question archive Debit Credit Retained profits (1 Jan 2020) $ 3,087,000 Cost of Building $ 12,000,000 Acct dep for Building (1 Jan 2020) $ 3,000,000 Prepaid insurance (building) $ 120,000 Accounts payable $ 780,000 Business checking account $ 400,500 8% long term loan $ 3,000,000 Accounts receivable $ 675,000 Land $ 3,000,000 Cost of Machinery $ 5,625,000 Acct dep for Machinery (1 Jan 2020) $ 3,510,000 Transportation cost $ 570,000 Revenue $ 7,500,000 Purchases $ 4,800,000 Return from customers $ 96,000 Administrative expenses $ 768,000 Provision for bad debt $ 97,500 Long term loan interest $ 120,000 $ 57,000 Inventory (1 Jan 2020) $ 357,000 Ordinary shares ($1 per share) $ 6,750,000 Share premium $ 750,000 $ 28,531,500 $ 28,531,500 Additional notes: A customer declared bankruptcy, write off $40,000
Debit Credit Retained profits (1 Jan 2020) $ 3,087,000 Cost of Building $ 12,000,000 Acct dep for Building (1 Jan 2020) $ 3,000,000 Prepaid insurance (building) $ 120,000 Accounts payable $ 780,000 Business checking account $ 400,500 8% long term loan $ 3,000,000 Accounts receivable $ 675,000 Land $ 3,000,000 Cost of Machinery $ 5,625,000 Acct dep for Machinery (1 Jan 2020) $ 3,510,000 Transportation cost $ 570,000 Revenue $ 7,500,000 Purchases $ 4,800,000 Return from customers $ 96,000 Administrative expenses $ 768,000 Provision for bad debt $ 97,500 Long term loan interest $ 120,000 $ 57,000 Inventory (1 Jan 2020) $ 357,000 Ordinary shares ($1 per share) $ 6,750,000 Share premium $ 750,000 $ 28,531,500 $ 28,531,500 Additional notes: A customer declared bankruptcy, write off $40,000
Subject:AccountingPrice: Bought3
| Debit | Credit | |
| Retained profits (1 Jan 2020) | $ 3,087,000 | |
| Cost of Building | $ 12,000,000 | |
| Acct dep for Building (1 Jan 2020) | $ 3,000,000 | |
| Prepaid insurance (building) | $ 120,000 | |
| Accounts payable | $ 780,000 | |
| Business checking account | $ 400,500 | |
| 8% long term loan | $ 3,000,000 | |
| Accounts receivable | $ 675,000 | |
| Land | $ 3,000,000 | |
| Cost of Machinery | $ 5,625,000 | |
| Acct dep for Machinery (1 Jan 2020) | $ 3,510,000 | |
| Transportation cost | $ 570,000 | |
| Revenue | $ 7,500,000 | |
| Purchases | $ 4,800,000 | |
| Return from customers | $ 96,000 | |
| Administrative expenses | $ 768,000 | |
| Provision for bad debt | $ 97,500 | |
| Long term loan interest | $ 120,000 | $ 57,000 |
| Inventory (1 Jan 2020) | $ 357,000 | |
| Ordinary shares ($1 per share) | $ 6,750,000 | |
| Share premium | $ 750,000 | |
| $ 28,531,500 | $ 28,531,500 |
Additional notes:
A customer declared bankruptcy, write off $40,000. Provision for bad debt is 5% of *remaining* accounts receivables.
Prepaid insurance (building) was $100,000 on Dec, 31, 2020.
Tax is $120,000
The management issued extra 20,000 shares ($2.5 each) on Dec, 30, 2020. Proceeds are paid as bonuses to workers.
No interest has been recorded so far for the long term loan.
Land is now valued at $4,500,000 as a result of a new appraisal.
Land-no depreciation.
Building-2% per year straight line
Machinery-10% reducing balance method.
Audit expense is $30,000
