PREPARATION OF

FINANCIAL STATEMENTS
 EXERCISE

The following transactions occurred during the year 2018 in First

Company. This is their first year of operations.

Jan 1 Andy, the owner invested 1 ,000,000 cash and

2,000,000 worth of machinery in the business with a life of 10
years.

Jan 5 Purchased 300,000 worth of merchandise on cash

with 5% discount.

Jan 15 Sold merchandise to Second Company worth

340,000 with 3% discount.

Jan 20 Sold merchandise to Third Company worth 120,000

with 5% discount on account
 EXERCISE

Jan 22 Third Company returned merchandise worth

30,000

Jan 23 Purchased of fice supplies worth 5,000 pesos

Jan 25 Paid the electricity bill of 12,000

Andy withdrew 80,000 cash from the business.

Jan 30 Paid the rent amounting to 15,000

Of fice Supplies at the end of the month is 2,000
pesos
Depreciation Expense
Inventory, ending – 200,000
 REQUIRED

Prepare necessary journal entries and adjusting entries

Prepare financial statements