QUESTION:

Assist your client $($Greenhorn Merchandising$).$ After which, you will be working for Eunice as an external bookkeeper.

$1.$ For her to pay the necessary income tax, determine her NET INCOME based from the above information available.

$2.$ Compute $($SHOW YOUR COMPUTATION$)$ for the FOLLOWING as of December $31,2023$:

a$.$ Total assets, total liabilities, total capital $($or equity$)$

b$.$ Sales, purchases, and cost of sales for the year

Use Excel file in answering please, thank you.Eunice N$.$ Pleasant established Greenhorn Merchandising, a retail business on January $5,2023.$ Eunice does not

maintain formal books of accounts but keeps her own records informally. Eunice approaches you for the necessary filing of

income tax for the year $2023$ and help her establish a formal bookkeeping for her business starting $2024.$ She showed you her

informal records which upon summarizing, the following information were gathered:

a$.$ A land she owned that she invested in business acquired in $1985$ for $P250,000.$ On January $5,2023,$ it has a fair

market value of $P2,000,000.$ Eunice constructed a building on the land spending $P3,250,000$ which was completed

in December $30,2022.$ This building was also invested in her business which has a useful life of $40$ years and

estimated salvage value of $P150,000.$ Lastly, total cash invested to the business for the year amounted to

P$1,350,000.$ During the year, he made monthly withdrawals of P$30,000$ every $15$ th of the month that started in

April.

b$.$ An Isuzu Traviz was purchased on March $1,2023$ for used in her business amounting to P$1,125,000.$ She made a

down payment of P$52,200$ and the balance payable in monthly installments for three $(3)$ years. The owner of the

dealer of vehicles happens to be her best friend that she is not charged with interest on this regard. Traviz has an

estimated economic life of $8$ years with estimated salvage value of P$50,000.$ Installment payment is religiously

paid on time. Further, equipment, furniture and fixtures used in his business which she purchased on January $5,$

$2022$ amounted to P$250,000.$ Estimated useful lives of these assets are $8$ years. Other assets upon your physical

inventory amounted to P$56,325.$

c$.$ Total accounts receivable to customers amounted to P$251,625.$ Estimated uncollectible amount is believed to be

$5\%.$

d$.$ She owed suppliers of merchandise a total amount of $2,673,248.$ Unpaid bills for utilities $($water$,$ power, WIFI,

telephone etc.$)$ amounted to P$32,667.$ Merchandise unsold as of December $31,2023$ amounted to P$4,561,879.$ All

tangible assets were insured and paid on June $1,2023$ for P$35,000.$

e$.$ Eunice does not maintain a record for sales and purchases. All her collections and cash sales were deposited in

the business' bank accounts, Likewise, all payments are withdrawn or issued checks. The balance of the business'

bank deposits as of December $31,2023$ amounted to P$1,531,261$ inclusive of the interest on deposits for P$1,522.$

f$.$ Total recorded business expenses paid in cash amounted to $P2,345,645$ including insurance premium on tangible

properties.

Because there is no formal bookkeeping done and incomplete records of sales, purchases, and others, it is not possible

for you to work back and reconstruct every transaction for the whole year. Eunice only revealed to you that his gross profit rate

is $18\%$ of cost of sales.

Requirements: Assist your client $($Greenhorn Merchandising$).$ After which, you will be working for Eunice as an external

bookkeeper.

For her to pay the necessary income tax, determine her net income based from the above information available.

Compute $($show your computation$)$ for the following as of December $31,2022$:

a$.$ Total assets, total liabilities, total capital $($or equity$)$

b$.$ Sales, purchases, and cost of sales for the year