IA3

problem
14-33
echon | dizon | tuazon
PROBLEM 14-33

Cash 200, 000

Accounts receivable 250, 000
Evelyn Company recorded
Inventory 150 ,000
transactions on a cash basis Land 300, 000
but prepared adjustments at Building 1, 000, 000
the end of accounting period Accumulated depreciation 200, 000
to conform with accrual Equipment 400, 000
basis. Accumulated depreciation 40, 000

Accounts payable 100, 000
The entity provided the Share capital 1, 500, 000

following account balances Retained earnings 345, 000

Sales 2, 000, 000
for the year ended
Purchases 1, 200, 000
December 31, 2021:
Office expenses 255, 000

Rent 240, 000
Insurance 50, 000
Supplies expense 140, 000
 ADDITIONAL INFORMATION &
1stREQUIREMENT

Inventory on December 31, 2021 amounted to P230,000.

Inventory - December 31, 2021 230, 000

Income Summary 230, 000

Accounts Receivable
December 31, 2021 290, 000
December 31, 2020 250, 000

Accounts Receivale 40, 000

Sales 40, 000
It is estimated that P15,000 of the outstanding accounts receivable on December 31,
2021 may prove uncollectible.

Doubtful Accounts 15, 000

Allowance for Doubtful Accounts 15, 000

Depreciation Rate
Building 5%
Equipment 10%

Depreciation Expense 90, 000

Accumulated Depreciation - bldg 50, 000
Accumulated Depreciation - equipment 40, 000
Accounts Payable
December 31, 2021 130, 000
December 31, 2020 100, 000

Purchases 30, 000

Acccounts Payable 30, 000

Accrued rent on December 31, 2020 was unrecorded in the amount of P5,000.

Retained Earnings 5, 000

Rent 5, 000
Accrued rent on December 31, 2021 amounted to P10,000.

Rent 10, 000

Accrued Rent Payable 10, 000

Prepaid insurance on December 31, 2020 in the amount of P7,000 was not recognized.

Insurance 7, 000
Retained Earnings 7, 000

Prepaid insurance on December 31, 2021 amounted to P12,000.

Prepaid Insurance 12, 000

Insurance 12, 000
 2nd
REQUIREMENT

B. PREPARE AN INCOME STATEMENT FOR 2021

 Evelyn Company
Income Statement
Year Ended December 31, 2021

Sales P2,040,000
Cost of Sales:
Inventory, Jan 1 P150,000
Purchases P1,230,000
GAS P1,380,000
Inventory, Dec 31 P230,000 P1,150,000
Gross Income P890,000
Expenses:
Office Expenses P255,000
Rent P245,000
Insurance P45,000
Supplies P140,000
Doubtful Accounts P15,000
Depreciation P90,000 P790,000
Net Income P100,000
 3rd
REQUIREMENT

c. prepare a statement of financial position on December

31, 2021.
 Evelyn Company
Statement of Financial Position
December 31, 2021

Current Assets:
Cash P200,000
Accounts Receivable, net P275,000
Inventory P230,000
Prepaid Insurance P12,000
Total Current Assets. P717,000

Non-current Assets:
Land P300,000
Building P1,000,000
Accumulated Depreciation P250,000 P750,000
Equipment P400,000
Accumulated Depreciation P80,000 P320,000
Total Non-Current Assets P1,370,000

Total Assets P2,087,000

 Evelyn Company
Statement of Financial Position
December 31, 2021

Liabilities & Equity

Current Liabilities:
Accounts Payable P130,000
Accrued Rent Payable P10,000
Total Current Liabilities P140,000

Equity:
Share Capital P1,500,000
Retained Earnings P447,000
Shareholder's Equity P1,947,000

Total Liabilities and Shareholder's Equity P2,087,000

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thank you
ECHON | DIZON | TUAZON