1102AFE Accounting for Decision Making Trimester 1 2017

Question 1

The list of account balances at 31 March is: Accounts payable $20,000; Accounts receivable
$50,000; Advertising expense $2,500; Capital $187,000; Cash at bank $100,000; Cost of
sales $133,000; Fixture and fittings $12,000; Inventory $40,000; Land $25,000; Loan payable
$20,000; Prepaid expenses $ 1,200; Rent expense $3,600; Repairs expense $11,900; Sales revenue
$165,500.
Calculate the following items that would appear in the Income Statement
for the period ended 31 March.
Gross Profit Net Profit

Gross Profit $32,500

Sales revenue $165,500 LESS Expenses
Advertising expense $2,500
LESS Cost of sales $133,000 Rent expense $3,600
Repairs expense $11,900
$18,000
NET PROFIT $14,500
GROSS PROFIT $32,500