Question

Question 1: Angelica Vasquez had the following balances.
Sales Revenue 3,053,081
Cost of goods sold 1,982,541
Salaries and commissions 509,044
Travel and entertainment expenses 48,940
Advertising expenses 38,315
Freight expenses 41,209
Shipping supplies and expenses 24,712
Postage and stationery 19,663
Telephone and internet expenses 12,215
Depreciation of equipment 25,005
Depreciation of building 18,059
Legal and professional services expenses 23,721
Insurance expense 17,029
Utilities expense 23,275
Miscellaneous office expense 2,612
Other Incomes
Dividend revenue 98,500
Rental revenue 42,910
Gain on sale of plant assets 30,000

Required: Prepare Angelica’s Income Statement for year ended January 31 2017





From the following TB of Mike, a store owner, prepare an Income Statement for the year ended December 31 2015 and a Balance Sheet as at that date
$
Sales Revenue 395,000
Cost of Sales 323,800
Wages and salaries 30,000
Insurance expense 6,000
Telephone expense 1,000
Shop Fittings, cost 40,000
Motor Car, cost 30,000
Account Receivable
Machinery                                                                                                                                9,800
20,300
Account Payable 61,100
Bad debts 200
Owner, Capital 179,800
Cash balance
Building 3,000
50,000
Drawings 1,800
Inventory (December 31, 2016) 120,000

Note
1. Accrued wages $3,500
2. Insurance prepaid $500
3. Provision for doubtful debts to be 2.5% of AR
4. Telephone outstanding $120
5. Depreciate Shop Fittings at 5.5% and motor car at 10% p.a, on cost

Answer 1

1.

Income statement for the year ended January 31,2017

Particulars	Amount($)	Amount($)
Sales		$3053081
Cost of goods sold		($1982541)
Gross profit		$1070540
Operating expenses:
Salaries and commissions	$509044
Travel and entertainment expenses	$48940
Advertisement expenses	$38315
Freight expenses	$41209
Shipping supplies and expenses	$24712
Postage and stationary	$19663
Telephone and internet expenses	$12215
Depreciation of equipment	$25005
Depreciation of building	$18059
Legal and professional services	$23721
Insurance expenses	$17029
Utilities expenses	$23275
Miscellenous office expenses	$2612
Total operating expenses		$803799
Operating profit		$266741
Other incomes:
Dividend revenue		$98500
Rental revenue		$42910
Gain on sale		$30000
Net income		$438151.

2.

Income statement for the year ended December 31,2015

Particulars	Amount($)	Amount($)
Sales		$395000
Cost of sales		($323800)
Gross profit		$71200
Operating expenses:
Wages and salaries	$30000
Add: accrued wages and salaries	$3500	($33500)
Insurance expense	$6000
Less: prepaid expenses	($500)	($5500)
Telephone expenses	$1000
Add: outstanding telephone expenses	$120	($1120)
Bad debts		($200)
Depreciation on fittings ($40000 * 5.5%)		($2200)
Depreciation on motor car($30000 * 10%)		($3000)
Provision for doubtful debts		($240)
Net income		$25440

Balance sheet as on December 31, 2015

Liabilities	Amount($)	Amount($)	Assets	Amount($)	Amount($)
Accounts payable		$61100	Cash		$3000
Outstanding telephone expenses		$120	Inventory		$120000
Accrued wages		$3500	Motor car less: depreciation	$30000 ($3000)	$27000
Capital	$179800		Fittings less: depreciation	$40000 ($2200)	$37800
add: net income	$25440		Accounts receivable less: provision for doubtful debts	$9800 ($240)	$9560
less: drawings	($1800)		Machinary		$20300
		$203440	Building		$50000
			Prepaid expenses		$500
Total liabilities		$268160	Total assets		$268160.