Prepare a detailed income statement and balance sheet

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The following values relate to various ratios determined for a sole trader, Ben Bournemouth, for the year ended 30 June 2013. At that date, the total assets in the Balance Sheet were $900 000. The ratios relate to the accounts either in respect of the 12-month period or at the date of the Balance Sheet for the end of the period.

Gross Profit to Total Sales

=

25%

Current Ratio

=

2.5:1

Quick (acid test) Ratio

=

2:1

Credit Sales to Total Sales

=

75%

Non-current Assets to Current Assets

=

10%

Profit to Total Assets

=

15%

Accounts Payable to Purchases

=

40%

Profit Margin

=

10%

Profit to Equity (start of period)

=

30%

Credit Sales to Accounts Receivable

=

7.5:1

 

Required:

Assuming that there are no prepaid expenses and that accounts payable are the only liability, and rounding answers to the nearest dollar, prepare:

  1. A detailed Income Statement for the year ended 30 June 2013, including an itemised cost of sales calculation (assuming a periodic inventory system)
  2. The business' Balance Sheet as at 30 June 2013.

Reference no: EM13903962

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