Reference no: EM133069936
QUESTION - 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
|
25,000
|
|
|
Retained Earnings (opening balance)
|
|
65,000
|
Additional information (not included in the figures above; Ignore GST):
1. 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.
2. Stock count of inventories at end of the year revealed that Tulip Ltd's inventory on hand balance on 30 June 2021 amounted to $146,000.
3. Cost of insurance that has expired during the financial year amounted to $12,000.
4. 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.
5. 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 -
1. On the basis of all the information above, calculate Profit (or Loss) for Tulip Ltd for the year ended 30 June 2021.
2. Prepare fully classified 'Liabilities' section only of Balance Sheet (after considering all the information above) as at 30 June 2021 for Tulip Ltd.
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?