Income statement as of December 31, 2020 In TCh$ Sales Cost of sales 2,638,125 (1,050,000) Gross margin 1,588,125 Selling expenses (649,425) Administrative expenses (665,875) Operational Utility 272,825 Others expenses (26,250) Others incomes 13,125 Utility before taxes 259,700 Income tax (51,940) Result of the period 207,760 Following are Statements of Position for periods ended December 31, 2019 and 2020; and Statement of Income of Euro City, S.A. to prepare financial statement of Cash Flows by Direct Method and by Indirect Method. Use an Excel spreadsheet and show all cleared calculations. ASSETS Cash and Banks Short-Term Investments Dec 2019, 31 Dec 2020, 31 520,375 864,385 Account Receivable Inventory Prepaid expenses Gross vehicles balance 20,000 409,500 30,000 420,000 1,349,250 1,317,750 28,875 34,125 637,875 551,250 Accumulated vehicle depreciation (94,500) (102,375) Gross furniture and equipment balance 160,250 195,250 Accumulated furniture and equipment depreciation (84,125) (95,675) Lands 75,000 600,000 Gross buildings balance 322,500 Accumulated buildings depreciation (15,000) TOTAL ASSETS 3,330,000 LIABILITY AND EQUITY Dec 2019, 31 Accounts payable 490,875 2,947,500 (162,375) 6,599,835 Dec 2020, 31 454,125 Other accounts payable Mortgage payable 107,625 114,450 300,000 2,400,000 Bonus issued and payable 480,000 Social Equity 2,100,000 2,735,000 Premium on sale of common stock 52,500 179,500 Retained utilities 279,000 236,760 TOTAL LIABILITIES AND EQUITY 3,330,000 6,599,835

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

ADDITIONAL INFORMATION (see attached images)

During month of May 2020, an increase of 1,050 shares with a value of $500 each was made, which were paid in cash. Consider a premium of 20%.
Vehicle purchases in 2020 were $65,625; additionally, vehicles have a total cost of $131,250 and an accumulated depreciation of $26,250 which were sold for $118,125.
Some vehicles that are fully depreciated were written off. Cost was $21,000.
During December 2020, land and buildings were acquired for $3,150,000 for a plant expansion. For its coverage, $1,050,000 was paid in cash, and to pay for remainder was paid in cash and a mortgage was taken out with Royal Bank.
Furniture and equipment were purchased for $35,000.
During 2020, dividends totaling $250,000 were declared and paid. In addition, $132,000 in common shares were paid considering same conditions as the May 2020 increase (see info N° 1). Difference generated was paid in cash.
Depreciation of vehicles and furniture and equipment were recorded in selling expenses account, while depreciation of buildings was recorded in administrative expenses. Detail is as follows:

Vehicles: $55,125

Furniture and equipment: $11,550

Buildings: $147,375

8. On January 1, 2020, $600,000 of bonds were issued for a 5-year term of $600,000. On December 31, 2020, first part of these bonds was redeemed together with interest, for which a payment of $146,250 was made.

9. Uncollectible accounts in amount of $25,000 are recorded under Administrative expenses account, which were operated against accounts receivable.

10. Initial balance of Prepaid Expenses account corresponds to insurance that was consumed in 2020 period, which was recorded in Administrative Expenses account.

11. 2020 Income tax is included in balance of Other accounts payable.

NOTE: It 's recommended that accounting entries be made in order to order transactions