the income statement for the curr Cash Furniture and equipment
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Topic Video
Question
![Problem 4
Ahw Tsu prepares financial statements on the cash basis. The statement of financial position on December 31, 2020 and
the income statement for the current year are as follows:
Cash
P1,500,000
2,500,000
P4,000,000
Furniture and equipment
Note payable
Сapital:
Balance, January 1
Add: Net income
P1,000,000
P1,600,000
2,250,000
P3,850,000
850,000
Less: Withdrawals
3,000,000
P4,000,000
Professional fees
P5,000,000
Expenses:
Rent
Supplies
Other expenses
P1,200,000
800,000
750,000
2,750,000
P2,250,000
Net income
It was decided that the financial statements should be prepared on the accrual basis. Relevant information is as follows:
1) The furniture and equipment were acquired on July 1, 2019. The estimated life is 10 years.
2) The 12% promissory note us dated April 1, 2020 and matures in one year. Interest is payable on the date of maturity.
3) The accounts receivable as at December 31, 2020 and 2019 is P750,000 and P500,000, respectively.
4) Accrued rent on December 31, 2020, P100,000.
5) Unused office supplies as at December 31, 2020 and 2019 is P250,000 and P300,000, respectively.
Required:
a) Adjusting entries to convert the records to accrual basis of accounting
b) Income statement
c) Statement of financial position](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1065b85d-d1e3-4b4d-b52b-65d50b43aeca%2F585b2818-4831-4157-8ffc-ec1618919bd3%2Fjnp7yy_processed.png&w=3840&q=75)
Transcribed Image Text:Problem 4
Ahw Tsu prepares financial statements on the cash basis. The statement of financial position on December 31, 2020 and
the income statement for the current year are as follows:
Cash
P1,500,000
2,500,000
P4,000,000
Furniture and equipment
Note payable
Сapital:
Balance, January 1
Add: Net income
P1,000,000
P1,600,000
2,250,000
P3,850,000
850,000
Less: Withdrawals
3,000,000
P4,000,000
Professional fees
P5,000,000
Expenses:
Rent
Supplies
Other expenses
P1,200,000
800,000
750,000
2,750,000
P2,250,000
Net income
It was decided that the financial statements should be prepared on the accrual basis. Relevant information is as follows:
1) The furniture and equipment were acquired on July 1, 2019. The estimated life is 10 years.
2) The 12% promissory note us dated April 1, 2020 and matures in one year. Interest is payable on the date of maturity.
3) The accounts receivable as at December 31, 2020 and 2019 is P750,000 and P500,000, respectively.
4) Accrued rent on December 31, 2020, P100,000.
5) Unused office supplies as at December 31, 2020 and 2019 is P250,000 and P300,000, respectively.
Required:
a) Adjusting entries to convert the records to accrual basis of accounting
b) Income statement
c) Statement of financial position
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education