F/S Preparation following notes to FS and line item presentation of Encantadia Company.

Problem 1

The following relates to balances of Encantadia Company for December 31, 2018 before the additional transactions below were provided:

Freight in20,000

Cash in Bank - savings300,000

Cash in Bank - current1,000,000

Claims receivable300,000

Petty Cash Fund30,000

Sales3,888,000

Investment in Equity securities10,000 shares1,200,000

3 years time deposit - BPI400,000

Trading Securities500,000

Treasury Bills600,000

Bondspayable due annually at 1,000,00010,000,000

Notes receivable1,100,000

Delivery expense6,000

Accounts receivable2,000,000

Allow. For doubtful accounts200,000

Sales returns60,000

Sales discount40,000

Subscriptions receivable collectible currently250,000

Advances of officers & employees (payroll deduction)100,000

Purchase discounts30,000

Advances to affiliates1,000,000

Financial Asset at FV through OCI1,350,000

Office supplies expense2,000

Advances to suppliers50,000

Merchandise inventory,Dec.31500,000

Unused supplies20,000

Prepaid advertising60,000

Long term Refundable deposit80,000

Sales salaries130,000

Patent300,000

Land held for speculation1,000,000

Land1,400,000

Depreciation expense(40% store,60% office eqpt)800,000

Building2,200,000

Furnitures and Fixtures900,000

Store Supplies expense3,000

Accumulated depreciation - F and F200,000

Delivery Truck1,800,000

Accumulated dep'n - Del. Truck300,000

Loans payable- short term300,000

Accumulated depreciation - building300,000

Accrued expenses50,000

Estimated liability for lawsuit100,000

Light and water expense4,000

Accounts payable350,000

Taxes and licenses3,000

Warranty Liability40,000

SSS/PHIC/ payable60,000

Purchase returns70,000

VAT payable100,000

Estimated Premiums liability90,000

Bonds payable - 5 year term bonds3,400,000

Deferred Tax liability that will reverse early in January, 2019700,000

Ordinary Shares Par 1001,800,000

Share premium500,000

Purchases2,300,000

Office salaries120,000

Retained Earnings, Unappropriated? Net Income result less approp

Retained Earnings appropriated(AJE # 3)?

Investment in bonds, 2 year term, 12%, dated Jan.1, pays annual interest

Every December 31, Face value 1,000,000 purchased at 1051,050,000

Additional transactions for November to December 31 are as follows; not yet reflected.

1.Trading securities has Fair market value on December 31, 2018 of 460,000.

2.5,000 shares of Investment in equity securities has been sold for 700,000 on November 18, 2018. Cash is deposited in its savings account.

3.Appropriated 200,000 of retained earnings on December 31.

Suggested entry:Retained earnings

Appropriated retained earnings

4.Financial asset at fair value through OCI Fair market value is 1,500,000.

5.Amortization of bonds and the receipt of interest on December 31. (straight line amortization)

6.Inventories net realizable value amounted to 485,000.

Suggested Adjustment:Loss on inventory writedown

Allowance for inventory writedown

Suggested line items:

For Current Assets:

Cash and cash equivalents

Trading Securities

Trade and Other receivables

Inventories

Prepaid Expenses

For Non Current Assets:

Property, plant, and equipment

Long-term investments

Investment Proprty

Intangible assets

Other noncurrent assets

For Current Liabilities:

Trade and other payable

Current portion of bonds payable

Loans payable - short term

Current provision

For Non current Liabilities:

Non current portion of LT debt

Deferred tax liability

Long term deferred revenues

For Shareholder's equity:

Share capital, P100 par

Reserves

UG - OCI

Retained earnings