A Company reported the following balances on its unadjusted trial balance as of December 31, 2021: Assets P870,000 Liabilities 250,000 Equity 110,000 Revenues 630,000 Expenses 120,000 The following adjustments were noted: a. The total premium paid on March 31, 2020, was P40,000 for a four-year fire insurance policy. This was initially recorded as an asset. b. Depreciation of office equipment purchased on October 1, 2021 with a depreciable amount of 50,000, useful life of 5 years based on straight line method and a residual value of P5,000. c. The Company issued a note for P30,000 for its September 1 purchase of merchandise. The note is dated on the same date, matures in 6 months and bears 5% interest. d. Rent income received from tenant on November 1, 2021 representing four months’ rent amounted to P20,000. This was recorded as a credit to a real account. e. An allowance for doubtful accounts of 1% of the accounts receivable is to be established. Accounts receivable amounted to P20,000. f. The office supplies account had a balance of P6,000 on January 1, 2021. Office supplies purchased for the year amounted to P25,000. Office supplies ending balance per count amounted to P10,000. [Q1]: Determine total amount of (1) net income or (net loss) (2) assets (3) liabilities and (4) equity on December 31, 2021.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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A Company reported the following balances on its unadjusted trial balance as of
December 31, 2021:
Assets P870,000
Liabilities 250,000
Equity 110,000
Revenues 630,000
Expenses 120,000

The following adjustments were noted:

a. The total premium paid on March 31, 2020, was P40,000 for a four-year fire insurance
policy. This was initially recorded as an asset.
b. Depreciation of office equipment purchased on October 1, 2021 with a depreciable amount
of 50,000, useful life of 5 years based on straight line method and a residual value of
P5,000.
c. The Company issued a note for P30,000 for its September 1 purchase of merchandise. The
note is dated on the same date, matures in 6 months and bears 5% interest.

d. Rent income received from tenant on November 1, 2021 representing four
months’ rent amounted to P20,000. This was recorded as a credit to a real account.
e. An allowance for doubtful accounts of 1% of the accounts receivable is to be established.
Accounts receivable amounted to P20,000.
f. The office supplies account had a balance of P6,000 on January 1, 2021. Office supplies
purchased for the year amounted to P25,000. Office supplies ending balance per count
amounted to P10,000.

[Q1]: Determine total amount of (1) net income or (net loss) (2) assets (3) liabilities and
(4) equity on December 31, 2021.

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