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QUESTION THREE [ 2 5 ] Benji Walker developed keep fit programmes which he also conducted to select groups of people. The following details appeared
QUESTION THREE
Benji Walker developed keep fit programmes which he also conducted to select groups of
people. The following details appeared in the pre
adjustment trial balance of Keep
fit
Services as at
December
the end of the financial year.
List of accounts Debit
R Credit
R
Equipment at cost
Accumulated depreciation: Equipment
Vehicles at cost
Accumulated depreciation: Vehicles
Inventory: consumables
Trade receivables
Allowances for credit losses
Bank
Capital: B Walker
Drawings
Long term borrowings
Trade payables
Service fees
Rent income
Salaries and wages
Rent expense
Telephone
Interest on borrowings
Electricity and water
Consumable material
Additional information:
Physical stock
taking revealed that there was consumable material on hand at
December
valued at R
Repairs to the vehicle costing R
was erroneously charged to the vehicle at cost
account. A correction has not been recorded as yet.
Equipment and Vehicles have to be depreciated as follows:
a
Equipment must be depreciated at
per year on the reducing balance method.
No equipment was bought or sold during the current year.
b
Vehicles must be depreciated on the straight line method over a
year period. The
residual value of the vehicle is estimated at R
A debtor
s account of R
must be written off as irrecoverable.
The allowance for credit losses must be adjusted to
of outstanding debtors.
Included in the rent expense is an amount of R
in respect of rent for January
which was paid and recorded in December
The telephone account of R
was received in December
but not yet paid nor
recorded.
An amount of R
was repaid towards the long term borrowing on
December
and recorded correctly. Account for outstanding interest on the long term
borrowing. Interest on the borrowing is payable at
per year.
Required:
Prepare the statement of profit or loss and other comprehensive income for
Keep Fit Services for the year ended
December
in compliance with
requirements of International Financial Reporting Standards
IFRS
appropriate to
businesses such as Keep Fit Services.
Show workings to determine the value at which the following items will be shown in
the statement of financial position at
December
:
Trade and other receivables
Inventory: consumable material
Trade and other payables
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