Question

You are presented with the following alphabetical list of accounts and balances (in thousands) for Sunland Enterprises Inc. at June 30, 2018. All accounts have a normal balance.

Accounts payable		$ 3,100		Income tax payable		$ 100
Accounts receivable		3,000		Interest expense		100
Accumulated depreciation—buildings		3,600		Land		7,600
Accumulated depreciation—equipment		900		Long-term investments		3,800
Buildings		13,900		Inventory		5,200
Cash		1,200		Mortgage payable, due 2025		16,000
Common shares		5,500		Office expense		2,900
Cost of goods sold		14,100		Prepaid insurance		900
Dividends declared		2,100		Retained earnings		6,100
Equipment		3,300		Sales		23,900
Income tax expense		1,100

In addition to this information, common shares in the amount of $2,500 were issued during the year and $1,100 of the mortgage is currently due.

a) Prepare an income statement for the year

b) Prepare a statement of changes in equity for the year

c) Prepare a statement of financial position for the year

Answer 1

a) Income statement for the year:

particulars		Amount($)
Sales	23900
Cost of Goods sold	(14100)	9800
Expenses:
interest expenses	100
office expenses	2900
dividend declared	2100
income tax expenses	1100	6200
Excess of income over expenditure		3600

b)statement of changes in equity for the year

opening number of shares	3000
current year shares issued	2500
closing no of shares	5500

c) financial position for the year

Liabilities	Amount($)	Assets	Amount($)
Equity	5500	land	7600
retained earnings	6100	Buildings	10300
current year profit	3600	equipment	2400
mortgage payable(16000-1100)	14900	long term investments	3800
income tax payable	100	inventory	5200
accounts payable	3100	prepaid insurance	900
		accounts receivable	3000
		cash	100
	33300		33300