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Benji Walker developed keep fit programmes which he also conducted to select groups of

people. The following details appeared in the pre$-$adjustment trial balance of Keep$-$fit

Services as at $31$ December $2019,$ the end of the financial year.

List of accounts Debit $-$ R Credit $-$ R

Equipment at cost

Accumulated depreciation: Equipment

Vehicles at cost

$490000$

$140000$

$100000$

$4$

Accumulated depreciation: Vehicles

Inventory: consumables

Trade receivables

Allowances for credit losses

Bank

Capital: B Walker

Drawings

Long term borrowings

Trade payables

Service fees

Rent income

Salaries and wages

Rent expense

Telephone

Interest on borrowings

Electricity and water

Consumable material

$53000$

$130600$

$128000$

$131000$

$234500$

$80600$

$6720$

$3000$

$42280$

$128000$

$20000$

$3400$

$370000$

$60000$

$130000$

$858800$

$25500$

$15677001567700$

Additional information:

$1.$ Physical stock$-$taking revealed that there was consumable material on hand at $31$

December $2019$ valued at R$70000.$

$2.$ Repairs to the vehicle costing R$10000$ was erroneously charged to the vehicle at cost

account. A correction has not been recorded as yet.

$3.$ Equipment and Vehicles have to be depreciated as follows:

a$)$ Equipment must be depreciated at $10\%$ per year on the reducing balance method.

No equipment was bought or sold during the current year.

b$)$ Vehicles must be depreciated on the straight line method over a $4$ year period. The

residual value of the vehicle is estimated at R$30000.$

$4.$ A debtor$$s account of R$2600$ must be written off as irrecoverable.

$5$

$5.$ The allowance for credit losses must be adjusted to $3\%$ of outstanding debtors.

$6.$ Included in the rent expense is an amount of R$20000$in respect of rent for January $2020$

which was paid and recorded in December $2019.$

$7.$ The telephone account of R$1200$ was received in December $2019$ but not yet paid nor

recorded.

$8.$ An amount of R$20000$ was repaid towards the long term borrowing on $31$ December

$2019$ and recorded correctly. Account for outstanding interest on the long term

borrowing. Interest on the borrowing is payable at $5\%$ per year.

Required:

$3\mathrm{.}1$ Prepare the statement of profit or loss and other comprehensive income for

Keep Fit Services for the year ended $31$ December $2019$ in compliance with

requirements of International Financial Reporting Standards $($IFRS$)$ appropriate to

businesses such as Keep Fit Services.

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