Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Waterhouse is a small township retail business that trades in soft drinks and has a 30 June 20.19 financial year-end. The business records the amount

  1. Waterhouse is a small township retail business that trades in soft drinks and has a 30 June 20.19 financial year-end. The business records the amount of inventory it purchases only on a cash basis. The owner, Daniel Makoe, has requested you to assist him in preparing the accounting records on an accrual basis. He has provided you with the following information:
Purchases: Inventory
Date Amount
R
15 July 20.19 10 385
19 August 20.19 7 236
28 September 20.19 17 311
12 October 20.19 14 422
30 November 20.19 20 005
31 December 20.19 17 987
03 February 20.19 6 500
25 March 20.19 7 340
17 May 20.19 3 670
104 856

Based on your review of the businesss bank statement and a discussion with Daniel, you established the following:

1. On 30 June 20.19, only R2 540 worth of inventory was still on hand. There was no opening inventory and no inventory shortages.

2. The business sells products at a 20% mark up on cost.

3. The owner and his assistant earn a total monthly salary of R2 000 a month, their salaries was not paid on 30 June 20.19 due to a lack of funds.

4. The rates and taxes account are in arrears. No payments have been made for an entire financial year due to a dispute with the municipality. The amount owing is R4 550.

5. According to Daniel, the business uses a prepaid electricity meter. Prepaid electricity bought for the year amounted to R3 200 of which R150 has not yet been used by year end.

6. The business rents a pool table from a gaming agent. The conditions for the rental of the pool table is that 50% of the takings are business income and the balance goes to the agent as a commission. By 31 May 2019, R2 834 was deposited into the businesss account for the businesses share. At year end, the pool table had R1 840 worth of R2 coins in its safe.

7. Daniel paid R870 for maintenance to the local handy man out of his own pocket and has not yet been refunded by the business.

8. A monthly rental of R500 is made to the garage owner of from where the business operates. Junes rent is still due.

9. The business has 10 fridges with a cost of R3 000 each. Daniel estimates that they have an estimated useful life of 8 years.

Use the information provided to prepare the trading section and other income sections of the statement of profit or loss and other comprehensive income of Waterhouse for the year ended 30 June 20.19.

image text in transcribed WATERHOUSE STA TEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE FOR THE YEAR ENDED 30 JUNE 20.20

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Collaborative Auditing

Authors: James Pelletier, Yuki Matsuura

2nd Edition

ISBN: 0894139606, 9780894139604

More Books

Students also viewed these Accounting questions

Question

=+What about SRI funds? Why, or why not?

Answered: 1 week ago