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DM Corporation provided a trial balance on December 31, 2X20 that had been adjusted except for income tax expense. The document lists account balances and additional information about accounts receivable and income tax payments and rates. It then provides requirements to calculate total current assets, total current liabilities, and retained earnings based on the information in the trial balance.

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Bryan Ken
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1K views1 page

10

DM Corporation provided a trial balance on December 31, 2X20 that had been adjusted except for income tax expense. The document lists account balances and additional information about accounts receivable and income tax payments and rates. It then provides requirements to calculate total current assets, total current liabilities, and retained earnings based on the information in the trial balance.

Uploaded by

Bryan Ken
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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DM Corporation provided the following trial balance on December 31, 2X20 which had been adjusted, except for

income
tax expense:

Cash 675,000
Accounts receivable (net) 2,695,000
Inventory 2,185,000
Property, plant, and equipment (net) 10,245,000
Accounts payable and accrued liabilities 1,800,000
Income tax payable 1,500,000
Deferred tax liability 750,000
Share capital 2,500,000
Share premium 3,000,000
Retained earnings, January 1 3,350,000
Net sales and other revenue 15,000,000
Cost and expenses 10,000,000
Income tax expense 2,100,000
27,900,000 27,900,000

The accounts receivable included P1,000,000 due from customers and payable in quarterly installments of P125,000. The
last payment is due December 30, 2X22. During the year, the estimated tax payment of P600,000 was charged to income
tax expense. The income tax rate is 30% on all types of income.

Requirement: On December 31, 2X20, compute for (3 items x 5 points):

a. Total current assets

Cash P 675,000
Accounts Receivable 2,195,000
Inventory 2,185,000
Total Current Asset P 5,055,000

b. Total current liabilities

Accounts payable and accrued liabilities P 1,800,000


Income tax payable 900,000
Total Current Liabilities P 5,055,000

c. Retained earnings
Net sales and other revenue P 15,000,000
Less: Cost and expenses 10,000,000
Income before tax 5,000,000
Less: Income Tax 1,500,000
Net Income 3,500,000
Add: Retained Earnings, January 1 3,350,000
Retained Earnings, December 31 P 6,850,000

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