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Accounting
Prepare the Income Statement for the year ended 31 December 20x3, under the captions of Revenues, Expenses, Profit before taxes and Profit after taxes. Prepare the Statement of Financial Position as at 31 December 20x3, under the captions of Total Assets, Total Liabilities, Total Equity, Total Liabilities and Equity.

Prepare the Income Statement for the year ended 31 December 20x3, under the captions of Revenues, Expenses, Profit before taxes and Profit after taxes. Prepare the Statement of Financial Position as at 31 December 20x3, under the captions of Total Assets, Total Liabilities, Total Equity, Total Liabilities and Equity.

FINANCIAL ACCOUNTING
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 1 Part I Cucu Pets Company (CP) is a pet beauty shop that provides grooming services for pets. Old customers usually have an account with CP and they are billed after receiving services for their pets. New customers have to pay in advance, and the amounts are credited to unearned fees account. CP performed adjusting entries at the end of each month, and closing entries are performed annually on 31 December. Below is CP's unadjusted trial balance as at 31 December 20x3. Account Title Cash Accounts receivable Prepaid rent Supplies 5% Note receivable (due in Apr.20x4) Accounts payable Income tax payable Unearned fees Cucu Pets Company Unadjusted Trial Balance As at 31 December 20x3 Share capital (15,000 Ordinary Share at $10 each) Retained earnings Fees earned Interest revenue Supplies expense Salaries expense Rent expense Utilities expense Income tax expense TOTAL Debit $ 299,800 25,000 240,000 1,000 180,000 12,000 190,000 200,000 8,000 33,000 1,188,800 Credit S 36,050 33,000 60,000 150,000 Required: 99,000 810,000 750 1,188,800 Information for entries/adjusting entries: (1) Purchased $450 supplies of animal's shampoos on account on 30 December 20x3 but not yet recorded. (3) A $60,000 machine was bought by cash on 1 October 20x3. It has 10 years' useful life and CP uses straight-line depreciation. Both the purchase and all related adjusting entries were not recorded. (4) On 1 December 20x3, CP prepaid and recorded a one-year rental of $240,000 covering up to 30 November 20x4. (5) $11,000 of unearned fees in the book was now earned on 31 December 20x3. (6) On 31 December 20x3, an old customer made a booking for pet grooming service on 5 January 20x4. Payment will be made when service is provided. (7) The Board of Directors declared a dividend of $0.1 per share and will be paid out next year. (8) The 5% note receivable was money lent to CC Company on 1 August 20x3 for 9 months. Interest is received at the end of each month. Journal entries were made up to 31 August 20x3. (9) From 16 November to 15 December 20x3, CP has to provide one month grooming services for the Pet Show at a monthly fee of $30,000. Adjusting entries were recorded at the end of November. CP received $30,000 cash on 15 December 20x3 but no record was made. (10) Estimated income tax expense for the entire year 20x3 was $52,000 that is due for payment in 20x4. (a) Prepare the necessary entries/adjusting entries on 31 December 20x3. No explanation is required. Show all workings in your journal. Use the account titles given in the Trial Balance or create new accounts where appropriate. If it does not require adjustment, state "no entry" and give the name of the accounting principle(s) applied. No need to explain. (b) Prepare the Income Statement for the year ended 31 December 20x3, under the captions of Revenues, Expenses, Profit before taxes and Profit after taxes. (c) Prepare the Statement of Financial Position as at 31 December 20x3, under the captions of Total Assets, Total Liabilities, Total Equity, Total Liabilities and Equity. (d) Prepare year-end closing entries. Cornical normally adjusts its books monthly. (1) to (5) below are entries made/information noted in December 2023. They are independent from each other. Other than those recorded as stated, no other adjusting entries were made in 20x3.
Transcribed Image Text:Question 1 Part I Cucu Pets Company (CP) is a pet beauty shop that provides grooming services for pets. Old customers usually have an account with CP and they are billed after receiving services for their pets. New customers have to pay in advance, and the amounts are credited to unearned fees account. CP performed adjusting entries at the end of each month, and closing entries are performed annually on 31 December. Below is CP's unadjusted trial balance as at 31 December 20x3. Account Title Cash Accounts receivable Prepaid rent Supplies 5% Note receivable (due in Apr.20x4) Accounts payable Income tax payable Unearned fees Cucu Pets Company Unadjusted Trial Balance As at 31 December 20x3 Share capital (15,000 Ordinary Share at $10 each) Retained earnings Fees earned Interest revenue Supplies expense Salaries expense Rent expense Utilities expense Income tax expense TOTAL Debit $ 299,800 25,000 240,000 1,000 180,000 12,000 190,000 200,000 8,000 33,000 1,188,800 Credit S 36,050 33,000 60,000 150,000 Required: 99,000 810,000 750 1,188,800 Information for entries/adjusting entries: (1) Purchased $450 supplies of animal's shampoos on account on 30 December 20x3 but not yet recorded. (3) A $60,000 machine was bought by cash on 1 October 20x3. It has 10 years' useful life and CP uses straight-line depreciation. Both the purchase and all related adjusting entries were not recorded. (4) On 1 December 20x3, CP prepaid and recorded a one-year rental of $240,000 covering up to 30 November 20x4. (5) $11,000 of unearned fees in the book was now earned on 31 December 20x3. (6) On 31 December 20x3, an old customer made a booking for pet grooming service on 5 January 20x4. Payment will be made when service is provided. (7) The Board of Directors declared a dividend of $0.1 per share and will be paid out next year. (8) The 5% note receivable was money lent to CC Company on 1 August 20x3 for 9 months. Interest is received at the end of each month. Journal entries were made up to 31 August 20x3. (9) From 16 November to 15 December 20x3, CP has to provide one month grooming services for the Pet Show at a monthly fee of $30,000. Adjusting entries were recorded at the end of November. CP received $30,000 cash on 15 December 20x3 but no record was made. (10) Estimated income tax expense for the entire year 20x3 was $52,000 that is due for payment in 20x4. (a) Prepare the necessary entries/adjusting entries on 31 December 20x3. No explanation is required. Show all workings in your journal. Use the account titles given in the Trial Balance or create new accounts where appropriate. If it does not require adjustment, state "no entry" and give the name of the accounting principle(s) applied. No need to explain. (b) Prepare the Income Statement for the year ended 31 December 20x3, under the captions of Revenues, Expenses, Profit before taxes and Profit after taxes. (c) Prepare the Statement of Financial Position as at 31 December 20x3, under the captions of Total Assets, Total Liabilities, Total Equity, Total Liabilities and Equity. (d) Prepare year-end closing entries. Cornical normally adjusts its books monthly. (1) to (5) below are entries made/information noted in December 2023. They are independent from each other. Other than those recorded as stated, no other adjusting entries were made in 20x3.
(1) On 1 December 20x3, Cornical bought a machine at $7,600 by cash with useful life of 4 years. Cornical recorded: Dr Machine $7,600 and Cr Cash $7,600. (2) Cornical agreed to provide two months' services to Musko Co. from 1 December 20x3 to 31 January 20x4 for a total fee of $3,000. Musko paid the $3,000 on 1 December 20x3, Cornical recorded: Dr Cash $3,000 and Cr Unearned Fees $3,000. (3) On 1 December 20x3, Cornical recorded a $90,000 one-year note payable signed with ABC Bank with 10% interest rate per annum. The interest is paid by each month end. Cornical recorded: Dr Cash $90,000 and Cr Note Payable $90,000 (4) On 31 December 20x3, the Board of Directors declared and paid out a dividend of $5,000. No entries were ade by Cornical. (5) Cornical prepaid a 6 months' insurance of $2,400 effective from 1 December 20x3. Cornical recorded: Dr Prepaid Insurance $2,400 and Cr Cash $2,400. Required: Assume no other adjusting entries were made. Indicate the effects on Cornical's book as at 31 December 20x3. Copy the Table for Answer below and fill in the answers. DO NOT copy the example. State O = overstated, U = understated and NE = no effect Example: There is an accrued and unrecorded $500 fees earned in December 2023. No entries were made by Cornical. The effects on the book are: e.g. Revenue U Table for Answer (1) (2) (3) (4) (5) Revenue Expenses NE Expenses Profit U Profit Assets U Assets Liabilities NE Liabilities Equity U Equity
Transcribed Image Text:(1) On 1 December 20x3, Cornical bought a machine at $7,600 by cash with useful life of 4 years. Cornical recorded: Dr Machine $7,600 and Cr Cash $7,600. (2) Cornical agreed to provide two months' services to Musko Co. from 1 December 20x3 to 31 January 20x4 for a total fee of $3,000. Musko paid the $3,000 on 1 December 20x3, Cornical recorded: Dr Cash $3,000 and Cr Unearned Fees $3,000. (3) On 1 December 20x3, Cornical recorded a $90,000 one-year note payable signed with ABC Bank with 10% interest rate per annum. The interest is paid by each month end. Cornical recorded: Dr Cash $90,000 and Cr Note Payable $90,000 (4) On 31 December 20x3, the Board of Directors declared and paid out a dividend of $5,000. No entries were ade by Cornical. (5) Cornical prepaid a 6 months' insurance of $2,400 effective from 1 December 20x3. Cornical recorded: Dr Prepaid Insurance $2,400 and Cr Cash $2,400. Required: Assume no other adjusting entries were made. Indicate the effects on Cornical's book as at 31 December 20x3. Copy the Table for Answer below and fill in the answers. DO NOT copy the example. State O = overstated, U = understated and NE = no effect Example: There is an accrued and unrecorded $500 fees earned in December 2023. No entries were made by Cornical. The effects on the book are: e.g. Revenue U Table for Answer (1) (2) (3) (4) (5) Revenue Expenses NE Expenses Profit U Profit Assets U Assets Liabilities NE Liabilities Equity U Equity
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