QUESTION 2: Financial Statement (15 marks)

Feta & Feast is a Feta cheese wholesale business owned by Mr Abderus.

Mr Abderus is a supplier of feta cheese to Avocado Smash Caf and a good friend of the owner, Pietra. Pietra is so impressed with the accounting work you have done for her that she has recommended you to Mr Abderus.

In your role as a Graduate Accountant at Warwick & Clarke Chartered Accountants you have been supplied with the Feta & Feast Trial Balance.

FETA & FEAST

TRIAL BALANCE

AS AT 30 JUNE 2021

	Debit ($)	Credit ($)
Prepaid Insurance	4 320
Freight outwards	3 648
Purchases	366 240
Drawings	39 720
Accumulated Depreciation - delivery van		7 464
Purchase returns & allowances		23 328
Sales		676 944
Accounts Receivable	47 832
Discount allowed	3 264
Store Equipment	71 232
Accounts Payable		23 280
Cash at Bank	39 936
Accumulated Depreciation - store equipment		21 072
Loan Payable		27 360
Sales returns & allowances	26 640
Freight inwards	7 512
Interest expense	3 888
Inventory (1 July 2020)	107 928
Delivery Van	17 856
Capital		121 536
Discount received		1 944
Salaries expense	162 912
TOTAL	902 928	902 928

Additional Information:

• The salaries expense represents $78 624 for sales staff and $84 288 for office staff.
• The inventory stocktake revealed a closing stock balance at 30 June 2021 as $87 432.
• 25% of the loan is due on the 1 February 2022 and the remainder due in subsequent financial years.

REQUIRED

Prepare a fully classified Income Statement, a Statement of Changes in Equity and a fully classified Balance Sheet using the Trial Balance provided in question 2.