Question
The Trial Balance of "Hair We Are" a beauty supplies store is shown below.
Trial Balance
as at June 30, 20X7
|
ACCOUNT NAME
|
$
|
$
|
|
Sales
|
|
425,000
|
|
Inventory @ July 1, 20X6
|
45,000
|
|
|
Purchases
|
190,000
|
|
|
Wages & Salaries
|
87,500
|
|
|
Telephone
|
14,500
|
|
|
Water Rates
|
10,800
|
|
|
Electricity
|
20,600
|
|
|
Discount Allowed / Discount Received
|
3,900
|
6,600
|
|
Sales Return / Purchases Return
|
9,000
|
12,300
|
|
Rental Income
|
|
72,000
|
|
Land
|
80,000
|
|
|
Buildings
|
130,000
|
|
|
Fixtures & Fittings
|
50,000
|
|
|
Provision for Depreciation @ July 1, 20X6:
|
|
|
|
Buildings
|
|
26,000
|
|
Fixtures & Fittings
|
|
9,500
|
|
Carriage Inwards
|
3,400
|
|
|
Carriage Outwards
|
2,900
|
|
|
Cash
|
3,700
|
|
|
Bank
|
16,250
|
|
|
Accounts Receivable / Accounts Payable
|
127,600
|
49,200
|
|
Short-term Loans
|
|
125,600
|
|
Drawings
|
7,400
|
|
|
Capital
|
________
|
76,350
|
|
TOTAL
|
$802,550
|
$802,550
|
The following information concerning the operation of "Hair We Are" is also available:
§ Closing inventory on June 30, 20X7 was $52,000.
§ Wages of $12,000 was owed at June 30, 20X7.
§ Electricity of $3,000 was prepaid at June 30, 20X7.
§ The business had the following depreciation policy:
Land: 0%
Buildings: 2.5% per year of the cost of the asset.
Fixtures and fittings: 8% per year of the net book value of the asset.
Required:
- Prepare the Income Statement of "Hair We Are" for the year ended June 30, 20X7
- Prepare the Balance Sheet as at June 30,20X7.
- Discuss the purpose of presenting the final accounts in a business.
- Discuss the accounting relevance of the accrual and matching principles.
Question 3 The Trial Balance of "Hair We Are" a beauty supplies store is shown below. Trial Balance as at June 30, 20X7 ACCOUNT NAME $ $ Sales 425,000 Inventory @ July 1,