Transcribed Image Text:Using the tabular analysis of business transactions, prepare, in good form, the income statement and balance sheet of IE Company for the year ended December 31,
2022. The balances of specific accounts for IE Company as of December 31, 2021 are presented below.
Cash
12,582
Accounts receivable
155,865
184,378
Merchandise inventory
Prepaid asset
30.000
Land
500,500
Building
360,000
Accum. depn. - building
120,000
Equipment
123,200
Accum. depn. - equipment
12,320
Accounts payable
148,756
Accrued expenses
48,732
Short-term loan payable
80,000
240,000
Long-term loan payable
Capital stock
500,000
Retained eamings
216,717
The following transactions occurred in
1. IE Company sold merchandise worth P30,000 at 100% margin. The customer paid in cash.
2. IE Company sold, on credit, merchandise worth P60,000 for $105,000.
3. IE Company bought merchandise worth $50,000 paying 25% in cash and the remainder under credit.
4. IE Company recorded salaries expense amounting to P25,000 in 2022. All but 10% remain unpaid as of year-end.
5. The accrued expenses as of end-2021 pertains to unpaid utilities. The entire amount was subsequently paid in 2022.
6. The prepaid asset pertains to a three-year insurance policy covering 2022, 2023 and 2024. P10,000 for the insurance coverage in 2022 was recognized as
expense.
7. The entity took out a four-year loan in 2021 payable in equal annual installments of P80,000. The short-term portion recorded as of end-2021 was fully paid in
2022. Corresponding interest payment amounting to P6,000 was also made. (Hint: In preparing the balance sheet, recognize and present separately the portion of the
loan maturing within the next 12 months as current.)
8. The building and equipment recorded depreciation of P120,000 and P24,640 during the year.
9. IE Company collected P225,000 of accounts receivable and paid P58,000 of accounts payable.
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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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