Trial balance sheet exercise 5
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The trial balance and financial statements are for Unleash Your Power Inc. for the 6-month period ended December 31, 2014. The company sells personal development training tools. The income statement shows a net profit of $42,100 with gross profit of $62,550 less total operating expenses of $20,450. The balance sheet lists total assets of $144,680 including current assets of $55,480 and fixed assets of $88,300, with total liabilities of $51,010 including a bank loan of $35,000. Owner's equity consists of initial capital less drawings plus net profit.
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Trial balance sheet exercise 5
- 1. Trial Balance Exercise 5 Tony and Laura are the owners of Unleash Your Power Inc., a business that sells training tools for personal developments. The following is their trial balance for the 6- monoth period that ended on 31st December 2014: Accounts Sales Bad debt Capital Inventory Drawings Office expense Debtors Utility expense Land and premises Accumulated depreciation- L & P Cost of goods sold Salesman commission Sales return Promotion expense Cash at bank Motor vehicle Accumulated depreciation –M.V. Interest expenses Bank loan Freight inwards Creditors Prepaid rent revenue Accrued interest expenses $ 900 15780 1030 4500 35000 1740 85000 82600 6460 400 2960 5600 22000 3500 450 $ 146000 52600 9700 6000 35000 14300 3420 900 Additional information 1) More vehicles are depreciated under the diminishing balance method at 25% p.a. (22000-6000) X 25% = 4000 / ½ = 2000 2) Land and premises are depreciated under the straight-line method (it has $5000 scrap value and a useful life of 40 years). (85000 – 5000) / 40 = 2000 / ½ = 1000 3) The business earned 50% of rent revenue that was previously received in advance. 3420 X 50% = 1710 4) It paid the interest expenses owed to banks. 3500 – 900 = 2600
- 2. Accounts Sales Bad debt Capital Inventory Drawings Office expense Debtors Utility expense Land and premises Accumulated depreciation- L & P Cost of goods sold Salesman commission Sales return Promotion expense Cash at bank Motor vehicle Accumulated depreciation –M.V. Interest expenses Bank loan Freight inwards Creditors Prepaid rent revenue Accrued interest expenses Depreciation expenses – M.V. Depreciation expenses – L & P Rent revenue $ 900 15780 1030 4500 35000 1740 85000 82600 6460 400 2960 4700 22000 2600 450 2000 1000 $ 146000 52600 10700 8000 35000 14300 1710 0 1710
- 3. P&L Statement for Unleash Your Power Inc. For the 6-month ended on 31st December 2014 Sales Less: Sales Return Less: Cost of Goods sold Add: freight inwards Gross profit Add: rent revenue Adjusted gross profit Less: operating expenses Selling expenses Salesman commission Promotion expenses General expenses Office expenses Utility expenses Depreciation expenses – M.V. Depreciation expenses – L & P Financial expenses Interest expenses Bad debt Total operating expenses Net profit 6460 2960 4500 1740 2000 1000 2600 900 82600 450 9420 9240 3500 14600 400 145600 83050 62550 1710 64260 22160 42100
- 4. Balance sheet for Unleash Your Power Inc. as at 6-month ended at 31st December 2014 Owner’s equity Capital Less: drawing Net profit Assets: Current assets Cash at bank Inventory Debtors Fixed assets Land & premises Accumulated depreciation – L & P Motor vehicle Accumulated depreciation – M.V. Total assets Liabilities: Current liabilities Creditor Prepaid rent revenue Less: operating expenses Non-current liabilities Bank loan Total liabilities Net assets 4700 15780 35000 85000 (10700) 22000 (8000) 14300 1710 35000 55480 88300 16010 35000 52600 (1030) 42100 93670 144680 51010 93670