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Adjustment no. 10 is for the mortgage loan - Redd Bank

The following information was extracted from the accounting records of Moducare Traders on 28 February 2018, the end of the financial year. REQUIRED Prepare the Statement of Financial Position of Moducare Traders as at 28 February 2018. (The notes to the financial statements are NOT required.)

Adjustments and additional information

According to the Statement of Comprehensive Income, the net profit for the year ended 28 February 2018 was R172 980 after taking the following adjustments and omissions into account:

1. On 26 February 2018, trading goods costing R3 000 were used as prizes in an advertising campaign. No entry has been made for this transaction.

2. Physical stocktaking on 28 February 2018 revealed the following inventories on hand: Trading inventory R73 000 Stationery R500

3. A debtor, J. Ritter, was declared insolvent. His account of R4 000 must be written off.

4. The provision for bad debts must be decreased to R4 400.

5. The telephone account for February 2018 was due to be paid on 01 March 2018, R2 100.

6. No entry was made for the tyres that were purchased on credit to replace the ones on the delivery vehicle, R5 000.

7. No entry was made for the bank charges that appeared on the bank statement for February 2018, R400.

8. The insurance account includes an annual premium of R1 200 that was paid for the period 01 December 2017 to 30 November 2018.

9. Part of the building has been leased to a tenant at R6 600 per month since 01 March 2017. Make the necessary adjustment.

10. Provide for outstanding interest on loan, R2 750. Monthly repayments are expected to reduce the loan balance by R35 000 during the financial year ended 28 February 2019.

11. The investment in fixed deposit at Redd Bank was made on 01 March 2017 and matures on 31 August 2018. Provide for the interest due to Moducare Traders.

12. Provide for depreciation as follows:

12.1 On vehicles, at 20% per annum on the diminishing balance.

12.2 On equipment at 10% per annum on cost.

Prepare the Statement of Financial Position of Moducare Traders as at 28 February 2018. (The notes to the financial statements are NOT r MODUCARE TRADERS PRE-ADJUSTMENT TRIAL BALANCE AS AT 28 FEBRUARY 2018 equired.) Debit (R Credit Balance sheet accounts section Capital Drawin Land and buildin Vehicles at cost Equipment at cost Accumulated d Accumulated d Fixed dep sit: Redd Bank (1296 p. a Trading Debtors control Provision for bad debts Bank Cash float Creditors control Mo Nominal accounts section Sales Cost of sales Sales returns Salaries and wa Bad debts Statione Rates and taxes Motor ex 826 769 54 744 627 000 462 000 330 000 on on vehicles 264 000 184 000 99 000 77 000 88 000 5 000 58 000 4000 91 000 165 000 e loan: Redd Bank (20% pa 1038 000 393 000 6 000 293 000 9000 15 000 29 000 16 000 11 000 22 000 33 000 4 000 6 000 30 250 Telephone and water Bank char Interest on mo Interest on fixed d Rent income e loan 7 425 85 800 2 666 994 2 666 994