A sample problem with solution

MAIN PROBLEM
The following are the summarized transactions of XYZ Trading for the year 20CY, its second year of
operations:
Cash sales Php 750,000.00
Sales on account 4,500.000.00
Sales from customers 4,300,000.00
Sales returns & discounts 80,000.00
Cash purchases 450,000.00
Purchase on account 3,000,000.00
Payment to creditors 2,700,000.00
Rental collections 140,000.00
Purchase returns and discounts 60,000.00
Salaries and wages paid 1,050,000.00
Store and office supplies used 300,000.00
Other operating expenses paid 100,000.00
Interest received 60,000.00
Equipment purchased 600,000.00
Interest paid 50,000.00
Accounts receivable written off 10,000.00

Equipment was acquired at the beginning of its first year with a 10-year useful life.

Additional information at December 31,20CY:

(12/31 PY) (12/31 CY)
Notes & Accounts Receivable 210,000.00 320,000.00
Unused Store & Office Supplies 75,000.00
Accrued Interest Receivable 15,000.00
Inventory 500,000.00 600,000.00
Unearned Interest Rent Income 20,000.00
Accrued Salaries Payable 110,000.00
Notes and Accounts Payable 300,000.00 540,000.00

, Compute the net purchases based under cash basis of accounting * 3/3



3,150,000.00

3,000,000.00

3,370,000.00

3,450,000.00




Compute the interest expense under cash basis of accounting * 3/3



70,000.00

60,000.00

50,000,00

80,000.00