Problem 1 Ecleo Company TRIAL BALANCE December 31, 2003 Debit Credit Petty Cash Fund P 3,000 Cash in Bank 38,700 Marketable Securities 300,000 Accounts Receivable 698,000 Allowance for Bad Debts P108,500 Accounts Receivable - Employees 14,200 Notes Receivable 45,000 Interest Receivable 5,100 Merchandise Inventory, 12/31/03 365,000 Office Supplies on Hand 15,000 Prepaid Insurance 90,000 Investment in Stock 1,500,000 Leasehold Improvements 180,000 Accumulated Depreciation - Leasehold Improvements 72,000 Equipment 300,000 Accumulated Depreciation - Equipment 27,000 Delivery Van 510,000 Accumulated Depreciation - Delivery Van 170,000 Accounts Payable 864,000 Notes Payable 340,000 Interest Payable 5,000 Common Stock 3,000,000 Retained Earnings 1,128,500 Sales 6,000,000 Interest Income 13,000 Dividend Income 120,000 Repairs Expense 123,000 Postage Expense 15,200 Cost of Goods Sold 3,900,000 Rent Expense 96,000 Advertising Expense 55,000 Taxes and licenses 45,000 Salaries Expense 1,700,000 Utilities Expense 413,500 Commission Expense 264,000 Interest Expense 34,000 Miscellaneous Selling Expense 148,000 Miscellaneous General Expense 132,000 Cash Over or Short 8,300 Loss on Damages 850,000 ___________ P11,848,000 P11,848,000

Additional information: 1. An examination of the petty cash fund on the morning of January 2, 2004, discloses the following items in the petty cash drawer. Coins and currency P 152.00 Postage stamps 29.00 An I.O.U. from Favila, an employee for cash advance 400.00 Check payable to Ecleo from Yongco, an employee, marked NSF 340.00 Vouchers for the following: Stamps P 200.00 Computer repairs 1,843.50 2,043.50 P2,964.50

2. The correct balance of the Cash in Bank account on November 1, 2003, was P40,000. Subsequent transactions during November and December relating to the records of Ecleo and Econg Bank are summarized below

Ecleo Books Econg Bank Books November deposits P73,600 P71,100 November checks 62,900 61,300 November service charge - 100 November 30 balance 50,700 49,700 December deposits 82,200 82,800 December checks 94,100 92,200 December service charge - 150 Note collected by bank in December - 10,150 November service charge recorded in December 100 - December 31 balance 38,700 50,300

3. An examination of the company's allowance for bad debts reveals the following: Estimated Bad Debts Actual Bad Debts 2000 P111,000 P45,000 2001 130,000 68,000 2002 165,000 89,500 2003 No adjustment yet 95,000 In the past, the company has estimated that 3% of sales will be uncollectible. The company's accountant has determined that the percentage used in estimating bad debts has been inappropriate. He would like to revise the estimate downward to 1.5%. The president of the company has stated that if the previous estimates of bad debt expense were incorrect, the financial statements should be restated using the more accurate estimate.

4. An examination of the company's December 31, 2003, inventory revealed errors in its inventory-taking procedures that have caused inventories for the last 3 years to be incorrect, as follows: December 31, 2001 Understated P160,000 December 31, 2002 Understated 210,000 December 31, 2003 Overstated 67,000

WHAT IS THE TOTAL CURRENT ASSETS?

WHAT IS THE TOTAL NON-CURRENT ASSETS?

WHAT IS THE TOTAL CURRENT LIABILITIES AND NON-CURRENT LIABILITIES?

WHAT IS THE TOTAL EQUITY?