Income Statement (TOTAL: 25 MARKS) 2. Angela Joss, the CEO of Sunshine Coast Ltd is confused about cash basis and accrual basis. She is also confused about which basis is more useful to measure financial performance in the Income statement. She is a lawyer by profession and has limited knowledge of accounting. The following are financial information from Sunshine Coast Ltd for the 12-month reporting period ended 30 June 2021 on a cash basis: Required: Prepare a memo advising Angela on which basis is more useful to measure financial performance and provide reasons. To support your argument, provide two examples from the income statement that you prepared in question 1 above [8 marks] Sales Cost of Goods Sold Gross Profit Advertising Administration Insurance Interest Rent Salary and Wages Profit S $ S S $ S $ $ $ S 416,100 246,000 170,100 8,400 28,200 5,160 7.140 13,800 42,600 64,800 You have also been provided with the following additional information: The accounts receivable and accounts payable balances at the start of the reporting period were $24,600 and $14,700 respectively. At the end of the reporting period, accounts receivable was $31 800 and accounts payable was $29,640. An advertising invoice of $4,440 had not been paid. The business has equipment that cost $60,600. It has a useful life of five years and an expected residual value of $6,600. The insurance expense represents the 12-month premium on a policy that was purchased on 30 April 2021. Required: 1. Prepare the Income Statement for Sunshine Coast Ltd for the year ended 30 June 2021 on an accrual basis. (17 marks) Page 3 of 10 Page 4 of 10