Thank you for providing the trial balance and additional information for Madida Traders. Below are some steps and pointers to help you prepare the required financial statements: --- ### **1. Statement of Comprehensive Income for the year ended 28 February 20.15** #### **Adjustments to Consider:** - **Inventory:** Closing inventory is R91,000 (Adjustment 1). - **Consumable stores:** Closing balance is R900 (Adjustment 2). - **Advertising:** R1,080 relates to the next financial year (Adjustment 3). - **Depreciation:** Calculate 10% using the diminishing balance method on equipment (Adjustment 4). - **Interest on Zen Bank loan:** Calculate for 1 month (Adjustment 5). - **Interest on Ben Bank deposit:** Calculate for 9 months (from June 1, 20.14 to Feb 28, 20.15; Adjustment 6). - **Prepaid rent:** Tenant paid March rent in advance (Adjustment 7). - **Insurance:** R500 was private and should be deducted (Adjustment 8). - **Bad debts:** Write off R800 and adjust for dividend received (Adjustment 9). - **Debtor with credit balance:** Transfer R200 to creditors (Adjustment 10). #### **Format:** | **Description** | Amount (R) | |------------------------|------------| | Sales | [From TB] | | Less: Sales returns | [From TB] | | **Net Sales** | | | Cost of Sales: | | | Opening inventory | [From TB] | | Purchases | [From TB] | | Less: Closing inventory| (91,000) | | **Cost of Sales** | | | **Gross Profit** | | | Add: Other Income: | | | Rent income | [From TB] | | Interest on deposit | [Calculated]| | Less: Expenses | | | Advertising | [Adjusted] | | Depreciation | [Calculated]| | Salaries and wages | [From TB] | | Insurance | [Adjusted] | | Water and electricity | [From TB] | | Telephone | [From TB] | | Bad debts | [Adjusted] | | Consumable stores | [Adjusted] | | Interest on loan | [Calculated]| | Bank charges | [From TB] | | Rates and taxes | [From TB] | | **Net Profit** | | --- ### **2. Statement of Changes in Equity for the year ended 28 February 20.15** Format: | **Description** | Amount (R) | |---------------------|------------| | Opening Capital | [From TB] | | Add: Net Profit | [From SOCI]| | Less: Drawings | [From TB] | | **Closing Capital** | | --- ### **3. Statement of Financial Position as at 28 February 20.15** #### **Assets** - Non-current assets: Land & buildings, equipment (less depreciation), fixed deposit (plus accrued interest) - Current assets: Inventory, debtors (less bad debts), bank, cash float, consumable stores #### **Equity and Liabilities** - Owner’s equity (closing capital) - Non-current liabilities: Zen Bank loan (plus accrued interest) - Current liabilities: Creditors (plus transferred debtor), accrued expenses, prepaid income (rent) --- ### **4. Notes to the Financial Statements** Disclose: - Basis of inventory valuation (FIFO & lower of cost and NRV) - Depreciation method - Loan and interest terms - Bad debt write-off and dividends received - Details of adjustments --- ## **Key Calculations** - **Depreciation:** Equipment value × 10%, diminishing balance. - **Interest on loan (Zen Bank):** R51,000 × 16% × 1/12 - **Interest on deposit (Ben Bank):** R80,400 × 8% × 9/12 - **Bad debts:** Write off R800, dividend received: R800 × 0.70 = R560 (income) - **Advertising:** Remove prepaid portion: R1,080 × 2/6 (for March & April) = R360 prepaid - **Prepaid rent:** Rent for March paid in advance (income received in advance) - **Consumable stores:** Expense = Opening + Purchases – Closing --- Would you like detailed calculations for each adjustment or a completed set of statements? Let me know how you’d like to proceed!