QUESTION THREE

$[$

$2$

$5$

$]$

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

$3$

$1$

$$December

$2$

$0$

$1$

$9$

$,$

$$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

$$

$4$

$9$

$0$

$0$

$0$

$0$

$$

$1$

$4$

$0$

$0$

$0$

$0$

$$

$1$

$0$

$0$

$0$

$0$

$0$

$$

$2$

$0$

$0$

$0$

$0$

$4$

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

$$

$5$

$3$

$0$

$0$

$0$

$$

$1$

$3$

$0$

$6$

$0$

$0$

$$

$1$

$2$

$8$

$0$

$0$

$0$

$$

$1$

$3$

$1$

$0$

$0$

$0$

$$

$2$

$3$

$4$

$5$

$0$

$0$

$$

$8$

$0$

$6$

$0$

$0$

$$

$6$

$7$

$2$

$0$

$$

$3$

$0$

$0$

$0$

$$

$4$

$2$

$2$

$8$

$0$

$$

$1$

$2$

$8$

$0$

$0$

$0$

$$

$3$

$4$

$0$

$0$

$$

$3$

$7$

$0$

$0$

$0$

$0$

$$

$6$

$0$

$0$

$0$

$0$

$$

$1$

$3$

$0$

$0$

$0$

$0$

$$

$8$

$5$

$8$

$8$

$0$

$0$

$$

$2$

$5$

$5$

$0$

$0$

$$

$1$

$5$

$6$

$7$

$7$

$0$

$0$

$1$

$5$

$6$

$7$

$7$

$0$

$0$

Additional information:

$1$

$.$

$$Physical stock

$-$

taking revealed that there was consumable material on hand at

$3$

$1$

$$

December

$2$

$0$

$1$

$9$

$$valued at R

$7$

$0$

$0$

$0$

$0$

$.$

$2$

$.$

$$Repairs to the vehicle costing R

$1$

$0$

$0$

$0$

$0$

$$was erroneously charged to the vehicle at cost

account. A correction has not been recorded as yet.

$3$

$.$

$$Equipment and Vehicles have to be depreciated as follows:

a

$)$

$$Equipment must be depreciated at

$1$

$0$

$\%$

$$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

$4$

$$year period. The

residual value of the vehicle is estimated at R

$3$

$0$

$0$

$0$

$0$

$.$

$4$

$.$

$$A debtor

$$

s account of R

$2$

$6$

$0$

$0$

$$must be written off as irrecoverable.

$5$

$.$

$$The allowance for credit losses must be adjusted to

$3$

$\%$

$$of outstanding debtors.

$5$

$6$

$.$

$$Included in the rent expense is an amount of R

$2$

$0$

$0$

$0$

$0$

in respect of rent for January

$2$

$0$

$2$

$0$

$$

which was paid and recorded in December

$2$

$0$

$1$

$9$

$.$

$7$

$.$

$$The telephone account of R

$1$

$2$

$0$

$0$

$$was received in December

$2$

$0$

$1$

$9$

$$but not yet paid nor

recorded.

$8$

$.$

$$An amount of R

$2$

$0$

$0$

$0$

$0$

$$was repaid towards the long term borrowing on

$3$

$1$

$$December

$2$

$0$

$1$

$9$

$$and recorded correctly. Account for outstanding interest on the long term

borrowing. Interest on the borrowing is payable at

$5$

$\%$

$$per year.

Required:

$3$

$.$

$1$

$$Prepare the statement of profit or loss and other comprehensive income for

Keep Fit Services for the year ended

$3$

$1$

$$December

$2$

$0$

$1$

$9$

$$in compliance with

requirements of International Financial Reporting Standards

$($

IFRS

$)$

$$appropriate to

businesses such as Keep Fit Services.

$($

$1$

$9$

$)$

$3$

$.$

$2$

$$Show workings to determine the value at which the following items will be shown in

the statement of financial position at

$3$

$1$

$$December

$2$

$0$

$1$

$9$

:

$3$

$.$

$2$

$.$

$1$

$$Trade and other receivables

$($

$2$

$)$

$3$

$.$

$2$

$.$

$2$

$$Inventory: consumable material

$($

$2$

$)$

$3$

$.$

$2$

$.$

$3$

$$Trade and other payables

$($

$2$