1. **Problem Statement:** Prepare the statement of financial position (account form) of Entity A as of December 31, 20x1 using the trial balance provided. 2. **Formula and Rules:** The statement of financial position (balance sheet) follows the accounting equation: $$\text{Assets} = \text{Liabilities} + \text{Owner's Equity}$$ Assets are classified as current and non-current. Liabilities are classified as current and non-current. Owner's equity includes capital. 3. **Classify and Calculate Assets:** - Cash and cash equivalents = Cash on hand + Cash in bank = 60,000 + 1,860,000 = 1,920,000 - Trade and other receivables = Accounts receivable - Allowance for doubtful accounts + Advances to employees + Advances to suppliers = 20,000,000 - 300,000 + 40,000 + 30,000 = 19,770,000 - Inventories = 1,200,000 - Prepaid supplies = 800,000 - Property, plant and equipment (PPE) = Land + Equipment - Accumulated depreciation = 2,200,000 + 3,400,000 - 2,000,000 = 3,600,000 4. **Classify Liabilities:** - Current liabilities: Accounts payable + Salaries payable + Unearned income + Interest payable = 720,000 + 70,000 + 500,000 + 340,000 = 1,630,000 - Non-current liabilities: Notes payable (due in 20x3) = 3,000,000 5. **Owner's Equity:** - Owner's Capital = 4,660,000 6. **Prepare Statement of Financial Position (Account Form):** | Assets | Amount | Liabilities and Owner's Equity | Amount | |-------------------------------|------------|-------------------------------|------------| | Cash and cash equivalents | 1,920,000 | Current liabilities | 1,630,000 | | Trade and other receivables | 19,770,000 | Non-current liabilities | 3,000,000 | | Inventories | 1,200,000 | Owner's equity | 4,660,000 | | Prepaid supplies | 800,000 | | | | Property, plant and equipment | 3,600,000 | | | | **Total Assets** | **27,290,000** | **Total Liabilities and Equity** | **9,290,000 + 4,660,000 = 13,580,000** | Note: The totals do not balance because the accounts receivable figure in the problem is likely a typo (20,000,000 instead of 2,000,000). Using 2,000,000 instead: Recalculate trade and other receivables: $$2,000,000 - 300,000 + 40,000 + 30,000 = 1,770,000$$ Recalculate total assets: $$1,920,000 + 1,770,000 + 1,200,000 + 800,000 + 3,600,000 = 9,290,000$$ Recalculate total liabilities and equity: $$1,630,000 + 3,000,000 + 4,660,000 = 9,290,000$$ Totals now balance. 7. **Partial Notes:** **Note 1: Cash and Cash Equivalents** - Cash on hand: 60,000 - Cash in bank: 1,860,000 - Total: 1,920,000 **Note 2: Trade and Other Receivables** - Accounts receivable: 2,000,000 - Less: Allowance for doubtful accounts: (300,000) - Advances to employees: 40,000 - Advances to suppliers: 30,000 - Total: 1,770,000 **Note 3: Property, Plant and Equipment** - Land: 2,200,000 - Equipment: 3,400,000 - Less: Accumulated depreciation: (2,000,000) - Total: 3,600,000 **Note 4: Trade and Other Payables** - Accounts payable: 720,000 - Salaries payable: 70,000 - Unearned income: 500,000 - Interest payable: 340,000 - Total: 1,630,000 **Final Answer:** The statement of financial position balances with total assets and total liabilities plus owner's equity both equal to 9,290,000.