Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Question 1 Crabby Pte Ltd's accountant left the company suddenly without giving notice. Kermit, the director approached you for help. He furnished you with the
Question 1 Crabby Pte Ltd's accountant left the company suddenly without giving notice. Kermit, the director approached you for help. He furnished you with the following unadjusted trial balance. The company uses the perpetual inventory system and the allowance methods to account for bad debts. It also provides for warranty expenses every time a sale is made. After discussing with Kermit, you are given the following additional information. (i) The company made additional sales on 31 December. Both the sales and the cost of goods sold were not recorded in the accounts. The cost of goods sold was $18,000 and the gross profit margin for these sales was 40%. 80% of the sales were on credit. (ii) The company estimated that warranty expenses average 5% of sales. (iii) On 10 Dec, the company was notified that a customer, Mati Pte Ltd, has been declared bankrupt and that the $2,000 balance owing needs to be written off. (iv) The machine that costs $117,000 was acquired on 1 January 2022. This cost includes $2,000 maintenance costs for the year ending 31 December 2022. (v) The company depreciates the machine using the straight-line method. The machine is expected to have a residual value of $8,000 at the end of its useful life of 5 years. (vi) The company depreciates motor vehicles using the double-declining method with an assumed useful life of 5 years and residual value at 5% of the cost. (vii) In the month of December, the company issued from the inventory, parts costing $1,800 to replace defective goods covered under warranty. (viii) The bank loan carries an annual interest of 6%, payable twice a year on every 30 June and 31 December. (ix) Included in the sales was $7,000 deposit received from a customer for goods to be delivered in January 2023. (x) Kermit estimated that 2% of accounts receivable owing on 31 December 2022 will be uncollectable. (xi) Overtime salaries of $500 for 27 - 31 December 2022 will be paid in January 2023. Required: Analyse the above and present the necessary entries for Crabby Pte Ltd for the year ending 31 December 2022. Show all workings. (40 marks)
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