QUESTION 3 FINANCIAL STATEMENT (20 Marks)

Use the information from the Pre-adjustment Trial Balance and the additional information provided to prepare the

Statement of Comprehensive Income of TOYO LTD for the year ended 28 February 2018. Use this format.

TOYO LTD.

Statement of..............

Sales ?

Less : Cost of sales ?

Gross Profit ?

Add : Operating Incomes ?

Gross Incomes

Less : Operating Expenses

Operating profit before interest

Add : Interest Incomes

Less : Interest Expenses

Net Profit before tax

Less Company tax

Profit after Tax

TOYO LTD.

PRE-ADJUSTMENT TRIAL BALANCE AS AT 28 FEBRUARY 2018.

Financial Position section DEBITSCREDITS

Ordinary Share Capital 1 800 000

Retained Income 625 000

Premises 980 000

Equipment 270 000

Accumulated Depreciation : Equipment 97 200

Vehicles 450 000

Accumulated Depreciation : Vehicles 219 600

Share Investment : Street Ltd 500 000

Trading Inventory 800 000

Debtors Control 120 000

Provision for bad debts 7 000

Bank 860 000

Cash Float 4 000

Petty Cash 2 000

Creditors Control 98 000

Loan : WB [ 16% p.a. ] 200 000

Pension fund 21 000

Medical Fund 16 000

SARS : Income tax 90 000

Nominal section

Sales 4 906 000

Cost of sales 2 100 000

Sales returns 20 000

Fee Income 92 300

Rent Income 98 900

Salaries and wages 860 000

Water and electricity 36 000

Telephone 24 000

Insurance 42 000

Contributions for pension and medical aid 110 000

Advertising 58 000

Bad debts 5 000

Bad debts recovered 3 000

Bank charges 8 000

Rates 25 000

Consumables 18 000

Directors fees 750 000

Audit Fees 80 000

Loss on sale of asset 2 000

Depreciation [ on vehicle sold ] 22 000

Dividends on Share Investment 76 000

Interest on loan 24 000

8 260 000 8 260 000

Adjustments and additional information.

1. Write off a debtor's account of R800 as irrecoverable.

2. Adjust the provision for bad debts to R5 600.

3. Rent for February 2018 has not yet been paid by the tenant.

NB : The monthly rent had been increased by 10% with effect from

01 September 2017.

4. The February 2018 bank statement received reflected the following :

service fees, R870

Cash deposit fees, R220

Credit card levies, R210

5. An employee who has returned from her maternity leave was inadvertently

not paid her February 2018 salary of R 18 000.

6. Provide for depreciation as follows :

• On vehicles at 20% p.a. on the diminishing balance method.
• NB: the vehicle sold during the year was properly recorded in the
• books of account
• On equipment at 12% p.a. on cost
• NB : Equipment costing R40 000 was purchased on
• 01 December 2017 and was properly recorded.

7. The February 2018 Water and Electricity account of R4 600 is outstanding.

8. The annual rates notification statement reflected the outstanding annual rates of R23 000.

9. Building maintenance payment of R50 000 was erroneously debited to the premises account.

10. Physical stocktaking on 28 February 2018 indicated the following were on hand : Trading Inventory, R780 000

Consumables, R3 000.

11. Provide for the outstanding interest on loan.

12. Company taxation as per legislation is 28%.