Problem 1
The summarized general ledger trial balance of Dapitan Corporation, an investment company,
includes the following accounts at December 31, 2010
Cash
Deposits, at call
Dividends receivable
Interest receivable
Outstanding Settlements receivable
Trading securities
Listed securities(available for sale)
deferred Tax
Outstanding settlements payable
Debit
P
Credit
7,000
112,869
15,693
478
4,900
68,455
1,880,472
655
Interest payable
Interest payable
Other payables
Current tax payable
Provision for employee benefits
Deferred tax
Share Capital
Revaluation Reserve - Investments
Retained Earnings
2,090,522
Note: Provision for employee benefits includes P525 payable within one year
Required: Compute for the following
1 Current assets
209,395
2 Noncurrent assets
1,881,127
3 Current Liabilities
11,383
4 Noncurrent liabilities
56,641
P
10,253
280
83
242
752
56,414
1,368,024
376,090
278,384
2,090,522
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Problem 2
The following balance sheet was prepared by the bookkeeper for Perry Company as of December 31, 2007.
Perry Company
Balance Sheet
as of December 31, 2007
Cash
Accounts receivable (net)
Inventories
Investments
Equipment (net)
Patents
P 80,000
52,200
57,000
76,300
96,000
32,000
P393,500
Accounts payable
Long-term liabilities
Stockholders' equity
P 75,000
100,000
218,500
P393,500
The following additional information is provided:
1. Cash includes the cash surrender value of a life insurance policy P9,400, and a bank overdraft of P2,500 has
been deducted.
2.
The net accounts receivable balance includes:
(a) accounts receivable—debit balances P60,000;
(b) accounts receivable—credit balances P4,000;
(c) allowance for doubtful accounts P3,800.
3. Inventories do not include goods costing P3,000 shipped out on consignment. Receivables of P3,000 were
recorded on these goods.
4. Investments include investments in common stock, trading P19,000 and available-for-sale P48,300, and
franchises P9,000.
5. Equipment costing P5,000 with accumulated depreciation P4,000 is no longer used and is held for sale.
Accumulated depreciation on the other equipment is P40,000.
Required: Compute for
a. Total current assets
b. Total assets
c. Total current liabilities
d. Total liabilities
e. Stockholders' equity
206,300
P400,000
81,500
181,500
218,500
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Problem 3
The following data pertain to Ramirez Company on December 31, 2011
Cash, incuding sinking fund of P500,000 with trustee
Notes receivable(including P200,000 pledged
P 2,000,000
and P700,000 discounted
1,200,000
Accounts receivable - unassigned
Accounts receivable assigned
3,000,000
Notes receivable discounted
Equity of assignee in accounts receivable
assigned
Inventory, including P600,000 cost of goods in transit
purchased FOB destination. The
goods
were received January 3,
2012
700,000
Allowancefor doubtful accounts
100,000
800,000
500,000
2,800,000
What total amounts of current assets should be reported in the statement of financial position on December
31, 2011?
P7,900,000
Problem 4
Neuver Company has manufactured a machine specifically to the design of its customers. Any other party could
not use the machine. Neuver Company has never manufactured this type of machine before and expects a
number of faults to materialize in its operation during its first year of use, which Neuver is contractually bound
to rectify at no further cost to customer. The nature of these faults could be well significant. As of December 31,
2014, the machine had been installed. The customer invoice was P500,000 and the cost incurred up to the point
of installation was P325,000. What amount of revenue from sales should Neuver Company recognize in
December 31,2014?
Answer: None/0
Problem 5
Meyer Corp. reports operating expenses in two categories: (1) selling and (2) general and administrative. The
adjusted trial balance at December 31, 2007, included the following expense accounts:
Accounting and legal fees
Advertising
Freight-out
Interest
Loss on sale of long-term investments
Officers' salaries
Rent for office space
Sales salaries and commissions
P140,000
120,000
75,000
60,000
30,000
180,000
180,000
110,000
One-half of the rented premises is occupied by the sales department.
a. How much of the expenses listed above should be included in Meyer's selling expenses for 2007?
b. How much of the expenses listed above should be included in Meyer's general and administrative
expenses for 2007?
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Answer:
a.
b
P120,000 + P75,000 + P110,000 + P90,000 = P395,000.
P140,000 + P180,000 + P90,000 = P410,000
Problem 6
Presented below is an income statement for Morton Company for the year ended December 31, 2007.
Morton Company
Income Statement
For the Year Ended December 31, 2007
Net sales
Costs and expenses:
Cost of goods sold
Selling, general, and administrative expenses
Other, net
Total costs and expenses
Income before income taxes
Income taxes
Net income
P800,000
640,000
70,000
20,000
730,000
70,000
21,000
P 49,000
Additional information:
1. "Selling, general, and administrative expenses" included a usual but infrequent charge of P7,000 due to a
loss on the sale of investments.
2. "Other, net" consisted of interest expense, P10,000, and an extraordinary loss of P10,000 before taxes due to
earthquake damage. If the extraordinary loss had not occurred, income taxes for 2007 would have been
P24,000 instead of P21,000.
4. Morton had 20,000 shares of common stock outstanding during 2007.
Net income of Morton Company is:
Answer: Net income P 49,000
Problem 7
Perry Corp. reports operating expenses in two categories: (1) selling and (2) general and administrative. The
adjusted trial balance at December 31, 2011, included the following expense accounts:
Accounting and legal fees
Advertising
Freight-out
Interest
Loss on sale of long-term investments
Officers' salaries
Rent for office space
Sales salaries and commissions
P140,000
120,000
75,000
60,000
30,000
180,000
180,000
110,000
One-half of the rented premises is occupied by the sales department.
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How much of the expenses listed above should be included in Perry's selling expenses for 2011?
P120,000 + P75,000 + P110,000 + P90,000 = P395,000.
Problem 8
127.
Perry Corp. reports operating expenses in two categories: (1) selling and (2) general and administrative.
The adjusted trial balance at December 31, 2011, included the following expense accounts:
Accounting and legal fees
Advertising
Freight-out
Interest
Loss on sale of long-term investments
Officers' salaries
Rent for office space
Sales salaries and commissions
P140,000
120,000
75,000
60,000
30,000
180,000
180,000
110,000
One-half of the rented premises is occupied by the sales department.
How much of the expenses listed above should be included in Perry's general and administrative
expenses for 2011?
P140,000 + P180,000 + P90,000 = P410,000.
Problem 9
The following changes in Vel Corp.’s account balances occurred during 2010:
Increase
Assets
P89,000
Liabilities
27,000
Capital stock
60,000
Additional paid-in capital
6,000
Except for a P13,000 dividend payment and the year’s earnings, there were no changes in retained earnings for
2010. What was Vel’s net income for 2010?
Answer: P 9,000
Problem 10
Logan Corp.'s trial balance of income statement accounts for the year ended December 31, 2011 included the
following:
Debit
Sales
Cost of sales
P 50,000
Administrative expenses
25,000
Loss on sale of equipment
9,000
Commissions to salespersons
8,000
Interest revenue
Freight-out
3,000
Loss on disposition of wholesale division
12,000
Bad debt expense
3,000
Totals
P110,000
Other information:
Logan's income tax rate is 30%. Finished goods inventory:
January 1, 2011
Credit
P140,000
5,000
P145,000
P80,000
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December 31, 2011
70,000
On Logan's income statement for 2011, cost of goods manufactured is
Answer: P50,000 + P70,000 – P80,000 = P40,000.
Problem 11
Ortiz Co. had the following account balances:
Sales
Cost of goods sold
Salary expense
Depreciation expense
Dividend revenue
Utilities expense
Rental revenue
Interest expense
Sales returns
Advertising expense
P 120,000
60,000
10,000
20,000
4,000
8,000
20,000
12,000
11,000
13,000
What amount would Ortiz report as income from operations in its income statement?
Answer: P34,000 - P8,000 + P20,000 - P11,000 - P13,000 = P22,000.
Problem 12
The financial records of Ronalyn Company were destroyed by fire at the end of the current
year. However, certain statistical data related to the income statement are available.
Interest expense
20,000
cost of goods sold
2,000,000
sales discount
100,000
the beginning inventory was P400,000 and decreased 20% during the year. Administrative
expenses are 25% of cost of goods sold but only 10% of gross sales. 4/5 of the operating
rxpenses relate to sale acctivities.
ignoring income tax, what is the net income for the current year?
P380,000
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