Question
The following account balances were taken from the adjusted trial balance of Juniper Design Studio, a graphic-design service business, at March 31, 2025.
| Account | Amount |
|---|
| Service Revenue | $21,500 |
| Salaries and Wages Expense | 9,800 |
| Rent Expense | 3,000 |
| Utilities Expense | 750 |
| Supplies Expense | 1,150 |
| Depreciation Expense | 800 |
Required: Prepare an income statement for the month ended March 31, 2025. Group the expenses under an "Expenses" heading, show Total Expenses, and finish with Net Income.
Scoring
- 40% Account naming / line matching
- 40% Amount correctness
- 20% Structure / section placement
IAS 1 — Presentation of Financial Statements
Work the cycle in its fixed order: journalise, post to the ledger, extract an unadjusted trial balance, pass adjusting entries, extract an adjusted trial balance, prepare the statements, then close the temporary accounts. Each step consumes the output of the one before it, so an error early on propagates all the way to the closing entries rather than staying local.
Common mistakes
- Preparing the financial statements from the unadjusted trial balance instead of the adjusted one.
- Closing permanent accounts — assets, liabilities and capital carry forward; only revenue, expense and drawings/dividends close.
- Forgetting that the post-closing trial balance should contain no income statement accounts at all.
Further readingIAS 1: what goes where in a full set of statements