Question

Blue Spruce Industries is a small wer managed business that sells artificial Christmas trees and decorations. The owner of Blue Spruce, Terrie Leroy, is a busy entrepreneur who does not have a bookkeeper. She provides the bank account records for the business, as well as various other documents to her accountant at the end of each year. The accountant uses this information to prepare both a balance sheet and an income statement An analysis of bank deposits and disbursements prepared by the countant for the current year showed the following: Bank Deposits $ Proceeds of bankinn Collections from customers Collections on trade notes Interest received on notes receivable Totalcash receipts 40,000 1.225.000 60,000 5,000 1,310,000 5 $ Bank Disbursements: Purchases of inventory Payment for new equipment Freight-in on purchase of merchandise Payments for selling expenses Payments for wates and salaries expenses Payment for insurance Dividends paid Payment of corporate income taxes Payment on bank loan interest $8.000 Total cash payments 752,000 10,200 65,000 75,000 121,000 12.000 42.000 54,000 15,900 1,147,100 Following is a list of assets and abilities at the beginning and end of the current year that was prepared by the accountant: lan 1 Dec. 31 Cash $ 164,100 $ 347,000 Accounts receivable 91.000 135.000 Notes receivable 110,000 50,000 Inventory 105,000 115,000 Prepaid insurance 14,000 12,000 2 Land 60,000 60,000 Building (net of depreciation) 200,000 195.000 Equipment (net of depreciation) 140,000 142,000 Total assets 884,100 $ 1.056,000 $ Accounts payable Salaries and wages payable Corporate income tax payable Bank loans payable 54,000 14,000 5,000 100,000 173.000 $ 45.900 15,000 3,000 132.100 s According to the corporation's legal records, $5,000 in common share capital was issued at the inception of the corporation. No other shares have been issued or retired. Assume that all accounts payable arise from the purchase of inventory. REQUIRED: Prepare a draft income statement for the year. You may use the following template Sales Cost of goods sold Opening inventory Purchases (incl. Freight-in) Closing inventory Gross profit on sales 1269.000 252000 ES. Expenses: Selling expenses Wages and salaries expense Insurance expense Depreciation expense Total expenses Income loss) from operations Other revenues and expenses Interest revenue Interest expense Profit (loss) before income taxes Income tax expense Profit (loss) for the year Note: Include schedules or show T-accounts for any calculation you perform. Alternatively, a worksheet is also attached. If using the worksheet, ensure that it's complete with columns totalled.

Answer 1

$ $ 1269000) 105000 826000 - 115000 816000 Income Statement at the Year End Income: Sales Cost of Goods sold: Opening Inventory Purchases(Including Freight in) 761000+65000 Closing Inventory Gross Profit on Sales Expense: Selling expense Wages and Salaries Expense Insurance expense Depreciation Expense 5000+8200 Total expenses Income(Loss) from Operations Other Revenues and expenses: Interest Revenue Interest Expense Profit(Loss) before income taxes Income tax tax Proft(Loss) for the Year 75000 122000 10000 13200 -220200 595800 5000 -8000 -3000) 592800 -52000 540800

Details Account Receivable Amount Amount Details 91000 1269000 1225000 Collections Beg. Bal Sales(Balancing Figure) End Bal. 135000 Account payable Details Amount Amount Details 54000 Credit Purchase(Balancing Figure) 761000 752000 Payment Beg. Bal End Bal. Details 45000 Salaries and Wages payable Amount Amount Details 14000 122000 121000 Payment Beg. Bal Expense(Balancing Figure) End Bal. 15000

Details Corporate Income tax payable Amount Amount Details 5000 52000 54000 Payment Beg. Bal Expense(Balancing Figure) End Bal. Details 3000 Prepaid Insurance Amount Amount Details 14000 10000 12000 Payment Beg. Bal Expense(Balancing Figure) End Bal. Details Beg. Bal 12000 Building Amount Amount Details 200000 5000 Depreciation(Balancing Figure) End Bal. 195000

Details Beg. Bal Additional Purchase Equipment Amount Amount Details 140000 10200 8200 Depreciation(Balancing Figure) End Bal. 142000

Note. Figures are clear and I took maximum care to figure it.Purchase of inventory is assumed as payment to Account payable.Or the difference in Account payable $9000 may be assumed as return or discount.