Question

Question 3 (Marks: 30) Gugu Mbatha is a South African Actress and has founded a Coffee Shop called Gorge Grab n Go in Sandton. Gorge Grab and Go sells sandwiches, coffee, smoothies and the rooftop is occasionally rented out for events. The year end of the business is 31 March 2019.

Answer 1

Adjustment entry

1.	Depreciation expense Dr (140,000/5)	28,000
	To Accumulated depreciation expense		28,000
2.	Accounts Receivables Dr	16,700
	To Service Revenue		16,700
3.	Supplies Expense Dr (4,000-2000)	2,000
	To Supplies expense		2,000
4.	Rental Expense Dr	2,400
	To Prepaid Expense (16,800- 1200*12)		2,400
5.	Drawings Dr(120*10)	1,200
	To Inventory		1,200

Adjusted Trial Balance

Restaurant equipment	140,000
Accumulated depreciation		56,000
Bank	201,000
Accounts Receivables	21,700
Supplies	2000
Prepaid Rent	2,400
Inevntory	22,800
Accounts Payable		2,000
Income in advance		3,000
Capital		25,000
Retained Earnings		12,600
Drawings	2,200
Sales		140,000
Service Income		336,700
Cost of sales	48,000
Salaries	16,000
Electricity	74,800
Supplies expense	2000
Rent expense	14,400
Depreication	28,000
	575,300	575,300

Statement of Financial Position ($)

Assets:
Current Assets:
Bank	201,000
Accounts Receivables	21,700
Supplies	2,000
Prepaid Rent	2,400
Inventory	22,800	249,900
Non-current assets:
Restaurant Account	140,000
Less: Accumulated Depreciation	(56,000)	84,000
Total Assets		333,900
Liabilities:
Accounts Payable	2,000
Income in advance	3,000	5,000
Equity:
Capital	25,000
Retained Earnings (12,600+293,500)	306,100
Drawings	(2,200)	328,900
Total Liabilities and Equity		333,900

NET INCOME: 140,000(Sales)+336,700(service)-[48,000+16,000+74,800+2,000+14,400+28000](expense) = $ 293,500.