Question

Attached, is the Trial Balance for Barry Cooperation, for the year ended 30 June, 2018.

Required:

1. Prepare Classified Financial Statements (Income Statement and Balance Sheet

Trial Balance of Barry Cooperation

As at 30 June, 2018

ACCOUNT	DEBIT	CREDIT
Assets
Cash at Bank	22 327
Account Receivable Control	11 484
Provision for Doubtful Debts		420
Inventory	6 057
Prepaid Expenses	2 230
Office Machinery	59 000
Accumulated Depreciation on Office Machinery		15 213
Motor Vehicles	22 000
Accumulated Depreciation on Motor Vehicles		6 600
Investment in shares in public companies	7 000
Liabilities
Accounts Payable Control		4 081
GST Clearing (Payable)		1 100
Accrued Expenses		3 565
5 year term loan from Bank		24 000
Equity
Capital		58 377
Drawings	3 175
Revenue
Sales		76 552
Rent Revenue		6 300
Dividends received		600
Expenses
Cost of Sales	29 611
Advertising	686
Freight and Delivery outwards	959
Depreciation expense -office machinery	1 555
Depreciation expense – motor vehicles	2 388
Salaries	21 889
Electricity	581
Telephone	334
Insurance	820
Bank Fees	161
Motor Vehicle expenses	2 896
Doubtful Debts Expense	208
Interest on bank loan	1080
Discount allowed	367
Totals	$196 808	$196 808

2. Comment on the profitability of the business for 2018, assuming that for the prior year, 2017, the business achieved a Gross Profit Ratio of 55% and a Net Profit Ratio of 12%.

Answer 1

Income Statement :-

	Amount ($)
Sales	76,552
Cost of sales	(29,611)
Gross Profit	46,941
Rent Revenue	6,300
Dividends received	600
Advertising	(686)
Freight and delivery outwards	(959)
Depreciation for office machinery	(1,555)
Depreciation for motor vehicles	(2,388)
Salaries	(21,889)
Electricity	(581)
Telephone	(334)
Insurance	(820)
Bank fees	(161)
Motor vwhicle expenses	(2,896)
Doubtful debts expenses	(208)
Interest on bank loan	(1,080)
Discount allowed	(367)
Net Profit	19,917

Balance Sheet

EQUITY
Capital	58,377
Drawings	(3,175)
Net Profit	19,917
		75,119
LIABILITIES
Accounts payable control		4,081
GST Payable		1,100
Accrued expenses		3,565
5 years term loan from bank		24,000
		107,865
ASSETS
Cash at Bank		22,327
Accounts receivable control	11,484
Provision for doubtful debts	(420)
		11,064
Inventory		6,057
Prepaid expenses		2,230
Office machinery	59,000
Accumulated depreciation on office machinery	15,213
		43,787
Motor Vehicles	22,000
Accumulated depreciation on motor vehicles	6,600
		15,400
Investment in shares in public company		7,000
		107,865

Gross Profit Ratio is = $46,941 / $76,552 * 100 = 61.32%

Net Profit Ratio = $19,917 / $76,552 * 100 = 26.02%

Business has achieved a good profit in 2018 as compared to its previous year.