QUESTION TWO

$[25]$

Eric Ngidi the sole proprietor of a general dealer, Welcome Traders, provided you with the following relevant accounting records for the financial year ended $28$ February $2023.$

$\backslash$table$[[$Pre$-$adjustment trial balance at $28$ February $2023,$Debit $-$ R$,$Credit $-$ R$],[$Land and buildings at cost$,600000,],[$Equipment at cost$,135000,],[$Accumulated depreciation: equipment,,$33000],[$Fixed deposit: Bold Bank $(12\%$ per year$),60000,],[$Accounts receivable $($Debtors$),51630,],[$Allowance for credit losses,,$2850],[$Inventory: merchandise $($Trade goods$),105330,],[$Bank$,20220,],[$Capital: Ngidi,,$593550],[$Drawings$,130500,],[$Long term borrowing: Rabada Finance $(16\%$ per year$),,60000],[$Accounts payable $($Creditors$),,74400],[$Sales$,,844500],[$Cost of sales,$422400,],[$Consumable expenses,$2400,],[$Sales returns,$3700,],[$Settlement discounts granted,$2300,],[$Salaries and wages,$93510,],[$Advertising$,4800,],[$Electricity and water,$18810,],[$Rates and Taxes,$24600,],[$Insurance$,5850,],[$Interest on long term borrowing,$11250,],[$Interest on fixed deposit,,$4800],[$Rent income,,$79200],[1692300,1692300]]$

Additional information and adjustments:

Physical stocktake was done on $28$ February $2023$ and inventories were valued at cost as follows: Inventories: Merchandise $($Trade goods$)$ R$103500$

Inventories: Consumable items $,R300$

Rates and taxes included a payment of $R6120$ for the $6$ month period $1$ January $2023$ to $30$ June $2023.$

The rent income for February $2023$ is still outstanding. The monthly rent did not change for the period $1$ March $2022$ to $31$ January $2023.$ However, the rent for February $2023$ must be increased by $10\%$ and recorded as outstanding at $28$ February $2023.$

A Debtor, A Noddy, who owed R$1200$ was declared insolvent and his estate declared a payment of $60$ cents in the Rand. The amount received was correctly recorded. However, the balance of the account must now be written off as a credit loss.

The allowance for credit losses must be adjusted to $5\%$ of outstanding Debtors.

On $25$ February $2023,$ an Electrical Fund Transfer $($EFT$)$ deposit of R$2250$ was made by E Lucky, a debtor whose account was previously written off. No entries have been made.

Provide for depreciation of Equipment at $10\%$ per year using the diminishing balance method. The purchase on $1$ February $2023$ of Equipment costing R$45000$ has not yet been recorded.

The telephone account of R$900$ for February $2023,$ has not been recorded nor paid.

The fixed deposit at Bold Bank was made on $1$ July $2022$ and matures on $31$ August $2023.$ Interest on the fixed deposit is received on a monthly basis.

A portion of the interest on the Long term borrowing has been paid in advance. The loan was obtained on $28$ February $2022.$ Equal annual repayments of R$15000$ will commence on $1$ March $2023.$

Required:

Prepare the statement of profit or loss and other comprehensive income for the financial year ended $28$ February $2023$ to comply with International Financial Reporting Standards $($IFRS$)$ appropriate to this entity and its type of business. Show all workings.