Source : Financial Accounting with IFRS Standards, Weygant Kimmel Kieso, Chapter 9

Raymond Company
Trial Balance at Dec 31, 2017

in £ Debit Credit
Cash 28,000
Accounts Receivable 36,800
Notes Receivable 10,000
Interest Receivable -
Inventory 36,200
Prepaid Insurance 4,400
Land 20,000
Buildings 160,000
Equipment 60,000
Patent 8,000
Allowance for Doubtful Accounts 300
Accumulated Depreciation - Buildings 49,000
Accumulated Depreciation - Euipment 24,000

Account Payable 28,300

Income Tax Payable -
Salaries and Wages Payable -
Unearned Rent Revenue 6,000
Notes Payable (due in 2018) 11,000
Interest Payable -
Notes Payable (due after2018) 35,000
Share Capital - Ordinary 50,000
Retained Earnings 63,600
Dividends 12,000

Sales Revenue 910,000

Interest Revenue -
Rent Revenue -
Gain on Disposal of Plant Assets -
Bad Debt Expense -
Cost of Goods Sold 630,000
Depreciation Expense -
Income Tax Expense -
Insurance Expense -
Interest Expense -
Other Operating Expense 61,800
Amortization Expense -
Salaries and Wages Expense 110,000

Total 1,177,200 1,177,200

Unrecorded transaction
All transaction
(1) represents
On May 1, 2017, in £ purchased equipment for £13,000 plus sales taxes of £780
Raymond
(all paid in cash).
Equipment
Cash

On July 1, 2017, Raymond sold for £3,500 equipment which originally cost £5,000. Accumulated depreciation on this
equipment at January 1, 2017, was £1,800; 2017depreciation prior to the sale of the equipment was £450.
Equipment - Purchase Price
Accumulated Depreciation @1/1/2017
Depreciation Expense 1/1/2017 - 1/7/2017
Equipment - Book Value -

(i) Journal to record depreciation expense

Depreciation Expense -
Accumulated Depreciation - Equipment -

(ii) Journal to record the sale transaction

Cash
Accumulated Depreciation - Euipment -
Equipment -
Gain on Disposal of Plant Asset -

On December 31, 2017, Raymond sold on account £9,400 of inventory that cost £6,600.
Account Receivable
Sales Revenue

COGS
Inventory

Raymond estimates that uncollectible accounts receivable at year-end is £4,000.

Note : According to the trial balance, the uncollectibe A/R that has been recorded was £300
Bad Debt Expense
Allowance for Doubtfull Account 0

The note receivable is a one-year, 8% note dated April 1, 2017. No interest has been recorded.
Interest Receivable =8%*10,000*9/12 = 600
Interest Receivable
Interest Revenue 0

The balance in prepaid insurance represents payment of a £4,400 6-month premium on October 1, 2017.
Insurance expense = 4400 *3/6
Insurance Expense
Prepaid Insurance 0

The building is being depreciated using the straight-line method over 40 years. The residual value is £20,000.
Depreciation Expense = (160.000-20.000)/40
Depreciation Expense
Accumulated Depreciation - Building 0

The equipment owned prior to this year is being depreciated using the straight-line method over 5 years.
The residual value is 10% of cost.
Equipment (60.000-5000) = 55.000
Depreciation Expense = (55.000 - 5500)/5
Depreciation Expense
Accumulated Depreciation - Equipment 0
The equipment purchased on May 1, 2017, is being depreciated using the straight-line method over 5 years,
with a residual value of £1,000.
Depreciation Expense = (13.000+780-1000)/5*8/12
Depreciation Expense
Accumulated Depreciation - Equipment 0.00

The patent was acquired on January 1, 2017, and has a useful life of 10 years from that date.
Depreciation Expense = 8000/10 = 800
Amortization Expense
Patent 0.00

Unpaid salaries and wages at December 31, 2017, total £2,200.

Salaries and Wages expense
Salaries and Wages Payable 0

The unearned rent revenue of £6,000 was received on December 1, 2017, for 4 months rent.
Unearned Revenue to be adjusted on Dec 31, 2017 = (6000/4)
Unearned revenue
Rent Revenue 0

Both the short-term and long-term notes payable are dated January 1, 2017, and carry a 9% interest rate.
All interest is payable in the next 12 months. Income tax expense was £17,000. It was unpaid at December 31.
Notes payable due in 2018 = 11,000 *9%
Notes payable due after 2018 = 35,000 *9%
Interest Expense 0
Interest Expense 0
Interest Payable 0

Income tax expense was £17,000. It was unpaid at December 31

Income Tax Expense
Income Tax Payable 0
 Raymond Company Raymond Company
Trial Balance at Dec 1, 2017 Trial Balance at Dec 31, 2017
Journal Entries
in £ Debit Credit in £ Debit Credit
Cash 28,000 - Cash 28,000
Accounts Receivable 36,800 0 Accounts Receivable 36,800
Notes Receivable 10,000 Notes Receivable 10,000
Interest Receivable - 0 Interest Receivable -
Inventory 36,200 0 Inventory 36,200
Prepaid Insurance 4,400 0 Prepaid Insurance 4,400
Land 20,000 Land 20,000
Buildings 160,000 Buildings 160,000
Equipment 60,000 - Equipment 60,000
Patent 8,000 0.00 Patent 8,000
Allowance for Doubtful Accounts 300 0 Allowance for Doubtful Accounts 300
Accumulated Depreciation - Buildings 49,000 0 Accumulated Depreciation - Buildings 49,000
Accumulated Depreciation - Euipment 24,000 - Accumulated Depreciation - Euipment 24,000

Account Payable 28,300 Account Payable 28,300

Income Tax Payable - 0 Income Tax Payable -
Salaries and Wages Payable - 0 Salaries and Wages Payable -
Unearned Rent Revenue 6,000 0 Unearned Rent Revenue 6,000
Notes Payable (due in 2018) 11,000 Notes Payable (due in 2018) 11,000
Interest Payable - 0 Interest Payable -
Notes Payable (due after2018) 35,000 Notes Payable (due after2018) 35,000
Share Capital - Ordinary 50,000 Share Capital - Ordinary 50,000
Retained Earnings 63,600 Retained Earnings 63,600
Dividends 12,000 Dividends 12,000

Sales Revenue 910,000 0 Sales Revenue 910,000

Interest Revenue - 0 Interest Revenue -
Rent Revenue - 0 Rent Revenue -
Gain on Disposal of Plant Assets - - Gain on Disposal of Plant Assets -
Bad Debt Expense - 0 Bad Debt Expense -
Cost of Goods Sold 630,000 0 Cost of Goods Sold 630,000
Depreciation Expense - - Depreciation Expense -
Income Tax Expense - 0 Income Tax Expense -
Insurance Expense - 0 Insurance Expense -
Interest Expense - 0 Interest Expense -
Other Operating Expense 61,800 Other Operating Expense 61,800
Amortization Expense - 0.00 Amortization Expense -
Salaries and Wages Expense 110,000 0 Salaries and Wages Expense 110,000

Total 1,177,200 1,177,200 Total 1,177,200 1,177,200

RAYMOND COMPANY
Income Statement
For the Year Ended Dec 31, 2017

Sales Revenue 910,000

Cost of Goods Sold 630,000
Gross Profit 280,000

Operating Expense:
Salaries and Wages Expense 110,000
Other Operating Expense 61,800
Depreciation Expense -
Bad Debt Expense -
Insurance Expense -
Amortization Expense -
Total Operating Expense 171,800

Income from Operation 108,200

Other Income & Expense:

Rent Revenue -
Gain on Disposal of Plant Assets -
Interest Revenue -
Interest Expense -

Income Before Income Taxes 108,200

Income Tax Expense -
Net Income 108,200
RAYMOND COMPANY
Retained Earnings Statement
For the Year Ended Dec 31, 2017

Retained Earning 1/1/2017 63,600

Add : Net Income 108,200
Less : Dividend 12,000
Retained Earning 31/12/2017 159,800
RAYMOND COMPANY
Retained Earnings Statement
For the Year Ended Dec 31, 2014

Current Asset Current Liabilities

Cash 28,000 Account Payable 28,300
Accounts Receivable 36,800 Income Tax Payable -
Allowance for Doubtful Accounts - 300 Salaries and Wages Payable -
Notes Receivable 10,000 Unearned Rent Revenue 6,000
Interest Receivable - Notes Payable (due in 2018) 11,000
Inventory 36,200 Interest Payable -
Prepaid Insurance 4,400 Total Current Liabilities 45,300
Total Current Asset 115,100
Non Current Liabilities
Non Current Asset Notes Payable (due after2018) 35,000
Land 20,000 Total Non Current Liabilitie 35,000
Buildings 160,000
Accumulated Depreciation - Buildings - 49,000 Equity
Equipment 60,000 Share Capital - Ordinary 50,000
Accumulated Depreciation - Euipment - 24,000 Retained Earnings 159,800
Patent 8,000 Total Equity 209,800
Total Non Current Asset 175,000

Total Asset 290,100 Total Liabilities & Equity 290,100