Accounting Business Reporting for Decision Making

CHAPTER 6 Statement of profit or loss and statement of changes in equity 251

SOLUTION TO 6.2

Coconut Plantations Pty Ltd

Statement of profit or loss for the year ended 31 December 2017

Income

Service fees

Cost of sales

$1 550 000

902 500

Gross profit

Other income

647 500

1 000

Expenses

Warehouse

Distribution

Sales and marketing

Administrative

Finance

48 000

18 000

131 000

109 500

14 000

Total expenses 320 500

Profit before income tax 328 000

Income tax 98 400

Profit $ 229 600

Coconut Plantations Pty Ltd

Statement of changes in shareholders’ equity

for the year ended 30 June 2017

Share capital as at 1 January 2017

Additional contributed equity during year

Contributed equity as at 30 June 2017

$200 000

0

200 000

Retained earnings as at 1 January 2017

Plus: Profit

Less: Dividends

90 210

229 600

130 000

Retained earnings as at 31 December 2017 189 810

Shareholders’ equity as at 31 December 2017 $ 389 810

6.3 a. The following lines represent independent cases. Fill in the missing items.

Income

Cost of

sales

Other

expenses Profit

Total

assets

Total

liabilities

Share

capital

Retained

earnings

325 000 a. 45 000 20 000 b. 15 000 120 000 45 000

550 000 350 000 c. 75 000 1 000 000 d. 600 000 320 000

e. 115 000 81 000 11 500 510 000 33 500 230 000 f.

498 000 400 000 g. 38 000 848 500 68 500 h. 400 000

244 000 138 000 32 000 i. 320 000 j. 125 000 125 000

b. For each of the independent cases presented, calculate the gross profit. Discuss the decisions that

can influence an entity’s gross profit margin.