Adjustments and additional information1. The telephone account for February 2020 has not yet been paid, R3 000.2. A debtor, P. Sellers, was declared insolvent. His insolvent estate paid 40% of his debt of R2 000 and this has been recorded. The balance of his account must now be written off.3. Stocktaking on 28 February 2020 revealed the following stocks on hand:Trading inventory R120 000Stationery R8004. The provision for bad debts must be adjusted to R6 800.5. Rent has only been received up to 31 December 2019. Provide for the outstanding rent.6. The insurance total includes an annual insurance premium of R6 000 that was paid for the period 01 September 2019 to 31 August 2020.7. Provide for outstanding interest on the mortgage loan, R9 600.8. Provide for outstanding interest on fixed deposit. The investment in fixed deposit was made on 01 March 2019 and matures on 31 August 2020.9. The credit purchase of a new battery for the motor vehicle has not been recorded, R500.10. Provide for depreciation as follows:On equipment at 15% p.a. on cost.On vehicles at 20% p.a. using the diminishing balance method The trial balance and additional information given below was obtained from the records of Vancouver Traders on 28 February 2020, the end of the financial year. REQUIREDUse the trial balance, adjustments and additional information to prepare the Income statement for the year ended 28 February 2020PRE-ADJUSTMENT TRIAL BALANCE ON 28 FEBRUARY 2020Balancesheet accounts sectionDebitCreditCapital1 300 00ODrawings96 000Land and Buildings912 000Vehicles at Cost672 000Equipment at Cost480 000Accumulated Depreciation on VehiclesAccumulated Depreciation on EquipmentFixed deposit: Fin Bank (9% p.a.)Trading inventory384 000168 800144 000123 000Debtors control142 420Provision for Bad Debts7 200Bank59 944Cash Float7 200Creditors Control133 344Mortgage Loan Fin Bank (12%)240 000Nominal Accounts SectionSales1 510 320Cost of sales432 000Sales returns9 600Salaries and wagesBad debts427 20013 400Stationery21 80057 10096 000Rates and TaxesMotor expensesRepairs to building17 200Telephone32 400Electricity and water48 500Bank charges6 000Insurance62 300Intereston mortgage loan19 200Interest on Fixed Deposit10 800Rent Incorme124 8003 879 2643 879 264

Income Statement on 28 February 2020 Particulars Amount(R) Sales 1510320 Less : Sales Returns…

Answered: The trial balance and additional…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter4: The Adjustment Process

Section: Chapter Questions

Problem 13PA: Prepare adjusting journal entries, as needed, considering the account balances excerpted from the...

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Adjustments and additional information
1. The telephone account for February 2020 has not yet been paid, R3 000.
2. A debtor, P. Sellers, was declared insolvent. His insolvent estate paid 40% of his debt of R2 000 and
this has been recorded. The balance of his account must now be written off.
3. Stocktaking on 28 February 2020 revealed the following stocks on hand:
Trading inventory R120 000
Stationery R800
4. The provision for bad debts must be adjusted to R6 800.
5. Rent has only been received up to 31 December 2019. Provide for the outstanding rent.
6. The insurance total includes an annual insurance premium of R6 000 that was paid for the period
01 September 2019 to 31 August 2020.
7. Provide for outstanding interest on the mortgage loan, R9 600.
8. Provide for outstanding interest on fixed deposit. The investment in fixed deposit was made on 01
March 2019 and matures on 31 August 2020.
9. The credit purchase of a new battery for the motor vehicle has not been recorded, R500.
10. Provide for depreciation as follows:
On equipment at 15% p.a. on cost.
On vehicles at 20% p.a. using the diminishing balance method

The trial balance and additional information given below was obtained from the records of Vancouver Traders on 28 February 2020, the end of the financial year. REQUIRED
Use the trial balance, adjustments and additional information to prepare the Income statement for the year ended 28 February 2020
PRE-ADJUSTMENT TRIAL BALANCE ON 28 FEBRUARY 2020
Balancesheet accounts section
Debit
Credit
Capital
1 300 00O
Drawings
96 000
Land and Buildings
912 000
Vehicles at Cost
672 000
Equipment at Cost
480 000
Accumulated Depreciation on Vehicles
Accumulated Depreciation on Equipment
Fixed deposit: Fin Bank (9% p.a.)
Trading inventory
384 000
168 800
144 000
123 000
Debtors control
142 420
Provision for Bad Debts
7 200
Bank
59 944
Cash Float
7 200
Creditors Control
133 344
Mortgage Loan Fin Bank (12%)
240 000
Nominal Accounts Section
Sales
1 510 320
Cost of sales
432 000
Sales returns
9 600
Salaries and wages
Bad debts
427 200
13 400
Stationery
21 800
57 100
96 000
Rates and Taxes
Motor expenses
Repairs to building
17 200
Telephone
32 400
Electricity and water
48 500
Bank charges
6 000
Insurance
62 300
Intereston mortgage loan
19 200
Interest on Fixed Deposit
10 800
Rent Incorme
124 800
3 879 264
3 879 264

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