QUESTION 1
[30 MARKS)
Kinta Baloyi Limited has an authorised share capital of 2 500 000 ordinary shares of no-par value, of which 600 000 had
already been issued by the time the trial balance was prepared. The financial director requests your accounting knowledge
in preparing the financial statements for the year ended 31 December 2021, and provides you with the following information:
Trial balance at 31 December 2021
Property
Furniture and Equipment (carrying value)
Investments
Bank
Trade receivables
Debit
R
1 300 000
925 000
150 000
35 000
Credit
R
222 000
Inventory
201 000
Ordinary share capital (600 000 shares)
Retained earnings (1 January 2021)
Revaluation surplus (1 January 2021)
14% Loan from SABA Bank
Trade payables
Current tax payable
Sales
Dividend income
1 200 000
210 000
225 000
100 000
90 000
152 000
4 900 000
55 000
Interest income
15 000
Profit on disposal of equipment
20 000
Cost of sales
3 020 000
Distribution costs
360 000
Operating costs
Administrative costs
72 000
330 000
Tax expense
352 000
6 967 000
6 967 000
Additional information:
1. On 31 December 2021 it was estimated that the inventory has a net realisable value of R180 000. No entries have yet
been made for this.
2. The loan from SABA Bank was acquired on 1 January 2020 and is repayable in full on 1 January 2022. The Interest is
payable annually in arrears on 1 January. Provide for the interest outstanding on the loan for the current financial
period.