TheFi

nanci
alRepor
ti
ngPr
ocess-Assi
gnment2

Q1.Consi dert
hefol
lowi
ngsetoftransact
ionsoccur r
ingdur
ingthemont hofMayforKnapp
consult
ingcompany.Foreacht
ransacti
onindicatetheimpacton1)t hebal
anceofcash2)
Cashbasisnetincomeand3)Accrualbasisnetincomef orMay.[Fi
rstisanexampl
e
provi
dedtoy ou]

Par
ti
cul
ars CashBal
ance Cashbasi
sNet Accr
ual
basi
snet
I
ncome I
ncome

a)ReceiveRs.1,500 +1,
500 +1,
500 0
from customers
whower ebil
l
ed
forservi
cesin
April
.

b)ProvideRs.3,
200 0 0 +3200
ofconsult
ing
servi
cestoalocal
business.
Paymentisnot
expectedunti
l
June.

c) Purchaseoff
ice 0 0 +400
suppli
esforRs.
400oncr edi
t.Al
l
suppli
esareused
bytheendofMay .

d)PayRs.600to -
400 0 -
200
worker
sRs.400is
forworki
nMay
andRs.200isfor
workinApri
l
.

e) PayRs.200to -
200 0 0
adver
ti
seina
l
ocalnewspaper
i
nMay .
Q2.Uni
tedHotel
spurchases1yearoff
ir
eI nsur
ancecov
erageonDecember1f
orRs.24,
000
(
2,000permonth)
,debit
ingpr
epaidI
nsurance.

On31stDecemberUni
tedHot
elswoul
drecor
dthef
oll
owi
ngadj
ust
ingent
ry.

a)I
nsur
anceexpense Dr
. 24,
000

To Pr
epai
dInsur
ance 24,
000

b)I
nsur
anceExpense Dr
. 2,
000

ToPr
epai
dInsur
ance 2,
000

c) I
nsur
anceExpense Dr
. 22,
000

ToPr
epai
dInsur
ance 22,
000

d)Noent
ryi
srequiedonDec31st,
r becausefull
cashpaymentwasmadeonDecember
1andt
heinsur
ancedoesnotexpir
eunti
lthefol
l
owingNovember30th.

Q3.Fi
l
lint
hebl
anks,
associ
atedwi
theachadj
ust
ingent
ry:

a)Accr
uedExpense:
Debi
tsal
aryA/
C;Cr
edi
t:Sal
ari
esPay
abl
e

b)Accr
uedRev
enue:
Debi
tAccount
srecei
vabl
e;Cr
edi
t:-Rev
enueA/
C.

Q4.Foreachofthef
oll
owingaccount
,indi
cat
ewhet
hert
heaccounti
sshowni
nthei
ncome
st
atementorthebal
ancesheet

Account
s Fi
nanci
alSt
atement
s

a)Account
sRecei
vabl
e Bal
ancesheet

b)Unear
nedRev
enue I
ncomest
atement

c) Suppl
i
esexpenses I
ncomest
atement

d)Sal
ari
esPay
abl
e Bal
ancesheet

e) Depr
eci
ati
onexpenses I
ncomest
atement

f
) Ser
viceRev
enue I
ncomest
atement

Q5.Fol
l
owi
ngaccountbal
ancesappeari
nthe2020adj
ust
edt
ri
albal
anceofBaj
aj
 Cor
por
ati
on:

Cash:Rs.4,
000;
Account
sRecei
vabl
e:Rs.8,
000;
Inv
ent
ory
:Rs.18,
000,
Equi
pment
:Rs.
110,
000

Accumulat
eddepr
eci
ati
on:Rs.40,
000;Account
spayabl
e:Rs.25,
000,
Sal
ari
esPay
abl
e:
Rs.15,
000;Commonstock:
Rs.50,000andRetai
nedEar
nings:??
?

PreparetheDecember31st,
2020,
classi
fi
edbal
ancesheeti
ncl
udi
ngt
hecor
rectbal
ance
ofretai
nedearni
ngs.

Bal
anceSheet
:-

Account
sPay
abl
e 25,
000 Cash 4000

Ser
vicePay
abl
e 15,
000 Account
srecei
vabl
e 8000

Commonst
ock 50,
000 I
nvent
ory 18,
000

Accumulated 40,
000 Equi
pment 1,
10,
000
Depreci
ati
on

Tot
al 1,
30,
000 Tot
al 1,
40,
000

Sor
etai
nedear
ningwi
l
lbe1,
40,
000–1,
30,
000=10,
000

st
Q6.The31 December
,2019,
adj
ust
edTr
ial
bal
ancef
orCCor
por
ati
oni
spr
esent
ed
bel
ow:

AccountTi
tl
e Debi
t Cr
edi
t

Cash 11,
000

Account
sRecei
vabl
e 140,
000

Pr
epai
dRent 5,
000

Of
fi
cesuppl
i
es 25,
000

Equi
pment 3,
00,
000

Accumul
atedDepr
eci
ati
on 125,
000

Account
spay
abl
e 11,
000

Sal
ari
esPay
abl
e 10,
000

I
nter
estPay
abl
e 4,
000
Notespay
abl
e(duei
n2 30,
000
years)

Commonst
ock 2,
00,
000

Ret
ainedEar
nings 50,
000

Ser
vicer
evenue 4,
00,
000

Sal
ari
esexpense 3,
00,
000

Rentexpense 15,
000

Depr
eci
ati
onExpense 30,
000

I
nter
estExpense 4,
000

830,
000 830,
000

Requi
red:

1)Pr
epar
eanI
ncomest
atementf
ort earendedDecember31st,
hey 2019.
st
2)Pr
epar
eacl
assi
fi
edbal
ancesheetasofDecember31 ,
2019.

I
1.ncomeSt
atement
:--

A. Rev
enues:
-

Ser
vicer
evenues 4,
00,
000

B.Ex
penses:
-

1.Ser
viceEx
penses 3,
00,
000

2.Rentexpenses 15,
000

3.Depr
eci
ati
onex
penses 30,
000
 4.I
nter
estexpenses 4000

Tot
alExpenses 3,
49,
000

Neti
ncome 4,
00,
000–3,
51,
000

=51,
000

2.
BALANCESHEET:-

Asset
s Li
abi
l
iti
es

Cash 11,
000 CommonSt
ock
2,
00,
000

Equi
pment 3,
00,
000 Not
esPay
abl
e
30,
000

Off
iceSuppl
i
es 25,
000 I
nter
estPay
abl
e
4,
000

Prepai
drent 5000 Account
sPay
abl
e
11,
000

Account
srecei
vabl
e 1,
40,
000 Sal
ari
esPay
abl
e
10,
000

AccountDepr
eci
ati
on -
1,25,
000 Ret
ainedEar
ning
50,
000

NetPr
ofi
t
51,
000

Tot
al 3,
56,
000 Tot
al
3,
56,
000