Question

1 Common information: 2 Name: Illini Tap - HW 2 3 4. Today's date: September 9, 2020 5 6 Balance Sheet Date: 7 3 Income Statement for period: 9 Beginning January 1, 2019 10 Ending: December 31, 2019 11 12 Fed. Marginal Tax Rate: 25.00% 13 SE rate: 15.30% 14 State Inc. Tax rate 5.00% 15 Type of Business: Business accrual 16 0 1 17
Income Statement worksheet

Answer 1

Particulars	Amount
Sales	925000
Less: COGS	4000
Gross Margin	921000
Less:
Operating expenses
Depreciation	50000
operating expenses	651000
Add: other income	5000
Less: Interest expenses	21000
Net operating profit	204000
Less: non-operating expense (Loss on sale of asset) (taxable under capital gain)	5000
Net Profit	199000
Tax expense (25%) (25% of operating profits)	51000
Profit after tax	148000
Other comprehensive income
Unrealised loss on assets	15000
Unrealised gain on investment	2000
Total comprehsive income	135000

	31-12-2018	31-12-2019	Adjustments	Notes
Assets
Accounts receivable	0	15000	15000	Revenue adjustment, increase in accounts receivable is a sale
Supplies	9000	10000		Only issuance of supplies to production is an expense (revenue item). Increase in supplies indicates increase in stock of supplies does not affect income statement
Inventories	27000	25000	2000	Revenue item, decrease in inventory is increase in COGS
Prepaid expenses	29500	31000		Non-revenue item as prepaid expenses increase is additional cash given for expenses to be incurred in future
Market value of Brewery investment	70000	72000		Gain or loss recorded in other comprehensive income below income statement
Market value of all real estate	0	440000		Gain or loss recorded in other comprehensive income below income statement
Liabilities
Current portion of deferred tax	2492	1359
Accounts payable	39000	41000	2000	Increase in accounts payable, increase in purchases and COGS
Notes payable within 1 year	16000	0		This is a non-revenue activity hene no effect
Accrued interest (current and non-current)	10000	14000	4000	As per note
Accrued income and soc sec taxes	21000	24000		As per note
Other accrued expenses and items	3000	4000	1000

Revenue
Cash Sales		910000
Credit sales	Increase in trade receivables	15000
		925000
Cost of goods sold
Opening		27000
Purchases		2000
Closing inventory		25000
		4000
Other income
Dividend Income		5000
Operating expenses
Non-cash
Depreciation		50000
Cash
Other operating expense		650000
Loss on sale of asset

Accrued interest
Opening		10000
Paid		17000
Balance		14000
Interest expenses incurred during the year		21000
Income tax expense
Opening		21000
Paid		48000
Balance		24000
Tax expenses of the year		51000
Operating expenses
Cash Operating expenses for the year		650000
Accrued operating expenses
Opening	3000
Closing	4000	1000
		651000