Problem 1 The following relates to balances of Encantadia Company for December 31, 2018 before the additional transactions below were provided:

Freight in 20,000 Cash in Bank savings 300,000 Cash in Bank current 1,000,000 Claims receivable 300,000 Petty Cash Fund 30,000 Sales 3,888,000 Investment in Equity securities 100,000 shares, 10,000 shares 1,200,000 3 years time deposit BPI 400,000 Trading Securities 500,000 Treasury Bills 600,000 Bondspayable due annually at 1,000,000 10,000,000 Notes receivable 1,100,000 Delivery expense 6,000 Accounts receivable 2,000,000 Allow. For doubtful accounts 200,000 Sales returns 60,000 Sales discount 40,000 Subscriptions receivable collectible currently 250,000 Advances of officers & employees (payroll deduction) 100,000 Purchase discounts 30,000 Advances to affiliates 1,000,000 Financial Asset at FV through OCI 1,350,000 Office supplies expense 2,000 Advances to suppliers 50,000 Merchandise inventory,Dec.31 500,000 Unused supplies 20,000 Prepaid advertising 60,000 Long term Refundable deposit 80,000 Sales salaries 130,000 Patent 300,000 Land held for speculation 1,000,000 Land 1,400,000 Depreciation expense 800,000 Building 2,200,000 Furnitures and Fixtures 900,000 Store Supplies expense 3,000 Accumulated depreciation F and F 200,000 Delivery Truck 1,800,000 Accumulated depn Del. Truck 300,000 Loans payable - short term 300,000 Accumulated depreciation building 300,000 Accrued expenses 50,000 Estimated liability for lawsuit 100,000 Light and water expense 4,000 Accounts payable 350,000 Taxes and licenses 3,000 Warranty Liability 40,000 SSS/PHIC/ payable 60,000 Purchase returns 70,000 VAT payable 100,000 Estimated Premiums liability 90,000 Bonds payable 5 year term bonds 3,440,000 Deferred Tax liability that will reverse early in January, 2019 700,000 Ordinary Shares Par 100 1,800,000 Share premium 500,000 Purchases 2,300,000 Office salaries 120,000 Retained Earnings, Unappropriated ? Net Income result less approp Retained Earnings appropriated ? Investment in bonds, 2 year term, 12%, dated Jan.1, pays annual interest Every December 31, Face value 1,000,000 purchased at 105 1,050,000

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. 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)

The depreciation expense of 800,000 in the project activity is presented in the income statement as 60% relating to general and admin while the 40% is on selling and distribution cost.