The trial balance and financial statements are for Unleash Your Power Inc. for the 6-month period ended December 31, 2014. The company sells personal development training tools. The income statement shows a net profit of $42,100 with gross profit of $62,550 less total operating expenses of $20,450. The balance sheet lists total assets of $144,680 including current assets of $55,480 and fixed assets of $88,300, with total liabilities of $51,010 including a bank loan of $35,000. Owner's equity consists of initial capital less drawings plus net profit.
1. Trial Balance Exercise 5
Tony and Laura are the owners of Unleash Your Power Inc., a business that sells
training tools for personal developments. The following is their trial balance for the 6-
monoth period that ended on 31st December 2014:
Accounts
Sales
Bad debt
Capital
Inventory
Drawings
Office expense
Debtors
Utility expense
Land and premises
Accumulated depreciation- L & P
Cost of goods sold
Salesman commission
Sales return
Promotion expense
Cash at bank
Motor vehicle
Accumulated depreciation –M.V.
Interest expenses
Bank loan
Freight inwards
Creditors
Prepaid rent revenue
Accrued interest expenses
$
900
15780
1030
4500
35000
1740
85000
82600
6460
400
2960
5600
22000
3500
450
$
146000
52600
9700
6000
35000
14300
3420
900
Additional information
1) More vehicles are depreciated under the diminishing balance method at 25%
p.a.
(22000-6000) X 25% = 4000 / ½
= 2000
2) Land and premises are depreciated under the straight-line method (it has
$5000 scrap value and a useful life of 40 years).
(85000 – 5000) / 40 = 2000 / ½
= 1000
3) The business earned 50% of rent revenue that was previously received in
advance.
3420 X 50% = 1710
4) It paid the interest expenses owed to banks.
3500 – 900 = 2600
2. Accounts
Sales
Bad debt
Capital
Inventory
Drawings
Office expense
Debtors
Utility expense
Land and premises
Accumulated depreciation- L & P
Cost of goods sold
Salesman commission
Sales return
Promotion expense
Cash at bank
Motor vehicle
Accumulated depreciation –M.V.
Interest expenses
Bank loan
Freight inwards
Creditors
Prepaid rent revenue
Accrued interest expenses
Depreciation expenses – M.V.
Depreciation expenses – L & P
Rent revenue
$
900
15780
1030
4500
35000
1740
85000
82600
6460
400
2960
4700
22000
2600
450
2000
1000
$
146000
52600
10700
8000
35000
14300
1710
0
1710
3. P&L Statement for Unleash Your Power Inc.
For the 6-month ended on 31st December 2014
Sales
Less: Sales Return
Less: Cost of Goods sold
Add: freight inwards
Gross profit
Add: rent revenue
Adjusted gross profit
Less: operating expenses
Selling expenses
Salesman commission
Promotion expenses
General expenses
Office expenses
Utility expenses
Depreciation expenses – M.V.
Depreciation expenses – L & P
Financial expenses
Interest expenses
Bad debt
Total operating expenses
Net profit
6460
2960
4500
1740
2000
1000
2600
900
82600
450
9420
9240
3500
14600
400
145600
83050
62550
1710
64260
22160
42100
4. Balance sheet for Unleash Your Power Inc.
as at 6-month ended at 31st December 2014
Owner’s equity
Capital
Less: drawing
Net profit
Assets:
Current assets
Cash at bank
Inventory
Debtors
Fixed assets
Land & premises
Accumulated depreciation – L & P
Motor vehicle
Accumulated depreciation – M.V.
Total assets
Liabilities:
Current liabilities
Creditor
Prepaid rent revenue
Less: operating expenses
Non-current liabilities
Bank loan
Total liabilities
Net assets
4700
15780
35000
85000
(10700)
22000
(8000)
14300
1710
35000
55480
88300
16010
35000
52600
(1030)
42100
93670
144680
51010
93670