES) Z&Y Clothing Ltd manufactures and sells clothings in Industria, Gauteng. The following balances were extracted from the trial balance of Z&Y Clothing Ltd for the reporting period ended 31 March 2023 before taking the additional information given below into account: Note R Revenue: Sales 14435550 Dividend received 267500 Rent received 66000 Interest on bank overdraft 28400 Cost of sales 3046644 Salaries and wages 3772000 Operating lease payments: Machinery 463000 Depreciation - manufacturing plant 5145000 Bad debts 648435 Distribution costs 278500 Administrative costs 393850 Profit before tax (calculated by the junior accountant)335240 ADDITIONAL INFORMATION: 1. Clothing, with a cost of R12355 and a selling price of R17915, were donated to the local orphanage. The junior accountant incorrectly included the donation as sales. 2. Z&Y Clothing received dividends were received from their investment of 22500 ordinary shares in H&N Ltd (total issued number of shares: 150000). The shares were purchased on 11 August 2022 for R27 per share. The closing price on 31 March 2023 was R32 per share. The investment were purchased with the intention of not being held for trading. The fair value adjustment has not yet been accounted for. The entity purchased R10000012% debentures at par in Lili Ltd on 1 April 2022. Interest is receivable annually on 31 March and the debentures mature on 31 March 2025. The nominal interest is R12000 and the effective interest is R10895 on 31 March 2023. Interest on the debentures was not taken into account in the profit before tax calculation. 3. Salaries and wages comprise: R Salaries: Managing director 185000 Sales, administrative personnel and managers 548000 Managing directors travel allowance 24000 Payment to chairman of the board 15000772000 Due to the good profit realised in the current year, the board of directors decided to award all employees (not directors) a bonus of 115% of their monthly basic salary. One of the administrative personnel started working for the company on 1 October 2022, and is entitled to a proportionate share of the bonus allocation.

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