QUESTION 2: Financial Statements
Zing Ming operates a guitar shop where he sells electric guitars. His business is called "Electric Dreams". At year end Zing has prepared the following unadjusted Trial Balance. The order of the accounts in the trial balance is not correct yet, as the balances are all correct, Zing knows that he will still be able to prepare his financial statements from the information provided.
\fQUESTION 2: Financial Statements (14 marks) Zing Ming operates a guitar shop where he sells electric guitars. His business is called "Electric Dreams". At year end Zing has prepared the following unadjusted Trial Balance. The order of the accounts in the trial balance is not correct yet, as the balances are all correct, Zing knows that he will still be able to prepare his financial statements from the information provided. Electric Dreams TRIAL BALANCE (continues on the next page) AS AT 30 JUNE 2020 DEBIT ($) CREDIT ($) Computer Equipment 45,000 Vehicles 80,000 Purchase returns and allowances 8,800 Accounts Receivable 32,000 Accumulated Depreciation - Computer Equipment 18,000 Sales Returns & Allowances 4,500 Salaries - Sales staff 100,000 Accumulated Depreciation - Vehicles 22,000 Discount allowed 6,800 Accountant salary 50,000 Office supplies on hand 4,500 Office supplies expense 3,200 Advertising expense 5,000 Allowance for Doubtful debts 2,700 Interest expense 5,000 Rent expense - Admin office 12,000 Rent expense - Shop 18,000 Accounts Payable 26,000 Prepaid rent 2,000 Electricity Expense 8,000 Freight Inwards Expense 6,000 Depreciation expense - Vehicles 4,000 Salaries payable 7,000 Purchases 180,000 Depreciation Expense - Computer Equipment 3,500 Drawings - Zing Ming 2,500Sales Revenue 422,000 Capital - Zing Ming (1 July 2019) 174,200 Loan payable (repayable on 30 June 2025) 20,000 Discount received 1,800 Inventory (1 July 2019) 18,000 Interest Income 3,100 Telephone expense 7,200 Freight Outwards Expense 5,000 Cash at Bank 100,000 Unearned Revenue 2,500 Doubtful debts expense 900 708,100 708,100 The following information has been provided to assist in your statement preparation: On 30 June 2020 the stocktake revealed an inventory balance of $25,000. . The electricity expense is split as follows: 60% to the Shop and 40% to the Administrative office. The telephone expense is split as follows - $2,000 to the Shop and the rest to the Administrative office. REQUIRED: Prepare a fully classified Income Statement AND a Statement of Changes in Equity using the Trial Balance and additional information provided. (14 Marks)QUESTION 2: Financial Statements (14 marks) Prepare a fully classified Income Statement AND a Statement of Changes in Equity. (14 Marks) Answer on following pages (please insert more lines if necessary) INCOME STATEMENT INCOME Less: EXPENSES t t t t t t t t t t t t t t t t t t t t t t t t t t t t t t L L L L t t t t t t t t t t t t t t t t t t t t t t t t
