Prepare the Statement of profit or loss and other comprehensive income of Young Traders for the year ended 30 April 2020. Remember to show all your working, and if the amount is added or subtracted.
Young Traders is owned by Yvonne Young. Young Traders is not a VAT vendor and uses the perpetual
inventory system. Goods are sold at a mark‐up of 50% on cost price. The following pre‐adjustment
balance
Pre‐adjustment Trial Balance of Young Traders as at 30 April 2020
Debit (R) Credit (R)
Capital (1 May 2019) 1 200 000
Vehicles 550 000
Accumulated
Fixed deposit (ABBA Bank) (12% p.a.) 75 000
Inventory 149 000
Debtors Control 123 500
Allowance for Credit Losses (1 May 2019) 2 500
Creditors Control 50 100
Bank 199 400
Sales 1 467 500
Cost of Sales 914 000
Sales Returns 70 000
Salaries and Wages 640 000
Stationery 84 500
Carriage on Sales 23 700
Credit Losses 13 500
Telephone 82 500
R2 925 100 R2 925 100
20 2020
© The Independent Institute of Education (Pty) Ltd 2020
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Additional information and adjustments at year‐end:
1. According to a physical stock taking, stationery on hand amounted to R4 500 and trading
inventory on hand amounted to R147 000.
2. An amount of R2 500 was prepaid on carriage on sales on goods that will be delivered in
March 2020.
3. A debtor, Joe Jones, isinsolvent and his debt of R3 500 must be written off asirrecoverable.
4. The allowance for credit losses must be adjusted to R2 000.
5. Provide depreciation on vehicles of R55 000 for the current financial year.
6. The owner withdrew R215 000 cash over the year for his personal use. This entry still needs
to be recorded.
7. An amount of R1 000 for Telephone was incorrectly debited to the Salaries and Wages
account during April 2020. Correct the error.
8. Young Traders invested the fixed deposit with ABBA Bank on 1 May 2019. The fixed deposit
will mature on 30 April 2021. Interest for the current year must still be provided.
Prepare the Statement of profit or loss and other comprehensive income of
Young Traders for the year ended 30 April 2020.
Remember to show all your working, and if the amount is added or subtracted.
Income Statement:
It is an important statement that tells that the company has earned profit or loss. Ratios such as earnings per share, profit margins and interest coverage ratios among the others are calculated using the income statement.
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