Sample Problems on Business Transactions The following is the unadjusted trial balance of P.D. trading on December 31, 2007, the end of the accounting period.
Cash Accounts Receivable Allowance for Bad Debts Notes Receivable Inventory, January 1 Furniture and Equipment Accumulated Depreciation Land Accounts Payable Notes Payable-bank debt in 2 years Mortgage Payable-due in 5 years P.D., Capital Sales Sales Returns and Allowance Purchases Freight In Salaries Rent Expense Insurance Other Operating Expenses Interest Expense Interest Income Total
P
10,000.00 40,000.00 P
400.00
12,000.00 22,000.00 25,000.00 10,000.00 115,000.00 60,000.00 20,000.00 50,000.00 99,000.00 360,000.00 11,000.00 280,000.00 6,200.00 36,000.00 24,000.00 4,800.00 12,000.00 1,800.00 P
600,000.00 P
600.00 600,000.00
Additional information for adjustments:
a. Estimated bad debts are 2 ½% of accounts receivable. b. A note receivable P8,000.00, 60-day 6% is dated Nov. 16, 2007. c. The furniture and equipment were acquired on Jan. 1, 2005 and are estimated to last two years from December 31, 2007. d. The note payable to bank is 15% note dated Sept. 1, 2007. e. Accrued interest on mortgage is P1,500.00. f. Accrued salaries 1,200.00. g. Prepaid rent P8,000.00 h. Unexpired insurance P600.00. i. Prepaid interest expense P300.00. j. Prepaid interest income P100.00. k. Inventory, December 31, 2007, P62,440.00.