Weekly test no 3
Question 1 (40 Marks: 24 min)
Information
Figures extracted from the Pre-adjustment Trail Balance on 30 June 2013
Note: Not all accounts provided
REQUIRED:
Use the information below to prepare Income Statement for the year ended 30 June 2013.
Debit
Ordinary share capital
Vehicles
Equipment
Accumulated depreciation on vehicles
Accumulated depreciation on equipment
Trading stock
Debtors control
Provision for bad debts
Creditors control
Mortgage loan from YZ Bank
Consumables stores on hand (1 July 2012)
SARS (income tax)
Sales
Cost of sales
Debtors allowances
Rent income
Directors fee
Audit fees
Salaries and wages
UIF contribution
Consumables stores
Bank charges
Bad debts
Sundry expenses
Credit
2 800 000
320 000
154 000
155 000
76 200
219 546
43 000
1 900
78 900
300 000
1034
60 000
3 109 650
2 066 600
9 650
40 900
312 000
21 900
354 000
3 680
4 890
5 870
3 560
42 322
Adjustments and additional information
1. The rent income was increased by R800 on 1 March 2013. The tenant has not yet paid
the rent for June 2013.
2. The bookkeeper forgot to write back consumable stores on hand on 1July 2012.
3. According to a physical stock taking done on 30 June 2012 the following were on
hand:
Trading stock
R218 700
Consumables stores R1 320
4. The details of employee, R Subiso, who had been employed on 1 June 2013, was
omitted from salaries journal for June 2013. The details were as follows:
Gross salary
Contribution
UIF
UIF
Pension
fund
11 000
1 760
900
150
150
5. The following appeared on the June bank statement, but had not been recorded in the
books of the company:
Bank charges, R523
A direct deposit by a debtor who had been written off as a bad debt in the previous
financial year, R1 300
6. Provision for bad debt must be adjusted to R2 100
7. The following loan statement was received from YZ Bank on 30 June 2013.
Interest on loan is capitalised.
Balance on 1 July 2012
315 000
Interest capitalised
?
Monthly payment of loan (R4000 x 12)
48000
Balance on 30 June 2013
300 000
8. Equipment was sold on 28 February 2013 for R 3000 cash. The details from the fixed
Assets Register were:
Cost price, R6 600
Accumulated depreciation at the beginning of the year, R3 465
Depreciation is calculated at 15% per annum on the cost price.
This asset disposal has not been recorded.
9. Provide for depreciation as follows:
On vehicles at 20% per annum on diminishing balance. A new vehicle was purchased
on 1 April 2013 for R80 000 and correctly recorded.
On equipment at 15% p.a on the cost price
10. A final dividend of 45 cents per share was declared on 30 June 2013.
11. Income tax is calculated at 28% of the net profit.
PAYE
WEEKLY TEST NO 3
MEMORANDUM
Income statement of HB Ltd for the year ended 30 June 2013
Sales (3 109650 - 9650)
Cost of sales
Gross profit
Other income
Rent income (40 900 +4 3000)
Bad debts recovered
Profit on sale of assets (4 125 +3 000 -6600)
3 100 000 √√
(2 066 600) √
1033 400 √
47 205 √
45 200 √√√
1 300√
525√√√
GROSS OPERATING PROFIT
Operating expenses
Directors fees
Audit fees
Salaries and wages (354 000 +11 000)
UIF contribution (3680 +150)
Consumables stores (4890 +1034 -1320)
Bank charges (5870 +523)
Bad debts
Sundry expenses
Trading stock deficit (219 546 – 218 700)
Depreciation (660 + 22 110 + 17 000 + 4000)
Provision for bad debts adjustment
1080 425 √
(804 425) √
312 000√
21 900√
365 000√√
3 830√√
4 604√√√
6 393√√
3 560√
42 322√
846√√
43 770√√√√
200√
OPERATING PROFIT
Interest income
Profit before interest expense
Interest expense
Profit before taxation
Taxation
Net profit for the year
276 000√
276 000√
(33 000) √
243 000√
(68 040) √
174 960√
WEEKLY TEST NO 3
ANSWERSHEET
Income statement of HB Ltd for the year ended 30 June 2013
Sales
Cost of sales
GROSS PROFIT
OTHER OPERATING INCOME
GROSS OPERATING PROFIT
OPERATING PROFIT
Interest income
Profit before interest expense
Interest expense
Profit before taxation
Taxation
Net profit for the year