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The trial balance, adjustments, and additional information below were extracted from the accounting records of Woodford Limited for the financial year ended 28 February 2022.

**WOODFORD LIMITED**
**Pre-Adjustment Trial Balance as at 28 February 2022**

| Account | Debit (R) | Credit (R) |
|---------|-----------|------------|
| **Balance Sheet Accounts Section** | | |
| Capital | | 1,000,000 |
| Retained Earnings | | 300,000 |
| Land and Buildings | 878,000 | |
| Vehicles at Cost | 572,000 | |
| Equipment at Cost | 480,000 | |
| Accumulated Depreciation on Vehicles | | 384,000 |
| Accumulated Depreciation on Equipment | | 168,000 |
| Fixed Deposit: Fin Bank (9% p.a.) | 144,000 | |
| Trading Inventory | 123,000 | |
| Debtors Control | 146,000 | |
| Provision for Bad Debts | | 8,000 |
| Bank | 120,000 | |
| Cash Float | 7,000 | |
| South African Revenue Services: Company Tax | 30,000 | |
| Creditors Control | | 134,000 |
| Mortgage Loan: Fin Bank (12% p.a.) | | 240,000 |

| **Nominal Accounts Section** | | |
| Sales | | 1,635,000 |
| Cost of Sales | 432,000 | |
| Sales Returns | 9,000 | |
| Salaries and Wages | 427,000 | |
| Bad Debts | 13,000 | |
| Stationery | 21,000 | |
| Rates and Taxes | 57,000 | |
| Motor Expenses | 96,000 | |
| Directors’ Fees | 120,000 | |
| Audit Fees | 20,000 | |
| Repairs to Building | 17,000 | |
| Telephone | 32,000 | |
| Electricity and Water | 48,000 | |
| Bank Charges | 6,000 | |
| Insurance | 62,000 | |
| Interest on Mortgage Loan | 19,000 | |
| Interest on Fixed Deposit | | 10,000 |
| **Total** | 3,879,000 | 3,879,000 |

**Adjustments and Additional Information**

1. The telephone account for February 2022, R4,000, was due to be paid on 03 March 2022.
2. A debtor, P. Martin, was declared insolvent; his account, R3,000, must now be written off.
3. Stocktaking on 28 February 2022 revealed the following on hand:
- Trading Inventory: R121,000
- Stationery: R1,000
4. The provision for bad debts must be increased by R700.
5. Directors’ fees unpaid amounted to R14,000.
6. The insurance total includes an amount of R6,000 paid for the next accounting period.
7. Provide for outstanding interest on the mortgage loan, R9,800. Interest is not capitalised. Loan repayments (excluding interest) totalling R30,000 are expected to be made in the next financial year.
8. Provide for outstanding interest on the fixed deposit. Interest is not capitalised. The investment in the fixed deposit was made on 01 March 2021 and it matures on 28 February 2024.
9. Provide for depreciation as follows:
- On Equipment: R72,000
- On Vehicles: R37,600
10. Company tax for the financial year ended 28 February 2022 amounted to R39,860.
11. The profit after tax for the year ended 28 February 2022 amounted to R93,000, after the above was taken into account.
12. A final dividend of 80 cents per share was declared by the directors.

Answer :

1. Telephone Expenses (February) 4,000 Accounts Payable 4,000

2. Bad Debts Expense 3,000 Provision for Bad Debts 3,000

3. Increase in Trading Inventory 2,000 Cost of Sales 2,000

4. Increase in Stationery 1,000 Stationery Expense 1,000

5. Increase in Provision for Bad Debts 700 Provision for Bad Debts 700

6. Directors' Fees Expense 14,000 Accrued Directors' Fees 14,000

7. Prepaid Insurance 6,000 Insurance Expense 6,000

8. Mortgage Loan Interest Expense 9,800 Interest Payable (Mortgage Loan) 9,800

9. Fixed Deposit Interest Receivable 10,000 Interest Revenue (Fixed Deposit) 10,000

10. Depreciation Expense - Equipment 72,000 Accumulated Depreciation - Equipment 72,000

11. Depreciation Expense - Vehicles 37,600 Accumulated Depreciation - Vehicles 37,60012. Income Tax Expense 39,860 Income Tax Payable 39,860

1. The telephone expenses for February of R4,000 are recorded as an accounts payable.2. The account of the insolvent debtor, P. Martin, is written off, resulting in a bad debts expense of R3,000.

3. The stocktaking reveals an increase in trading inventory by R2,000, which is recorded as an expense in the cost of sales.4. The stocktaking reveals an increase in stationery by R1,000, which is recorded as an expense.

5. The provision for bad debts is increased by R700 to account for potential future bad debts.6. Directors' fees of R14,000 that were unpaid are accrued as an expense.

7. The prepaid insurance amount of R6,000 is recorded as an insurance expense.8. The outstanding interest on the mortgage loan, R9,800, is recognized as an interest expense.

9. The interest receivable on the fixed deposit of R10,000 is recognized as interest revenue.10. Depreciation expense of R72,000 is recorded for the equipment.

11. Depreciation expense of R37,600 is recorded for the vehicles.12. The income tax expense of R39,860 is recorded for the financial year.

(Note: The remaining adjustment regarding the dividend amount is not mentioned in the provided information.)

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