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Causeway Ltd adopts perpetual inventory system and prepares its financial statements at 31 December. The unadjusted trial balance of the company at 31 December 2022 is detailed below: Account Title Land Equipment Accumulated depreciation - Equipment Inventories Prepaid rent Accounts receivable Allowance for doubtful accounts Cash Loan payable Accounts payable Tax payable Share capital Dividends - Interim (paid in August 2022) Retained earnings (at 1 January 2022) Sales Cost of goods sold Administrative expense Salary expense Selling expense Rent expense Utilities expense Other expense Tax expense + Dr $497,000 120,000 107,600 7,200 181,100 63,400 15,000 Cr $30,000 5,000 150,000 222,500 20,000 100,000+ 274,580 1,167,800 554,100 52,880 174,000 91,000 18,000 21,200 47,400 20,000 $1,969,880 $1,969,880 Additional information: 1. On 1 November 2022, Causeway Ltd paid $7,200 for office rent covering the period from 1 November 2022 to 31 January 2023 at $2,400 per month. Causeway Ltd recorded the total payment in "Prepaid rent" account. 2. Included in "Inventories" were some inventories which were bought in year 2021 costing $29,000. These inventories have still been kept in "Inventories" and have

Causeway Ltd adopts perpetual inventory system and prepares its financial statements at 31 December. The unadjusted trial balance of the company at 31 December 2022 is detailed below: Account Title Land Equipment Accumulated depreciation - Equipment Inventories Prepaid rent Accounts receivable Allowance for doubtful accounts Cash Loan payable Accounts payable Tax payable Share capital Dividends - Interim (paid in August 2022) Retained earnings (at 1 January 2022) Sales Cost of goods sold Administrative expense Salary expense Selling expense Rent expense Utilities expense Other expense Tax expense + Dr $497,000 120,000 107,600 7,200 181,100 63,400 15,000 Cr $30,000 5,000 150,000 222,500 20,000 100,000+ 274,580 1,167,800 554,100 52,880 174,000 91,000 18,000 21,200 47,400 20,000 $1,969,880 $1,969,880 Additional information: 1. On 1 November 2022, Causeway Ltd paid $7,200 for office rent covering the period from 1 November 2022 to 31 January 2023 at $2,400 per month. Causeway Ltd recorded the total payment in "Prepaid rent" account. 2. Included in "Inventories" were some inventories which were bought in year 2021 costing $29,000. These inventories have still been kept in "Inventories" and have

Financial Accounting
Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter6: Accounting For Merchandising Businesses
Section: Chapter Questions
Problem 9PB: On June 30, 2019, the balances of the accounts appearing in the ledger of Simkins Company are as...
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3. Depreciation for the "Equipment" has not been recorded for the current year. Included in "Equipment" was a newly acquired copier on 1 July 2022 at a cost of $20,000. All equipments are depreciated at 10% per annum on cost on a straight- line method with no residual value (to the beginning of the month for acquisitions during the year). 4. 6. the estimated net realizable value of $25,000 on 31 December 2022. 5. The "Loan Payable" of $150,000 obtained from the bank on 1 October 2022 is repayable in three equal annual payments with the first payment due on 1 October 2023. Interest of 6% per annum is to be paid annually with the first interest payment due on 1 October 2023. a. The "Allowance for doubtful accounts" account at 31 December 2022 should be $7,250. C. The expenses should be classified in the following way for reporting on the Income Statement: Category on Income Statement Administrative expenses Expenses 30% of salary expense, 30% of rent expense, utilities expense, depreciation expense Selling and distribution expenses 70% of salary expense, selling expense, 70% of rent expense, bad debt expense Other expenses Cost of goods sold Required: Provide all (adjusting) journal entries necessary for the preparation of the 2022 financial statements. Other expense, interest expense Inventory write-down expense b. Prepare the income statements in multi-step format for the year ended 31 December 2022. Prepare the statement of changes in equity for the year ended 31 December 2022.
Transcribed Image Text:3. Depreciation for the "Equipment" has not been recorded for the current year. Included in "Equipment" was a newly acquired copier on 1 July 2022 at a cost of $20,000. All equipments are depreciated at 10% per annum on cost on a straight- line method with no residual value (to the beginning of the month for acquisitions during the year). 4. 6. the estimated net realizable value of $25,000 on 31 December 2022. 5. The "Loan Payable" of $150,000 obtained from the bank on 1 October 2022 is repayable in three equal annual payments with the first payment due on 1 October 2023. Interest of 6% per annum is to be paid annually with the first interest payment due on 1 October 2023. a. The "Allowance for doubtful accounts" account at 31 December 2022 should be $7,250. C. The expenses should be classified in the following way for reporting on the Income Statement: Category on Income Statement Administrative expenses Expenses 30% of salary expense, 30% of rent expense, utilities expense, depreciation expense Selling and distribution expenses 70% of salary expense, selling expense, 70% of rent expense, bad debt expense Other expenses Cost of goods sold Required: Provide all (adjusting) journal entries necessary for the preparation of the 2022 financial statements. Other expense, interest expense Inventory write-down expense b. Prepare the income statements in multi-step format for the year ended 31 December 2022. Prepare the statement of changes in equity for the year ended 31 December 2022.
Causeway Ltd adopts perpetual inventory system and prepares its financial statements at 31 December. The unadjusted trial balance of the company at 31 December 2022 is detailed below: Account Title Land Equipment Accumulated depreciation - Equipment Inventories Prepaid rent Accounts receivable Allowance for doubtful accounts Cash Loan payable Accounts payable Tax payable Share capital Dividends - Interim (paid in August 2022) Retained earnings (at 1 January 2022) Sales Cost of goods sold Administrative expense Salary expense Selling expense Rent expense Utilities expense Other expense Tax expense + Dr $497,000 120,000 107,600 7,200 181,100 63,400 15,000 554,100 52,880 174,000 91,000 18,000 Cr $30,000 5,000 150,000 222,500 20,000 100,000+ 274,580 1,167,800 21,200 47,400 20,000 $1,969,880 $1,969,880 Additional information: 1. On 1 November 2022, Causeway Ltd paid $7,200 for office rent covering the period from 1 November 2022 to 31 January 2023 at $2,400 per month. Causeway Ltd recorded the total payment in "Prepaid rent" account. 2. Included in "Inventories" were some inventories which were bought in year 2021 costing $29,000. These inventories have still been kept in "Inventories" and have
Transcribed Image Text:Causeway Ltd adopts perpetual inventory system and prepares its financial statements at 31 December. The unadjusted trial balance of the company at 31 December 2022 is detailed below: Account Title Land Equipment Accumulated depreciation - Equipment Inventories Prepaid rent Accounts receivable Allowance for doubtful accounts Cash Loan payable Accounts payable Tax payable Share capital Dividends - Interim (paid in August 2022) Retained earnings (at 1 January 2022) Sales Cost of goods sold Administrative expense Salary expense Selling expense Rent expense Utilities expense Other expense Tax expense + Dr $497,000 120,000 107,600 7,200 181,100 63,400 15,000 554,100 52,880 174,000 91,000 18,000 Cr $30,000 5,000 150,000 222,500 20,000 100,000+ 274,580 1,167,800 21,200 47,400 20,000 $1,969,880 $1,969,880 Additional information: 1. On 1 November 2022, Causeway Ltd paid $7,200 for office rent covering the period from 1 November 2022 to 31 January 2023 at $2,400 per month. Causeway Ltd recorded the total payment in "Prepaid rent" account. 2. Included in "Inventories" were some inventories which were bought in year 2021 costing $29,000. These inventories have still been kept in "Inventories" and have
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