The following adjusted balances were taken from the ledgerof EBC Trading on Dece

ID: 2406246 • Letter: T

Question

The following adjusted balances were taken from the ledgerof EBC Trading on December 31, 2016 . Here are the entries, Cash 350,000. Accounts Receivable 33,950. Interest receivable 1,500. Merchandise , January 1 50,000. Supplies 2,650. Prepaid rent 40,000. Equipment 75,000. Accumulated Depreciation 25,000.Accounts Payable 15,000. Notes Payable 10,000. Interest Payable 1,000. E. Capital 50,000. E. Drawing 10,000. B Capital 75,000. B Drawing15,000. C Capital 100,000. Sales 980,650. Sales Discount 5,500. Sales Returns 3,500. Purchases 455,000. Purchase Returns 7,500.Purchase Discount 3,300. Sales Salary Expense 97,000. Supplies Expenses 16,600. Rent Expense 80,000.Utilities Expenses 24,000. Insurance Expenses 8,250. Interest Expense 1,000. Interest Income 1,500. Total 1,268,950. A.) Prepare the Income Statement in good form. B.)Prepare Statement of Partners Capital: E (20%) B (30%) C (50%). C) Prepare Statement of Financial Position. D) Statement of Liquidation effecting the partners share profit and losses of 2:3:5. Note, Group all the NON Cash assets and label NON CASH ASSETS.E.) Prepare a statement of liquidation effecting all the non cash assets sold for 100,000, except the interest receivable and the prepaid rent which will be written of, write a General Journal.

Explanation / Answer

Solution (a)

The Income statement of EBC trading for the year ended December 31, 2016

The Particulars

Amount

Total revenue

(1) The Income from operations

a. The Gross sales

980,650

b. Sales discount

5,500

c. Sales returns

3,500

Net sales (A - b - c)

971,650

(2) Income from other than operations

1,500

Total revenue (1 + 2)

973,150

Less: Cost of goods sold

a. Purchases

455,000

b. Purchases returns

7,500

c. Purchase discounts

3,300

Cost of goods sold (a - b - c)

(444,200)

Gross profit = (1 - 2)

528,950

Less: Operting , selling and Administrative expenses

Sales Salary Expenses

97,100

Supplies Expense

16,600

Rent expense

80,000

Utilities expense

24,000

Insurance expense

8,250

interest expense

1,000

Total Expenses

(226,950)

Net profit/(loss) (Gross profit - Total expenses)

302,000