M a r i o i s p r e p a r i n g h i s b a l a n c e s h e e t a n d i n c o m e a n d e x p e n s e s s t a t e m e n t f o r t h e y e a r e n d i n g J u n e 3 0 , 2 0 2 2 . H e i s h a v i n g d i f f i c u l t y c l a s s i f y i n g s i x i t e m s a n d a s k s f o r y o u r h e l p . W h i c h, i f a n y , o f t h e f o l l o w i n g t r a n s a c t i o n s a r e a s s e t s , l i a b i l i t i e s , i n c o me , o r e x p e n s e i t e m s ?a ) M a r i o r e n t s a h o u s e f o r P 1 0 , 0 0 0 . 0 0 a m o n t h b ) O n J u n e 2 1 , 2 0 2 2 , M a r i o b o u g h t g o l d p i e c e s o f j e w e l r y f o r h i s w i f e a n d c h a r g e d t h e m u s i n g h i s V i s a c a r d . T h e p i e c e s o f j e w e l r y c o s t P 6 0 , 0 0 0 . 0 0 , b u t h e h a s n ’ t r e c e i v e d t h e b i l l .c ) M a r i o b o r r o w e d P 2 0 , 0 0 0 . 0 0 f r o m h i s p a r e n t s l a s t y e a r , b u t s o f a r h e h a s m a d e n o p a y m e n t s t o t h e m . d ) M a r i o m a k e s m o n t h l y p a y m e n t s o f P 1 2 , 0 0 0 . 0 0 o n a n i n s t a l l m e n t l o a n ; a b o u t h a l f o f i t i s i n t e r e s t , a n d t h e b a l a n ce i s r e p a y m e n t o f p r i n c i p a l . H e h a s 2 0 p a y m e n t s l e f t , t o t a l i n g P 2 4 0 , 0 0 0 . 0 0 .e ) M a r i o p a i d P 2 8 , 0 0 0 . 0 0 i n t a x e s d u r i n g t h e y e a r a n d i s d u e a t a x r e f u n d o f P 4 , 5 0 0 . 0 0 , w h i c h h e h a s n ’ t y e t r e c e i v e d . f ) M a r i o i n v e s t e d P 1 8 , 0 0 0 . 0 0 i n s o m e c o m m o n s t o c k .J e f f a n d C h r i s t y A b a y a n a r e p r e p a r i n g t h e i r 2 0 2 3 c a s h b u d g e t . H e l p t h e A b ay a n ’ s r e c o n c i l e t h e f o l l o w i n g d i f f e r e n c e s , g i v i n g r e a s o n s t o s u p p o r t y o u r a n s w e r s : a ) T h e i r o n l y s o u r c e o f i n c o m e i s J e f f ’ s s a l a r y , w h i c h a m o u n t s t o P 5 0 , 0 0 0 . 0 0 a m o n t h b e f o r e t a x e s . C h r i s t y w a n t s t o s h o w t h e P 5 0 , 0 0 0 . 0 0 a s t h e i r m o n t h l y i n c o m e , w h e r e a s J e f f a r g u e s t h a t h i s t a k e - h o m e p a y o f P 3 3 , 9 1 7 . 0 0 i s t h e c o r r e c t v a l u e t o s h o w .b ) C h r i s t y w a n t s t o m a k e a p r o v i s i o n f o r f u n m o n e y , a n i d e a t h a t J e f f c a n n o t u n d e r s t a nd . H e a sk s , “ W h y d o w e n e e d f u n m o n e y w h e n e v e r y t h i n g i s p r o v i d e d f o r i n t h e b u d g e t ? ”

1 a) This transaction represents an expense item since it is payment for a service ( renting a…

Answered: W h i c h, i f a n y , o f t h…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

M a r i o i s p r e p a r i n g h i s b a l a n c e s h e e t a n d i n c o m e a n d e x p e n s e s s t a t e m e n t f o r t h e y e a r e n d i n g J u n e 3 0 , 2 0 2 2 . H e i s h a v i n g d i f f i c u l t y c l a s s i f y i n g s i x i t e m s a n d a s k s f o r y o u r h e l p . W h i c h, i f a n y , o f t h e f o l l o w i n g t r a n s a c t i o n s a r e a s s e t s , l i a b i l i t i e s , i n c o me , o r e x p e n s e i t e m s ?

a ) M a r i o r e n t s a h o u s e f o r P 1 0 , 0 0 0 . 0 0 a m o n t h
b ) O n J u n e 2 1 , 2 0 2 2 , M a r i o b o u g h t g o l d p i e c e s o f j e w e l r y f o r h i s w i f e a n d c h a r g e d t h e m u s i n g h i s V i s a c a r d . T h e p i e c e s o f j e w e l r y c o s t P 6 0 , 0 0 0 . 0 0 , b u t h e h a s n ’ t r e c e i v e d t h e b i l l .
c ) M a r i o b o r r o w e d P 2 0 , 0 0 0 . 0 0 f r o m h i s p a r e n t s l a s t y e a r , b u t s o f a r h e h a s m a d e n o p a y m e n t s t o t h e m .
d ) M a r i o m a k e s m o n t h l y p a y m e n t s o f P 1 2 , 0 0 0 . 0 0 o n a n i n s t a l l m e n t l o a n ; a b o u t h a l f o f i t i s i n t e r e s t , a n d t h e b a l a n ce i s r e p a y m e n t o f p r i n c i p a l . H e h a s 2 0 p a y m e n t s l e f t , t o t a l i n g P 2 4 0 , 0 0 0 . 0 0 .
e ) M a r i o p a i d P 2 8 , 0 0 0 . 0 0 i n t a x e s d u r i n g t h e y e a r a n d i s d u e a t a x r e f u n d o f P 4 , 5 0 0 . 0 0 , w h i c h h e h a s n ’ t y e t r e c e i v e d .
f ) M a r i o i n v e s t e d P 1 8 , 0 0 0 . 0 0 i n s o m e c o m m o n s t o c k .
J e f f a n d C h r i s t y A b a y a n a r e p r e p a r i n g t h e i r 2 0 2 3 c a s h b u d g e t . H e l p t h e A b ay a n ’ s r e c o n c i l e t h e f o l l o w i n g d i f f e r e n c e s , g i v i n g r e a s o n s t o s u p p o r t y o u r a n s w e r s :

a ) T h e i r o n l y s o u r c e o f i n c o m e i s J e f f ’ s s a l a r y , w h i c h a m o u n t s t o P 5 0 , 0 0 0 . 0 0 a m o n t h b e f o r e t a x e s . C h r i s t y w a n t s t o s h o w t h e P 5 0 , 0 0 0 . 0 0 a s t h e i r m o n t h l y i n c o m e , w h e r e a s J e f f a r g u e s t h a t h i s t a k e - h o m e p a y o f P 3 3 , 9 1 7 . 0 0 i s t h e c o r r e c t v a l u e t o s h o w .
b ) C h r i s t y w a n t s t o m a k e a p r o v i s i o n f o r f u n m o n e y , a n i d e a t h a t J e f f c a n n o t u n d e r s t a nd . H e a sk s , “ W h y d o w e n e e d f u n m o n e y w h e n e v e r y t h i n g i s p r o v i d e d f o r i n t h e b u d g e t ? ”

Expert Solution

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

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.