Question

WPitten Problems! 6. The following accounts were extracted from the accounting records of Teutonic Enterprises following its first year of operations, June 30, 2019: Rent expense $ 7,500 Truck 13,600 Accounts payable 8,300 Supplies expense 2,500 Service revenue 55,000 Cost of Goods Sold 20,800 Salary expense 2,200 Accounts receivable 13,200 Utilities expense 5,000 Common stock 25,000 20,900 Depreciation Exp-truck 1,600 Cash Prepare an income statement, a statement of shareholders' equity, and a balance sheet for Teutonic Enterprises. 7. Prepare a horizontal analysis of the following comparative income statement for the Buff Bodies Corporation. Round percentage changes to the nearest one-tenth percent. Buff Bodies Corporation Comparative Income Statement For the Years Ended December 31, 2019 and 2018 2019 2018 Total revenue $1,450,000 $1,300,000 Cost of goods sold $1,030,000 $ 925,000 Gross profit $420,000 $ 375,000 Expenses: Operating expenses 318,000 280,000 Interest expense 6,000 10,000 Income tax expense 25,300 22.000 Total expenses $ 378,300 $ 312,000 Net income $ 70,700 $ 63,000

Answer 1

Answer to 6th :
Income Statement for the period ended June 30, 2019
Particulars	Amount ($)
Service Revenue	55,000
Less : Cost of goods sold	-20,800
Gross Profit	34,200
Less : Expenses
Salary expense	2,200
Rent expense	7,500
Utilities expense	5,000
Supplies expense ( Refer Note-1 )	2,500
Depreication - Truck	1,600
Net Income	15,400
Statement of shareholders' equity as on June 30, 2019
Particulars	Common Stock	Retained Earnings	Other Comprehensive Income	Total
Opening Balance	25,000	-	-	25,000
Net Income during the year	-	15,400	-	15,400
Common stock issued	-	-	-	-
Total	25,000	15,400	-	40,400
Balance Sheet as on June 30, 2019
Particulars	Amount ($)
I. Assets
a) Non-Current Assets
Property, plant & Equipment : Truck	12,000
b) Current Assets
Cash	20,900
Accounts Receivable	13,200
Supplies	2,500
Total	48,600
II. Equity & Liabilities
a) Equity
Common Stock	25,000
Retained Earnings	15,400
b) Liabilities
i) Non-Current Liabilities	-
ii) Current Liabilities
Accounts payable	8,300
Total	48,700
Note 1: It has been assumed that the supplies expense mentioned in the question is not already included in the cost of goods sold and hence we have charged the same separately as an expense in the income statement.
Note 2 : There is a difference of 100 coming in the balance sheet since we are preparing an extract of the balance sheet only using a few accounts.
Answer to 7th :
Buff Bodies Corporation
Horizontal Analysis - Comparative Income Statements
For Year ended December 31, 2019 & 2018
Particulars	2019 ($)	2018 ($)	Variance (in aboslute figures)	Variance (In % terms)
Total revenue	14,50,000	13,00,000	1,50,000	12%
Less : Cost of goods sold	10,30,000	9,25,000	1,05,000	11%
Gross Profit	4,20,000	3,75,000	45,000	12%
Expenses :
Operating expenses	3,18,000	2,80,000	38,000	14%
Interest expense	6,000	10,000	-4,000	-40%
Income tax expense	25,300	22,000	3,300	15%
Total expenses	3,49,300	3,12,000	37,300	12%
Ner Income	70,700	63,000	7,700	12%