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Prepare the Income Statement for the year ended 31 December 2023, including all necessary calculations.

Accounting

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Answer

To complete the Income Statement, we need to identify all income and expense items from the pre-adjustment trial balance and calculate any necessary adjustments.

Step-by-step solution

7 steps

  1. Calculate Interest Income from Fixed Deposit.

    The fixed deposit earns 8% interest per annum.

    Interest Income=Fixed Deposit×Interest Rate\text{Interest Income} = \text{Fixed Deposit} \times \text{Interest Rate} Interest Income=R370 000×0.08=R29 600\text{Interest Income} = R370\,000 \times 0.08 = R29\,600

  2. Identify and sum all Revenue items.

    • Sales: R1 290 450
    • Fee income: R1 584 000
    Total Revenue=R1 290 450+R1 584 000=R2 874 450\text{Total Revenue} = R1\,290\,450 + R1\,584\,000 = R2\,874\,450

  3. Calculate Gross Profit.

    Gross Profit=Total Revenue−Cost of Sales\text{Gross Profit} = \text{Total Revenue} - \text{Cost of Sales} Gross Profit=R2 874 450−R1 032 350=R1 842 100\text{Gross Profit} = R2\,874\,450 - R1\,032\,350 = R1\,842\,100

  4. Identify and sum all Other Income items.

    • Rent income: R121 650
    • Interest income (from Step 1): R29 600
    Total Other Income=R121 650+R29 600=R151 250\text{Total Other Income} = R121\,650 + R29\,600 = R151\,250

  5. Identify and sum all Operating Expenses.

    • Salaries and wages: R367 500
    • Consumable stores: R72 790
    • Advertising: R12 120
    • Sundry Expense: R247 760
    • Employer's Contribution: R33 210
    Total Operating Expenses=R367 500+R72 790+R12 120+R247 760+R33 210=R733 380\text{Total Operating Expenses} = R367\,500 + R72\,790 + R12\,120 + R247\,760 + R33\,210 = R733\,380

  6. Identify Finance Costs.

    • Interest on loan: R11 500

  7. Calculate Profit for the year.

    Profit for the year=Gross Profit+Total Other Income−Total Operating Expenses−Finance Costs\text{Profit for the year} = \text{Gross Profit} + \text{Total Other Income} - \text{Total Operating Expenses} - \text{Finance Costs} Profit for the year=R1 842 100+R151 250−R733 380−R11 500\text{Profit for the year} = R1\,842\,100 + R151\,250 - R733\,380 - R11\,500 Profit for the year=R1 993 350−R733 380−R11 500\text{Profit for the year} = R1\,993\,350 - R733\,380 - R11\,500 Profit for the year=R1 259 970−R11 500\text{Profit for the year} = R1\,259\,970 - R11\,500 Profit for the year=R1 248 470\text{Profit for the year} = R1\,248\,470

    Here is the completed Income Statement:

    TERA PRIVATE HOSPITAL
    Income Statement for the year ended 30 September 2020

    | | | R | | :-------------------------------- | :----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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