The following is a partial list of the account balances, after adjustments, for Wilson Company on December 31, 20x1: Depreciation expense - buildings and office equipment P29,000 Sales commissions and salaries 36,400 Inventory, January 1, 20x1 75,600 Sales supplies used 11,200 Retained earnings, January 1, 20x1 367,400 Purchase returns and allowances 12,400 Bad debts expense 5,400 Freight in 27,000 Sales discounts taken 9,800 Purchases 346,000 Delivery expense 15,400 Office supplies expense 2,800 Ordinary share capital, P20 par value 160,000 Loss on sale of office equipment (pretax) 10,000 Insurance and property tax expense 17,000 Sales 681,400 Rent revenue 13,800 Office and administrative salaries expense 64,000 Promotion and advertising expense 34,000 Sales returns and allowances 24,200 Purchase discounts taken 8,200 Depreciation expense - sales equipment 19,200 Interest expense 7,400 The following information is also available: The company declared and paid a P0.60 share cash dividend on its ordinary shares. The shares were outstanding the entire A physical count determined that December 31, 2015 ending inventory was P68,200. A flood destroyed a warehouse, resulting in a pretax loss of P24,000. The last flood in this area had occurred 20 years earlier. While making its December 31, 20x1 adjusting entries, the company determined that: In 20x0, it had unintentionally omitted P22,000 depreciation expense on its buildings and office The error did not have any effect upon the depreciation recorded in 20x1. Due to recently increased obsolescence, its sales equipment should be depreciated over a shorter useful The resulting P5,000 of additional depreciation has been included in the 20x1 depreciation
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
The following is a partial list of the account balances, after adjustments, for Wilson Company on December 31, 20x1:
|
Depreciation expense - buildings and office equipment |
P29,000 |
|
Sales commissions and salaries |
36,400 |
|
Inventory, January 1, 20x1 |
75,600 |
|
Sales supplies used |
11,200 |
|
|
367,400 |
|
Purchase returns and allowances |
12,400 |
|
|
5,400 |
|
Freight in |
27,000 |
|
Sales discounts taken |
9,800 |
|
Purchases |
346,000 |
|
Delivery expense |
15,400 |
|
Office supplies expense |
2,800 |
|
Ordinary share capital, P20 par value |
160,000 |
|
Loss on sale of office equipment (pretax) |
10,000 |
|
Insurance and property tax expense |
17,000 |
|
Sales |
681,400 |
|
Rent revenue |
13,800 |
|
Office and administrative salaries expense |
64,000 |
|
Promotion and advertising expense |
34,000 |
|
Sales returns and allowances |
24,200 |
|
Purchase discounts taken |
8,200 |
|
Depreciation expense - sales equipment |
19,200 |
|
Interest expense |
7,400 |
The following information is also available:
- The company declared and paid a P0.60 share cash dividend on its ordinary shares. The shares were outstanding the entire
- A physical count determined that December 31, 2015 ending inventory was P68,200.
- A flood destroyed a warehouse, resulting in a pretax loss of P24,000. The last flood in this area had occurred 20 years earlier.
- While making its December 31, 20x1
adjusting entries , the company determined that:- In 20x0, it had unintentionally omitted P22,000 depreciation expense on its buildings and office The error did not have any effect upon the depreciation recorded in 20x1.
- Due to recently increased obsolescence, its sales equipment should be
depreciated over a shorter useful The resulting P5,000 of additional depreciation has been included in the 20x1 depreciation expense.
- On May 1, 20x1, the company disposed of an unprofitable segment (Segment A). From January through April, Segment A had incurred a pretax operating loss of P17,400. Segment A was sold at a pretax gain of P20,000.
- The income tax expense for 20x1 totals P1,860. The breakdown is as follows:
Income tax expense (credit) related to Amount
Continuing income P14,880
Operating loss of Segment A (5,220)
Gain on sale of Segment A 6,000
Loss from flood (7,200)
Error in recording 20x0 depreciation expense (6,600)
P1,860
- The company had an average shareholders’ equity of P100,000 during
I NEED THIS THANKSSSS
- As supporting documents for Requirement 2, prepare separate supporting schedules for the following:
- Cost of goods sold
- Selling expenses
- General and administrative expenses
- Depreciation expense
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