2016 Cengage Australia Pty Limited

© 2016 Cengage Australia Pty Limited Chapter 1 Introduction to financial accounting Practice Problems Practice Problem A 1 Account Classification Cash at bank Asset Inventory Asset Sales Revenue Wages Expense Cost of goods sold Expense Share capital Equity Accounts payable Liability

2 Income Statement For the year ending 30 June 2016 $ Sales 210,000 Cost of goods sold (70,000) Gross profit 140,000 Wages (40,000) Net Profit 100,000

3 Balance Sheet As at 30 June 2016 Assets Liabilities and shareholders’ equity $ $ Cash at bank 210,000 Accounts payable 30,000 Inventory 60,000 Share capital 140,000 Retained profits 100,000 *

270,000 270,000

*Opening retained profit + profit –dividend = closing balance retained profit (0 +

100,000 – 0 = 100,000)

Financial Accounting An Integ Approach Australia 6th Edition Trotman Solutions Manual Visit TestBankDeal.com to get complete for all chapters

Trotman: Financial Accounting 6e – Practice Problem Solutions

© 2016 Cengage Australia Pty Limited Practice Problem B

• Accrual profit = total sales – total expenses

= $750,000 + 260,000 – 580,000 – 240,000

= $190,000

• Sales revenue = 2,000 x $8

= $16,000

Cost of goods sold = 2,000 x $5

= $10,000

Practice Problem C Shareholders’ equity = Assets – Liabilities = (Property, Plant and Equipment $1,500,000 + Accounts Receivable $400,000 + Cash $100,000 + Inventory $500,000) – (Bank loan $250,000 + Wages Payable $90,000)

= $2,500,000 – 340,000

= $2,160,000

Financial Accounting An Integ Approach Australia 6th Edition Trotman Solutions Manual Visit TestBankDeal.com to get complete for all chapters