Solution for QID #74944: Prepare the Statement of Financial Position as at 29 Februar | StudyHelpMe

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 Physical stocktaking on 29 February 2020 showed the following inventories: Trading inventory R150 000; Stationery R3 000. Write off the account of debtor, R. Smith, R2 000.   The provision for bad debts must be increased by R1 000. Rent income amounts to R16 000 per month.  Make the necessary adjustment. The water and electricity account for February 2020 was due to be paid on 02 March 2020,  R11 000. Rates and taxes include an amount of R15 000 that was paid for the period  01 January 2020 to 31 March 2020. An amount of R800 appeared in the February 2020 bank statement for bank charges.  This transaction was not recorded. The investment in fixed deposit was made on 01 March 2019 and matures on  31 August 2020.  Make the necessary adjustment for the interest. 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. Provide for depreciation as follows: On equipment at 10% p.a. on cost. On vehicles at 20% p.a. using the diminishing balance method. 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.