QUESTION 5 Prepare the Statement of Financial Position as at 31 December 2020.

The notes to the financial statements are not required. Show workings in the spaces provided. (20 Marks)

INFORMATION The information given below was extracted from the accounting records of Merewent Ltd on 31 December 2020 (the end of the financial year). MEREWENT LTD PRE-ADJUSTMENT TRIAL BALANCE AS AT 31 DECEMBER 2020

Balance Sheet Accounts Section Debit (R) Credit (R)

Ordinary share capital 320 000

Retained earnings 40 000

ntures (10% p.a.) 260 000

Debtors control 36 000

Provision for bad debts 2 000

Bank 23 000 Creditors control 93 000

South African Revenue Services (Company tax) 29 000

Nominal accounts section Sales 757 000

Opening inventory 110 000

urchases 411 000

Sales returns 5 000

Purchases returns 33 000

Carriage on purchases 8 000

Maintenance 7 000

Municipal rates 5 000

Carriage on sales 10 000

Wages and salaries 80 000

Stationery 1 000

Bad debts 2 000

Sundry expenses 7 000

Insurance 3 000

Telephone 7 000

Water and electricity 8 000

Directors fees 48 000

Auditors fees 5 000

Ordinary share dividends 20 000 1 595 000 1 595 000

Adjustments and additional information

1. Physical stocktaking on 28 February 31 December 2020 revealed the following inventories:

1.1 Trading inventory, R90 000

1.2 Stationery, R200.

2. A notice from the municipality reflected an amount of R200 that was paid for municipal rates for the next financial year.

3. Depreciation must be provided for as follows:

3.1 On vehicles, R16 000.

3.2 On equipment, R10 000.

4. A debtor, who owed R1 000, was declared insolvent. Received R400 of the amount owing from his insolvent estate. The balance of his account must now be written off. No entries were made for these transactions.

5. The insurance total includes a premium of R100 that was paid for January 2021.

6. An amount of R2 000 was due to be paid for audit fees on 02 January 2021.

7. The provision for bad debts must be increased to R2 200.

8. Provide for interest on debentures that is yet to be paid, R26 000.

9. The company tax for the year amounted to R33 000. The profit after tax AFTER taking the above information into account was R75 700.

10. The final dividend declared on 31 December 2020 amounted to R50 000.