ATHENS Company began operations in 2021. The company purchases computer equipment from manufacturers and then sells them to retail stores. During the year, the bookkeeper only used a check register to record all cash receipts and disbursements. No other journals were used. The following is a summary of cash receipts and disbursements made by ATHENS during the year: Cash receipts: • Sale of ordinary shares, P50,000 • Collections from customers, P320,000 • Borrowed from a local bank on April 1, signed a note requiring principal and interest at 12% to be paid on March 31, 2022, P40,000 Cash disbursements: • Purchase of merchandise, P220,000 • Payment of salaries, P80,000 • Purchase of equipment, P30,000 • Payment of rent for the office building, P14,000 • Payment of miscellaneous expenses, P10.000 As a CPA who recently passed the board examination, you were engaged to prepare the financial statements at December 31, 2021. The following additional information was provided to you: a. Amounts still owed by customers to ATHENS at year-end, P22,000. Of this amount, it was anticipated that P3,000 would be uncollectible. There were no actual bad debts written off in 2021. b. Amounts still owed by ATHENS to suppliers of merchandise, P30,000. c. Cost of merchandise still on hand at year-end, P50,000. d. Salaries owed to employees at year-end, P5,000. e. On December 1, P3.000 rent was paid to the owner of the office building used by the ATHENS. This represented rent for the period December 2021 to February 2022. f. The equipment was purchased on January1 and had a 10-year useful life with no salvage value. Straight-line method of depreciation was used.
ATHENS Company began operations in 2021. The company purchases computer equipment from manufacturers and then sells them to retail stores. During the year, the bookkeeper only used a check register to record all cash receipts and disbursements. No other journals were used. The following is a summary of cash receipts and disbursements made by ATHENS during the year: Cash receipts: • Sale of ordinary shares, P50,000 • Collections from customers, P320,000 • Borrowed from a local bank on April 1, signed a note requiring principal and interest at 12% to be paid on March 31, 2022, P40,000 Cash disbursements: • Purchase of merchandise, P220,000 • Payment of salaries, P80,000 • Purchase of equipment, P30,000 • Payment of rent for the office building, P14,000 • Payment of miscellaneous expenses, P10.000 As a CPA who recently passed the board examination, you were engaged to prepare the financial statements at December 31, 2021. The following additional information was provided to you: a. Amounts still owed by customers to ATHENS at year-end, P22,000. Of this amount, it was anticipated that P3,000 would be uncollectible. There were no actual bad debts written off in 2021. b. Amounts still owed by ATHENS to suppliers of merchandise, P30,000. c. Cost of merchandise still on hand at year-end, P50,000. d. Salaries owed to employees at year-end, P5,000. e. On December 1, P3.000 rent was paid to the owner of the office building used by the ATHENS. This represented rent for the period December 2021 to February 2022. f. The equipment was purchased on January1 and had a 10-year useful life with no salvage value. Straight-line method of depreciation was used.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
How much is ATHENS' accrual basis purchases during the year?
Transcribed Image Text:ATHENS Company began operations in 2021. The company purchases computer equipment from manufacturers and then sells them to retail
stores. During the year, the bookkeeper only used a check register to record all cash receipts and disbursements. No other journals were used.
The following is a summary of cash receipts and disbursements made by ATHENS during the year:
Cash receipts:
• Sale of ordinary shares, P50,000
• Collections from customers, P320,000
· Borrowed from a local bank on April 1, signed a note requiring principal and interest at 12% to be paid on March 31, 2022, P40,000
Cash disbursements:
• Purchase of merchandise, P220,000
• Payment of salaries, P80,000
• Purchase of equipment, P30,000
Payment of rent for the office building. P14,000
• Payment of miscellianeous expenses, P10,000
As a CPA who recently passed the board examination, you were engaged to prepare the financial statements at December 31, 2021. The
following additional information was provided to you:
a. Amounts still owed by customers to ATHENS at year-end, P22,000. Of this amount, it was anticipated that P3,000 would be uncollectible.
There were no actual bad debts written off in 2021.
b. Amounts still owed by ATHENS to suppliers of merchandise, P30,000.
c. Cost of merchandise still on hand at year-end, P50,000.
d. Salaries owed to employees at year-end, P5,000.
e. On December 1, P3,000 rent was paid to the owner of the office building used by the ATHENS. This represented rent for the period
December 2021 to February 2022.
f. The equipment was purchased on January1 and had a 10-year useful life with no salvage value. Straight-line method of depreciation was
used.
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