QUESTION TWO [20] Sifiso Phakathi has a general dealer store in the Ixopo area that he has been operating for a few years. The following information was provided by Sifiso for the financial year ended 28 February 2021: Pre-adjustment trial balance at 28 February 2021 Debit - R Credit - R Land and buildings 604 000 Equipment at cost 195 000 Accumulated Depreciation: Equipment 1 March 2020 32 100 Inventory: trade goods 1 March 2020 109 500 Trade receivables 81 630 Bank 20 220 Capital - Sifiso 626 400 Drawings 130 530 Long term borrowing: Niks Finance (15% per year) 65 000 Trade payables 69 400 Sales 853 470 Rent income 80 400 Purchases returns 5 000 Purchases 409 660 Sales returns 6 800 Settlement discounts received 5 150 Settlement discounts granted 4 720 Advertising 14 800 Consumables 10 960 Insurance 5 850 Page 4 of 8 Other operating expenses 136 000 Interest on borrowings 7 250 1 736 920 1 736 920 Additional information: 1. A physical stock-take on 28 February 2021 revealed the following: Trade goods on hand was valued at R96 000; and Consumable stores on hand were R1 830. 2. Advertising included an amount of R 2 160 for advertisement to appear in print from 1 November 2020 to 30 April 2021. 3. Depreciation on equipment is provided at 10% per year using the reducing balance method. Note that equipment was purchased on 31 July 2020 for R30 000. The purchase was recorded and is included in the above balances. 4. The long term borrowing from Niks Finance was granted on 1 May 2020. The borrowing is payable in full on 31 April 2025. Provide for the outstanding interest. 5. The tenant has already paid the rent for March 2021. Note that the monthly rent was increased by 10% effective on 1 December 2020. 6. A debit order of R800 for the insurance of Sifisos home was erroneously allocated to the business insurance account. A correction is required. 7. A debtor who owed R1 600 has been declared insolvent and his estate paid out 70 cents in the Rand on all debts. The balance of the account must be written off as irrecoverable. Entries must be made to record the receipt of money from the estate and the write-off of the remaining balance. 8. Create an allowance for credit losses equal to 5% of remaining outstanding debtors. Required: Prepare the following for Sifisos Stolo for the financial year ended 28 February 2021: The statement of profit or loss and other comprehensive income. (20)