PROBLEM NO. 1
& eatles (ompany
Requirement No. 1
1)
Sales returns Accounts Accounts receivable receivable
92,000 92,000
2) 3)
None None, None, this this is only misposti misposting. ng. Hoever Hoever,, the the custo customers mers!! le"ger le"ger shoul" shoul" be be a"#ust a"#uste". e".
$)
Sales Accounts Accounts receivable receivable
%) ') ) *) 9)
$0,000 $0,000
Acco Accoun unts ts rece receiv ivab able le&N &Non ontr tra" a"e e Accounts Accounts receivable receivable
1'0, 1'0,00 000 0
(ash Accounts Accounts receivable receivable
12$,000
1'0,000 12$,000
None, None, this this is only a mispos misposting ting.. Hoever Hoever,, the the custom customers! ers! le"ger le"ger shou shoul" l" be be a"#ust a"#uste". e". None, None, this this is only a mispos misposting ting.. Hoever Hoever,, the the custom customers! ers! le"ger le"ger shou shoul" l" be be a"#ust a"#uste". e". None, None, this this is only a mispos misposting ting.. Hoever Hoever,, the the custom customers! ers! le"ger le"ger shou shoul" l" be be a"#ust a"#uste". e".
Requirement No. 2
+na"#uste" balance A"" -e"uct) -e"uct) a"#ustments a"#ustments No. 1 No. $ No. % No. ' A"#uste" balance, 12/31/0%
2,020,000 92,000) $0,000) 1'0,000) 12$,000) 1,'0$,000
PROBLEM NO. 2 -
7aul (ompany
(ash sales Sales on account see computations belo) otal sales (ost o sales 4ross proit
2003
2004
'*,000 ''',$00 3$,$00 %*,%20 1$',**0
10$,000 21,'00 *2%,'00 ''0,$*0 1'%,120
2005
12$,*00 9$*,000 1,02,*00 *%*,2$0 21$,%'0
(omputation o total sales rom 2003 to 200% *you may also use +(+ account otal accounts receivable, 12/31/0% otal collections rom 2003 to 200% otal 5ess total accounts receivable, 12/31/02 otal sales on account rom 2003 to 200%
Total
29',*00 2,33',000 2,'32,*00 2,10',2$0 %2',%'0
100 *0 20
132,000 2,20,$00 2,$02,$00 '',$00 2,33',000
(omputation o total cost o sales rom 2003 to 200% *you may also use +(+ account 6nventories, 12/31/02 A"" purchases or 2003 to 200% otal accounts payable, 12/31/0% $$,000 otal payments or purchases rom 2003 to 200% 2,0'0,000 otal 2,10$,000 5ess total accounts payable, 12/31/02 20,000 otal goo"s available or sale 5ess inventories, 12/31/0% otal cost o sales rom 2003 to 200%
1$',$00
2,0*$,000 2,230,$00 12$,1'0 2,10',2$0
Note: Since it was mentioned in the problem that the rate of gross profit on sales has remained constant for each of the three years, we can compute the GR from the total sales and cost of sales. (omputation o sales on account or 2003, 200$, an" 200% Accounts receivable rom sales in 2003
Accounts receivable, 12/31/0% (ollections
3,200 2003 200$ 200%
Sales on account
%9%,200 '0,000 *,000 ''',$00
2004
,200
'$,200 ',200 21,'00
2005
Total
112,*00
123,200
*3%,200 9$*,000
%9%,200 0,200 910,$00 2,33',000
Note: !ess than one year old " 2##$% &ne to two years old " 2##'% (wo to three years old " 2##).
PROBLEM NO. 3 -
4eorge (ompany
Requirement No. 1 *a Alloance or "oubtul accounts per aging A"" ba" "ebts ritten o otal 5ess alloance or "oubtul accounts, 1/1/0% 8ecovery o ba" "ebts ritten o -oubtul accounts epense or 200%
200,000 1*,%00 3*,%00 300,000 %0,000
3%0,000 3,%00
Requirement No. 1 *b Accounts receivable, 12/31/0% 5ess alloance or "oubtul accounts per aging Net reali:able value
2,3%,000 200,000 2,1%,000
Requirement No. 1 *c Shoul" be per aging) As recor"e" per client) Alloance or "oubtul accounts, 1/1/0% A"" "oubtul accounts epense or 200% 8ecovery o ba" "ebts ritten o otal 5ess ba" "ebts ritten o -ecrease in recor"e" alloance
200,000 300,000 1%0,000 %0,000 %00,000 1*,%00
312,%00 112,%00
Requirement No. 1 *c -ebit) Alloance or"oubtul accounts (re"it) -oubtul accounts epense
112,%00 112,%00
Requirement No. 2 a) 7%,000,000 3 ; 71%0,000 b) 7300,000 < 71%0,000 <7%0,000 & 71*,%00 ; 7312,%00
Requirement No. ) a) 72,3%,000 * )< 71*,%00 & 7300,000 & 7%0,000 ; 72,%00 b) 72,3%,000 * ; 7190,000 PROBLEM NO. 4 -
?ohn (orporation
-uestion No. 1 / 7urchases 5ess inventory , 12/31/0% (ost o sales A"" gross proit 71,*%,000 $0) otal sales =ultiply by o cre"it sales (re"it sales 5ess (ollections rom customers Accounts ritten o Accounts receivable, 12/31/0% per au"it Accounts receivable, 12/31/0% per boo>s +n"erstatement o accounts receivable
2,2%0,000 3%,000 1,*%,000 %0,000 2,'2%,000 0.*0 2,100,000 1,%00,000 12,%00
1,%12,%00 %*,%00 %%,000 12,%00
-uestion No.2 0 (re"it sales or 200% see no. 1) =ultiply by ba" "ebt rate -oubtul accounts epense or 200%, per au"it
2,100,000 0.0% 10%,000
-uestion No. ) 0 -oubtul accounts epense see no. 2) 5ess accounts ritten o Alloance or "oubtul accounts, 12/31/0% per au"it Alloance or "oubtul accounts, 12/31/0% per boo>s +n"erstatement o alloance or "oubtul accounts
10%,000 12,%00 92,%00 '2,%00 30 000
PROBLEM NO. 5 & 1
8ingo (orporation
( (ustomer
alance
=aybe, 6nc.
1$0,20 *3,'*0 122,$00 1*0,%'0 12',$00 '9,'00 23,3'0
7erhaps (o. 7e"e (orp. 7erchance (o. 7ossibly (o. 5uc>, 6nc.
otal
Age o accounts 0 30 "ays 31 '0 "ays '1 90 "ays 91 120 "ays over 120 "ays
2
0&30 "ays %',000 & *0,000 & 12',$00 &
2'2,$00
otal 2'2,$00 1,2*0 130,$00 11,'00 3%,'*0 23,3'0
31&'0 "ays
'1&90 "ays
*$,20
&
& & 92,%'0 & &
1,2*0
& $2,$00 **,000 & &
130,$00
91&120 "ays @120 "ays & $*,000 & & & '9,'00
11,'00
8ate Alloance 1.00 2,'2$.00 1.%0 2,'%9.20 3.00 3,912.00 10.00 11,'0.00 %0.00 1,*$0.00 3*,9%.20
-ebit) -oubtul accounts epense 2$,9%.20 B (re"it) Alloance or "oubtul accounts 2$,9%.20 *)3,45$.2# 1',###
PROBLEM NO. 7 -
Eno (orporation
-uestion No. 1 7C o 7rincipal 7300,000 0.%13) 7C o 6nterest 7300,000 % 2.$*'9) (onsultation service ee revenue -uestion No. 2 (arrying amount, 12/31/0$ see no.1) A"" "iscount amorti:ation or 200% Dective interest 72'2,'9$ 10) Nominal interest 7300,000 %) (arrying amount, 12/31/0%
22%,390 3,30$ 2'2,'9$
2'2,'9$ 2',2'9 1%,000
11,2'9 23,9'3
-uestion No. ) 6nterest income or 200% 72'2,'9$ 10)
2',2'9
& 3%,'*0 & & & &
3%,'*0
PROBLEM NO. 6 1
Go>o (orporation
Note receivable rom sale o plant alance, 12/31/0% 7',000,000 & 72,000,000) 5ess installment "ue on April 1, 200' Note receivable rom oicer, "ue 12/31/0 Note receivable rom sale o eFuipment 7resent value o note, $/1/0% 7*00,000 0.9) A"" interest earne" or 200% 7'3,'00 12 9/12) Note receivable rom sale o lan" alance, 12/31/0% 5ess principal installment "ue on /1/0' otal amount to be receive" 902,%00 5ess interest 72,*00,000 11) 30*,000
$,000,000 2,000,000
'3,'00 %,3*$
3
4
%9$,%00
2,000,000 %9$,%00
(urrent portion o long&term receivables
2,%9$,%00
Note receivable rom sale o plant 7$,000,000 12 9/12) Note receivable rom sale o lan" 72,*00,000 11 '/12)
3'0,000 1%$,000
Accrue" interest receivable, 12/31/0%
%1$,000
PROBLEM NO. 8
1. 2. 3. $. %. ( '. . *. ( 9. ( 10.
11. 12. 13. 1$. 1%. 1'. 1. 1*. 19. 20.
A A ( A A
21. 22. 23. 2$. 2%.
A (
2,20%,%00 ',%00,$*$
Note receivable rom sale o plant "ue on $/1/0' Note receivable rom sale o lan" see no. 1)
Note receivable rom sale o plant 7',000,000 12 3/12 7$,000,000 12 9/12 Note receivable rom oicer 71,'00,000 10) Note receivable rom sale o eFuipment 7'3,'00 12 9/12) Note receivable rom sale o lan" 72,*00,000 11 '/12) otal interest income or 200%
'9$,9*$
2,*00,000
otal noncurrent receivables, 12/31/0% 2
2,000,000 1,'00,000
1*0,000 3'0,000
%$0,000 1'0,000 %,3*$ 1%$,000 911,3*$
A
1 2 3 $ % ' * 9 10 11 12 13 1$ 1% 1' 1 1* 19 20 21 22 23 2$ 2% 2' 2 2* 29 30 31 32 33 3$ 3%
(ash on han" an" in ban> Notes receivable Accounts receivable Allo. or "oubtul accounts Accounts receivable&net Accounts receivable&others A"vances to oicers an" employees =ar>etable securities Allo. or "ecline in =C o mar>etable sec. 6nventories 7repayments otal curent assets 7roperty, plant an" eFuipment Accumulate" "epreciation 77D&net otal assets Accounts payable Accrue" epenses otal current liabilities on"s payable on" "iscount otal liabilities (ommon stoc> 8etaine" earnings, en". Net sales (ost o sales 4ross 7roit Eperating epenses Eperating income Ether income Ether charges Net income 4ain on sale o =aretable securities&S=( on" "iscount amorti:ation -ivi"en" income&S=( (o. common
3*,00 $,000 3',000 1,*00 $0,100 2,%0 3,*$0 13,000 1,3% 1%,$00 100 111,90$ 990,000 3$',000 %'',000 ',90$ '00 2,*00 2,*00 39,000 3,000 $00,000 311,102 12%,10$ 9$$,000 ''9,'00 2*0,$00 20,9* 23,'02 %,000 ',%00 1',3%2 1,000 1,000 1,000
B
3%,002 $,%00 $0,000 2,000 3*,000 & 1,000 10,%0 2%0 20,000 %00 113,302 1,910,000 3$$,000 1,%'',000 13,9%0 $,000 $,000 %,200 $00,000 3,000 $0%,200 200,000 10*,%0 9$*,000 ''%,000 2*2,$00 2'$,9* 1%,000 ,2%0 9,000 11,000 2,2%0 $,000 %00
C
3$,$02 %,000 $2,000 2,100 $0,000 %00 2,*$0 *,%00 1,12% 2$,'00 & 113,9%0 910,000 3%0,000 '0',000 '9,302 %,200 %,200 $,000 3'3,000 $3,000 3'3,000 10*,%0 111,102 9%0,000 ''1,000 2*%,000 20,000 1,'02 %,%00 ',000 1,000 1,%0 3,000 2,000
D
3%,%02 %,%00 3*,000 1,900 39,900 1,000 3,$0 $,2%0 & 1',000 900 112,*02 9$0,000 3%',000 %*$,000 '*,*02 2,*00 1,200 1,200 3'0,000 $0,000 3'*,200 30*,%0 9$,%0 9%2,000 ''$,$00 2*,000 2'$,000 1*,$00 ,%0 3,000 1$,000 & & 1,%00
