Test I.

The following accounts were taken from the books of Far Merchandising for the year ended December
31, 2021.

 Accounts receivable 135,000

 Equipment 110,000
 Sales 1,455,000
Miscellaneous expense 100,000
 Office supplies expense 2,000
 Prepaid interest 50,000
 Cash 30,000
 Office supplies 120,000
 Delivery truck 180,000
 Rent expense 300,000
 Advertising expense 100,000
 Land 800,000
 Building 950,000
 Accumulated depreciation-Building 30,000
 Salaries and wages 100,000
o Notes payable due on Dec. 31, 2023 370,000
Repairs and maintenance expense 355,000
 Capital stock 1,089,000
o Accounts payable 565,000
o Mortgage payable 250,000
o Withholding tax Payable 32,000
 Accrued income 30,000
o Accrued expenses 58,000
 Prepaid Rent 25,000
 Accumulated depreciation-Equipment 23,000
 Delivery expense 52,000
 Utilities expense 100,000
 Installation Revenue  400,000
 Accumulated depreciation-delivery truck 20,000
o Unearned Income 100,000
 Merchandise inventory January 1, 2021 100,000
 Purchases 210,000
 Marketable securities 100,000
 Sales returns and allowances 10,000
 Freight in 21,000
 Freight out 50,000
Depreciation expense 112,000
 Franchise 100,000
 Machinery 150,000

Additional information:
Merchandise inventory on December 31, 2021 is P 96,000.
Required: Prepare the following in good form
1. Income statement
2. Statement of changes in Owners ‘s Equity
3. Balance Sheet
Cash 30,000
Marketable securities 100,000
Accounts receivable 135,000
Merchandise inventory January 1, 2021 100,000
Office supplies 120,000
Prepaid Rent 25,000
Prepaid interest 50,000
Accrued income 30,000
Land 800,000
Building 950,000
Equipment 110,000
Machinery 150,000
Delivery truck 180,000
Franchise 100,000
Accumulated depreciation-Building 30,000
Accumulated depreciation-Equipment 23,000
Accumulated depreciation-delivery truck 20,000
Accounts payable 565,000
Notes payable due on Dec. 31, 2023 370,000
Accrued expenses 58,000
Unearned Income 100,000
Withholding tax Payable 32,000
Mortgage payable 250,000
Capital stock 1,089,000
Sales 1,455,000
Installation Revenue 400,000
Sales returns and allowances 10,000
Purchases 210,000
Freight in 21,000
Salaries and wages 100,000
Office supplies expense 2,000
Rent expense 300,000
Advertising expense 100,000
Freight out 50,000
Delivery expense 52,000
Utilities expense 100,000
Repairs and maintenance expense 355,000
Miscellaneous expense 100,000
Depreciation expense 112,000

Total 4,392,000 4,392,000

 Far Merchandising
Income Statement
For the year ended, December 31, 2021
Sales 1,455,000
Installation Revenue 400,000
Less: Sales returns and allowances 10,000 .
NET SALES 1,845,000

Less : Cost of Goods Sold:

Merchandise inventory beg. 1/1/2021 100,000
Purchases 210,000
Freight In 21,000
Total Purchases 231,000 231,000
Goods Available for sale 331,000
Merchandise inventory end 12/31/2021 96,000 235,000
Gross Profit 1,610,000
Less: Operating Expenses
Salaries and Wages Expense 100,000
Advertising Expense 100,000
Office Supplies Expense 2,000
Rent Expense 300,000
Repairs and Maintenance Expense 355,000
Delivery Expense 52,000
Freight Out 50,000
Depreciation Expense 112,000
Utilities Expense 100,000
Miscellaneous Expense 100,000 1,271,000

NET INCOME 339,000

Far Merchandising
Statement of Changes in Owner’s Equity
For the year ended, December 31, 2021

Capital Stock P 1,089,000

ADD: Net Income P 339,000

Far Capital Ending 12/31/2021 1,428,000

 Far Merchandising
Balance Sheet
For the year Ended, December 31, 2021

Assets Liabilities
Current Assets Current Liabilities
Cash 30,000 Accounts Payable 565,000
Accounts Receivable 135,000 Accrued expenses 58,000
Marketable Securities 100,000 Unearned Income 100,000
Office Supplies 120,000 Withholding tax Payable 32,000
Prepaid Interest 50,000 TOTAL CURRENT LIABILITIES 755,000
Prepaid Rent 25,000
Merchandise Inventory end 96,000
Accrued Income 30,000
TOTAL CURRENT ASSETS 586,000

Non- Current Assets Non-Current Liabilities

Land 800,00 Notes Payable by Dec. 31, 2023 370,000
Building 950,000 Mortgage payable 250,000
LESS: ACCUMULATED DEPRECIATION (30,000)
Equipment 110,000
LESS: ACCUMULATED DEPRECIATION (23,000)
Machinery 150,000
Delivery Truck 180,000
LESS: ACCUMULATED DEPRECIATION (20,000) TOTAL NONCURRENT LIABILITIES 620,000
Franchise 100,000
TOTAL NONCURRENT ASSETS 2,217,000 Owner’s Equity
Far Capital end, 1,428,000

TOTAL ASSETS 2,803,000 TOTAL LIABILITIES & EQUITY 2,803,000