QUESTION 3 The accountant hands to you the following pre-adjustment trial balanc

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QUESTION 3 The accountant hands to you the following pre-adjustment trial balance of JOU BOU ENTERPRISES: JOU BOU Trial balance on 28 February 20.4 Dr Cr R R Purchases 107 000 Administrative expenditure 28 400 Bank 101 500 Fuel 34 000 VAT input 5 000 VAT control 8 000 VAT output (VAT rate = 10%) 20 000 Debtors control 9 100 Land 150 000 Trademarks 20 000 Rental income 22 000 Capital ? 11 Drawings 30 500 Accrued depreciation – vehicle 21 000 Mortgage loan 120 000 Sales 200 000 Insurance 23 200 Vehicles 30 000 Inventory – 1/3/20.3 12 500 Allowance for credit losses 1 000 560 000 560 000 Additional information: 1. Allowance for credit losses must be adjusted to 10% of debtors. 2. Rental income amounts to R1 100 per month (VAT included). 3. The mortgage loan carries interest at a rate of 20%. The loan of R120 000 was made on 28 February 20.3 and must be repaid in equal capital instalments over six (6) years. The payment has already been made but no entries has been made. 4. After a stock-take was done, the following was found: Quantity Cost price 10kg Bags JOU BOU 100 R40 5kg Bags JOU BOU 100 R30 5. The entity has three (3) identical vehicles in use that were purchased on the same date. Depreciation is provided for on the straight line basis at 20% on the cost price. No depreciation has been provided yet, the current year. 6. One of the vehicles was hijacked in the city on the last day of the financial year. The insurance paid out R3 300, including 10% VAT. The transaction has not yet been accounted for. 7. Trademarks are written of on the straight line basis at R1 000 per annum. REQUIRED: Prepare the statement of financial position on 28 February 20.4 to comply with the requirements of IFRS and Companies Act. (notes are not required).

Explanation / Answer

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Balance sheet of jou as on 28 feb 20.4 Assets Non Current Assets Property , Plant and equipments 152000 Trade mark 19000 Investment Current Assets Inventories 7000 Trade Payable 8190 Cash & Cash Equivalents 60800 Total Assets 246990 Equity and Liabilities Equity Capita 159200 Drawing -30500 retain earning -14710 Total Equity 113990 Non Current Liabilities Long term loan 100000 Total non current liabilities 100000 Current Liabilities:- Accured rent income 10000 vat payable 23000 Total Current liabilities 33000 Total EQUITY & LIABILITIES 246990

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