The following information relates to Paris Cosmetics. Ltd. for the year 2017 (1/1/2018).
Cash……………………………………. € 3,500
Short term investments………………... 1,297
Accounts Payable………………………. 4,200
Accounts Receivable…………………… 22,475
Prepaid Insurance………………………. 4,200
Inventory………………………………. 10,325
Intangible Assets………………………. 2,694
Notes Payable….…………………….. 20,000
Wages payable…………………………. 400
Non-current borrowings………………... 1,683
Property Plant and Equipment, net…….. 23,316
Accumulated depreciation……………… 12,423
Share Capital-Ordinary………………… 24,594
Retained Earnings……………………… ?
Earlier in the year, Paris Cosmetics obtained a bank loan of $20,000 cash for the firm (it will be paid off in one year). One of the provisions of the loan is that the year-end debt-to equity ratio (ratio of total liabilities to total equity cannot exceed 0.7. Paris Cosmetics is concerned about being in violation of the loan agreement and requests assistance from its accounting department in reviewing the situation. Management would like to pay a 20% of net income cash dividend to its shareholders at year’s end. Assume the prior year’s retained earnings was €6,000.
Management knows that final adjustments at year-end have not been made. Discussions with the accounting department reveal the following
Adjust the accounts using the beginning balances.
Account |
Assets Adjustments |
Liabilities Adjustments |
Owner’s Equity Adjustments |
Beginning Totals |
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Recognitions of insurance expense |
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Depreciation corrections |
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Interest |
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Unbilled sales of cosmetics and gift certificates |
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Advance on Paris Fashion Week |
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Recognition of supply expense |
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Revised totals |
Adjusted Post-Closing Trial Balance
Accounts |
Dr. |
Cr. |
Total |
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