The asset and liability balances of Stuart Enterprises, as obtained from the comparative balance sheet from its incomplete records are as follows: 12/31/2019 12/31/2020 Assets Cash P3,200 P7,360 Accounts receivable (net) 4,065 8,350 Merchandise inventory (based on physical count) 8,365 6,425 Prepaid expenses 300 400 Equipment (net) 6,000 5,400 Liabilities Accounts payable 7,365 6,065 Notes payable – bank 3,000 – Accrued interest on notes payable 150 – Accrued operating expenses 250 500 Additional information: A. The cashbook shows the following: Receipts From customers, net of cash discounts of P425 P59,425 From trade creditors for returned goods 110 Disbursements To trade creditors, net of cash discounts of P560 P43,560 To notes payable and interest 3,300 To customers for returns 115 For expenses 8,400 B. Customers’ accounts of P425 were written off during 2020. An account of 350, written off in 2019, was recovered in 2020 and recorded among the receipts from customers. C. Sales returns in 2020 amounted to P385, and purchase returns were P290. D. An examination of shipping and delivery records disclosed that goods invoiced for P2,500 as of December 31, 2019 and shown as a receivable on that date were actually delivered on January 15, 2020. Of the accounts receivable shown as of December 31, 2020, one for P2,700 (billed amount) was actually delivered on January 7, 2021. Goods received from suppliers on December 30, 2020 amounting to P3,000 were invoiced by the creditor only on January 31, 2021. This amount was not included in the accounts payable as of December 31, 2020. E. Physical inventory which was taken on December 31, 2020 amounted to P6,425, at cost. Net realizable value of inventory as of that date was P5,800. Inventory shown on December 31, 2019 balance sheet was P8,365, at cost; P8,450 at net realizable value. Inventory is shown on the balance sheet at the lower of cost or net realizable value, and any loss due to inventory write-down is treated as operating expense under asset impairment. F. Cash discounts are treated as direct reduction from sales and purchases, as the case may be. G. There was no addition or disposal of equipment during the year. H. A review of the financial statements of previous years prepared on the basis mentioned in Item E above showed an average gross profit of 30% on net sales. The same markup was maintained in 2020. Based on the information above, answer the following: How much is the gross sales for the year ended December 31, 2020? How much is the gross purchases for the year ended December 31, 2020? How much is the inventory shortage for the year ended December 31, 2020?
- The asset and liability balances of Stuart Enterprises, as obtained from the comparative balance sheet from its incomplete records are as follows:
|
|
12/31/2019 |
12/31/2020 |
|
Assets |
|
|
|
Cash |
P3,200 |
P7,360 |
|
Accounts receivable (net) |
4,065 |
8,350 |
|
Merchandise inventory (based on physical count) |
8,365 |
6,425 |
|
Prepaid expenses |
300 |
400 |
|
Equipment (net) |
6,000 |
5,400 |
|
|
|
|
|
Liabilities |
|
|
|
Accounts payable |
7,365 |
6,065 |
|
Notes payable – bank |
3,000 |
– |
|
Accrued interest on notes payable |
150 |
– |
|
Accrued operating expenses |
250 |
500 |
Additional information:
A. The
|
Receipts |
|
|
From customers, net of cash discounts of P425 |
P59,425 |
|
From trade creditors for returned goods |
110 |
|
|
|
|
Disbursements |
|
|
To trade creditors, net of cash discounts of P560 |
P43,560 |
|
To notes payable and interest |
3,300 |
|
To customers for returns |
115 |
|
For expenses |
8,400 |
B. Customers’ accounts of P425 were written off during 2020. An account of 350, written off in 2019, was recovered in 2020 and recorded among the receipts from customers.
C. Sales returns in 2020 amounted to P385, and purchase returns were P290.
D. An examination of shipping and delivery records disclosed that goods invoiced for P2,500 as of December 31, 2019 and shown as a receivable on that date were actually delivered on January 15, 2020. Of the accounts receivable shown as of December 31, 2020, one for P2,700 (billed amount) was actually delivered on January 7, 2021. Goods received from suppliers on December 30, 2020 amounting to P3,000 were invoiced by the creditor only on January 31, 2021. This amount was not included in the accounts payable as of December 31, 2020.
E. Physical inventory which was taken on December 31, 2020 amounted to P6,425, at cost. Net realizable value of inventory as of that date was P5,800. Inventory shown on December 31, 2019 balance sheet was P8,365, at cost; P8,450 at net realizable value. Inventory is shown on the balance sheet at the lower of cost or net realizable value, and any loss due to inventory write-down is treated as operating expense under asset impairment.
F. Cash discounts are treated as direct reduction from sales and purchases, as the case may be.
G. There was no addition or disposal of equipment during the year.
H. A review of the financial statements of previous years prepared on the basis mentioned in Item E above showed an average gross profit of 30% on net sales. The same markup was maintained in 2020.
Based on the information above, answer the following:
- How much is the gross sales for the year ended December 31, 2020?
- How much is the gross purchases for the year ended December 31, 2020?
- How much is the inventory shortage for the year ended December 31, 2020?
- How much is the operating expenses other than
bad debts anddepreciation for the year ended December 31, 2020? - How much is the interest expense for the year ended December 31, 2020?
- How much is the net income before income tax for the year ended December 31, 2020?
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