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Question 2 (30 marks) Cross Shop is a small general store located inside a hospital. Cross Shop uses a periodic inventory system. Cross Shop adjusts and closes its accounts monthly Part I (10 marks) Below is the extracted information from the adjusted trial balance as at 31 January 2019 of the Company Debit Credit 40.000 2.000 259.000 495,000 20.000 Inventory Supplies Purchases Sales Sales Returns Uneamed sales revenue Interest expense Salaries expense Insurance expense Rent expense Income taxes expense 31.000 8,000 12,500 2.000 60.000 20,500 A physical inventory taken as at 31 January 2019 indicates goods costing S14,000 remains in stock Required: (a)(i) Prepare the Income Statement for Cross Shop, showing the captions with figures of net sales, gross profit, profit before tax and profit after tax for the month ended 31 January 2019. (8 marks) (ii) Compute the gross profit rate for the month of January 2019. (2 marks) Part II (20 marks) Cross Shop is engaged in the following transactions during February 2019. Purchased 1,000 boxes of masks for resale for $120 per box from 6M Company on account. Returned 10 boxes of defective masks to 6M Company Sold 200 boxes of masks to a customer for $180 per box for cash. Paid half of the amount owed to 6M Company for the masks purchased on 2 February The customer returned 10 boxes of masks purchased on 8 February to Cross Shop because they are in the wrong color. Purchased 100 boxes of bandages for resale for $150 per box from 6M Company by cash. Received $5,000 cash in advance from a customer for the bandages which will be delivered on 5 March 2019. A complete physical inventory taken as at 28 February 2019 indicates goods costing $130,700 remains in stock

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