21. The following list of accounts and their balances appear on the books of MJ Thai Spa as of December 31, 2018: Cash Accounts Receivable Allowance for Bad Debts Notes Receivable Unexpired Insurance Furniture & Fixtures Accumulated Depn. - Furniture Equipment Accumulated Depn. - Equipment Accounts Payable Notes Payable Unearned Commissions Jay, Capital Jay, Personal P 58,850 Mel, Capital 32,400 Membership Fee 2,500 19,000 Advertising Expense 2,575 238,000 5,950 432,000 21,600 Store Supplies Expense 15,000 50,000 600 60,000 3,600 40,000 945,900 1,530,500 300,160 108,970 644,000 346,000 150,000 3,400 2,090 310,850 10,610 5,455 15,000 Service Fee Income Taxes and Licenses Rent Sales Salaries Office Salaries Office Supplies Expense Utilities Expense Interest Expense Interest Income Loss on Foreign Exchange Partnership agreement calls for the following: Monthly salary allowance of P5,000 for Mel and P7,500 for Jay, 12% interest on capital balances, and residual profit to be shared equally. Additional information were given to adjust the books: a) Provision for bad debts should be 10% of the outstanding accounts receivable. b) Office Furniture and Fixtures were acquired July 1, 2017 and the Delivery Equipment were acquired January 1, 2017. Depreciation rate is the same for both assets. c) One half of the unearned commission is already earned. d) Prepaid insurance on the delivery equipment is payable annually starting May 1. e) P10,000 of the notes receivable is interest bearing at 18% dated December 1, 2018 and due after 60 days. f) The note payable was issued to the bank and discounted at 18% for a year on December 1, 2018. The discount was charged to interest expense. g) Tax rate is 30%. Direction: Prenare a 10-column worksheet with a profit distribution table.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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22. 

a. Prepare the adjusting entries

b. Close the nominal accounts

c. Record the 30% tax liability

d. Make a statement of comprehensive income under the function of expense method and use line items with supporting notes. Rent and utilities are 75% distribution expenses.

e. Make a statement of partner's equity. Mel Capital was initially P80,000 before she made a permanent withdrawal.

f. Make a statement of financial position also using line items with supporting notes.

 

1 The following list of accounts and their balances appear on the books of MJ Thai Spa as
of December 31, 2018 :
Cash
Accounts Receivable
Allowance for Bad Debts
Notes Receivable
Unexpired Insurance
Furniture & Fixtures
Accumulated Depn. - Furniture
Equipment
Accumulated Depn. - Equipment
Accounts Payable
Notes Payable
Unearned Commissions
Jay, Capital
Jay, Personal
P 58,850 Mel, Capital
32,400 Membership Fee
2,500
19,000 Advertising Expense
2,575
238,000
5,950
432,000
21,600 Store Supplies Expense
15,000
50,000 Utilities Expense
600
40,000
945,900
1,530,500
300,160
108,970
644,000
346,000
150,000
3,400
2,090
310,850
10,610
5,455
15,000
Service Fee Income
Taxes and Licenses
Rent
Sales Salaries
Office Salaries
Office Supplies Expense
60,000
3,600
Interest Expense
Interest Income
Loss on Foreign Exchange
Partnership agreement calls for the following:
Monthly salary allowance of P5,000 for Mel and P7,500 for Jay,
12% interest on capital balances, and residual profit to be shared equally.
Additional information were given to adjust the books:
a) Provision for bad debts should be 10% of the outstanding accounts receivable.
b) Office Furniture and Fixtures were acquired July 1, 2017 and the Delivery Equipment
were acquired January 1, 2017. Depreciation rate is the same for both assets.
c) One half of the unearned commission is already earned.
d) Prepaid insurance on the delivery equipment is payable annually starting May 1.
e) P10,000 of the notes receivable is interest bearing at 18% dated December 1, 2018
and due after 60 days.
f) The note payable was issued to the bank and discounted at 18% for a year on
December 1, 2018. The discount was charged to interest expense.
g) Tax rate is 30%.
Direction: Prepare a 10-column worksheet with a profit distribution table.
Transcribed Image Text:1 The following list of accounts and their balances appear on the books of MJ Thai Spa as of December 31, 2018 : Cash Accounts Receivable Allowance for Bad Debts Notes Receivable Unexpired Insurance Furniture & Fixtures Accumulated Depn. - Furniture Equipment Accumulated Depn. - Equipment Accounts Payable Notes Payable Unearned Commissions Jay, Capital Jay, Personal P 58,850 Mel, Capital 32,400 Membership Fee 2,500 19,000 Advertising Expense 2,575 238,000 5,950 432,000 21,600 Store Supplies Expense 15,000 50,000 Utilities Expense 600 40,000 945,900 1,530,500 300,160 108,970 644,000 346,000 150,000 3,400 2,090 310,850 10,610 5,455 15,000 Service Fee Income Taxes and Licenses Rent Sales Salaries Office Salaries Office Supplies Expense 60,000 3,600 Interest Expense Interest Income Loss on Foreign Exchange Partnership agreement calls for the following: Monthly salary allowance of P5,000 for Mel and P7,500 for Jay, 12% interest on capital balances, and residual profit to be shared equally. Additional information were given to adjust the books: a) Provision for bad debts should be 10% of the outstanding accounts receivable. b) Office Furniture and Fixtures were acquired July 1, 2017 and the Delivery Equipment were acquired January 1, 2017. Depreciation rate is the same for both assets. c) One half of the unearned commission is already earned. d) Prepaid insurance on the delivery equipment is payable annually starting May 1. e) P10,000 of the notes receivable is interest bearing at 18% dated December 1, 2018 and due after 60 days. f) The note payable was issued to the bank and discounted at 18% for a year on December 1, 2018. The discount was charged to interest expense. g) Tax rate is 30%. Direction: Prepare a 10-column worksheet with a profit distribution table.
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