Question 2 Lodh Ltd commenced business operations on 1 Janua

Question 2 Lodh Ltd. commenced business operations on 1 January 2015. The cash receipts and cash payments of the business for the first year of operations were as follows: Cash receipts Collections from customers $46,000 Wages cash revenue Cash payments $16,000 Office supplies Rent Drawings by owner Advertis Insurance 7,000 12,400 10,000 2,600 2,400 Additional information At 31 December 2015, customers are owing $4,000 to the business for services that were provided by Lodh Ltd during 2015 At 31 December 2015, $1,000 of wages are owing to an employee for work done during 2015. At 31 December 2015, it was identified that $1,600 of supplies are on hand. At 31 December 2015, $800 of rent has been paid in advance for January 2016. Required Prepare a statement of financial performance (profit and loss statement) on an accrual basis for Lodh Ltd for the year ending 2015 Answer Question 2 below: Lodh Ltd Statement of profit or Loss For the year ending 31st Dec 2015 Cash transactions Accrual Accrual Basis Total adjustments Revenue/Expenses Revenue Less Expenses Net Profit

Solution

Lodh Ltd

Statement of profit or loss

For the year ending 31st Dec 2015

Note: Drawings by owner$10000 is not part of item profit and loss statement. It is part of balance sheet.

So it is not included in the above statement.

Particulars		Cash transaction	accrual adjustments	accrual basis total revenue/expenses
Revenue		46000	4000	50000
Total Revenue				50000
Expenses
Wages		16000	1000	17000
Office supplies		7000	-1600	5400
Rent		12400	-800	11600
Advertising		2600	0	2600
Insurance		2400	0	2400
Total Expense				39000
Net Profit				11000