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CASE STUDY SCENARIO
You are provided with the pre-adjustment trial balance of XYZ Limited is presented as follows:
| Description | Debit | Credit |
| Ordinary shares | 200 000 | |
| 7,5% preference shares | 150 000 | |
| Retained earnings | 147 500 | |
| Trade creditors | 54 750 | |
| Plant and machinery | 352 000 | |
| Motor vehicles | 195 000 | |
| Office furniture | 25 600 | |
| Trade debtors | 42 500 | |
| Allowance for credit losses | 1 650 | |
| Accumulated depreciation on plant and machinery | 56 850 | |
| Accumulated depreciation on motor vehicles | 34 850 | |
| Accumulated depreciation on office furniture | 4 520 | |
| ABSA cheque account | 98 523 | |
| Petty cash | 3 354 | |
| Inventory | 6 210 | |
| Sale of goods | 656 974 | |
| Cost of sales | 268 500 | |
| Water and electricity | 12 500 | |
| Travelling and fuel | 8 540 | |
| Motor vehicle repairs and maintenance | 12 580 | |
| Telephone cost | 64 850 | |
| Salaries and wages | 198 500 | |
| Director’s training | 12 400 | |
| Cleaning and consumables | 3 568 | |
| Staff welfare | 1 489 | |
| Printing and stationery | 980 | |
| 1 307 094 | 1 307 094 |
Additional information:
- A customer returned defective goods of R5 750. VAT of 15% is levied per the Value Added Tax Act by XYZ Limited. The company has a 10% markup rate.
- The municipal account amounting to R1 450 was received on 14 April
- Repairs to the motor vehicle of R 3 200 was refunded through payroll and posted to the salaries and wages account.
- XYZ Trading adopted the periodic inventory system to account for the Consumables purchased during March 2023 of R5 000 was posted to the cost of sales account by the bookkeeper. The stock count concluded on 31 March 2023 valued the consumable inventory on R4 200.
- Ordinary shares trades at R2 At reporting date, the shareholders declared a dividend of 5c. A prospectus offering 50 000 R2 ordinary shares and 10 000 R10 preference shares was advertised during March 2023. Mrs. Flinch entered into an underwriter’s agreement with XYZ Limited for an agreed 3,5% fee.
- The allowance for credit losses should equal 8% of the debtor’s book at reporting
Use the information provided and:
Prepare general journal entries to record the additional information as at 31 March 2023.
| # | General Ledger account | Debit | Credit |
Prepare:
Trial Balance
The Statement of Financial Position as at 31 March 2023 based on the reporting requirements of the International Financial Reporting Standards.