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Interest income Prepare the following: 1. The journal entries 2. The ledgers 3. The trial balance 2 Describe the accounting function and give an outline of the four financial statements. 3 Examine the contents and the structure of the statement of income and the statement of comprehen income, the statement of changes in equity, and the statement of financial position. EXERCISE 2: PREPARING THE STATEMENT OF INCOME At the end of December 31, 2012, Cougar Inc.'s accounts are as follows: Office salaries $30,000 Finance costs 3,000 Depreciation (administration) 2,000 Cost of sales 300,000 Income tax expense 35,000 Sales salaries 40,000 6,000 Gross revenue 520,000 Advertising 10,000 Lease (administration) 3,000 Promotional expenses 2.000 Sales discounts 20,000 Travel expenses 3,000 Rental charges 5.000 Question Prepare Cougar's statement of income for the year ended December 31, 2012. EXERCISE 3: DEPRECIATION AND CAPITAL COST ALLOWANCE On its statement of financial position, a company shows buildings purchase $700,000, equipment purchased for $350,000, and machinery purchased for $170, The depreciation and capital cost allowance rates for these non-current assets a follows: Capital Cost Allowance Straight-Line Deprecia 1. Buildings 7% 2. Equipment 20% 25% 3. Machinery 15% 30% 5% Question For the first five years of operation, calculate the amount of depreciation and ca cost allowance for the non-current assets. Interest income Prepare the following: 1. The journal entries 2. The ledgers 3. The trial balance 2 Describe the accounting function and give an outline of the four financial statements. 3 Examine the contents and the structure of the statement of income and the statement of comprehen income, the statement of changes in equity, and the statement of financial position. EXERCISE 2: PREPARING THE STATEMENT OF INCOME At the end of December 31, 2012, Cougar Inc.'s accounts are as follows: Office salaries $30,000 Finance costs 3,000 Depreciation (administration) 2,000 Cost of sales 300,000 Income tax expense 35,000 Sales salaries 40,000 6,000 Gross revenue 520,000 Advertising 10,000 Lease (administration) 3,000 Promotional expenses 2.000 Sales discounts 20,000 Travel expenses 3,000 Rental charges 5.000 Question Prepare Cougar's statement of income for the year ended December 31, 2012. EXERCISE 3: DEPRECIATION AND CAPITAL COST ALLOWANCE On its statement of financial position, a company shows buildings purchase $700,000, equipment purchased for $350,000, and machinery purchased for $170, The depreciation and capital cost allowance rates for these non-current assets a follows: Capital Cost Allowance Straight-Line Deprecia 1. Buildings 7% 2. Equipment 20% 25% 3. Machinery 15% 30% 5% Question For the first five years of operation, calculate the amount of depreciation and ca cost allowance for the non-current assets

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