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Use the above Adjusted Trial Balance to derive the full 2020 Statement of Income (Profit & Loss) of the company. Calculate and show Gross Profit, Operating Profit, Profit before Interest and Tax, Profit before Tax. Calculate Net Profit = Profit before Tax – Corporate Tax Expense assuming a 30% corporate tax rate. (Consider the various expenses incl. depreciation expense as part of operating expenses, although not as part of Cost of Goods Sold. Rent Revenue is part of non-operating activities)

Use the above Adjusted Trial Balance to derive the full 2020 Statement of Income (Profit & Loss) of the company. Calculate and show Gross Profit, Operating Profit, Profit before Interest and Tax, Profit before Tax. Calculate Net Profit = Profit before Tax – Corporate Tax Expense assuming a 30% corporate tax rate. (Consider the various expenses incl. depreciation expense as part of operating expenses, although not as part of Cost of Goods Sold. Rent Revenue is part of non-operating activities)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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(d) Use the above Adjusted Trial Balance to derive the full 2020 Statement of Income (Profit
& Loss) of the company. Calculate and show Gross Profit, Operating Profit, Profit before
Interest and Tax, Profit before Tax. Calculate Net Profit = Profit before Tax – Corporate Tax
Expense assuming a 30% corporate tax rate.
(Consider the various expenses incl. depreciation expense as part of operating expenses,
although not as part of Cost of Goods Sold. Rent Revenue is part of non-operating
activities)

31 Dec 2020 Unadjusted Trial Balance Adjusting Entries Adjusted Trial Balance Accounts Debit Credit Debit Credit Debit Credit Cash € 120,000 € 120,000 Accounts Receivable 100,000 100,000 Notes Receivable 15,000 15,000 Interest Receivable € 1,500 1,500 Merchandise Inventory 130,000 130,000 Prepaid Insurance 2,000 € 1,000 1,000 Land 70,000 70,000 Buildings & Equipment 350,000 350,000 Accumulated Depreciation € 115,000 45,000 € 160,000 Accounts Payable 180,000 180,000 Notes payable Salaries Payable 25,000 25,000 15,000 15,000 Interest Payable Dividends Payable 1,200 1,200 20,000 20,000 Bond payables 100,000 100,000 Common stock (=Ordinary Share Capital) Additional Paid-in Capital (=Share Premium) 180,000 180,000 30,000 30,000 Retained Earnings 40,000 40,000 Sales Revenue 600,000 600,000 Interest Revenue 1,500 1,500 Rent Revenue 10,000 10,000 Cost of Goods Sold 408,000 408,000 Advertising Expense Salaries Expense 20,000 20,000 80,000 5,000 15,000 95,000 Interest Expense 1,200 6,200 Insurance Expense 1,000 1,000 Depreciation Expense 45,000 45,000 Totals 1,300,000 1,300,000 63,700 63,700 1,362,700 1,362,700
Transcribed Image Text:31 Dec 2020 Unadjusted Trial Balance Adjusting Entries Adjusted Trial Balance Accounts Debit Credit Debit Credit Debit Credit Cash € 120,000 € 120,000 Accounts Receivable 100,000 100,000 Notes Receivable 15,000 15,000 Interest Receivable € 1,500 1,500 Merchandise Inventory 130,000 130,000 Prepaid Insurance 2,000 € 1,000 1,000 Land 70,000 70,000 Buildings & Equipment 350,000 350,000 Accumulated Depreciation € 115,000 45,000 € 160,000 Accounts Payable 180,000 180,000 Notes payable Salaries Payable 25,000 25,000 15,000 15,000 Interest Payable Dividends Payable 1,200 1,200 20,000 20,000 Bond payables 100,000 100,000 Common stock (=Ordinary Share Capital) Additional Paid-in Capital (=Share Premium) 180,000 180,000 30,000 30,000 Retained Earnings 40,000 40,000 Sales Revenue 600,000 600,000 Interest Revenue 1,500 1,500 Rent Revenue 10,000 10,000 Cost of Goods Sold 408,000 408,000 Advertising Expense Salaries Expense 20,000 20,000 80,000 5,000 15,000 95,000 Interest Expense 1,200 6,200 Insurance Expense 1,000 1,000 Depreciation Expense 45,000 45,000 Totals 1,300,000 1,300,000 63,700 63,700 1,362,700 1,362,700
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