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 $2023.$

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:

$1.$

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 R $300$

$2.$

Rates and taxes included a payment of R$6120$ for the $6$ month period $1$ January $2023$ to $30$ June $2023.$

$3.$

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 $2023.$

$4.$

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.

$5.$

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

$6.$

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.

$7.$

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.

$8.$

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

$9.$

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.

$10.$

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.