Compute for: a. Retained Earning 2019 (Restated) b. Total Assets 2020 (Restated) c. Retained Earning 2020 ( REstated) d. Net Income- 2020 (Restated) e. Gain on Purchasing Power Problem 1: ABC Company, an entity organized on January 1, 2018, provided thefollowing information:20192020Cash and cash equivalentsInventoryEquipment, netLand3,000,000 4,250,0002,200,000 3,000,0001,500,000 1,400,0004,500,000 4,500,0001,500,000 2,000,0006,000,000 6,500,0003,000,000 3,000,000700,000 1,650,0008,000,0002,200,0005,200,0003,000,0001,700,000100,000500,000350,000Current liabilities (all monetary)Noncurrent liabilities (all monetary)Share capitalRetained earningsSalesInventory, January 1PurchasesInventory, December 31Operating expenses (excluding depreciation)DepreciationIncome tax expenseCash dividend paid on December 31, 2020Additional information:1. The pertinent index numbers are:January 1, 2018 - 100January 1, 2019 - 1002. The land and equipment were acquired on January 1, 2018.December 31, 2019 – 120December 31, 2020 – 200Required: If financial statements are restated using 2020 price level in accordance withconstant peso accounting, how much would be:a. Retained earnings - 2019 (restated)b. Total assets – 2020 (restated)c. Retained earnings - 2020 (restated)d. Net income – 2020 (restated)e. Gain on purchasing power

Retained earnings are defined as the amount of net income which is left for the company after paying…

Answered: Compute for: a. Retained Earning 2019…

Business

Accounting

Compute for: a. Retained Earning 2019 (Restated) b. Total Assets 2020 (Restated) c. Retained Earning 2020 ( REstated)

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

Compute for: a. Retained Earning 2019 (Restated) b. Total Assets 2020 (Restated) c. Retained Earning 2020 ( REstated) d. Net Income- 2020 (Restated) e. Gain on Purchasing Power

Problem 1: ABC Company, an entity organized on January 1, 2018, provided the
following information:
2019
2020
Cash and cash equivalents
Inventory
Equipment, net
Land
3,000,000 4,250,000
2,200,000 3,000,000
1,500,000 1,400,000
4,500,000 4,500,000
1,500,000 2,000,000
6,000,000 6,500,000
3,000,000 3,000,000
700,000 1,650,000
8,000,000
2,200,000
5,200,000
3,000,000
1,700,000
100,000
500,000
350,000
Current liabilities (all monetary)
Noncurrent liabilities (all monetary)
Share capital
Retained earnings
Sales
Inventory, January 1
Purchases
Inventory, December 31
Operating expenses (excluding depreciation)
Depreciation
Income tax expense
Cash dividend paid on December 31, 2020
Additional information:
1. The pertinent index numbers are:
January 1, 2018 - 100
January 1, 2019 - 100
2. The land and equipment were acquired on January 1, 2018.
December 31, 2019 – 120
December 31, 2020 – 200
Required: If financial statements are restated using 2020 price level in accordance with
constant peso accounting, how much would be:
a. Retained earnings - 2019 (restated)
b. Total assets – 2020 (restated)
c. Retained earnings - 2020 (restated)
d. Net income – 2020 (restated)
e. Gain on purchasing power

Definition Definition Value of one unit of currency in terms of goods and services. Purchasing power refers to the ability of money to purchase goods and services at a particular point of time. As price levels in the economy increase, the purchasing power of one unit of currency decreases and vice versa.

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