Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Account Cash Accounts Receivable ABC Trading LTD Unadjusted Trial Balance 31 December 2021 Allowance for Doubtful Accounts (-) Inventory Debit (USD) Credit (USD) 35.000
Account Cash Accounts Receivable ABC Trading LTD Unadjusted Trial Balance 31 December 2021 Allowance for Doubtful Accounts (-) Inventory Debit (USD) Credit (USD) 35.000 45.000 2.000 - Share Investments 50.000 Equipment 30.000 Building 180.000 Land 18.000 Accounts Payable 25.000 Share Capital 150.000 Retained Earnings 160.000 Sales 135.000 Sales Returns and Allowances 10.000 Sales Discounts 5.000 Cost of Goods Sold 60.000 Salaries & Wages Expense 25.000 Rent Expense 10.000 Total 470.000 470.000 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 ple 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%)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started