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



  • 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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  2. Yaurun

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


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