East Hills Ltd began business on 1 July 2015 with each of the two owners contributing $20000 cash. The company paid $2200 in advance for a two-year lease of its retail premises. Inventory worth $3500 was purchased in the first month of operation; by 30 June 2016, $1200 of that inventory remained. Sales revenue of $9100 was invoiced during the year, although $1600 of this amount is yet to be collected.
During the year, wages totalling $1300 were paid to employees and $900 was paid for various administrative expenses. The company received an advertising invoice for $1100 as well as a utilities bill for $385; these are yet to be paid as at 30 June 2016.
1. Prepare a cash-basis income statement for East Hills Ltd for the year ended 30 June 2016.
2. Prepare an accrual-basis income statement for East Hills Ltd for the year ended 30 June 2016.