The following balance was extracted from the books of Goodluck Enterprises on 31 December 2014 Details...

 

Transcribed Image Text:

The following balance was extracted from the books of Goodluck Enterprises on 31 December 2014 Details Purchases Drawings ofice Building at cost Machine at valuation Fixtures and fittings at cost 51,400 4,80 30,000 4,500 5,400 Provision for depreciation of fixtures and fittings Inventory 1 January 2014 Account receivables 1,O80 7,500 4,900 Bad debts Bad debts recovered Provision for doubtful debts Carriage outwards Revenue Owner's Equity 1 January 2014 Purchases returns Trade payables 50 150 116 700 58,200 55,686 2.300 5,100 5,240 7,960 Bank Administration expenses Discount allowed 182 Additional information: a. Goodluck Enterprises did not value the inventory on 31" December 2014 due to an oversight. The gross profit margin is 20%. b. The provision for doubtful debts is to be maintained at 2% of Account receivables. c. Machine was valued at $3800 on 31 December 2014. No Machine was bought or sold during the year ended 31 December 2014. d. Fixtures and fittings are to be depreciated by 10% per annum on cost. REQUIRED: Prepare the income statement of Goodluck Enterprises for the year ended 31 December 2014. The income statement should clearly show the gross and net profits for the year and the value of the inventory on 31 December 2014. The following balance was extracted from the books of Goodluck Enterprises on 31 December 2014 Details Purchases Drawings ofice Building at cost Machine at valuation Fixtures and fittings at cost 51,400 4,80 30,000 4,500 5,400 Provision for depreciation of fixtures and fittings Inventory 1 January 2014 Account receivables 1,O80 7,500 4,900 Bad debts Bad debts recovered Provision for doubtful debts Carriage outwards Revenue Owner's Equity 1 January 2014 Purchases returns Trade payables 50 150 116 700 58,200 55,686 2.300 5,100 5,240 7,960 Bank Administration expenses Discount allowed 182 Additional information: a. Goodluck Enterprises did not value the inventory on 31" December 2014 due to an oversight. The gross profit margin is 20%. b. The provision for doubtful debts is to be maintained at 2% of Account receivables. c. Machine was valued at $3800 on 31 December 2014. No Machine was bought or sold during the year ended 31 December 2014. d. Fixtures and fittings are to be depreciated by 10% per annum on cost. REQUIRED: Prepare the income statement of Goodluck Enterprises for the year ended 31 December 2014. The income statement should clearly show the gross and net profits for the year and the value of the inventory on 31 December 2014.

Answer rating: 100% (QA)

Gross profit marigin Salescost of goods soldsales100 20 58200COGS5... View the full answer