Description
QUESTION 1 (50 marks) (100 minutes)
The following balances were extracted from the accounting records of Purco Trucks Ltd, a manufacturing
company of various equipment, machinery and trucks for the financial year ended 28 February 2025:
Additional
information
R
Dr/(Cr)
Revenue (Including VAT at 15%)
(13 800 000)
Cost of sales
1,2,7
5 700 000
Rent expenses
1
1 128 000
Administrative expenses:
2 845 000
Bank charges
110 000
Salaries and wages
2
2 250 000
Advertising
265 000
Auditors remuneration:
– Fees for audit
– Expenses
185 000
35 000
Distribution costs (Fuel costs)
275 000
Other operating expenses
3
890 000
Dividend income
4
(100 000)
Depreciation expense: Spray painting robot
6
?
Income tax expense (after all adjustments)
110 000
Additional information:
1. Purco Trucks Ltd rent all its premises from TradersCo Ltd. Monthly payments were made from 1 March
2024 until 28 February 2025. From 1 March 2025, an annual increase of 5% was implemented. Purco
Trucks Ltd paid the rent for March and April 2025 in advance, and these payments are included in the
“Rent expense” line item in the balances above. The rent expense is allocated on a 20:60:20 basis to
Purco Trucks Ltd’s head office, manufacturing department and distribution warehouse respectively.
Note: The above lease does not constitute a lease agreement in terms of IFRS 16, Leases.
2. Two quarters of the total salaries and wages are made up of the salaries of all administrative staff and
management. The manufacturing and distribution departments contributed equally to the remaining
balance.
3. Included in other operating expenses is an amount of R16 000 in respect of lease payments for three
photocopying machines from Xerox Ltd. The contract is a lease in terms of IFRS 16. Purco Trucks Ltd
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