Revved up motors
Trial balance at 31 December 2024
Equipment: Cost 50,000
Accumulated depreciation: equipment
Second hand motor vehicles on the sales floor 650,000
Investment in RSA Bonds 500,000
Bank overdraft
Ordinary share capital
Retained earnings
Sales
Cost of sales 1,671,000
Administration expenses 55,000
Salaries and wages 60,000
Finance income from providing financing to customers
Interest income on investment in RSA bonds
Interest expense: Bank overdraft 500
Income tax expense for the year 271,000
Dividend paid 20,000
3,277,500
Additional information
1. Revved up motors classifies expenses according to their function. Three functions have been iden
Administration, Distribution and operations
2. Salaries and wages is allocated to the three functions on a 30:40:10 basis (Admin:Distribution:oper
3. Depreciation on equipment is provided for at 20% per annum on the straightline method.
No depreciation has been provided yet for the year. The depreciation can be allocated to administrat
function.
4. The interest in RSA bonds is with regards to an investment made years ago, this is not
part of Revved up Motors normal business activities.
5. A final dividend of R20 000 for the year ended 31 December 2024 was paid on 31 December 2024.
6, Revved up Motors is expanding rapidly and therefore they issued 90 000 shares at R1 each on 15 D
The shares were paid up on the same date.
REQUIRED:
Prepare the following statements according to IFRS18:
- Statement of profit and loss and other comprehensive income
- Statement of changes in equity (only the colums for share capital and retained earnings)
- Statement of financial position
15,000
20,500
590,000
32,000
2,500,000 2,500,000
- 1,671,000
- 55,000
- 60,000
70,000 70,000
50,000 50,000
834,000
3,277,500 -
n. Three functions have been identified:
0:10 basis (Admin:Distribution:operations)
the straightline method.
on can be allocated to administration
e years ago, this is not
4 was paid on 31 December 2024.
90 000 shares at R1 each on 15 December 2024.
and retained earnings)
Suggested solution
Statement of profit and loss and other comprehensive income
2024
Sales 2,500,000
Cost of sales 1,671,000
Gross profit 829,000
Finance income from providing financing to customers 70,000
Administrative expenses (55+10depr+22,5s&w) 87,500
Distribution expenses (S&w 30) 30,000
Other expenses (s&w 7,5) 7,500
Operating profit /(loss) 774,000
Finance income 50,000
Profit before financing and income taxes 824,000
Finance costs of borrowings 500
Profit before income tax expense 823,500
Income tax expense 271,000
Profit for the year 552,500
Retained
Statement of comprehensive income Share capital earnings
Opening balance 500,000 32,000
Shares issued 90,000
Profit for the year 552,500
Dividends paid 20,000
Closing balance 590,000 564,500
Statement of financial position 2024
Non current assets
Property plant and equipment
Equipment (50-15- 2024 depr 10) 25,000
Current assets
Inventory 650,000
Investment in RSA Bonds 500,000
1,175,000
Equity and liabilities
Ordinary share capital 590,000
Retained earnings 564,500
Current liabilities
Bank overdraft 20,500
1,175,000
Markers note -
Students must have the subtotals to earn the marks
Calculation of expenses Total Admin
Salaries and wages 60
Ratio 30
Salaries and wages allocated to function 22.5
0.5
0.5
1
1.5
1
1
0.5
0.5
1
0.5
1
1
1
1
1 ME
1
0.5
0.5
1 ME
0.5 ME
0.5
18
Maks 17 marks
Distr Operation
40 10 80
30 7.5 60
