Question

Question 2 Walton (Pty) Ltd presents you with the following list of balances from their books for the year ended 31 August 2019. List of balances Sales Inventory (1 September 2018) Purchases Inventory (31 August 2019) Advertising Salaries and wages R 18 000 000 129 600 7 488 000 1 728 000 518 400 2 599 200 Insurance 180 000 Depreciation Maintenance Fuel Printing Postage and courier expense Rent paid 864 000 259 200 204 480 158 400 8 064 30 240 148 760 282 240 25 920 Telephones Water and electricity Interest expense Non-current assets Ordinary shares Retained earning Cash 14 112 000 13 426 560 1 440 000 178 560 2 304 000 1 728 000 1 728 000 1 728 000 Accounts receivables Inventory Accounts payable Long-term liabilities

Answer 1

To prepare Financials we need to know Cost of goods sold, we can calculate it by using below formula

COGS = Opening Inventory+Purchases - Closing Inventory.

Opening Inventory	Purchases	Ending Inventory	COGS
+129600	+7488000	-1728000	=5889600

Profit and Loss Account.

Trading A/c
Particular	Amount	Particular	Amount
COGS	58,89,600	Sales	1,80,00,000
Gross Profit	1,21,10,400
	1,80,00,000		1,80,00,000
P&L A/c
Particular	Amount	Particular	Amount
Advertising	518400	Gross Profit	1,21,10,400
Salaries and wages	2599200
Insurance	1,80,000
Depreciation	864000
Maintenance	259200
Fuel	204480
printing	158400
Postage	8064
Telephones	148760
Rent paid	30240
Water and Electricity	282240
Interest	25920
Tax *	19,12,819
Profit After Tax **	49,18,677
	1,21,10,400		1,21,10,400

*See below for calculation of Tax and profit after tax

First we need to Know profit before tax i.e. Gross Profit - All Expenses before Tax

Gross Profit = 1,21,10,400

All Expenses = (518400+2599200+180000+864000+259200+204480+158400+8064+148760+30240+282240+25920)= 52,78,904

Profit before Tax = 1,21,10,400 - 52,78,904 = 68,31,496

*Tax @ 28% = 68,31,496 X 28/100 = 19,12,819

**Profit After Tax = Profit before tax- Tax

= 68,31,496 - 19,12,819 = 49,18,677

Balance Sheet

Liabilities	Amount	Assets	Amount
Ordinary shares	1,34,26,560	Non-current assets	1,41,12,000
Retained Earnings	14,40,000	Cash	1,78,560
Accounts Payable	17,28,000	Accounts Receivable	23,04,000
Long term liabilities	17,28,000	Inventory	17,28,000
	1,83,22,560		1,83,22,560