statement of comprehensive income

P. Prince had a lifelong dream of starting a business. From a young age he started saving cash so that he could have enough capital. His dream came true on 01 March 2017 when he started a business trading as Royal Traders. The trial balance and additional information given below were extracted from the accounting records of his business, Royal Traders, on 28 February 2018, the end of the first financial year. REQUIRED Prepare the Statement of Comprehensive Income of Royal Traders for the year ended 28 February 2018. Note: Some of the amounts in the statement have been provided. ROYAL TRADERS STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 28 FEBRUARY 2018 Sales Cost of sales (240 000) Gross profit Other operating income Bad debts recovered Commission income 1 000 5 000 89 000 1 000 Gross operating income Operating expenses Salaries and wages Bad debts Stationery Rent expense Motor expenses Telephone Electricity and water Bank charges Insurance Operating profit Interest income Interest expense Net profit for the year Credit (R) 150 500 93 000 31 000 4 000 INFORMATION Royal Traders PRE-ADJUSTMENT TRIAL BALANCE AS AT 28 FEBRUARY 2018 Debit (R) Balance sheet accounts section Capital Drawings 67 360 Vehicles at cost 180 000 Equipment at cost 120 000 Accumulated depreciation on vehicles Accumulated depreciation on equipment Trading inventory 70 000 Debtors control 31 000 Provision for bad debts Bank 21 400 Cash float 500 Creditors control Mortgage loan: Leo Bank (18% p.a.) Nominal accounts section Sales Cost of sales 240 000 Sales returns 4 000 Salaries and wages 89 000 Bad debts 1 000 Stationery 2 000 Rent expense 21 440 Motor expenses 17 000 Bad debts recovered Telephone 7 000 Electricity and water 12 000 Bank charges 3 000 Insurance 6 000 Interest on mortgage loan 13 200 Commission income 905 900 41 400 80 000 500 000 1 000 5 000 905 900 Adjustments and additional information 1. According to the physical stocktaking completed on 28 February 2018, the following inventories were on hand: 1.1 Trading inventory, R67 000 1.2 Stationery, R400 2. An account received from Airkon Fitters for the installation of an air conditioning unit in one of the vehicles was debited to the motor expenses account in error, R4 000. 3. 6. The No entry has been made for interest at 12% p.a. that was charged for two months on the overdue account of a debtor who owed R5 000. Received a cheque for R760 on 28 February 2018 from a debtor, after a settlement discount of 5% was deducted. No entries have been made for this transaction. The provision for bad debts must be decreased by R2 500. The telephone account for February 2018 was due to be paid on 02 March 2018, R800. Rent expense has been paid up to 31 March 2018. Note: The rental was increased by 10% with effect from 01 December 2017. Make the necessary adjustment. Interest on loan has not yet been paid for February 2018. The insurance total includes an annual premium of R3 600 that was paid for the period 7. 01 June 2017 to 31 May 2018. 10. Cash deposit fees, R100, and service fees, R300, which appeared in the February 2018 bank statement were left out in error when the cash journals for February 2018 were prepared and posted. 11. Provide for depreciation as follows: 11.1 On equipment at 10% per annum on cost. Note: Equipment that cost R30 000 was purchased on 01 September 2017. The purchase has been recorded. 11.2 On vehicles at 20% per annum on the diminishing balance