Question

Haze Enterprise provided the following:

Sales    7,500,000.00

Inventories - Jan 1

   Raw Materials 200,000.00

   Goods in Process    240,000.00

   Finished Goods    360,000.00

Inventories - Dec 31

Raw Materials 280,000.00

Goods in process 170,000.00

   Finished Goods 300,000.00

Purchases    3,000,000.00

Direct Labor    950,000.00

Indirect Labor    250,000.00

Superintendent 210,000.00

Light, heat and power 320,000.00

Rent- Factory Building    120,000.00

Repair and Maintenance Machinery    50,000.00

Factory Supplies Used 110,000.00

Sales, Salaries    400,000.00

Advertising 160,000.00

Depreciation - Store Equipment    70,000.00

Office Salaries 150,000.00

Depreciation - Office Equipment    40,000.00

Depreciation- Machinery 60,000.00

Sales , Returns and Allowances 50,000.00

Interest Income    10,000.00

Gain on Sale of Equipment    100,000.00

Delivery Expenses    200,000.00

Accounting and Legal Fees 150,000.00

Office Expenses    250,000.00

Earthquake Loss    2,000,000.00

Gain from Expropriation of Asset    100,000.00

Income Tax Expenses 320,000.00

* Prepare an Income Statement using the functional Method with Appropriate Notes for the year Ended Dec. 31, 2019

Answer 1

HAZE ENTERPRISES
Statement of Profit and Loss for the period from 01 Jan ,2019 to 31 Dec, 2019
		Note No.	For the period
			01 Jan, 2019 to 31 Dec, 2019
1	INCOME
a	Revenue from Operations	1	7,500,000.00
b	Other Income	1	210,000.00
	TOTAL REVENUE		7,710,000.00
2	EXPENSES
a	Purchases		3,000,000.00
b	Changes in Inventories of Stock-in-Trade	2	50,000.00
c	Employee benefit expense	3	550,000.00
d	Labor Expenses	4	1,200,000.00
e	Legal & Professional Services	5	360,000.00
f	Operational Expenses	6	1,260,000.00
g	Other unexpected Expenses	7	2,000,000.00
h	Depreciation	8	170,000.00
	TOTAL EXPENSES		8,590,000.00
3	PROFIT/LOSS BEFORE TAX		(880,000.00)
4	LESS: TAX EXPENSES		(320,000.00)
5	NET PROFIT/LOSS FOR PERIOD		(1,200,000.00)
			For and on behalf of
			Haze Enterprises

HAZE ENTERPRISES
Notes forming part of the Financial Statements as at 31 DEC 2019
		As at
		December 31, 2019
1	INCOME
a	Revenue from Operations	7,500,000.00
b	Other Income	210,000.00
		7,710,000.00
2	CHANGES IN INVENTORIES OF STOCK-IN-TRADE
	(Increase) / decrease in Inventories
a	Inventories at the end of year	750,000.00
b	Inventories at the begining of year	800,000.00
		50,000.00
3	Employee benefit expense
a	Sales, Salaries	400,000.00
b	Office Salaries	150,000.00
		-
		550,000.00
4	Labor Expenses
a	Direct Labor	950,000.00
b	Indirect Labor	250,000.00
		-
		1,200,000.00
5	Legal & Professional Services
a	Superintendent	210,000.00
b	Accounting and Legal Fees	150,000.00
		-
		360,000.00
6	Operational Expenses
a	Light, heat and power	320,000.00
b	Repair and Maintenance Machinery	50,000.00
c	Factory Supplies Used	110,000.00
d	Advertising	160,000.00
e	Delivery Expenses	200,000.00
f	Office Expenses	250,000.00
g	Rent- Factory Building	120,000.00
h	Sales , Returns and Allowances	50,000.00
		1,260,000.00
7	Other unexpected Expenses
a	Earthquake Loss	2,000,000.00
		2,000,000.00
8	Depreciation
a	Depreciation - Store Equipment	70,000.00
b	Depreciation - Office Equipment	40,000.00
c	Depreciation- Machinery	60,000.00
		170,000.00