TASK(S): INCOME STATEMENT

Format for Income Statement

$ $
Revenue (Sales) x
-) Sales Returns or Return inwards (x)
XX
Opening inventory x
Purchases x
+) Carriage inwards x
+) Duty on purchases x
-) Purchases Returns or Return outwards (x)
Cost of goods available for sale XX
-) Closing inventory (x)
Cost of sales (XX)
Gross Profit or Gross Loss XXX

Add: Income
Discount received x
Rent received x
Decrease in provision for doubtful debts x x
XX

Less: Expenses
Advertising x
Wages and salaries x
Discount allowed x
Carriage outwards x
Insurance x
Rent x
Electricity x
Interest on loan x
Increase in provision for doubtful debts x
Provision for depreciation of fixed assets x (XX)
Profit for the year or Loss for the year XXX
1. From the following information provided by San Lian, a sole trader, calculate the gross
profit and net profit earned by his business for the year ended 30 November 2023.

$
Inventory, 1 October 2022 15000
Inventory, 30 November 2023 8400
Sales 35000
Purchases 23230
Sales return 350
Purchases return 330
Carriage on purchases 250
Carriage on sales 310
Wages and salaries 6600
Commission received 4700
Rental paid on premises 4320

2. The following Trial balance was extracted from the books of Luca, a trader as at 30 April
2023:

Dr ($) Cr ($)
Capital, 1 March 2022 10755
Furniture 16400
Stock, 1 March 2022 3580
Debtors 12600
Creditors 13400
Sales 48650
Purchases 34600
Return inwards 120
Return outwards 310
General expenses 475
Carriage on purchases 940
Wages 12500
Drawings 600
Bank loan 20000
Bank 8750
Interest on loan 2550
93115 93115
The closing stock was valued at $6800.
You are required to prepare the Income Statement for the year ended 30 April 2023.

3. The following balance is extracted from the books James B, a sole trader, on 31 August
2020:

$
Purchases 6430
Revenue 9620
Carriage inwards 230
Trade receivable 1080
Trade payable 1630
Rent payable 500
Office expenses 390
Lighting and heating 580
Advertising 610
Rent receivable 300
Return inwards 310
Return outwards 180
Carriage outwards 270
Furniture and fittings 600
Motor vehicle 1300
Cash at bank 1100
Cash in office 50
Inventory on 1 July 2019 1200
Capital 3820
Drawings 900

James values his inventory on 31 August 2020 at $ 2300.

Prepare the income statement for the year ended 31 August 2020.

4. The following Trial balance was extracted from the books of Min Xi, a sole trader on 31
March 2021:
$ $
Capital, 1 January 2021 14000
 Stock, 1 January 2021 6500
Drawings 2000
Cash at bank 2000
Cash in hand 100
Freehold premises 10000
Motor van 6000
Provision for depreciation of motor van 2400
Debtors and creditors 2400 3400
Provision for bad debts 50
Provision for discount on debtors 30
Discount allowed 80
Sales 42270
Purchases 27650
Wages 2400
Rates 320
Miscellaneous expenses 700
Repairs 2000

Prepare the Income statement for the first quarter, 1 January to 31 March 2021, taking into
account the following additional information given:
i. The closing stock was valued at $4200.
ii. The motor van was depreciated at 20% per annum on its cost price.
iii. It was decided to maintain 5% of debtors as a Provision for Bad Debts and 2 ½% of
debtors as a Provision for Discount on Debtors.
iv. Rates of $320 had been paid for the period 1 January to 30 June 2021.
v. Of the amount for repairs, actually 1500 was for an extension to the business premises
while $500 was for repairs to the leaking roof.

5. Mulan is a retailer of pastries. The following balances were extracted from her books on 31
December 2024:

$
Revenue 210000
Purchases 113500
Goods returned by customers 8120
Goods returned to suppliers 3400
Inventory at 1 January 2024 9430
Carriage 1700
Insurance 5600
 Light and heat 6300
Staff wages 27000
Advertising 10600
General expenses 15850
Discount received 1750
Building 20100
Land and buildings 100000
Fixture and fittings 18000
Computer equipment 12000
Provision for depreciation:
Fixture and fittings 7200
Computer equipment 3600
Disposal account 200 Cr
7% Bank loan repayable 20000
Bank overdraft 18500
Trade receivables 8200
Trade payables 26750
Provision for doubtful debts 500
Drawings 15500
Capital at 1 January 2024 80000

Additional information:
1. Inventory at 31 December 2024 was valued at $ 11780.
2. The cost of carriage from suppliers was $ 500, the remainder of the cost related to the
delivery of goods to customers.
3. At 30 September 2024:
Heating expenses, $ 375, were accrued.
Insurance, $ 1120, is prepaid.
4. The 7% bank loan was received on 1 July 2024. Interest is payable on each anniversary of
the loan.
5. Buildings costs consist of $ 16000 to build an extension to the building and $ 4100 to
repair the heating system.
6. Depreciation is charged on:
 Fixtures and fittings at the rate of 20% per annum on cost using the straight line
method.
Computer equipment at the rate of 30% per annum using the diminishing (reducing)
balance method.
7. A provision for doubtful debts is to be maintained at 5% of trade receivables.

Hence, prepare the Income Statement for the year ended 31 December 2024.