KINGSWAY SUPPLIERS
PRE-ADJUSTMENT TRIAL BALANCE AS AT 29 FEBRUARY 2024
Balance Sheet accounts section
Debit (R)
Credit (R)
Capital
798 850
Drawings
150 000
Vehicles at cost
990 000
Equipment at cost
460 000
Accumulated depreciation on vehicles
190 000
Accumulated depreciation on equipment
138 000
Fixed deposit: Fin Bank (12% p.a.)
40 000
Trading inventory
312 500
Debtors control
166 500
Provision for bad debts
4 500
Bank
241 000
Petty cash
2 500
Creditors control
78 500
Long-term loan: Fin Bank (18% p.a.)
350 000
Nominal accounts section
Sales
3 600 000
Cost of sales
1 550 000
Sales returns
45 000
Salaries and wages
700 000
Discount received
3 000
Discount allowed
2 000
Rent expense
180 000
Motor expenses
58 500
Advertising
48 000
Telephone
42 000
Electricity and water
52 500
Bank charges
24 000
Insurance
31 000
Interest on mortgage loan
47 250
Interest on fixed deposit
2 400
Consumable stores
22 500
5 165 250
5 165 250
Adjustments and additional information
1. Inventories, cost price R6 000, were donated to a local charity on 26 February 2024. No entry was made for this.
2. According to stocktaking at the end of the financial year, the following were on hand:
Trading inventory R296 500
Consumable stores R1 500.
3. Interest of R15 750 is due on the long-term loan. Interest is not capitalised. Repayments to be made during the next financial period are expected to reduce the loan balance by R100 000.
4. Provide for interest not yet received on the fixed deposit. The investment in fixed deposit was made on 28 February 2023 and it matures on 30 June 2024. Interest is not capitalised.
5. In terms of the rental agreement the rent expense for the first ten months of the financial year was R15 000 per month. Thereafter, the monthly rental increased by R4 000.
6. The advertising total includes a payment of R3 600 for an advertisement that was due to appear in March 2024.
7. The telephone account for February 2024 was due to be paid on 02 March 2024, R3 900.
8. The bank statement from Fin Bank reflected bank charges that must still be recorded, R2 150.
9. The insurance total includes a payment made for the proprietor's personal life insurance, R3 500.
10. An account of R4 500 was received from Hooper Tyres to replace the tyres of one of the vehicles. No entry was made for this. Note: Do not treat this as accrued expenses.
11. The account of a debtor, P. Thomas, must be written off as irrecoverable, R6 500.
12. The provision for bad debts must be increased by R3 500.
13. Provide for depreciation as follows:
13.1 On vehicles at 15% per annum on cost.
13.2 On equipment at 20% per annum using the diminishing balance method.
14. The net profit, after taking all the information provided above into account, amounted to R528 450.
