In: Finance
XYZcom is a startup that builds high end BBQs for the consumer market. They commence operations (rather conveniently) on the first of July.
On the first of July they buy the equipment they need to produce their range of BBQs. The equipment they purchase is:
BBQ stamping machine for $220,000
BBQ Seam welder for $25,000
The effective life of the equipment is 10 years.
1) Create a table or other tool you can use as an asset register. Calculate the depreciation (diminishing value method) for the first year and include it in your asset register.
This equipment can be entered in the asset register using the ID numbers PR001 and PR002.
2)XYZcom pays $4,800 for 12 months insurance in July. Rather than recording the whole amount against July’s expenses, it wishes to show the expense equally across the periods for which it paid the premium. In other words, rather than showing a $4,800 expense for July it wishes to use prepayments to show a $400 expense in all months.Show the general journal transactions for July. The general journal transaction number is GL7, the insurance account is 6010, and the prepaid insurance 1945. The transaction is processed on the 31st July.
3) One of XYZcom’s account customers, JZ House and Garden, has gone broke, owing XYZcom $5,700. Prepare a worksheet showing the appropriate journal or ledger entries to write off the debt. Use the docket number JZ345, move the debt into bad debts in April and finalise the transactions on the 31st July. Before the write off, profit is 275,300.00. At the time of write off, theirs is the only receivable and afterwards the only bad debt.
4) XYZcom, being a startup, had a zero beginning inventory. They spent $425,000 on inventory items, receiving $12,000 for prompt payment and paying $10,000 for freight. Their closing inventory is $84,000. Determine the cost of goods sold and the closing entries for a periodic inventory.
5) Prepare a trial balance, an income statement and a balance
sheet using your calculations.
You will need the following information:
Sales were $1,181,200.00
Administrative and sales expenses $225,000.00
Interest on debt is $97,000.00
At the end of the period, XYZcom has the following account
balances:
Cash 550,000
Accounts receivable 117,000
Inventory 84,000
Prepaid expenses 4,800
Equipment 196,000
Depreciation 49,000
Accounts payable 125,000
Loans payable 361,300
Net Profit 465,500
I just need assistance with part 5. I need help with the trial balance, income statement and balance sheet.
PARTICULARS | DEBIT | CREDIT |
Cash | 5,50,000 | |
Accounts receivable | 1,17,000 | |
Inventory | 84,000 | |
Prepaid expenses | 4,800 | |
Equipment | 1,96,000 | |
Depreciation | 49,000 | |
Accounts payable | 1,25,000 | |
Loans payable | 3,61,300 | |
Sales | 11,81,200 | |
Administrative and sales expenses | 225,000 | |
Interest on debt | 97,000 | |
Miscellaneous expenses | 3,44,700 | |
TOTAL | 16,67,500 | 16,67,500 |
Revenue Account
sales | 11,81,200 | |
less Administrative and sales expenses | (2,25,000) | |
Interest on debt | (97,000) | |
depreciation | (49,000) | |
miscellaneous expenses (BALANCING FIGURE) | 3,44,700 | |
Net profit | 4,65,500 |
note since net profit and traces of expenses of income statement are already given we assume that some portion of expenses have not been mentioned in the question. The same has been calculated for balancing figure and has been calculated under the category of miscellaneous expenses.
BALANCE SHEET
PARTICULAR | NOTE NO | AMOUNT |
NON CURRENT ASSETS | ||
Equipment | 1 | 1,96,000 |
CURRENT ASSETS | ||
Cash | 550,000 | |
Accounts receivable | 117,000 | |
Inventory | 84,000 | |
Prepaid expenses | 4,800 | |
TOTAL | 9,51,800 | |
NON CURRENT LIABILITIES | ||
Equity and reserves | 2 | 4,65,500 |
CURRENT LIABILITIES | ||
Accounts payable | 125,000 | |
Loans payable | 361,300 | |
TOTAL | 9,51,800 | |
note no-1
equipment at book value= 196,000
it is therefore clear that the equipment is inclusive of the treatment for depreciation.
note no 2
amount in reserves Net Profit 465,500
less- depreciation 49,000
= 4,16,500