During the year ending 31 Aug 2021, Aden Financial Advisory Service reports cash revenue of $220,000 and cash expense of $140,000.

Additional information:

1.  Salary payable as at 31 Aug 2021 is $7,800;

2.  Annual depreciation expense of $20,000 is not included in the cash expenses;

3.  Fees for advice given for the year ended 31 Aug 2020 for $9,000 were collected in the current year and are included above;

4.  Fees earned in the current year of $12,000 are expected to be collected in the following year.

 

Required: 

a) Using the above information, prepare the Statement of Profit and Loss on the accrual basis of accounting. Show all calculations?

 

b) The depreciation expense above is for printing equipment with an initial cost of $82,000. The equipment is expected to be used for 4 years with a residual value of $2,000. The accumulated depreciation as of 1 Sept 2020 was 20,000. Prepare necessary journal entries to record the depreciation expense for the year ended on 31 Aug 2021. Calculate the age of the printing equipment as at 31 Aug 2021. Show all calculations?

Answer rating: 100% (QA)

a Statement of Profit and Loss on the accrual basis of accounting Cash revenue 220000 Less Cash ... View the full answer