Adjusting Entries - Assignment

Prepare Financial reports

Table of Contents
QUESTION 1...................................................................................................................................3
Income Statement........................................................................................................................3
Statement of Equity.....................................................................................................................4
QUESTION 2...................................................................................................................................4
Calculation of Depreciation........................................................................................................4
QUESTION 3 ..................................................................................................................................6
A. Adjustment entries..................................................................................................................6
B. Calculating overstatement or understatement of profit or loss if these adjustment entries
would not have been passed........................................................................................................7
QUESTION 4 ..................................................................................................................................7
Adjustment entries......................................................................................................................7
QUESTION 5 ..................................................................................................................................8
A.. Adjustment entries.................................................................................................................8
Question 6......................................................................................................................................10
1. Calculation of profit or loss from sale of old machine..........................................................10
2. Statement concerning the allowance for doubtful debts account that is not true..................10
3) Journal entry for estimated bad debts under the allowance method.....................................10
4) Calculation of amount for bad and doubtful debts to be appear in the income statement for
the year......................................................................................................................................11
5) Correct closing general journal entry ...................................................................................11
6) Balance of profit and loss summary before it is closed represents.......................................11
7) Statement relating to profit and loss summary Account that is incorrect is:........................11
8) Major purpose of post closing trial balance .........................................................................12
9) Correct statement for reversing entries.................................................................................12
10) Calculation of retained profit..............................................................................................12
REFERENCES..............................................................................................................................13

QUESTION 1
Income Statement
Income Statement
for the year end 30 June 2015
Particulars Amount ($000)
Sales 1600
Less-Cost of Goods Sold -550
Gross Profit 1050
Less-Operating Expenses
Administration Salary -170
Depreciation -70
Damage by Space Junk -65
Net Operation Income(A) 745
Add- Interest Income 200
Less- Interest Expenses -25
Net Non Operating Income(B) 175
Net Income before Tax (A+B) 920
Less- Tax Expenses @ 33% -157.5*
Net Income after Interest & Tax
(C)
762.5
Adjustment-

Tax Expenses- $150
Amount on which Tax Deducted- $150/33%
= $454.54
Add- Cost of Damage by Space Junk- $21.450
Actual Amount on which tax is calculated- $475.99
Actual Tax Expenses- $475.99*33%= 157.5
Statement of Equity
Statement of Equity
for the year end 30 June 2015
Share
Capital
($000)
Retained
Earnings
($000)
Revaluation
Surplus ($000)
Dividend
($000)
Total Equity
($000)
Balance at 1 July
2014
510 1950 Nil 200 2660
Changes in
Accounting Policy
-50
Correction in Prior
Period Error
Restated Balance 510 1900 Nil 200 2610
Changes in Equity
for the year end
2015
Issues of Share
Capital
Nil Nil Nil Nil
Revolution Gain Nil Nil 80 Nil 80