The accounting period of Homezone Traders ends annually on the last day of February. The following information appeared in their books on 29 February 2016. (Owner: C Pappendort)

Required

Use the necessary information to draw up the Income Statement and Balance Sheet for the year ended 29 February 2016.

Adjustments

1. On 26 February 2016 a debtor returned goods, R360. The goods were sold at a profit mark-up of 25%. No entry of these returns has been made yet.

2. Stock on hand on 29 February 2016: Trading stock R20 000 Stationery R282 Packaging R256

3. An amount of R30 was received from a debtor whose account had previously been written off as irrecoverable. The bookkeeper has credited the amount to Debtors Control. Correct the error.

4. Write off T Bell's Debtor of R40 as irrecoverable.

5. An insurance premium of R490 was paid on 1 December 2015 for the period 1 December 2015 to 30 June 2016.

6. The fixed deposit was invested on 1 October 2015. Interest is paid quarterly at 18 % per annum.

7. Rent income amounts to R353 per month.

8. The bank statement was received on 29 February 2016. The following items must be recorded: - Cost of cheque book R9 - Service fees R14 - Sundry debits R5 - Interest on overdraft R70 - Monthly stop order for R200 for the owner's personal loan. - RD Cheque for R150 from D Bruwer, received in settlement of his account of R155.

9. The mortgage loan was increased by R5 000 on 1 September 2015. Provide for the outstanding interest. The interest rate was originally 15% per annum but was increased to 18% per annum on 1 September 2015. 10. Provide for depreciation as follows: - Equipment R1 864 - Vehicles R930 Note * Capital was increased by R12 000 on 1 October 2015. (The transaction has already been recorded.)

Pre-adjustment Trial Balance on 29 February 2016
Balance Sheet accounts					Debit	Credit
Capital						72 208.00
Drawings					22 824.00
Mortgage loan: United						35 000.00
Land and Buildings					115 000.00
Fixed deposit: Allied					5 000.00
Equipment (cost price)					12 000.00
Accumulated depreciation on equipment						3 171.00
Vehicles (cost price)					17 500.00
Accumulated depreciation on vehicles						6 300.00
Trading stock					19 980.00
Debtors control					9 740.00
Bank						2 355.00
Creditors control						14 782.00
Petty cash					50.00
Cash float					200.00
Nominal accounts					Debit	Credit
Sales						395 853.00
Cost of sales					250 060.00
Debtors allowances					4 260.00
Rates and taxes					4 010.00
Salaries					59 550.00
Bank charges					310.00
Rent income						3 795.00
Discount received						734.00
Discount allowed					870.00
Bad debts					320.00
Interest on a mortgage loan					2 250.00
Stationery					1 682.00
Packaging					4 056.00
Telephone					1 522.00
Insurance					820.00
Water and electricity					2 419.00
Interest on fixed deposit						255.00
					534 423.00	534 423.00