During your examination of the 20x3 financial statements of Goyo Company, the following data were discovered. Give any correcting and adjusting entries called for by the information given. Disregard any effects on income tax. 13. On December 1, 20x3, the company purchased for P410,000 a new machine for its main factory. The machine is being depreciated on a straight-line method over an estimated useful life of 10 years. When the new machine was installed, the company paid for the following items which were not included in the cost of the machine but were charged to Repairs and Maintenance. Delivery expense P3,000 Installation cost 24,000 Rearrangement of related equipment 13,000 Total P40,000 14. On May 3, 20x3, Goyo exchanged 1,000 treasury shares (P50 par value ordinary shares) for a parcel of land to be used as a site for a new factory. The treasury shares had a cost of P70 per share when it was acquired. On May 3, 20x3, it had a fair market value of P80 per share. Goyo received P4,000 when an existing building on the land was sold for scrap. The land was capitalized at P80,000, and Goyo recorded a gain of P10,000 on the sale of its treasury shares. You found the following journal entries in the books: Land (debit) 80,000 Treasury Shares (credit) 70,000 Gain on Sale of Treasury Shares (credit) 10,000 Cash (debit) 4,000 Miscellaneous Income (credit) 4,000 15. Goyo uses the allowance account for uncollectible trade accounts receivable. The allowance is based upon 3% of past due accounts (over 120 days) and 1% of current accounts as of the close of each month. Due to changing economic conditions and climate, the amount of past-due accounts has increased insignificantly, and management has decided to increase the percentage based on past due accounts to 5%. The following balances are available: As of Nov. 30, 20x3 Debit Credit Accounts Receivable P780,000 - Past due accounts (included in A/R) 24,000 - Allowance for Doubtful Accounts - P56,000 As of Dec. 31, 20x3 Debit Credit Accounts Receivable P860,000 - Past due accounts (included in A/R) 60,000 - Allowance for Doubtful Accounts 18,000 -
During your examination of the 20x3 financial statements of Goyo Company, the following data were discovered. Give any correcting and
13. On December 1, 20x3, the company purchased for P410,000 a new machine for its main factory. The machine is being
|
Delivery expense |
P3,000 |
|
Installation cost |
24,000 |
|
Rearrangement of related equipment |
13,000 |
|
Total |
P40,000 |
14. On May 3, 20x3, Goyo exchanged 1,000 treasury shares (P50 par value ordinary shares) for a parcel of land to be used as a site for a new factory. The treasury shares had a cost of P70 per share when it was acquired. On May 3, 20x3, it had a fair market value of P80 per share. Goyo received P4,000 when an existing building on the land was sold for scrap. The land was capitalized at P80,000, and Goyo recorded a gain of P10,000 on the sale of its treasury shares.
You found the following
|
Land (debit) |
80,000 |
|
Treasury Shares (credit) |
70,000 |
|
Gain on Sale of Treasury Shares (credit) |
10,000 |
|
Cash (debit) |
4,000 |
|
Miscellaneous Income (credit) |
4,000 |
15. Goyo uses the allowance account for uncollectible trade
|
As of Nov. 30, 20x3 |
||
|
|
Debit |
Credit |
|
Accounts Receivable |
P780,000 |
- |
|
Past due accounts (included in A/R) |
24,000 |
- |
|
Allowance for Doubtful Accounts |
- |
P56,000 |
|
As of Dec. 31, 20x3 |
||
|
|
Debit |
Credit |
|
Accounts Receivable |
P860,000 |
- |
|
Past due accounts (included in A/R) |
60,000 |
- |
|
Allowance for Doubtful Accounts |
18,000 |
- |
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