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Practice Exercise #1 - Financial Statements Preparation

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34 views11 pages

Practice Exercise #1 - Financial Statements Preparation

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norie.ecija
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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PRACTICE EXERCISE #1

Preparation of Financial Statements


CLOVER CORPORATION

The adjusted trial balance of Clover Corporation shows the following account balances:

Clover Corporation
Adjusted Trial Balance
December 31, 2021

Debit Credit
Cash Php 4,500,000
Accounts receivable 3,000,000
Allowance for doubtful accounts Php 200,000
Office supplies 307,000
Store supplies 500,000
Prepaid rent 1,000,000
Merchandise inventory, Jan. 1, 2021 1,160,000
Office equipment 1,100,000
Accumulated depreciation - equipment 440,000
Store equipment 1,400,000
Accumulated depreciation - equipment 700,000
Accounts payable 900,000
Salaries payable 43,000
Interest payable 36,000
Long-term notes payable 1,200,000
Share capital - Ordinary 5,000,000
Share premium - Ordinary 3,200,000
Retained earnings 3,300,000
Dividends 1,000,000
Treasury Shares 500,000
Sales 9,810,000
Sales returns and allowances 260,000
Sales discounts 140,000
Purchases 6,710,000
Purchase returns and allowances 250,000
Purchase discounts 180,000
Freight in 100,000
Salaries expense - Selling 960,000
Advertising expense 150,000
Freight out 260,000
Depreciation expense - Store equipment 140,000
Salaries expense - Selling 1,130,000
Selling supplies expense 70,000
Depreciation expense - Office equipment 110,000
Doubtful accounts expense 188,000
Office supplies expense 430,000
Miscellaneous expenses 90,000
Interest expense 54,000

Total 25,259,000 25,259,000

Additional information:
Merchandise on hand at the end of December is P1,040,000.
Clover Corporation
Statement of Profit or Loss
For the year ended, December 31 2021

Net Sales 1 P
Less: Cost of sales 2
Gross profit
Less: Operating expenses
Selling and distribution expenses 3
General and administrative expenses 4
Total
021

9,410,000
7,360,000
2,050,000
Name of the Company
Statement of Changes in Equity
Period
Name of the Company
Statement of Financial Position
Period
NOTES TO FINANCIAL STATEMENT

Note 1 - Net Sales


Sales
Less:
Sales Returns and Allowances
Sales Discounts
Net Sales

Note 2 - Cost of Sales


Merchandise Inventory, Jan. 1, 2021
Add: Net Purchases
Purchases
Less:
Purchases Returns and Allowances
Purchase Discounts

Add: Freight-in
Cost of goods available for sale
Less: Merchandise Inventory, Dec. 31, 2021
Cost of goods sold
NOTES TO FINANCIAL STATEMENTS

ns and Allowances

ventory, Jan. 1, 2021

ses Returns and Allowances P


se Discounts

vailable for sale


dise Inventory, Dec. 31, 2021
MENTS

P 9,810,000

P 260,000
140,000 400,000
9,410,000

P 1,160,000

P 6,710,000

250,000
180,000 430,000
7,140,000
100,000 7,240,000
8,400,000
1,040,000
7,360,000

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