Problem 2-2 (IAA). Socorro Company provided the following information on December 31, 2019: Current assets 3,100,000 Current liabilities 1,000,000 Other assets 5,900,000 Long term liabilities 1,000,000 Capital 7,000,000 Cash (including P200,000 invested in money market arid restricted foreign deposit of P300,000) 1,000,000 Land held for undetermined use 500,000 Accounts receivable less allowance of P50,000 700,000 Inventories 600,000 Socorro Corporation share capital, at cost 300,000 Total current assets 3,100,000 Store supplies 50,000 Building less allowance of P500,000 3,000,000 Equipment less allowance of P250,000 750,000 Financial assets at amortized cost 1,000,000 Trademark 300,000 Advances to officers-indefinite repayment 150,000 Patent 250,000 Land 400,000 Total other assets 5,900,000 Accounts payable 500,000 Note payable, due December 31, 2020 100,000 Income tax payable 150,000 Share premium 250,000 Total current liabilities 1,000,000 Unearned leasehold income (five yeurs starting 2020) 350,000 Stock dividend payable 150,000 Serial bonds payable (P100,000 maturing annually) 500,000 Total long-term liabilities 1,000,000 Retained earnings 1,500,000 Share capital, P100 par 5,000,000 Retained earnings appropriated for plant expansion 500,000 Total capital 7,000,000 Required: Prepare statement of financial position with supporting notes and computations. 58 Problem 2-7 (AICPA Adapted) At year-end, the current assets of Hazel Company revealed cash and cash equivalents of P700,000, accounts receivable of P1,200,000 and inventories of P600,000. The examination of accounts receivable disclosed the following: Trade accounts 930,000 Allowance for doubtful accounts ( 20,000) Claim against shipper for goods lost in transit 30,000 Selling price of unsold goods sent by Hazel on consignment at 130% of cost and not included in ending inventory 260.000 Total accounts receivable 1,200,000 What total amount should be reported as current assets at year-end? a. 2,412,000 b. 2,440,000 c. 2,240,000 d. 2,500,000 62 Problem 2-8 (AICPA Adapted) Petite Company reported the following current assets on December 31, 2019: Cash Accounts receivable 5,000,000 2,000,000 Inventory, including goods received on consignment P200,000 800,000 Prepaid expenses, including a deposit of P50,000 made on inventory to be delivered in 18 months 150,000 Total current assets 7,950,000 Cash in general checking account 3,500,000 Cash fund to be used to retire bonds payable in 2021 1,000,000 Cash held to pay value added taxes 500.000 Total cash 5,000,000 What total amount of current'assets should be reported on December 31, 2019? a. 6,750,000 b. 6,700,000 c. 7,700,000 d. 7,750,000 Problem 2-9 (AICPA Adapted) Rice Company was incorporated on January 1, 2019 with P5,000,000 from the issuance of share capital and borrowed funds of P1,500,000. During the first year, net income was P2,500,000 On December 15, the entity paid a P500,000 cash dividend. On December 31, 2019, the liabilities had increased to On December 31, 2019, what amount should be reported P1,800,000. as total assets? a. 6,500,000 b. 9,300,000 c. 8,800,000 d. 6,800,000 63 Problem 2-12 (AICPA Adapted) Gar Company reported the following account balances on December 31, 2019 Accounts payable Bonds payable Premium on bonds payable Deferred tax liability Dividend payable Income tax payable 1,900,000 3,400,000 200,000 400,000 500,000 900,000 Note payable, due January 31, 2020 600,000 On December 31, 2019, what total amount should be reported as current liabilities? a. 7,100,000 b. 4,300,000 c. 3,900,000 d. 4,100,000 Problem 2-13 (PHILCPA Adapted) Burma Company disclosed the following liabilities: Accounts payable, after deducting debit balances in suppliers' accounts amounting to P100,000 4,000,000 Accrued expenses 1,500,000 Credit balances of customers' accounts 500,000 Share dividend payable 1,000,000 Claims for increase in wages and allowance by employees, covered in a pending lawsuit 400,000 Estimated expenses in redeeming prize coupons 600,000 What total amount should be reported as current liabilities? a. 6,700,000 b. 6,600,000 c. 7,100,000 d. 7,700,000 65 Problem 2-15 (AICPA Adapted) Gold Company provided the following trial balance on June 30, 2019: Cash overdraft Accounts receivable Inventory Prepaid expenses Land held for sale 100,000 350,000 580,000 120,000 1,000,000 Property, plant and equipment, net 950,000 Accounts payable 200,000 Accrued expenses 150,000 Share premium 250,000 Share capital 1,500,000 Retained earnings 800,000 3,000,000 3,000,000 Checks amounting to P300,000 were written to vendors and recorded on June 29, 2019 resulting in a cash overdraft of P100,000. The checks were mailed on July 9, 2019. Land held for sale was sold for cash on July 15, 2019. The entity issued the financial statements on July 31, 2019. 1. What total amount should be reported as current assets? a. 2,250,000 b. 2,050,000 c. 1,950,000 d. 1,250,000 2. What total amount should be reported as current liabilities? a. 450,000 b. 350,000 c. 650,000 d. 300,000 3. What total amount should be reported as shareholders' equity? a. 2,550,000 b. 1,750,000 c. 1,500,000 d. 2,300,000 6 67 Problem 2-18 (AICPA Adapted) Shaw Company provided the following trial balance on December 31, 2019 which had been adjusted except for income tax expense: Cash 600,000 Accounts receivable 2.800,000 Inventory 2,000,000 Property, plant and equipment (net) 10,500,000 Accounts payable and accrued liabilities 1,800,000 Income tax payable 1,500,000 Deferred tax liability 700,000 Share capital 2,500,000 Share premium 3,000,000 Retained earnings, January 1 3,500,000 Net sales and other revenue 15,000,000 Costs and expenses 10,000,000 Income tax expense 2,100,000 28,000,000 28.000.000 The accounts receivable included P1,000,000 due from a customer and payable in quarterly installments of P125,000. The last payment is due December 30, 2021.16 During the year, estimated tax payment of P600,000 was charged to income tax expense. The income tax rate is 30%. On December 31, 2019, what amount should be reported as 1. Total current assets? a. 3,400,000 b. 4,400,000 c. 5,400,000 d. 4,900,000 0 0 2. Total current liabilities? a. 2,700,000 b. 3,300,000 000 c. 4,050,000 d. 3,450,000 3. Retained earnings? a. 8,500,000 b. 6,400,000 c. 7,000,000 d. 3,500,000 70 on Problem 2-20 (IAA) Kaye Company reported the following liabilities December 31, 2019: Accounts payable 6,500,000 Bank note payable - 10% 3,000,000 Bank note payable - 11% 5.000,000 Mortgage note payable - 10% 2,000,000 Bonds payable 4,000,000 * The P3,000,000, 10% note was issued March 1, 2019, payable on demand. Interest is payable every six months. The one-year P5,000,000, 11% note was issued January 15, 2019. On December 31, 2019, the entity negotiated a written agreement with the bank to replace the note with a 2-year, P5,000,000, 10% note to be issued January 15, 2020. The 10% mortgage note was issued October 1, 2017 with a term of 10 years. Terms of the note give the holder the right to demand immediate payment if the entity fails to make a monthly interest payment within 10 days from the date the payment is due. On ecember 31, 2019, the entity is three months behind in paying the required interest payment. The bonds payable are ten-year, 8% bonds, issued June 30, 2010. Interest is payable semiannually on June 30 and December 31. The entity has not prepared the adjustment for any accrued interest on the liabilities. What total amount should be reported as current liabilities on December 31, 2019? a. 15,650,000 b. 11,650,000 c. 20,650,000 d. 13,650,000 * 72 2 Problem 2-2 (IAA). Socorro Company provided the following information on December 31, 2019: Current assets 3,100,000 Current liabilities 1,000,000 Other assets 5,900,000 Long term liabilities 1,000,000 Capital 7,000,000 Cash (including P200,000 invested in money market arid restricted foreign deposit of P300,000) 1,000,000 Land held for undetermined use 500,000 Accounts receivable less allowance of P50,000 700,000 Inventories 600,000 Socorro Corporation share capital, at cost 300,000 Total current assets 3,100,000 Store supplies 50,000 Building less allowance of P500,000 3,000,000 Equipment less allowance of P250,000 750,000 Financial assets at amortized cost 1,000,000 Trademark 300,000 Advances to officers-indefinite repayment 150,000 Patent 250,000 Land 400,000 Total other assets 5,900,000 Accounts payable 500,000 Note payable, due December 31, 2020 100,000 Income tax payable 150,000 Share premium 250,000 Total current liabilities 1,000,000 Unearned leasehold income (five yeurs starting 2020) 350,000 Stock dividend payable 150,000 Serial bonds payable (P100,000 maturing annually) 500,000 Total long-term liabilities 1,000,000 Retained earnings 1,500,000 Share capital, P100 par 5,000,000 Retained earnings appropriated for plant expansion 500,000 Total capital 7,000,000 Required: Prepare statement of financial position with supporting notes and computations. 58 Problem 2-7 (AICPA Adapted) At year-end, the current assets of Hazel Company revealed cash and cash equivalents of P700,000, accounts receivable of P1,200,000 and inventories of P600,000. The examination of accounts receivable disclosed the following: Trade accounts 930,000 Allowance for doubtful accounts ( 20,000) Claim against shipper for goods lost in transit 30,000 Selling price of unsold goods sent by Hazel on consignment at 130% of cost and not included in ending inventory 260.000 Total accounts receivable 1,200,000 What total amount should be reported as current assets at year-end? a. 2,412,000 b. 2,440,000 c. 2,240,000 d. 2,500,000 62 Problem 2-8 (AICPA Adapted) Petite Company reported the following current assets on December 31, 2019: Cash Accounts receivable 5,000,000 2,000,000 Inventory, including goods received on consignment P200,000 800,000 Prepaid expenses, including a deposit of P50,000 made on inventory to be delivered in 18 months 150,000 Total current assets 7,950,000 Cash in general checking account 3,500,000 Cash fund to be used to retire bonds payable in 2021 1,000,000 Cash held to pay value added taxes 500.000 Total cash 5,000,000 What total amount of current'assets should be reported on December 31, 2019? a. 6,750,000 b. 6,700,000 c. 7,700,000 d. 7,750,000 Problem 2-9 (AICPA Adapted) Rice Company was incorporated on January 1, 2019 with P5,000,000 from the issuance of share capital and borrowed funds of P1,500,000. During the first year, net income was P2,500,000 On December 15, the entity paid a P500,000 cash dividend. On December 31, 2019, the liabilities had increased to On December 31, 2019, what amount should be reported P1,800,000. as total assets? a. 6,500,000 b. 9,300,000 c. 8,800,000 d. 6,800,000 63 Problem 2-12 (AICPA Adapted) Gar Company reported the following account balances on December 31, 2019 Accounts payable Bonds payable Premium on bonds payable Deferred tax liability Dividend payable Income tax payable 1,900,000 3,400,000 200,000 400,000 500,000 900,000 Note payable, due January 31, 2020 600,000 On December 31, 2019, what total amount should be reported as current liabilities? a. 7,100,000 b. 4,300,000 c. 3,900,000 d. 4,100,000 Problem 2-13 (PHILCPA Adapted) Burma Company disclosed the following liabilities: Accounts payable, after deducting debit balances in suppliers' accounts amounting to P100,000 4,000,000 Accrued expenses 1,500,000 Credit balances of customers' accounts 500,000 Share dividend payable 1,000,000 Claims for increase in wages and allowance by employees, covered in a pending lawsuit 400,000 Estimated expenses in redeeming prize coupons 600,000 What total amount should be reported as current liabilities? a. 6,700,000 b. 6,600,000 c. 7,100,000 d. 7,700,000 65 Problem 2-15 (AICPA Adapted) Gold Company provided the following trial balance on June 30, 2019: Cash overdraft Accounts receivable Inventory Prepaid expenses Land held for sale 100,000 350,000 580,000 120,000 1,000,000 Property, plant and equipment, net 950,000 Accounts payable 200,000 Accrued expenses 150,000 Share premium 250,000 Share capital 1,500,000 Retained earnings 800,000 3,000,000 3,000,000 Checks amounting to P300,000 were written to vendors and recorded on June 29, 2019 resulting in a cash overdraft of P100,000. The checks were mailed on July 9, 2019. Land held for sale was sold for cash on July 15, 2019. The entity issued the financial statements on July 31, 2019. 1. What total amount should be reported as current assets? a. 2,250,000 b. 2,050,000 c. 1,950,000 d. 1,250,000 2. What total amount should be reported as current liabilities? a. 450,000 b. 350,000 c. 650,000 d. 300,000 3. What total amount should be reported as shareholders' equity? a. 2,550,000 b. 1,750,000 c. 1,500,000 d. 2,300,000 6 67 Problem 2-18 (AICPA Adapted) Shaw Company provided the following trial balance on December 31, 2019 which had been adjusted except for income tax expense: Cash 600,000 Accounts receivable 2.800,000 Inventory 2,000,000 Property, plant and equipment (net) 10,500,000 Accounts payable and accrued liabilities 1,800,000 Income tax payable 1,500,000 Deferred tax liability 700,000 Share capital 2,500,000 Share premium 3,000,000 Retained earnings, January 1 3,500,000 Net sales and other revenue 15,000,000 Costs and expenses 10,000,000 Income tax expense 2,100,000 28,000,000 28.000.000 The accounts receivable included P1,000,000 due from a customer and payable in quarterly installments of P125,000. The last payment is due December 30, 2021.16 During the year, estimated tax payment of P600,000 was charged to income tax expense. The income tax rate is 30%. On December 31, 2019, what amount should be reported as 1. Total current assets? a. 3,400,000 b. 4,400,000 c. 5,400,000 d. 4,900,000 0 0 2. Total current liabilities? a. 2,700,000 b. 3,300,000 000 c. 4,050,000 d. 3,450,000 3. Retained earnings? a. 8,500,000 b. 6,400,000 c. 7,000,000 d. 3,500,000 70 on Problem 2-20 (IAA) Kaye Company reported the following liabilities December 31, 2019: Accounts payable 6,500,000 Bank note payable - 10% 3,000,000 Bank note payable - 11% 5.000,000 Mortgage note payable - 10% 2,000,000 Bonds payable 4,000,000 * The P3,000,000, 10% note was issued March 1, 2019, payable on demand. Interest is payable every six months. The one-year P5,000,000, 11% note was issued January 15, 2019. On December 31, 2019, the entity negotiated a written agreement with the bank to replace the note with a 2-year, P5,000,000, 10% note to be issued January 15, 2020. The 10% mortgage note was issued October 1, 2017 with a term of 10 years. Terms of the note give the holder the right to demand immediate payment if the entity fails to make a monthly interest payment within 10 days from the date the payment is due. On ecember 31, 2019, the entity is three months behind in paying the required interest payment. The bonds payable are ten-year, 8% bonds, issued June 30, 2010. Interest is payable semiannually on June 30 and December 31. The entity has not prepared the adjustment for any accrued interest on the liabilities. What total amount should be reported as current liabilities on December 31, 2019? a. 15,650,000 b. 11,650,000 c. 20,650,000 d. 13,650,000 * 72 2