The selected accounts from the unadjusted trial balance of “Federation Garden Supplies” are presented below as at 30 June 2020. Dr ($) Cr ($) Cash at Bank 13,690 Garden Supplies 42,000 Accounts Receivable 39,000 Prepaid Insurance 24,000 Machinery 45,000 Accumulated depreciation - Machinery 8,500 Office Equipment 16, 000 Accumulated depreciation - Office Equipment 3,200 Intangible asset - Patent 40,000 Note Payable (due in 2025) 30,000 Sales 512, 000 Sales Returns 6, 000 Sales discount 1,400 Interest Revenue 14, 000 Cost of Sales 317, 000 Freight-out 2, 000 Rent Expense (for administration department) 12, 200 Salaries Expense (50% selling and 50% administrative) 61, 000 Sales Commissions Expense 1,500 Electricity Expense (for administration department) 4,500 Adjustment data: i.The amount in “Prepaid Insurance” represents a one year premium which was paid on 1 January, 2020 (note that 50% of insurance relates to selling and 50% administrative). ii.Depreciation on all Machinery and Office Equipment is 20 % per year using the reducing balance method. iii.6 % annual interest is due on the note payable. iv.Salaries owing which remain unpaid amounted to $2,300. v.The patent was only acquired on 1 July, 2019 and it has a useful life of 20 years. vi.Accrued interest revenue amounts to $2,000. vii.Bad debts are expected to be 2% of accounts receivable. There has been no prior provision made for this expense in the books. viii.A physical stock-take reveals that Garden Supplies on hand amounted to $41,500. Required: Prepare a fully classified Income Statement for the year ending 30 June 2020.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Topic Video
Question

The selected accounts from the unadjusted trial balance of “Federation Garden Supplies”
are presented below as at 30 June 2020.
Dr ($) Cr ($)
Cash at Bank 13,690
Garden Supplies 42,000
Accounts Receivable 39,000
Prepaid Insurance 24,000
Machinery 45,000
Accumulated depreciation - Machinery 8,500
Office Equipment 16, 000
Accumulated depreciation - Office Equipment 3,200
Intangible asset - Patent 40,000
Note Payable (due in 2025) 30,000
Sales 512, 000
Sales Returns 6, 000
Sales discount 1,400
Interest Revenue 14, 000
Cost of Sales 317, 000
Freight-out 2, 000
Rent Expense (for administration department) 12, 200
Salaries Expense (50% selling and 50%
administrative)
61, 000
Sales Commissions Expense 1,500
Electricity Expense (for administration department) 4,500
Adjustment data:
i.The amount in “Prepaid Insurance” represents a one year premium which was paid on 1
January, 2020 (note that 50% of insurance relates to selling and 50% administrative).
ii.Depreciation on all Machinery and Office Equipment is 20 % per year using the reducing
balance method
.
iii.6 % annual interest is due on the note payable.
iv.Salaries owing which remain unpaid amounted to $2,300.
v.The patent was only acquired on 1 July, 2019 and it has a useful life of 20 years.
vi.Accrued interest revenue amounts to $2,000.
vii.Bad debts are expected to be 2% of accounts receivable. There has been no prior
provision made for this expense in the books.
viii.A physical stock-take reveals that Garden Supplies on hand amounted to $41,500.
Required:
Prepare a fully classified Income Statement for the year ending 30 June 2020.

Expert Solution
steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Knowledge Booster
Financial Statements
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education