Selected accounts of Tulip Ltd and their balances for the financial year ending 30 June 2021 are
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Question:
Selected accounts of Tulip Ltd and their balances for the financial year ending 30 June 2021 are provided below.
Additional information (not included in the figures above; Ignore GST):
- Tulip Ltd purchased a machine on 1 June 2021 for $38,000, paying $8,000 cash and signing a 2-month note payable for the remaining balance. Interest rate on the note is 15% per annum. The machine is expected to depreciate $3,600 each year.
- Stock count of inventories at end of the year revealed that Tulip Ltd’s inventory on hand balance on 30 June 2021 amounted to $146,000.
- Cost of insurance that has expired during the financial year amounted to $12,000.
- The company has determined that the allowance for doubtful debts should be adjusted to reflect 4% of accounts receivable at the end of the year.
- Tulip Ltd took out a loan of $100,000 at an annual interest rate of 12% from GMC Bank on 30 June 2021. The loan is repayable over 5 years and $12,000 of the loan is payable within 12 months. No interest is accrued on 30 June 2021.
REQUIRED:
- On the basis of all the information above, calculate Profit (or Loss) for Tulip Ltd for the year ended 30 June 2021.
- Prepare fully classified ‘Liabilities’ section only of Balance Sheet (after considering all the information above) as at 30 June 2021 for Tulip Ltd.
- Financial accounting statements tend to reflect past events. In view of this, how can they be of any assistance to a user making a decision when decisions, by their very nature, can only be made about the future?
Related Book For
Managerial accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
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