Workings in regards to adjustment for module 3 are computed as follows:
Cost of goods sold is computed as (opening stock +purchases-closing stock)
So the necessary adjustment in this regard will be computed as follows:
The adjusted cost of sales = (307,000-42,500) =$264,500
Module 4 workings is computed as follows,
New cash level= (16,700+150,000-15,000-40,000) =$111,700
Land purchase=$400,000
Notes payable= (400,000-40,000) =$360,000
Other computations from the trial balance can be categorized as follows:
Liabilities & Assets &
Accounts payable 78,000
Accounts receivable 36,500
New adjusted cash level 111,700
Common stock 10,000
Equipment 415,000
Inventory 42,500
Long term debt 127,000
Paid in capital 50,000
Notes Payable 360,000
The second category is as follows Income ($) Expenditures ($)
Depreciation 24,350
Insurance 1,400
Rent 28,000
Property taxes 16,900
Salaries 78,500
Utilities 6,700
Revenues 586,000
Cost of sales 262,000
Marketing 4,500
EARNINGS IS COMPUTED AS :( REVENUE-COST OF SALES-EXPENSES)
REVENUE= (586,000-42,500) = 543,500
Earnings= (543,500-264,500-160,350) = 118,650
BALANCE SHEET FOR THE COMPANY FOR THE YEAR ENDED 31 DECEMBER 2012
ASSETS LIABLITIES AND EQUITIES
LONGTERM ASSETS $ LONGTERM LIABILITIES $
LAND 400,000 LONG TERM DEBTS 127,000
EQUIPMENT 415,000 TOTALS 127,000
TOTALS 815,000 CURRENT LIABILITIES
CURRENT ASSETS NOTES PAYABLE 360,000
CASH 111,700 ACCOUNTS PAYABLE 78,000
INVENTORY 42,500 TOTALS 438,000
ACCOUNTS RECEIVABLE 36,500 TOTAL LIABILITIES
TOTALS 190,700 EQUITIES
TOTALS ASSETS 1,005,700 COMMON STOCK 10,000
PAID IN CAPITAL 50,000
RETAINED EARNINGS 118,650
NEW STOCK ISSUED 150,000
INITIAL CAPITAL 112,050
TOTALS 440,700
TOTALS OF ASSETS AND EQUITIES 1,005,700
Reference
Ramachandran, N., Ramachandran, N., & Kakani, R. K. (2010). How to read a balance sheet. New Delhi: McGraw Hill Education Private Ltd.
Baltazar, E., & Ernst & Young. (2011). International GAAP 2012: Generally Accepted Accounting Practice under International Financial Reporting Standards. Chichester, West Sussex, U.K: John Wiley & Sons.
