The information relates to the accounting records of Maruping Dealers for the year ended 31 August 2024. Take…

Question

The information relates to the accounting records of Maruping Dealers for the year ended 31 August 2024. Take the information into account and complete the Income Statement.

ScanSolve AI Tutor · Accepted Answer

Here is the Statement of Comprehensive Income for Maruping Dealers.

Statement of Comprehensive Income for the year ended 31 August 2024

	R	R
Sales		$758\,413$
Less: Cost of Sales		$(500\,000)$
Gross Profit		$\mathbf{258\,413}$

Other Operating Income
Rent income	$31\,300$
Interest on fixed deposit	$2\,125$
Discount received	560
Total Other Operating Income		$\mathbf{33\,985}$

Operating Expenses
Debtors allowances	$12\,435$
Bad debts	$1\,250$
Salaries	$114\,000$
Telephone	$7\,490$
Water and electricity	$5\,350$
Stationery	$3\,210$
Advertising	$6\,346$
Insurance	$3\,250$
Discount allowed	789
Total Operating Expenses		$\mathbf{(154\,170)}$

Profit before Interest on loan		$\mathbf{138\,228}$

Interest on loan		$?$
Net Profit for the year		$\mathbf{Cannot\ be\ determined}$

Calculations:

Calculate Gross Profit.
$\text{Gross Profit} = \text{Sales} - \text{Cost of Sales}$ $\text{Gross Profit} = R758\,413 - R500\,000 = R258\,413$
Calculate Total Other Operating Income.
$\text{Total Other Operating Income} = \text{Rent income} + \text{Interest on fixed deposit} + \text{Discount received}$ $\text{Total Other Operating Income} = R31\,300 + R2\,125 + R560 = R33\,985$
Calculate Total Operating Expenses (excluding Interest on loan).
$\text{Total Operating Expenses} = \text{Debtors allowances} + \text{Bad debts} + \text{Salaries} + \text{Telephone} + \text{Water and electricity} + \text{Stationery} + \text{Advertising} + \text{Insurance} + \text{Discount allowed}$ $\text{Total Operating Expenses} = R12\,435 + R1\,250 + R114\,000 + R7\,490 + R5\,350 + R3\,210 + R6\,346 + R3\,250 + R789 = R154\,170$
Calculate Profit before Interest on loan.
$\text{Profit before Interest on loan} = \text{Gross Profit} + \text{Total Other Operating Income} - \text{Total Operating Expenses}$ $\text{Profit before Interest on loan} = R258\,413 + R33\,985 - R154\,170 = R138\,228$
Determine Net Profit.
The value for "Interest on loan" is marked with a '?' in the trial balance, and no additional information is provided to calculate it. Therefore, the final Net Profit for the year cannot be determined from the given information.

The information relates to the accounting records of Maruping Dealers for the year ended 31 August 2024. Take the information into account and complete the Income Statement.

Step-by-step solution

Calculate Gross Profit.

Calculate Total Other Operating Income.

Calculate Total Operating Expenses (excluding Interest on loan).

Calculate Profit before Interest on loan.

Determine Net Profit.

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