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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 MARKS 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 March before taking the additional information given below into account: Note R Revenue: Sales Dividend received Rent received Interest on bank overdraft Cost of sales Salaries and wages Operating lease payments: Machinery Depreciation manufacturing plant Bad debts Distribution costs Administrative costs Profit before tax calculated by the junior accountant ADDITIONAL INFORMATION: Clothing, with a cost of R and a selling price of R were donated to the local orphanage. The junior accountant incorrectly included the donation as sales. Z&Y Clothing received dividends were received from their investment of ordinary shares in H&N Ltd total issued number of shares: The shares were purchased on August for R per share. The closing price on March was R 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 R debentures at par in Lili Ltd on April Interest is receivable annually on March and the debentures mature on March The nominal interest is R and the effective interest is R on March Interest on the debentures was not taken into account in the profit before tax calculation. Salaries and wages comprise: R Salaries: Managing director Sales, administrative personnel and managers Managing directors travel allowance Payment to chairman of the board Due to the good profit realised in the current year, the board of directors decided to award all employees not directors a bonus of of their monthly basic salary. One of the administrative personnel started working for the company on October and is entitled to a proportionate share of the bonus allocation.
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