You were able to gather the following from your first-time audit client, ABC Corporation, as of and for the period ended December 31, 2021: Supplies bought last October 20, 2020; 10% used during 2020; 20% remaining as of December 31, 2021; entry made in 2020 includes a debit to expense for the whole amount 50,000 Advance rental payment for 3 months paid to lessor on November 30, 2021; amount charged to rent expense; no adjusting entry made Sales recorded on January 2, 2022 pertaining to a merchandise shipped to a customer last December 28, 2021; FOB Shipping point Purchases recorded last December 30, 2021; merchandise was shipped last December 29, 2021, received January 3, 2022; FOB Destination Interest on an amount lent to a borrower; note was received last December 1, 2021; term is 6 months; face value is P100,000; no interest income recorded; interest rate per annum is A minor repair on an equipment on January 2, 2021 was capitalized; the useful life of the equipment on January 2, 2021 was 6 years 30,000 120,000 45,000 9% 300,000 REQUIREMENTS: 1. Determine the net increase/decrease in net income for 2021. 2. Prepare a compound adjusting journal entry to reflect the correct net income for 2021, assuming that the books of 2021 are still open
You were able to gather the following from your first-time audit client, ABC Corporation, as of and for the period ended December 31, 2021: Supplies bought last October 20, 2020; 10% used during 2020; 20% remaining as of December 31, 2021; entry made in 2020 includes a debit to expense for the whole amount 50,000 Advance rental payment for 3 months paid to lessor on November 30, 2021; amount charged to rent expense; no adjusting entry made Sales recorded on January 2, 2022 pertaining to a merchandise shipped to a customer last December 28, 2021; FOB Shipping point Purchases recorded last December 30, 2021; merchandise was shipped last December 29, 2021, received January 3, 2022; FOB Destination Interest on an amount lent to a borrower; note was received last December 1, 2021; term is 6 months; face value is P100,000; no interest income recorded; interest rate per annum is A minor repair on an equipment on January 2, 2021 was capitalized; the useful life of the equipment on January 2, 2021 was 6 years 30,000 120,000 45,000 9% 300,000 REQUIREMENTS: 1. Determine the net increase/decrease in net income for 2021. 2. Prepare a compound adjusting journal entry to reflect the correct net income for 2021, assuming that the books of 2021 are still open
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:You were able to gather the following from your first-time audit client, ABC Corporation, as of and for the
period ended December 31, 2021:
Supplies bought last October 20, 2020; 10% used during
2020; 20% remaining as of December 31, 2021; entry
made in 2020 includes a debit to expense for the
whole amount
50,000
Advance rental payment for 3 months paid to lessor on
November 30, 2021; amount charged to rent expense;
no adjusting entry made
Sales recorded on January 2, 2022 pertaining to a
merchandise shipped to a customer last December
28, 2021; FOB Shipping point
30,000
120,000
Purchases recorded last December 30, 2021; merchandise
was shipped last December 29, 2021, received
January 3, 2022; FOB Destination
Interest on an amount lent to a borrower; note was
received last December 1, 2021; term is 6 months;
face value is P100,000; no interest income recorded;
45,000
interest rate per annum is
9%
A minor repair on an equipment on January 2, 2021 was
capitalized; the useful life of the equipment on
January 2, 2021 was 6 years
300,000
REQUIREMENTS:
1. Determine the net increase/decrease in net income for 2021.
2. Prepare a compound adjusting journal entry to reflect the correct net income for 2021,
assuming that the books of 2021 are still open
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