Exercise w C F Direction: Identify (by using letters) the basic concept that best describes each situation: be Concepts: A Exchange Price D Business Entity G Realization B Matching Accrual E H Objectivity Feedback Value Predictive Value I Disclosure 1. Joshua bought land for his business and issued a three year note due 2021 for P300,000. This was higher than the cash price of P250,000. The land was recorded for P250,000. 2. Bernie Flower Shop issued a bill to a customer for floral service on a wedding that will take place in the first month of 2020. On October 2, 2019 Bernie Flower Shop received a down payment and recorded it as an unearned revenue. 3. Merchandise sold for P500,000 was recorded as sales revenue by MORE Company. The accountant also recognized P300,000 cost of sales for this in the same year. 4. The company was confronted by a lawsuit in 2019 for breach of contract in the amount of P500,000. No final judgment has been rendered as at Dec 31, 2019 and the firm has some doubts about the outcome of the case. Nevertheless, accountant added this information to the financial report for the benefit of all readers. 5. Company accountant prepared a report analyzing the financial statements of the business as to its liquidity, profitability and solvency for the past three years. . 6. Using no. 5 as a guide, management was able to foresee the future direction of the company and a master budget was prepared to improve its financial performance. 7. Stationeries and supplies were purchased on several separate occasions and some of them were usable for a period longer than a year. This was expensed as incurred. 8. Refer to no. 1. The land was appraised in 2020 for P350,000. The accountant still presented the land at P250,000 in its current statement of financial position but with a supporting note of its appraised value. (Give three principles supporting this procedure). 9. The owner of Bernie Flower Shop took home some flowers. The accountant recorded this as personal drawing of the owner. 10. Sales revenue of P1,000,000 was recorded in 2020. Related to this was the recording of salesmen commission based on 10% of sales. a. C. a Identify the following definitions with the terms given below: The relationship between a company's assets, liabilities, and equity. b. This represents an exchange of value between two parties. A financial statement that reports the changes in the equity of the owner or investor d. A financial statement that lists cash receipts and payments over a period of time arranged according to the major activities of the company. e. Creditors' claims on assets. f. Sourcing of funds is one of the major activities of the company. A decrease in economic benefit during the accounting period that results in decrease in equity, other than those relating to distributions to equity participants (in the form of personal drawings made by the owner), as defined in PAS 1. h. As defined in the Framework, these are resources obtained and controlled by the enterprise as a result of a past event and from which probable future economic benefits are expected to flow to the enterprise. i. PAS 1 defines this as an increase in economic benefits during the period that results in increase in equity, other than those resulting from contributions of the equity participants (investors). 1. Business Transactions 6. Expenses 11. Financing Activity 2. Accounting equation 7. Investing Activity 12. Economic Benefit 3. Liabilities 8. Assets 13. Statement of Cash Flows 4. Statement of Owner's Equity 9. Revenues 5. Statement of Financial Position 10. Statement of Comprehensive Income lapoo Exercise 8 From the following adjusted trial balance, determine: 1) Net income earned by the agency 2) Owner's equity at the end of 2019. 3) Total assets of the company classified into current assets and properties. 4) Total liabilities of the company classified into current and long term. GO NA Travel Agency Trial Balance December 31, 2019 Cash On Hand and in bank P 99,550.00 Notes Receivable 6,000.00 Accounts Receivable 26,400.00 Allowance for Bad Debts P 2,640.00 Prepaid Insurance 1,800.00 Supplies inventory 1,500.00 Land 300,000.00 Building 1,350,000 00 Accumulated Depreciation Building 135,000.00 Furniture & Equipment 81,000.00 Accumulated Depreciation - Furniture & Equipment 15,000.00 Accounts Payable 78,000.00 Mortgage Payable due 2025 450,000.00 Go, Capital 700,000.00 Go, Drawing 1,800.00 Service Fee 550,000.00 Commission Income 231,760.00 Interest Income 11,100.00 Rent Income 24,000.00 Insurance Expense 600.00 Depreciation Expense - Furniture & Equipment 5,000.00 Bad Debts 1800.00 Taxes Expense 14,000.00 2,200.00 Utility Expense Salaries Expense 195,000.00 40,500.00 Advertising Expense 67,500.00 Depreciation Expense - Building 1,350.00 Interest Expense 1,500.00 Supplies Expense P2,197,500.00 P2,197,500.00 Selected transaction data of a business for the month of January are summarized below. Determine the amount of revenue, expense and net income for the month of January. P350,000 Service sales charged to customers on account for January 300,000 Cash received from cash customers for the month of January Cash received from account customers during January: Service sales charged to customers prior to January 150,000 Service sales charged to customers during January 200,000 Expenses incurred prior to January and paid during January 80,500 Expenses incurred and paid in January 38,500 Expenses incurred in January but paid in February 70,000