Depreciation on equipment must be provided for at 10% p.a. according to the diminishing balance method.

Here are the calculations for the adjustments and additional information provided: Step 1: Calculate the value of donated goods. The business donated goods worth R525. This is recorded as an expense. Donations Expense = R525 Step 2: Calculate stationery expense. The value of stationery used during the year is R2 820. Stationery Expense = R2,820 Step 3: Calculate bad debts. The account of debtor D Ponti, amounting to R900, must be written off as irrecoverable. Bad Debts Expense = R900 Step 4: Calculate interest capitalised on the loan. The loan statement shows the opening balance, repayments, and closing balance. We can find the interest capitalised (interest expense for the year) using the formula: Opening Balance + Interest - Repayments = Closing Balance Interest = Closing Balance - Opening Balance + Repayments Interest = R239,820 - R262,000 + R51,000 Interest = R28,820 Step 5: Calculate rent income for the year and prepaid rent. Rent has been received for thirteen months, and the rent was increased by R250 per month from 1 July 2024. The financial year ends on 31 August 2024. The total rent received (from the previous step's calculation) is R407,250. Let X be the monthly rent before 1 July 2024. The rent for July and August 2024 (2 months) is X + 250. The rent for the 10 months from September 2023 to June 2024 is X. Since 13 months of rent were received, one month's rent is prepaid. This prepaid month is for September 2024, and its value is X + 250. Total rent received = 10X + 2(X+250) + (X+250) = 13X + 750. We know the total rent received is R407,250. 13X + 750 = 407,250 13X = 407,250 - 750 13X = 406,500 X = (406,500)/(13) = 31,269.23 Now, calculate the rent income for the year (12 months): Rent Income for the year = 10X + 2(X+250) = 12X + 500 Rent Income for the year = 12(31,269.23) + 500 = 375,230.76 + 500 = 375,730.76 The prepaid rent is the rent for one month at the new rate: Prepaid Rent = X + 250 = 31,269.23 + 250 = 31,519.23 Step 6: Calculate telephone expense. The telephone account for August 2024, amounting to R405, has been received but not yet paid. This is an accrued expense. Telephone Expense (Accrued) = R405 Step 7: Calculate insurance expense and prepaid insurance. An annual insurance premium of R1 140 was paid on 31 March 2024. The financial year ends on 31 August 2024. Monthly insurance premium: Monthly Premium = R1,14012 = R95 The insurance covers 5 months of the current financial year (April to August 2024). Insurance Expense for the year = R95 × 5 = R475 The remaining 7 months (September 2024 to March 2025) are prepaid. Prepaid Insurance = R95 × 7 = R665 Step 8: Calculate depreciation on vehicles. Depreciation on vehicles is calculated at 15% p.a. on the cost price. A new vehicle with a cost of R120 000 was purchased on 1 May 2024. The vehicle was used for 4 months in the current financial year (May, June, July, August). Depreciation on New Vehicle = R120,000 × 15\% × (4)/(12) Depreciation on New Vehicle = R120,000 × 0.15 × (1)/(3) = R6,000 (Note: Depreciation for any other vehicles cannot be calculated without their cost.) Step 9: Depreciation on equipment. Depreciation on equipment must be provided for at 10% p.a. according to the diminishing balance method. (Note: The cost and accumulated depreciation of equipment are not provided, so this calculation cannot be completed.) Here is a summary of the calculated adjustments: Donations Expense: R525 Stationery Expense: R2,820 Bad Debts Expense: R900 Loan Interest Expense: R28,820 Rent Income for the year: R375,730.76 Prepaid Rent: R31,519.23 Telephone Expense (Accrued): R405 Insurance Expense for the year: R475 Prepaid Insurance: R665 Depreciation on New Vehicle: R6,000 That's 2 down. 3 left today — send the next one.