Capricorn Company must determine the December 31, 2019 year-end accruals for advertising and rent expenses. A P2,000 advertising bill was received January 6, 2020. It related to costs of P1,500 for advertisements in December 2019 issues and P500 for advertisements in January 2, 2020 issues of the newspaper. A store lease, effective December 15, 2018, calls for fixed rent of P4,800 per month payable 1 month from the effective date and monthly thereafter. In addition, rent equal to 5% of net sales over P1,200,000 per calendar year is payable on January 31 of the following year. Net sales for 2019 were P2,200,000. In its December 31, 2019 statement of financial position, Capricorn should report accrued liabilities of: P51,500 P53,900P56,800 P56,300

Accrued rent from December 16 to December 31 = Monthly rent x 15/30 days = 4800 x 15/30 = P2400

Answered: Capricorn Company must determine the…

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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Capricorn Company must determine the December 31, 2019 year-end accruals for advertising and rent expenses. A P2,000 advertising bill was received January 6, 2020. It related to costs of P1,500 for advertisements in December 2019 issues and P500 for advertisements in January 2, 2020 issues of the newspaper. A store lease, effective December 15, 2018, calls for fixed rent of P4,800 per month payable 1 month from the effective date and monthly thereafter. In addition, rent equal to 5% of net sales over P1,200,000 per calendar year is payable on January 31 of the following year. Net sales for 2019 were P2,200,000. In its December 31, 2019 statement of financial position, Capricorn should report accrued liabilities of:
1. P51,500 P53,900
2. P56,800 P56,300

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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