problem 4.2

Problem 4.2 The bookkeeper of AZ Company prepared the following condensed statement of financial position on December 31, 2019 Current assets P4,000,000 Current liabilities 1,500,000 Working capital 2,500,000 Add other assets 1,800,000 Working capital plus other assets 4,300,000 Deduct other liabilities 100,000 Net assets 4,200,000 An analysis if the current assets revealed the following: Money market placement - 3 months 500,000 Cash in bank 700,000 Accounts receivable 800,000 Notes receivable 200,000 Trading securities 400,000 Inventory 1,300,000 Goodwill 100,000 4,000,000 The inventory account was found to include the cost of office supplies of P50,000 and office equipment acquired at the end of 2019. The total for other assets was determined as follows: 2018 Land and building, at cost on January 1. 4,000,000 Less mortgage, P2,000,000, and accrued 2.200,000 interest on mortgage, P200,000 1,800,000 It was estimated at the time of purchased that the land was worth P1,000,000. The building as of December 31, 2019 was estimated to have a remaining life of 18 years. Current liabilities represented balances that were payable to trade creditors. Other liabilities consisted of withholding tax payable. However, no recognition was given to accrued salaries of P250,000. ( IV - 18 ] CHAPTER 4: AUDIT OF FINANCIAL PERFORMANCE, FINANCIAL POSITION AND STATEMENT OF CASH FLOWS The company was originally organized in 2015, when 30,000 ordinary shares with par value of P100 were issued in exchange for assets with fair value of P3,200,000. In your examination of the above information, you are to determine the following: 1. Cash and cash equivalents a. P1,200,000 C. P1,000,000 b. P1, 100,000 d. P900,000 2. Book value of property, plant and equipment a. P4,550,000 C. P3,950,000 b. 4,250,000 d. P3,850,000 3. Trade accounts and other payables a. P2,550,000 C. P2,050,000 b. P2,500,000 d. P1,550,000 4. Retained earnings a. P500,000 C. P450,000 b. P480,000 d. P420,000