For each of the following questions:

1. Prepare the necessary journal entries for the year-ended 31 December 2018.
2. Prepare the Income Statement (Statement of Profit or Loss and Other Comprehensive Income), classifying expenses by function, for the year ended 31 December 2018.
3. Prepare the Statement of Changes in Equity for the year ended 31 December 2018.
4. Prepare the Balance Sheet (Statement of Financial Position) as of 31 December 2018.

The following account balances are taken from the General Ledger of P&G Co. on 31 December 2018, the end of its fiscal year.

	$
Accounts Payable	47,300
Accounts Receivable	91,000
Accumulated depreciation – furniture and fittings	21,300
Accumulated depreciations – plant and equipment	46,780
Allowance for Bad Debts (credit balance)	1,800
Cash	34,400
Furniture and fixtures	65,500
Inventories	84,000
Loans Payable	120,000
Plant and equipment	227,500
Share Capital, no par	100,000
Retained earnings, 31 December 2017	108,020
Dividends – interim	9,000
Sales	409,000
Sales Returns & Discounts	20,430
Purchases	184,000
Purchases Discounts	6,780
Selling Expenses	48,650
Administrative Expenses	39,900
Other operating Expenses	17,000
Office Rent Expenses	36,000
Interest Expense	3,600

Additional information:

1. The Administrative expenses incorrectly include $12,000 for office furniture purchases. The purchases were made on 1 May 2018.
2. Depreciation of 10% (to the nearest month for additions during the year).
3. Inventories based on a physical count on 31 December 2018 were determined to be $60,000.
4. Tax payable is estimated at $4,000.
5. The loans were obtained on 1 May 2018 and are repayable in four equal annual installments with the first payment due on 1 May 2019. The interest charged is 6% per annum payable on a semi-annual basis.
6. The board of directors proposed final dividends of $9,000 for the year ended 31 December 2018.

Answer rating: 100% (QA)

Journal Entries 1 Office Furniture Purchases Debit Furniture and Fixtures 12000 Credit Accounts Paya... View the full answer