NSC Accounting Note to the Balance Sheet and Asset disposal: 4.1 Choose a description from CO

Question

4.1 Choose a description from COLUMN B that matches the term in COLUMN A. Write only the letter (A–D) next to the question number (4.1.1–4.1.4) in the ANSWER BOOK, for example 4.1.5 E.

4.1.1 Income Statement
4.1.2 Balance Sheet
4.1.3 Cash Flow Statement
4.1.4 Independent Audit Report

4.2 MTOMBENI LTD
The information relates to Mtombeni Limited for the financial year ended 28 February 2017:

REQUIRED:

4.2.1 Refer to Information A and B and calculate:
- Carrying value of the vehicle sold on 30 November 2016
- Total depreciation on 28 February 2017

4.2.2 Prepare the Income Statement (Statement of Comprehensive Income) for the year ended 28 February 2017.

INFORMATION:
Information extracted from the Pre-adjustment Trial Balance on 28 February 2017:

Balance Sheet Accounts Section
Land and buildings  1 600 000
Vehicles  ?
Equipment  250 000
Accumulated depreciation on equipment (01/03/2016)  85 000
Trading stock  46 000
Debtors' control  3 650
Provision for bad debts  3 650
Mortgage loan: Quick Bank  1 056 000

Nominal Accounts Section
Sales  5 500 000
Cost of sales  3 150 000
Debtors' allowances  ?
Directors' fees  380 000
Audit fees  ?
Bad debt expense  ?
Rent income  19 220
Interest income  ?
Employees' salaries and wages  ?
Bad debts recovered 7 760
Consumable stores  67 500
Bank charges  7 760
Sundry expenses  140 085

Adjustments and additional information:
A. No entries were made for a vehicle sold on 30 November 2016 for R97 700 cash. Details of the vehicle:
Cost price, R190 000
Accumulated depreciation (1 March 2016), R72 000
Depreciation rate: 20% p.a. on cost
B. Provide for depreciation as follows:
On remaining vehicles – R138 000 for the financial year
On equipment at 10% p.a. on the diminishing-balance method
NOTE: New equipment costing R32 000 was purchased and recorded on 1 September 2016.
C. Goods sold on credit to debtor J. Gander, for R15 000 were not recorded. The mark-up is 60% on cost price.
D. A physical stocktaking on 28 February 2017 reflected trading stock of R374 000.
E. Consumable stores used during the financial year amounted to R61 700.
F. The account of debtor, L. Maseko, must be written off as irrecoverable, R1 900.
G. Entries on the February 2017 Bank Statement not yet recorded in the books of the company:
Bank charges, R870
Debit order payment for the monthly insurance premium, R1 780.
H. Provision for bad debts must be adjusted to R4 030.
I. Loan statement received reflected the following:
Balance: 1 March 2016  1 356 000
Interest  ?
Repayment during the financial year  300 000
Balance: 28 February 2017  1 200 000
J. An employee, H. Brooks, who commenced work on 1 February 2017, was omitted from the Salaries Journal. Details of his salary for February 2017 are:

GROSS SALARY
13 500  
DEDUCTIONS
PAYE  1 080  
PENSION FUND  135  
UIF  1 620  
CONTRIBUTIONS
PENSION FUND  135  
UIF  
NOTE: All contributions are recorded as part of salaries and wages.

The rent increase was R1 500 per month from 1 November 2016. The tenant has not paid for the February 2017 rent.

Interest income is calculated at 28% of net profit.

Net profit after tax amounts to R864 000.

4.1 Choose a description from COLUMN B that matches the term in COLUMN A - NSC Accounting - Question 4 - 2017 - Paper 1

Worked Solution & Example Answer:4.1 Choose a description from COLUMN B that matches the term in COLUMN A - NSC Accounting - Question 4 - 2017 - Paper 1

4.2.1 Carrying value of the vehicle sold on 30 November 2016

4.2.1 Total depreciation on 28 February 2017

4.2.2 Prepare the Income Statement (Statement of Comprehensive Income) for the year ended 28 February 2017

Mtombeni Limited

Income Statement for the Year Ended 28 February 2017

Revenue

Operating Income

Operating Expenses

Operating Profit

Interest Income

Net Profit Before Tax

Income Tax Expense

Net Profit After Tax

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