Audit adjusting Entries:
1. Advances to officers & employees 3,000
Marketing and administrative expense 4,500
Petty Cash 7,500
2. A. Accounts Receivable 35,000
Cash in Bank 35,000
B. Cash in Bank 40,000
Accounts Receivable 40,000
E. Cash in bank 48,300
Accounts Payable 48,300
3. Trading Securities 20,000
Unrealized gain on Trading Securities 20,000
4. A. Advances to Officers and Employees 120,000
Accounts Receivable 120,000
B. Sales 625,000
Inventories 500,000
Accounts Receivable 625,000
Cost of goods sold 500,000
5. A. Inventories 26,000
Cost of goods sold 26,000
B. Accounts Payable 35,000
Cost of good sold 35,000
C. Inventories 27,000
Accounts Payable 27,000
D. Cost of good sold 22,350
Accounts Payable 22,350
E. Sales 36,000
Inventories 25,000
Accounts Receivable 36,000
Cost of good sold 25,000
*Marketing and Administrative Expense 17,900
Allowance for uncollectible accounts 17,900
6. Marketing and Administrative Expense 6,250
Prepaid Insurance 6,250
A. Land 1,864,000
Building 7,606,000
Other income 30,000
Land and Building 8,600,000
Marketing and administrative Expense 900,000
B. Marketing and Administrative Expense 166,800
Accumulated Depreciation- Building 150,000
Accumulated Depreciation-Leasehold Improvements 16,800
8. Marketing and Administrative Expense 50,000
Accumulated Amortization-Franchise 50,000
9. Marketing and administrative Expense 72,000
Licensing Agreement 144,000
Accumulated Amortization-Licensing Agreement 216,000
10. A. Accounts Payable- De la Cruz 126,000
Accounts payable- De Leon 126,000
B. Marketing and Administrative Expense 50,800
Accrued expense 50,800
11. Other Income 130,000
Unearned Revenue 130,000
12. Interest Expense 200,000
Interest Payable 200,000
Mortgage Payable 500,000
Current portion of long term 500,000
13. Interest Expense 187,800
Interest Payable 180,000
Discount on Bonds Payable 7,800
14. Income Tax Payable 127,126
Income Tax Expense 127,126
Karkits Corporation
Statement of Comprehensive Income
For the year ended December 31, 2018
Sales P 31,589,000
Cost of Good Sold (17,606,300)
Gross profit 13,982,700
Other Income 40,000
Total Income 14,022,700
Marketing and Administrative Expense (8,368,650)
Income before Interest and taxes 5,654,050
Interest expense (792,120)
Profit before Tax 4,861,930
Income Tax (4,861,930*30%) (1,458,579)
Profit P 3,403,351
Karkits Corporation
Statement of Financial Position
As of December 31, 2018
Assets
CURRENT ASSETS
Cash and Cash Equivalents P 304,400
Trading Securities, market value 350,000
Accounts receivable, net 2,743,100
Inventories 4,976,900
Prepaid Insurance 23,150
CURRENT ASSETS P 8,397,550
NON CURRENT ASSETS
Property, Plant and Equipment P 11,124,700
Intangibles, Net 594,000
NON CURREN ASSETS 11,583,700
Total assets P 19,936,250
Liabilities and Shareholders’ Equity
CURRENT LIABILITIES
Trade and Other Payables P 4,983,020
Unearned Revenues 130,000
Income Tax Payable 66,239
CURRENT LIABILITIES P 5,179,259
N0N CURRENT LIABILITIES
Mortgage Payable P 1,500,000
Bonds Payable 8 1,885,800
NON CURRENT LIABILITIES 3,385,800
Total Liabilities P 8,565,059
SHAREHOLDERS’ EQUITY
Ordinary Share Capital P 5,000,000
Additional Paid-in Capital 1,350,000
Retained Earnings 5,021,191
SHAREHOLDERS’ EQUITY 11,371,191
Total Liabilities and Shareholders’ Equity 19,936,250
NOTES
3. Cash
Petty Cash P 7,500
Cash in bank 296,900
Cash and Cash Equivalents P 304,400
4. Trade and other receivables
Accounts receivable, net 2, 758,000
Advance to Officers and Employees 123,000
Allowance for uncollectible account (137,900)
Trade and Other Receivables P 2,743, 100
5. Property, plant and equipment
Land P 1,720,000
Building P 7,750,000
Accumulated Depreciation-Building (150,000) 7,600,000
Furniture and Fixtures P 2,177,000
Accumulated depreciation- Furniture and Fixtures (703,500) 1,473,500
Leasehold Improvements P 168,00
Accumulated depreciation Leasehold
Improvements (16,800) 151,200
Total Property, Plant and Equipment, Net P 11,124,700
6. Intangible Assets
Franchise P 500,000
Accumulated Amortization-Franchise (50,000) P 450,000
Licensing Agreements P 360,000
Accumulated Amortization – Licensing agreements (216,000) 144,000
Total Intangible assets P 594,000
7. Trade and Other Payables
Accounts Payable P 2, 204, 200
Accrued Expense 648, 820
Interest Payable 380,000
Dividends Payable 1, 250, 000
Current portion of Long term Debt 500,000
Trade and other Payables P 4,983, 020
8. Amortized cost of bonds payable
Bonds Payable P 2,000,000
Discount on Bonds payable (114,200)
Bonds Payable, Net of Discount P 1, 885,800
Answers:
1.petty cash 7,500
2. Cash in bank 296,900
3. trading securities 350,000
4. Account Receivable 2,758,900
5. Allowance for doubtful accounts 137,900
6. Advances to Officers & Employees 123,000
7. Inventories 4,976,900
8. Prepaid Insurance 23,150
9. Land 1,720,000
10. Building 7,750,000
11. Accumulated Depreciation- Building 150,000
12. Dividends Payable 151,200
13. Franchise 500,000
14. Licensing agreement, net 144,000
15. Accounts Payable 2,204,200
16. Accrued Expenses 648,820
17. Unearned Revenues 130,000
18. Interest Payable 380,000
19. Income Taxes Payable 163,477
20. Dividends Payable 1,250,000
21. Current portion of long term debt 500,000
22. Discount on Bonds Payable 114,200
23. Ordinary share capital 5,0000,000
24. Retained Earnings 5,021,191
25. Sales 31,589,000
26. Cost of Good Sold 17,606,000
27. Marketing & administrative expenses 8,368,650
28. Other income 40,000
29. Interest expense 792,120
30. Net income 3,306,113
