Question

Klever Kitchen (KK), retailer that sells smart kitchen appliances. The business commenced itx trading activities on January 2020. The following is a summary of business transactions that occurred during the first year of trading 1. The owners introduced RM 300,000 of cash, which was paid into a business bunk account 2 The company borrowed RM50,000 from a local bank 3. A motor vehicle was bought on 1 January 2020 for RM60,000. This is expected to be used in the business for nine years and then to be sold for RM6,000 4. Equipment costing RM20,000 was purchased for RM10,000 cash and signing a note payable for RM10,000. It has an expected useful conomic life of 6 years and an estimated residual value of RM2,000 $ The business purchased inventories on credit from a manufacturer Muster Kitchen) for RM120,000 Inventories totalling RM25.000 were bought for cash. 7 Sales revenue on credit totalled RM130,000 (cost of sales RM50.000) & Cash sales revenue totalled RM40,000 cost of sales RM15,000). 9, Salaries of RM12,000 were paid in cash. However, at the end of the year, the businca owed RM1,000 of salaries for the last week of the year, 10. Premises were rented from 1 January 2020 at an annual rental of RM15,000 During the year, rent of RM21,000 was paid to the owner of the promises 11. Electricity bills for the first three quarters of the year were paid totalling RM1,400 Atter 31 December 2020, but before the financial statements had been finalised for the year, the bill for the last quarter arrived showing a charge of RM120. 12. One of the customers was declared bankrupt und unable to settle his debts. The customer still owed RM60. 13. Receipts from trade receivables totalled RM80,000 14. Payments of trade payables totalled RM 70,000 NOTE: The business uses the straight-line method for depreciating its non-current Required: (a) Prepare an Income Statement of Klever Kitchen for the year ended 31 December 2020

Answer 1

Klever Kitchen Income Statement for the year ended 31 December 2020

Sales revenue on credit: RM130,000

Cash sales revenue: RM40,000

Total revenue: RM170,000

Cost of sales:

Opening inventory: RM0

Purchases on credit: RM120,000

Cash purchases: RM25,000

Total cost of sales: RM145,000

Gross profit: RM25,000

Operating expenses:

Salaries: RM12,000

Rent: RM21,000

Electricity bills: RM1,400

Depreciation: (RM60,000 - RM6,000) / 9 years = RM6,000

Total operating expenses: RM40,400

Net profit before interest and tax: RM (15,400)

Interest expenses: RM50,000 x 5% = RM2,500

Net loss before tax: RM (17,900)

Tax expenses: RM0

Net loss after tax: RM (17,900)

Note: The company incurred a net loss for the year ended 31 December 2020.

Step-by-step explanation: