This accounting problem is solved step by step below, with detailed explanations to help you understand the method and arrive at the correct answer.
ScanSolve AI Answer
Welcome back Trust — been a while! Let's pick up where you left off. 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 1: Calculate Interest Income from Fixed Deposit. The fixed deposit earns 8% interest per annum. Interest Income = Fixed Deposit × Interest Rate Interest Income = R370\,000 × 0.08 = R29\,600 Step 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 Step 3: Calculate Gross Profit. Gross Profit = Total Revenue - Cost of Sales Gross Profit = R2\,874\,450 - R1\,032\,350 = R1\,842\,100 Step 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 Step 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 Step 6: Identify Finance Costs. Interest on loan: R11 500 Step 7: Calculate Profit for the year. Profit for the year = Gross Profit + Total Other Income - Total Operating Expenses - Finance Costs Profit for the year = R1\,842\,100 + R151\,250 - R733\,380 - R11\,500 Profit for the year = R1\,993\,350 - R733\,380 - R11\,500 Profit for the year = R1\,259\,970 - R11\,500 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 | | :-------------------------------- | :----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------