Question

Quote L ABCD AABBCCD AABAC Intense ... Subtle Ref... Intense R.. Book Tim Styles Jake Colombo is a sole trader. On December 31, 2015 the following Trial Balance was extracted from his books: Trial Balance as at December 31, 2015 Details Premises DR CR Plant and Machinery 8,000,000 Office Furniture 6,500,000 Provision for Depreciation: Plant and Machinery 1,500,000 - Provision for Depreciation office furniture 3,500,000 Stock at 1.1.2015 1,000,000 600,000 Debtors 550,000 Creditors 270,000 Purchases 4,700,000 Carriage Inwards M 120,000 Carriage outwards 210,000 Sales - 13,085.000 Retum inwards 260,000 Return outwards - 140,000 Provision for doubtful debts 50,000 Selling and distribution expenses 2,080,000 Administration expenses 1,540,000 Discounts received - 200,000 Discounts allowed 180,000 - Rent expense 1,250,000 Commission Received - 1,000,000 Electricity 320,000 Salary and Wages 80,000 Commissions paid 95,000 Drawings 1,260,000 Capital 10,000,000 29.245.000 29.245.000 (1) Depreciation is to be recorded as follows: Plant and Machinery 10% reducing balance: office furniture and fittings 10% of cost. (ii) Stock on December 31, 2015 was valued at $200,000 (ii) On December 31, 2015 rent amounting to $400,000 was outstanding, selling and distribution expenses for $90,000 was still outstanding. (iv) Prepaid administration expenses of $110.000 (v) Provision for bad and doubtful debt is to be increased to fifteen percent (159) of debtors Required: Prepare Jake Colombo's Income Statements for the financial year ending December 31, 2015

Answer 1

	Income Statement
	Jake Colombo
	year ending 31 december ,2015
	Financial Statements in U.S. Dollars
	Revenue
		Gross Sales				$ 1,30,85,000.00
		Less: Sales Returns and Allowances				$      2,60,000.00
		Net Sales					12825000
	Cost of Goods Sold
		Beginning Inventory				$      6,00,000.00
		Add:	Purchases			$    45,60,000.00
			Carriage inward			$      1,20,000.00
		Inventory Available				5280000
		Less: Ending Inventory				200000
		Cost of Goods Sold					5080000
		Gross Profit (Loss)					7745000
	Expenses
		Administrative expenses				$    14,30,000.00
		Carriage Outward				$      2,10,000.00
		Commissions				$          95,000.00
		Discount Allowed				$      1,80,000.00
		Depreciation				$    4,50,000.00
		Employee Benefit Programs				$          80,000.00
		Electricity expenses				$      3,20,000.00
		Provision for debtors(excess needed)				$       32,500.00
		Rent				$    16,50,000.00
		Selling and distribution expenses				$    21,70,000.00
		Total Expenses					6617500
		Net Operating Income					1127500
	Other Income
		Commision Received				$    10,00,000.00
		Discount Received				$      2,00,000.00
		Total Other Income					1200000
		Net Income (Loss)					2327500

	Jake colombo	Balance Sheet
	Assets		2015
	Current Assets
		Cash
		Accounts receivable	$      4,67,500.00
		Inventory	2,00,000
		Prepaid expenses	1,10,000
		Short-term investments
		Total current assets	$            7,77,500
	Fixed (Long-Term) Assets
		Long-term investments
		Property, plant, and equipment	$ 1,60,00,000.00
		(Less accumulated depreciation)	(49,50,000)
		Intangible assets	-
		Total fixed assets	$       1,10,50,000
	Other Assets
		Deferred income tax
		Other
		Total Other Assets	$                          -
	Total Assets		$ 1,18,27,500
[42]	Liabilities and Owner's Equity
	Current Liabilities
		Accounts payable	2,70,000
		Rent outstanding	4,00,000
		Income taxes payable
		Selling and distribution expenses	90,000
		Unearned revenue
		Current portion of long-term debt
		Total current liabilities	$            7,60,000
	Long-Term Liabilities
		Long-term debt
		Deferred income tax
		Other
		Total long-term liabilities	$                          -
	Owner's Equity
		Owner's investment	87,40,000
		Retained earnings	23,27,500
		Other
		Total owner's equity	$       1,10,67,500
	Total Liabilities and Owner's Equity		$ 1,18,27,500