Question

Prepare a fully classified Income Statement using the Trial Balance provided for the period in question.

Ms Daphne Blake is the sole proprietor of 'Sunset, a beach shade sale and hire business specialising in beach tents. She is also a good friend of Fred Jones and often refers customers who are holidaying in the area to the 'Shore Read'. The following Trial Balance for 'Subsetz has been prepared at peaceod by Ms Blake who likes to keep a hand in the bookkeeping side of the business. SUNSETZ-TRIAL BALANCE AS AT 30 JUNE 2020 Debit ($1 Credit ($1 Shop Furniture & Fittings 20 000 Salaries Expense 33 280 Sales Returns & Allowances 6904 Accounts Receivable 36 871 Office Electricity Expense 800 Discount Received 2 536 Insurance Expense 1 520 Accumulated Depreciation - 7216 Shop Furniture & Fittings Office Rent Expense 2920 Daphne, Drawings 14 800 Doubtful Debts Expense 800 Cash at Bank 38 789 Advertising Payable 7957 Interest Expense 376 Sales 335 000 Shop Electricity Expense 454 Purchases 308 968 Purchase returns and 4 336 allowances Daphne Capital 35 848 Depreciation Expense-Shop 2 840 Furniture & Fittings Interest received 1 848 Sales Equipment 11 520 Freight Inwards 2 256 Hire Fees 100 000 Shop Rent Expense 20 520 Advertising Expense 5 237 Accounts Payable 8478 Discount Allowed 2980 Interest Payable 496 Inventory (1 July 2019) 16 768 Loan Payable 25 880 Prepaid Advertising 1 232 Allowance for Doubtful Debts 800 Fuel Expense-Delivery Van 2 560 Totals 532 395 532 395

Answer 1

$ 326116 SUNSETEZ Income Statement for the Year ended 30 June 2020 $ $ Sales 336000 Sales returns and allowance -6904 Discount allowed -2980 Net sales Opening inventory 16768 Purchases 308963 Freight in 2256 Less Discount received -2536 Less Returns and allowance -4336 Net purchases 304347 Less Inventory at the end -46750) Cost of goods sold Gross profit -257597 68519

10640 800 1520 2920 800 16680 Operating expenses: Administration expenses: Salaries expense Office Electricity Expense Insurance expense office Office Rent Expense Doubtful Debts expense Total Administration expenses Selling Expenses: Shop electricity expense Depreciation of shop Furniture Shop rent expense Shop salary Advertisment Expense Fuel expenses Delivery Van Total Selling Expenses Total Operating expenses Non operating Incomes and Expenses Hire Fees Interest Income Interest Income Net non operating income Net Income 454 2840 20520 22640 5237 2560 54251 -70931 100000 1848 -376 101472 99060

Note. Hire income is assumed as Non operating income.

Discount allowed and received are deducted from sales and purchaes respectively.