CQL Company began operations on January 1, 2021. The company reported the following data which constitute a condensed description of the business for the first year of operation ending December 31,2021. Cash sales P 1,800,000 Sales on account 2,000,000 Collection from customers 1,600,000 Cash purchases 400,000 Purchases on account 2,500,000 Payments to trade creditors 1,300,000 Salaries paid 700,000 Office supplies paid 400,000 Other expenses paid 80,000 Interest received 50,000 Equipment 600,000 The equipment was acquired by CQL on January 1 and has an estimated useful life of 8 years with no residual value. The following are additional information provided by CQL company on December 31: Accrued salaries amounted to P90,000 It is estimated that P50,000 of the outstanding accounts receivable may not be collected on December 31, 2021. Unused office supplies also amounted to P 30,000. Accrued interest receivable was P5,000. The ending inventory on December 31, 2021 amounted to P500,000. Prepare the Comparative Income Statement for cash and accrual. (please provide an explanation for each to easily understand, thank you)
CQL Company began operations on January 1, 2021. The company reported the following data which constitute a condensed description of the business for the first year of operation ending December 31,2021. Cash sales P 1,800,000 Sales on account 2,000,000 Collection from customers 1,600,000 Cash purchases 400,000 Purchases on account 2,500,000 Payments to trade creditors 1,300,000 Salaries paid 700,000 Office supplies paid 400,000 Other expenses paid 80,000 Interest received 50,000 Equipment 600,000 The equipment was acquired by CQL on January 1 and has an estimated useful life of 8 years with no residual value. The following are additional information provided by CQL company on December 31: Accrued salaries amounted to P90,000 It is estimated that P50,000 of the outstanding accounts receivable may not be collected on December 31, 2021. Unused office supplies also amounted to P 30,000. Accrued interest receivable was P5,000. The ending inventory on December 31, 2021 amounted to P500,000. Prepare the Comparative Income Statement for cash and accrual. (please provide an explanation for each to easily understand, thank you)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
CQL Company began operations on January 1, 2021. The company reported the following data which constitute a condensed description of the business for the first year of operation ending December 31,2021.
|
Cash sales |
P 1,800,000 |
|
Sales on account |
2,000,000 |
|
Collection from customers |
1,600,000 |
|
Cash purchases |
400,000 |
|
Purchases on account |
2,500,000 |
|
Payments to trade creditors |
1,300,000 |
|
Salaries paid |
700,000 |
|
Office supplies paid |
400,000 |
|
Other expenses paid |
80,000 |
|
Interest received |
50,000 |
|
Equipment |
600,000 |
The equipment was acquired by CQL on January 1 and has an estimated useful life of 8 years with no residual value.
The following are additional information provided by CQL company on December 31:
- Accrued salaries amounted to P90,000
- It is estimated that P50,000 of the outstanding
accounts receivable may not be collected on December 31, 2021. - Unused office supplies also amounted to P 30,000.
- Accrued interest receivable was P5,000.
- The ending inventory on December 31, 2021 amounted to P500,000.
Prepare the Comparative Income Statement for cash and accrual. (please provide an explanation for each to easily understand, thank you)
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