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A new merchandising business, Dazzle Corporation started its operations last January 1, 2020. Presented below is information concerning the financial condition of Dazzle Corporation for the calendar year 2020:   Prepare adjusting entries.

A new merchandising business, Dazzle Corporation started its operations last January 1, 2020. Presented below is information concerning the financial condition of Dazzle Corporation for the calendar year 2020:   Prepare adjusting entries.

FINANCIAL ACCOUNTING
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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A new merchandising business, Dazzle Corporation started its operations last January 1, 2020. Presented below is information concerning the financial condition of Dazzle Corporation for the calendar year 2020:

 

Prepare adjusting entries. 

The following transactions has transpired during 2021: a. Furniture & fixtures was purchased on credit for Php50,000. b. Merchandise costing Php202,560 was bought, 50% was paid in cash and the remaining on account. c. Sold merchandise for Php150,000. The company maintains a mark-up of 60% based on cost. d. Utility bills for the year is Php5,368. Additional Information: e. The following fixed assets are as follows: Initial Cost Accumulated Depreciation (as of Dec. 31, 2020) Estimated Useful Life Residual Value Building & Equipment 84,800 16,000 5 yrs. 4,800 Furniture & Fixtures 50,000 0 5 yrs. 1,000 All fixed assets are depreciated using straight line method. f. Unexpired insurance at the end of the year is Php14,000. g. Wages of employees worth Php2,500 was paid in cash. This includes the wages from last year. h. Last year, Dazzle Corporation received an offer from local business owner to rent the unused portion of its land. Dazzle Corporation agreed to rent the land for 5 years, payable in advance. Dazzle Corporation received Php150,000 on December 31, 2020 and properly recorded the amount as deferred income in its December 31, 2020 balance sheet.
Transcribed Image Text:The following transactions has transpired during 2021: a. Furniture & fixtures was purchased on credit for Php50,000. b. Merchandise costing Php202,560 was bought, 50% was paid in cash and the remaining on account. c. Sold merchandise for Php150,000. The company maintains a mark-up of 60% based on cost. d. Utility bills for the year is Php5,368. Additional Information: e. The following fixed assets are as follows: Initial Cost Accumulated Depreciation (as of Dec. 31, 2020) Estimated Useful Life Residual Value Building & Equipment 84,800 16,000 5 yrs. 4,800 Furniture & Fixtures 50,000 0 5 yrs. 1,000 All fixed assets are depreciated using straight line method. f. Unexpired insurance at the end of the year is Php14,000. g. Wages of employees worth Php2,500 was paid in cash. This includes the wages from last year. h. Last year, Dazzle Corporation received an offer from local business owner to rent the unused portion of its land. Dazzle Corporation agreed to rent the land for 5 years, payable in advance. Dazzle Corporation received Php150,000 on December 31, 2020 and properly recorded the amount as deferred income in its December 31, 2020 balance sheet.
ng ASSETS Current Assets Cash Accounts Receivable Merchandise Inventory Prepaid Insurance Total Current Assets Noncurrent Assets Land Building & Equipment Less: Accumulated Depreciation - Building & Equipment Net Noncurrent Assets TOTAL ASSETS Dazzle Corporation Balance Sheet As of December 31, 2020 P 253,700.00 120,000.00 16,900.00 15,000.00 * 405,600.00 500,000.00 84,800.00 16,000.00 # 568,800.00 # 974,400.00 LIABILITIES & STOCKHOLDER'S EQUITY Current Liabilities Accounts Payable Deferred Income Wages Payable Bank Loans Payable Total Current Liabilities Stockholder's Equity Common Stocks Retained Earnings Total Stockholder's Equity TOTAL LIABILITIES & STOCKHOLDER'S EQUITY P 124,000.00 150,000.00 500.00 63,840.00 # 338,340.00 450,750.00 185,310.00 # 636,060.00 #974,400.00
Transcribed Image Text:ng ASSETS Current Assets Cash Accounts Receivable Merchandise Inventory Prepaid Insurance Total Current Assets Noncurrent Assets Land Building & Equipment Less: Accumulated Depreciation - Building & Equipment Net Noncurrent Assets TOTAL ASSETS Dazzle Corporation Balance Sheet As of December 31, 2020 P 253,700.00 120,000.00 16,900.00 15,000.00 * 405,600.00 500,000.00 84,800.00 16,000.00 # 568,800.00 # 974,400.00 LIABILITIES & STOCKHOLDER'S EQUITY Current Liabilities Accounts Payable Deferred Income Wages Payable Bank Loans Payable Total Current Liabilities Stockholder's Equity Common Stocks Retained Earnings Total Stockholder's Equity TOTAL LIABILITIES & STOCKHOLDER'S EQUITY P 124,000.00 150,000.00 500.00 63,840.00 # 338,340.00 450,750.00 185,310.00 # 636,060.00 #974,400.00
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