Reference no: EM13545551

Question

The Trial Balance of "Hair We Are" a beauty supplies store is shown below.

Trial Balance

as at June 30, 20X7

ACCOUNT NAME	$	$
Sales		425,000
Inventory @ July 1, 20X6	45,000
Purchases	190,000
Wages & Salaries	87,500
Telephone	14,500
Water Rates	10,800
Electricity	20,600
Discount Allowed / Discount Received	3,900	6,600
Sales Return / Purchases Return	9,000	12,300
Rental Income		72,000
Land	80,000
Buildings	130,000
Fixtures & Fittings	50,000
Provision for Depreciation @ July 1, 20X6:
Buildings		26,000
Fixtures & Fittings		9,500
Carriage Inwards	3,400
Carriage Outwards	2,900
Cash	3,700
Bank	16,250
Accounts Receivable / Accounts Payable	127,600	49,200
Short-term Loans		125,600
Drawings	7,400
Capital	________	76,350
TOTAL	$802,550	$802,550

The following information concerning the operation of "Hair We Are" is also available:

§ Closing inventory on June 30, 20X7 was $52,000.

§ Wages of $12,000 was owed at June 30, 20X7.

§ Electricity of $3,000 was prepaid at June 30, 20X7.

§ The business had the following depreciation policy:

Land: 0%

Buildings: 2.5% per year of the cost of the asset.

Fixtures and fittings: 8% per year of the net book value of the asset.

Required:

1. Prepare the Income Statement of "Hair We Are" for the year ended June 30, 20X7
2. Prepare the Balance Sheet as at June 30,20X7.
3. Discuss the purpose of presenting the final accounts in a business.
4. Discuss the accounting relevance of the accrual and matching principles.

Question 3 The Trial Balance of "Hair We Are" a beauty supplies store is shown below. Trial Balance as at June 30, 20X7 ACCOUNT NAME $ $ Sales 425,000 Inventory @ July 1,