QUESTION B7(19 marks / 35 minutes)

The following information relates to Natal Close Corporation:

1.	Balances at 30 April 2004:
		R
	Members contributions	143 000
	Furniture and equipment at cost	149 000
	Vehicles at cost	155 000
	Accumulated depreciation 30 April 2003:
	Furniture and equipment	24 000
	Vehicles	36 000
	Investment at cost 45 000 shares in Long Limited	60 000
	Inventory 1 May 2003	218 900
	Accumulated profits 30 April 2003	35 700
	Receiver of Revenue provisional tax paid	27 600
	Accounts Receivable	73 500
	Accounts Payable	80 000
	Provision for bad debts 30 April 2003	1 440
	12% loan from member Z Zita, acquired on
	1 November 2003	90 000
	17% long-term loan, acquired on 1 May 2003	180 000
	Bank (dr)	10 400
	Sales	1 290 000
	Purchases	970 000
	Import duty on purchases	6 180
	Railage on purchases	10 200
	Repairs and maintenance	6 300
	Water and electricity	2 700
	Commission on sales	7 800
	Delivery expenses on sales	5 880
	Discount allowed	5 340
	Salaries and wages	94 500
	Stationery	2 250
	Loss on sale of fixed assets	5 900
	Insurance	6 590
	Rent paid	39 600
	Interest paid	22 500

2. Additional information:

2.1 Inventory on 30 April 2004 amounted to R267 000.

2.2 Included in salaries and wages is an amount of R45 000 which was paid to member T Tiger as remuneration for his special contribution to the management of the enterprise.

2.3 A debt of R500 must still be written off and the provision for bad debts must be adjusted to 5% of the outstanding accounts receivable balances. (Ignore VAT)

2.4 Long Limited declared a dividend on 30 April of 10 cents per share, which is payable on 15 May 2004.

2.5Provision must be made for the following:

2.5.1Depreciation on furniture and equipment at 15% p.a. on the diminished balance.

2.5.2Depreciation on vehicles at 20% p.a. on cost.

2.5.3SA Normal tax for the year, R42 700.

2.5.4Distributions to members, R22 000.

Required:

The income statement of Natal Close Corporation for the year ended 30 April 2004 in accordance with generally accepted accounting practice.