From the trial balance for Forlegco for 31 July 2010 (Exercise E2.3)

(i) Prepare a simple income statement for July 2010.

(ii) Has Forlegco made a profit in July?

(iii) If Forlegco has not made a profit, why not?

 DATA (Exercise E2.3)

Arthur Moment set up a table-making business, Forlegco, on 1 July 2010. He had £10,000 available to invest, which is the amount he estimated was required for setting up costs. In the first month of trading Forlegco entered into the following transactions:

Purchases of timber, glue, and varnish, from Woodco, payable within the month £1,500 – half of this inventory will be on hand at 31 July 2010 Sales of tables to Gardenfurnco for settlement one month later (10 tables at £700 each)

Transcribed Image Text:

10,000 from Arthur Moment Purchase of hand tools for cash Purchase of lathe, power saw and drill on one month's credit Purchase of printing and stationery - invoice received for half the order The total order is 200, and it was all delivered in July and used 10,000 2,000 6,000 100 Purchase of advertising flyers for cash 2,000 at 50p each, of which 1,000 will be used in July, and 500 in August and September