Financial Statement Problems and Solutions

 

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Problem # 1:

Prepare Adjustment Entries, Adjusted Trial Balance and three Informal Financial Statements excluding cash flow statement.

 

financial statements problems and solution

 

Adjustments

  • Inventory on 31st, December 2015 was valued at Rs. 68,000.
  • Depreciation Machinery by 10 % and Amortization of Patents by 20 %.
  • Unexpired Insurance at the end financial year was Rs. 2,000.
  • Wages includes Rs. 7,000 paid as advance to employees (Prepaid Wages Debit).

Solution # 1 Adjustment Entries

adjusting entries

 

Solution # 2 Adjusted Trial Balance

 

adjusted trial balance


Solution # 3 Three Financial Statements (Informal)   

 

 

 

statement of owner equity

 

income statement

 

balance sheet

 

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References

Ramchandran, N., & Kakani, R. K. (2007). Financial Accounting for Management. (2nd, Ed.) New Delhi: Tata McGraw Hill.

Sehgal, A., & Sehgal, D. (n.d.). Advanced Accountancy (Vol. I & II). New Delhi: Taxmann Publication Pvt. Ltd.

Shukla, M. C., Grewal, T. S., & Gupta, S. C. (2008). Advanced Accountancy (Vol. I & II). New Delhi: S Chand & Co.

Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2012). Accounting Principles (10th ed.). Hoboken: John Wiley & Sons, Inc.

Williams, M., & Bettner, H. (1999). Accounting (The basic for business decisions). (11th, Ed.) USA: Irwin McGraw- Hill.

 

2 Comments

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  2. Yaurun

    Aren’t COGS = Opening inventory + New Purchase – Closing inventory?
    Why the opening inventory is not included in the income statement?