Question 2 (10 marks)

Ram operates a small law firm in Bondi, Sydney. He has a small office and an employee. Ram rents the office and owns the office equipment (desk, chairs and filing cabinets). Ram also insures his business. Ram wants to work out how much profit or loss his business made during the last financial year which started on 1 July 2020 and ended on 30 June 2021. He has asked for your help in calculating the profit or loss as he knows that you are studying accounting in your degree program at college. Ram provides you with the following information from his accounting records for the year ending 30 June 2021.

Account	Dr	Cr
Fees Revenue		138,950
Salaries payable	10,000
Salaries expense	58,860
Telephone expense	6,770
Rent expense	10,900
Interest expense	520
Depreciation expense - office equipment	1,020
Office supplies expense	3,460
Insurance expense	2,184
Prepaid insurance	5,000

1. Prepare the profit or loss statement for Ram's law firm for the year ending 30 June 2021. (8 marks)