ABC Trading LTD Unadjusted Trial Balance 21 Deremher gos1 Transactions 1. ABC purchased inventory on account from supplier D with $40,000 value, terms 2/10,n/30.$1,000 freight cost is paid by the seller (D) as cash. 2. ABC sold all existing inventory on account with $80,000 value, terms 1/10,n/30. Pricing policy of the company is cost plus 100% markup. $1,000 freight cost is paid by the seller (ABC) as cash. 3. Customer (in transaction 2) returned 25% of goods to ABC. Assume that the goods were not defective. 4. After applying aging schedule method for ABC, total estimated bad debt is calculated as $8,000. 5. The equipment has no salvage value and useful life is 8 years. The building has a useful life of 30 years with no salvage value. Both the equipment and building were purchased on January 1, 2021. There has been no adjustment to account for depreciation for the current year of 2021. ABC applies declining-balance method for the equipment and straight-line method for the building. 6. ABC got long term corporate loan of $200,000,8%, with 5 -year maturity on December 31 , 2021 with equal annual payments. 7. ABC had acquired 40% of the ordinary shares of XYZ plc for $50,000 on January 1,2021 (reported as Share Investments in unadjusted trial balance). For 2021, XYZ reports net income of $10,000 and paid dividends of $4,000. 8. ABC paid $1,500 1-year insurance premium on December 31,2021. Required a) Open ledger accounts and journalize the transactions. (56\%) b) Prepare adjusted trial balance and multiple-step income statement for the period ended December 31, 2021. (7\%) c) Prepare a classified statement of financial position as of December 31,2021 . (7\%) ABC Trading LTD Unadjusted Trial Balance 21 Deremher gos1 Transactions 1. ABC purchased inventory on account from supplier D with $40,000 value, terms 2/10,n/30.$1,000 freight cost is paid by the seller (D) as cash. 2. ABC sold all existing inventory on account with $80,000 value, terms 1/10,n/30. Pricing policy of the company is cost plus 100% markup. $1,000 freight cost is paid by the seller (ABC) as cash. 3. Customer (in transaction 2) returned 25% of goods to ABC. Assume that the goods were not defective. 4. After applying aging schedule method for ABC, total estimated bad debt is calculated as $8,000. 5. The equipment has no salvage value and useful life is 8 years. The building has a useful life of 30 years with no salvage value. Both the equipment and building were purchased on January 1, 2021. There has been no adjustment to account for depreciation for the current year of 2021. ABC applies declining-balance method for the equipment and straight-line method for the building. 6. ABC got long term corporate loan of $200,000,8%, with 5 -year maturity on December 31 , 2021 with equal annual payments. 7. ABC had acquired 40% of the ordinary shares of XYZ plc for $50,000 on January 1,2021 (reported as Share Investments in unadjusted trial balance). For 2021, XYZ reports net income of $10,000 and paid dividends of $4,000. 8. ABC paid $1,500 1-year insurance premium on December 31,2021. Required a) Open ledger accounts and journalize the transactions. (56\%) b) Prepare adjusted trial balance and multiple-step income statement for the period ended December 31, 2021. (7\%) c) Prepare a classified statement of financial position as of December 31,2021 . (7\%)
