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compute the adjusted balances of the following accounts:   4. General and administrative expenses 5. Total operating expenses 6. Gain or loss on sale of land

compute the adjusted balances of the following accounts:   4. General and administrative expenses 5. Total operating expenses 6. Gain or loss on sale of land

Auditing: A Risk Based-Approach (MindTap Course List)
Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Chapter13: Auditing Debt, Equity, And Long-term Liabilities Requiring Management Estimates
Section: Chapter Questions
Problem 28RQSC
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compute the adjusted balances of the following accounts:

 

4. General and administrative expenses
5. Total operating expenses
6. Gain or loss on sale of land

5. The following information was prepared by the bookkeeper during the audit of the financial statements of TANGA Corporation for the calendar year ended December 31, 2020: Cash receipts: Collection of accounts receivable Less: discounts taken Cash sales of merchandise Sale of warehouse equipment Insurance proceed from boiler explosion Sale of land on November 1 Cash disbursements: Payment to trade creditors General and administrative expenses Cash purchases of merchandise Repairs made on warranty contracts Purchased of land on May 1 Purchase on November 10 of 100 shares of Wood Company stock 756,500 6,500 750,000 80,000 6,000 21,000 10,000 603,000 102,000 60,000 3,200 8,000 16,000
Transcribed Image Text:5. The following information was prepared by the bookkeeper during the audit of the financial statements of TANGA Corporation for the calendar year ended December 31, 2020: Cash receipts: Collection of accounts receivable Less: discounts taken Cash sales of merchandise Sale of warehouse equipment Insurance proceed from boiler explosion Sale of land on November 1 Cash disbursements: Payment to trade creditors General and administrative expenses Cash purchases of merchandise Repairs made on warranty contracts Purchased of land on May 1 Purchase on November 10 of 100 shares of Wood Company stock 756,500 6,500 750,000 80,000 6,000 21,000 10,000 603,000 102,000 60,000 3,200 8,000 16,000
Supplementary information: 1. The following account balances were taken from the general ledger: December 31, 2019 Accounts receivable Inventory Prepaid expenses Accrued expenses Accounts payable 62,000 93,000 4,800 3,500 191,000 December 31, 2020 73,000 95,000 4,200 4,500 205,000 2. Depreciation for 2020 was P42,000. 3. The warehouse equipment sold during 2020 was acquired in 2015 at a cost of P16,500. The double declining method of depreciation was used and accumulated charges were P8,000 at the date of sale. If the straight line method had been used the accumulated depreciation would have been P5,000. 4. An explosion occurred on January 15, 2020 in which a boiler, not the structural component of a building, was completely destroyed. It was purchased in January 2013 at a cost of P24,000; depreciation was recorded by the straight line method and P10,000 had accumulated at the date of explosion. 5. Land was purchased on May 1, 2020 and was used as a storage facility. It was found to be unsuitable for this purpose and was sold on November 1, 2020.
Transcribed Image Text:Supplementary information: 1. The following account balances were taken from the general ledger: December 31, 2019 Accounts receivable Inventory Prepaid expenses Accrued expenses Accounts payable 62,000 93,000 4,800 3,500 191,000 December 31, 2020 73,000 95,000 4,200 4,500 205,000 2. Depreciation for 2020 was P42,000. 3. The warehouse equipment sold during 2020 was acquired in 2015 at a cost of P16,500. The double declining method of depreciation was used and accumulated charges were P8,000 at the date of sale. If the straight line method had been used the accumulated depreciation would have been P5,000. 4. An explosion occurred on January 15, 2020 in which a boiler, not the structural component of a building, was completely destroyed. It was purchased in January 2013 at a cost of P24,000; depreciation was recorded by the straight line method and P10,000 had accumulated at the date of explosion. 5. Land was purchased on May 1, 2020 and was used as a storage facility. It was found to be unsuitable for this purpose and was sold on November 1, 2020.
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