Question 2 (40 marks 60 MINUTES) DFIDO Limited is a company involved in retailing of special event promotional materials. An extract from the trial balance of DFIDO Limited on 30 June 2019: Ordinary share capital (510 000 shares issued for R1 12% non-redeemable preference share capital [200000 shares issued at R0,50 each] 15% Debentures Retained earnings Land and buildings: carrying amount Plant and equipment: Carrying amount Merchandise inventory Rent receivable Inventory in transit R510 000 100 000 100 000 16 485 420 000 110 500 90 450 500 8 300 A summary of the company's receipts and payments for the year ended 30 June 2020 is provided below: Receipts Sales Rent 15% Debentures R785 000 5 000 50.000 Payments: Accounts payable General administration expenses 340 000 26 115 Auditors' and directors' remuneration Debenture interest Donations to hands of compassion fund Insurance Repairs to buildings Extensions to buildings Current company tax The following additional information is available: 1. All sales are made on cash only. 180 000 7 500 1555 6 000 15 000 125 000 37 424 II. The land and buildings cost R520 000 were acquired on 1 July 2014.The land cost R120 000 and the building (an office building cost R400 000). The extensions to the building were completed on 30 June 2020. A section of the office building had be sublet at R500 per month until 31 March 2020. Land is not depreciated. The office building is depreciated at 5% per annum on cost with nil residual value. III. The plant and equipment originally cost R138 125. Plant and equipment is depreciated at 20% per annum on the reducing balance basis. IV. > V. The debentures were issued on 2 January 2020. All debentures have been issued at par value and are secured on land and buildings. All payments in respect of accounts payable are for goods for resale. All amounts owing to suppliers are settled by the end of the month in which the purchases are made.