Diagnostic Test 1

Juan DL Cruz, a single proprietor, keeps track of his business in a cash book, ledgers of
customers & suppliers and a memorandum book. A careful analysis of the data gathered from
various sources revealed the following:
20X1 20X2

Cash 72000 66150

Accounts Receivable 86000 64000

Notes Receivable 20000 10000

Accrued commission 2100 1500

Merchandise Inventory 153000 182000

Prepaid Rent 2400 3600

Supplies 800 1200

Furniture & Equipment (net) 75000 76000

Total Assets 411300 404450

Accounts Payable 58000 64000

Notes Payable 9000 12000

Accrued Taxes 12000 14000

Accrued utilities 0 460

Accrued interest 90 240

Unearned interest 100 50

Cruz, Capital 332110 313700

Total Liabilities & Capital 411300 404450

The cash book revealed the following information:

Receipts during 20X2

Cash sales 246000

Collections of accounts receivable 312500

Collection of notes receivable 35000

Receipts of commission revenue 32000

Receipts of interest revenue 250

Proceeds from sale of old equipment 4500 630250

Disbursements during 20X2

Cash purchases 152500

Payment of accounts payable 231100

Payment of notes payable 30000

Payment of expenses 98500

Acquisition of new equipment 12000

Personal withdrawal of owner 112000 636100

Net change in cash -5850

Additional data gathered from other documents available are:

1. The equipment sold had an original cost of P10,000 with accumulated depreciation of
P5,000 on the date of sale.
2. Worthless accounts of P400 were written off.
3. Sales discounts granted to customers during the year was P1,500.
4. Purchase discount taken was P1,000.
5. Returned merchandise to suppliers was P700.
6. Details of expenses paid in cash were : rent, P13,200; supplies, P4,800; taxes, P27,000;
utilities, P12,000; salaries, P24,000; interest, P500 and other expenses, P17,000.

Required: Income Statement for the year ending December 31, 20X2.
Juan DL Cruz Business
Statement of Profit
For the period ended December 31, 20X2

Net Sales 561,900

Less: Cost of Sales
Beginning Inventory 153,000
Add: Net Purchases 422,600
Total Goods Available for Sale 575,600
-
Less: Ending Inventory 182,000 393,600
Gross Profit 168,300
Less: Operating Expenses
Tax Expense 29,000
Salaries Expense 24,000
Utilities Expense 12,460
Rent Expense 12,000
Depreciation Expense 6,000
Supplies Expense 4,400
Bad debts Expense 400
Miscellaneous Expense 17,000 105,260
Operating Profit 63,040
Add (Less): Other Income
(Expenses)
Commission Income 31,400
Interest Income 300
Interest Expense -650
Loss on sale -500
NET PROFIT 93,590