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QUESTION FOUR

$(20$ MARKS$)$

The following information relates to Richfield Distributors:

Pre$-$adjustment trial balance of Richfield Distributors as at $31$ December $20\mathrm{.}1$

The following adjustment must still be accounted for:

Packaging material on hand at $31$ December $20\mathrm{.}1$ to the value of $R980.$

The long$-$term borrowing was entered into on $1$ October $20\mathrm{.}1.$ according to the agreement, interest is payable bi$-$annually at a rate of $18\%$ vper annum.

Advertisements includes an amount of R$400$ paid for January $20\mathrm{.}2$

Rental income includes an amount in respect of January $20\mathrm{.}2.$

Interest on fixed deposit has not yet been received for the last two months of the financial year. Interest is calculated at a rate of $12\%$ per annum.

Insurance includes an amount of R$750$ paid for the period $1$ November $20\mathrm{.}1$ to $31$ October $20\mathrm{.}2.$

The telephone account of R$165$ for December $20\mathrm{.}1$ has not yet been paid.

Equipment of R$2000($cost price$)$ was $[$purchased on $1$ July $20\mathrm{.}1.$

Depreciation must be provided as follows:

a$.$ Vehicle: $20\%$ per annum on the diminishing balance method

b$.$ Equipment: $10\%$ per annum on the diminishing balance method

The account of Loose$-$Ends Ltd$,$ a debtor who owes the entity R$200,$ must still be written off as irrecoverable.

It was determined that on $31$ December $20\mathrm{.}1$ the allowance for credit losses should amount to R$250.$

Required

Prepare the journal entries with narration of the above additional information or adjustments given.

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