QUESTION 2

The following data are some of the accounts of Cool Water Pty Ltd, a retailer of bottled water:

Account

Amount

Revenue from sale of bottled water 88000

Interest Income -------5400

Purchase of Inventory -------43000

Wages and Salaries -------13500

Insurance Expense -------4750

Rent Expense -------7200

Shareholders' Equity as at 1 July 2019 ----- 21500

Interest Expense-------7500

Retained Earnings as at 1 July 2019-------13700

Advertising Expense-------4100

Utilities Expense-------3000

Inventory as at 1 July 2019-------25000

Inventory as at 30 June 2020-------36000

In addition, the company owns a van to distribute its bottled water to some milk bars. The company purchased the van for $42000 on 1 July 2019, with an estimated useful life of 6 years and expected residual value of $6000.

REQUIRED

Based on the information given above:

a. Calculate the company's cost of sales.

b. Determine depreciation expense for the van for the year 2020 assuming the company is using straight-line method.

c. Make the income statement for Cool Water Pty Ltd for the year ended 30 June 2020 (ignore income tax expense).