Question
Selected accounts of Tulip Ltd and their balances for the financial year ending 30 June 2021 are provided below. Account Name Debit $ Credit $
Selected accounts of Tulip Ltd and their balances for the financial year ending 30 June 2021 are provided below.
Account Name |
Debit $ |
Credit $ |
Sales Revenue | 374,800 | |
Accounts Payable | 94,500 | |
Accounts Receivable | 67,500 | |
Cost of goods sold | 105,000 | |
Wages Payable | 5,000 | |
Cash at Bank | 221,900 | |
Share Capital (15,000 shares) | 150,000 | |
Inventory | 147,500 | |
Prepaid Insurance | 28,500 | |
Revenue Received in Advance | 10,600 | |
Rent expense | 52,500 | |
Wages expense | 54,500 | |
Allowance for doubtful debt | 2,500 | |
Other expenses | 25000 | |
Retained Earnings (opening balance) | 65000 |
Additional information (not included in the figures above; Ignore GST):
- Tulip Ltd purchased a machine on 1 June 2021 for $38,000, paying $8,000 cash and signing a 2-month note payable for the remaining balance. Interest rate on the note is 15% per annum. The machine is expected to depreciate $3,600 each year.
- Stock count of inventories at end of the year revealed that Tulip Ltds inventory on hand balance on 30 June 2021 amounted to $146,000.
- Cost of insurance that has expired during the financial year amounted to $12,000.
- The company has determined that the allowance for doubtful debts should be adjusted to reflect 4% of accounts receivable at the end of the year.
- Tulip Ltd took out a loan of $100,000 at an annual interest rate of 12% from GMC Bank on 30 June 2021. The loan is repayable over 5 years and $12,000 of the loan is payable within 12 months. No interest is accrued on 30 June 2021.
REQUIRED:
- Financial accounting statements tend to reflect past events. In view of this, how can they be of any assistance to a user making a decision when decisions, by their very nature, can only be made about the future?
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