The following is a pre-adjusted Trial balance of Khulumani Pty Ltd (Khulumani) on 28 February 2020 Balance sheet section Capital 596 400,00 Drawings 130 500,00 Land and buildings 600 000,00 Equipment 145 000,00 Accumulated depreciation (1 March 2020) 33 000,00 Fixed deposit: TT Bank (8% p.a) 50 000,00 Loan: BTK Bank (16% p.a) 60 000,00 Inventory (1 March 2020) 105 330,00 Debtors control 51 630,00 Creditors control 74 400,00 Bank 18 720,00 Petty cash 1 500,00 Nominal Accounts Sales 841 600,00 Purchases 408 760,00 Sales returns 6 000,00 Purchases returns 4 500,00 Rent income 80 400,00 Interest on fixed deposit 2 000,00 Bank charges 2 700,00 water & electricity 18 810,00 Telephone 5 250,00 Insurance 5 850,00 Interest on loan 7 250,00 Rates and taxes 24 600,00 Salaries & wages 84 640,00 Consumables stores 10 960,00 Advertising 14 800,00 Adjustments and additional information 1. Inventory on hand on 28 February 2020 amounted to R91 000. Inventories are measured at cost, on a FIFO method and at net realisable value, whichever is the lower. 2. Consumable stores according to stocktaking on 28 February 2020 amounted to R900. 3. Advertising included a payment of R1 080 for advertisements to appear in a local newspaper from 1 November 2019 to 30 April 2020. 4. Depreciation is provided annually on equipment at 10% p.a. using the diminishing balance method. 5. The loan from BTK bank is an unsecured loan that was granted to Khulumani on 01 February 2019. Provide for outstanding interest on loan. The loan is repayable in 10 equal instalments. The first instalment is payable on 31 March 2020 6. The investment at TT Bank was made on 1 June 2019. Provide for outstanding interest on the fixed deposit. The fixed deposit matures on 1 June 2021. 7. The tenant has already paid the rent for March 2020. Note that the monthly rental of R6 000 was increased by 10% with effect from 1 December 2019 8. A debit order for R500 for the insurance of the owner’s home was erroneously entered in the Insurance account. 9. A debtor who owed R800 has been declared insolvent. His estate paid a first and final dividend of 70 cents in the Rand. The balance of his account must be written off. No entries have been made for these transactions. 10. A debtor’s account with a credit balance of R200 must be transferred to her account in the creditor’s ledger Required Prepare statement of comprehensive income of Khulumani Pty Ltd for the year ended 28 February 2020
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
The following is a pre-adjusted
Balance sheet section
Capital 596 400,00
Drawings 130 500,00
Land and buildings 600 000,00
Equipment 145 000,00
Accumulated
Fixed deposit: TT Bank (8% p.a) 50 000,00
Loan: BTK Bank (16% p.a) 60 000,00
Inventory (1 March 2020) 105 330,00
Debtors control 51 630,00
Creditors control 74 400,00
Bank 18 720,00
Petty cash 1 500,00
Nominal Accounts
Sales 841 600,00
Purchases 408 760,00
Sales returns 6 000,00
Purchases returns 4 500,00
Rent income 80 400,00
Interest on fixed deposit 2 000,00
Bank charges 2 700,00
water & electricity 18 810,00
Telephone 5 250,00
Insurance 5 850,00
Interest on loan 7 250,00
Rates and taxes 24 600,00
Salaries & wages 84 640,00
Consumables stores 10 960,00
Advertising 14 800,00
Adjustments and additional information
1. Inventory on hand on 28 February 2020 amounted to R91 000. Inventories are measured at cost, on a FIFO method and
at net realisable value, whichever is the lower.
2. Consumable stores according to stocktaking on 28 February 2020 amounted to R900.
3. Advertising included a payment of R1 080 for advertisements to appear in a local newspaper from 1 November 2019 to
30 April 2020.
4. Depreciation is provided annually on equipment at 10% p.a. using the diminishing balance method.
5. The loan from BTK bank is an unsecured loan that was granted to Khulumani on 01 February 2019. Provide for
outstanding interest on loan. The loan is repayable in 10 equal instalments. The first instalment is payable on 31 March
2020
6. The investment at TT Bank was made on 1 June 2019. Provide for outstanding interest on the fixed deposit. The fixed
deposit matures on 1 June 2021.
7. The tenant has already paid the rent for March 2020. Note that the monthly rental of R6 000 was increased by 10% with
effect from 1 December 2019
8. A debit order for R500 for the insurance of the owner’s home was erroneously entered in the Insurance account.
9. A debtor who owed R800 has been declared insolvent. His estate paid a first and final dividend of 70 cents in the Rand.
The balance of his account must be written off. No entries have been made for these transactions.
10. A debtor’s account with a credit balance of R200 must be transferred to her account in the creditor’s ledger
Required
Prepare statement of comprehensive income of Khulumani Pty Ltd for the year ended 28 February 2020
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