QUESTION B1 The following information relates to Promo CC: 1. Trial balance at 31 December 2004: Dr Cr R R Land and buildings at cost 95 000 Furniture and equipment at cost 33 000 Vehicles at cost 21 000 Accumulated depreciation: Furniture and equipment 6 700 Vehicles 8 400 Inventory: 31 December 2003 54 600 15% long-term secured by first mortgage bond over land and buildings 50 000 Trade accounts receivable 20 500 Provision for bad debts: 31 December 2003 955 Cash in bank 24 000 Trade accounts payable 37 100 Provisional tax paid 6 900 Sales 321 500 Purchases 224 700 Import duty on purchases 1 550 Railage on purchases 2 500 Repairs and maintenance 1 315 Assessment rates 710 Commission on sales 1 500 Delivery expenses 650 Discount allowed 1 350 Salaries and wages 35 615 Stationery 520 Bad debts 460 Loss on sale of non-current assets 220 Insurance 475 Water and electricity 2 100 Dividends received 450 Investment: 10 000 shares in Vicks Limited at cost 11 000 Loans from members: A Adam 10 000 C Charles 8 000 Interest paid 9 660 Members contributions: A Adam 40 000 B Ben 35 000 C Charles 25 000 Accumulated profits: 31 December 2003 6 220 549 325 549 325 2. Additional information: (a) Included in salaries and wages is an amount of R10 000 which was paid to member B Ben as remuneration for his special contribution to the management of the enterprise. (b) Interest paid includes R2 160, which represents 12% interest, paid to A Adam and C Charles in respect of the loans they made to the close corporation. (c) Provision for depreciation of R1 650 on furniture and equipment and R2 050 on vehicles must still be made. (d) The provision for bad debts must be adjusted to 5% of the outstanding trade accounts receivable. (e) Inventory on hand on 31 December 2004 amounted to R58 300. (f) The income tax provision for the year amounted to R17 125. (g) A profit distribution of R20 000 must be made to the members. Required: (1) Prepare the income statement of Promo CC for the year ended 31 December 2004. (2) Prepare the statement of changes in equity of Promo CC for the year ended 31 December 2004. (3) Prepare the balance sheet of Promo CC on 31 December 2004. (4) Prepare the notes to the financial statements of Promo CC for the year ended 31 December 2004. Your answer must include the required analysis of transactions with members.