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Ia vol 3 valix 2019-solman
Accountancy (Far Eastern University)
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FRANZ KYLLE POCSON
UPV BSA
Problem 1-1 Problem 1-2 Problem 1-3 Problem 1-4 Problem 1-5 Problem 1-6 Problem 1-7
1D
2A
3A
4D
5B
1D
2D
3D
4D
5A
1D
2C
3B
4B
5B
6 A
7 D
8 A
9 D
10 B
1C
2A
3B
4D
1A
2D
3A
4C
5C
1C
2C
3C
4C
5D
1B
2B
3C
4B
5C
Problem 2-1
Dillema Company
Statement of Financial Position
December 31, 2019
ASSETS
Current Assets
Cash
Account Receivable—net
Prepaid Expenses
Inventory
Financial Assets over Fair Value
Total Current Assets
Notes
P
800,000
700,000
160,000
1,000,000
440,000
P
Noncurrent Assets
Property, Plant, and Equipment
Intangible Asset
Total Noncurrent Assets
(1)
(2)
3,100,000
6,700,000
200,000
6,900,000
Total assets
P
10,000,000
LIABILITIES AND SHARESHOLDER’S EQUITY
Current Liabilities
Trade Payables
Total Current Liabilities
(3)
1,200,000
1,200,000
Noncurrent Liabilities
Notes Payable
Bonds Payable—net
Total Noncurrent Liabilities
250,000
1,800,000
2,050,000
Equity
Share Capital
Reserves
Retained Earnings
Treasury Shares
Shareholder’s Equity
(4)
(5)
3,000,000
250,000
3,750,000
(250,000)
6,750,000
Total Liabilities and Shareholder’s Equity
Notes
1 Building
Equipment
Land
5,000,000
1,500,000
500,000
P
Accumulated Depreciation
Property, Plant and Equipment
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10,000,000
(300,000)
6,700,000
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FRANZ KYLLE POCSON
UPV BSA
2 Patent
Intangible Asset
200,000
200,000
3 Accounts Payable
Accrued Expenses
Lawsuit Liability
Trade and other Payables
900,000
200,000
100,000
1,200,000
4 Appropriated for Treasury Shares
250,000
5 Retained Earnings
Canceled appropriation
Treasury Appropriation
Loss on Lawsuit
Accrued Interest
TOTAL
4,000,000
150,000
(250,000)
(100,000)
(50,000)
3,750,000
Retained Earnings
400,000
Interest Payable
50,000
Lawsuit Liability
100,000
Retained Earnings – Appropriated 250,000
Problem 2-2
Socorro Company
Statement of Financial Position
December 31, 2019
ASSETS
Current Assets
Cash and Cash Equivalents
Account Receivable—net
Store Supplies
Inventory
Restricted Cash
Total Current Assets
Noncurrent Assets
Property, Plant and Equipment
Long-term Investments
Intangible Assets
Advances to officers
Total Noncurrent Assets
Notes
(1)
P
(2)
700,000
700,000
50,000
600,000
300,000
P
(3)
(4)
(5)
2,350,000
4,150,000
1,500,000
550,000
150,000
6,350,000
Total assets
P
8,700,000
LIABILITIES AND SHARESHOLDER’S EQUITY
Current Liabilities
Trade Payables
Current Portion of Long-term debt
Total Current Liabilities
(6)
850,000
Noncurrent Liabilities
Serial Bonds Payable
Unearned Income
Total Noncurrent Liabilities
Equity
Share Capital
Reserves
Retained Earnings
Treasury Shares
Shareholder’s Equity
750,000
100,000
400,000
350,000
750,000
(7)
(8)
(9)
5,150,000
1,050,000
1,200,000
(300,000)
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7,100,000
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UPV BSA
Total Liabilities and Shareholder’s Equity
P
Notes
1 Cash
Money Market
Total Cash and Cash Equivalents
500,000
200,000
700,000
2 Accounts Receivable
Allowance for Doubtful accounts
Total Cash and Cash Equivalents
750,000
50,000
700,000
4 Cash
Money Market
Total Cash and Cash Equivalents
500,000
200,000
700,000
5 Patent
Trademark
Intangible Assets
250,000
300,000
550,000
6 Accounts Payable
Income Tax Payable
Notes Payable
Trade Payables
500,000
150,000
100,000
750,000
8,700,000
3 Building
Equipment
Land
Accumulated Depreciation
Property, Plant and Equipment
3, 500,000
1,000,000
400,000
(750,000)
4,150,000
7 Share Capital, beg
Stock Dividend
Share Capital, end
5,000,000
150,000
5,150,000
8 Share Premium
Retained Earnings for Plant exp
Retained Earnings for Treasury
Reserves
250,000
500,000
300,000
1,050,000
9 Retained Earnings, beg
Appropriation for Treasury
Retained Earnings, end
1,500,000
300,000
1,200,000
Problem 2-3
Magna Company
Statement of Financial Position
December 31, 2019
ASSETS
Current Assets
Cash
Accounts Receivable, net
Inventories
Prepaid Expenses
Short Term Investment
Total Current Assets
Noncurrent Assets
PPE
Long Term Investments
Intangible Assets
Total Noncurrent Assets
Notes
P
(1)
400,000
700,000
800,000
100,000
100,000
P
(2)
(3)
(4)
5,650,000
1,800,000
300,000
7,750,000
Total assets
P
LIABILITIES AND SHAREHOLDER’S EQUITY
Current Liabilities
Trade Payables
(5)
Total Current Liabilities
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2,100,000
9,850,000
1,000,000
1,000,000
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FRANZ KYLLE POCSON
UPV BSA
Noncurrent Liabilities
Notes Payable
Bonds Payable, net (2,000,000 – 100,000)
Total Noncurrent Liabilities
300,000
1,900,000
2,200,000
Equity
Preference share, no par, P5 stated value,
authorized 300,000 shares, issued 150,000 shares
Ordinary share, P20 par value, authorized 400,000
Shares, issued 100,000 shares
750,000
Reserves
Retained Earnings
Total Shareholder’s Equity
Total Liabilities and Shareholder’s Equity
Notes:
1 Accounts Receivable
Allowance for Doubtful accounts
Total Cash and Cash Equivalents
2 Building
Equipment
Land
Accumulated Depreciation
Property, Plant and Equipment
3 Investment Property
Investment in Securities
Cash surrender value
Total Cash and Cash Equivalents
(6)
2,000,000
1,450,000
2,450,000
P
750,000
50,000
700,000
4 Franchise
Goodwill
Intangible Assets
6,650,000
9,850,000
100,000
200,000
300,000
5,000,000 5 Accounts Payable
1,400,000
Income Tax Payable
1,250,000
Notes Payable
Trade Payables
(2,000,000)
5,650,000
6 Excess of Stated
1,500,000
Excess of Par
250,000
Appropriation for Contingencies
Share Capital, end
50,000
1,800,000
400,000
150,000
450,000
1,000,000
250,000
1,000,000
200,000
1,450,000
Problem 2-4
Boracay Company
Statement of Financial Position
December 31, 2019
ASSETS
Current Assets
Cash
Trade and other Receivables
Financial Asset – Fair Value
Inventory
Office Supplies
Total Current Assets
Noncurrent Assets
PPE, net
Goodwill
Total Noncurrent Assets
Notes
(1)
P
(2)
1,200,000
1,000,000
400,000
1,000,000
50,000
P
(3)
Total assets
3,950,000
100,000
4,050,000
P
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3,650,000
7,700,000
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FRANZ KYLLE POCSON
UPV BSA
LIABILITIES AND SHAREHOLDER’S EQUITY
Current Liabilities
Trade Payables
Other Payables
(4)
Total Current Liabilities
Noncurrent Liabilities
Mortgage Payable
Total Noncurrent Liabilities
1,500,000
550,000
2,050,000
2,000,000
2,000,000
Equity
3,000,000
200,000
450,000
Ordinary share, P100 par value, issued 30,000 shares
Share Premium
Retained Earnings
Total Shareholder’s Equity
Total Liabilities and Shareholder’s Equity
P
Notes:
1 Money Market – 3 mos
Cash
Total Cash and Cash Equivalents
500,000
700,000
1,200,000
2 Accounts Receivable
Notes Receivable
Trade and other Payable
800,000
200,000
1,000,000
3 Land
Office Equipment
Building
Acc Dep – Building
Property, Plant, & Equipment
1,000,000
250,000
3,000,000
(300,000)
3,950,000
4 Accrued Salaries
Accrued Interest
Tax Payable
Other Payables
3,650,000
7,700,000
250,000
200,000
100,000
550,000
5 Net Assets - Equity
Contributed Capital
Excess, Retained Earnings
Unrecorded Exp:
Depreciation
Accrued Salaries
Adj, Retained Earnings
4,200,000
3,200,000
1,000,000
300,000
250,000
450,000
Problem 2-5
Dakak Company
Statement of Financial Position
December 31, 2019
ASSETS
Current Assets
Cash and Cash Equivalents
Accounts Receivables
Financial Asset – Trading
Inventory
Total Current Assets
Notes
P
Noncurrent Assets
PPE, net
Long term Investments
Total Noncurrent Assets
Total assets
(1)
500,000
750,000
600,000
850,000
P
2,700,000
P
6,250,000
8,950,000
4,000,000
2,250,000
LIABILITIES AND SHAREHOLDER’S EQUITY
Current Liabilities
Trade & other Payables
(2)
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1,500,000
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FRANZ KYLLE POCSON
UPV BSA
Currently Portion of Bonds Payable
Total Current Liabilities
500,000
2,000,000
Noncurrent Liabilities
Bonds Payable
Notes Payable
Advances from officers
Total Noncurrent Liabilities
1,500,000
800,000
200,000
2,500,000
Equity
Ordinary share, P100 par value, issued 50,000 shares
Share Premium
Retained Earnings (deficit)
Total Shareholder’s Equity
Total Liabilities and Shareholder’s Equity
(3)
P
Notes:
1 Property, Plant, & Equipment
Acc Dep
PPE, Net
6,000,000
2,000,000
4,000,000
2 Accrued Expenses
Customers’ Deposit
Accounts Payable
Other Payables
100,000
400,000
1,000,000
1,500,000
Problem 2-6
A. Cash
Accounts Receivable
Inventory
FA – Trading
Equipment held for sale
TOTAL
Problem 2-7
B. Cash and Cash Eq.
Accounts Receivable:
Trade Accounts
ADA
Claims
Cost of Consigned
Goods
Inventory
TOTAL
Problem 2-8
B. Cash
Accounts Receivable
Inventory
Prepaid Expenses
TOTAL
P
5,000,000
500,000
(1,050,000)
3 Equity
Contributed Capital
Deficit, Retained Earnings
Losses – Goodwill
Adj, Retained Earnings
P
1,500,000
1,200,000
1,000,000
300,000
2,000,000
6,000,000
P
700,000
4,450,000
8,950,000
4,800,000
5,500,000
(700,000)
(350,000)
1,050,000
930,000
(20,000)
30,000
P
P
P
200,000
600,000
2,440,000
[260,000 / 130%]
4,000,000
2,000,000
600,000
100,000
6,700,000
Excluding Cash Fund
Excluding Consigned Goods
Excluding Deposit on Inventory
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FRANZ KYLLE POCSON
UPV BSA
Problem 2-9
C. Equity
Liabilities
Assets
P
Problem 2-10
A. Cash
Accounts Receivable:
Trade Receivables
ADA
Cost of Consigned
Goods
Notes Receivable, net
Inventory
TOTAL
Problem 2-11
A. Equity
Liabilities
Net Income
TOTAL
P
7,000,000
1,800,000
8,800,000
P
4,500,000
5,000,000
(500,000)
P
P
P
Problem 2-12
C. Accounts Payable
Dividends Payable
Income Tax Payable
Notes Payable
TOTAL
Problem 2-13
A. Accounts Payable
Accrued Expenses
Credit Balances
Estimated Expenses
TOTAL
Problem 2-14
1. B
2. C
Current Liabilities:
Accounts Payable
Accrued Expenses
Income Tax Payable
Dividends Payable
TOTAL
Non Current Liabilities
Bonds Payable
Premium on Bonds
Deferred Tax Liability
Long Term Notes
6%
8%
TOTAL
[5,000,000 + 2,500,000 – 500,000]
P
P
P
P
P
P
2,000,000
2,000,000
4,000,000
17,000,000
7,500,000
2,000,000
1,800,000
11,300,000
[8,200,000 – 6,400,000]
1,900,000
500,000
900,000
600,000
3,900,000
4,100,000
1,500,000
500,000
600,000
6,700,000
no offsetting
2,200,000
800,000
1,100,000
600,000
4,700,000
no offsetting
4,500,000
500,000
500,000
P
1,500,000
1,000,000
8,000,000
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FRANZ KYLLE POCSON
UPV BSA
Problem 2-15
1. A
2. C
3. A
Adjusting Entry:
Cash
300,000
Accounts Payable
300,000
To revert the undelivered check to cash
Current Assets
Cash
Accounts Receivable
Inventory
Prepaid expenses
Land held for sale
TOTAL
Current Liabilities
Accounts Payable
Accrued Expenses
TOTAL
Shareholders’ Equity
Share Capital
Share Premium
Retained Earnings
TOTAL
P
P
200,000
350,000
580,000
120,000
1,000,000
2,250,000
P
500,000
150,000
650,000
P
1,500,000
250,000
800,000
2,550,000
Undelivered Check, net of cash overdraft
{200,000 + 300,000}
Problem 2-16
1. C
2. B
Current Assets
Cash
Accounts Receivable
Inventory
TOTAL
Retained Earnings, beg
Net Income before Tax
Income Tax
Retained Earnings, end
P
5,000,000
6,000,000
P
6,000,000
11,000,000
P
5,000,000
5,000,000
(1,500,000)
8,500,000
Excluding the 2,000,000 net of
2 semi annual payments of 500,000
Problem 2-17
1. B
2. A
3. C
4. C
Retained Earnings, unappropriated
Retained Earnings, restricted
Net Income before Tax
Income Tax
Total Retained Earnings
P
P
900,000
160,000
1,500,000
(450,000)
2,110,000
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FRANZ KYLLE POCSON
UPV BSA
Current Assets
Cash
Accounts Receivable
Cost in excess of billings
TOTAL
Shareholders’ Equity
Share Capital
Share Premium
Retained Earnings
TOTAL
P
P
600,000
3,500,000
1,600,000
5,700,000
P
750,000
2,030,000
2,110,000
4,890,000
Problem 2-18
1. D
2. A
3. C
Current Assets
Cash
Accounts Receivable
Inventory
TOTAL
Current Liabilities
Accounts Payable &
Accrued Liabilities
Income Tax Payable
TOTAL
Retained Earnings, beg
Net Income
Income Tax
Retained Earnings, end
Problem 2-19
D. Accounts Payable
Accrued Expenses
Dividends Payable
Accrued Interest Payable
Income Tax Payable
Current Liabilities
Problem 2-20
A. Accounts Payable
Bank Note Payable
Mortgage Payable
Bonds
Accrued Interest:
10% - Bank
10% - Mortgage
TOTAL
P
600,000
2,300,000
P
2,000,000
4,900,000
P
1,800,000
900,000
2,700,000
P
3,500,000
5,000,000
1,500,000
7,000,000
P
P
P
P
500,000
300,000
700,000
200,000
800,000
2,500,000
Excluding the 500,000 net of
4 quarterly payments of 125,000
Income Tax Payment of 600,000
Deduct 600,000
[ 5,000,000 x 8% x 6/12 ]
6,500,000
3,000,000
2,000,000
4,000,000
100,000
50,000
15,650,000
[ 3,000,000 x 10% x 4/12 ] Sept-Dec
[ 2,000,000 x 10% x 3/12 ]
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FRANZ KYLLE POCSON
UPV BSA
Problem 2-21
1D
6 D
2C
7 D
3A
8 B
4D
9 D
5D
10 A
Problem 3-1
1D
2A
3C
4C
5B
Problem 3-2
1C
6 D
2C
7 C
3D
8 D
4B
9 C
5D
10 D
Problem 3-3
1A
5C
2C
6B
3B
7A
4D
8A
Problem 4-1
1D
2B
3D
4 D
5D
Problem 4-2
1D
6 B
2B
7 C
3C
8 D
4B
9 B
5D
10 C
Problem 3-3
1A
5C
2C
6B
3B
7A
4D
8A
Problem 5-1
Adjusting Entries:
Dec 31,2019
Doubtful Accounts
Accounts Receivable
P
Loss on Lawsuit
Estimated Liability
3,000,000
3,000,000
500,000
500,000
DISCLOSURES
Feb 14,2020
A shipping vessel of Caroline with carrying amount of P5,000,000 was
completely lost at sea because of a hurricane.
The financial statements of 2019 are authorized for issue on March 20,2020.
Problem 5-2
B. P9,000,000
The event(s) is/are non adjusting, profit before tax is not affected
Problem 5-3
B. P3,500,000
Total estimated lawsuit liability amount
Problem 5-4
C. P1,000,000
Additional provision
Problem 5-5
D. Adjusting Events:
Profit Share Payment
Doubtful Accounts
TOTAL
P
P
200,000
900,000
1,100,000
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UPV BSA
Problem 5-6
1B
2D
3D
4C
5B
Problem 5-7
1D
2C
3C
4D
5D
Problem 3-3
1A
5C
2C
6B
3B
7A
4D
8A
Problem 6-1
Masay Company
Statement of Cost of Goods Manufactured
Year Ended XX 2019
`
Raw Materials, beg.
Add: Purchases
Raw Materials Available for use
Less: Raw Materials, end.
Raw Materials Used
Direct Labor
Factory Overhead:
Indirect Labor
Superintendence
Light, heat and power
Rent – Factory Building
Repair and Maintenance
Factory Supplies used
Depreciation – Machinery
Cost of Manufacturing
Goods in Process, beg.
Cost of Goods in Process
Less: Goods in Process, end.
Cost of Goods Manufactured
P
200,000
3,000,000
3,200,000
280,000
2,920,000
950,000
250,000
210,000
320,000
120,000
50,000
110,000
60,000
1,120,000
4,990,000
240,000
5,230,000
(170,000)
5,060,000
P
Masay Company
Income Statement (Functional Method)
Year Ended XX 2019
Net Sales
Less: Cost of Goods Sold
Gross Profit
Other Income
Total Income
Expenses:
Distribution Costs
Administrative Costs
Other losses
Income before Tax
Income Tax
Net Income
Notes
(1)
(2)
P
(3)
(4)
(5)
(6)
830,000
590.000
300,000
P
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7,450,000
5,120,000
2,330,000
210,000
2,540,000
1,720,000
820,000
(320,000)
500,000
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FRANZ KYLLE POCSON
UPV BSA
Notes
1 Sales
P7,500,000
Sales Return and Allowances
(50,000)
Net Sales
P7,450,000
2 Cost of Goods Manufactured P5,060,000
Finished Goods, beg.
360,000
Cost of Goods Available
for Sale
P5,420,000
Finished Goods, end.
(300,000)
Cost of Goods Sold
P5,120,000
3 Interest Income
Gain on sale of equipment
Gain from expropriation of
Asset
Other Income
P
10,000
100,000
100,000
P 210,000
4 Sales Salaries
Advertising
P 400,000
160,000
Depreciation – Store Equipment
70,000
Delivery Expenses
200,000
Distribution Costs
P 830,000
5 Office Salaries
P 150,000
Depreciation – Office Equipment
40,000
Accounting and Legal Fees
150,000
Office Expenses
250,000
Administrative Costs
P 590,000
6 Earthquake loss
Other Losses
P 300,000
P 300,000
Masay Company
Income Statement (Natural Method)
Year Ended XX 2019
Notes
(1)
(2)
Net Sales
Other Income
Total Income
Expenses:
Decrease in Inventory
Raw Materials Used
Salaries
Depreciation
Advertising
Office Expenses
Delivery Expense
Product Cost
Accounting and Legal fees
Other Losses
Income before Tax
Income Tax
Net Income
Notes
1 Sales
P7,500,000
Sales Return and Allowances
(50,000)
Net Sales
P7,450,000
2 Interest Income
Gain on sale of equipment
Gain from expropriation of
Asset
Other Income
P
10,000
100,000
100,000
P 210,000
(3)
(4)
(5)
(6)
(7)
(8)
P
130,000
2,920.000
550,000
110,000
160,000
250,000
200,000
2,070,000
150,000
300,000
P
7,450,000
210,000
7,660,000
6,840,000
820,000
(320,000)
500,000
3 Inventories:
Goods in Process, beg.
Goods in Process, end.
Decrease
P240,000
170,000
P 70,000
Finished Goods, beg.
Finished Goods, end.
Decrease
P360,000
300,000
P 60,000
TOTAL DECREASE
P130,000
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4 Raw Materials, beg.
Purchases
Raw Materials, end.
Raw Materials Used
.
5 Sales Salaries
Office Salaries
Salaries
P 200,000
3,000,000
280,000
P2,920,000
P 400,000
150,000
P 550,000
6 Depreciation – Store Equipment P 70,000
Depreciation – Office Equipment
40,000
Depreciation
P 110,000
7 Direct Labor
P950,000
Factory Overhead:
Indirect Labor
250,000
Superintendence
210,000
Light, heat and power 320,000
Rent – Factory Building 120,000
Repair and Maintenance 50,000
Factory Supplies used 110,000
Depreciation – Machinery 60,000
Product Costs
P2,070,000
8 Earthquake loss
Other Losses
P 300,000
P 300,000
Problem 6-2
Endless Company
Income Statement
Year Ended December 31, 2019
Notes
(1)
(2)
Net Sales
Cost of Goods Sold
Gross Profit
Other Income
Total Income
P
(3)
Expenses:
Distribution Costs
Administrative Costs
Other Losses
Income before Tax
Income tax
Net Income
Notes
1 Sales
P8,750,000
Sales Return and Allowances
(150,000)
Net Sales
P8,600,000
2 Inventory, beg
Purchases
Purchase Discounts
Freight-In
COGAS
Inventory, end.
COGS, before writedown
Inventory writedown
COGS, after writedown
P1,100,000
4,600,000
(45,000)
145,000
5,800,000
(1,000,000)
P4,800,000
150,000
P4,950,000
3 Interest Revenue
Dividend Revenue
Gain on Sale
Other Income
P
P
(4)
(5)
(6)
8,600,000
(4,950,000)
3,650,000
80,000
3,730,000
1,260,000
1,140,000
50,000
P
(2,450,000)
1,280,000
(280,00)
1,000,000
4 Sales Salaries
Store Supplies
P 600,000
150,000
Depreciation -Delivery truck
60,000
Depreciation – Store Equipment
25,000
Delivery Expenses
425,000
Distribution Costs
P1,260,000
5 Office Salaries
Depreciation – Office Equipment
Doubtful Accounts
Contributions
Administrative Costs
6 Loss on Sale
Other Losses
P 950,000
35,000
30,000
125,000
P1,140,000
P
P
50,000
50,000
20,000
50,000
10,000
80,000
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Problem 6-3
Berna Company
Income Statement
Year Ended December 31, 2019
Sales
Cost of Goods Sold
Gross Profit
P
Less: Expenses
Net Income
P
Computations:
Sales
Cost of Goods Sold
Gross Profit
Less: Expenses
Net Income
P
4,000,000
1,800,000
3,200,000
1,200,000
1,000,000
100%
(45% of Sales) [ 150% of 30% ]
SQUEEZE
4,000,000
1,800,000
(30% of sales)
25% of sales
1,200,000
1,000,000
[1]
[2]
1 P1,000,000 / 25%
2 P4,000,000 x 45%
Cost of Goods Sold (SQUEEZE)
The Entity has no beginning balances for inventories since it is the first year of operations
Raw Materials Purchased
2,000,000
Raw Materials, Remaining
500,000
Raw Materials Used
1,500,000
Direct Materials
900,000
Factory Overhead
600,000
Cost of Goods in Process
3,000,000
Goods in Process, remaining
750,000
Cost of Goods Available
2,250,000
Finished Goods, remaining
450,000
Cost of Goods Sold
P 1,800,000
{8}
[9]
{7}
{6}
[5]
[4]
[3]
[2]
[1}
1,500,000 / 75%
2,000,000 x 25%
3,000,000 x 50%
3,000,000 x 30%
3,000,000 x 20%
2,250,000 + 750,000
2,250,000 / 3
1,800,000 + 450,000
25% of COGS
Berna Company
Statement of Financial Position
December 31, 2019
Assets
Current Assets
Cash
Accounts Receivable
Inventories
Total Current Assets
Non Current Assets
Property, Plant, and Equipment
Total Assets
Notes
(1)
(2)
(3)
P
(4)
P
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500,000
400,000
1,700,000
2,600,000
2,900,000
5,500,000
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UPV BSA
Liabilities and Shareholders’ Equity
Liabilities
Accounts Payable
Total Liabilities
(5)
Shareholders’ Equity
Ordinary Shares, issued 25,000 shares
at P100 par value
Share Premium
Retained Earnings (net income)
2, 500,000
1,500,000
1,000,000
P
Total Liabilities and Shareholders’ Equity
Notes/Computation:
1 Cash, Jan 1
Cash Sales
Operating Expenses
Production Cost
Direct Labor
Overhead***
Paid Purchases
Cash, Dec 31
500,000
500,000
P1,000,000
3,600,000
(1,200,000)
(900,000)
(500,000)
(1,500,000)
P 500,000
***Depreciation is not a cash expense
5,000,000
5,500,000
3 Raw Materials
Goods in Process
Finished Goods
Inventories
P 500,000
750,000
450,000
P1,700,000
4 PPE
Depreciation
PPE
P 3.,000,000
(100,000)
P 2,900,000
5 Accounts Payable
(25% Purchases unpaid)
P 2,000,000 x 25% = P 500,000
2 Accounts Receivable
(10% sales collectible)
4,000,000 x 10% = P400,000
Problem 6-4
Youth Company
Income Statement
Year Ended XX 2019
Notes
(1)
P
(2)
Net Sales
Cost of Goods Sold
Gross Profit
Expenses:
Distribution Costs
Administrative Costs
Other Losses
Net Income Before Tax
Income Tax
Net Income
(3)
(4)
(5)
690,000
580,000
340,000
P
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8,870,000
(5,900,000)
2,970.000
(1,610,000)
1,360,000
(360,000)
1,000,000
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UPV BSA
Notes
1 Sales
P9,070,000
Sales Return and Allowances (200,000)
Net Sales
P8,870,000
3 Sales Salaries
Store Supplies
2 Inventory, beg
Purchases
Purchase Discounts
Transportation-In
COGAS
Inventory, end.
Cost of Goods Sold
4 Office Salaries
P1,500,000
5,750,000
(100,000)
150,000
7,300,000
(1,400,000)
P5,900,000
P 500,000
80,000
Depreciation – Store Equipment
110,000
Distribution Costs
P 690,000
Office Supplies
Administrative Costs
P 400,000
120,000
60,000
P 580,000
5 Uninsured Flood Loss
Other Losses
P 340,000
P 340,000
Depreciation – Building
Problem 6-5
Rose Company
Statement of Comprehensive Income
Year Ended XX 2019
Income
Dividend Income from investments
Distribution Income from trusts
Interest Income on deposits
Income from bank treasury bills
Income from dealing in securities and
derivatives held for trading
Other Income
Total Income
Expenses
Administrative Costs
Sundry Administrative Costs
Finance Costs
Net Income Before Tax
Income Tax
Net Income
P
9,200,000
500,000
700,000
100,000
450,000
250,000
11,200,000
3,800,000
1,200,000
300,000
Other Comprehensive Income
Unrealized Gain on forward contracts
designated as cash flow hedge
Comprehensive Income
P
(5,300,000)
5,900,000
(1,700,000)
4,200,000
400,000
4,600,000
Problem 6-6
Dahlia Company
Statement of Comprehensive Income
December 31,2019
Notes
Sales
Cost of Goods Sold
Gross Profit
P
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9,500,000
6,000,000
3,500,000
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UPV BSA
Investment Income
Other Income
Total Income
350,000
350,000
4,200,000
(1)
Expenses
Distribution Costs
Administrative Costs
Finance Costs
Net Income before Tax
Income Tax
Net Income
Other Comprehensive Income
Revaluation Surplus
Translation loss on foreign operations
Comprehensive Income
Note
1 Interest Revenue
Gain on Sale
Other Income
500,000
300,000
150,000
950,0000
3,250,000
(950,000)
2,300,000
1,200,000
(200,000)
3,300,000
P
P250,000
100,000
P350,000
Problem 6-7
Lotus Company
Statement of Comprehensive Income
December 31, 2019
Sales
Cost of Goods Sold
Gross Profit
Investment Income
Other Income
Total Income
P
9,750,000
(3,750,000)
6,000,000
150,000
350,000
450,000
6,450,000
Expenses
Employee Benefit Expense
Depreciation
Finance Costs
Other Expenses
Impairment Loss
Net Income before Tax
Income Tax
Net Income
Other Comprehensive Income
Translation gain on foreign operations
Unrealized gain on option contract
designated as cash flow hedge
Comprehensive Income
1,500,000
450,000
350,000
450,000
800,000
(3,550,000)
2,900,000
(900.000)
2,000,000
300,000
P
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200,000
2,500,000
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UPV BSA
Problem 6-8
C. Advertising
Freight Out
Rent – sales
Sales Salaries
Distribution Costs
P1,500,000
750,000
900,000
1,400,000
P4,550,000
Problem 6-9
D. Property Taxes
P 250,000
Doubtful Accounts
1,600,000
Officers’ Salaries
1,500,000
Insurance
850,000
Administrative Costs P4,200,000
Problem 6-10
1. B
2. C
3. C
Raw Materials, beg.
Materials Purchased
Purchased Discount
Transportation In
Raw Materials, end
Raw Materials Used
Direct Materials
Manufacturing Overhead
Cost of Manufacturing
Goods in process, beg.
Cost of Goods in Process
Goods in Process, end.
Cost of Goods Manufactured
Finished Goods, beg.
Cost of Goods Available
Finished Goods, end.
Cost of Goods Sold
Problem 6-11
D. Inventory, beg.
Purchases (Squeeze)
Purchase Returns
Freight In
Cost of Goods Available
Inventory, end
Cost of Goods Sold
Problem 6-12
B. Net Sales 100%
COGS
80%
Gross Profit 20%
P
200,000
2,500,000
(100,000)
200,000
(400,000)
2,400,000
3,000,000
1,500,000
6,900,000
300,000
7,200,000
200,000
7,000,000
400,000
7,400,000
300,000
P 7,100,000
P 400,000
8,200,000
(900,000)
300,000
8,000,000
(500,000)
P7,500,000
six times P1,250,000 Distribution costs
Sales (Squeeze)
Sales Returns & allowances
Net Sales
Cost of Goods
Inventory beg 2,000,000
Purchases
7,500,000
Returns
(500,000)
Inventory, end (2,800,000)
Gross Profit
Net Sales:
6,200,000 / 80%
= 7,750,000
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P8,500,000
750,000
7,750,000
6,200,000
P1,550,000
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Problem 6-13
C. Net Income, unadj.
P7,410,000
Components of OCI Included
Add: Unrealized Loss on FA – FVOCI
540,000
Less: Gain from Change in fair value
attributable to credit risk
500,000
Components of Retained Earnings
Add: Prior period adjustment
750,000
Net Income
P8,200,000
Problem 6-14
D. Net Income, unadj.
P5,000,000
Components of Retained Earnings
Less: Dividend received
320,000
Add: Prior period adjustment
1,400,000
Net Income
P6,080,000
Problem 6-15
1. C
2. C
3. C
Income from continuing operations
Income from discontinued operations
Unrealized gain on FA – FVPL
Net Income
Other comprehensive income
Revaluation Surplus
Unrealized loss Equity- FVOCI
Unrealized gain Debt – FVOCI
Unrealized gain on future contracts
designated as cash flow hedge
Translation loss on foreign operation
Net measurement gain on defined
benefit plan
Loss on credit risk
Comprehensive Income
P 4,000,000
500,000
800,000
P 5,300,000
2,500,000
(1,000,000)
1,200,000
400,000
(200,000)
600,000
(300,000)
3,200,000
P8,500,000
Problem 6-16
1B
6 B
2D
7 B
3D
8 D
4B
9 B
5D
10 A
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Problem 7-1
Reliable Company
Statement of Retained Earnings
Year Ended December 31, 2019
Retained Earnings – unappropriated, Jan. 1
Correction of error:
Change from FIFO to Weighted – Credit
Overdepreciation
Corrected beginning balance
Net Income
Decrease in Appropriation for Treasury
Dividends Paid
Appropriated for Contingencies
Retained Earnings, Dec. 31
P
200,000
P
150,000
100,000
450,000
1,300,000
200,000
(500,000)
(100,000)
1,350,000
Problem 7-2
Gondola Company
Statement of Retained Earnings
Year Ended XX 2019
Retained Earnings. Jan. 1
Correction of error
:
Compensation not accrued
Correction error – credit
Corrected beginning balance
Net Income
Loss on retirement of preference share
Stock Dividends
Appropriation for Treasury
Retained Earnings, Dec. 31
Net Income, unadj.
Items included in retained earnings:
Loss from Fire
Goodwill Impairment
Loss on sale of equipment
Gain on early retirement
Gain on settlement of insurance
Net Income, adj,
P
2,600,000
P
(500,000)
400,000
2,500,000
3,050,000***
(350,000)
(700,000)
(1,000,000)
3,500,000
3,000,000
(50.000)
(250,000)
(200,000)
100,000
450,000
3,050,000***
Problem 7-3
Angola Company
Comparative Income Statement
Year Ended XX 2020 and 2019
2020
P 6,000,000
2,900,000
3,100,000
1,490,000
P 1,610,000
Sales
COGS
Gross Income
Expenses
Net Income
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2019
4,500,000
2,300,000
2.,200,000
1,800,000
400,000
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UPV BSA
Angola Company
Comparative Statement of Retained Earnings
Year Ended XX 2020 and 2019
2020
P 1,250,000
1,610,000
500,000
P 2,360,000
Retained earnings, beg.
Net Income
Dividends Paid
Retained Earnings, end.
Adjustments:
COGS
Retained Earnings
2019
1,000,000
400,000
150,000
1,250,000
100,000
100,000
Acc. Dep
10,000
Depreciation Expense
10,000
Problem 7-4
Martha Company
Statement of Changes in Equity
Year Ended December 31, 2019
PS
Balances, Jan. 1 P
Issuance of PS
Reacquirement
of OS
Issuance of OS
Dividends – OS
Retirement of Treasury
Dividends – PS
Overstatement
of prior period
ending inventory
Net Income
Balance, Dec 31 P
2019
Jan. 5
OS
10,000,000
SP
7,500,000
400,000
2,500,000
3,500,000
5,000,000
RE
3,250,000
TS
320,000
(2,480,000)
50,000
(160,000)
(450,000)
5,000,000
Cash
12,500,000
(140,000)
2,250,000
2,430,000
11,450,000
160,000
5,400,000
Preference Share
Share Premium - PS
Feb. 1 Treasury Shares
Cash
5,000,000
400,000
320,000
320,000
Apr. 30 Cash
6,000,000
Ordinary Share
Share Premium – OS
Jun. 17 Retained Earnings
Dividends Payable
2,500,000
3,500,000
2,480,000
2,480,000
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UPV BSA
Jul. 10 Dividends Payable
Cash
2,480,000
2,480,000
Nov. 6 Cash
210,000
Retained Earnings
Treasury Share
50,000
160,000
Dec. 7 Retained Earnings
Dividends Payable
450,000
450,000
Problem 7-5
Carr Company
Statement of Changes in Equity
Year Ended December 31, 2019
Balances, Jan. 1 P
Retirement of
Treasury
Property Dividend
Dividend – PS
Overstatement
of prior period
Income
Net Income
Balance, Dec 31 P
PS
1,800,000
OS
5,150,000
SP
3,590,000
(150,000)
(120,000)
RE
4,000,000
TS
270,000
(270,000)
(750,000)
(180,000)
1,800,000
5,000,000
2019
Jan. 10 Ordinary Shares
Share Premium
Treasury Shares
3,470,000
-
150,000
120,000
270,000
Feb. 10 Retained Earnings
Dividends Payable
750,000
Dec. 12 Retained Earnings
Dividends Payable
180,000
Problem 7-6
A. Share Capital
Share Premium
Retained Earnings
Treasury
Total
(350,000)
2,600,000
5,320,000
750,000
180,000
P 5,000,000
2,000,000
500,000
(300,000)
P 7,200,000
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UPV BSA
Problem 7-7
B. Share Capital
P 6,000,000
Share Premium
3,500,000
Retained Earnings
1,500,000
Treasury
(700,000)
Cumulative translation
adjustment-debit
(2,000,000)
Cumulative unrealized
gain designated as
cash flow hedge
600,000
TOTAL
P 8,900,000
Problem 7-8
A. PS, at par
P 2,000,000
OS, at par
3,000,000
Share Premium
1,000,000
Retained Earnings, beg. 1,000,000
Dividends
(700,000)
Treasury
(500,000)
Net Income
2,200,000
TOTAL
P 8,000,000
Problem 7-6
A.
Share Capital
Share Premium
Retained Earnings
Treasury
Total
P15,000,000
5,000,000
13,500,000***
(2,000,000)
P31,500,000
RE, unapp
6,000,000
RE, app
3,000,000
Revaluation surplus
4,000,000
Cumulative translation
adjustment-credit
1,500,000
Actuarial Loss
(1,000,000)
RE, end
13,500,000***
Problem 7-10
1A
2A
3D
4B
5A
Problem 8-1
1. A
2. C
3. B
4. A
2019
Jun. 30 Land held for sale
Revaluation surplus
Impairment Loss
Land held for sale
400,000
400,000
200,000
200,000
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UPV BSA
Dec. 31 Impairment Loss
Land held for sale
100,000
100,000
Land held for sale, before adjustment P2,900,000
Fair value at classification
3,300,000
Revaluation surplus
400,000
Revaluation surplus, beg.
200,000
TOTAL
P 600,000
Carrying Amount, Jun 30
FV less cost of disposal
Impairment loss
Impairment loss – Jun 30
TOTAL
P3,100,000
3,000,000
200,000
100,000
P 300,000
3,300,000 – 200,000
3,250,000 – 250,000
Problem 8-2
1. C
2. A
3. B
4. D
2019
Oct. 1 Land held for sale
Revaluation surplus
Impairment Loss
Land held for sale
2020
Jan. 1 Cash
Gain on Disposal
Land held for sale
500,000
500,000
100,000
100,000
6,000,000
600,000
5,400,000
Land held for sale, before adjustment P5,000,000
Fair value at classification
5,500,000
Revaluation surplus
500,000
Revaluation surplus, beg.
1,500,000
TOTAL
P 2,000,000
Problem 8-3
1. B
2. C
3. C
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UPV BSA
Land held for sale, Jan 2019
Fair value at Dec. 2019
Revaluation surplus
P6,000,000
7,000,000
1,000,000
Land held for sale, Jan 2020
Fair value at Dec. 2020
Revaluation surplus
P7,000,000
8,500,000
1,500,000
OCI for the current year
Revaluation surplus, beg.
TOTAL
1,000,000
P 2,500,000
recycled to Retained Earnings
Selling Price
Carrying Amount
Gain on sale
P8,000,000
(7,600,000)
P 400,000
Problem 8-4
1. A
2. B
3. C
2019
Dec. 31 Impairment Loss
Equipment
Equipment held for sale
Equipment
400,000
400,000
4,600,000
4,600,000
Impairment Loss
200,000
Equipment held for sale
200,000
Recoverable amount
Carrying amount before
classified as held for sale
lower of CA over recoverable
P 4,250,000
Measurement of equipment – lower
Carrying Amount:
Loss on reclassification
4,000,000
4,400,000
P 400,000
Equipment
Depreciation
Carrying Amount
FV less cost of disposal
Impairment Loss
P 5,000,000
500,000
4,500,000
4,150,000
P 350,000
4,000,000
4,000,000
Problem 8-5
1. A
2. C
3. B
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UPV BSA
Recoverable amount
Carrying amount before
classified as held for sale
lower of CA over recoverable
P 3,400,000
Measurement of equipment – lower
Carrying Amount:
Loss on reclassification
3,400,000
4,150,000
P 750,000
Equipment
Depreciation
Carrying Amount
FV less cost of disposal
Impairment Loss
P 5,000,000
3,750,000
1,250,000
450,000
P 800,000
FV less cost of disposal, Dec
Carrying Amount
Gain on reversal of impairment
650,000
450,000
P 200,000
4,000,000
3,400,000
Problem 8-6
1. B
2. D
Problem 8-7
1A
6 B
2A
7 C
3D
8 A
4D
9 C
5C
10 D
Problem 9-1
A. Carrying Amount
FV less cost of disposal
Impairment loss
Termination cost
Operating Loss
Pretax Loss
P 2,000,000
(1,800,000)
(200,000)
*100,000)
(700,000)
P(1,000,000)
Problem 9-2
C. Operating Income
Carrying Amount
P 4,000,000
FV less cost of disposal
3,500,000
Impairment loss
Pretax Income
Income Tax
Income from discontinued operations
P 3,000,000
(500,000)
2,500,000
(750,000)
P 1,750,000
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Problem 9-3
D. Loss on disposal
Operating Loss
Pretax Loss
Income Tax (tax relief)
Loss from discontinued operations
P(2,000,000)
(400,000)
(2,400,000)
720,000
P(1,680,000)
Problem 9-4
D. Termination cost
Operating Loss
Pretax Loss
Income Tax (tax relief)
Loss from discontinued operations
P(2,000,000)
(6,000,000)
(8,000,000)
2,400,000
P(5,600,000)
Problem 9-5
D. Operating Loss
Gain on disposal
Pretax Income
Income Tax
Income from discontinued operations
Problem 9-6
A. Trading loss
Impairment loss
Total Loss
P(2,000,000)
(1,500,000)
P(3,500,000)
Problem 9-7
B. Operating loss
Loss on disposal
Total Loss
P(8,000,000)
(500,000)
P(8,500,000)
Problem 9-8
D. Carrying Amount
P15,000,000
Fair value
Cost of disposal
FV less cost of disposal
Measurement – lower
Problem 9-9
A. Loss from disposition
Operating loss
Pretax Loss
P,8,000)
15,000
7,000
(2,,100)
P 4,900
9,000,000
(500,000)
* 8,500,000
P 8,500,000
P
(700,000)
(200,000)
P (900,000)
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Problem 9-10
B. Impairment Loss
Operating loss
Pretax Loss
Income Tax (tax relief)
Loss from discontinued operations
P (500,000)
(1,500,000)
(2,000,000)
600,000
P(1,400,000)
Problem 9-11
1A
2D
3A
4D
5A
Problem 10-1
A. Cost
P 2,640,000
Accumulated Depreciation
2,640,000 /8 x 3
(990,000)
Carrying amount
1,650,000
Residual Value
(240,000)
Depreciable amount
1,410,000
Remaining useful life (6-3)
/ 3yrs
Depreciation
470,000
Accumulated Depreciation, beg 990,000
Total
P 1,460,000
Problem 10-2
1. A
2. B
Cost
P 4,000,000
Accumulated Depreciation
4,000,000 - 400,000 /10 x 4 (1,440,000)
Carrying amount
2,560,000
Residual Value
(480,000)
Depreciable amount
2,080,000
Remaining useful life (12-4)
/ 8yrs
Depreciation
P 260,000
Problem 10-3
A. Cost
Accumulated Depreciation
3,000,000 /6 x 3
Carrying amount
Residual Value
Depreciable amount
Remaining useful life (5-3)
Depreciation
P 3,000,000
(1,500,000)
1,500,000
(100,000)
1,400,000
/ 2yrs
P 700,000
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Problem 10-4
D. Carrying amount
Remaining useful life (10-2)
Depreciation
Problem 10-5
C. Cost
Accumulated Depreciation
2,750,000 x 10/55
Carrying amount
Remaining useful life (10-1)
Depreciation
P 1,536,000
/ 8yrs
P 192,000
P 2,750,000
(500,000)
2,250,000
/ 9yrs
P 250,000
Problem 10-6
B. Cost
Accumulated Depreciation
5,000,000 /2,5
2,000,000
3,000,000/2.5
1,200,000
Carrying amount
Remaining useful life (5-2)
Depreciation
Accumulated Depreciation, beg,
Total
Problem 10-7
A. Cost
Accumulated Depreciation
7,200,000 /10 x 3
Carrying amount
Sum of the years (10-3)
Depreciation
P 5,000,000
(3,200,000)
1,800,000
/ 3yrs
600,000
3,200,000
P 3,800,000
P 7,200,000
(2,160,000)
5,040,000
x 7/28
P 1,260,000
Problem 10-8
B. Cost
Accumulated Depreciation
4,800,000 /5
960,000
3,840,000/2.5
768,000
Carrying amount
Residual Value
Depreciable Amount
Remaining useful life (10-2)
Depreciation
Accumulated Depreciation, beg,
Total
P 4,800,000
(1,728,000)
3,072,000
(200,000)
2,872,000
/ 8yrs
359,000
1,728,000
P 2,087,000
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Problem 10-9
B. Cost
Accumulated Depreciation
6,000,000 /2
Carrying amount
Residual value
Depreciable amount
Remaining useful life (2-1)
Depreciation
Problem 10-10
A. Cost
Accumulated Depreciation
3,000,000 /10 x 5
Carrying amount
Remaining useful life (8-5)
Amortization Expense
Cost
Accumulated Depreciation
Carrying amount
Residual value
Remaining useful life
Depreciation Expense
Total Expenses
P 6,000,000
(3,000,000)
3,000,000
(600,000)
2,400,000
/ 1yr
P 2,400,000
P 3,000,000
(1,500,000)
1,500,000
/ 3yrs
P
500,000
P 8,000,000
(3,400,000)
4,600,000
(200,000)
/ 10yrs
P 440,000
P 990,000
Problem 10-11
1A
2A
3B
4C
5D
Problem 11-1
D. Inventory – beg
P 600,000
Retained Earnings
P 600,000
Problem 11-2
A. Jan 1, Weighted
P 7,700,000
Jan 1, FIFO
7.200,000
Increase in inventory
P 500,000
Adjustment to reflect the change in inventory method
Inventory – beg
P 500,000
Retained Earnings
P 500,000
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Problem 11-3
A. Jan 1, Weighted
P 7,800,000
Jan 1, FIFO
8.300,000
Decrease in inventory
P (500,000)
Adjustment to reflect the change in inventory method
Retained Earnings
P 500,000
Inventory – beg
P 500,000
Problem 11-4
C. Income under percentage of completion
Income under cost recovery
Pretax difference
Income Tax (30%)
Credit adjustment to retained earnings
P 9,000,000
7,000,000
2,000,000
(600,000)
P 1,400,000
Problem 11-5
A. Income by contracts under cost recovery
2016
P 7,000,000
2017
13,000,000
2018
12,000,000
P 32,000,000
Income by contracts under percentage of completion
2016
15,000,000
2017
16,000,000
2018
7,000,000
Pretax cumulative effect
Problem 11-6
A. Retained earnings, beg
Correction of error:
Overstatement of depreciation
Corrected Retained earnings
Net Income
Retained earnings, end
P
38,000,000
P 6,000,000
850,000
(50,000)
800,000
500,000
P 1,300,000
Problem 11-7
D. The effect is charged against retained earnings.
Problem 11-8
B. Inventory write off is not a prior period error.
Problem 11-9
1. A
2. D
Not a change in accounting policy but change in accounting estimate – adjustments
shall be recognized currently and prospectively.
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Problem 11-10
1. C
2. C
Development costs, 2018
Amortization
Adjustment to RE
P 5,840,000
(1,200,000)
P 4,640,000
Development costs, 2019
Amortization
Carrying amount
Error capitalized
Expensed in 2019
P 8,160,000
(1,800,000)
6,360,000
4,640,000
P 1,720,000
Problem 11-11
D. Gross Profit under cost recovery
2017
950,000
2018
1,250,000
Gross Profit under percentage of completion
2017
1,600,000
2018
1,900,000
Pretax cumulative effect
Income tax (30%)
Increase in Retained Earnings
P 2,200,000
3,500,000
P 1,300,000
(390,000)
P 910,000
Problem 11-12
A. The provision for uncollectible accounts receivable has no effect on retained earnings
Problem 11-13
B. Settlement of litigation has no effect on retained earnings
Problem 11-14
1. A
2. A
Retained earnings, Jan. 1, 2018
Net Income
Dividends Paid
Retained earnings, Dec. 31, 2018
Retained earnings, Jan. 1, 2019
Correction of error:
Overstatement of prior period
Income
Corrected Retained earnings
Net Income
Dividends Paid
Retained earnings, Dec. 31,2019
P 1,100,000
600,000
(300,000)
P 1,400,000
P 1,400,000
(650,000)
750,000
700,000
(150,000)
P 1,300,000
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Problem 11-15
1A
6 C
2A
7 A
3B
8 B
4A
9 B
5D
10 D
Problem 12-1
D. Depreciation
Bonus
Expenses
P 250,000
600,000
P 850,000
Problem 12-2
C. P40,000,000 x 5%
= P 2,000,000
Basis of income for half year is 25,000,000. Since 40,000,000 exceeds the half year
annual profit, 5% bonus charge is expensed for that period.
Problem 12-3
A. Property Tax
Repairs
Expenses
P 150,000
900,000
P1,050,000
{ 600,000 / 4 ]
Problem 12-4
D. Net Income
P 950,000
Incorrect allocation
of Gain
(200,000)
Incorrect recognition
of change in inventory 150,000
Net Income
P 900,000
Problem 12-5
C. Advertising
Bonus
Expenses
{ gains should be reported at the period realized ]
{ change in accounting policy, adjusted to RE }
P 2,000,000
3,000,000
P 5,000,000
Problem 12-6
A. Provision for first quarter
5% x P 10,000,000
Provision for second quarter
10% x P 25,000,000
Charge for the period
P 500,000
2,500,000
P2,000,000
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Problem 12-7
A. P 5,000,000 x 35%
= P 1,750,000
Problem 12-8
B. First quarter
Second quarter
Third quarter
6,000,000 x 30%
7,000,000 x 30%
8,000,000
21,000,000 x 25%
P 1,800,000
2,100,000
1,350,000
P 5,250,000
1,000,000 x 30%
1,500,000 x 30%
2,500,000 x 25%
4,000,000 x 25%
P 300,000
450,000
625,000
1,000,000
P 2,375,000
2,000,000 x 5%
1,500,000 x 5%
2,500,000 x 5%
P
Problem 12-9
A. First quarter
Second quarter
Third quarter
Fourth quarter
Income tax
Problem 12-10
B. First quarter
Second quarter
Third quarter
Total Bad Debts
Fourth quarter
Problem 12-11
D. Variable costs
Advertising
Depreciation
Fixed costs
Total expenses
P 1,000,000
375,000
60,000
900,000
P 2,335,000
100,000
75,000
125,000
300,000
450,000
P 150,000
[ 4,000,000 x 25% ]
[ 1,500,000 /4 ]
[ 600,000 / 10mos]
{ 4,000,000 – 1,000,000, - 1,500,000 – 600,000 ]
Problem 12-12
1. C
2. D
3. D
4. D
First Quarter P20,000,000 – 15,000,000 = 5,000,000 x 10% = P 500,000
Second Quarter
no work performed
Third Quarter P20,000,000 – 19,200,000 = 800,000 x 25% = P 200,000
First Quarter Balance
(500,000)
Third Quarter loss
P 300,000
Fourth Quarter
no work performed
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Problem 12-13
Charmaine Company
Income Statement
Three month ended March 31, 2019
Notes
Net Sales
Cost of sales
Gross profit (40% of net sales)
Interest income
Gross Income
P
25,000,000
15,000,000
10,000,000
150,000
10,150,000
{1}
Expenses
Selling Costs
Administrative Costs
Income before Tax
Income Tax (30%)
Net Income
{2]
[3]
(3,350,000)
(3,050,000)
3,750,000
(1,125,000)
2,625,000
P
Notes/Computations
1 Cost of sales 60% of P25,000,000
15,000,000
3 Depreciation – administrative
300,000
Insurance expense(400,000 /4)
100,000
Doubtful accounts (1% of net sales) 250,000
Administrative expenses
2,400,000
Total Administrative Costs
3,050,000
2 Depreciation – selling
150,000
Distribution Costs
3,200,000
Total Selling Costs
3,350,000
Charmaine Company
Statement of Financial Position
March 31, 2019
Assets
Current Assets
Cash
Receivables
Inventory
Prepaid Insurance
Total Current Assets
Non Current Assets
Notes Receivable
Property, Plant, and Equipment
Total Assets
Notes
(1)
(2)
(3)
P
1,000,000
1,900,000
3,500,000
300,000
6,700,000
(4)
5,000,000
19,050,000
30,750,000
P
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Liabilities and Shareholders’ Equity
Liabilities
Accounts Payable
Interest Payable
Total Liabilities
8,500,000
1,125,000
9,625,000
Shareholders’ Equity
Share Capital
Share Premium
Retained Earnings (net income)
Total Liabilities and Shareholders’ Equity
Notes
1 Accounts Receivables P 2,000,000
Doubtful accounts
(250,000)
Interest receivable
150,000
Total
P 1,900,000
2 Inventory, beg
Purchases
COGAS
Inventory, end(squeeze)
COGS
P 1,500,000
17,000,000
18,500,000
3,500,000
P15,000,000
(5)
5,000,000
4,000,000
12,125,000
P
3 Prepaid Insurance
Expired
Total
21,125,000
30,750,000
P 400,000
(100,000)
P 300,000
4 Land
P 1,500,000
Building & Equipment 18,000,000
Depreciation
(450,000)
PPE
P19,050,000
5 RE, beg
Net Income
RE, end
P 9,500,000
2,625,000
P12,125,000
Problem 12-14
Dunhill Company
Income Statement
Six month ended June 30, 2019
Sales
Cost of sales
Gross profit
Interest income
Dividend revenue
Gross Income
P
Expenses
Distribution Costs
General Expense
Depreciation
Interest Expense
Income before Tax
Income Tax (30%)
Net Income
P
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20,000,000
11,500,000
8,500,000
250,000
500,000
9,250,000
(2,500,000)
(1,100,000)
(700,000)
(300,000)
4,650,000
(1,300,000)
3,350,000
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Dunhill Company
Income Statement
Six month ended June 30, 2019
Sales
Cost of sales
Gross profit
Interest income
Dividend revenue
Gross Income
P
Expenses
Distribution Costs
General Expense
Depreciation
Interest Expense
Income before Tax
Income Tax (30%)
Net Income
12,500,000
7,000,000
5,500,000
250,000
200,000
5,950,000
(1,600,000)
(600,000)
(300,000)
(200,000)
3,250,000
(900,000)
2,350,000
P
Problem 12-15
COGS, before P
Inventory loss
Gain on reversal
COGS, after
Sales
Gross Profit
P
First
(7,000,000)
(100,000)
(7,100,000)
10,000,000
2,900,000
Second
(4,700,000)
100,000
(4,600,000)
8,000,000
3,400,000
Third
(4,900,000)
(150,000)
(5,050,000)
7,000,000
1,950,000
Fourth
(13,400,000)
150,000
(13,250,000)
15,000,000
1,750,000
Problem 12-16
1C
6 A
2C
7 C
3B
8 B
4D
9 B
5D
10 A
Problem 13-1
C. Segment Bix
Segment Dil
Revenue for reportable
segments
P 12,000
59,000
P 71,000
Problem 13-2
C. Segments A, B, C and E satisfy the 3 criteria
Segment D satisfies the 10% minimum of total assets
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Problem 13-3
B. Greater between profit and loss: P 4,800,000
Multiplied by
10%
Minimum Profit/loss
P 480,000
Reportable segments: V, W and X
Problem 13-4
B. P 1,200,000 / 10,000,000 = 12% minimum of total Profit
Problem 13-5
B. Sales – external
Sales – internal
Interest revenue
Total Sales
Multiplied by
Minimum revenue
P 20,000,000
5,000,000
1,000,000
P 26,000,000
10%
P 2,600,000
Problem 13-6
1. A
2. D
Sales – external P 50,000,000
Multiplied by
x 10%
Minimum
P 5,000,000
Sales – external P 50,000,000
Multiplied by
x 75%
Minimum
P 37,500,000
minimum sales to a major customer is 10% of total
external sales.
minimum total revenue to be disclosed by reportable
segments should qualify at least 75% of the entity’s
total external revenue.
Problem 13-7
D. Revenue
Expenses
Indirect
General
Interest
Income Tax
Operating Profit
P 3,000,000
(1,500,000)
(450,000)
(300,000)
(150,000)
(100,000)
P 500,000
Problem 13-8
D. Sales
Expenses
Gross profit
Common Costs
Operating Profit
P 3,000,000
7,500,000
(1,750,000)
(5,000,000)
1,250,000 / 2,500,000 Ratio: 50%
(750,000)
P 500,000
Ratio: 25% [ 3,000,000 / 12,000,000 ]
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Problem 13-9
D. Sales
Expenses
Indirect
Interest
Operating Profit
P 3,000,000
(1,900,000)
(125,000)
(300,000)
P 675,000
Problem 13-10
D. Sales
Expenses
Common Costs
Operating Profit
P 3,500,000
(1,100,000)
(1,625,000)
P 775,000
Problem 13-11
D. Sales
Expenses
Interest
Common Costs
Operating Profit
P 8,000,000
(4,800,000)
(640,000)
(320,000)
P 2,240,000
Problem 13-12
D. The amount reported to the chief operating decision maker should be the amount reported
as segment profit for the reportable segments.
Problem 13-13
Disclosures – Diversity Company
Sales
Profit/Loss
Total Assets
Segment A
25,000,000
7,000,000
35,000,000
B
15,000,000
6,000,000
18,000,000
Others
5,000,000
1,000,000
7,000,000
Total
45,000,000
14,000,000
60,000,000
Reconciliations
Revenue from reportable segments
P 40,000,000
Revenue from non reportable segments
5,000,000
Entity’s revenue shown in Income Statement P 45,000,000
Profit from reportable segments
Profit from non reportable segments
General Corporate expenses
Entity’s Profit shown in Income Statement
P 13,000,000
1,000,000
(2,000,000)
P 12,000,000
Assets from reportable segments
Assets from non reportable segments
Entity’s Assets shown in SFP
P 53,000,000
7,000,000
P 60,000,000
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Problem 13-14
Segment X
24,000,000
(9,800,000)
14,200,000
(4,800,000)
(1,200,000)
(2,000,000)
6,200,000
Segment Y
27,000,000
(14,000,000)
13,000,000
(4,800,000)
(1,350,000)
(1,600,000)
5,250,000
Others
9,000,000
(4,200,000)
4,800,000
(2,400,000)
(450,000)
(400,000)
1,550,000
Disclosures – Congo Company
Segment A
Sales
24,000,000
Profit/Loss
6,200,000
Depreciation
1,200,000
Y
27,000,000
5,250,000
1,350,000
Others
9,000,000
1,550,000
450,000
Sales
COGS
Gross Profit
Expenses
Depreciation
Income Tax
Profit/ Loss
P
P
Total
60,000,000
(28,000,000)
32,000,000
(12,000,000)
(3,000,000)
(4,000,000)
13,000,000
Total
60,000,000
13,000,000
3,000,000
Reconciliations
Revenue from reportable segments
P 51,000,000
Revenue from non reportable segments
9,000,000
Entity’s revenue shown in Income Statement P 60,000,000
Profit from reportable segments
Profit from non reportable segments
Unallocated Depreciation
General Corporate expenses
Entity’s Profit shown in Income Statement
P 11,450,000
1,550,000
(1,000,000)
(2,000,000)
P 10,000,000
Problem 13-15
Furniture
800,000
200,000
(600,000)
(120,000)
280,000
(100,000)
(50,000)
(30,000)
100,000
Stationery
500,000
150,000
(300,000)
(96,000)
254,000
(50,000)
(25,000)
(15,000)
164,000
Computer
400,000
50,000
(240,000)
(24,000)
186,000
(40,000)
(20,000)
(12,000)
114,000
Disclosures – Easy Company
Furniture
Sales - external P
800,000
Sales – internal
200,000
Finance Cost.
30,000
Profit/Loss
100,000
Total Assets
440,000
Total Liabilities
75,000
Stationery
500,000
150,000
15,000
164,000
170,000
50,000
Computer
400,000
50,000
12,000
114,000
100,000
15,000
Sales - external P
Sales – internal
COGS – external
COGS - internal
Gross Profit
Distribution Cost
Administrative Exp.
Finance Cost.
Profit/Loss
P
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Other
100,000
(60,000)
40,000
(10,000)
(5,000)
(3,000)
22,000
Other
100,000
3,000
22,000
5,000
3,000
Total
1,800,000
400,000
(1,200,000)
(240,000)
760,000
(200,000)
(100,000)
(60,000)
400,000
Total
1,800,000
400,000
60,000
400,000
715,000
143,000
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Reconciliations
Revenue from reportable segments
P 2,100,000
Revenue from non reportable segments
100,000
Elimination of intersegment revenue
(400,000)
Entity’s revenue shown in Income Statement P 1,800,000
Profit from reportable segments
Profit from non reportable segments
Share in profit
Elimination of intersegment profit
Unallocated Income
Unallocated Expense
Unallocated Income tax
Entity’s Profit shown in Income Statement
P 378,000
22,000
10,000
(160,000)
60,000
(50,000)
(90,000)
P 170,000
Assets from reportable segments
Assets from non reportable segments
General corporate assets
Entity’s Assets shown in SFP
P 710,000
5,000
85,000
P 800,000
Liabilities from reportable segments
Liabilities from non reportable segments
General corporate liabilities
Entity’s Liabilities shown in SFP
P 140,000
3,000
7,000
P 150,000
Problem 13-16
Criteria:
1. Total Revenue P 2,000,000
Multiplied by
10%
Minimum
P 200,000
2.
3.
Segments qualified:
1&3
Total Profit
Total Loss
Greater:
Multiplied by
Minimum
P 300,000
(100,000)
300,000
10%
P 30,000
Segments qualified:
1, 3 & 4
Total Assets
Multiplied by
Minimum
P 1,500,000
10%
P 150,000
Segments qualified:
1, 3 & 5
Segment 1
Segment 3
Segment 4
Segment 5
Total
Revenue
620,000
340,000
190,000
180,000
1,330,000 / 2,000,000 = 66.5%
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Additional reportable segments:
Segment 6 & 7 – 3 over 5 in aggregation criteria
Similar products, similar production process, and
similar product distribution system.
Revenue
Segment 1
620,000
Segment 3
340,000
Segment 4
190,000
Segment 5
180,000
Segment 6&7 190,000
Total
1,520,000 / 2,000,000 = 76%
Problem 13-17
Disclosures – Universal Company
Product A
2,500,000
650,000
350,000
2,600,000
1,300,000
600,000
Revenue
P
Segment profit/loss
Depreciation
Segment assets
Segment liabilities
Capital Expenditures
Product B
6,000,000
700,000
1,300,000
10,000,000
6,000,000
1,300,000
Total
8,500,000
1,350,000
1,650,000
12,600.000
7,300,000
1,900,000
Japan
3,500,000
Total
8,500,000
Entity-wide Disclosure – Universal Company
Revenue
Philippines
5,000,000
P
Problem 13-18
1B
6 D
2D
7 B
3B
8 D
4D
9 C
5C
10 D
Problem 14-1
D. Sales
AR, beg.
AR, end.
Writeoff
Cash Basis – Sales
P 4,600,000
1,000,000
(1,300,000)
(50,000)
P 4,250,000
Problem 14-2
C. Cash Sales
Credit Sales
AR, beg.
AR, end.
Cash Basis – Sales
P
200,000
3,000,000
400,000
(485,000)
P 3,115,000
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UPV BSA
Problem 14-3
A. Cash Sales
Credit Sales
AR, beg.
AR, end.
Cash Basis – Sales
P 1,900,000
2,850,000
1,000,000
(750,000)
P 5,000,000
Problem 14-4
A. Cash Sales
Credit Sales
AR, beg.
AR, end.
Writeoff
Cash Basis – Sales
[ 2,000,000 – 100,000 ]
[ 3,000,000 – 150,000 ]
P
500,000
3,000,000
1,000,000
(1,680,000)
(120,000)
P 2,700,000
Problem 14-5
D. Charges to insurance expense P 625,000
Increase in Prepaid Insurance
25,000
Insurance paid
P 650,000
Problem 14-6
B. Insurance
P 700,000
Salaries
1,500,000
Increase in Prepaid insurance
50,000
Decrease is Accrued Payables
20,000
Total
P 2,270,000
Problem 14-7
C. Initial Investment
Services earned
Drawings
Cash Basis – Capital
Problem 14-8
B. Sales
AR, end.
AR, beg.
Total
***Depreciation is not a cash expense
P 200,000
500,000
(100,000)
P 600,000
P 1,750,000
300,000
(500,000)
P 1,550,000
Problem 14-9
D. Cash Basis, Income
Add:
AR, end
4,000,000
AP, beg
3,000,000
Less:
AR, beg
2,000,000
AP, end
1,500,000
Accrual Basis, Income
P 6,000,000
7,000,000
(3,500,000)
P 9,500,000
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Problem 14-10
A. Payment to Suppliers P 4,900,000
Increase in AP
250,000
Purchases
P 5,150,000
Inventory, beg.
2,900,000
Inventory, end.
(2,600,000)
COGS
P 5,450,000
Problem 14-11
1. B
2. B
3. A
4. A
Cash Receipts
P 8,000,000
Discounts
500,000
Returns
250,000
Error
(50,000)
Writeoff
100,000
AR, end
1,350,000
AR, beg
(1,200,000)
Accrual – Gross Sales P 8,950,000
Less:
Discount
(500,000)
Sales Returns
(250,000)
Accrual – Net Sales P 8,200,000
Cash Payments
P 5,000,000
Discounts
200,000
Returns
400,000
Error
(100,000)
AR, end
1,850,000
AR, beg
(1,500,000)
Accrual – Gross Sales P 5,850,000
Less:
Discount
(200,000)
Sales Returns
(400,000)
Accrual – Net Sales P 5,250,000
amount not included in cash collections
amount not included in cash payments
Problem 14-12
1. A
2. A
Cash Sales
P 500,000
Collection - AR
1,800,000
Discounts
40,000
Collection - NR
80,000
Receivables, end.
400,000
Receivables, beg.
(400,000)
Accrual – Gross Sales P 2,420,000
Cash Purchases
P
130,000
Payments - AP
1,500,000
Discounts
20,000
Payments - NP
400,000
Payables, end.
220,000
Payables, beg.
(310,000)
Accrual – Gross Sales P 1,960,000
***Bank loan not included in the balance
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Problem 14-13
B. Prepaid Royalties, beg.
Year-end credit adjustment
Prepaid Royalties, end.
P 650,000
(250,000)
P 400,000
Problem 14-14
D. Annual Insurance, Jul 1
Insurance expense
Insurance, Dec. 31
P 32,000
(16,000)
P 16,000
Problem 14-15
1. A
2. A
Insurance, Mar. 1
Insurance expense
Insurance, Mar. 31
P 72,000
(2,000)
P 70,000
Insurance, Mar. 31.
Insurance expense
Total Insurance
Insurance, Mar 31
Insurance expense
3,000
72,000
75,000
70,000
P 5,000
Problem 14-16
B. Insurance, Jul. 1
Prepaid Tax
Less:
Expired Insurance
Tax Covered
Prepaid Expense
(36,000)
(6,000)
P 54,000
Problem 14-17
D. Interest Expense, unadj.
Decrease in Prepaid interest
Increase in Interest Payable
Interest Expense, Dec. 31
P 100,000
5,500
8,500
P 114,000
P 72,000
24,000
Problem 14-18
B. Advertising Expense, unadj
P 990,000
December Bill
50,000
Future Advertising
(60,000)
Advertising Expense, Dec. 31 P 980,000
Problem 14-19
A. Compensation Expense, unadj P 490,000
Accrued Salary
18,000
Bonus
175,000
Compensation Expense, Dec. 31P 683,000
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UPV BSA
Problem 14-20
B. Professional fees, unadj
December Bill
Future Advertising
Professional fees, Dec. 31
P 820,000
60,000
70,000
P 950,000
Problem 14-21
A. Rent Revenue, unadj
P 8,000,000
Increase in Receivable
280,000
Decrease in Unearned Income
800,000
Rent Revenue, Dec. 31 P 9,080,000
Problem 14-22
C. Royalty Revenue, unadj
Increase in Receivable
Increase in Unearned
Royalty Revenue, Dec. 31
P 2,500,000
50,000
(200,000)
P 2,350,000
Problem 14-23
2019
Dec. 31 Accounts Receivable
Retained Earnings
Sales
250,000
160,000
90,000
Retained Earnings
Advances to Supplier
Purchases
Accounts Payable
350,000
100,000
170,000
280,000
Expenses
Retained Earnings
Accrued Expenses
30,000
70,000
100,000
Inventory, beg.
Retained Earnings
150,000
150,000
Inventory, end
Income Summary
210,000
210,000
Retained Earnings
310,000
Depreciation
320,000
Acc. Dep – Equipment
30,000
Acc. Dep – Building
600,000
Doubtful Accounts
Allowance for DA
25,000
Interest Expense
Interest Payable
36,000
25,000
36,000
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Computations:
Sales, Cash Basis
AR, end
AR, beg.
Prior Period, adj
Sales
UPV BSA
P 4,000,000
250,000
(200,000)
40,000
P 4,090,000
Purchases, Cash Basis P 2,000,000
AP, end
280,000
AP, beg.
(350,000)
Error
100,000
Purchases
P 1,830,000
Inventory, beg
150,000
Inventory, end.
(210,000)
COGS
P 1,770,000
Expenses
Accrued Exp, end
Accrued Exp, beg
Expenses
P 1,500,000
100,000
(70,000)
P 1,530,000
Retained Earnings, unadj
P 600,000
Errors:
Sales earned, 2018
200,000
Prior Period Sales Adjustment
(40,000)
Unrecorded Purchases, 2018
(350,000)
Accrued Expenses
(70,000)
Unrecorded Inventory
150,000
Unrecorded Depreciation
(310,000)
Retained Earnings, adj
P 180,000
Zamboanga Company
Income Statement
Year Ended December 31, 2019
Sales
Cost of Sales
Gross Profit
P
Expenses
Depreciation
Doubtful Accounts
Interest Expense
Net Income
4,090,000
1,770,000
2,320,000
1,530,000
320,000
25,000
36,000
P
1,911,000
409,000
Zamboanga Company
Statement of Financial Position
December 31, 2019
ASSETS
Current Assets
Cash
Account Receivable – net
Inventory
Advances to Supplier
Total Current Assets
Noncurrent Assets
Equipment – net
Building – net
Land
Total Noncurrent Assets
P
1,500,000
225,000
210,000
100,000
P
2,035,000
170,000
900,000
800,000
Total assets
1,870,000
P
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3,905,000
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UPV BSA
LIABILITIES AND SHARESHOLDER’S EQUITY
Current Liabilities
Accounts Payable
Accrued Expenses
Total Current Liabilities
280,000
136,000
416,000
Noncurrent Liabilities
Mortgage Payable
900,000
Equity
Share Capital
Retained Earnings (180,000 + 409,000)
Shareholder’s Equity
2,000,000
589,000
2,589,000
Total Liabilities and Shareholder’s Equity
P
3,905,000
Problem 14-24
2019
Dec. 31 Accounts Receivable
Sales
Purchases
Accounts Payable
Inventory, end
Income Summary
Doubtful Accounts
Allowance for DA
40,000
40,000
30,000
30,000
230,000
230,000
15,000
15,000
Depreciation
90,000
Acc. Dep. – Equipment
40,000
Acc, Dep. – Building
50,000
Rent
Retained Earnings
Accrued Rent
Prepaid Insurance
Retained Earnings
Insurance
5,000
5,000
10,000
12,000
5,000
7,000
Computations:
Sales, Cash Basis
AR, end
AR, beg.
Sales
P 2,000,000
290,000
(250,000)
P 2,040,000
Purchases, Cash Basis P 1,200,000
AP, end
130,000
AP, beg.
(100,000)
Purchases
P 1,230,000
Inventory, beg
150,000
Inventory, end.
(230,000)
COGS
P 1,150,000
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UPV BSA
Retained Earnings, unadj
Errors:
Unrecorded Rent, 2018
Unrecorded Insurance
Retained Earnings, adj
P
345,000
(5,000)
7,000
P 347,000
Evelyn Company
Income Statement
Year Ended December 31, 2019
Sales
Cost of Sales
Gross Profit
P
Office Expenses
Depreciation
Doubtful Accounts
Rent
Insurance
Supplies Expense
Net Income
2,040,000
1,150,000
890,000
255,000
90,000
15,000
245,000
45,000
140,000
P
790,000
100,000
Evelyn Company
Statement of Financial Position
December 31, 2019
ASSETS
Current Assets
Cash
Account Receivable – net
Inventory
Prepaid Insurance
Total Current Assets
Noncurrent Assets
Equipment – net
Building – net
Land
Total Noncurrent Assets
P
200,000
275,000
230,000
12,000
P
717,000
320,000
750,000
300,000
1,370,000
Total assets
P
2,087,000
LIABILITIES AND SHARESHOLDER’S EQUITY
Current Liabilities
Accounts Payable
Accrued Expenses
Total Current Liabilities
130,000
10,000
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140,000
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UPV BSA
Equity
Share Capital
Retained Earnings (180,000 + 409,000)
Shareholder’s Equity
1,500,000
447,000
1,947,000
Total Liabilities and Shareholder’s Equity
P
2,087,000
Problem 14-25
2019
Dec. 31 Inventory, end
Income Summary
Accounts Receivable
Sales
500,000
500,000
500,000
500,000
Purchases
Accounts Payable
80,000
Expenses
Accrued Expense
20,000
Receivable from President
Purchases
10,000
Sales
25,000
80,000
20,000
10,000
Deposit from customer
25,000
Doubtful Accounts
Allowance for DA
5,000
Supplies
Expenses
5,000
5,000
5,000
Equipment
100,000
Depreciation
5,000
Acc. Dep. – Equipment
5,000
Expenses
100,000
Prepaid Insurance
Expenses
Interest Expense
Interest Payable
15,000
15,000
4,000
4,000
Computations:
Sales, Cash Basis
AR, end
Error
Sales
P 4,400,000
100,000
(25,000)
P 4,475,000
Purchases, Cash Basis P 4,200,000
AP, end
80,000
Error
(10,000)
Purchases
P 4,270,000
Inventory, end.
(500,000)
COGS
P 3,770,000
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Expenses
Accrued Exp, end
Errors:
Supplies
Equipment
Insurance
Expenses
P
560,000
20,000
(5,000)
(100,000)
(15,000)
P 460,000
Civic Company
Income Statement
Year Ended December 31, 2019
Sales
Cost of Sales
Gross Profit
P
Expenses
Doubtful Accounts
Depreciation
Interest Expense
Net Income
4,475,000
3,370,000
705,000
460,000
5,000
5,000
4,000
P
474,000
231,000
Civic Company
Statement of Financial Position
December 31, 2019
ASSETS
Current Assets
Cash
Account Receivable – net
Inventory
Prepaid Insurance
Supplies
Receivable from President
Total Current Assets
P
840,000
95,000
500,000
15,000
5,000
10,000
P
Noncurrent Assets
Equipment – net
1,465,000
95,000
Total assets
P
1,560,000
LIABILITIES AND SHARESHOLDER’S EQUITY
Current Liabilities
Accounts Payable
Accrued Expenses
Deposit from Customers
Interest Payable
Total Current Liabilities
80,000
20,000
25,000
4,000
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129,000
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UPV BSA
Non Current Liabilities
Notes Payable
Equity
Share Capital
Retained Earnings
Shareholder’s Equity
200,000
1,000,000
231,000
Total Liabilities and Shareholder’s Equity
1,231,000
P
1,560,000
Problem 14-26
1A
6 B
2B
7 A
3D
8 A
4D
9 C
5C
10 D
Problem 15-1
C. Total Assets, end
P 7,500,000
Total Liabilities, end
(3,200,000)
Total Equity
P 4,300,000
Contributed Capital
(2,800,000)
Retained Earnings, end 1,500,000
Dividends
250,0000
Retained Earnings, beg (1,000,000)
Net Income
P 750,000
Problem 15-2
A. Retained Earnings, end P 4,500,000
Dividends:
Cash Dividend
1,000,000
Share Dividend
1,250,000
Retained Earnings, beg (3,500,000)
Net Income
P 3,250,000
Problem 15-3
B. Shareholders’ Equity P 4,000,000
Share Capital
(3,000,000)
Retained Earnings, end 1,000,000
Retained Earnings, beg 900,000
Correction of error
(200,000)
Dividend
(400,000)
Net Income
700,000
Retained Earnings, end P 1,000,000
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Problem 15-4
A. Shareholders’ Equity P 5,000,000
Share Capital
(3,000,000)
Gain on Treasury
(300,000)
Retained Earnings, end 1,700,000
[ Share Premium ]
Retained Earnings, beg 1,400,000
Correction of error
100,000
Dividend
(600,000)
Net Income
800,000
Retained Earnings, end P 1,700,000
Problem 15-5
C. Asset
Liabilities
Equity (net increase)
Dividends
Contributed Capital
Net Income
P 8,900,000
2,700,000
6,200,000
1,300,000
(6,600,000)
P 900,000
Problem 15-6
A. Assets (net increase) P 1,650,000
Liabilities (net decrease)
100,000
Equity (net increase)
1,750,000
Correction of error
(250,000)
Dividends
1,500,000
Contributed Capital
(1,000,000)
Net Income
P 2,000,000
Problem 15-7
C. Asset (net increase)
Liabilities
Equity (net increase)
Increase in Capital
Net Loss
Problem 15-8
C. Asset
Liabilities
Equity (net increase)
Dividends
Contributed Capital
Net Income
P
200,000
160,000
40,000
(240,000)
P (200,000)
P 1,800,000
500,000
1,300,000
300,000
(1,100,000)
P 500,000
Problem 15-9
C. Asset
Liabilities
Net of Bank loan
P10,900,000
(1,200,000)
(3,000,000)
Increase in Interest Payable
(300,000)
Equity (net increase)
6,400,000
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Equity (net increase)
Dividends
Increase Capital
Donated Capital
Net Income
6,400,000
4,500,000
(3,000,000)
(2,000,000)
P 5,900,000
Problem 15-10
D. Assets (net increase) P 370,000
Liabilities (net increase)
(110,000)
Equity (net increase)
260,000
Investments
(500,000)
Withdrawals
100,000
Net Loss
P 140,000
Problem 15-11
1. B
2. B
3. A
4. B
Payment to Creditors
Accounts Payable, end
Purchases
Merchandise (debit)
P 2,000,000
750,000
2,750,000
(700,000) since Merchandise account balance is debit,
there are more merchandise on hand than sold.
Sales
Accounts Receivable
Collections
2,050,000
(600,000)
P 1,450,000
Cash Transactions:
Capital
Collections
Expenses
Payment to Creditors
Cash
P 2,000,000
1,450,000
(100,000)
(2,000,000)
P 1,350,000
SQUEEZE:
Sales
COGS
Purchases
Inventory
Gross Loss
Expenses
Net Loss
2,050,000
2,750,000
(450,000)
(2,300,000)
(250,000)
(100,000)
(350,000)
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Problem 15-12
Dec. 31
6,880,000
1,600,000
5,280,000
Assets
Liabilities
Equity
Equity, end.
Withdrawals
Investments
Equity, beg.
Net Income
P
P
Cash Sales
Collections
Discounts
Returns
Writeoff
Jan. 1
6,000,000
2,120,000
3,880,000
5,280,000
400,000
(600,000)
(3,880,000)
1,200,000
P
800,000
3,960,000
100,000
320,000
120,000
Increase in Trade Receivables 1,200,000
Gross Sales
P 6,500,000
Discounts
(100,000)
Returns
(320,000)
Net Sales
P 6,080,000
Cash Purchases
Payments
Allowances
P
600,000
2,800,000
80,000
Decrease in Trade Payables
(400,000)
Gross Sales
P 3,080,000
Allowances
(80,000)
Net Purchases
P 3,000,000
Inventory, beg
1,600,000
Inventory, end
(960,000)
COGS
P 3,640,000
Equipment, beg
Purchase
Sold
Equipment, end
Depreciation
P 1,200,000
400,000
(100,000)
(1,120,000)
P 380,000
Proceeds from sale
Carrying Amount
Gain on Sale
P
120,000
(100,000)
P 20,000
Accrued Expense, beg P 40,000
Interest Expense
160,000
Accrued Expense, end
(80,000)
Total Interest
P 120,000
Unearned Income, beg P 120,000
Rent Income
80,000
Unearned Income, end
(40,000)
Total Rent Income
P 160,000
Lancer Company
Income Statement
Year Ended December 31, 2019
Net Sales
COGS
Gross Profit
Other Income
Gain on Sale
Rent Income
Total Income
Expenses
Depreciation
Doubtful Accounts
Interest
Net Income
P
P
6,080,000
3,640,000
2,440,000
P
180,000
2,620,000
P
1,420,000
1,200,000
20,000
160,000
800,000
380,000
120,000
120,000
114 INTERMEDIATE ACCOUNTING
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FRANZ KYLLE POCSON
UPV BSA
Problem 15-13
Dec. 31
4,810,000
1,410,000
3,400,000
Assets
Liabilities
Equity
Increase in Equity
Dividends
Increase in Share Capital
Net Income
Jan. 1
4,390,000
1,890,000
2,500,000
P 900,000
400,000
(800,000)
P 500,000
Collections
Discounted Note
Returns
P 2,950,000
200,000
320,000
Increase in Trade Receivables
220,000
Sales
P 3,370,000
Payments
2,100,000
Decrease in Trade Payables
(320,000)
Purchases
P 1,780,000
Inventory, beg
1,600,000
Inventory, end
(1,500,000)
COGS
P 1,880,000
190,000
P 200,000
P (10,000)
Equipment, beg
Purchase
Equipment, end
Depreciation
P 1,000,000
280,000
(1,120,000)
P 80,000
Expense
P 790,000
Prepaid Expense, beg
120,000
Accrued Expense, end
50,000
Prepaid Expense, end
(100,000)
Accrued Expense, beg
(40,000)
Total Expense
P 820,000
Bank loan should not be included in
the Trade Payables.
Proceeds from sale
Investment, end
Investment, beg
Loss on Sale
Proceeds
Face Value, note
Loss on discounting
P
250,000
100,000
(400,000)
P (50,000)
Interest:
P 300,000 x 12% (10/12) = P 30,000
Corolla Company
Income Statement
Year Ended December 31, 2019
Sales
COGS
Gross Profit
P
Expenses
Depreciation
Interest
Loss on Sale
Loss on discounting
Net Income
P
3,370,000
1,880,000
1,490,000
P
990,000
500,000
820,000
80,000
30,000
50,000
10,000
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FRANZ KYLLE POCSON
UPV BSA
Problem 15-14
Assets
Liabilities
Equity
Jan. 1
1,590,000
460,000
1,130,000
Cash
Deposits
Disbursements
Service Charge
Cash
P 200,000
3,930,000
(3,360,00)
(10,000)
P 760,000
Accrued Salaries, end P
15,000
Salaries Expense
400,000
Accrued Salaries, beg
(10,000)
Total Salaries
P 405,000
Receipts
P 3,930,000
Writeoff
30,000
Increase in Receivables
30,000
Sales
P 3,990,000
Payments
P 2,280,000
Returns
(80,000)
Decrease in inventory
50,000
COGS
P 2,260,000
Supplies, beg
Supplies Expense
Supplies, end
Total Supplies
P
ADA, end
Write off
ADA, beg
Doubtful Accounts
P
AP, beg
Purchase on account
Returns
Payments
AP, end
Depreciation:
P 350,000 x 10% = P 35,0000
P
P
40,000
75,000
(20,000)
95,000
50,000
30,000
(20,000)
60,000
P
250,000
2,250,000
(70,000)
(2,200,000)
P 260,000
Camry Company
Income Statement
Year Ended December 31, 2019
Sales
COGS
Gross Profit
P
Salaries
Supplies
Tax
Depreciation
Doubtful Accounts
Bank Charge
Other Expense
Miscellaneous
Net Income
P
3,990,000
2,260,000
1,730,000
P
930,000
800,000
405,000
95,000
45,000
35,000
60,000
10,000
245,000
35,000
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FRANZ KYLLE POCSON
UPV BSA
Camry Company
Statement of Financial Position
December 31, 2019
ASSETS
Current Assets
Cash
Account Receivable – net
Inventory
Supplies
Total Current Assets
P
760,000
400,000
650,000
20,000
P
1,830,000
Noncurrent Assets
Equipment – net
215,000
Total assets
P
2,045,000
LIABILITIES AND OWNER’S EQUITY
Current Liabilities
Accounts Payable
Notes Payable
Accrued Expense
Total Liabilities
260,000
80,000
15,000
355,000
Equity
Owner’s Capital, beg
Net Income
Withdrawals
Total Liabilities and Owner’s Equity
Problem 15-15
Cash in Bank, unadj
Outstanding Check
Correct Balance
Total Deposits
Total Checks drawn
250,000
(50,000)
P 200,000
3,500,000
P 3,300,000
Receipts
Cash Investment
Bank Proceeds
Deposit from Sales
P 3,500,000
(500,000)
(500,000)
P 2,500,000
1,130,000
800,000
(240,000)
P
1,690,000
2,045,000
P
Disbursements
P 3,300,000
Bank Payment
(125,000)
Interest
(25,000)
Installments
(445,000)
Checks paid-Creditors P 2,705,000
Receipts
Disbursements
Cash on Hand, end
Advances
Disbursements
Cash Collections
Deposit from Sales
Accounts Receivable
Sales
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P
125,000
(75,000)
550,000
P 600,000
2,500,000
900,000
P 4,000,000
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FRANZ KYLLE POCSON
UPV BSA
Checks paid-Creditors P 2,705,000
Accounts Payable
350,000
Purchases
P 3,055,000
Inventory, end
(755,000)
COGS
P 2,300,000
Building, 4,500,000 /15 = P 300,000
Equipment 400,000 / 5 =
80,000
Depreciation
P 380,000
Complex Company
Income Statement
Year Ended December 31, 2019
Sales
COGS
Gross Profit
P
Expenses
Utilities
Salaries
Supplies
Tax
Depreciation
Doubtful Accounts
Interest
Net Income
P
4,000,000
2,300,000
1,700,000
P
900,000
800,000
100,000
100,000
175,000
25,000
380,000
50,000
70,000
Complex Company
Statement of Financial Position
December 31, 2019
ASSETS
Current Assets
Cash
Account Receivable – net
Inventory
Total Current Assets
P
325,000
850,000
755,000
Noncurrent Assets
PPE
Total assets
P
1,930,000
P
6,020,000
7,950,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts Payable
Notes Payable
Advances to Customers
Total Liabilities
Equity
Share Capital
Retained Earnings (800,000 – 150,0000)
Total Liabilities and Owner’s Equity
350,000
375,000
75,000
800,000
6,500,000
650,000
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P
7,150,000
7,950,000
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FRANZ KYLLE POCSON
UPV BSA
Problem 15-16
Cash Collections
Advances
Receipts
AR, end
Advances, beg
AR, beg
Advances, end
Sales
P 2,960,000
70,000
P 3,030,000
200,000
90,000
(120,000)
(50,000)
P 3,150,000
Cash Payments
AP, end
AP, beg
Purchases
Inventory, beg
Inventory, end
COGS
P 1,640,000
100,000
(170,000)
P 1,570,000
230,000
(245,000)
P 1,555,000
Equipment Sold
Acc. Dep
Carrying Amount
Proceeds
Gain
P
Insurance, beg
Insurance Expense
Insurance, end
Insurance Expense
Depreciation:
750,000 x 10%
200,000 x 10% (1/4)
2,000,000 x 10%
Total
P
P
35,000
80,000
(25,000)
90,000
= 75,000
= 5,000
= 200,000
P 280,000
Land
P 500,000
Building
2,000,000
Equipment 1
750,000
Equipment 2
200,000
Acc Dep – Building
(900,000)
Acc Dep – Equipment 1 (285,000)
Acc Dep – Equipment 2
(5,000)
PPE
P 2,260,000
50,000
(30,000)
P 20,000
45,000
P 25,000
Retained Earnings, beg P 365,000
Net Income
705,000
Dividends
250,000
Retained Earnings, end P 820,000
Accrued Salaries, end P 30,000
Salaries Expense
390,000
Accrued Salaries, beg
(20,000)
Salaries Expense
P 400,000
Ultimate Company
Income Statement
Year Ended December 31, 2019
Sales
COGS
Gross Profit
Gain on sale
Total Income
P
P
P
Expenses
Salaries
Insurance
Depreciation
Doubtful Accounts
Other Expenses
Net Income
400,000
90,000
280,000
10,000
135,000
P
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3,150,000
1,555,000
1,595,000
25,000
1,620,000
915,000
705,000
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FRANZ KYLLE POCSON
UPV BSA
Ultimate Company
Statement of Financial Position
December 31, 2019
ASSETS
Current Assets
Cash
Account Receivable – net
Inventory
Prepaid Insurance
Total Current Assets
P
905,000
190,000
245,000
25,000
Noncurrent Assets
PPE
Total assets
P
1,365,000
P
2,260,000
3,625,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts Payable
Accrued Salaries
Dividend Payable
Advances to Customers
Total Liabilities
100,000
10,000
125,000
50,000
305,000
Equity
Share Capital
Retained Earnings
Total Liabilities and Owner’s Equity
2,500,000
820,000
P
3,320,000
3,625,000
Problem 16-1
a. Omission of accrued salaries
b. Inventory Overstated
c. Prepaid insurance expensed
d. Unrecorded Interest receivable
e. Error in Recording Sale
Net Correction
Net Income, before
Net Income
P
2018
(100,000)
(190,000)
(290,000)
1,750,000
1,460,000
2019
100,000
(140,000)
190,000
120,000
20,000
(120,000)
170,000
2,000,000
2,170,000
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FRANZ KYLLE POCSON
UPV BSA
Adjusting entries:
Books – open
Books – closed
Retained Earnings
100,000
Salaries Expense
100,000
Salaries Expense
140,000
Salaries Payable
Retained Earnings
Inventory
none
Retained Earnings
140,000
Salaries Payable
140,000
190,000
190,000
none
Prepaid Insurance
120,000
Insurance Expense
120,000
Prepaid Insurance
120,000
Retained Earnings
120,000
Interest Receivable
20,000
Interest Income
20,000
Interest Receivable
20,000
Retained Earnings
20,000
Miscellaneous Income 220,000
Acc. Depreciation
280,000
Equipment
400,000
Depreciation
40,000
Gain on sale
60,000
Retained Earnings
Acc. Depreciation
Equipment
120,000
280,000
400,000
Problem 16-2
a. Inventory Understated
Inventory Overstated
b. Depreciation Understated
c. Premium Insurance expensed
d. Unrecorded Sale
Net Correction
Net Income, before
Net Income
P
2018
20,000
(4,000)
10,000
26,000
3,000,000
3,026,000
2019
(20,000)
(18,000)
(5,000)
32,000
(11,000)
4,000,000
3,989,000
Adjusting entries:
Inventory, Jan. 1
20,000
Retained Earnings
20,000
Income Summary
18,000
Inventory, Dec. 31
18,000
Retained Earnings
4,000
Acc. Depreciation
4,000
Prepaid Insurance
5,000
Insurance Expense
5,000
Retained Earnings
10,000
Cash
32,000
Acc. Depreciation
200,000
Machine
200,000
Gain on Sale
32,000
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FRANZ KYLLE POCSON
UPV BSA
Problem 16-3
a. Collection
b. Unrecorded Purchases
c. Depreciation Understated
d. Error in recording supplies
e. Unrecorded Sale
Net Correction
Net Income, before
Net Income
2018
-
2019
(160,000)
(90,000)
P
300,000
140,000
5,000,000
5,140,000
(90,000)
4,000,000
3,026,000
Adjusting entries:
Cash
100,000
Accounts Receivable 100,000
Retained Earnings
90,000
Acc. Depreciation
90,000
Purchases
160,000
Accounts Payable
160,000
Supplies
Purchases
Accounts Receivable
Sales
20,000
300,000
300,000
20,000
Problem 16-4
a.
b.
Prepaid Insurance expensed
Inventory, 2018 Understated
Inventory, 2019 Understated
c. Unrecorded Taxes
d. Error in recording Advances
Net Correction
Net Income, before
Net Income
P
10,000
(80,000)
120,000
(60,000)
(100,000)
(120,000)
1,550,000
1,440,000
Adjusting entries:
Prepaid Insurance
10,000
Insurance Expense
10,000
Inventory, Jan. 1
80,000
Retained Earnings
80,000
Tax Expense
Tax Payable
Sales
60,000
60,000
100,000
Advances to Customer
100,000
Inventory, Dec. 31
120,000
Income Summary
120,000
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FRANZ KYLLE POCSON
UPV BSA
Problem 16-5
A. Net Income
P 5,000,000
Prepaid Insurance
200,000
Accrued Wages
(250,000)
Deferred Rent
(250,000)
Interest Receivable
100,000
Corrected Net Income P 4,750,000
Problem 16-6
B.
Inventory Understated
Inventory Overstated
Depreciation Understated
Depreciation Overstated
Net Corrections
2018
200,000
2019
(200,000)
(300,000)
Retained Earnings
(50,000)
150,000
100,000
(400,000)
(250,000)
Problem 16-7
C.
Inventory Understated
Inventory Overstated
Net Corrections
2018
60,000
60,000
2019
(60,000)
(75,000)
(135,000)
Retained Earnings
2019
140,000
200,000
Retained Earnings
(75,000)
Problem 16-8
D.
Inventory Overstated
Inventory Understated
Rent Expense Understated
Rent Expense Overstated
Net Corrections
2018
(140,000)
(48,000)
(188,000)
66,000
406,000
(218,000)
Problem 16-9
1. A
2. B
3. C
Inventory Understated
Inventory Overstated
Depreciation Understated
Prepaid Insurance expensed
Unrecorded Sale
Net Corrections
2018
200,000
(50,000)
100,000
250,000
2019
(200,000)
(300,000)
Retained Earnings
(50,000)
250,000
(300,000)
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(50,000)
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UPV BSA
Problem 16-10
1. B
2. A
3. A
4. A
Inventory Understated
Inventory Overstated
Depreciation Understated
Prepaid Insurance expensed
Unrecorded Sale
Net Corrections
2018
160,000
(60,000)
100,000
200,000
2019
(160,000)
(150,000)
(100,000)
108,000
(302,000)
RE
Working Capital
(150,000)
(102,000)
108,000
(42,000)
Problem 16-11
1. A
2. D
2017
(220,000)
a. Omission of accrued salaries
b. Inventory Understated
Inventory Overstated
Inventory Understated
Net Correction
Net Income, before
Net Income
Retained Earnings, beg.
Prior Period adjustment
(860,000) + 180,000
Net Income
Dividends
Retained Earnings, end
400,000
180,000
2018
220,000
(140,000)
(400,000)
(540,000)
(860,000)
P
P
12,600,000
P
(680,000)
3,830,000
(1,750,000)
11,000,000
2019
140,000
540,000
150,000
830,000
3,000,000
3,830,000
Problem 16-12
B.
Inventory Understated
Inventory Overstated
Depreciation Understated
Depreciation Understated
Unrecorded Accrued Salaries
Unrecorded Accrued Salaries
Net Corrections
2018
100,000
2019
(100,000)
(40,000)
(40,000)
(80,000)
(20,000)
(60,000)
80,000
(120,000)
(240,000)
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UPV BSA
Problem 16-13
A.
Inventory, beg Overstated
Inventory, end Understated
Prepaid Insurance Expensed
Error in Recording Advances
Net Corrections
Net Income, before
Net Income
2019
300,000
500,000
(50,000)
(100,000)
650,000
2,000,000
P 2,650,000
Problem 16-14
1. A
2. B
3. D
Inventory Understated
Inventory Overstated
Depreciation Overstated
Accrued Income Overstated
Accrued Salaries Understated
Unrecorded Sale
Net Corrections
2018
-
2019
(800,000)
Retained Earnings
250,000)
250,000
(300,000)
(150,000)
100,000
(1,150,000)
(900,000)
Problem 16-15
1. D
2. A
3. A
4. D
2018
(35,000)
Inventory Overstated
Inventory Understated
Depreciation Overstated
25,000
Depreciation Understated
Prepaid Insurance Understated 5,000
Unearned Income Overstated
Accrued Salaries Understated
Net Corrections
(5,000)
2019
35,000
10,000
(8,000)
(5,000)
4,000
(20,000)
16,000
RE
Working Capital
10,000
11,000
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4,000
(20,000)
(6,000)
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UPV BSA
Problem 16-16
B. Net Income, before
Correction of error:
Unrecorded Purchases
Unrecorded Inventory
Unrecorded Advertising
Overstated Rent Income
Understated Insurance
Net Income
P 6,500,000
(1,000,000)
1,500,000
(500,000)
(200,000)
100,000
P 6,400,000
Problem 16-17
1C
6 D
2A
7 D
3A
8 B
4C
9 D
5C
10 C
Problem 17-1
Accounts Receivable, beg.
P 440,000
Sales
4,500,000
Accounts Receivable, end
(540,000)
Write Off
(10,000)
Cash received from customers P 4,390,000
Accounts Payable, beg.
Purchases
Accounts Payable, end
Cash payments to creditors
P
160,000
2,850,000
(280,000)
P 2,730,000
Accrued Salaries, beg
Salaries Expense
Accrued Salaries, end
Salaries Paid
P
Prepaid Insurance, end
Salaries Expense
Accrued Salaries, beg
Insurance Paid
P
P
15,000
20,000
(10,000)
25,000
Rent
P
250,000
Other Expenses
P
100,000
80,000
600,000
(50,000)
P 630,000
Direct Method – Operating Activities:
Cash received
Cash payments
Salaries Paid
Insurance Paid
Rent
Other Expenses
Net Cash Provided
P 4,390,000
(2,730,000)
(630,000)
(25,000)
(250,000)
(100,000)
P 655,000
Indirect Method – Operating Activities:
Net Income
P
Increase in AR
Decrease in Inventory
Increase in Insurance
Increase in AP
Decrease in Accrued
Salaries
Depreciation
Net Cash Provided
P
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450,000
(80,000)
150,000
(5,000)
120,000
(30,000)
50,000
655,000
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UPV BSA
Problem 17-2
Hill Company
Statement of Cash Flows
Year Ended XX 2019
Cash flows from operating activities:
Net Income
Increase in Accounts Receivable
Increase in Inventory
Decrease in Prepaid Expenses
Increase in Accounts Payable
Decrease in Accrued Expenses
Depreciation
Net Cash provided
P 1,500,000
(650,000)
(750,000)
50,000
250,000
(150,000)
350,000
P
Cash flows from investing activities:
Purchase of equipment
600,000
(1,000,000)
Cash flows from financing activities:
Issuance of share capital
Payment of cash dividend
Net Cash provided
Decrease in cash and cash equivalents
Add: Cash and Cash Equivalent – 2018
Cash and Cash Equivalent – 2019
500,000
(300,000)
200,000
P (200,000)
950,000
P 750,000
Problem 17-3
Accounts Receivable, beg.
P 210,000
Sales
4,450,000
Accounts Receivable, end
(370,000)
Write Off
(20,000)
Cash received from customers P 4,270,000
Accounts Payable, beg.
Purchases
Accounts Payable, end
Cash payments to creditors
Accrued Salaries, beg
Salaries Expense
Accrued Salaries, end
Salaries Paid
P
345,000
2,630,000
(400,000)
P 2,575,000
40,000
640,000
(70,000)
P 610,000
Prepaid Insurance, end
Salaries Expense
Accrued Salaries, beg
Insurance Paid
P
P
80,000
100,000
(90,000)
90,000
Rent
P
350,000
Interest Expense
Interest Payable, end
Interest Paid
P
40,000
(5,000)
35,000
P
P
Income Tax Payable, beg
Income Tax Expense
Income Tax Payable, end
Interest Paid
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P
P
15,000
200,000
(35,000)
180,000
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Sandy Company
Statement of Cash Flows
Year Ended XX 2019
Cash flows from operating activities:
Cash received
Cash payments
Salaries Paid
Insurance Paid
Rent
Interest Paid
Income Tax Paid
Net Cash provided
P 4,270,000
(2,575,000)
(610,000)
(90,000)
(350,000)
(35,000)
(180,000)
Cash flows from investing activities:
Purchase of equipment
Sale of Equipment
Net Cash used
(870,000)
110,000
P
430,000
(760,000)
Cash flows from financing activities:
Issuance of Bonds Payable
Purchase of Treasury
Payment of cash dividend
Net Cash provided
Decrease in cash and cash equivalents
Add: Cash and Cash Equivalent – 2018
Cash and Cash Equivalent – 2019
600,000
(140,000)
(160,000)
300,000
P (30,000)
150,000
P 120,000
Sandy Company
Statement of Cash Flows
Year Ended XX 2019
Cash flows from operating activities:
Net Income
Increase in Accounts Receivable
Increase in Inventory
Decrease in Prepaid Expenses
Increase in Accounts Payable
Increase in Salaries Payable
Increase in Income Tax Payable
Increase in Interest Payable
Gain on Sale
Depreciation
Net Cash provided
P
500,000
(160,000)
(230,000)
10,000
55,000
30,000
20,000
5,000
(60,000)
260,000
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P
430,000
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Problem 17-4
Forest Company
Statement of Cash Flows
Year Ended XX 2019
Cash flows from operating activities:
Net Income
Increase in Accounts Receivable
Increase in Inventory
Decrease in Accounts Payable
Increase in Accrued Expenses
Depreciation
Unrealized gain
Loss on retirement
Discount Amortization
Net Cash provided
Cash flows from financing activities:
Retirement of Bonds
Issuance of share capital
Payment of cash dividend
Net Cash provided
Increase in cash and cash equivalents
Add: Cash and Cash Equivalent – 2018
Cash and Cash Equivalent – 2019
P 1,705,000
(80,000)
(60,000)
(310,000)
100,000
100,000
(100,000)
28,000
10,000
P 1,393,000
(210,000)
120,000
(1,000,000)
1,090,000
P 303,000
300,000
P 603,000
Problem 17-5
Fearsome Company
Statement of Cash Flows
Year Ended XX 2019
Cash flows from operating activities:
Net Income
Decrease in Accounts Receivable
Increase in Inventory
Increase in Accounts Payable
Depreciation
Investment Income
Gain on Sale
Net Cash provided
Cash flows from investing activities:
Purchase of equipment
Sale of Equipment
Net Cash used
Cash flows from financing activities:
Issuance of share capital
Sale of Treasury
Payment of cash dividend
P 3,050,000
100,000
(150,000)
50,000
400,000
(200,000)
(20,000)
P 3,230,000
(1,200,000)
70,000
(1,130,000)
1,500,000
900,000
(2,500,000)
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Net Cash provided
Increase in cash and cash equivalents
Add: Cash and Cash Equivalent – 2018
Cash and Cash Equivalent – 2019
(100,000)
P 2,000,000
350,000
P 2,350,000
Problem 17-6
Kenwood Company
Statement of Cash Flows
Year Ended XX 2019
Cash flows from operating activities:
Net Income
Increase in Accounts Receivable
Increase in Inventory
Increase in Accounts Payable
Increase in Accrued Expenses
Depreciation
Amortization of Patent
Gain on Retirement
Loss on Sale
Net Cash provided
P 1,095,000
(350,000)
(100,000)
350,000
250,000
100,000
15,000
(50,000)
20,000
P 1,330,000
Cash flows from investing activities:
Purchase of Land
Sale of Equipment
Net Cash used
(425,000)
95,000
(330,000)
Cash flows from financing activities:
Retirement of Bonds
Payment of cash dividend
Net Cash provided
Increase in cash and cash equivalents
Add: Cash and Cash Equivalent – 2018
Cash and Cash Equivalent – 2019
(450,000)
(500,000)
(950,000)
50,000
450,000
P 500,000
P
Problem 17-7
Sandra Company
Statement of Cash Flows
Year Ended XX 2019
Cash flows from operating activities:
Net Income
Increase in Accounts Receivable
Decrease in Inventory
Decrease in Accounts Payable
Increase in Deferred Tax Liability
Investment Income
Depreciation
Amortization of Patent
P
305,000
(35,000)
80,000
(135,000)
20,000
(10,000)
82,000
250,000
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UPV BSA
Loss on Sale
Net Cash provided
10,000
P
Cash flows from investing activities:
Purchase of Equipment
Sale of Equipment
Net Cash used
(120,000)
18,000
(102,000)
Cash flows from financing activities:
Issuance of share capital
Payment of long term note
Payment of cash dividend
Net Cash provided
Increase in cash and cash equivalents
Add: Cash and Cash Equivalent – 2018
Cash and Cash Equivalent – 2019
Problem 17-8
A. Checking Account #101
Checking Account #201
Time Deposit
Commercial papers
90-day Treasury Bill
Total
567,000
260,000
(300,000)
(85,000)
(125,000)
340,000
300,000
P 640,000
P
P 1,760,000
(100,000)
250,000
1,000,000
500,000
P 3,400,000
Problem 17-9
A. Cash flow from operating activities
P 400,000
Cash flow from investing activities
(1,500,000)
Cash flow from financing activities
1,000,000
Decrease
(100,000)
Add: Cash and Cash Equivalents – beg 1,300,000
Cash Balance
P 1,200,000
Problem 17-10
A. Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Increase
P 4,200,000
(2,500,000)
(800,000)
900,000
[ SQUEEZE ]
Problem 17-11
A. Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Increase
P 3,500,000
(4,800,000)
1,800,000
500,000
[ SQUEEZE ]
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UPV BSA
Problem 17-12
C. Depreciation
Accounts Receivable
Inventory
Accounts Payable
Total
P 1,900,000
(1,100,000)
(730,000)
1,220,000
P 1,290,000
Problem 17-13
D. Net Income
Inc. Accounts Receivable
Dec. Prepaid Rent
Inc. Accounts Payable
Net Cash provided
P 750,000
(29,000)
21,000
15,000
P 757,000
Problem 17-14
C. Net Income
Investment Income
Premium on Bonds
Deferred Tax liability
Net Cash provided
P 1.500,000
(55,000)
(14,000)
18,000
P 1,449,000
Problem 17-15
A. Net Income
Inc. Accounts Receivable
Net Cash provided
P 2,500,000
(400,000)
P 2,100,000
or
Accounts Receivable, beg
Sales
Accounts Receivable, end
Write Off
Recovery
Cash Collections
Cash Expenses
Net Cash provided
P 1,300,000
8,000,000
(1,900,000)
(70,000)
20,000
P 7,350,000
(5,250,000)
P 2,100,000
Problem 17-16
A. Accounts Receivable, end P 800,000
Collections
9,500,000
Accounts Receivable, beg (900,000)
Total Sales
P 9,400,000
Accounts Payable, end
Cash Paid for Inventory
Accounts Payable, beg
Purchases
Purchases
Inventory, beg
Inventory, end
COGS
P 3,950,000
250,000
(300,000)
P 3,900,000
P 500,000
4,100,000
(650,000)
P 3,950,000
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Sales
COGS
Gain on Sale
Depreciation
Other Expenses
Prepaid Expense
Net Income
P 9,400,000
(3,900,000)
300,000
(900,000)
(1,400,000)
(200,000)
P 3,300,000
Problem 17-17
C. Income tax paid
Interest Payments
Total
P 325,000
220,000
P 545,000
Problem 17-18
A. Net Income
Dec. Accounts Receivable
Inc. Inventory
Dec. Accounts Payable
Inc. Accrued Expenses
Depreciation
Amortization of Patent
Gain on sale
Net Cash provided
P 2,120,000
60,000
(120,000)
(140,000)
160,000
240,000
80,000
(200,000)
P 2,200,000
Problem 17-19
D. Sales
COGS
Distribution
Administrative
Interest (80,000 + 20,000)
Income Tax
Net Cash provided
P 2,800,000
(1,000,000)
(400,000)
(350,000)
(100,000)
(280,000)
P 670,000
Problem 17-20
B. Purchase of land
Purchase of plant
Proceeds from Sale
Net Cash used
P (2,500,000)
(2,500,000)
400,000
P (4,600,000)
Problem 17-21
D. Issuance of Share Capital
Borrowings (Net increase – 200,000)
Payment of cash dividends
Net Cash provided
P 1,500,000
1,500,000
(700,000)
P 2,300,000
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UPV BSA
Problem 17-22
1. D
2. C
Purchase of Building
Purchase of Land
Net Cash used – investing
P 400,000
350,000
P 750,000
Long term loan
P 550,000
Payment of cash dividend
(300,000)
Net Cash provided – financing P 250,000
Problem 17-23
1. A
2. D
3. B
Accumulated Depreciation Increase
Equipment sold
Depreciation Expense
P 400,000
120,000
P 520,000
Purchase of Equipment
Sale of Equipment
Net Cash used – investing
P (200,000)
180,000
P (20,000)
Net Income
Depreciation
Gain on sale
Net Cash provided – operating
P 3,000,000
520,000
(20,000)
P 3,470,000
Problem 17-24
1. D
2. A
Sale of Treasury
P 750,000
Payment of Dividend
(380,000)
Net Cash provided – financing P 370,000
Purchase of bonds
Sale of Equipment
Net Cash used – investing
Problem 17-25
B. Sale of equipment
Increase in patent
Increase in financial asset
Net cash provided – investing
P (1,800,000)
100,000
P (1,700,000)
P 1,770,000
(450,000)
( 100,000)
P 1,220,000
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UPV BSA
Problem 17-26
1. A
2. B
3. C
Retained Earnings, beg
Add: Net Income (squeeze)
Less: Dividends
Retained Earnings, end
P (1,000,000)
6,500,000
(3,000,000)
P 2,500,000
Net Income
Decrease in Accounts Receivable
Increase in Inventory
Decrease in Prepaid Expense
Decrease in Accounts Payable
Increase in Accrued Expense
Depreciation
Gain on Sale
Net Cash provided – operating
P 6,500,000
500,000
(1,500,000)
200,000
(3,500,000)
1,000,000
4,500,000**
(300,000)
P 7,400,000
Purchase of Equipment
Sale of Equipment
Net Cash used – investing
P (15,000,000)***
1,800,000
P (13,200,000
Long term note
Payment of note
Payment of cash dividend
Net Cash provided – financing
P 10,000,000
(3,000,000)
(3,000,000)
P 4,000,000
**Accumulated Depreciation, end
Sold Equipment
Accumulated Depreciation, beg
Depreciation Expense
P20,000,000
500,000
(16,000,000)
P 4,500,000
***PPE, end
Sold Equipment
PPE, beg
Purchases
P 55,000,000
2,000,000
(42,000,000)
P 15,000,000
Problem 17-27
1. A
2. B
3. D
Net Income
Increase in Accounts Receivable
Increase in Accounts Payable
Depreciation
Gain on Sale
Net Cash provided – operating
P 3,000,000
(2,400,000)
1,000,000
750,000
(500,000)
P 1,850,000
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Purchase of Plant
Sale of Investment
Net Cash used – investing
P (2,500,000)
1,250,000
P (1,250,000)
Issuance of share capital
Payment of dividends
Net Cash provided – financing
P 2,500,000
(2,350,000)
P 150,000
Problem 17-28
1. A
2. B
3. C
Accounts Receivable, beg
Sales
Accounts Receivable, end
Write off
Cash Collected from customers
P
840,000
12,000,000
(780,000)
(50,000)
P 12,010,000
COGS
Inventory, end
Inventory, beg
Gross Purchases
Accounts Payable, beg
Accounts Payable, end
Cash Disbursed for purchases
P 8,400,000
1,400,000
(1,500,000)
P 8.300,000
950,000
(980,000)
P 8,270,000
Variable expense (1,200,000 x 50%)
P 600,000
Fixed Expenses (excluding depreciation
and bad debts)
600,000
Variable expenses of 2018
550,000
Cash Disbursed for 2019
ratio is based on percentage of sales
1,200,000 / 12,000,000 = 10%
10% x 11,000,0000 x 50%
P 1,750,000
Problem 17-29
1. C
2. C
3. B
Accounts Receivable, beg
Sales
Accounts Receivable, end
Cash Collected from customers
P
670,000
7,980,000
(900,000)
P 7,750,000
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UPV BSA
COGS
Inventory, end
Inventory, beg
Gross Purchases
Accounts Payable, beg
Accounts Payable, end
Cash Disbursed for purchases
P 5,830,000
780,000
(860,000)
P 5.750,000
530,000
(480,000)
P 5,800,000
Cash Collected from customers
Cash Disbursed for purchases
Cash Expenses
Increase
Cash Balance, Jan 1
Cash Balance, Dec 31
P 7,750,000
(5,800,000)
(1,070,000)
P 880,000
620,000
P 1,500,000
Problem 17-30
1. D
2. B
3. B
Net Income
Increase in Accounts Receivable
Increase in Inventory
Increase in Accrued Expense
Increase in Accounts Payable
Depreciation
Amortization of Patent
Net Cash provided – operating
P 2,000,000
(300,000)
(1,500,000)
50,000
320,000
480,000**
50,000***
P 1,100,000
Purchase of PPE
Sale of Investment
Net Cash used – investing
P
(850,000)****
50,000
P (800,000)
Long Term note
Retirement of bonds
Issuance of bonds
Payment of dividends
Net Cash used – financing
P 700,000
(2,500,000)
2,750,000
(1,400,000)
P (450,000)
**Accumulated Depreciation P180,000
Disposal of Equipment
200,000
Sale of Equipment
100,000
Depreciation Expense
P480,000
*** Patent (25,000 x 13)
Patent, carrying amount
Amortization
****PPE
P
Disposal of Equipment
Sale of Equipment
Purchases
P
500,000
200,000
150,000
850,000
P 325,000
(275,000)
P 50,000
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UPV BSA
Problem 17-31
1. C
2. A
3. D
Net Income
Increase in Inventory
Decrease in Accounts Payable
Depreciation
Gain on sale
Net Cash provided – operating
P
P
Sale of Equipment
Sale of Investment
Increase in Investments
Purchase of PPE
Net Cash used – investing
P
Issuance of share capital
Short term bank debt
Payment of cash dividend
Net Cash provided – financing
P
**PPE
Sold Equipment
Equipment acquired through
Issuance of shares
Purchases
P
790,000
(80,000)
(5,000)
250,000
(35,000)
920,000
350,000
135,000
(300,000)
(1,190,000)**
P(1,005,000)
220,000
325,000
(340,000)
P 205,000
700,000
600,000
(110,000)
P 1,190,000
Problem 17-32
1. B
2. C
3. C
Net Income
Depreciation
Amortization
Loss on condemnation
Net Cash provided – operating
P 2,900,000
930,000**
120,000
300,000
P 4,250,000
Cash received from Land
Purchase of Patent
Purchase of PPE
Net Cash used – investing
P 3,300,000
(680,000)
(5,800,000)***
P 3,180,000
Payment of cash dividends
Acquisition of Treasury
Net Cash use – financing
P (250,000)
(620,000)
P 870,000
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Problem 17-33
1C
6 B
2A
7 D
3A
8 C
4C
9 C
5D
10 D
Problem 17-34
1C
2D
3A
4C
5B
Problem 18-1
Book value per share
=
=
=
Problem 18-2
a.
Excess
P 3,000,000
(240,000)
(480,000)
P 2,280,000
1/5
4/5
Balance
Outstanding shares
Book value per share
b.
c.
Shareholder’s Equity
No. of shares outstanding
P 8,800,000 / 50,000 shares
P 176
Preference
1,000,000
240,000
Ordinary
4,000,000
480,000
456,000
1,696,000
/ 10,000
P 169,6
Excess
P 3,000,000
(240,000)
(600,000)
P 2,160,000
1/5
4/5
Balance
Outstanding shares
Book value per share
Preference
1,000,000
240,000
Excess
P 3,000,000
(240,000)
(480,000)
P 2,280,000
4%
Preference
1,000,000
240,000
Balance
Outstanding shares
Book value per share
1,280,000
/ 10,000
P 128
1,824,000
6,304,000
/ 40,000
P 157.6
Ordinary
4,000,000
600,000
432,000
1,672,000
/ 10,000
P 167.2
1,728,000
6,328,000
/ 40,000
P 158.2
Ordinary
4,000,000
480,000
40,000
2,240,000
6,720,000
/ 40,000
P 168 x
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d.
e.
UPV BSA
Excess
P 3,000,000
(240,000)
P 2,760,000
Balance
Outstanding shares
Book value per share
Preference
1,000,000
240,000
Excess
P 3,000,000
(120,000)
P 2,880,000
Balance
Outstanding shares
Book value per share
Preference
1,000,000
120,000
1,240,000
/ 10,000
P 124
1,120,000
/ 10,000
P 112
Ordinary
4,000,000
2,760,000
6,760,000
/ 40,000
P 169 x
Ordinary
4,000,000
2,880,000
6,880,000
/ 40,000
P 172 x
Problem 18-3
Preference as to assets
Excess
P (900,000)
(720,000)
P(1,620,000)
Balance
Outstanding shares
Book value per share
Preference as to dividends
Excess
P ( 900,000)
Balance
Outstanding shares
Book value per share
Preference
2,000,000
720,000
Ordinary
4,000,000
2,720,000
/ 40,000
P 68
(1,620,000)
2,380,000
/ 40,000
P 59.5 x
Preference
2,000,000
(300,000)
1,700,000
/ 40,000
P 42.5
Ordinary
4,000,000
(600,000)
3,400,000
/ 40,000
P 85 x
Preference
2,000,000
240,000
120,000
Ordinary
5,000,000
Problem 18-4
Excess
P 4,000,000
(240,000)
P3 x 40,000
(120,000)
P 3,640,000
Balance
Outstanding shares
Book value per share
2,360,000
/ 40,000
P 59
3,640,000
8,640,000
/ 100,000
P 86.4 x
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UPV BSA
Problem 18-5
Preference as to assets
Excess
P 530,000
(540,000)
(160,000)
P (170,000)
Balance
Outstanding shares
Book value per share
Preference as to dividends
Excess
P 530,000
(360,000)
P 170,000
180/340
160/340
Balance
Outstanding shares
Book value per share
6%
3,000,000
540,000
8%
2,000,000
Ordinary
5,000,000
160,000
3,540,000
/ 30,000
P 118
2,160,000
/ 20,000
P 108
(170,000)
4,830,000
/50,000
P96.6 x
6%
3,000,000
360,000
8%
2,000,000
Ordinary
5,000,000
80,000
2,080,000
/ 20,000
P 104
x
5,000,000
/50,000
P100 x
90,000
3,450,000
/ 30,000
P 115
Problem 18-6
Issued
Subscribed
Treasury
Outstanding
Preference
Amount
Shares
1,500,000 15,000
200,000
2,000
(100,000) (1,000)
1,600,000 16,000
PS
Share Premium
Treasury
100,000
10,000
110,000
Share Premium
RE, unapp.
RE, app.
Total
P
320,000
968,000
680,000
P 1,968,000
Excess
P 1,968,000
(960,000)
(408,000)
P 600,000
16/50
34/50
Balance
Outstanding shares
Book value per share
Issued
Subscribed
Treasury
Outstanding
Ordinary
Amount
Shares
3,000,000 30,000
500,000
5,000
(100,000)
(1,000)
3,400,000 34,000
OS
100,000
Share Premium
Treasury
30,000
70,000
[ 300,000 – 10,000 + 20,000 ]
Preference
1,600,000
960,000
Ordinary
3,400,000
408,000
192,000
2,752,000
/ 16,000
P 172
408,000
4,216,000
/ 34,000
P 124 x
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UPV BSA
Problem 18-7
Issued
Treasury
Outstanding
Ordinary
Amount
Shares
2,200,000
22,000
(200,000)
(2,000)
2,000,000 20,000
Excess
820,000
(160,000)
P 660,000
Balance
Outstanding shares
Book value per share
P
OS
Share Premium
Treasury
Preference
1,000,000
160,000
200,000
100,000
300,000
Ordinary
2,000,000
660,000
2,660,000
/ 20,000
P 133 x
1,160,000
/ 10,000
P 116
Problem 18-8
Issued
Subscribed
Treasury
Outstanding
Ordinary
Amount
Shares
2,000,000
20,000
1,000,000
10,000
(500,000)
(5,000)
2,500,000 25,000
Excess
P 2,440,000
(540,000)
(300,000)
P 1,600,000
15/40
25/40
Balance
Outstanding shares
Book value per share
Preference
1,500,000
540,000
OS
500,000
Share Premium
Treasury
100,000
400,000
Ordinary
2,500,000
300,000
600,000
2,640,000
/ 15,000
P 176
1,000,000
3,800,000
/ 25,000
P 152 x
Problem 18-9
Issued
Subscribed
Treasury
Outstanding
Ordinary
Amount
Shares
10,000,000
200,000
3,500,000
70,000
(1,000,000)
(20,000)
2,500,000
250,000
OS
Share Premium
Treasury
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1,000,000
200,000
1,200,000
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FRANZ KYLLE POCSON
UPV BSA
Excess
P 7,800,000
(1,200,000)
P10x40,000
(400,000)
P 6,200,000
Balance
Outstanding shares
Book value per share
Preference
4,000,000
1,200,000
400,000
Ordinary
12,500,000
6,200,000
18,700,000
/ 250,000
P 74.8 x
5,600,000
/ 40,000
P 140
Problem 18-10
2018
2019
Annual Dividends
240,000
240,000
Paid
200,000
600,000
To be carried =
40,000
=
=
Preference
200,000
280,000
Ordinary
320,000
Problem 18-11
2015
2016
2017
2018
2019
Excess
(300,000)
(200,000)
(100,000)
350,000
1,260,000
1,010,000
(50,000)
(600,000)
(150,000)
210,000
5/30
10/30
15/30
Dividends
10%
50,000
12%
Ordinary
600,000
150,000
35,000
70,000
85,000
670,000
105,000
255,000
Problem 18-12
Ordinary (P5 x 250,000)
Preference:
15% x 2,500,000
Maximum Dividend
P 1,000,000
375,000
P 1,375,000
Problem 18-13
Percentage of ordinary dividend (2,000,000 / 10,000,000)
Ordinary (P10 x 200,000)
P 2,000,000
Preference:
12% x 8,000,000
960,000
20% x 8,000,000
1,600,000
Maximum Dividend
P 4,560,000
20%
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UPV BSA
Problem 18-14
D. Excess
Preference:
Arrears
Liquidating
Ordinary
OS – Capital
Outstanding
Book value
(250,000)
(500,000)
P 3,500,000
3,500,000
/ 100,000
P
70.00
Problem 18-15
A. PS – Capital
Dividends
Liquidating
Balance
Outstanding
Book value
P 1,000,000
120,000
100,000
P 1,220,000
/ 20,000
P
61
Problem 18-16
C. Excess
Preference:
Arrears
Liquidating
Ordinary
OS – Capital
Outstanding
Book value
Problem 18-17
B. Excess
Preference:
Liquidating
Ordinary
OS – Capital
Outstanding
Book value
Problem 18-18
A. Excess
Preference
Ordinary
OS – Capital
Outstanding
Book value
P 4,250,000
P
400,000
(160,000)
(100,000)
P
140,000
2,500,000
/ 100,000
P
26.40
P
950,000
(50,000)
900,000
3,000,000
/ 30,000
P
130.00
P
P
218,000
(40,000)
P
178,000
890,000
/ 89,000
P
12.00
[ (90,000 -10,000) + 138,000 ]
{ 900,000 – 10,000 ]
[ 90,000 – 1,000 ]
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Problem 18-19
C. Excess
Preference:
Arrears
Ordinary
OS – Capital
Outstanding
Book value
UPV BSA
P
410,000
(80,000)
P 330,000
1,000,000
/ 10,000
P
133
[ (200,000 – 50,000) + 260,000 ]
[ 1,100,000 – 100,000 ]
[ 11,000 – 1,000 ]
Problem 18-20
A.
Excess
12%
P 3,740,000
2,000,000
(720,000)
720,000
(420,000)
(600,000)
P 2,000,000
2/10
400,000
3/10
5/10
Balance
3,120,000
Outstanding shares
/ 20,000
B. Book value per share
P 156
Problem 18-21
C.
Issued
Subscribed
Treasury
Outstanding
Excess
Preference:
Arrears
Ordinary
OS – Capital
Outstanding
Book value
14%
3,000,000
Ordinary
5,000,000
420,000
600,000
600,000
4,020,000
/ 10,000
P 402
1,000,000
6,600,000
/50,000
P 132 x
Ordinary
Amount
Shares
4,000,000
40,000
2,000,000
20,000
(1,000,000)
(10,000)
5,000,000
50,000
P 3,600,000
[ (1,000,000 + 200,000) + 2,400,000 ]
(600,000)
P 3,000,000
5,000,000
/ 50,000
P
160
Problem 18-22
B. Preference Annual Dividend
Add: Arrears
Total Preference Dividend
Dividends Paid
Ordinary Dividend
P 240,000
120,000
P 360,000
440,000
P 80,000
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UPV BSA
Problem 18-23
D. Ordinary (P4 x 250,000)
Preference:
10% x 2,500,000
Maximum Dividend
Problem 18-24
C.
Dividend
Balance:
P 500,000
3/5
2/5
Total
Problem 18-25
B.
Dividend
Balance:
P 480,000
1/5
4/5
Total
Preference
300,000
P 1,000,000
250,000
P 1,250,000
Ordinary
200,000
300,000
600,000
200,000
400,000
Preference
180,000
Ordinary
240,000
96,000
276,000
384,000
624,000
Problem 18-26
1. B
2. A
2017
2018
2019
Annual Dividends
360,000
360,000
360,000
Paid
500,000
300,000
900,000
To be carried
60,000
-
=
=
=
=
Preference
360,000
300,000
420,000
Ordinary
140,000
480,000
Annual Dividends
5,000,000
5,000,000
5,000,000
Paid
3,000,000
4,000,000
12,000,000
To be carried
2,000,000
1,000,000
-
=
=
=
=
Preference
3,000,000
4,000,000
8,000,000
Ordinary
4,000,000
Problem 18-27
1. A
2. B
2017
2018
2019
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UPV BSA
Problem 18-28
1. B
2. A
3. B
Excess
P 5,000,000
(120,000)
(1,250,000)
(750,000)
P 2,880,000
12%
10%
Ordinary
120,000
1,250,000
750,000
1/4
3/4
Dividends
720,000
120,000
1,970,000
2,160,000
2,910,000
Problem 18-29
1C
2B
3D
4A
5A
Problem 19-1
a.
Net Income
e = P 2,800,000
Outstanding Ordinary Share
50,000
Basic EPS
= P 56
b.
Net Income
e = P 2,800,000 – 200,000
Outstanding Ordinary Share
50,000
Basic EPS
= P 52
Shares
120,000
12,000
(24,000)
Months Outstanding
12/12
7/12
3/12
Problem 19-2
Date
Jan. 1
Jun. 1
Sept. 30
Peso Months
120,000
7,000
(6,000)
121,000
EPS = P 3,630,000
121,000
EPS = P30
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UPV BSA
Problem 19-3
Date
Jan. 1
May. 1
Jul. 1
Dec. 1
Shares
150,000
30,000
(12,000)
6,000
Months Outstanding
12/12
8/12
6/12
1/12
Peso Months
150,000
20,000
(6,000)
500
164,500
EPS = P (2,690,000) – 600,000
164,500
EPS = P(20)
Problem 19-4
Date
Jan. 1
Mar. 1
Nov. 1
Shares
500,000 x 2
60,000 x 2
(48,000)
Months Outstanding
12/12
8/12
1/12
Peso Months
1,000,000
100,000
(8,000)
1,092,000
EPS = P 5,860,000 – 400,000
1,092,000
EPS = P5
Problem 19-5
Date
Jan. 1
Jan. 1
Apr. 1
Jul. 1
Shares
3,000,000
250,000 / 5
600,000
(400,000)
Months Outstanding
12/12
12/12
9/12
6/12
Net Income
P 15,000,000
Current Dividend
(2,000,000)
Payable on Redemption (1,000,000)
Exceptional Profit
4,000,000
Net Income
P 16,000,000
Outstanding
/ 3,300,000
EPS
P
4.85
Peso Months
3,000,000
50,000
450,000
(200,000)
3,300,000
[ 400,000 / 2 ]
Dividends on Redeemable Preference are Interests
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UPV BSA
Problem 19-6
P 2,600,000
(1,240,000)
P 1,360,000
3/8
5/8
Balance
Outstanding
Earnings per share
Preference
Ordinary
240,000
1,000,000
510,000
750,000
/ 30,000
P 25
850,000
1,850,000
/ 100,000
P 18.5 c
Problem 19-7
Theoretical Value:
11 - 5
5+1
2019
EPS
=
=
2020
EPS
=
=
2021
EPS
=
=
=1
Adjustment factor:
11 – 1 = 10
11/10 = 1.1
P 11,000,000
600,000 x 1.1
P 16.67
P 15,000,000
710,000
P 21.13
[ 600,000 x 1.1 x 2/12 ] + [ 720,000 x 10/12 ]
P 18,000,000
720,000
P 25
[ 600,000 + 120,000 ]
Problem 19-8
Theoretical Value:
12 - 6
5+1
2019
EPS
=
=
2020
EPS
=
=
=1
Adjustment factor:
12 – 1 = 11
12/11
P 2,250,000 1
810,000 x 12/11
P 2.55
P 3,500,000
950,000
P 3.68
[ 810,000 x 1.1 x 3/12 ] + [ 972,000 x 9/12 ]
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Problem 19-9
A. Net Income
Preference
Outstanding
EPS
Problem 19-10
D. Net Income
Preference
UPV BSA
P 750,000
(120,000)
P 630,000
/ 60,000
P
10.5
Outstanding
EPS
P 1,920,000
(200,000)
P 1,720,000
/ 220,000
P
7.82
Problem 19-11
A. Net Income
Outstanding
EPS
P 4,300,000
/ 200,000
P
21.5
Dividends from redeemable preference share are in a form of interest, so it has been
included in the computation of your net income.
Problem 19-12
B. Net Income
Preference
Outstanding
EPS
P 5,000,000
( 100,000)
P 4,900,000
/ 200,000
P
24.5
Problem 19-13
D. P 1,800,000
The Preference share is a potential ordinary share or a potential diluter, dividends are not
deducted
Problem 19-14
A. Net Income
Preference
Outstanding
EPS
P 15,000,000
(500,000)
P 1,000,000
/ 250,000
P
58
[ issued – treasury ]
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Problem 19-15
C. Net Income
Preference
Outstanding
EPS
UPV BSA
P 7,500,000
(400,000)
P 7,100,000
/ 400,000
P
17.75
[ 200,000 x 2 ]
Problem 19-16
1. B
2. B
2019
Net Income
Outstanding
EPS
2020
Net Income
Outstanding
EPS
[ 100,000 x 2 ]
=
P 350,000
200,000
P 1.75
[ 100,000 x 2 ] + [ 20,000 x 2 x 9/12 ]
=
P 410,000
230,000
P 1.78
Problem 19-17
B. Shares
Mar. 1 100,000 x 2 x 1.2
Jun. 1
30,000 x 1.2
Shares Outstanding
Problem 19-18
B. Shares
Jan. 1 100,000 x 2 x 1.2 x 3
Apr. 1
30,000 x 2 x 1.2 x 3
Jun. 30 (10,000) x 1.2 x 3
Shares Outstanding
Problem 19-19
A. Shares
Jan. 1 44,000 x 1.25 x 3
Feb. 1 56,000 x 1.25 x 3
May. 1 (25,000) x 1.25 x 3
Sept. 1 10,000 x 3
Shares Outstanding
12/12
7/12
240,000
21,000
261,000
12/12
9/12
6/12
720,000
162,000
(18,000)
864,000
12/12
11/12
8/12
4/12
165,000
192,500
(62,500)
10,000
305,000
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UPV BSA
Problem 19-20
A. Shares
Jan. 1 200,000 x 2
Jul. 1 100,000
Shares Outstanding
12/12
6/12
400,000
50,000
450,000
12/12
10/12
3/12
1/12
900,000
72,000
12,000
(3,750)
980,250
12/12
12/12
12/12
12/12
4/12
900,000
86,400
48,000
(45,000)
20,000
1,009,400
Problem 19-21
1. A
2. A
2019
Shares
Jan. 1 250,000 x 1.2 x 3
Mar. 1 24,000 x 1.2 x 3
Oct. 1
16,000 x 3
Dec. 1 (15,000) x 3
Shares Outstanding
2020
Jan. 1 250,000 x 1.2 x 3
Jan. 1
24,000 x 1.2 x 3
Jan. 1
16,000 x 3
Jan. 1 (15,000) x 3
Sept 1 60,000
Shares Outstanding
Problem 19-22
C. Shares
Jan. 1 1,250,000 x 2
Apr. 1
200,000 x 2
Jun. 30 (100,000) x 2
Shares Outstanding
12/12
9/12
3/12
2,500,000
300,000
(50,000)
2,750,000
Problem 19-23
A.
Theoretical Value:
160 - 100
5+1
2019
EPS
=
= 10
P 6,000,000
350,000
P 17.14
=
Adjustment factor:
160 – 10 = 150
160/150
[ 300,000 x 160/150 x 3/12 ] + [ 360,000 x 9/12 ]
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UPV BSA
Problem 19-24
1. B
2. B
2019
Shares Outstanding
Bonus issue
Total
200,000
400,000
600,000
Net Income
Outstanding
EPS
P 18,000,000
/ 600,000
P
30
2020
Net Income
Outstanding
EPS
P 60,000,000
/ 600,000
P
100
Problem 19-25
1B
6 A
2D
7 B
3B
8 D
4A
9 A
5B
10 B
Problem 20-1
Basic EPS e
= P 1,730,000
50,000
= P 34.6
Diluted EPSe
= P 1,730,000 + 70,0000
50,000 + 10,000
= P 30
For Dilution:
Interest (net of Tax)
= P 1,000,000 x 10% x 70%
= P 70,000
Assumed Ordinary shares
= 1,000 bonds x 10 shares
= 10,000 ordinary shares
Problem 20-2
Basic EPS e
Diluted EPSe
= P 2,749,000
100,000
= P 27.49
= P 2,749,000 + 126,0000
100,000 + 15,000
= P 25
For Dilution:
Interest (net of Tax):
= P 2,000,000 x 12% x 9/12 x 70%
= P 126,000
Assumed Ordinary shares
= 2,000 bonds x 10 shares x 9/12
= 15,000 ordinary shares
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UPV BSA
Problem 20-3
Basic EPS e
=
Diluted EPSe
= P 2,320,000 + 147,000
100,000 + 80,000
= P 13.71
P 2,320,000
0
100,000+ 45,000
= P 16
For Dilution:
Interest (net of Tax):
= P 3,000,000 x 12% x 3/12 x 70%
+ P 1,000,000 x 12% x 70%
= P 147,000
Assumed Ordinary shares
= 4,000 bonds x 20 shares
= 80,000 ordinary shares
Problem 20-4
Basic EPS e
= P 2,000,000
100,000
= P 20
Diluted EPSe
= P 2,000,000 + 28,0000
100,000 + 12,000
= P 18.11
For Dilution:
Interest (net of Tax):
= P 800,000 x 5% x 70%
= P 28,000
Assumed Ordinary shares
= 80 bonds x 150 shares
= 12,000 ordinary shares
Problem 20-5
Basic EPS e
= P 2,850,000 – 240,000
90,000
= P 29
Diluted EPSe
=
P 2,850, 000
0
90,000 + 20,000
= P 25.91
Problem 20-6
Basic EPS e
= P 5,000,000 – 300,000
200,000 + 50,000
= P 18.8
Diluted EPSe
=
P 5,000, 000
0
200,000 + 150,000
= P 14.29
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UPV BSA
Problem 20-7
Basic EPS e
Diluted EPSe
= P 7,500,000
200,000
= P 37.5
For Dilution:
=
P 7,500, 000
0
200,000 + 10,000
= P 35.71
Share options:
Option Shares
[ (75-60) / 75 ]
Incremental shares
50,000
x 0.2
10,000
Problem 20-8
Basic EPS e
= P 1,820,000
200,000
= P 9.1
Dilutive EPS is the same as Basic EPS
Share options are anti dilutive since the market price is lower than the exercise price
Problem 20-9
Basic EPS e
Diluted EPSe
= P 3,000,000
60,000
= P 50
=
P 3,000, 000
60,000 + 5,400
= P 45.87
For Dilution:
0
Share options:
Option Shares (20,000 x 9/12) 15,000
[ (250-160) / 250 ]
x 0.36
Incremental shares
5,400
Problem 20-10
Basic EPS e
Diluted EPSe
Problem 20-11
B. Net Income
Outstanding
D EPS
=
P 5,500, 000
0
100,000 + 37,500
= P 40
=
P 3,000, 000
0
100,000 + 37,500 + 8,750
= P 37.61
For Dilution:
Share options:
Option Shares (50,000 x 9/12) 12,500
[ (400-120) / 400 ]
x 0.7
Incremental shares
8,750
P 3,400,000
1,250,000
=P
2.72
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UPV BSA
Problem 20-12
B. Net Income
P 840,000
Outstanding:
OS – 200,000
PS – 100,000
[20,000 x 5]
/300,000
D EPS
=P
2.8
Problem 20-13
1. D
2. A
Net Income
Dividends
Earnings
Outstanding
OS – 100,000
PS – 20,000
[ 10,000 x 6 x 4/12 ]
P 2,000,000
(50,000)
P 1,950,000
Net Income
Outstanding
OS – 100,000
PS – 60,000
[ 10,000 x 6 ]
D EPS
P 2,000,000
/ 160,000
=P
12.5
/ 120,000
=P
16.25
B EPS
Problem 20-14
C. Shares
500,000
120,000
100,000
Months Outstanding
12/12
3/12
12/12
Peso Months
500,000
30,000
100,000
630,000
Problem 20-15
B. Shares
2,500,000
500,000
250,000
200,000
Months Outstanding
12/12
9/12
6/12
3/12
Peso Months
2,500,000
375,000
125,000
50,000
3,050,000
Problem 20-16
A. Net Income
Interest:
Earnings
Outstanding
OS – 100,000
PS – 40,000
P 5,551,000
49,000
P 5,600,000
[ 2,000,000 x 7% x ½ x 70% ]
/ 140,000
=P
40
D EPS
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Problem 20-17
C. Shares
600,000
180,000
150,000
UPV BSA
Months Outstanding
12/12
9/12
12/12
Peso Months
600,000
135,000
150,000
885,000
Problem 20-18
1. A
2. A
Converted
Converted
Shares
800,000
60,000
(100,000)
160,000
Months Outstanding
12/12
8/12
6/12
3/12
Net Income
Outstanding
B EPS
P 9,500,000
/ 830,000
P
11.45
Shares
800,000
60,000
(100,000)
400,000
Months Outstanding
12/12
8/12
6/12
12/12
Net Income
Interest
Outstanding
B EPS
P 9,500,000
378,000
/1,190,000
P
8.30
P 5,000,000
210,000
P 5,210,000
/ 360,000
P
14.47
Peso Months
800,000
40,000
(50,000)
400,000
1,190,000
[ (2,000,000 x 12% x 9/12) + (3,000,000 x 12%) ] 70%
Problem 20-19
B. The convertible bonds is antidilutive
Net Income
P 6,000,000
Net Income
Outstanding
/200,000
Outstanding
B EPS
P
30
D EPS
Problem 20-20
A. Net Income
Interest
Earnings
Outstanding
D EPS
Peso Months
800,000
40,000
(50,000)
40,000
830,000
P 6,000,000 + 490,000
/200,000 + 10,000 0
P
30.90
[ 4,000,000 x 10% x 9/12 x 70% ]
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Problem 20-21
C. Net Income
Interest
Earnings
Outstanding
D EPS
Problem 20-22
B.
Shares
300,000
50,000
Share options
UPV BSA
P 6,000,000
840,000
P 6,840,000
/ 750,000
P
9.12
40,000
x 0.25
10,000
Problem 20-23
A. Net Income
Outstanding
D EPS
P 2,000,000
/ 115,000
P
17.39
Problem 20-24
1. B
2. A
Net Income
Outstanding
B EPS
P 2,000,000
/ 130,000
P
15.38
Net Income
Outstanding
D EPS
P 2,000,000
/ 133,750
P
14.95
Net Income
Outstanding
D EPS
[ 500,000 + (100,000 x3/12) + 225,000 ]
Months Outstanding
12/12
6/12
(20 - 15) /20
Problem 20-25
D. Shares
150,000
120,000
180,000
[ 20,000,000 x 6% x 70% ]
Peso Months
300,000
25,000
325,000
10,000
335,000
plus Share Options: 40,000 x [ (16-10) /16 ]
plus Share Options : (40,000 x 3/12) x [ (16-10) / 16 ]
Months Outstanding
3/12
2/12
7/12
Peso Months
37,500
20,000
105,000
162,500
P 2,500,000
/ 162,500
P
15.38
Share options are anti dilutive, market price is lesser than exercise price
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UPV BSA
Problem 20-26
1D
6 B
2C
7 D
3D
8 D
4C
9 A
5C
10 A
Problem 21-1
Basic EPS e
= P 3,695,000 – 360,000
100,000
= P 33.35
Test for Dilution
1
2
Preference Dividends
s
Ordinary Shares if converted
=
=
360,000
60,000
6
=
=
Income
3,335,ooo
105,000
3,440,000
360,000
3,800,000
Basic EPS
Convertible bond
Diluted EPS
Convertible PS
Diluted EPS
Ordinary Shares
100,000
30,000
130,000
60,000
190,000
Interest (net of tax)
c
Ordinary Shares if converted
105,000
30,000
3.5
EPS
33.35
26.46
20.00
Problem 21-2
Basic EPS e
= P 2,410,000 – 100,000
100,000
= P 23.1
Test for Dilution
1
=
=
Preference Dividends
s
Ordinary Shares if converted
2
=
100,000
40,000
2.5
=
Income
2,310,ooo
100,000
2,410,000
140,000
2,550,000
Basic EPS
Convertible PS
Diluted EPS
Convertible bond
Diluted EPS
Ordinary Shares
100,000
40,000
140,000
30,000
170,000
c
Interest (net of tax)
Ordinary Shares if converted
140,000
30,000
4.67
EPS
23.10
17.21
15.00
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UPV BSA
Problem 21-3
Net Income
Dividend
Earnings
Outstanding
B EPS
P 6,700,000
(300,000)
P 6,400,000
/ 380,000
P
16.84
plus 20,000 [ 60,000 x 4/12 ]
Test for Dilution
1 Share options
[30 -25] /30
30,000
x 5/30
5,000
2
=
=
Income
6,400,000
Basic EPS
Share Options
Diluted EPS
Convertible bond
Diluted EPS
6,400,000
70,000
6,470,000
Ordinary Shares
380,000
5,000
385,000
40,000
425,000
c
Interest (net of tax)
Ordinary Shares if converted
70,000
40,000
1.75
EPS
16.84
16.62
15.22
Problem 21-4
Basic EPS e
= P 5,000,000 – 500,000
500,000
= P 9.00
Test for Dilution
1
=
=
Preference Dividends
s
Ordinary Shares if converted
2
=
500,000
200,000
2.5
=
Income
4,500,ooo
210,000
4,710,000
500,000
5,210,000
Basic EPS
Convertible bond
Diluted EPS
Convertible PS
Diluted EPS
Ordinary Shares
500,000
100,000
600,000
200,000
800,000
Interest (net of tax)
c
Ordinary Shares if converted
210,000
100,000
2.1
EPS
9.00
7.85
6.51
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UPV BSA
Problem 21-5
Basic EPS e
= P 650,000 – 100,000
110,000
= P 5.00
Test for Dilution
1 Share options
[20 -15] 20
2
60,000
x 0.25
15,000
3
Preference Dividends
s
Ordinary Shares if converted
=
=
=
=
100,000
40,000
2.5
Income
550,000
Basic EPS
Share Options
Diluted EPS
Convertible PS
Diluted EPS
Convertible Bonds
Diluted EPS
550,000
100,000
650,000
140,000
790,000
Ordinary Shares
110,000
15,000
125,000
40,000
165,000
30,000
195,000
Interest (net of tax)
c
Ordinary Shares if converted
140,000
30,000
4.67
EPS
5.00
4.40
3.95
4.05
Convertible bonds are anti dilutive since there is an increase in EPS if included
Problem 21-6
Shares
1,000,000
50,000
50,000
Shares
1,000,000
50,000
50,000
900,000
= P 5,900,000
1.062,500
= P 5.55
12/12
9/12
6/12
Outstanding
1,000,000
37,500
25,000
1,062,500
Basic EPS e
12/12
12/12
12/12
1,000,000
37,500
25,000
900,000
2,000,000
Dilutive EPS e = P 5,900,000
2,000,000
= P 2.95
Outstanding
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UPV BSA
Problem 21-7
1. D
2. B
3. C
Basic EPS e
= P 8,000,000 – 800,000
200,000
= P 36.00
Convertible Preference
Convertible Bonds
Potential OS
Net Income
Interest
Earnings
Outstanding
Dilutive EPS
40,000
25,000
65,000
P 8,000,000
350,000
P 8,350,000
/ 265,000
P
31.51
[ 5,000,000 x 10% x 70% ]
Problem 21-8
1. A
2. B
Basic EPS e
= P 11,000,000
1,500,000
= P 7.33
Dilutive EPS
=
0
P 11,000,000
1,500,000 + 100,000
= P 6.88
Problem 21-9
1. C
2. C
Shares
100,000
(24,000)
8,000
10/12
3/12
Outstanding
Basic EPS e= P 5,400,000 – 350,000
82,000
= P 61,59
100,000
(20,000)
2,000
82,000
Test of Dilution
=
Share Options 50,000
[ 50-40 ] / 50
x 0.20
Incremental 10,000
=
=
c
Interest (net of tax)
Ordinary Shares if converted
210,000 / 25,000
P 8.4
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FRANZ KYLLE POCSON
UPV BSA
Income
5,050,000
Basic EPS
Share Options
Diluted EPS
Convertible Bonds
Diluted EPS
5,050,000
210,000
5,260,000
Ordinary Shares
82,000
10,000
92,000
25,000
117,000
EPS
61.59
54.89
44.96
Problem 21-10
1. A
2. B
2019
Shares
Jan. 1 200,000 x 1.1 x 2
Apr. 1 125,000 x 1.1 x 2
Oct. 1
7,000 x 2
Shares Outstanding
2020
Jan. 1 200,000 x 1.1 x 2
Jan. 1 125,000 x 1.1 x 2
Jan. 1
7,000 x 2
Oct 1 170,000
Shares Outstanding
12/12
9/12
3/12
440,000
206,250
3,500
649,750
12/12
12/12
12/12
3/12
440,000
275,000
14,000
42,500
771,500
Problem 21-11
Shares
100,000 x 1,25
(3,000) x 1.25 10/12
3,000 x 1.25 4/12
66,000 x 1.25 1/12
Outstanding
125,000
(3,125)
1,250
6,875
130,000
Basic EPS e= P 2,600,000
130,000
= P 20
Shares
100,000
(3,000)
3,000
66,000
Outstanding
125,000
(3,750)
3,750
82,500
207,500
Basic EPS e= P 4,000,000
207,500
= P 19.28
x 1,25
x 1.25
x 1.25
x 1.25
Problem 21-12
A. Basic EPS
Potential Diluter
Dilutive EPS
P 150
(8)
P 142
Problem 21-13
1. A
2. D
Maximum Amount is the Basic EPS
Basic EPS
P 120
Potential Diluters
(3)
Dilutive EPS
P 117
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