The balance sheet of Simpson Ltd at 30 June 2021 was as follows: Simpson Ltd Balance Sheet as at 30 June 2021 Assets Liabilities Cash 320,000 Accounts payable 152,000 Inventory 125,000 Rent payable 1,000 Accounts Receivable 130,500 Wages payable 5.500 Prepaid Insurance 750 Total current liabilities 158,000 Supplies 3.750 Loan 200,500 Total current assets 580,000 Total Liabilities 358,500 Equipment Accumulated depreciation 80,000 Shareholders' Equity (59,500) Share capital 100,000 Total Non-Current Assets 20,500 Retained profits 142,000 Total Assets 600,500 Total Shareholders' Equity 242,000 The following events occurred for Simpson Ltd during the month of July 2021: a) Received $30,000 from accounts receivable. b) Bought equipment for $90,000 paying cash on 1 July 2021. The annual rate of depreciation for equipment owned by Simpson Limited increased to $9,000 following this transaction. c) $101,000 of credit sales occurred during the month. This inventory cost Simpson Ltd $42,000 to purchase. d) On July 1st 2021, borrowed $300,000 from the bank. The loan is due on 30 June 2023 when the principal will be repaid in full. The loan carries an interest rate of 10 per cent per annum. The monthly interest expense before the new loan was acquired was $1750 and an interest payment of $2050 was made during the month of July 2021. e) Paid S6,000 rent for the six-month period from 1 June 2021 to 31 August 2021. f) Paid wages of $20,000 during the month, $5,500 of which were owed for the month of June. $4,000 remained outstanding to employees at the end of July. 9) Cash dividends of $6,000 declared of which $1,500 remained outstanding at the end of July. h) Paid an insurance policy worth $9,000 covering 1 August 2021 to 31 July 2022. Insurance is prepaid each year on 31 July. i) A physical count on 31 July shows that the ending balance of supplies is $1,750 j) Received $7,000 for inventory to be delivered to a customer on 15 August 2021.
The balance sheet of Simpson Ltd at 30 June 2021 was as follows: Simpson Ltd Balance Sheet as at 30 June 2021 Assets Liabilities Cash 320,000 Accounts payable 152,000 Inventory 125,000 Rent payable 1,000 Accounts Receivable 130,500 Wages payable 5.500 Prepaid Insurance 750 Total current liabilities 158,000 Supplies 3.750 Loan 200,500 Total current assets 580,000 Total Liabilities 358,500 Equipment Accumulated depreciation 80,000 Shareholders' Equity (59,500) Share capital 100,000 Total Non-Current Assets 20,500 Retained profits 142,000 Total Assets 600,500 Total Shareholders' Equity 242,000 The following events occurred for Simpson Ltd during the month of July 2021: a) Received $30,000 from accounts receivable. b) Bought equipment for $90,000 paying cash on 1 July 2021. The annual rate of depreciation for equipment owned by Simpson Limited increased to $9,000 following this transaction. c) $101,000 of credit sales occurred during the month. This inventory cost Simpson Ltd $42,000 to purchase. d) On July 1st 2021, borrowed $300,000 from the bank. The loan is due on 30 June 2023 when the principal will be repaid in full. The loan carries an interest rate of 10 per cent per annum. The monthly interest expense before the new loan was acquired was $1750 and an interest payment of $2050 was made during the month of July 2021. e) Paid S6,000 rent for the six-month period from 1 June 2021 to 31 August 2021. f) Paid wages of $20,000 during the month, $5,500 of which were owed for the month of June. $4,000 remained outstanding to employees at the end of July. 9) Cash dividends of $6,000 declared of which $1,500 remained outstanding at the end of July. h) Paid an insurance policy worth $9,000 covering 1 August 2021 to 31 July 2022. Insurance is prepaid each year on 31 July. i) A physical count on 31 July shows that the ending balance of supplies is $1,750 j) Received $7,000 for inventory to be delivered to a customer on 15 August 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Prepare an income statement for Simpson Ltd for the month ended 31 July 2021
Transcribed Image Text:Prepare an income statement for Simpson Ltd for the month ended 31 July 2021
Transcribed Image Text:The balance sheet of Simpson Ltd at 30 June 2021 was as follows:
Simpson Ltd
Balance Sheet
as at 30 June 2021
Assets
Liabilities
Cash
320,000
Accounts payable
152,000
Inventory
125,000
Rent payable
1,000
Accounts Receivable
130,500
Wages payable
5.500
Prepaid Insurance
750
Total current liabilities
158,000
Supplies
3,750
Loan
200,500
Total current assets
580,000
Total Liabilities
358,500
Equipment
80,000
Shareholders' Equity
Accumulated depreciation
(59,500)
Share capital
100,000
Total Non-Current Assets
20,500
Retained profits
142,000
Total Assets
600,500
Total Shareholders' Equity
242,000
The following events occurred for Simpson Ltd during the month of July 2021:
a) Received $30,000 from accounts receivable.
b) Bought equipment for $90,000 paying cash on 1 July 2021. The annual rate of depreciation for equipment owned by Simpson Limited increased to $9,000 following this transaction.
c) $101,000 of credit sales occurred during the month. This inventory cost Simpson Ltd $42,000 to purchase.
d) On July 1st 2021, borrowed $300,000 from the bank. The loan is due on 30 June 2023 when the principal will be repaid in full. The loan carries an interest rate of 10 per cent per annum. The monthly interest expense before the new loan
was acquired was $1750 and an interest payment of $2050 was made during the month of July 2021.
e) Paid $6,000 rent for the six-month period from 1 June 2021 to 31 August 2021.
f) Paid wages of $20,000 during the month, $5,500 of which were owed for the month of June. $4,000 remained outstanding to employees at the end of July.
g) Cash dividends of $6,000 declared of which $1,500 remained outstanding at the end of July.
h) Paid an insurance policy worth $9,000 covering 1 August 2021 to 31 July 2022. Insurance is prepaid each year on 31 July.
i) A physical count on 31 July shows that the ending balance of supplies is $1,750
j) Received $7,000 for inventory to be delivered to a customer on 15 August 2021.
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