Prepare the Statement of Financial Position as at 29 February 2020 Midway Traders is owned by Mr K

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Prepare the Statement of Financial Position as at 29 February 2020

Midway Traders is owned by Mr K. Rabada.  His accountant, Mr V. Philander, prepared the Statement of Comprehensive Income for the year ended 29 February 2020.  However he unexpectedly fell ill and was unable to prepare the remaining financial statements.

 

Mr K. Rabada requires your assistance in preparing the Statement of Financial Position.  The net profit, pre-adjustment trial balance, adjustments and additional information from accountant’s records as at 29 February 2020 were retrieved and are presented below.

 

REQUIRED

Prepare the Statement of Financial Position as at 29 February 2020.

Note:   * Use the format from your study guide.

             * The notes to the financial statements are not required.

(20 Marks) INFORMATION

The information given below was retrieved from the accounting records maintained by the accountant of Midway Traders on 29 February 2020, the end of the financial year:

                 

MIDWAY TRADERS

PRE-ADJUSTMENT TRIAL BALANCE AS AT 29 FEBRUARY 2020

	Debit (R)	Credit (R)
Balance sheet accounts section
Capital		1 656 600
Drawings	134 200
Land and buildings	1 254 900
Vehicles at cost	945 000
Equipment at cost	650 000
Accumulated depreciation on vehicles		528 000
Accumulated depreciation on equipment		365 200
Fixed deposit: Pep Bank (8% p.a.)	198 000
Trading inventory	155 000
Debtors control	176 600
Provision for bad debts		9 900
Bank	137 800
Creditors control		184 800
Mortgage loan: Pep Bank (20% p.a.)		330 000
Nominal accounts section
Sales		2 070 000
Cost of sales	794 000
Sales returns	13 000
Salaries and wages	587 000
Bad debts	18 000
Stationery	30 000
Rates and taxes	58 000
Motor expenses	32 000
Advertising	23 000
Telephone	44 000
Electricity and water	66 000
Bank charges	8 000
Insurance	10 000
Interest on fixed deposit		14 000
Rent income		176 000
	5 334 500	5 334 500

       

 

ADJUSTMENTS AND ADDITIONAL INFORMATION

1. Physical stocktaking on 29 February 2020 showed the following inventories:
   1. Trading inventory R150 000;
   2. Stationery R3 000.
2. Write off the account of debtor, R. Smith, R2 000.  
3. The provision for bad debts must be increased by R1 000.
4. Rent income amounts to R16 000 per month.  Make the necessary adjustment.
5. The water and electricity account for February 2020 was due to be paid on 02 March 2020,  R11 000.
6. Rates and taxes include an amount of R15 000 that was paid for the period  01 January 2020 to 31 March 2020.
7. An amount of R800 appeared in the February 2020 bank statement for bank charges.  This transaction was not recorded.
8. The investment in fixed deposit was made on 01 March 2019 and matures on  31 August 2020.  Make the necessary adjustment for the interest.
9. The loan from Pep Bank was obtained on 01 February 2020.  Provide for the outstanding interest.  Interest is not capitalised.  Note:  Loan repayments during the next financial year are expected to total R50 000.
10. Provide for depreciation as follows:
    1. On equipment at 10% p.a. on cost.
    2. On vehicles at 20% p.a. using the diminishing balance method.
11. The net profit, according to the Statement of Comprehensive Income for the year ended  29 February 2020, amounted to R429 140 after the above adjustments and additional information were taken into account.