REVIEW MATERIALS FOR QUIZ 3
PROBLEM 1
For purposes of stating the working capital of Jay Trading on December 31,
2018, the following data are submitted:
Cash on hand and in bank
Petty cash
Notes receivable
Accounts receivable
Merchandise inventory
Prepaid expenses
Accounts payable
Notes payable (due annually at P1,000,000
payable every May 31
Accrued expenses
P
610,000
6,000
500,000
1,200,000
1,300,000
90,000
650,000
2,000,000
80,000
1. How much total current assets should be presented on the
statement of financial position of Jay Trading on December 31,
2018?
Answer: P3,706,000
Cash on hand and in bank
Petty cash
Notes receivable
Accounts receivable
Merchandise inventory
Prepaid expenses
Total Current Assets
P 610,000
6,000
500,000
1,200,000
1,300,000
90,000
P3,706,000
2. How much total current liabilities should Jay Trading present in
its statement of financial position on December 31, 2018?
Accounts payable
Notes payable - current portion
Accrued expenses
Total current Liabilities
P 650,000
1,000,000
80,000
P1,730,000
PROBLEM 2
The accounts below were taken from the unadjusted trial balance of May
Company at December 31, 2018:
Cash
Equity investments at FVPL (at cost)
Notes receivable
Trade accounts receivable
Allowance for uncollectible accounts
Employees income tax withheld
Notes payable
Trade accounts payable
Merchandise inventory
Bonds payable
Share dividends payable
Income tax payable
P137,000
87,000
92,000
129,000
6,000
4,000
150,000
87,000
136,000
250,000
15,000
28,000
An analysis of the above accounts disclosed the following:
a. Merchandise purchased on account worth P10,000 received December
30, 2018 was included in the inventory but was not recorded as a
purchase.
b. A bank loan of P30,000 due on December 31, 2020 was included in the
notes payable balance.
c. Bonds payable that was issued in 2018 will mature in five annual
installments beginning June 1, 2019.
d. The fair value of the equity investments at December 31, 2018 was
P90,000.
3. How much total current assets should be reported in the statement
of financial position at December 31, 2018?
Cash
Equity investments at FVPL (at Fair Value)
Notes receivable
Trade accounts receivable
Allowance for uncollectible accounts
Merchandise inventory
Total Current Assets
P137,000
90,000
92,000
129,000
(6,000)
136,000
P578,000
4. How much total current liabilities should be reported in the
statement of financial position as of December 31, 2018?
Employees income tax withheld
Notes payable (P150,000 - P30,000)
Trade accounts payable (P87,000 + P10,000)
Bonds payable due June 1, 2019
Income tax payable
Total Current Liabilities
P 4,000
120,000
97,000
50,000
28,000
P299,000
PROBLEM 3
following:
Ordinary Share Capital, P5 par
Share Premium
Treasury Shares, at cost
Cumulative Net Unrealized Loss on Equity Investments at FVOCI
Retained Earnings Appropriated for Contingencies
Retained Earnings - Unappropriated
P360,000
480,000
30,000
12,000
90,000
120,000
Question:
5.
What amount should Way
December 31, 2018 Statement of Financial Position?
Ordinary Share Capital, P5 par
Share Premium
Treasury Shares, at cost
Cumulative Net Unrealized Loss on Equity Investments at FVOCI
Retained Earnings Appropriated for Contingencies
Retained Earnings - Unappropriated
P 360,000
480,000
(30,000)
(12,000)
90,000
120,000
P1,008,000
PROBLEM 4
Shown below are selected accounts and their balances for the Zay Company as
of December 31, 2018:
Accounts Payable
Accounts Receivable
Allowance for Bad Debts
Cash
Wages Payable
Trademarks
Long-term Advances to Officers
Inventory
Income Taxes Payable
Notes Receivable - Short term
Bond Redemption Fund
Bonds Payable
Premium on Bonds Payable
Treasury Shares
P 980,000
2,160,000
250,000
224,000
108,000
450,000
1,500,000
830,000
720,000
970,000
1,800,000
5,000,000
400,000
576,000
Questions:
6.
How much were the total current assets at December 31, 2018?
Accounts Receivable
Allowance for Bad Debts
Cash
Inventory
Notes Receivable - Short term
Total Current Assets
7.
P2,160,000
(250,000)
224,000
830,000
970,000
P3,934,000
How much were the total current liabilities at December 31, 2018?
Accounts Payable
Wages Payable
Income Taxes Payable
Total Current Liabilities
P 980,000
108,000
720,000
P1,808,000
PROBLEM 5
balance reflected the following account balances at
December 31, 2018:
Accounts Receivable (net)
Debt Securities at FVPL
Accumulated Depreciation - Equipment
Cash
Merchandise Inventory
Equipment
Prepaid Expenses
Patent
Land held for future business site
total is
Answer:
Accounts Receivable (net)
Debt Securities at FVPL
Cash
Merchandise Inventory
Prepaid Expenses
Total Current Assets
P160,000
50,000
110,000
300,000
10,000
P630,000
P160,000
50,000
150,000
110,000
300,000
250,000
10,000
40,000
180,000
PROBLEM 6
An alphabetical list of account balances from the books of Lay Company on
December 31, 2018 is presented below:
Accounts Payable
Cash Surrender Value of Life Insurance
Ordinary Share Capital, P100 par
Dividends declared
Mortgage Payable (including P200,000 due in six months)
Notes Payable, 10% (due January 1, 2022)
Share Premium - Ordinary
Preference Share Capital, P200 par
Premium on Notes Payable
Profit and Loss Summary, credit balance
Retained Earnings, Jan. 1, 2018
Unearned Rent Income
Questions:
8.
2018?
Mortgage Payable (P1,200,000 - P200,000)
Notes Payable, 10% (due January 1, 2022)
Premium on Notes Payable
Total Non-Current Liabilities
25,000
29,000
1,000,000
250,000
1,200,000
1,500,000
250,000
450,000
25,000
500,000
550,000
33,000
noncurrent liabilities at December 31,
P1,000,000
1,500,000
25,000
P2,525,000
9.
Ordinary Share Capital, P100 par
Share Premium - Ordinary
Preference Share Capital, P200 par
Profit and Loss Summary, credit balance
Retained Earnings, Jan. 1, 2018
Dividends declared
P
P 1,000,000
250,000
450,000
500,000
550,000
(250,000)
P2,500,000
PROBLEM 7
adjusted trial balance:
Wages Payable
Cash
Bonds Payable
Dividends Payable
Prepaid Expenses
Inventory
Long-term Funds
Financial Assets at FVPL
Accumulated Depreciation
Financial Assets at FVOCI
Discount on Bonds Payable
Investment in Associates
Taxes Payable
Accounts Payable
Accounts Receivable
Property, Plant and Equipment
Goodwill
Advances from Affiliated Companies
P 250,000
175,000
600,000
140,000
136,000
820,000
525,000
153,000
400,000
300,000
48,000
1,020,000
228,000
248,000
366,000
1,200,000
450,000
900,000
Questions:
10. Den Company should report total current assets of
Cash
Prepaid Expenses
Inventory
Financial Assets at FVPL
Accounts Receivable
Total Current Assets
P 175,000
136,000
820,000
153,000
366,000
P1,650,000
11. Den Company should report total current liabilities of
Wages Payable
Dividends Payable
Taxes Payable
Accounts Payable
Total Current Liabilities
P250,000
140,000
228,000
248,000
P866,000
12. Den Company should report total non-current assets of
Long-term Funds
Accumulated Depreciation
Financial Assets at FVOCI
Investment in Associates
Property, Plant and Equipment
Goodwill
Total Noncurrent Assets
P 525,000
(400,000)
300,000
1,020,000
1,200,000
450,000
P3,095,000
PROBLEM 8
Four Queens Corporation reports operating expenses in two categories: (1)
Selling and (2) general and administrative. The adjusted trial balance at
December 31, 2019 included the following expense and loss accounts:
Accounting and Legal Fees
Advertising
Freight-out
Interest Expense
Loss on Sale of Equity Investments at FVPL
Rent Expense
Sales salaries and commissions
P120,000
150,000
80,000
70,000
30,000
225,000
220,000
140,000
One-half of the rented premises is occupied by the sales department.
13. Four Queen shall report total selling expenses for 2019 of
Advertising
Freight-out
Rent Expense (P220,000 x ½)
Sales salaries and commissions
Total Selling Expenses
P150,000
80,000
110,000
140,000
P480,000
PROBLEM 9
comprehensive income for the year ended December 31, 2019:
Legal and Audit Fees
Rent Expense
Interest Expense
Loss on Sale of Equipment
P170,000
240,000
210,000
35,000
14. What amount of the above-listed items should be classified as general and
administrative expenses?
Legal and Audit Fees
Rent Expense (P240,000 x ½)
Total General and Administrative Expenses
P170,000
120,000
P290,000
PROBLEM 10
The net sales of Flamingo Manufacturing Company in 2019 is P5,800,000. The
cost of goods manufactured is P4,800,000. The beginning inventories of goods in
process and finished goods are P820,000 and P650,000, respectively. The
ending inventories are: Goods in process - P750,000; Finished goods P550,000. The selling expenses and general and administrative expenses are
5% and 2.5% of cost of sales, respectively.
15.
Net Sales
Cost of Goods Sold
Gross Profit
Selling Expenses (P4,900,000 x 5%)
General and Administrative Expenses (P4,900,000 x 2.5%)
Profit
P 5,800,000
(4,900,000)
P 900,000
(245,000)
(122,500)
P 532,500
Finished Goods Inventory, Beginning
Cost of Goods Manufactured
Finished Goods Inventory, Ending
Cost of Goods Sold
P
650,000
4,800,000
(550,000)
P 4,900,000
PROBLEM 11
December 31, 2019 included the following:
Sales
Cost of sales
Administrative Expenses
Loss on Sale of Equipment
P1,500,000
P600,000
150,000
90,000
100,000
Interest Revenue
Freight-out
Loss on Condemnation of Asset
Bad Debts Expense
Total
50,000
30,000
100,000
30,000
P1,100,000
Other information:
Finished Goods Inventory, Jan. 1
Finished Goods Inventory, Dec. 31
P1,000,000
900,000
16.
Finished Goods Inventory, Dec. 31
Cost of Sales
Finished Goods Inventory, Jan. 1
Cost of Goods Manufactured
P
900,000
600,000
(1,000,000)
P 500,000
17.
Sales
Cost of sales
Administrative Expenses
Loss on Sale of Equipment
Interest Revenue
Freight-out
Loss on Condemnation of Asset
Bad Debts Expense
Profit Before Tax
P1,500,000
(600,000)
(150,000)
(90,000)
(100,000)
50,000
(30,000)
(100,000)
(30,000)
P 450,000
P1,550,000
PROBLEM 12
The adjusted trial balance of Stratosphere Company includes the following
accounts at December 31, 2019:
Sales Revenue
Commission Income
Interest Expense
Inventory, December 31, 2019
Purchases (net of returns)
Sales Commissions
Administrative Salaries
Office Supplies Expense
Dividends declared
Dividend Income
Gain on Sale of Equipment
Rent Expense
Unrealized Gain on Investments at FVPL
Unrealized Gain on Investments at FVOCI
Depreciation Expense - Store Equipment
Depreciation Expense - Office Equipment
Freight-in
Freight-out
P5,000,000
28,000
180,000
520,000
2,800,000
500,000
720,000
110,000
800,000
16,000
100,000
400,000
55,000
88,000
70,000
50,000
80,000
120,000
Additional information:
(1) Merchandise inventory, January 1, 2019, P450,000
(2) Income tax rate is 30%.
(3) Rent expense is allocated 60% to selling and 40% to
administrative .
18. How much was the profit before finance cost and income tax?
Sales Revenue
Commission Income
Dividend Income
Gain on Sale of Equipment
Unrealized Gain on Investments at FVPL
Cost of Goods Sold
Sales Commissions
Administrative Salaries
Office Supplies Expense
Rent Expense
Depreciation Expense - Store Equipment
Depreciation Expense - Office Equipment
Freight-out
Profit Before Finance Cost and Income Tax
P5,000,000
28,000
16,000
100,000
55,000
(2,810,000)
(500,000)
(720,000)
(110,000)
(400,000)
(70,000)
(50,000)
(120,000)
P 419,000
19. If the company classifies expenses by function, how much were the selling
expenses?
Sales Commissions
Rent Expense (P400,000 x 60%)
Depreciation Expense - Store Equipment
Freight-out
Total Selling Expenses
P500,000
240,000
70,000
120,000
P930,000
20. How much cost of goods sold would be presented using the function of
expense method?
Merchandise Inventory, Jan. 1
Purchases (net of returns)
Freight-in
Merchandise Inventory, December 31, 2019
Cost of Goods Sold
P 450,000
2,800,000
80,000
(520,000)
P2,810,000
21. How much is the total comprehensive income?
Profit Before Finance Cost and Income Tax
Interest Expense
Profit Before Income Tax
Provision for income Tax (P239,000 x 30%)
Profit
OCI (Unrealized Gain on Investments at FVOCI net
of tax of 30%) P88,000 x 70%
Total Comprehensive Income
22.
P419,000
(180,000)
P239,000
(71,700)
P167,300
61,600
P228,000