Question 17 3.5 pts Problem 4 - PLM Company (PART 1) You are in charge of auditing PLM (PopoyLangMalakas) Company's investment accounts for the year ended December 31, 2021, which was incorporated last March 3, 2020. During the course of the audit, you have obtained the balances and the related journal entries of its investment related transactions and have revealed the following information: Investment in Bonds Investment in Stocks Total P101,258 62.400 P163,658 Journal Entries: Investment in bonds - 10% treasury bonds from the Banko Sentral ng Pilipinas. The investment is in a portfolio which has the objective of collecting contractual cash flows. Date Account Debit Credit July 1, 2020 Investment in BSP bonds 105, 242 Cash 105. 242 To record the acquisition of P100,000 face value BSP bonds 2.242 December Unrealized Gain /(Loss) on 31, 2020 market changes Investment in BSP bonds 2,242 To record the market value adjustment for 2020 January 1, 2021 Cash 5,000 Interest revenue 5,000 To record interest for 6 months December Unrealized Gain / (Loss) on 31, 2021 market changes 1,742 Investment in BSP bonds 1,742 To record the market value adjustment for 2021 Audit Notes: The market rate for similar bonds at date of acquisition is 8%. The bonds will mature on July 1, 2023. The journal entries pertaining to the market value adjustments was prepared by the accountant in accordance with the following information: Year Cost Market Value Unrealized Gain / (Loss) (2,242) 2020 105,242 103,000 2021 105,242 103,500 (1,742) To be continued... Question 1: The adjustment to correct the interest income for 2021 includes a debit/(credit) to the interest revenue account amounting to? (Put a negative sign if credit) Question 18 3.5 pts Problem 4 - PLM Company Question 2: How much is the retroactive adjustment to the beginning balance of retained earnings for the year 2021. pertaining to the investment in BSP bonds? (Please indicate debit or (credit), use negative sign if credit). Question 19 3.5 pts Problem 4 - PLM Company Question 3: The correct amount of investment in BSP bonds that should be presented in the statement of financial position as of December 31, 2021 is? Question 20 14 pts Problem 4 - PLM Company (PART 2) Continued.. Investments in Stocks - This portfolio is composed of GKKB Company shares (GanyanKabakatigasBash) and ABC Company shares. The shares were not held for trading and management has elected to designate the investments at fair value through other comprehensive income. Account Debit Credit Date May 3, 2020 Investment in GKKB 25,250 Company Quiz: FA2 - Audit of Investments 1,000 Broker's fee Cash 26,250 Broker's fee 1,000 Cash 26,250 To record the acquisition of GKKB shares and its related transaction cost Investment in ABC Company 32,450 Cash 32,450 To record the acquisition of ABC shares, acquired at P32.45 per share December Unrealized Gain / (Loss) on 400 31, 2020 market changes Investment in ABC Company 1,500 1,900 Investment in GKKB Company To record the market value adjustment for 2020 May 28, 2021 Investment in ABC Company 5,000 Dividend income 5,000 Received 100 shares of ABC Company in lieu of cash dividends of P5 per share. ABC shares were selling for P42 per share on this date. December Unrealized Gain /(Loss) on 31, 2021 market changes 100 100 December Unrealized Gain / (Loss) on 31, 2021 market changes Investment in ABC Company 300 feur 200 Investment in GKKB Company To record the market value adjustment for 2021 Audit Notes: The changes in fair value were appropriately recognized in OCI. The journal entries pertaining to the market value adjustments was prepared by the accountant in accordance with the following information: Market Unrealized Year Cost Value Gain / (Loss) 2020 GKKB P25,250 P23,350 (P1,900) ABC 32,450 33,950 1,500 2021 GKKB P25,250 P24,950 (P300) ABC 32,450 32,650 200 Question 4: The retroactive adjustment to the beginning balance of retained earnings to correct the initial carrying value of the investment in stocks includes a debit / (credit) amounting to? (Use negative sign if credit) Question 5: The amount of unrealized gain or loss) as of December 31, 2021 amounts to? (Use negative sign if loss) Question 6: The total amount that should be taken to profit or loss for 2021 amounts to? (Use negative sign if net expense) ifr Question 7: The investment in stocks account is overstated or understated by? (Use negative sign if overstated) Question 17 3.5 pts Problem 4 - PLM Company (PART 1) You are in charge of auditing PLM (PopoyLangMalakas) Company's investment accounts for the year ended December 31, 2021, which was incorporated last March 3, 2020. During the course of the audit, you have obtained the balances and the related journal entries of its investment related transactions and have revealed the following information: Investment in Bonds Investment in Stocks Total P101,258 62.400 P163,658 Journal Entries: Investment in bonds - 10% treasury bonds from the Banko Sentral ng Pilipinas. The investment is in a portfolio which has the objective of collecting contractual cash flows. Date Account Debit Credit July 1, 2020 Investment in BSP bonds 105, 242 Cash 105. 242 To record the acquisition of P100,000 face value BSP bonds 2.242 December Unrealized Gain /(Loss) on 31, 2020 market changes Investment in BSP bonds 2,242 To record the market value adjustment for 2020 January 1, 2021 Cash 5,000 Interest revenue 5,000 To record interest for 6 months December Unrealized Gain / (Loss) on 31, 2021 market changes 1,742 Investment in BSP bonds 1,742 To record the market value adjustment for 2021 Audit Notes: The market rate for similar bonds at date of acquisition is 8%. The bonds will mature on July 1, 2023. The journal entries pertaining to the market value adjustments was prepared by the accountant in accordance with the following information: Year Cost Market Value Unrealized Gain / (Loss) (2,242) 2020 105,242 103,000 2021 105,242 103,500 (1,742) To be continued... Question 1: The adjustment to correct the interest income for 2021 includes a debit/(credit) to the interest revenue account amounting to? (Put a negative sign if credit) Question 18 3.5 pts Problem 4 - PLM Company Question 2: How much is the retroactive adjustment to the beginning balance of retained earnings for the year 2021. pertaining to the investment in BSP bonds? (Please indicate debit or (credit), use negative sign if credit). Question 19 3.5 pts Problem 4 - PLM Company Question 3: The correct amount of investment in BSP bonds that should be presented in the statement of financial position as of December 31, 2021 is? Question 20 14 pts Problem 4 - PLM Company (PART 2) Continued.. Investments in Stocks - This portfolio is composed of GKKB Company shares (GanyanKabakatigasBash) and ABC Company shares. The shares were not held for trading and management has elected to designate the investments at fair value through other comprehensive income. Account Debit Credit Date May 3, 2020 Investment in GKKB 25,250 Company Quiz: FA2 - Audit of Investments 1,000 Broker's fee Cash 26,250 Broker's fee 1,000 Cash 26,250 To record the acquisition of GKKB shares and its related transaction cost Investment in ABC Company 32,450 Cash 32,450 To record the acquisition of ABC shares, acquired at P32.45 per share December Unrealized Gain / (Loss) on 400 31, 2020 market changes Investment in ABC Company 1,500 1,900 Investment in GKKB Company To record the market value adjustment for 2020 May 28, 2021 Investment in ABC Company 5,000 Dividend income 5,000 Received 100 shares of ABC Company in lieu of cash dividends of P5 per share. ABC shares were selling for P42 per share on this date. December Unrealized Gain /(Loss) on 31, 2021 market changes 100 100 December Unrealized Gain / (Loss) on 31, 2021 market changes Investment in ABC Company 300 feur 200 Investment in GKKB Company To record the market value adjustment for 2021 Audit Notes: The changes in fair value were appropriately recognized in OCI. The journal entries pertaining to the market value adjustments was prepared by the accountant in accordance with the following information: Market Unrealized Year Cost Value Gain / (Loss) 2020 GKKB P25,250 P23,350 (P1,900) ABC 32,450 33,950 1,500 2021 GKKB P25,250 P24,950 (P300) ABC 32,450 32,650 200 Question 4: The retroactive adjustment to the beginning balance of retained earnings to correct the initial carrying value of the investment in stocks includes a debit / (credit) amounting to? (Use negative sign if credit) Question 5: The amount of unrealized gain or loss) as of December 31, 2021 amounts to? (Use negative sign if loss) Question 6: The total amount that should be taken to profit or loss for 2021 amounts to? (Use negative sign if net expense) ifr Question 7: The investment in stocks account is overstated or understated by? (Use negative sign if overstated)