Tutorial 4

Income Statement (T format)

Income Statement is otherwise known as profit and loss account, the main of income statement is to
express the profit or loss resulted from business operation.

We prepare income statement taking into account REVENUES and EXPENSES

2 methods of preparing income statement these are the statement format and the T format
ABC Trading
Dr Cr
st
Income Statement for the year ended 31 December 2019
EXPENSES REVENUES
Insurance XX Service revenue XX
Rent XX Sales XX
Salary XX Discount received XX
Electricity XX Interest received XX
Commission XX Rent received XX
Discount allowed XX Net loss 350
Carriage outward XX
Depreciation XX
Net profit 920
6,000/7,500 6,000/7500

Total Dr = 5,080
Total Cr = 6,000

Profit = when Cr side is greater than the Dr side (difference between the Cr and Dr sides) i.e., Cr
MINUS Dr

Assuming
Total dr side is 7,500
Total Cr side 7,150

Loss when Dr side is greater than the Cr side

1 From the following trial balance of l. Lamb, extracted after one year’s trading, prepare a statement of
profit or loss for the year ending 31 October 2016. A statement of financial position is not required.
Trial balance as at 31 October 2016
Dr Cr
RM RM
Service Revenue 100,250
Salaries 89,700
Motor expenses 1,200
Rent 950
Insurance 150
General expenses 85
Premises 47,800
Motor vehicles 8,600
Account receivable 13,400
Account payable 8,800
Cash at bank 8,200
Cash in hand 300
Drawing 4,200
Capital 65,535
174,585 174,585
Requirements:
1) Identify Assets, Liabilities, Capital, Expenses & Income.

Identification
Service Revenue Income
Salaries expenses
Motor expenses Expenses
Rent Expenses
Insurance Expenses
General expenses Expenses
Premises Asset
Motor vehicles Asset
Account receivable Asset
Account payable Liability
Cash at bank Asset
Cash in hand Asset
Drawing Decrease in
Capital
Capital Capital

2) Prepare Income Statement (T format).

 I Lamb
Dr Cr
st
Income Statement for the year ended 31 October 2016
Expenses: RM Revenues: RM
Salaries 89,700 Service Revenue 100,250
Motor expenses 1,200
Rent 950
Insurance 150
General expenses 85
Net profit 8,165

100,250 100,250

Total Dr = 92,085

Total Cr = 100,250
 Solution:

Service Revenue Income

Salaries Expense

Motor expenses Expense

Rent Expense

Insurance Expense

General expenses Expense

Premises Asset

Motor vehicles Asset

Account receivable Asset

Account payable Liability

Cash at bank Asset

Cash in hand Asset

Drawing Decrease Capital

Capital Capital

Income Statement

Salaries 89,700 Services Revenue 100,250

Motor expenses 1,200

Rent 950

Insurance 150

General expenses 85

Net Profit 8,165

100,250 100,250
2 From the following trial balance of G. foot after his first year’s trading. You are required to draw up a
statement of profit or loss for the year ending 30 June 2016. A statement of financial position is not
required.
Trial balance as at 30 June 2016
Dr Cr
RM RM
Service Revenue 266,000
Rent 53,800
Lighting and heating expenses 700
Salaries and wages 156,000
Insurance 3,000
Building 84,800
Fixtures 2,000
Accounts receivable 31,200
Sunday expenses 300
Account payable 16,000
Cash at bank 15,000
Drawings 28,600
Vans 16,000
Motor running expenses 4,600
Capital 114,000
396,000 396,000
Requirements:
1) Identify Assets, Liabilities, Capital, Expenses & Income.
Identification
Service Revenue Income
Rent Expense
Lighting and heating expenses Expense
Salaries and wages Expense
Insurance Expense
Building Asset
Fixtures Asset
Accounts receivable Asset
Sunday expenses Expense
Account payable Liability
Cash at bank Asset
Drawings Decrease in
Equity/capital
Vans Asset
Motor running expenses Expense
Capital Capital

2) Prepare Income Statement (T format).

 G. Foot trading
Dr Income Statement for the year ended 30th June 2016 Cr
RM RM
Rent 53,800 Service Revenue 266,000
Lighting and heating expenses 700
Salaries and wages 156,000
Insurance 3,000
Sunday expenses 300
Motor running expenses 4,600
Net profit 47,600
266,000 266,000

Total Dr = 218,400

Total Cr = 266,000
Solution:

Service Revenue Income

Rent Expense

Lighting and heating expenses Expense

Salaries and wages Expense

Insurance Expense

Building Asset

Fixtures Asset

Accounts receivable Asset

Sunday expenses Expense

Account payable Liability

Cash at bank Asset

Drawings Decrease Capital

Vans Asset

Motor running expenses Expense

Capital Capital

Income Statement

Rent 53,800 Service Revenue 266,000

Lighting and heating expenses 700

Salaries and wages 156,000

Insurance 3,000

Sunday expenses 300

Motor running expenses 4,600

Net Profit 47,600

266,000 266,000
3 From the following trial balance of F. Dover drawn up on conclusion of his first year in business, draw
up a statement of profit or loss for the year ending 31 May 2017. A statement of financial position is not
required.
Trial balance as at 31 May 2017
Dr Cr
RM RM
General expenses 610
Business rent 4,800
Motor expenses 1,820
Salaries 221,200
Insurance 2,480
Service Revenue 471,624
Car 8,600
Accounts payable 22,400
Accounts receivable 42,160
Premises 206,000
Cash at bank 5,430
Cash in hand 650
Capital 46,526
Drawings 540,550 540,550
Requirements:
1) Identify Assets, Liabilities, Capital, Expenses & Income.
Identification
General expenses Expense
Business rent Expense
Motor expenses Expense
Salaries Expense
Insurance Expense
Service Revenue Income
Car Asset
Accounts payable Liability
Accounts receivable Asset
Premises Asset
Cash at bank Asset
Cash in hand Asset
Capital Equity
Drawings Decr in equi.
 2) Prepare Income Statement (T format).

F. Dover
Dr Income Statement for the year ended 31st May 2017 Cr
RM RM
General expenses 610 Service Revenue 471,624
Business rent 4,800
Motor expenses 1,820
Insurance 2,480
Salaries 221,200
Net profit 240,714
471,624 471,624

Total Dr = 230,910

Total Cr = 471,624
Solution:

General expenses Expense

Business rates Expense

Motor expenses Expense

Salaries Expense

Insurance Expense

Service Revenue Income

Car Asset

Accounts payable Liability

Accounts receivable Asset

Premises Asset

Cash at bank Asset

Cash in hand Asset

Capital Capital

Drawings Decreases Capital

Income Statement

General expenses 610 Service Revenue 471,624

Business rates 4,800

Motor expenses 1,820

Salaries 221,200

Insurance 2,480

Net Profit 240,714

471,624 471,624
4 Extract a statement of profit or loss for the year ending 30 June 2016 for G. Graham. The trial balance
as at 30 June 2016 after his first year of trading was as following.

Dr Cr
RM RM
Equipment rental 940
Insurance 1,804
Lighting and heating expenses 1,990
Motor expenses 2,350
Salaries and wages 48,580
Service Revenue 382,420
Other Expenses 245,950
Sundry expenses 624
Lorry 19,400
Accounts payable 23,408
Accounts receivable 44,516
Fixtures 4,600
Shop 1174,000
Cash at bank 11,346
Drawings 44,000
Capital 194,272
600,100 600,100
Requirements:
1) Identify Assets, Liabilities, Capital, Expenses & Income.
2) Prepare Income Statement (T format).
Solution:

Equipment rental Expense

Insurance Expense
Lighting and heating expenses Expense
Motor expenses Expense
Salaries and wages Expense
Service Revenue Income
Other Expenses Expense
Sundry expenses Expense
Lorry Asset
Accounts payable Liability
Accounts receivable Asset
Fixtures Asset
Shop Asset
Cash at bank Asset
Drawings Decreases Capital
Capital Capital

Income Statement

Equipment rental 940 Service Revenue 382,420

Insurance 1,804

Lighting and heating expenses 1,990

Motor expenses 2,350

Salaries and wages 48,580

Other Expenses 245,950

Sundry expenses 624

Net Profit 80,182

382,420 382,420

Y7846V