Transactions

DEF LId. is a retailer following the perpetual inventory method. Assume that there are no credit transactions and all

amounts are settled in cash. The following information for DEF L$.$d$.$ for the month of December $2022$ are provided below:

$1.-4.$ Journalize each of the transactions by following FIFO cost flow assumption.

Aging schedule of DEF LTD is given below. Calculate end of the year doubtful accounts and journalize bad debt

expense.

The equipment has no salvage value and a useful life of $5$ years. The equipment was purchased at January $1,2022.$

There has been no adjustment to account for depreciation for the current year of $2022.$ DEF LTD applies straight$-$line

method for the equipment.

The building has a useful life of $50$ years with no salvage value. Building was purchased at January $1,2022.$ There has been

no adjustment to account for depreciation for the current year of $2022.$ DEF LTD applies accelerating method for the

building.

DEF LTD borrowed an $$100,000,10\%,5-$year financial debt at December $31\mathrm{.}2022$ with equal annual payments.

Journalize use of financial debt $($bank loan$)$ occurred at December $31,2022.$

On December $1,$ DEF LTD purchased a $25\%$ equity in ABC Company for $$75,000.$ AL December $31,$ ABC reported

total net income of $$80,000$ and declared and paid a $$40,000$ cash dividend in total.

Calculate provision for corporate tax expense by assuming $20\%$ corporate tax rate.

Required:

a$)$ Open ledger accounts and journalize the transactions. $(72\%)$

b$)$ Prepare adjusted trial balance and multiple$-$step income statement for the period ended December $31,2021.(8\%)$

c$)$ Prepare a classified statement of financial position as of December $31,2021.(5\%)$