Acc GR 11 Lesson 1 Final Eng

Gr 11 ACCOUNTING Term 2: Week 1
Topic: Year-end adjustments and Statement of Comprehensive income (Income Statement)
You already know about ... The lesson/worksheet will enable you to...
 year-end adjustments covered in Gr 10 and Gr 11 in  prepare the Statement of Comprehensive Income
term 1 (Income statement) of partnerships taking the year-
 final accounts [Trading account & Profit and Loss end adjustments into account.
account] completed in Grade 10
 adjustments that are used to determine the net profit
for ONE financial period.
 applying the relevant GAAP principles e.g. matching
when preparing financial statements.
Summary of some of the adjustments dealt with and how they affect the financial statements:
Examples:
1. Accrued Income: Commission received is still due, R500
General Ledger EXPLANATION
Dr Accrued Income (B) Cr Accrued means an amount is “still
Commission income 500 owing”, “not yet received”,
therefore we ADD the outstanding
Commission income (N) amount. Remember:
Profit and Loss 1 400 Total 900 Dr Accrued Income
Accrued income 500 Cr 'Income account'
2. Accrued Expenses: Telephone account of R900 has not yet been paid
General Ledger The telephone amount of R900
Dr Accrued Expenses (B) Cr was still owed, therefore we ADD
Telephone 900 the adjustment amount to the total
in the Trial balance. Remember:
Telephone (N) Dr 'Expense account'
Total 2 100 Profit and Loss 3 000 Cr Accrued Expenses
Accrued Expenses 900
3. Trading stock deficit: Trading stock account balance: R156 000.

Trading stock value according to stock taking/physical stock count, R153 000
General Ledger Stock taking amount is less than
Dr Trading stock (B) Cr the balance in the Trial balance.
Balance b/d 156 000 Trading stock deficit 3 000 The difference is the trading stock
deficit (shortfall), a 'loss'.
Trading stock deficit (N) Dr Trading stock deficit
Trading stock 3 000 Profit and Loss 3 000 Cr Trading stock
1
New Topic:
What is the Statement of Comprehensive income (Income Statement) and why is it important?
 The Statement of Comprehensive Income is a financial statement which contains income and expenses
and is used to calculate the net profit or loss for the business (financial result).
 The Statement of Comprehensive income is prepared in keeping with the GAAP principles, especially the
matching concepts where incomes and expenses for the same period must be reflected.
 Income and expenses are found in the Nominal accounts section of the Trial balance.
 There is no difference between the Statement of Comprehensive income of a sole trader and partnership.
REMEMBER:
1. Know the format of the Statement of Comprehensive income (refer to the example in your textbook)
2. Take adjustments into account to reflect the correct amounts for the financial period
'Steps' in completing a Statement of Comprehensive Income

1. Enter the names of the accounts from the Trial balance in their respective place in the statement, for
example Depreciation will appear under Operating expenses in the Statement of Comprehensive income
2. Open the bracket and enter the amount that appears in the Pre-adjustment trial balance next to the account
(NOTE: DO NOT CLOSE THE BRACKET)
3. Read each adjustment and make the necessary changes as per the requirements of the adjustment.
4. Once you have attended to all the adjustments – close the bracket and enter the amount in the total column
5. When all the adjustments have been done, calculate your final figures and enter it in the amount column.
Use your Text book to read about: Alternative resources:

Partnerships: Via Afrika Gr 11 Study Guide (ENG/AFR)
 Year-end Adjustments bit.ly/Gr11ViaENG
 Preparing financial statements of
partnerships
Study examples of adjustment entries and Lucem Publishers Gr 11 Teachers Guide

financial statements. (text book & workbook in one)
Follow the CORRECT format in your textbook bit.ly/Gr11LucemAE
ACTIVITY
You are provided with a partially completed Statement of Comprehensive income relating to
Do-Nutt Traders on 29 February 2020.
The business is owned by D. Olynn and C Nutt.
REQUIRED:
Use the information provided to complete the Statement of Comprehensive Income for the year
ended 29 February 2020.
INFORMATION
An extract from the Pre-adjustment Trial balance on 29 February 2020
Balance Sheet Accounts Section Debit Credit
Trading stock 985 000
Debtors Control 283 500
Provision for bad debts 12 000
Nominal Accounts Section
Bad debts 4 300
Packing material 13 500
Water and electricity 23 600
Insurance 16 800
Rent income 31 500
2
ADJUSTMENTS AND ADDITIONAL INFORMATION
1. The water and electricity account for February has not yet been paid, R1 500.
2. A debtor who owes us R4 800 has been declared insolvent. His debt must be written off as irrecoverable.
3. The provision for bad debts must be adjusted to 5% of trade debtors.
4. Insurance included a premium of R4 800 paid annually on 1 August.
5. A physical stocktaking revealed the following stock on hand:
 Trading stock, R954 000
 Packing material, R1 900
6. Rent for March and April was paid by the tenant during February.
Complete the partially completed Statement of Comprehensive income for the year
ended 29 February 2020 (show calculations clearly)
Sales 1 654 000
Cost of Sales (1 033 750)
Gross profit 620 250
Other Operating Income
Fee income 71 000

Gross Operating Income 718 250
Operating Expenses (378 135)
Salaries and wages 284 600
Operating profit
Interest income 4 000
Profit before interest expense
Interest expense (7 000)
Net profit for the year
Calculations:
Rent income
Insurance
Provision for bad debts adjustment
Other:

Acc GR 11 Lesson 1 Final Eng

Uploaded by

Copyright:

Available Formats

Acc GR 11 Lesson 1 Final Eng

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Acc GR 11 Lesson 1 Final Eng

Uploaded by

Copyright:

Available Formats

Gr 11 ACCOUNTING Term 2: Week 1

Topic: Year-end adjustments and Statement of Comprehensive income (Income Statement)

3. Trading stock deficit: Trading stock account balance: R156 000.

'Steps' in completing a Statement of Comprehensive Income

Use your Text book to read about: Alternative resources:

Study examples of adjustment entries and Lucem Publishers Gr 11 Teachers Guide

Follow the CORRECT format in your textbook bit.ly/Gr11LucemAE

Fee income 71 000

Provision for bad debts adjustment

You might also like