QUESTION $2[30$ marks$]$

Tom Johns produces and sells a variety of cakes and snacks. They also offer cake

decorating classes to aspiring bakers. The firm$$s PRE$-$ADJUSTED trial balance as at

$31$ December $2023$ is presented below.

Pre$-$adjusted trial balance of Tom Johns as at $31$ December $2023$

Debit Credit

Capital $(1$ January $2023)138000$

Retained earnings $(1$ January $2023)146820$

Bank loan $(12\%)240000$

Motor vehicles, at cost $($see point $3$ below$)499200$

Accumulated depreciation: Motor vehicles $(1$ January $2023)$

$($see point $3$ below$)$

$192000$

Investment: Fixed deposit account $($see point $1$ below$)90000$

Inventory $(1$ January $2023)474000$

Trade receivables $($see point $4$ below$)219600$

Cash at bank $195840$

Trade payables $267360$

Sales $1195080$

Fees income: Cake decorating $($see point $6$ below$)228000$

Interest income $($see point $1$ below$)5250$

Purchases $351600$

Drawings $73500$

Rent expense $154080$

Water and electricity expense $4200$

Advertising expense $($see point $2$ below$)12960$

Petrol expense $12240$

$6$ HFAC$130-1-$JanJun$2024-$SA$1-$GC$-$V$\mathrm{.}2-25032024$

Salaries and wages $301800$

Telephone expense $($see point $5$ below$)5490$

Interest expense $18000$

$24125102412510$

Assume all the appropriate reversal entries relating to the prior year were

processed correctly on $1$ January $2023.$

On $30$ June $2023,$ a cheque for R$60000$ was issued to repay part of the $12\%$ bank

loan. Interest on the loan is payable half$-$yearly in arrears on the $1$ July and $1$ January.

The bookkeeper correctly recorded the payments made on $1$ January $2023$ and

$30$ June $2023$ but has, however not yet accrued for the interest on the loan that will be

paid on $1$ January $2024.$

The bookkeeper has also not recorded $($or adjusted for$)$ the following items relating to

the financial year ended $31$ December $2023$:

$1.$ The fixed deposit investment was made on $1$ March $2023$ and correctly

recorded. It earns interest at $10\%$ per annum. The interest on the fixed deposit

has not yet been received for the last two months of the financial year.

$2.$ The advertising expenses $($see the pre$-$adjustment trial balance$)$ include an

amount of R$600$ paid for advertising to be done in January $2024.$

$3.$ According to the non$-$current assets register, there is only one delivery vehicle

which is depreciated at $20\%$ per annum using the straight$-$line method of

depreciation. The vehicle was purchased on the $1$st of January $2021$ and has a

residual value of R$19200.$ The bookkeeper has not yet provided for this year$$s

depreciation.

$4.$ The account of BBz Little Cakes, a debtor owing the entity R$2400,$ was

declared insolvent and must be written off as irrecoverable.

$7$ HFAC$130-1-$JanJun$2024-$SA$1-$GC$-$V$\mathrm{.}2-25032024$

$5.$ A telephone bill of R$1800$ relating to the month of December $2023$ was received

on $5$ January $2024$ and no entries had been made for it$.$

$6.$ The fees income of R$228000$ includes an amount of R$6000($received in

December $2023),$ which relates to cake decorating classes to be provided in

January $2024.$

$7.$ The physical count conducted on $31$ December $2023$ revealed that inventory

on hand had a cost of R$125000$ and a net realisable value $($NRV$)$ of R$100000.$

The company makes use of a Trading Account in the General Ledger in order to

calculate the gross profit.

REQUIRED:

Prepare the following accounts in the General Ledger of Tom Johns for the year

ended $31$ December $2023.$ Show all your workings.

$2\mathrm{.}1$ Trading Account $(6$ marks$)$

$2\mathrm{.}2$ Profit and Loss Account