Farah And Lisa Rina Are Sisters And Have Had A Lifelong Dream To Open A Bed And Breakfast Together Named Lily Bakery. They Invested RM200,000 Of Their Own Money, And The Company Issued Common Stock To Them. The Business Then Got A RM200,000 Bank Loan For The Total Of RM400,000 Needed To Get Started. The Company Bought A Harold's Bread Style For RM160,000. It

 

Farah and Lisa Rina are sisters and have had a lifelong dream to open a bed and breakfast together named Lily Bakery. They invested RM200,000 of their own money, and the company issued common stock to them. The business then got a RM200,000 bank loan for the total of RM400,000 needed to get started. The company bought a Harold's Bread style for RM160,000. It was in need of renovations which cost another RM100,000. They found most of the furniture at antique shops and flea markets for a total cost of RM40,000. Kitchen equipment cost RM20,000, and a computer system cost RM4,000. Prior to the grand opening, the banker requests a report on their activities thus far. The bank statement of Lily Bakery shows a cash balance of RM76,000. Farah and Lisa believe that the RM76,000 represents net income for the period, and they feel pretty good about the results of their business. To better understand how well they are doing, they prepare the following income statement for presentation to the bank: Revenues: Common stock Bank loan Total revenues Expenses: LILY BAKERY Income Statement for the month ended 30 June 2020 RM RM 200,000 200,000 400,000 Cost of the house 160,000 Renovation to the house 100,000 Furniture expense 40,000 Kitchen equipment expense 20,000 Computer expense 4,000 Total expenses 324,000 Net Income 76,000 Required: Comment the net income of the business from the statement given by Farah and Lisa Rina. Would you congratulate them on their net income? Advise them about the computation of net income and prepare the balance sheet for Lily Bakery based on the statement above.