Eastern Ltd., which has just started trading on I January 2021, has the following account balances...

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Eastern Ltd., which has just started trading on I January 2021, has the following account balances prior to the recording of the final month of the year: Account Balances as at 30 November 2021 Account Cash Accounts receivable Stock of Supplies Property, Plant & Equipment (cost) Accounts payable Bank Loan Contributed capital (26 200 shares) Sales revenue Operating expenses (excluding depreciation) Other operating income Cost of goods sold $3 700 $6 300 $8 000 6. Paid rent of $1,200. 7. Paid annual interest expense. 8. Bank loan repayment of $3,000. $50 000 $13 800 $25 000 $26 200 $85 000 $43 000 $9 000 $48 000 In December 2021, the following transactions took place: 1. Credit purchases of goods $34,000. 2. Received payment from debtors $5,000. 3. Credit sales $58,000 (cost of goods sold $30,000). 4. Paid wages of $3,000. 5. At the end of December, sold off an equipment that has costed $25,000 at the price of $22,000. The yearly depreciation expense of this equipment was $5,000. Additional information as below: 1. Operating expenses above include rent and wages but exclude depreciation. The interest rate of the bank loan of $25,000 is 10% per annum. The bank loan was acquired on I January 2021. Monthly rental expense is $800. 2. Annual depreciation expense for the property, plant & equipment before the disposal of the equipment at transaction 4 was $12,000. Required: 1. Record the Account balances prior to adjustments in the workbook. Then, calculate and record the Adjustments in the workbook, total and balance the workbook. Indicate the transaction and additional information number accordingly in the workbook. [3 marks) 2. Prepare a properly formatted Balance Sheet as at 31 December 2021 and Income Statement for the year ended 31 December 2021. (2 marks] Eastern Ltd., which has just started trading on I January 2021, has the following account balances prior to the recording of the final month of the year: Account Balances as at 30 November 2021 Account Cash Accounts receivable Stock of Supplies Property, Plant & Equipment (cost) Accounts payable Bank Loan Contributed capital (26 200 shares) Sales revenue Operating expenses (excluding depreciation) Other operating income Cost of goods sold $3 700 $6 300 $8 000 6. Paid rent of $1,200. 7. Paid annual interest expense. 8. Bank loan repayment of $3,000. $50 000 $13 800 $25 000 $26 200 $85 000 $43 000 $9 000 $48 000 In December 2021, the following transactions took place: 1. Credit purchases of goods $34,000. 2. Received payment from debtors $5,000. 3. Credit sales $58,000 (cost of goods sold $30,000). 4. Paid wages of $3,000. 5. At the end of December, sold off an equipment that has costed $25,000 at the price of $22,000. The yearly depreciation expense of this equipment was $5,000. Additional information as below: 1. Operating expenses above include rent and wages but exclude depreciation. The interest rate of the bank loan of $25,000 is 10% per annum. The bank loan was acquired on I January 2021. Monthly rental expense is $800. 2. Annual depreciation expense for the property, plant & equipment before the disposal of the equipment at transaction 4 was $12,000. Required: 1. Record the Account balances prior to adjustments in the workbook. Then, calculate and record the Adjustments in the workbook, total and balance the workbook. Indicate the transaction and additional information number accordingly in the workbook. [3 marks) 2. Prepare a properly formatted Balance Sheet as at 31 December 2021 and Income Statement for the year ended 31 December 2021. (2 marks]

Answer rating: 100% (QA)

Calculations for the Balance Sheet as at 30 November 2021 Assets Cash Cash 3700 from the initial account balances Accounts Receivable Accounts Receivable 6300 from the initial account balances Stock o... View the full answer