“Quick Kip” is a pet store specialising in cat beds. The store is owned and operated by Kat Knapp. The following adjusted trial balance has been prepared at year end but is not in the correct order.

Quick Kip – TRIAL BALANCE AS AT 30 JUNE 2020

Debit ($) Credit ($)
Cash 16,000
Advertising Expense 1,200
Depreciation Expense – Equipment 4,200
Freight Outwards 3,750
Allowance for Doubtful Debts 3,100
Insurance Expense 3,600
Inventory (1 July 2019) 43,000
General Expense 2,800
Loan Payable 32,000
Rent Expense 6,600
Equipment 16,000
Sales Returns 400
Accumulated Depreciation – Equipment 5,400
Prepaid Rent 1,500
Delivery Van 24,000
Purchases Returns 5,200
Accumulated Depreciation – Delivery Van 4,800
Accounts Payable 22,250
Sales Staff Wages Expense 19,000
Freight Inwards 2,150
Accounts Receivable 36,600
Doubtful Debts Expense 700
K. Knapp, Capital (1 July 2019) 58,000
Depreciation Expense – Delivery Van 2,800
Discount Received 900
K. Knapp, Drawings 12,500
Sales 217,800
Purchases 145,200
Discount Allowed 7,450
349,450 349,450

Additional information
⦁ Closing Inventory (as per stocktake) at 30 June 2020 was $45,500.
⦁ 30% of the insurance expense specifically relates to the administration office. The remainder of this expense relates to insuring the store.
⦁ $2,000 of the rent expense specifically relates to the administration office. The remainder of this expense relates to rent of the store.
⦁ The Loan is not due for repayment until 2022.




Identify which inventory method Quick Kip is using.

Explain how you determined which inventory method Quick Kip is using from the trial balance provided.

(b) Using the Trial Balance, prepare the following financial statements for the period in question:
⦁ A fully classified Income Statement
⦁ A separate Statement of Changes in Equity
⦁ A fully classified Balance Sheet in the narrative format

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