Question

Canvas Exercise on Preparation of Financial Statements I. At the end of Dec. 2019, the following accounts appeared in the trial balance of B Paper Company: Account Title Accounts Payable Accounts Receivable Balance P 25,200 30,500 Account Title Notes Payable Owner's Capital, Dec.1, 2019 Owner's Drawings Balance P 37,000 101,700 45,000 10,000 Accumulated Depr. - Equipment Cash Cost of Goods Sold Freight -Out Equipment Depreciation expense 26,000 518,000 6,500 146,000 11,000 3,500 2,500 2,500 15,000 96,000 1.000 Insurance Expense Interest Expense Prepaid Insurance Property tax Expense Property taxes Payable Rent expense Salaries and Wages expense Sales revenue Sales Commissions Expense Sales Commissions Payable Sales Returns & Allowances Utilities Expense 720,000 11,000 6,400 Interest Revenue 2,000 4,500 Inventory 32,000 8,000 8,500 Based on the above, prepare in good form the following financial statements for the month ended Dec. 31: a) Statement of Performance (b) Statement of Changes in Owner's Capital and a c ) Classified Statement of Financial Position.

Answer 1

a) Statement of performance Currency is P B Paper Company Income Statement For The Year Ended December 31st, 2019 Sales revenue 720,000 Less: Sales returns and allowances 8,000 Net Sales 712,000 Less: Cost of goods sold 518,000 Gross profit 194,000 Less: Operating Expenses Salaries and wages expense 96,000 Rent expense 15,000 Sales commissions expense 11,000 Depreciation expense 11,000 Utilities expense 8,500 Insurance expense 7,000 Freight out 6,500 Property tax expense 2,500 Total Operating expenses 157,500 Operating income 36,500 Other income and expenses Interest revenue 2,000 Interest expense 6,400 4,400 Net Income 32,100 b) Statement of changes in Owners' Equity Currency is P B Paper Company Statement of Owners' Equity For The Year Ended December 31st, 2019 Opening balance 101,700 Add: Net Income during the year 32,100 133,800 Less: Drawings 10,000 Closing balance 123,800 c) Classified Statement of Financial position Currency is P B Paper Company Balance Sheet As on December 31, 2019 Assets Current Assets: Cash Accounts Receivable Inventory Prepaid insurance Total Current Assets 26,000 30,500 32,000 3,500 92.000 146,000 -45,000 101,000 193,000 Plant, Property and Equipment: Equipment Less: Accumulated depreciation Equipment (net) Total Assets Liabilities and Owners' Equity Current Liabilities: Accounts payable Sales commissions payable Property taxes payable Total current liabilities 25,200 4,500 2,500 32,200 Long-term liabilities: Notes payable Total Liabilities 37,000 69,200 Owners' Equity Total Liabilities and Owners' Equity 123,800 193,000