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Solution Accounting 2

The document provides financial information for a company including its assets, liabilities, equity, revenues, expenses, and net income. It shows that as of the end of the period the company had total assets of $974,000 including $442,000 of current assets and $532,000 of non-current assets. It also had total liabilities of $472,000 including $322,000 of current liabilities and $150,000 of non-current liabilities. For the period, the company had net sales of $640,000, cost of goods sold of $352,000, and other income of $50,000. After total operating expenses of $225,000, it reported net income before

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144 views3 pages

Solution Accounting 2

The document provides financial information for a company including its assets, liabilities, equity, revenues, expenses, and net income. It shows that as of the end of the period the company had total assets of $974,000 including $442,000 of current assets and $532,000 of non-current assets. It also had total liabilities of $472,000 including $322,000 of current liabilities and $150,000 of non-current liabilities. For the period, the company had net sales of $640,000, cost of goods sold of $352,000, and other income of $50,000. After total operating expenses of $225,000, it reported net income before

Uploaded by

Hanzo vargas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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1.

) Current Assets

Cash 40,000
Trading securities 20,000
Receivables:
Accounts receivable 230,000
Allowance for Bad Debts ( 12,000)
Notes receivable (trade) 90,000
Rent receivable 12,000
Total receivables 320,000
Merchandise inventory (end) 40,000
Prepaid Expenses:
Prepaid interest expense 18,000
Unused office supplies 4,000
Total prepaid expenses 22,000
Total Current Assets P 442,000

2.) Non-current assets

Land 100,000
Building 400,000
Acc. Depreciation – Bldg. ( 34,000)
Furniture and equipment 60,000
Acc. Depreciation – Furn. and Equipt. ( 6,000)
Total P532,000

3.) Current assets 442,000


Non-current assets 532,000
Total assets 974,000

4.) Current Liabilities


Unearned interest Income 2,000
Accounts payable 210,000
Tax payable 14,000
Accrued interest expense 46,000
Bank loan – current portion 50,000
Total 322,000

Non-current Liabilities
Bank Loan Payable – non-current portion 150,000

Current liabilities 322,000


Non-current liabilities 150,000
Total 472,000
Stockholders Equity
Share Capital:
Ordinary 150,000
Preferrred 150,000
Total share capital 300,000

Retained earnings, Jan. 1 110,000


Add: Net income 80,000
Total 190,000
Less: Dividend 0
Retained earnings, Dec. 31 190,000*

Premium on Share Capital- Common 12,000


Retained earnings, Dec.31 190,000
Total Stockholders’ Equity 502,000

1. Net Sales

Sales 700,000
Sales returns and allowances ( 40,000)
Sales discounts ( 20,000)
Net sales 640,000

2. Cost of Sales

Purchases 440,000
Purchase returns and allowances ( 60,000)
Purchase discounts ( 10,000)
Net purchases 370,000
Freight In 2,000
Net cost of purchases 372,000
Merchandise inventory, Jan. 1 20,000
Total cost of goods available for sale 392,000
Merchandise inventory, December 31 ( 40,000)
Cost of goods sold 352,000

3. Other Income

Interest income 18,000


Rent income 30,000
Gain on sale of used furniture 2,000
Total 50,000
4. Selling or Distribution Expenses

Advertising Expense 12,000


Freight out 8,000
Salesmen commission 49,000
Total 69,000

5. Administrative Expenses

Office Utility expense 22,000


Depreciation expense – Bldg. 20,000
Insurance expense 8,000
Office Salary expense 82,000
Office supplies expense 14,000
Transportation expense 8,000
Total 154,000

6. Other Expense
Loss on Sale of Trading Securities – P2,000

7. Finance costs
Interest expense P12,000

Income:
Revenue from net sales 1 640,000
Cost of goods sold 2 ( 352,000)
Gross profit from sales 288,000
Other income 3 50,000
Total revenue 338,000

Operating Expenses:
Selling expenses 4 ( 69,000)
Administrative expenses 5 ( 154,000)
Other expenses 6 ( 2,000)
Total operating expenses (225,000)

Net Operating Income or EBIT 113,000 (Earnings Before Interest and


Taxes)

Finance costs 7 ( 12,000)


Net Income before Income Tax 8 101,000

Income tax expense (given) ( 21,000)

Net Income for the Year 9 80,000

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