Topic: Cash and Accrual Basis of Accounting Requirement: Compute for the profit under the accrual basis of accounting. 5. A comparative balance sheet for Bill Industries is given below:Assets20x220x1Cash and cash equivalents80,000300,000430,000120,000340,000Trade and other receivablesInventoryPrepaid supplies380,00060,00040,000 800,000900,000Property, plant and equipment1,670,000 1,780,000Total assetsLiabilities65,00075,000Accounts payableDeferred tax liability20,000100,0001,505,000 1,685,000Net assetsAdditional information:There are no acquisitions or disposals of property, plant andequipment during the year.The entity's profit under the cash basis of accounting isP1,000,000.Requirement: Compute for the profit under the accrual basis ofaccounting.

Under the indirect method, the deferred tax will be adjusted to profit in the operating activities…

5. A comparative balance sheet for Bill Industries is given below: Assets 20x2 20x1 Cash and cash equivalents 80,000 120,000 Trade and other receivables 300,000 340,000 380,000 Inventory Prepaid supplies 430,000 60,000 40,000

5. A comparative balance sheet for Bill Industries is given below: Assets 20x2 20x1 Cash and cash equivalents 80,000 120,000 Trade and other receivables 300,000 340,000 380,000 Inventory Prepaid supplies 430,000 60,000 40,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Topic: Cash and Accrual Basis of Accounting

Requirement: Compute for the profit under the accrual basis of accounting.

5. A comparative balance sheet for Bill Industries is given below:
Assets
20x2
20x1
Cash and cash equivalents
80,000
300,000
430,000
120,000
340,000
Trade and other receivables
Inventory
Prepaid supplies
380,000
60,000
40,000

800,000
900,000
Property, plant and equipment
1,670,000 1,780,000
Total assets
Liabilities
65,000
75,000
Accounts payable
Deferred tax liability
20,000
100,000
1,505,000 1,685,000
Net assets
Additional information:
There are no acquisitions or disposals of property, plant and
equipment during the year.
The entity's profit under the cash basis of accounting is
P1,000,000.
Requirement: Compute for the profit under the accrual basis of
accounting.

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