Question

Use the following information for the next five (5) questions: You were able to gather the following information of Vergara Corporation for the year ended December 31, 2020: January 1 December 31 Accounts receivable 6,400,000 4,000,000 Accounts payable 4,632,000 2,621,000 Accrued wages 85,000 125,000 Advertising supplies inventory 35,000 75,000 Accrued advertising expense 14,250 40,000 Prepaid insurance 25,000 0 Unexpired insurance 0 41,000 During the year: Amount collected from customers, P10,000,000 Total payments to suppliers of merchandise, P13,618,000. Wages paid, P3,050,000. Advertising paid which includes, P300,000 Insurance premium paid, P125,000. What is the total sales for 2020 under accrual basis? What is the total purchases for 2020 under accrual basis? What is the wages expense for 2020 under accrual basis? What is the advertising expense in 2020 under accrual basis? What is the insurance expense in 2020 under accrual basis?

Answer 1

Sol Information Given Particulars Accounts Receivable Accounts Payable Accrued Wages Advertising Supplies Inventory Accrued Advertising Expenses Prepaid Insurance Unexpired Insurance Opening January 1 64,00,000 46,32,000 85,000 35,000 14,250 25,000 Closing December 31 40,00,000 26,21,000 1,25,000 75,000 40,000 41,000 Received from Customers Payment Suppliers Wages Paid Advertising Paid Insurance Paid 1,00,00,000 1,36,18,000 30,50,000 3,00,000 1,25,000 Let us Answer the questions

Total Sales 2020 Particulars Received from Customers (A) Less: Opening Balance of accounts receivable (B) Sales Amount received for 2020-(C)=(A)-(B) Closing Accounts Receivable-(D) Total Sales for 2020 on acrual Basis (C) +(D) Amount in P 1,00,00,000 64,00,000 36,00,000 40,00,000 76,00,000 Total Purchase 2020 Particulars Payments Made to Suppliers (A) Less: Opening Balance of accounts Payables(B) Purchases Payment relating to supplies of 2020-(C)=(A)-(B) Add:Closing Accounts Payable-(D) Total Purchases for 2020 on acrual Basis (C) +(D) Amount in P 1,36,18,000 46,32,000 89,86,000 26,21,000 1,16,07,000 Wages expense 2020 Particulars Wages paid(A) Less: Opening Balance of accrued wages(B) Wages paid relating to 2020-(C)=(A)-(B) Add:Closing Balance of accrued wages - (D) Wages expense for 2020 on acrual Basis (C) +(D) Amount in P 30,50,000 85,000 29,65,000 1,25,000 30,90,000

Advertising expense 2020 Particulars Advertising paid (A) Less: Opening Balance of Accrued Advertising expense(B) Advertised paid relating to 2020-(C)=(A)-(B) Add:Closing balance of Accrued Advertising expense-(D) Less;Increase in Advertising Inventory -(E) (Note 1) Advertisment expense for 2020 on acrual Basis (C) +D)-(E) Amount in P 3,00,000 14,250 2,85,750 40,000 40,000 2,85,750 Note 1: It is assumed that amount paid for advertising includes payment towards Advertising Inventory Supplies Amount in P We need more careful incase insurance expense as it is prepaid and also Unexpired insurance is nothing but a prepaid insurance Insurance Expense for 2020 Particulars Insurance Paid during the year 1,25,000 Less: Closing balance of Unexpired insurance(B) 41,000 Insurance paid relating to expense 2020-(C)=(A)-(B) 84,000 Add:Opening balance of Prepaid Insurance-(D) 25,000 Insurance expense for 2020 on acrual Basis (C) +(D) 1,09,000

Summary of answer Total Sales for 2020 under acrual Basis Total Purchases for 2020 under acrual Basis Wages expense for 2020 under acrual Basis Advertisment expense for 2020 under acrual Basis Insurance expense for 2020 under acrual Basis 76,00,000 1,16,07,000 30,90,000 2,85,750 1,09,000