Group Activity 1 Aec 217

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GROUP ACTIVITY 1

Cash and Accrual Basis


(Group 5)
Problem 1: Zamboanga Company
Required:

1. Prepare adjusting entries on December 31, 2019.


2. Prepare an income statement for the year ended December 31, 2019.
3. Prepare a statement of financial position on December 31, 2019

Req. 1 Adjusting Entries


Adjusting Entries- December 31, 2019

1. Sales 200,000

Retained Earnings 200,000

-to record the unrecorded Accounts Receivable on December 2018 that are
collected in 2019 and credited to sales

Accounts Receivable 250,000

Sales 250,000

-to record the unrecorded accounts receivable in December 2019.

2. Retained Earnings 40,000

Sales 40,000

-to record the customer deposit erroneously credited to sales.

3. Retained Earnings 350,000

Purchases 350,000

-to record the unrecorded accounts payable on December 2018 paid and
debited to purchases

Purchases 280,000

Accounts Payable 280,000

-to record the unrecorded AP on December 2019.

4. Expenses 100,000

Accrued Expenses 100,000

-accrued expenses on December 31, 2019

Retained earnings 70,000

Expenses 70,000

- to record the unrecorded accrued expenses on December 31, 2018 paid in


2019 and charged to expenses

5. Merchandise Inventory- December 31 210,000

Income Summary 210,000

-to record the unrecorded inventory on December 31, 2019

Merchandise Inventory -January 1 150,000

Retained Earnings 150,000

-to record the unrecorded inventory on December 2018


Req. 2 : Income Statement

Zamboanga
Company
Income Statement
December 31, 2019

Sales 4,090,000
Cost of goods sold
Beggining Inventory 150,000
Purchases 1,830,000
Goods Available for sale 1,980,000
Less: Ending inventory 210,000 1,770,000
Gross Profit 2,320,000
Operating Expenses
Expenses 1,530,000
Doubtful Account 25,000
Depreciation 320,000
Interest Expense 36,000 1,911,000
Net Income 409,000

Req. 3: Balance Sheet

Zomboanga Company
Statement of Financial Position
December 31, 2019

Assets

Current Assets

Cash 1,500,000
Accounts Receivable 250,000

Allowance for doubtful Account 25,000 225,000

Merchandise Inventory 210,000

Advances paid to supplier 100,000

Total Current Assets 2,035,000

Noncurrent Asset

Land 800,000

Building 1,500,000

Accumulated Depreciation 600,000 900,000

Equipment 200,000

Accumulated Depreciation 30,000 170,000

Total Noncurrent Asset 1,870,000

Total Asset 3,905,000

Liabilities and Equity

Current Liabilities

Accounts Payable 280,000

Accrued Expenses 100,000

Accrued Interest Payable 36,000

Total Current liabilities 416,000

Noncurrent Liabiliities

Mortgage Payable 900,000

Total Liabilities 1,316,000

Shareholder's Equity

Share Capital 2,000,000

Retained Earnings 589,000

Total Equity 2,589,000

Total Liabilities and equity 3,905,000


Adjusted Retained Earnings- January 1 180,000

Net Income 409,000

Retained Earnings- December 31, 2019 589,000

Problem 2
“Evelyn Company”
Required:
a. Prepare adjusting entries on December 31, 2019.
b. Prepare an income statement.
c. Prepare a statement of financial position.

Req. a) Adjusting Entries

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