QUESTION 5 FINANCIAL STATEMENTS (20 MARKS)

The trial balance, adjustments, and additional information given below were extracted from the accounting records of Menton Enterprises on 29 February 2016, the end of the financial year.REQUIRED Use the trial balance, adjustments, and additional information to prepare the Statement of Comprehensive Income of Menton Enterprises for the year ended 29 February 2016.

Use the following format:

Statement of Comprehensive Income format

Sales Cost of sales Gross profit Other operating income

Gross operating income Operating expenses

Operating profit Interest income Interest expense Net profit for the year

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Menton Enterprises PRE-ADJUSTMENT TRIAL BALANCE AS AT 29 FEBRUARY 2016

Balance sheet accounts section

Capital Drawings Land and buildings Vehicles at cost Equipment at cost Accumulated depreciation on vehicles Accumulated depreciation on equipment Fixed deposit: Gogo Bank (6% p.a.) Trading inventory Debtors control Provision for bad debts Bank Creditors control Loan: Gogo Bank (14%) Nominal accounts section Sales Cost of sales Sales returns Wages and salaries Bank charges Rent income Municipal rates Interest on fixed deposit Bad debts Discount allowed Discount received Consumable stores Interest on loan Water and electricity Insurance Telephone

Adjustments and additional information

1. Physical stocktaking on 29 February 2016 revealed the following inventories on hand: Trading inventory R148 000

   Consumable stores R1 000

2. Rent has been received up to 31 January 2015. Make the necessary adjustment.

3. The bank statement for February 2016 reflected the following that must still be recorded:

   Bank charges R300

4. The telephone account for February 2016, R400, has not yet been paid.

5. Municipal rates amount to R2 000 per month. Make the necessary adjustment.

6. The insurance account includes an amount of R300 that was paid for the next accounting

Debit (R)

20 800

269 100

140 000

55 000

150 000

150 000

130 000

68 500

464 000

20 000

112 000

2 000

22 000

8 000

1 500

8 000

7 000

6 000

2 000

4 000

1 640 500

Credit (R)

660 500

28 000 15 000

5 000

70 000 50 000

780 000

22 000 9 000

1 000

1 640 500

00

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period.

7. Write off the account of a debtor, K. Minton, who owed R500.

8. The provision for bad debts must be increased to R5 200.

9. The water and electricity account erroneously includes a payment of R600 for the payment of

   the proprietors personal water and electricity account.

10. Provide for depreciation as follows:

1. 10.1 On vehicles at 20% per annum on the diminishing balance.

2. 10.2 On equipment at 10% per annum on cost.