The post-closing trial balance of Triangle Pte Ltd as of 31 December 20 X0 was given follow:
Following was a summary of the company’s transactions for the year 20X1.
- On 1 January, the company paid $144,000 to renew the rent of the office foranother2years.
- On 13 May the company paid $9,000 for a daily radio broadcast of the company product for12 months. The daily broadcast started in the month of June.
- On3December, a customer paid$ 3,500 for the company product to be delivered next month.
- On 29 December, the company received a utility bill of $860 for usage for the month. The bill remained unpaid at year-end. The company paid $3,600 during the year for utilities.
- Totalinventorypurchasesfortheyearwere$54,900.30%of the purchases were on credit. The company adopts the periodic inventory system.
- Total revenue for the year was$415,000.Cash collected was360,000.
- The company collected $43,000 of outstanding amounts from customers during the year.
- The long-term bank loan carries an annual interest of 6%,payableon1September.
- Salaries paid during gt the year were $67,000 and $4,500 remains outstanding.
- The depreciation expense for the Van was $14,000 for the whole year.
- The income tax for the year was $2,350 which will be paid the following year.
- The company paid $33,000 on outstanding amounts to suppliers during the year.
- Dividends of $20,000 were paid to stockholders in December.
- Inventory at year-end was $11,000.
a. Analyse the transaction and record the journal entries/adjusting journal entries for Triangle Pte Ltd for the year 20X1. You must follow the number and sequence given in the question when providing the answers.
b. Illustrate the T-account for cash. (10marks)
c. Prepare the adjusted trial balance of Triangle Pte Ltd as at 31 December 20X1 and demonstrate its uses and limitations.
d. From the trial balance, present:
i.The Income Statement for the year ending 31 December20X1.
ii. The Statement of Financial Position as of 31December20X1.
The financial statements of a company perform several important functions. They reflect the state of affairs of the company and enable users of the statements to make important economic decisions. Despite the abundant information financial statements provide, their usefulness is limited by certain constraints of the reporting process. Explain some of these limitations.