Trick Traders

QUESTION (21 marks)(30 minutes)
TRICK TRADERS
PRE-ADJUSTMENT TRIAL BALANCE AS AT 28 FEBRUARY 2022
Debit Credit
Financial position section R R
Capital ........................................................................................... B1 - 619 900
Drawings ....................................................................................... B2 12 000 -
Vehicles ......................................................................................... B3 125 000 -
Accumulated depreciation : Vehicles ............................................. B4 - 25 000
Trading inventory ........................................................................... B5 350 000 -
Trade receivables control .............................................................. B6 65 000 -
Trade payables control .................................................................. B7 - 90 000
Long-term loan: AB Bank (10% p.a.) ............................................. B8 - 360 000
Bank .............................................................................................. B9 700 000 -
Petty cash...................................................................................... B10 1 000 -
Nominal accounts section
Sales ............................................................................................. N1 - 950 000
Cost of sales .................................................................................. N2 760 000 -
Sales returns ................................................................................. N3 650 -
Rental income................................................................................ N4 - 48 000
Wages and salaries ....................................................................... N5 12 000 -
Interest on loan .............................................................................. N6 33 000 -
Telephone expenses ..................................................................... N7 2 500 -
Credit losses .................................................................................. N8 1 600 -
Settlement discount received ......................................................... N9 - 1 700
Insurance....................................................................................... N10 13 350 -
Settlement discount granted .......................................................... N11 500 -
Water and electricity ...................................................................... N12 3 000 -
Sundry expenses ........................................................................... N13 15 000 -
2 094 600 2 094 600
Additional information
1. According to the physical inventory count, the following items were on hand at 28 February 2022:
Inventory, R300 000.
2. Depreciation on vehicles must be provided for at 20% per annum using the reducing (diminishing)
balance method.
3. Mrs J Johnson’s account of R800 must be written off as irrecoverable.
4. The insurance premium was prepaid from 1 March 2022 to 31 May 2022.
5. The long-term loan was entered into on 1 March 2021.
REQUIRED:
Prepare the statement of profit or loss and other comprehensive income of Trick Traders for the year
ended 28 February 2022. (21)
SOLUTION
TRICK TRADERS
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR
ENDED 28 FEBRUARY 2022
R R
Revenue (950 000 - 650 - 500) 948 850
Cost of sales (760 000 - 1 700) (758 300)
Gross profit 190 550
Other income 48 000
Rental income 48 000
238 550
Distribution, administrative and other expenses (115 580)
Trading inventory deficits (350 000 - 300 000) 50 000
Depreciation [(125 000 - 25 000) x 20%] 20 000
Credit losses (1 600 + 800) 2 400
Insurance (13 350 ÷ 15 x 12) 10 680
Wages and salaries 12 000
Telephone expenses 2 500
Water and electricity 3 000
Sundry expenses 15 000
Finance charges (36 000)
Interest on loan (33 000 + 3 000) or (360 000 x 10%) 36 000
Profit for the year 86 970
Other comprehensive income for the year -
Total comprehensive income for the year 86 970
(21)

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QUESTION (21 marks)(30 minutes)

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