Answered: Exercise1 Prepare Income Statement…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter12: Corporate Valuation And Financial Planning

Section: Chapter Questions

Problem 12SP

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Exercise1

Prepare Income Statement of XYZ Enterprises for the year ended 31.12.2016 from the given information :

Details	Debit	Credit
Opening stock	20000
Sales		475000
Purchases	90000
Freight in	2550
Sales discount	870
Purchase returns		5000
Sales returns	2000
Stationery Expense	200
Salaries Expense	14000
Rent Expense	7000
Depreciation	3500
Purchase discount	150
Insurance Expense	1500
Telephone charges	2000
Other income		5000
Rent received		3000

Tax 2800
Closing Stock 20000

Exercise2

You are required to record all journal entries for each of the separate events.

The opening balance on 1 January 2019, for the supplies is $120. On 1 March 2019, the company purchased supplies for $ 2800 in cash. On 31 December 2014, the balance of supplies in the company is $ 580.
On 1 January 2019, the company paid $ 5000 cash as rent expenses for two years.
On 5 January 2019, a company paid in advance the rent of $ 16000. Rent per month is $ 1000.
The cost of a machine is $ 95000 and has a useful life of 5 years, the company uses Straight Line method to calculate expense.

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