QUESTION 12-B (SUGGESTED SOLUTION)

R
(a) Profit before tax 500 670
Pre-paid advertising cost (18 000/18 x 8) 8 000
Installation costs as part of cost 5 000
Inventories on hand - stationery 370
- packaging materials 4 870
Depreciation adjustment

New : (180 000 + 1 000 + 5 000 + 3 000) x 10% x 6/12 = 9 450

9 450 - 12 145 (already provided) 2 695

Adjusted profit before tax 521 605

(b) PLAYTOYS LIMITED

STATEMENT OF COMPREHENSIVE INCOME FOR THE REPORTING PERIOD
ENDED 28 FEBRUARY 20x9
Notes R
Revenue 1 2 370 000
Cost of sales (1 100 430)
Gross profit 1 269 570
Other income (3 180 + 40 300 + 24 000) 67 480
Distribution costs (23 960)
Administrative expenses (27 400)
Other expenses (balancing figure) (688 485)
Income from financial assets 3 74 400
Finance charges 4 (100 000)
Profit before tax 5 521 605
Taxation 7 (167 553)
Profit for the period 405 052

PLAYTOYS LIMITED
NOTES TO THE STATEMENT OF COMPREHENSIVE INCOME AND
STATEMENT OF CHANGES IN EQUITY FOR THE REPORTING PERIOD
ENDED 28 FEBRUARY 20x9
R

1. Other income

Profit on sale of asset 40 300

Sale of by-products 3 180
Fees 24 000
67 180
QUESTION 12-B (SUGGESTED SOLUTION - CONTINUED)

2. Income from financial assets

Unlisted - dividends (27 000 + 45 000) 72 000

Listed - interest 2 400
74 400

3. Finance costs

Finance charges 100 000

4. Profit before tax

Profit before tax shown after the following had

been taken into account, amongst others:
Directors’ remuneration (see note 3) 148 600
Auditors’ remuneration
For audit 3 000
Computer advisory services 1 090
Expenses (430 + 80) 510

Depreciation
Manufacturing plant (60 000 + 9 450) 69 450
Vehicles 30 000
Employee benefit expense (347 800 - 148 600) 199 200
Loss of inventories 40 970

Directors’ remuneration

Executive directors
Emoluments (120 000 + 9 600 + 3 000 + 2 000 + 12 000 + 4 300 + 600) 151 500
Less: Paid by subsidiaries (600)
Less: Payment in kind (4 300)
Total paid by company 146 600

Non-executive directors

Emoluments 500
Compensation in respect of loss of office 1 500
Total paid by company 2 000

6. Tax
Comprising:

SA normal tax
Current tax - current year 167 553