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QUESTION 2
(20 MARKS)
REQUIRED: Use the information provided below to prepare the Statement of Financial Position of Trent Limited as at 31 July 2023.
INFORMATION: TRENT LTD EXCEPT OF PRE-ADJUSTMENT TRIAL BALANCE AS AT 31 JULY 2023
Balance Sheet Accounts Section Credit(R)
Ordinary share capital (200,000 shares) 4,000,000
Retained earnings 589,200
Land and buildings 3,904,100
Vehicles (cost) 1,400,000
Equipment (cost) 900,000
Accumulated depreciation on vehicles 510,000
Accumulated depreciation on equipment 397,000
Debentures 12% p. Maturity date 31 July 2028 1,700,000
Investment (25,000 shares in ABC Limited) 500,000
Trading inventory 1,090,000
Debtors control 360,000
Provision for bad debts 30,000
Bank 287,000
Creditors control 484,000
South African Revenue Services: Company tax 140,000
Adjustments and additional information:
The profit tax for the year ended 31 July 2023 amounted to R392,100. The following adjustments were made to the income and expenses but not to the balance sheet accounts:
1. A physical stocktake on 31 July 2023 revealed the following:
1.1 Trading inventory on hand amounted to R1,050,000.
1.2 Stationery unused amounted to R2,000.
2. Rent for August 2023 was received and recorded on 31 July 2023, R14,000.
3. Dividends of 70 cents per share are due from ABC Limited.
4. Commission on sales of R30,000 is owed to the salespersons.
5. Depreciation on equipment is calculated at 15% p.a. on cost and on vehicles at 20% p.a. on the diminishing balance.
6. The bank statement was received after the trial balance was prepared and it reflected bank charges of R1,800.
7. The provision for bad debts must be adjusted to 5% of debtors.
8. Two of the directors of the company are owed remuneration of R20,000 each.
9. Based on the profit for the year, an amount of R30,000 is still owed to South African Revenue Services for company tax.
10. The directors declared a final dividend of 52 cents per share. The interim dividend amounted to R100,000.
