Question

Question 1
(Note this question is from the Week 5 Tutorial)
Sandox Retail has the following unadjusted trial balance as at 30 June 2020 in the table:
Accounts
Debit ($)
Credit ($)
Cash
8,524
Accounts Receivable
7,000
Supplies
15,000
Prepaid Insurance
300
Insurance Expense
600
Equipment
27,000
Accumulated Depreciation
12,000
Other Assets
5,100
Wages Payable
1,500
Accounts Payable
7,500
Income Tax Payable
3,150
Share Capital (3000 shares outstanding all year)
16,000
Retained Profit
10,300
Sales Revenue
95,000
COGS
32,900
Wages Expense
18,000
Supplies Expense
25,680
Income Tax Expense
5,346
Total
145,450
145,450
3
Question 1 (Cont’d)
Required:
a) Prepare an Income Statement for Sandox Retail for the financial year 2019-2020. (2.5 marks)
b) Prepare a Balance Sheet as of 30 June 2020. (2.5 marks)
c) Prepare the closing journals for Sandox Retail.

Answer 1

Requirement a):

Sandox Retail
Income Statement
for the end of 2019-2020
Revenues:
Sales Revenue		$ 95,000
Expenses:
Insurance Expense	$ 600
COGS	$ 32,900
Wages Expense	$ 18,000
Supplies Expense	$ 25,680
Income Tax Expense	$ 5,346
Total expenses		$ 82,526
Net Income		$ 12,474

*EPS [12474 ÷ 3000] = 4.16

Sandox Retail
Statement of Retained profit
for the end of 2019-2020
Retained earnings, beginning	$ 10,300
Add: Net income	$ 12,474
Retained earnings ending	$ 22,774

Requirement b:

Sandox Retail
Balance sheet
as of 30 June 2020
Assets:			Liabilities
Current assets:			Current liabilities:
Cash	$ 8,524		Wages Payable	$ 1,500
Accounts Receivable	$ 7,000		Accounts Payable	$ 7,500
Supplies	$ 15,000		Income Tax Payable	$ 3,150
Prepaid Insurance	$ 300		Total current liabilities		$ 12,150
Other Assets	$ 5,100		Shareholders' equity
Total current assets		$ 35,924	Share capital	$ 16,000
Property, plant and equipment			Retained profit	$ 22,774
Equipment	$ 27,000
(Less): Accumulated depreciation	($ 12,000)
Total property, plant and equipment		$ 15,000	Total shareholders' equity		$ 38,774
Total assets		$ 50,924	Total liabilities and shareholders' equity		$ 50,924

Requirement c:

CLOSING ENTRIES
Date	Account title and explanation	Debit	Credit
June 30 2020	Sales revenues	$ 95,000
	Income summary		$ 95,000
	[To close revenue accounts]
June 30 2020	Income summary account	$ 12,474
	Insurance Expense		$ 600
	COGS		$ 32,900
	Wages Expense		$ 18,000
	Supplies Expense		$ 25,680
	Income Tax Expense		$ 5,346
	[To close expenses accounts]
June 30 2020	Income summary	$ 12,474
	Retained profit		$ 12,474
	[To close income summary account]