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Khanyisile and Tinyiko are business partners in Ride4Yours, a partnership busine...
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Khanyisile and Tinyiko are business partners in Ride4Yours, a partnership business based in Malelane that manufactures specialised helmets for motorcycle riders. The business prides itself on using eco-friendly materials, making their helmets not only durable but also safe and sustainable for the environment.
Khanyisile is passionate about motorcycle riding, while Tinyiko is an advocate for sustainability and green business solutions. Together, they aim to position Ride4Yours as a leading brand in the motorcycle safety industry.
The following information pertains to the business activities as of February 28, 2025:
Extract of given amounts as at 28 February 2025:
| R | |
| Land and buildings at cost | 1,276,300 |
| Machinery at cost | 941,400 |
Accumulated depreciation: Machinery | 354,900 |
| Vehicles at cost | 716,700 |
Accumulated depreciation: Vehicles | 354,900 |
| Inventory (1 March 2024) | 214,400 |
| Bank (positive balance) | 994,900 |
| Trade receivables control | 548,000 |
| Trade payables control | 430,400 |
| Long-term loan (Mbombela Bank) | 1,338,400 |
| Capital: Khanyisile | 361,700 |
| Capital: Tinyiko | 368,400 |
| Drawings: Khanyisile | 95,500 |
| Drawings: Tinyiko | 94,300 |
| Interest on loan | ? |
| Depreciation | 129,300 |
| Delivery cost on sales | 61,200 |
| Water and electricity | 103,200 |
| Purchases | 2,027,100 |
| Security expenses | 32,300 |
| Salaries and wages | 474,600 |
| Delivery cost on purchases | 27,900 |
| Bank charges | 16,800 |
| Sales | 3,126,800 |
| Stationery consumed | 27,200 |
| Settlement discount received | 41,500 |
| Settlement discount granted | 27,200 |
Additional information:
1.1 Partnership agreement:
1.1.1 An annual interest rate of 12% is applied to the capital account balances.
1.1.2 Khanyisile and Tinyiko agreed to share profits and losses equally.
1.1.3 Each partner has a monthly salary entitlement of R12,000.
2 Year-end adjustments:
2.1. The security expenses billed to the business every month include a R700 monthly fee for security at Tinyiko’s private house. The security bill amounting to R2 900 for February 2025 has not yet been accounted for.
2.2. The long-term loan with Mbombela Bank secured by land and buildings, bearing a 11.4% annual interest rate, was secured on June 1, 2024, with interest payments due semi-annually at the end of December and May.
2.3. During the year, 3 helmets valued at R5 500 each were borrowed to Khanyisile’s friends for a weekend ride as part of marketing campaign. After the weekend, Khanyisile decided to take two of the helmets for her personal use for weekend rides. This adjustment is yet to be made.
2.4. The inventory's value was calculated to be R209 000 as of February 28, 2025.
2.5. Khanyisile withdrew his salary from March-2024 to December-2024, whilst Tinyiko withdrew her salary for only 8 months of the financial year. The total amounts paid was debited to the salaries and wages account.
REQUIRED:
What is the correct amount that must be disclosed as in the statement of profit or loss and other comprehensive income of Ride4Yours for the year ended 28 February 2025?
Instructions:
1. Round off all your answers to the nearest rand (eg: 50.56 = 51)
2. Don’t use any special characters (&) and don’t use bold in your answer.
3. Do not use any abbreviations.
4. Do not use brackets () to indicate a negative amount, instead use the minus sign “–“, e.g. (50) will be indicated as -50.