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.
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
Solution # 2 Adjusted Trial Balance
Solution # 3 Three Financial Statements (Informal)
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.
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Aren’t COGS = Opening inventory + New Purchase – Closing inventory?
Why the opening inventory is not included in the income statement?
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