Question

The following is the general ledger balances of Herbie a herb trading business entity as at 31 July 2018 HERBIE EXTRACT FROM THE LIST OF BALANCES AT 31 JULY 2018 Capital Drawings Vehicles at cost (1 August 2017) Accumulated depreciation: Vehicles (1 August 2017). Inventory: Trading (1 August 2018). Stationery (1 August 2017). Fixed deposit. Bank (favourable) Mortgage (ZZC bank). Commission income Insurance expenses Packing materials (1 August 2017) Rental income Water and electricity expenses Deposit water and electricity Advertising Bank charges . . . Communication and website expenses Interest income 100 000 52 000 100 000 46 000 116 000 11 200 200 000 38 974 380 000 192 888 27 000 9 000 77 900 105 100 2 000 260 000 5 564 7 600 8 500 376 000 80 000 67 000 Trade receivables control Trade payables control Additional information 1 An annual rental income of R27 000 was received on 1 October 2017 2. On the 31 June 2017 water and electricity of R32 500 was paid for the period up to 30 December 2018 On 31 July 2018 stationery on hand amounted to R13 000. On 31 August 2017 Herbie bought a new delivery van for R60 000 cash. Depreciation must still be provided for as follows: -vehicles at 20% per annum on the diminishing-balance method. Packing materials on hand at 31 July 2018 amounted to R6 000 On the 31 August 2018 an instalment of 5% of mortgage was due. The interest payable on the mortgage is at a rate of 15% per annum and is still due for the current year 3. 4. 5 6. 7- 8. An inventory count on 31 July 2018 revealed that inventory amounting to R66 000 was on hand. 9.You may assume that the total comprehensive loss for the year, after all the above adjustments have been taken into account, amounted to R31 243

a. Prepare the statement of financial position of Herbie as at 31 July 2018.

b. Prepare the note for property, plant and equipment of Herbie for the year ended 31 July 2018 (The total column can be omitted)

Please note:
The statements must comply with the requirements of International Financial Reporting Standards (IFRS) appropriate to the business of the entity
All calculations must be shown.
Notes on accounting policy are not required

Answer 1

1. Statement of Profit & Loss A/c as at 31 July 2018

Particulars	Amount (R)
Revenue	1,35,000
Cost of Sales	Nil
Gross Profit	1,35,000
Other Income
Rental Income	77,900
Commission Income	1,92,888
Interest Income	8,500
Other Expenses
Stationery	(11,200)
Insurance	(27,000)
Packing Material	(9,000)
Water and Electricity	(96,072)
Advertising	(2,60,000)
Bank Charges	(5,564)
Communication and Website	(7,600)
Salaries	(3,76,000)
Depreciation on Car	(22,800)
Finance Cost	(57,000)
Profit/(Loss) before tax	(4,57,948)
Income tax expense	Nil
Profit/(Loss) for the year from continuing operation	(4,57,948)
Loss for the year from discontinuing operation	Nil
Profit/ (Loss) for the year	(4,57,948)
Other Comprehensive loss	(31,243)
Loss for the year	(4,89,191)

2. Statement of Financial Position as at 31 July 2018

EQUITY AND LIABILITIES	(R)
Equity attributable to owner
Capital	100,000
Drawings	52,000
Retained Earning	(4,89,191)
Total Equity	(3,37,191)
Non-Current Liabilities
Mortgage (ZZC Bank)	3,80,000
Total Non-Current Liabilities	3,80,000
Current Liabilities
Interest Payable on Mortgage	57,000
Trade Payable Control	67,000
Total Current Liabilities	124,000
Total Liabilities	504,000
Total Equity and Liabilities	166,809
Non- Current Assets
Vehicle as on 1st August 2017 100,000
Add : Addition 60,000
Less : Accumulated Depreciation (46,000)
Less : Current Year Depreciation ( 22,800)	91,200
Fixed Deposit	200,000
Total Non-Current Assets	291200
Current Assets
Bank	38,974
Cash	(60,000)
Deposit Water & Electricity	2,000
Prepaid Water & Electricity	9028
Trade Receivable Control	80,000
Inventory	116,000
Stationery	13,000
Packing Material	6,000
Total Current assets	205,002
Total Non-Current Assets and Current Assets	496,202