Reference no: EM131565335

Problem -

The accountant for Bert's Office Supplies has had to take extended sick leave. Before he left he had one outstanding task, to prepare the 'statement of financial performance'. You have been called in as a contract accountant to help Bert Office Supplies create this financial statement. The information below has been given to you by the Managing Director, who says this what you need to prepare the 'statement of financial performance'. All balances are for the current year (ended 30 June 2010):

Account $

Sales revenue 1,235,650

Gross Profit 655,366

Inventory 55,135

Marketing expenses 15,650

Depreciation expenses 10,500

Accrued expenses 55,500

Staff salaries 356,138

Accounts payable 89,599

Tax expense 17,115

Entertainment expenses 35,600

Interest expense 56,980

Administration expenses 18,550

A scrap of paper has also been found which contains a list of adjustments required in order to finalise the 'statement of financial performance' for the year ended 30 June 2010:

• Insurance paid during the financial period of $4,800 (for a 12 month contract) was expensed, (included under administration expenses) however at year end there are still eight months of insurance coverage under the policy.
• an invoice for office supplies of $536 (already used up) was found and hasn't yet been recorded as administration expenses.
• a customer has paid $1,509 in advance (of goods supplied). This amount has been recorded as sales revenue.
• staff salaries accrual is $3,645.
• as a result of the above changes tax expense should be $18,650.

(i) Make detailed 'statement of financial performance' ('income statement') in the template below, using the above financial information and making any relevant adjustments. (there are 14 lines and 4th line must be gross margin and last line is net profit after tax)

(ii) Calculate the gross margin percentage.