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 600 000 Equipment at cost 135 000 Accumulated depreciation: equipment 33 000 Fixed deposit: Bold Bank (12% per year) 60 000 Accounts receivable (Debtors) 51 630 Allowance for credit losses 2 850 Inventory: merchandise (Trade goods) 105 330 Bank 20 220 Capital: Ngidi 593 550 Drawings 130 500 Long term borrowing: Rabada Finance (16% per year) 60 000 Accounts payable (Creditors) 74 400 Sales 844 500 Cost of sales 422 400 Consumable expenses 2 400 Sales returns 3 700 Settlement discounts granted 2 300 Salaries and wages 93 510 Advertising 4 800 Electricity and water 18 810 Rates and Taxes 24 600 Insurance 5 850 Interest on long term borrowing 11 250 Interest on fixed deposit 4 800 Rent income 79 200 1 692 300 1 692 300 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) R103 500 Inventories: Consumable items R 300 2. Rates and taxes included a payment of R6 120 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 R1 200 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 R2 250 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 R45 000 has not yet been recorded. 8. The telephone account of R900 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 R15 000 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.