Question 4 [25]

The following information relates to Australis Traders:

Pre-adjustment trial balance for the year ending 31 May 2021

	R	R
Balance sheet section
Capital		889 725
Drawings	23 400
Land and buildings	670 000
Vehicles	94 000
Accumulated depreciation: Vehicles		20 560
Furniture and fittings	20 400
Accumulated depreciation: Furniture and fittings		6 410
Fixed deposit	100 000
Trading inventory (1 June 2020)	50 260
Debtors control	104 700
Bank	42340
Creditors control		66 780
Nominal accounts section
Sales		1721 680
Purchases	1 272 600
Sales returns	15 680
Purchases income		23 420
Rent income		44 850
Commission income		18 725
Advertising	18 530
Insurance	30 940
Interest expenses	2 240
Stationery	6 642
Telephone	30 418
Wages and Salaries	310 000
	2 792 150	2 792 150

Additional information

1. A physical stocktake was performed on 31 May 2021. The value of the stock on this date was R49 936.
2. Depreciation must be provided for as follows:
   • Vehicles at a rate of 20% on the diminishing balance
   • Furniture and fittings at a rate of 10% on cost
3. After consideration of the trade receivables (debtors), it is decided to raise an allowance for credit losses, being 1% of outstanding debts.
4. The rent for June 2021, R3 450, was received and banked before 31 May 2021.
5. Interest earned on the fixed deposit is 8% per annum.
6. The insurance premium for June 2021, R2 380, was paid in May 2021.
7. The telephone account for May 2021 was received late and has not been paid yet, R2 815.

Required:

Prepare the statement of profit or loss and other comprehensive income of Australis Traders for the year ended 31 May 2021.