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Course of your examinations wizard company trial

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course of your examinations:Wizard CompanyTRIAL BALANCEDecember 31, 2016DebitsCreditsCashP448,000Accounts receivable, 12/31/15283,500Inventory, 12/31/151,085,000Furniture & Fixtures2,068,500Leasehold improvements787,500Accumulated depreciation, 12/31/15P567,000Accounts payable297,500Wizard, DrawingsWizard, Capital, 12/31/152,180,500Sales11,427,500Purchases5,339,250Salaries expense3,045,000Taxes and licenses217,000Insurance expense152,250Rent expense598,500Utilities expense220,500Living expenses227,500TotalP 14,472,500P 14,472,500Additional information:
1. At December 31, 2016, amounts due from customers totaled P415,000.2. Based on the analysis of the above receivables, P20,750 may prove uncollectible.3. Unpaid invoices for the plant purchases totaled P533,750 and P297,500 at December 31,2016 and December 31, 2015 respectively.4. The inventory totaled P1,274,000 based on a physical count of the goods at December31, 2016. The inventory was priced at cost, which approximates market value.5. On May 1. 2016, Wizard paid P152,250 to renew its comprehensive insurance coveragefor one year. The premium on the previous policy, which expired on April 30, 2016, wasP136,500.6. On January 2, 2016, Wizard entered into a twenty-year operating lease for the vacantlot adjacent Wizard’s retail store used as a parking lot. As agreed in the lease, Wizardpaved and fenced in the lot at a cost of P787,500. The improvements were completed onApril 1, 2016, and estimated to have a useful life of fifteen years. No provision fordepreciation has been recorded. Depreciation on furniture and fixtures was P210,000 for2016.7. Accrued expenses at December 31, 2016 and 2015 were as follows:20162015Taxes and licensesP33,750P20,250Utilities36,00024,750TotalP69,750P45,0008. Wizard is being sued for P4,000,000. The coverage under the comprehensive insurancepolicy is limited to P2,500,000. Wizard’s attorney believes that an unfavorable outcome
is probable and that a reasonable estimate of the settlement is P3,000,000.9. The salaries account includes P40,000 per month paid to the proprietor. Wizard alsoreceives P4,375 per week for living expenses.Determine the balances of the following under the accrual basis of accounting.Doubtful Account Expense - Dec. 31, 2016 -(20,750)Question 121.5 / 1.5 pointsWizard Company, a calendar-year sole proprietorship, maintained its books on the cashbasis during the yearWizard is in the process of negotiating a bank loan to finance the planned expansion of itsbusiness. The bank is requesting 2016 financial statements prepared on the accrual basis ofaccounting from Wizard. As Wizard’s accountant, you were called upon to assist inpreparing the financial statements. The following information were obtained during thecourse of your examinations:Wizard CompanyTRIAL BALANCEDecember 31, 2016DebitsCreditsCashP448,000Accounts receivable, 12/31/15283,500Inventory, 12/31/151,085,000Furniture & Fixtures2,068,500Leasehold improvements787,500Accumulated depreciation, 12/31/15P567,000
Accounts payable297,500Wizard, DrawingsWizard, Capital, 12/31/152,180,500Sales11,427,500Purchases5,339,250Salaries expense3,045,000Taxes and licenses217,000Insurance expense152,250Rent expense598,500Utilities expense220,500Living expenses227,500TotalP 14,472,500P 14,472,500Additional information:1. At December 31, 2016, amounts due from customers totaled P415,000.

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Term
Fall
Professor
Jane Smith
Tags
Balance Sheet, Generally Accepted Accounting Principles

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