Start with the net profit calculated by the bookkeeper.

Step 1: Start with the net profit calculated by the bookkeeper. The bookkeeper calculated the net profit to be R420 000. Net Profit (initial) = R420\,000 Step 2: Adjust for unrecorded interest on fixed deposit. Interest on fixed deposit is an income that was not recorded. It increases the net profit. Net Profit = R420\,000 + R800 = R420\,800 Step 3: Adjust for unrecorded bank charges. Bank charges are an expense that was not recorded. It decreases the net profit. Net Profit = R420\,800 - R1\,300 = R419\,500 Step 4: Calculate and adjust for depreciation on equipment. The equipment cost is R150 000 and accumulated depreciation as of 01 March 2020 is R65 000. Depreciation is calculated at 10% on the diminishing balance method. The financial year ends on 28 February 2021. Carrying Value (01 March 2020) = R150\,000 - R65\,000 = R85\,000 Depreciation for the year = 10\% × R85\,000 = R8\,500 Depreciation is an expense that was not recorded. It decreases the net profit. Net Profit = R419\,500 - R8\,500 = R411\,000 Step 5: Adjust for trading stock taken by partner Grey. When a partner takes trading stock for personal use, the cost price of the stock is removed from the cost of sales and charged to drawings. This means the cost of sales was overstated, so the net profit needs to be increased by the cost price of the stock. Cost price of trading stock taken = R1\,800 Net Profit = R411\,000 + R1\,800 = R412\,800 The adjusted net profit is: R412\,800 Send me the next one 📸