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hili..its an accepting question..i do not understand how to solve especially transactions 2,3,4,5,6 plus how did he get delivery van- cost to be =12,000 i
hili..its an accepting question..i do not understand how to solve especially transactions
2,3,4,5,6 plus how did he get delivery van- cost to be =12,000
i have answer i just need clear explanation plz... because my exam is on sunday
thanks
Chapter 3 - ACCT 500 Net sales revenue= earned sales revenue - sales returns and allowances - sales discounts Sales Revenue earned in income statement = cash received - beginning AR + Ending AR + beginning unearned revenue - ending unearned revenue Cost of goods sold = Beginning balance of inventory +net cost of purchases- Ending balance of inventory Net cost of purchases = purchases of inventory + freight in (transportation in)- purchase returns and allowances - purchase discounts Purchases of inventory = cash paid - beginning Accounts payable + ending accounts payable Expense incurred in income statement = cash paid - expense payable at beginning of period + expense payable at end of period + prepaid expense at beginning of period - prepaid expense at end of period Straight line depreciation expense =( cost of plant asset- residual value) * 1/useful life in years * X/12 Beginning balance of RE+ NI after tx - dividends = ending balance of RE The depreciation expense will be recognized in the income statement while the accumulated depreciation will be added to any previous accumulated depreciation and will appear as a contra asset account deducted from plant assets in the balance sheet. Cost of plant asset - Accumulated deprecation Page When a plant asset is sold 1 = carrying value or book value of plant asset Question 3.6 in your book page 114 Delivery Van-cost 12000 AD (2500) Inventory = 65000 AR = 19600 Prepaid rent = 5000 Prepaid rates = 300 Cash = 750 (ii) Cash= 750-20,000 (iii) Cash = 750-2000015000 Prepaid rent = 5000-5000 Cash = 750-2000015000-1300 Prepaid rate = 300+25 (iv).I (iv). II Delivery van = 12000+13000 Cash = 750-2000015000-1300-13000 (v) AD = -2500 - 5000 (vi) Cash = 750-2000015000-1300-13000 -36700 Liabilities Equity AP = 22000 Accrued wages (wages payable) = 630 Share capital = 50,000 RE= 26900 Dividen ds Accrued electricity (electricity payable) = 620 Dividend s=20,00 0 Rent expense = 20,000 Rate expense = 1275 Depreciatio n expense = 2500+2500 Wages expense = 36930 Accrued wages (wages 2 (i) Expenses Page Assets Revenue payable) = 630+ 230 (vii). I Cash = 750-2000015000-1300-13000 -36700-1820 (vii). II Inventory = 65000+67000 Electricity expense = 1890 Accrued electricity (electricity payable) = 620+70 AP = 22000+6700 0 Inventory = 65000+67000+8000 Cash = 750-2000015000-1300-13000 -36700-1820-8000 Inventory = 65000+67000+8000 -89000 AR = 19600+179000 Cgs= 89000 Sales revenue = 179000 Sales revenue = 179000+54000 Cash = 750-2000015000-1300-13000 -36700-18208000+54000 Inventory = 65000+67000+8000 -89000-25000 Cash = 750-2000015000-1300-13000 -36700-18208000+54000+17800 0 Cgs = 25000 AP = 22000+6700 Page Cash = 750-2000015000-1300-13000 3 AR = 19600+179000178000 -36700-18208000+54000+17800 0 -71000 Cash = 750-2000015000-1300-13000 -36700-18208000+54000+17800 0 -71000-16200 0 -71000 Van expenses = 16200 Account balances Cash = 49730 AR = 20600 Inventory = 26000 AD = -7500 Delivery van = 25000 Prepaid rate = 325 Prepaid rent = 0 Rent expense = 20000 Rate expense = 1275 Depreciation expense = 5000 Wages expense = 36930 Electricity expense = 1890 Page 4 Cost of goods sold = 114000 Van expenses = 16200 AP = 18000 Electricity payable = 690 Wages payable = 860 Share capital = 50,000 Dividend = 20000 RE = 26900 Sales revenue = 233000 Rent expense = rent paid +prepaid rent at beginning of period - prepaid rent at end of period = 15,000+5000 - 0 = 20,000 Rate expense = expense paid + prepaid rate expense at beginning - prepaid rate at end of period = 1300+300-325=1275 Wages expense = wages paid - wages payable at beginning + wages payable at end = 36700630+860= 36930 Purchases = cash paid - beginning AP + ending AP 75000 = (8000+71000) - 22000 + ending AP Ending AP = 18000 Elecreicity expense = cash paid 1820 - electricity payable at beginning + electricity payable at end = 1820 -620+690 = 1890 Sales Revenue earned in income statement = cash received - beginning AR + Ending AR + beginning unearned revenue - ending unearned revenue 233000 = 232000 (178000+54000)- 19600 +Ending AR Ending AR = 20600 Depreciation expense = (13,000-3000)/4 *12/12 = 2500 Cost of goods sold = Beginning balance of inventory +net cost of purchases- Ending balance of inventory 114000 = 65000+75000- Ending balance of inventory Ending balance of inventory = 26000 Income statement for the year ended 31 December 2012 Sales revenue (+179,000 + 54,000) 233,000 Rent (5,000 + 15,000) Page Gross profit (114,000) 5 Cost of goods sold (+89,000 + 25,000) 119,000 (20,000) Rates (300 + 975) (1,275) Wages (630 + 36,700 + 860) (36,930) Electricity (620 + 1,820 + 690) (1,890) Van depreciation (2,500 + 2,500) (5,000) Van expenses (16,200) (16,200) Profit for the year 37,705 Statement of OE Beginning RE+ NI - dividends =ERE 26900+37705- 20000= 44605 TT and Co Statement of financial position as at 31 December 2012 ASSETS Non-current assets Property, plant and equipment Motor van at cost 25,000 Accumulated depreciation (7,500) 17,500 Current assets Inventories 26,000 Trade receivables 20,600 Prepaid expenses 325 Cash 49,730 Page Total assets 6 96,655 114,155 EQUITY AND LIABILITIES Equity (owner's capital) Share capital 50000 Ending RE 44605 Current liabilities Trade payables 18,000 Accrued expenses 1,550 19,550 114,155 Page 7 Total equity and liabilities The following is the statement of financial position of Al-Raya Company at the end of its first year of operations AL-Raya Company Comparative Balance Sheet, December 31, Assets 2009 Non-current assets Property, plant and equipment (cost) ............................................... $100,000 Accumulated Depreciation ................................................................ (9,500) 90,500 Current assets Prepaid rent .............................................................................................. 2,000 Inventory ........................................................................................... 60,000 Accounts receivable (net) .................................................................. 105,000 Cash ................................................................................................... 25,000 192,000 Total assets ....................................................................................... $ 282,500 Stockholders' equity and liabilities Equity 200,000 Retained earnings ............................................................................. 50,000 Page Current liabilities 8 Share capital ...................................................................................... 250,000 Accounts payable .............................................................................. 31,000 Electricity payable ....................................................................................... 500 Salary payable............................................................................................... 1,000 32,500 Total liabilities and stockholders' equity......................................... $ 282,500 During 2010 the following transactions took place: 1- A dividend of $ 10,000 was paid on ordinary shares. 2- Rent of $ 15,000 was paid during the year. At the end of the year the company had a balance of $1,000 in prepaid rent. 3- Salary expense for the year was $96,000. During the year salaries of 95,000 were paid to employees. 4- Electricity bills paid during the year totaled $7,000. At the end of the year the company had $200 of electricity incurred but not paid for. 5- The company paid $40,000 to acquire new property, plant and equipment at 1 July 2010. The new PPE has an estimated useful life of 10 years and a residual value of $2,000. The old PPE appearing in the opening balance sheet was acquired on 1 January 2009, has an estimated useful life of 10 years and a residual value of $5,000. The company uses the straight line method for depreciating non-current assets. 6- Inventories totaling $150,000 were bought on credit 7- Inventories totaling $70,000 were bought for cash 8- Sales revenue on credit totaled $210,000 (Cost $150,000) 9- Cash sales revenue totaled $140,000 (cost $100,000) 10- Receipts from accounts receivable totaled $290,000 11- Payments to accounts payable totaled $130,000 12- The company paid $2,500 for advertising and marketing during the year. Page 9 Required Page 10 1- Record the above transactions using the extended accounting equation template 2- Prepare the income statement and statement of owners' equity for Al-Raya Company for year ended 31 December 2010. 3- Prepare the classified statement of financial position for Al-Raya Company as at 31 December 2010.Step by Step Solution
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