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Financial Year-End Adjustments Summary

The document outlines financial adjustments and transactions for the year ending February 28, 2022, including trade discounts, bad debt provisions, and stock valuations. It details the sale of an old vehicle, the purchase of new equipment, and adjustments for advertising and rent income. Additionally, it mentions the provision for depreciation and cash flow considerations, including tax and dividends paid.

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tlotlegophemelo8
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61 views16 pages

Financial Year-End Adjustments Summary

The document outlines financial adjustments and transactions for the year ending February 28, 2022, including trade discounts, bad debt provisions, and stock valuations. It details the sale of an old vehicle, the purchase of new equipment, and adjustments for advertising and rent income. Additionally, it mentions the provision for depreciation and cash flow considerations, including tax and dividends paid.

Uploaded by

tlotlegophemelo8
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

First example:.

The year ended is 28 February 2022

markup is 60%
1. Trade discount of 360000 was allowed on invoices
to certain customers.

2. A debtor with outstanding balance of


R42000 has left. His account must be
written off.

3. Provision for bad debts must be adjusted to


5% of outstanding debtors
4. Physical stock taking reflected:
Trading stock: 1 002 000
Packing material : 6 020

One employee received a double salary from


salary journal - must reverse . Employee made
direct deposit as refund.
other examples

-An old vehicle , with carrying value of R170 000 on 1 march


2022 , was sold for R150 000 cash on 1 December 2022
• depreciation for vehicles is 20% on deminishing balance
method

Equipment new costing R50 000 was purchased on 1 nov


2022 for cash. Transaction was recorded
Depreciation: 15% on cost
Two directors were paid . One requested that his fees for
March 2023 to be paid in February 2023, due to his
findncial problems. They agreed and now they receive same
monthly payment
Advertising of R40000 consists of a month to
month contract with local radio station.
Advertising was paid for 13 months from 1
November 2021, contract rate was decreased
by 10%
H. Provision for depreciation:
On vehicles at 15% on cost price
On equipment at 10% on diminishing
NOTE: new computer was purchased on credit
on 1 June 2021 for 60000. This has already
been recorded .
Operating profile is 15% on turnover
( turnover is sales)

rent of R74000 was received from tenant for


the period 1 July 2020 to. 31 August 2021.
This has been recorded. This amount takes into
account a reduction of R750 per month from 1
May 2021. This has not been adjusted
Cash flow

Tax paid '. Opening balance


Net profit before- net after ( income tax)
tax end of year
= tax paid

Dividends paid

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