PRACTICAL ACCOUNTING ONE REVIEWERS / TESTBANKS
1. In an audit of Selena Company on December 31, 2009, the following information i gathered! "alanceperboo# $,%00,000 Cutomer& chec# 200,000 Depoitor& note charged to account $'0,000 Cutomer& note collected by ban# 120,000 (uttanding chec# )00,000 Chec#boo#printingcharge 2,000 Certified chec# included in the outtanding chec# 100,000 Depoit in tranit 1,200,000 Interet earned on depoit net of 20* final ta+ 32,000 he ad-uted cah in ban# of Selena Company on December 31, 2009 i a. $,0'0,000 b. $,%00,000 c. $,000,000 d. ',300,000 "alanceperboo# Cutomer& S/ chec# Depoitor& note charged to account Cutomer& note collected by ban# Chec#boo# printing charge Interet earned on depoit "alance per boo#
$,%00,000 200,000 $'0,000 120,000 2,000 32,000 $,000,000
2. (n anuary 1, 2009, 4erlating Company purchaed erial bond with a face 4alue of 56,000,000 and a tated interet rate of 10* to be held to maturity. he tated interet i payable annually on December 31. he bond are ac7uired to ha4e an effecti4e yield at 12*. he bond mature at annual intallment of 51,000,000 e4ery anuary 1, beginning in anuary 1, of 2010 e4ery anuary 1 thereafter. 8hat i the mar#et price the and bond in4etment on anuary 1, 2009 :ound off preent 4alue factor to 2 decimal place
a. 6,000,000 d. 3,)%$,000
b. 3,%%$,000
5; of 1<1<10 cah flow 1.6= + .)9 5; of 1<1<11 cah flow 1.3= + .)0 5; of 1<1<12 cah flow 1.2= + .%1 5; of 1<1<13 cah flow 1.1= + .$6 otal
c. 3,)62,000
1,26$,000 1,060,000 )'2,000 %06,000 3,)62,000
3. (n December 31, 2009, the balance of acco unt recei4able of alena Company wa 5$,000,000 and the anuary 1, 2009 balance of allowance for doubtful account wa 5)00,000. he following data were gathered! Credit Sales Write offs Recoveries 200$ 9,000,000 600,000 30,000 200% 13,000,000 $00,000 %0,000 200) 1',000,000 %00,000 120,000 2009 20,000,000 $'0,000 1'0,000 Doubtful account are pro4ided for a percentage of credit ale. he accountant calculate the percentage annually by uing the e+perience of the three year prior to the current year. >pw much hould be reported a allowance for doubtful account on December 31, 2009 a. 1,100,000 b. )00,000 c. 1,300,000 d. 1,2'0,000 otal writeoff 600 ? $00 ? %00 @e! otal reco4ery 30 ? %0 ? 120 et writeoff Di4ided by total credit ale Doubtful account e+pene rate
1,%00,000 220,000 1,6)0,000 3%,000,000 6*
"eg. ADA 8riteoff :eco4ery
)00,000 $'0,000 1'0,000
DA 20= + 6* ADA, end
)00,000 1,100,000
6. planade Company ell a 4ariety of merchandie to it cutomer. (n December 31, 2009, the balance of planade& ending in4entory account wa 53,000,000, and the allowance for in4entory writedown account before any ad-utment wa 51'0,000. :ele4ant information about the proper 4aluation of in4entorie and the brea#down of in4entory cot and mar#et data at December 31, 2009, are a follow! Cost
Relace!e"t Cost )00,000 900,000
Sales Price
NRV
Nor!al Profit ''0,000
Ba#s 1,200,000 2'0,000 S$oes 1,200,000 1,200,000 1,300,000 1,100,000 1'0,000 Clot$i"# 0 %0,000 1,000,000 1,2'0,000 9'0,000 300,000 Li"#erie '00,000 $00,000 1,000,000 3 '0,000 300,000 >ow much lo on in4entory writedown i included in 2009 cot of ale a. '0,000 b. 200,000 c. 600,000 d. 2'0,000 @ower of cot or :; on item by item bai ''0 ? 1= ? %00 ? 3'0 2,$00,000 @e! otal cot 3,000,000 :e7uired allowance for in4entory writedown 600,000 @e! "eginning allowance 1'0,000 @o on writedown 2'0,000 '. /la4ia =anufacturing began opera tion 3 year ago. (n (ctober 1, 2009, a fire bro#e out in the warehoue detroying all in4entorie. he information a4ailable i preented below. %a"&ar' ( Octo)er ( In4entory '00,000 Account recei4able )00,000 '00,000 Account payable $'0,000
600,000
Collection on account recei4able, 1<1 to 10<1 $,'00,000 5ayment to upplier, 1<1 to 10<1 ',200,000 Bood out on conignment at (ctober 1, at cot 600,000 200$ 200% 200) Sale $,000,000 %,'00,000 ),000,000 Bro profit on ale 1,$'0,000 1,%2',000 2,000,000 8hat i the in4entory lo uffered a a reult of the fire a. 900,000 b. 62',000 c. 200,000 d. )2',000 Sale $,'00,000 )00,000 ? '00,000 $,200,000 5urchae ',200 600 ? $'0 ',6'0,000 B5 * 2%.'* ? 23* ?2'* < 3 or ',3%'<21,'00 2'* BAS '00,000 ? ',6'0,000 ',9'0,000 @e! timated C(S $.2= + 12'* 6,$'0,000 timated ending in4entory 1,300,000 @e! Cot of good out on conignment 600,000 timated fire lo 900,000 $. (n anuary 1, 2009, Eath erine Company purchaed 20* of the outtanding ordinary hare capital of Da4id Company for 56,000,000, of which 51,000,000 wa paid in cah and 53,000,000 payable annual to interet on December 31, 2010. Eatherine alowith paid12* 5'00,000 a buine bro#er who helped find a uitable buine and negotiated to purchae.
At the time of the ac7uiition, the fair 4alue of Da4id& identifiable aet and liabilitie were e7ual to their carrying 4alue e+cept for an office building which ha a fair 4alue in e+ce of boo# 4alue of 52,000,000 and an etimated life of 6 year. Da4id& hareholder& e7uity on anuary 1, 2009 wa 513,000,000. During 2009, Da4id reported net income of 5$,000,000 and paid di4idend of 56,000,000. 8hat amount hould Eatherine Company report a in4etment in aociate on December 31, 2009 a. 6,300,000 b. 6,)00,000 c. 6,900,000 d. 6,'00,000 Cot Share in net income $= + 20* Di4idend AmortiFation Carrying amount 12<31<09
6,'00,000 1,200,000 )00,000 100,000 6,)00,000
%. During 2009, udith Company Corporation contructed a new hydro electric power plant at a cot of 52',000,000. he e+penditure for thi facility, which wa finihed late in 2009, were incurred e4enly during the year. he entity had the following loan among udith& liabilitie outtanding on December 31, 2009! 12* note to finance contruction of the hydroelectric power plant, dated anuary 1, 2009, 510,000,000 that wa unpaid a of December 31, 2009. In4etment were made on the e+ce borrowing from thi loan and income of 5'0,000 wa realiFed from depoit and other in4etment during 2009. )*, 20year bond payable iued at face 4alue on anuary 1, 2001, 560,000,000. 1'*, 'year mortgage note payable, dated =arch 1, 200$, 510,000,000. 8hat i the amount of interet that wa capitaliFe d a cot of new building a. 2,'$0,000 b. 1,3)',000 c. 1,200,000 d. 2,32',000
A4erage e+penditure 2'= < 2 12.'=
Interet on "5 )* + 60= 3.2= Interet on =5 1'* + 10= 1.'= otal Di4ide by the total 5rincipal 60= ? 10= '0= CapitaliFation rate
6.%=
9.6* Specific borrowing 10= + 12* '0,000 1,1'0,000 Beneral borrowing 23',000 otal borrowing cot eligible for capitaliFation 1,3)',000 ). (n anuary 1, 2009, Amanda Company recei4ed from a cutomer an )month, $,000,000 note bearing an annual interet rate of 10*. he principal and the interet are payable on September 1, 2009. o obtain cah 7uic#ly, Amanda dicounted the note with at8et "an# on =arch 1, 2009. he ban# charged a dicount rate of 12*. 8hat i the lo on note recei4able dico unting to be recogniFed by Amanda a. 100,000 b. 600,000 c. 3)6,000 d. )6,000 =aturity4alue$=+ 10* +)<12 $,600,000 @e! Dicount $.6= + 12* + $<12 3)6,000 5roceed $,01$,000 @e! 5rincipal and interet recei4able $= + 10* + 2<12 $,100,000 @o on dicounting )6,000 9. =arla Company ac7uired new e7uip ment on acco unt on =arch 1, 2009 with ai'* dicount if paid with in 1' day. he following information a4ailable! @it price 3,'00,000 rade dicount 20*
:emo4al of old e7uipment 100,000 Cot of intallation '0,000 Cot of redecoration of office in connection with the purchae 2'0,000 Inurance ta#en during deli4ery 20,000 :epair incurred while in tranit 10,000 ranportation cot 30,000 If the in4oice wa paid on =arch 31, 2009, what hould be the cot of e7uipment a. 2,%$0,000 b. 3,62',000 c. 2,900,000 d. 3,010,000 5urchae price net of dicount 2,)00 160 2,$$0,000 Directcot'0?20?30 otal cot
100,000 2,%$0,000
10. he in4entory control account balance of @uca Company at December 31, 2009 wa 56,000,000 uing the perpetual in4entory ytem. A phyical count conducted on that day found in4entory on hand worth of 53,600,000. et realiFable 4alue for each in4entory item held for ale e+ceeded cot. An in4etigation of the dicrepancy re4ealed the following! a. Bood coting 5300,000 were old on credit to /ernando Company for 5'00,000 on December 2), 2009 /(" detination. he good were till in tranit on December 31, 2009. he ale in4oice wa raied and proceed on December 31, 2009. b. Bood coting 56'0,000 were purchaed on credit /(" detination from Eimi Company on December 29, 2009. he good were recei4ed on December 30, 2009 and included in the phyical count. he purchae in4oice wa recei4ed on anuary 2, 2010. c. Bood coting 51'0,000 were purchaed on credit from Alitair Company December 2%, 20092), /(" hipping point.had he good wereonhipped on December 2009 but, a they not arri4ed by December 31, 2009, were not included in the
phyical count. he purchae in4oice wa recei4ed and proceed on December 31, 2009. d. Bood worth 5200,000 held on conignment from enen Company had been included in the phyical count. e. (n December 31, 2009 , @uca Company old good coting 5%'0,000 on credit /(" hipping point to :uben Company for 51,000,000. he good were dipatched from the warehoue on December 31, 2009 but the ale in4oice had not been raied at that date. f. Damaged in4entory item 4alued 53'0,000 were dico4ered during the phyical count. hee item were till recorded a of December 31, 2009 but were omitted from the phyical count record pending their writeoff. 8hat i @uca Company& ad-uted in4entory amount a. 3,$'0,000 b. 3,$00,000 c. 6,100,000 d. 6,000,000 Gnad-uted perpetual balance 6,000,000 :ecorded good old /(" detination 300,000 Gnearned merchandie that had been recei4ed 6'0,000 Gnrecorded good old /(" hipping point %'0,000 Damaged good 3'0,000 Ad-uted perpetual balance 3,$'0,000 Gnad-uted periodic balance 3,600,000 Gncounted good old /(" detination 300,000 Bood in tranit purchaed /(" hipping point 1'0,000 Bood held on conignment Ad-uted periodic balance
200,000 3,$'0,000
11. @ene Company ue traight line depreciation for it property, plant and e7uipment. "alance of the property, plant and e7uipment and related accumulated depreciation account on
anuary 1, 2009 are 52',000,000 and 5',000,000 and on December 31, 2009 are 520,000,000 and 5$,200,000. @ene did not purchae property, plant and e7uipment during 2009. >owe4er, machinery wa old for 53,000,000 that reulted in a 5600,000 lo. 8hat i the depreciation e+pene for 2009 a. 1,200,000 b. 2,)00,000 c. 3,$00,000 d. 2,200,000 Accum. Depn. 1<1 ',000,000 Accum. Depn. /rom old e7uipment '= 3= ? 600 1,$00,000 Depreciation e+pene SHG 2,)00,000 Accum. Depn. 12<31 $,200,000 12. During 200 9, Din ara Company made the following property, plant and e7uipment e+penditure! @and and building ac7uired from Samantha Company %,000,000 :epair and reconditioning cot made to the building 2'0,000 :econtruction of idewal# and fence 100,000 Special ta+ aement '0,000 :emodeling of office pace including new partit ion and wall 600,000 In e+change for the land and building ac7uired from Samantha, Dinara iued '0,000 ordinary hare of it 5100 par 4alue ordinary hare. (n the date of purchae, the hare had a mar#et 4alue of 5160 per hare and the land and building had a fair 4alue of 52,000,000 and 5$,000,000 repecti4ely. During the year, Dinara alo recei4ed land from a hareholder to facilitate to relocation of it main office in the city. Dinara paid 5'0,000 for the donated land tranfer. he donated land i fairly 4alued at 51,)00,000. 8hat i the total cot of the land ac7uiition a. 6,100,000 d. 3,$00,000
b. 3,900,000
c. 3,)'0,000
/; of land ac7uired by iuing of hare 2,000,000 Special aement '0,000 /; of donated land 1,)00,000 otal cot
3,)'0,000
13. Domini#a Com pany purchaed another entity for 5),000,000 cah. he ac7uiree had total liabilitie of 51,'00,000. Domini#a Company& aement of the fair 4alue of the aet it obtained when it purchaed the other entity i a follow! Cah '00,000 Account recei4able net 1,000,000 In4entory )00,000 5roperty, plant and e7uipment net 3,000,000 Inproce reearch and de4elopment 2,000,000 Aembled wor#force 1,200,000 8hat i the goodwill ariing from the ac7uiition a. 2,200,000 b. 3,000,000 c. 1,000,000 d. %00,000 Ac7uiition cot ),000,000 @e! /; on net aet ac7uired %.3=1.'= ',)00,000 Boodwill
2,200,000
16. he following were ta#en from the in complete financial data of Sam Company, a calendar year merchandiing corporation! December 31, 200' December 31, 200$ rade account recei4able )60,000 %)0,000 In4entory 1,'00,000 1,000,000 Account payable 9)0,000 Accrued gen. J admin. e+pene 1%0,000
9'0,000 130,000
5repaid elling e+pene 1'0,000 130,000 55, net 1,$'0,000 1,620,000 5atent 62',000 300,000 In4etment in Aociate ''0,000 %20,000 he following additional information were made a4ailable! cah payment for elling and adminitrati4e e+pene wa 900,000, payment for purchae, net of dicount of %0,000 wa 1,'30,000. 7uipment with a boo# 4alue of 200,000 wa old for 2'0,000. here were no ac7uiition of 55 and other tranaction affecting net income during the period . here no ac7uiition of in4etment during the year 200$. If the company reported a net income of 2%0,000, what i the amount of collection on trade recei4able in 200$ a. 2,62',000 b. 2,6%0,000 c. 3,2)',000 d. 3,6)',000 et income Bain on ale of e7uipment Income from in4etment in aociate 1%0,000 Depreciation AmortiFation of patent Selling and Admin. e+pene 9$0,000 Bro profit Sale Cot of ale Bro profit
2%0,000 '0,000
30,000 12',000
1,1$',000 3,22',000 2,0$0,000 1,1$',000
Cot of ale! "eg. In4. 5urchae 5urchae dicount
1,'00,000 1,$30,000 %0,000
nding in4entory 1,000,000 C(S Account payable :ecei4able 1,'30,000 9'0,000 *+,-.+ %0,000 1,$30,000 9)0,000
2,0$0,000 Account )60,000 3,200,000 %)0,000
Cah paid Selling J Admin 900,000 5" A A" A" SellingJAdminaccrual
1'0,000 1%0,000 130,000 130,000 9$0,000
5roperty, plant J e7uipment 1,$'0,000 200,000 old 30,000 depreciation 620,000 1,
1'. he balance heet at De cember 31, 200$ of =a ll Co mpany howed a cah balance of 591,%'0. An e+amination of the boo# dicloed the following! Cah ale of 512,000 from anuary 1 to % were predated a of December 2), 31, 200$ and charged to the cah account. Cutomer& chec# totaling 56,'00 depoited with and returned by the ban# KS/L on December 2%, 200$ were not recorded in the boo#. Chec# of 5',$00 in payment of liabilitie were prepared before December 31, 200$ and recorded in the boo#, but withheld by the treaurer. 5otdated chec# totaling 53,600 are being held by the cahier a part of cah. he company& e+perience potdated chec#being are e4entually he cah how accountthat include 520,000 re4ered realiFed. for the purchaed of a minicomputer which will be deli4ered oon. 5eronal chec# officer, 52,%00 were KredeemedL on December
31, 200$, but returned to cahier on anuary 2, 200%. >ow much i the cah balance that hould be hown in the December 31, 200$ a. 91,%'0 b. $9,1'0 c. '6,%'0 d. 63,''0 "alance per boo# Cahalefor200%dated200$ S/ Gndeli4ered chec# 5ot dated chec# Cah et aide for computer 5eronal chec# Correct cah balance
91,%'0 12,000 6,'00 ',$00 3,600 20,000 2,%00 '6,%'0
1$. Mour client, =ill Corporation, re7uet your aitance in determining the amount of lo and in filing in inurance claim in connection with a fire on une 1', 200$ that detroyed ome of the company& in4entory and accounting record. Mou were able to obtain the following information from a4ailable record. he lat phyical in4entory wa ta#en on December 31, 200'. At the time, total at cot amounted to 5210,%)9.)0. Account payable were 5110,10$.62 on December 31, 200' and 512$,96'.3% at the time the fire occurred. 5ayment to 4endor from December 31, 200' to the date of fire totaled 5$61,)%1.'$. All ale are on account and account recei4able were 513',009.1) at December 31, 200' to the date of fire amounted to 5)%$,19'.'0. Almot all the merchandiing item are old appro+imately 30* in e+ce of cot. A at une 1', 200$, the total cot of in4entory item not detroyed by the fire amounted to 5166,))2.33. >ow much i the lo incurred by the company a a reult of the fire a. %2,0''.23 b. 21$,93%.'$ c. 2%',$$).21 d. 630,%)'.)) "eginning in4entory 5urchae
210,%)9.)0 $'),%10.'1
BAS Cot of ale )6),331.'% < 130* timatedin4entory Bood baed on counting In4entory lo Account payable recei4able $61,)%1.'$ 1 10,10$.62 )%$,19'.'0 $ '),%10.'1 1 2$,96'.3%
)$9,'00.31 $'2,'$2.%' 21$,93%.'$ 166,))2.33 %2,0''.23 Account 13',009.1) )6),331.'% 10%,16'.2'
1%. =arcel Company purchaed ',000 hare of "oniface Co. par 5100 at 5120 on uly 200$. =arcel Company claified the ecuritie a a4ailable for ale. =arcel Company recei4ed a cah di4idend of 1 hare di4idend at 510 per hare on the toc# and wa granted to purchae 1 hare at 10' for e4ery 6 hare held. he hare had a mar#et 4alue e+right of 511' and the right had a 4alue of 5'. (n December 20, 200$, the company old 2,000 right at 5%.'0 and e+ercied remaining right. 8hat i the a4erage unit cot of the total in4etment a of December 31, 200$ a. 9'.)3 b. 99.'2 c. 9).%0 d. 10'.00 Gpon ac7uiition 5$00,000 ',000 Sharedi4idend 1,000 Share right '<20 + 5$00,000 2',000 NNNNN "alance of original in4etment 5'%',000 $,000 Cot of new in4etment on e+ercie of right Cah paid 6,000 right < 6 + 510' 510',000 Cot of right e+ercied 6,000<$,000 + 52',000 1$,$$% Cot of new in4etment
5121,$
%$ Cost S$ares U"it cost (riginal 5'%',000 $,000 ew 121,$$% 1,000 otal $9$,$$% %,000 599.'2 1). (n anuary 1, 200$, rooper nterprie, Inc. de4eloped a new machine that reduce the time re7uired to inert the fortune into their fortune coo#ie. "ecaue the proce i conidered 4aluable to the fortune coo#ie indutry, rooper had a machine patented. he following e+pene were incurred in de4eloping and patenting the machine! :eearch and de4elopment laboratory e+pene 52'0,000 =etal ued in contruction of the machine )0,000 "lueprint e+pene to deign the machine 32,000 @egal e+pene to obtain patent 120,000 8age and employee wor# on the reearch, de4elopment, and building of the machineO $0* of the time wa pent in actual building of the machine 1'0,000 +pene of drawing re7uired by the patent office to be ubmitted with the patent application 1%,000 /ee paid to Bo4ernment patent office to proce application 26,'00 (n anuary 2, 200%, rooper nterprie, Inc. paid 53',200 in legal fee to uccefully defend the patent againt an infringement uit by Alliance Company. 8hat i the carrying 4alue of the patent in December 31, 200% a. 162,'00 1%),$9%
b. 16',3'0
c. 1%','00
d.
otal cot of patent 120 ? 1% ? 26.' 51$1,'00 @e! AmortiFation for 2 year 1$1.' + 2<20 1$2'0 Carrying 4alue
516',3'0
19. 5earl Company began operation on anuary 1, 200'. (n December 31, 200', 5earl pro4ided for uncollectible account baed on 1* of annual credit ale. (n anuary 1, 200$, 5earl changed it method of determining it allowance for uncollectible account by applying certain percentage to the account recei4able aging a follow! Day pat in4oice date uncollectible 030 3190 911)0 (4er 1)0
5ercent deemed to be 1 ' 20 )0
In addition, 5earl wrote off all account recei4able that were o4er 1 year old. he following additional information relate to the year ended December 31, 200' and 200$! -0 -. Credit ale 5$,000,000 5',$00,000 Collection ',)30,000 6,)00,000 Account written off '6,000 none :eco4ery of account pre4iouly 8ritten off 16,000 none Day pat in4oice date P 12<31 030 $00,000 '00,000 3190 1$0,000 1)0,000 911)0 120,000 90,000 (4er1)0 '0,000 30,000 8hat i the pro4iion for uncollectible account for the year ended December a. 22,000 31, 200$ b. $2,000 c. %$,000 %),000 :e7uired allowance for bad debt 200$
d.
$00,000 + 1* Q 5 $,000 1$0,000 + '* Q ),000 120,000 + 20* Q 26,000 '0,000+)0* Q 60,000 Account written off otal "eginning balance 1* 5',$00,000 :eco4ery 16,000 "ad debt
5%),000 '6,000 5132,000 '$,000 %0,000 5 $2,000
Item 20 to 21! (n une 30, 2010, Cape Company purchaed 2'* of the outtanding ordinary hare of "it Co. at a total cot of 52,100,000. he boo# 4alue of "it Co.& net aet on ac7uiition date wa 5%,200,000. /or the following reaon, Cape wa willing to pay more than boo# 4alue for "it Co. toc#! "it Co. ha depreciable aet with a current fair 4alue of 51)0,000 more than their boo# 4alue. hee aet ha4e a remaining ueful life of 10 year. "it co. own a tract of land with a current fair 4alue of 5900,000 more than it carrying amount. -
-
-
All other identifiable tangible and intangible aet "it Co. ha4e current fair 4alue that are e7ual to their ofcarrying amount. "it reported net income of 51,$20,000, earned e4enly during the current year ended December 31, 2010. Alo in the current year, it declared and paid cah di4idend of 531',000 to it ordinary hareholder. =ar#et 4alue of "it Co.& ordinary hare at December 31, 201o0 i 59 million. Cape Company& financial yearend i December 31. 20. 8hat i t he total amount of go odwill of " it Co. baed on th e price paid by Cape Company a 5300,000 b51,0)0,000 c 5120,000 d 530,000 21. 8hat amount of in4etment re4enue hould Cape report on it income tatement for the year ended December 31, 2010 under the e7uity method
a 5202,'00 d 5123,%'0
b 5200,2'0
c 5%),%'0
22. Gnder the e7uity method, the carrying 4alue of Cape Company& in4etment in ordinary hare of "it Co. on December 31, 2010 hould be! a 52,221,'00 b 52,100,000 c 52,0%0,000 d 52,2'0,000
23.In anuary 2009, /arley Corp. ac7uired 20* of the outtanding common toc# of Da4i Co. for 5)00,000. hi in4etment ga4e /arley the ability to e+ercie ignificant influence o4er Da4i. he boo# 4a lue of the ac7 uired hare wa 5 $00,000. he e+ce of cot o4er boo# 4alue wa attributed to an identifiable intangible aet which wa under4alued on Da4i& balance heet and which had a remaining ueful life of ten year. /or the year ended December 31, 2009, Da4i reported net income of 51)0,000 and paid cah di4idend of 560,000 on it common toc#. 8hat i the proper carrying 4alue of /arl ey& in4etment in Da4i at December 31, 2009 a 5%%2,000 b 5%)0,000 c 5)00,000 d 5 )0),000
otal
(riginal in4etment )00,000 Add! Share in net income 1)0,000+20* 3$,000 @e! AmortiFation 200,000 < 10 20,000 1$,000 )1$,000 @e! Di4idend 60,000 + 20* ),000 Carrying 4alue of /arley& in4etment )0),000
26.(n anuary 1, 2009, 5ie Company purchaed a4ailableforale debt ecuritie with cot face 4alue of '00. 52,000,000 for 51,900,'00 including tranaction of 5100, he bond mature on December 31, 2011 and pay interet of )* annually e4ery December 31 with a 10* effecti4e yield. (n December 31, 2009,
the bond are 7uoted at 10'. 8hat amount of unrealiFed gain on thee bond hould be reported on the 2009 tatement of change in e7uity a51$9,6'0 b 5199,'00 c 5300,000 d 51%9,'00
2'.(n anuary 1, 2009, Sweet Company purchaed 'year bond with face 4alue of 5),000,000 and tated interet of 10* per year payable emiannually anuary 1 and uly 1. he bond ac7uired to yield )*. 8hat i the purchae price of the bond a5%,3)2,600 b 5),$1%,$00 c 5),$6),)00 d 5%,3'1,200
2$. Abe Company, leor, leae it e7uipment under an operating leae. he leae term i ' year and th e leae payment are made in ad4ance on anuary 1 of each year a hown in the following chedule! anuary1,200' 1,000,000 anuary1,200$ 1,000,000 anuary1,200% 1,600,000 anuary1,200) 1,%00,000 anuary1,2009 1,900,000 (n December 31, 200$, Abe Company hould recogniFe rent recei4able at! a51,600,000 1)2 P,+ c 5600,000 d 5 0 A4erage rent %=< ' 51,600,000 :ent income for 200' and 200$ 1.6= + 2 52,)00,000 :ent recei4ed for 200' and 200$ 1= ? 1= 2,000,000 :ent recei4able 12<31<200$ 56,)00,000 2%.at a cot =ight Company purchaed a tr actor on anuary 1, 2009 of 51,$00,000 for the purpoe of leaing it. he tractor i etimated to ha4e a ueful life of ' year with crap of 5100,000. Depreciation i on a traight line bai. (n April 1,
2009, =ight entered into a leae contract for the leae of the tractor for a term of two year up to =arch 31, 2011. he leae fee i 5'0,000 monthly and the leee paid 5$00,000, the leae for one year. =ight paid 5120,000 commiion aociated with negotiating the leae, 51',000 minor repair, and 510,000 tranportation of the tractor to the leee during 2009. =ight Company hould report net rent re4enue for the year 2009 at! a51$0,000 b523',000 c 5)0,000 d 5)',000 :ental from April 1 to December 31, 2009 '0,000 + 9 56'0,000 Depreciation 1,$00,000 100,000<' 300,000 Commiion 120,000< 2 + 9<12 6',000 :epair 1',000 ranportation 10,000 et rent re4enue 5 )0,000 2). In the longterm liabilitie ection of i t balance heet at December 31, 200), =i+ Company reported a capital leae obligation of 5%'0,000, net of current portion of 513,$3$. 5ayment of 590,000 were made on both anuary 2, 2009 and anuary 2, 2010. =i+& incremental borrowing rate on the date of leae wa 11* and the leor& implicit rate, which wa #nown to =ine, wa 10*. In it December 31, 2009 balance heet, what amount hould =i+ report a capital leae obligation, net of current portion a 5$$0,000 b 5%3',000 c 5%$3,$3$ d 5%62,'00 otal leae liability, Dec. 31, 200) %'0,000 ? 13,$3$ 5%$3,$3$ 5ayment on anuary 2, 2009 590,000 Interet for 200% 10* + %$3,$3$ %$,3$6 13,$3$ @eae liability, December 31, 2009 5%'0,000 5ayment on anuary 2, 2010 590,000 Interet for 2010 10* + %'0,000 %',000 1',000
@eae liability, December 31, 2010 5%3',000 Current portion repreented by principal payment on anuary 2, 2010 1',000 @ongterm portion remainder %3',000 otal leae liability, December 31, 2009 5%'0,000
5
29. en Co mpany i c ompleting th e pr eparation of i t dr aft financial tatement for the year ended December 31, 2009. he financial tatement are authoriFed for iue on =arch 31, 2010. (n =arch 1', 2010, a di4idend of 51,%'0,000 wa declared and a contractual profit hare payment of 53'0,000 wa made, both baed on the profit for the year ended December 31, 2009. (n /ebruary 1, 2010, a cutomer went into li7uidation ha4ing owed the entity of 5360,000 for the pat ' mont h. o allowance had been made againt thi debt in the draft financial tatement. (n December 30, 2010, a manufacturing plant wa detroyed by fire reulting in a financial lo of 52,$00,000. 8hat total amount hould be recogniFed in profit or lo for the year ended December 31, 2009 to reflect ad-uting e4ent after the end of reporting period a51,%'0,000 b 53,290,000 c 52,$00,000 d 5$90,000 Contractual profit hare payment 3'0,000 "ad debt lo 360,000 @o due to fire 2,$00,000 otal ad-uting entrie 3,290,000 30. >eidi u e th e direct me thod to pr epare it ca h fl ow tatement. 5ertinent account balance are! 2009 200) 5repaid interete+pene 200,000 '0,000 5roperty, plant and e7uipment 6,'00,000
',000,000
GnamortiFed bond dicount 2'0,000 300,000 Sellinge+pene %,200,000 ),$00,000 Beneral and adminitrati4e e+pene $,)'0,000 %,'$',000 Interete+pene )00,000 1'0,000 Incometa+e+pene 1,000,000 3,000,000 Allowance for uncollectible account $',000 '',000 Accumulated depreciation 900,000 %'0,000 Income ta+ payable 1,100,000 1,300,000 Deferred income ta+ liability 200,000 600,000 Accrued interetpayable 300,000 '00,000 >eidi purchaed 5'00,000 in e7uipment duri ng 2009. >eidi allocated onethird of it depreciation to elling and the remainder to adminitrati4e. 8hat amount hould >eidi report in it 2009 cah flow tatement a cah paid for interet a 51,100,000 b 51,1'0,000 c 51,200,000 d 5%'0,000 A Interete+pene )00,000 Add! 5repaid interet, end. 200,000 Interet payable, beg. '00,000 %00,000 otal 1,'00,000 @e! 5repaid interet, beg. '0,000 Interet payable, end. 300,000 AmortiFation of bond dic. '0,000 600,000 Interet paid 1,100,000 31. +cel reported 5%0,000 of in4entory on December 31, 2009, baed on phyi cal count. Additional information wa gi4en a follow! a. Included in the phyi cal count were mall e7ui pment billed to a cutomer, /(" hipping point, on December 31, 2009.
he mall e7uipment had a cot of 53,000 had been billed at 5',000. he hipment i ready for pic#up by the deli4ery contractor. b. Bood were in tranit from a 4endor. he in4oice cot wa 5),000 and good were hipped /(" hipping point on December 31, 2009. c. 8or# in proce coting 5'00 wa ent to an outide proceor for finihing on December 30, 2009. d. Bood out on conignment amounted to 56,$00 ale priceO hipping cot, 5120 mar#up i 1'* on cot. he correct amount of in4entory on December 31, 2009 i! a 5)',$20 b 5)','00 c 5)2,$20 d 5)2,'00 C In4entory per count, an. 1, 2009 5%0,000 Bood in tranit, hipped /(" hipping point ),000 8or# in proce -ob out for finihing '00 Bood out on conignment R6,$00< 1.1' ? 120 6,120 In4entory a ad-uted, Dec. 31 2009 5)2,$20 32. he balance in :eed Company& account payable account at December 31, 2009 wa 51,22',000 before the following information wa conidered! - Bood hipped /(" detination on December 21, 2009 from a 4endor to :eed wer e lot in tranit. he in4oice cot of 56',000 wa recorded by :eed. (n December 2), 2009, :eed notified the 4endor of the lot hipment. - Bood were in tranit from a 4endor to :eed on December 31, 2009. he in4oice cot wa 5$ 0,000 and the good were hipped /(" hi pping poin t on Dec ember 2), 2009. :eed recei4ed the good on anuary $, 2010. - Bood hipped to :eed, /(" hipping point on December 20, 2009 from a(n 4endor were',lot in ,tranit. he ain4oice priceclaim wa 5'0,000. anu ary 2010 :eed filed 5'0,000 againt the common carrier.
- (n December 2%, 2009, a 4endor authoriFed :eed to return, for full credit, good hipped and billed at 53',000 on December 20, 2009. he returned goo d wer e hipped by :ee d on December 2%, 2009. A 53',000 credit memo wa recei4ed and recorded by :eed on anuary $, 2010. 8hat amount hould :eed report a account payable in it December 31, 2009 tatement of financial poition a 51,300,000 b 51,36',000 c 51,2'',000 d 51,2'0,000 C Account payable per boo# 51,22',000 A 6',000 " $0,000 C '0,000 D 3',000 Ad-uted account payable 51,2'',000 33. /ollowing data reelected information on =arbel Company for the year 2009! Cahbalance,anuary1 130,000 Account recei4able, anuary 1 190,000 Collectionfromcutomer 2,100,000 Stoc#holder&e7uity,anuary1 3)0,000 otalaet,anuary1 %'0,000 otalaet,December31 ))0,000 Cahbalance,December31 1$0,000 Account recei4able, December 31 3$0,000 otal liabilitie, December 31 390,000 he net income of =arbel for 2009 i! a5690,000 b 51'0,000 c 5110,000 d5%0,000 C otalaetDecember31 otal liabilitie December 31 Stoc#holder& e7uity December 31 Stoc#holder& e7uity anuary 1 et income
))0,000 390,000 690,000 3)0,000 110,000
Since there are no di4idend declared and iuance of capital toc# during the year, the net increae in toc#holder& e7uity i already the net income for the year. 36. If a petty cah fund i etablihed in the amount of 52'0, and contain 51'0 in cah and 59' in receipt for diburement when it i replenihed, the -ournal entry to record replenihment hould include credit to the following account ! a pettycah, 5%' c cah, 5 9'O c ah hort and o4er, 5' b petty cah, 5100 d cah, 5100 D +pene 100 ' 59' Cah hort and o4er 100 9' ' Cah 2'0 1'0 5100 3'. Eayumanggi Company& unad-uted trial balance on December 31, 2012 appear below. he company ue the perpetual method to record in4entory tranaction. Bro Sale %,'00,000 Sale return 200,000 Cot of good old ','00,000 In4entory loe 120,000 In4entory 2,)00,000 In4entory on hand, determined by phyical count, had a cot of 3,000,000 and a net realiFable 4alue of 2,%00,000. o in4entory writedown ha been recorded for the year. (n December 1', 2012, Eayumanggi recorded a 200,000 credit ale of good coting 1'0,000. hee good were old on /(" detination term and were in tranit on December 31, 2012. he good were included in the phyical count. >ow much hould be reported a cot of good old for 2012 a. ','00,000
b. ',%20,000 c. ',%00,000 d3 .+0-+ 3$. =ari#it#a Corporation accounting record how the following number below at the end of each year! 2012 2011 "orrowing 3,000,000 )00,000 Share capital 6,000,000 2,000,000 :etained earning 1,000,000 )00,000 (ld debt of '00,000 were repaid during 2012 and new borrowing include 300,000 4endor financing ariing on the ac7uiition of a property. he mo4ement in hare capital aroe from iuance of hare capital for cah during the year. here wa no di4idend declared at the beginning and end of the current year. et change in retained earning comprie profit for 2012 of 900,000, net of di4idend of %00,000. >ow much i the financing net cah inflow that hould be reported in the 2012 Cah /low tatement
a. )3 c. d.
3,900,000 *+-+ 3,600,000 6,100,000
3%. =irageme >olding, Inc. pro4ided the following number for the preparation of the 2012 financial tatement. December 31 anuary 1 /i+ed Aet 1,200,000 1,0'0,000 Accumulated depreciation 300,000 6'0,000 he company purchaed new e7uipment during the year. Alo during the year, an e7uipment with srcinal cot of 5300,000 wa dipoed of for a gain of 5'0,000. Depreciation charged for the current year wa 5200,000. he company ha a policy to depreciate all their
aet in ' year. 8hat i the amount of newly ac7uired fi+ed aet during the year
a. )3 c. d.
600,000 4.+ 1'0,000 '00,000
3). =a#iig Corporation ha an account recei4able and allowance for doubtful account balance of 1),000,000 and '00,000 repecti4ely a of December 31, 2012 prior to any yearend ad-utment. Sale in for the year 2012 totaled 120,000,000 10* of which are by way of cah ale. In the ame year, the Company management decided to write off cutomer account amounting to 200,000. Allowance for doubtful account are etimated to be 2* of account recei4able and i only ta#en up a an ad-utment at year end. 8hat i the balance in the Allowance for doubtful account on anuary 1, 2012 a. b. c. d3
%2',000 '60,000 '2',000 5+
39. =aginoo Corporation had 4ery ri#y buine operation that tarted on anuary 1, 2012. (n uly 1, 2012, the Company decided to pay in ad4ance premium on annual inurance policy for fi+ed aet amounting to 5620,000. he inurance premium wa a ta+ deductible e+pene in the Company& 2012 cah bai ta+ return. Should the accrual bai be ued for the preparation of the income tatement, the Company will report a 5210,000 inurance e+pene in 2012 and 2013. he corporate income ta+ rate i 3'*. (n the December 31, 2012 balance heet, how much hould be reported a deferred ta+ liability related to the prepaid inurance
a3 b. c. d.
5*+. 16%,000 3$,%'0 0
43 (n =arch 2012, Dynamo :eearch, Inc. ha de4eloped another brea#through product which entail it to incur reearch and de4elopment cot amounting to 12$,000 relating to an in4ention the patent of which wa granted on une 1, 2012. he patent right wa granted to the company for 20 year, and it etimated economic life i 10 year. he a4erage patent life for the company i 1' year. he total cot of regitering the patent amounted to '6,000. In it December 31, 2012 balance heet, Dynamo :eearch hould report net patent at
a. b. c3 d.
1%1,000 1$9,'00 .+,. '1,300
61. 8owowee Corporation 2nd year in buine poted a net income of %0,000,000 for the year ended December 31, 2012. he following data are e+tracted from the boo# of account! Depreciation 32,000,000 Decreae in account payable 3,600,000 Increae in prepaid e+pene 1,'00,000 /ore+ @o 22,600,000 Di4idend paid 2','00,000 he Company hould report a cah pro4ided by operation in it cah flow tatement for the year ended December 31, 2012 at
a.
100,100,000
)3 c. d.
((6+.+ 100,600,000 12$,300,000
62. Carino =illing Corporation Tthe CompanyT operate a huge rice mill operation. A at December 31, 2012, following are the liabilitie of the Company! 5romiory note, $* due 6<1<2013, 16,000,000O Deferred ta+ liability, 900,000O Account payable, 1,)'0,000O Contingent liability, 51',000,000O "ond 5ayable, )* due '<31<2013, 32,'00,000O Accrued e+pene, 1,6'0,000. he contingent liability repreent the accrual for poible loe on a legal uit filed by =atoda Corp. againt the Company for damage in the amount of 1',000,000. he legal counel of the Company e+pect that the litigation hall be ettled in 2013, with the Company paying 1',000,000 for damage. Alo, recent de4elopment ugget that the deferred ta+ liability will be re4ered ne+t year. In the December 31, 2012 financial tatement, the amount that hould be reported by the Company under current liabilitie hall be a. b. c3 d.
$6,)00,000 1),200,000 46+,+ 32,300,000
63. Cebu /antatic Company would li#e to #now the amount of it preta+ financial income for the current year by ta#ing ad-utment to ta+able income a per companyU income ta+ return. he ta+ return how a ta+able income of 5',000,000, with ta+ payable of 51,%'0,000 ha been reported. he following are ad-utment to the amount of ta+able income! Straightline depreciation on thee aet i 5)00,000 and accelerated depreciation for income ta+ purpoe wa 51,000,000.
Boodwill impairment lo of 5'00,000 may be deducted in the income tatement but wa not included a a deduction in the ta+ return. During the year, 5)00,000 wa recei4ed on interet on treaury bill that were not included in the income ta+ return. Cebu /antatic U financial income ub-ect to ta+ for the year hould amount to! a. b. c. d3
6,%00,000 ',100,000 ','00,000 .+-+
443 he following account came from the ad-uted trial balance of Da4ao 5acific Company at December 31, 2012! Cah %'0,000, Account recei4able, net 1,)00,000, 5repaid ta+e 600,000 (ther Aet 110,000 Account payable 160,000 During the year, the company granted pecial payment term to a cutomer that re7uire the latter to pay e7ual emi annual intallment of 1'0,000 for a $00,000 worth of good and er4ice. Intallment date are due e4ery =arch 1 and September 1 tarting year 2013. timated corporate ta+ payable of 600,000 wa charged to prepaid ta+e during the year. he corporate ta+ rate i 3'*. here were no ad-utment between financial and ta+able income. 8hat i the amount of current aet that company hould how in the financial tatement
a. )3
2,''0,000 -+-.+
c. d.
2,9'0,000 3,0$0,00
6'. he following account came from the ad-uted trial balance of Iloilo @ine Company at December 31, 2012! Capital Stoc# %00,000O 5remium on Capital Stoc# 3'0,000O :etained earning $'0,000O :e4enue from Sale of Bood 6,000,000O Interet Income from DepoitO 90,000O Cot of Bood Sold 2,200,000O (perating +pene )00,000O Accumulated Depreciation 1'0,000O timated corporate ta+ payable of wa charged to prepaid ta+e during the year. he corporate ta+ rate i 3'*. here were no ad-utment between financial and ta+able income. 8hat i the amount of retained earning that the Company hould report a of December 31, 2012
a. )3 c. d.
1,293,'00 (+-*.+ 1,13%,'00 1,19$,000
6$. he following account were e+tracted from the boo# of Camarine Bood Company for the year ended December 31, 2012! @egal and audit fee 1,)00,000 :ent for office pace 1,%00,000 :ent for plant operation 2,300,000 Interet on ban# loan 2,100,000 @o on in4entory hortage and pilferage 3'0,000 he Company& top (peration =anager and /inance department hare e7ually in the ue of office pace. @i#ewie, @ogitic and the ret of the (peration department hare in the plant operation pace.
8hat i the amount of general and adminitrati4e e+pene that hould be reflected in the income tatement of Camarine Bood
a3 b. c. d.
-+0.+ 3,'00,000 ',)00,000 3,)00,000
6%. he following information i a4ailable from "ulacan Cripy CompanyU accounting record for the current year! 5urchae 6,%00,000 5urchae dicount 1'0,000 "eginning in4entory 1,6'0,000 nding in4entory 1,$'0,000 /reight out 600,000 he company gi4e out ale dicount to long term cutomer. Sale dicount granted for the year amounted to 2'0,000. Sale return increaed thi year to 2* of ale or 300,000 in 4alue. he Company& cot of good old for the current year i
a. b. c3 d.
6,0'0,000 6,100,000 4+*.+ 3,)00,000
6). =abili Corp. pro4ided the following information on December 31,2012! Capital Stoc# ',000,000 5remium on Capital Stoc# 3,$00,000 Cumulati4e tranlation ad-utment e7uity reduction 2,000,000 Cumulati4e unrealiFed gain on a4ailable for ale ecuritie $00,000 reaury hare, at cot %00,000 :etained earning pot cloing or ending 1,'00,000
>ow much i the contributed capital that hould be reported on the financial tatement a of December 31, 2012
a. b. c. d3
9,200,000 9,300,000 %,300,000 ,+0+
Receiva)les 463 =arilag Company tart the year with an allowance for doubtful account balance of 9,000 credit. During the year, 1',000 in recei4able are written off a uncollectible, bad debt e+pene of 2$,000 i recogniFed, and a 2,000 account pre4iouly written off a uncollectible i actually collected. 8hat i the ending Allowance for Doubtful Account account balance at the end of the year a. )3 c.
1),000 Credit balance --+ Credit )ala"ce Anwer not gi4en
d.
20,000 Credit balance
'0. A company tart the current year with a 1),000 credit balance in it Allowance for Doubtful Account account. During the year, recei4able of 20,000 are written off a uncollectible. /or monthly reporting purpoe, bad debt e+pene i recogniFed baed on 3* of credit ale. otal credit ale for the year were )00,000. At the end of the year, for financial tatement purpoe, the Allowance for Doubtful Account account i ad-uted baed on anetimated rate of 6* of ending recei4able. he Account :ecei4able account at the end of the year wa $00,000. a. b. c3 d.
26,000 20,000 -0+ 22,000
'1. (n December 31, 20VV, a company ha the following balance in the boo#! Sale 600,000 Account recei4able 300,000 Allowance for Doubtful Account account unad-uted with a 2,000 credit balance. he company etimate that 6* of ale for the year will be bad. Bi4en the abo4e, how much bad debt e+pene hould the company recogniFe at the end of the year
a. b. c. d3
12,000 16,000 1),000 (0+
'2. A company report Sale of 300,000, Account recei4able of 200,000, and an Allowance for Doubtful Account account of 6,000 credit balance unad-uted a of the end of the year. "aed on e+perience, the company etimate that 10* of it account recei4able will be uncollectible. >ow much bad debt e+pene hould the company recogniFe at the end of the year
a. )3 c. d.
20,000 (0+ 26,000 2$,000
'3. =abili company ha a beginning Account recei4able balance of %00,000. During the year, the company generated credit ale amounting to 2.)= with 100,000 ale return and write off of '0,000. During the year, the company collected a total of 2.2=.
At the end of the year, the company etimated future ale return at '0,000 and uncollectible account of 100,000. 8hat amount hould the company report for gro Account :ecei4able balance at year end a3 b. c. d.
(+(+ 1,000,000 1,1'0,000 1,0'0,000
'6. =atipid company ha an Account recei4able beginning balance of 1,200,000 with a correponding Allowance for doubtful account of $0,000. During the year, the company e+tended credit to cutomer amounting to '.3= while collecting 3.9= of it. At the end of the year, the company ha written off 100,000 worth of recei4able already and etimated the uncollectible account per recei4able aging report of 120,000. >ow much i the Allowance for doubtful account balance a of the end of year
a. b. c. d3
$0,000 1)0,000 220,000 (-+
..3 =a#unat company ha an Account recei4able beginning balance of 1.'= with it correponding Allowance for doubtful account of 130,000. During the year, the company e+tended credit to cutomer amounting to '.3= and collected 3.9= of it. At the end of the year, the company ha written off already 200,000 and etimated the uncollectible account per recei4able aging report of 100,000. he ending balance of Account recei4able before allowance for doubtful account hould be
a. b. c. d3
2,)00,000 2,900,000 2,$00,000 -+5+
.03 =abait Corporation factored )= of it Account :ecei4able to =aduga Corporation. =aduga accepted and too# o4er the recei4able ub-ect to recoure for nonpayment. It i etimated that the fair 4alue of the recoure obligation i $26,000. he weighted a4erage time to maturity of the recei4able i computed at %3 day. (ther information include! /actoring fee 2* >oldbac# ;alue 6* Interet Charge 11* >ow much cah hould =abait e+pect from the factoring tranaction
a. b. c3 d.
%,'20,000 $,%20,000 5+*44+ %,$9$,000
'%. =alupeet Corporation factored )= of it Account :ecei4able to =aduga Corporation. =aduga accepted and too# o4er the recei4able ub-ect to recoure for nonpayment. It i etimated that the fair 4alue of the recoure obligation i 260,000. (ther information include! /actoring fee 2* >oldbac# ;alue 6* Calculate the lo of =abait in thi factoring tranaction!
a.
'$0,000
)3 c. d.
5-+ 6)0,000 ))0,000
'). he company record howed the following balance and tranaction at year end! Collection recei4ed 3,6'0,000 ote gi4en to creditor 2'0,000 =erchandie returned to upplier %0,000 5ayment on note payable '0,000 Dicount gi4en to cutomer 2',000 Sale on account 6,'00,000 5ro4iion for doubtful account 90,000 "ad debt written off '0,000 5urchae on account 3,900,000 5ayment to creditor 3,200,000 Dicount allowed by creditor 2$0,000 =erchandie returned by cutomer 2',000 Compute the et Account :ecei4able at year end!
a. b. c. d3
))0,000 1,000,000 900,000 6.+
Cas$ .63 "ayani Corp ha the following information relating to cah at December 31, 2011!
"an# tatement balance 2,'00,000 Chec#boo# balance 2,$00,000 Depoit in tranit %00,000
(uttanding chec# 200,000 "ayaniU December 31, 2011 "alance Sheet hould report cah a!
a. b.
3,600,000 3,'00,000
c. d3
3,100,000 *++
03 he petty cah fund account of =agiting Company howed the following! Coin and currency ','00 5aid 4oucher! ranportation 200 Baoline 1'0 (ffice upplie 2'0 5otage tamp 200 Due from employee 1,200 Digging deeper into the record, you realiFed that there i a =anagerU chec# returned by ban# mar#ed TS/T for 1,000. here i alo a chec# drawn by company to the order of petty cah cutodian amounting to 3,'00. 8hat i the amount of the petty cah fund for balance heet purpoe
a. )3 c. d.
10,000 6+ 11,000 ',)00
$1. he current aet ection of the balance heet of Bregorio Corporation conit of! "ond in#ing fund cah 1,'00,000 Chec#ing account in >S"C 3,2$',000 Currency and coin awaiting depoit 1.$3',000 Depoit in a ban# cloed by "S5 '00,000 5etty cah fund of which 100,000 in i the form of paid 4oucher '0,000 Ad4ance to officer and employee 200,000 he >S"C chec#ing account ha 2'0,000 chec# till outtanding per ban# tatement. he petty cah fund ha ',000 worth of paid 4oucher. he correct cah balance that hould be hown in the balance heet i
a. b. c. d3
6,9'0,000 6,$00,000 6,'9',000 4+64.+
0-3 Diego "andido CompanyU accounting data howed the following information a of December 31,2011! 5etty cah fund of 20,000 and undepoited receipt amounting to 1,600,000. he undepoited collection include a potdated cutomer chec# for '0,000. Cah in =etroban# a per ban# tatement of 2,3'0,000 with a chec# for 30,000 till outtanding a of balance heet date. here wa a "ond in#ing fund amounting to 900,000. Gnrecorded 4oucher paid out of collection and I(G igned by employee ta#en alo from collection amounted to 60,000 and 10,000 repecti4ely. Bi4en the abo4e data, what amount hould cah on hand and in ban#
that hould be reported on the December 31, 2011 balance heet
a. b. c3 d.
3,%60,000 6,$%0,000 *+06+ 3,%%0,000
Solution 5etty cah fund 20,000 Gndepoited receipt 1,600,000 '0,000 1,3'0,000 Cah in =etroban# 2,3'0,000 30,000 2,320,000 otal cah on hand and in ban# 3,$90,000 WWWhe potdated cutomer chec# of '0,000 hould not be included a cah and hould be treated a account recei4able. he outtanding chec# of 30,000 i deducted from the cah in =etro"an# becaue the cah balance gi4en i per ban# tatement. he bond in#ing fund hould be hown a noncurrent in4etment. he 4oucher paid hould be recorded a e+pene and the I(G hould be hown a ad4ance to employee. $3. =al4ar Eni4e Company had the following cah balance a of December 31, 2011, Cah in ban# >S"C 2,600,000 5etty cah fund '0,000 :e4ol4ing fund 100,000 ime depoit due /ebruary 1, 200' '00,000 here wa a compenating balance of '00,000 on the >S"C account maintained againt a hort term borrowing arrangement made at the end
of the year. Gntil the hort term loan i ettled the company cannot withdraw the compenating balance. ime depoit i due on anuary 1, 200' coming from a half year term. 5etty cah fund wa all dibured out by the end of the year including a 10,000 cah ad4ance to employee coming of the re4ol4ing fund. 8hat total amount hould be reported a cah a of December 31, 2011
a. )3 c. d.
2,'60,000 -+.+ 2,''0,000 2,060,000
Solution Cah in ban# 2,600,000 '00,000 1,900,000 5etty cah fund '0,000 :e4ol4ing fund 100,000 otal cah 2,0'0,000 WWWSince the compenating balance i not withdrawable, it i not included in the cah balance. he compenating balance hould be hown a Tcah held a compenating balanceT a a current aet becaue the related loan i hortterm. he term of the time depoit i gi4en a $ month hence it i not included in the computation a well. erm of three month or le i needed for thi to be included a cah. he 10,000 cah ad4ance i already ta#en up o thi i -ut a nuiance data that hould not be included in the computation. $6. 5laridel 5ublihing Company had the following trial balance at December 31,2011!
Cah in Citi 3,'00,000 Cah on hand 2'0,000 reaury "ill '00,000 Special ime Depoit '00,000 Cah in ban# include 5'00,000 of compenating balance againt hortterm borrowing arrangement which i not legally retricted a to withdrawal by the company. Alo, the pecial depoit account pertain to cah legally retricted for machinery upgrade that i e+pected to be dibured in 2012. In the current aet ection of CompanyU December 31, 2011 balance heet, the total cah and cah e7ui4alent hould be
a. b. c. d3
3,%'0,000 3,2'0,000 6,%'0,000 4+-.+
Solution Cah in Citi 3,'00,000 Cah on hand 2'0,000 reaury bill '00,000 otal cah and cah e7ui4alent 6,2'0,000 WWWA compenating balance i the ban#U minimum balance re7uirement that mut be maintained in the companyU ban# account for er4icing a chec#ing or demand depoit account or in connection with a borrowing arrangement with the ban#. It hould be part of cah if not legally retricted. (therwie, it hould be treated a other current or noncurrent aet depending on the loan or ban# er4ice it i related. here wa no mention of any contrary tatement for the reaury bill o it hould be aumed a maturing within 90 day.
$'. he accountant of "onifacio >olding preented the following account balance a of December 31,2011! Cah in ban# Chec#ing 2,$00,000 Cah in ban# Sa4ing %00,000 Cah on hand 300,000 Cah in ban# retricted 2,000,000 reaury bill 3,000,000 he retricted cah in ban# account i opened pecifically for building contruction e+pected to be dibured in H1 2012. he cah on hand include a 5100,000 chec# payable to "onifacio, dated anuary ', 2012. he reaury bill are purchaed December 1, 2011 and due on /ebruary 2), 2012. If you are the Accountant of "onifacio >olding, what amount of Tcah and cah e7ui4alentT hould be reported a of December 31, 2011
a. )3 c. d.
$,300,000 0+.+ $,$00,000 ),%00,000
Solution Cah in ban# Chec#ing 2,$00,000 Cah in ban# Sa4ing %00,000 Cah on hand 300,000100,000 200,000 reaury bill 3,000,000 otal cah and cah e7ui4alent $,'00,000 WWWhe cah in ban# et aide for payroll i included in cah becaue it i for the payment of current liability.
Cah on hand hould be reduced by the potdated chec#. he 5DC amount hould be conidered till a account recei4able. reaury bill are claified a cah e7ui4alent becaue the term i within the 90day rule. An in4etment 7ualifie a a cah e7ui4alent only when it ha a hort maturity of three month or le from the date of ac7uiition. he cah in ban# retricted for building contruction hould be claified a a noncurrent in4etment hence not included in the computation. $$. he Accounting Department produced the following data for Aguinaldo Company a of December 31, 2011! Chec#boo# balance 9'0,000 Collectible balance 1,000,000 Cah in in#ing fund 1,000,000 5etty cah fund balance 10,000 here wa alo a chec# drawn on horU account, payable to upplier amounting to 20,000, dated and recorded on December 31, 2006, but wa mailed only on anuary 1', 2012. (n December 31, 2011, how much hould be reported a Tcah and cah e7ui4alentT
a. )3 c. d.
1,9)0,000 6,+ 1,9$0,000 9$0,000
Solution Chec#boo# balance 9'0,000 Add! Gndeli4ered che7ue balance 20,000 5etty Cah fund 10,000 Ad-uted cah balance 9)0,000 WWWGndeli4ered che7ue a of cloing date hould be retored to the cah balance by debiting cah and crediting account payable. he cah in in#ing fund hould be conidered aa noncurrent in4etment becaue it i et aide for the payment of noncurrent liability. $%. (n December 31, 2011, =abini 8heelchair, Inc. had the following data related to it cah poition! Chec#ing Account "alance 6,'00,000 5etty cah fund '0,000 ime depoit 6,000,000 Sa4ing depoit 1,000,000 he time depoit i held for one year and i maturing on =arch 1',2012. here wa a chec# amounting to 5'0,000 dated anuary 1',2012 in payment of account payable that wa recorded and mailed on December 31, 2011. 8hat amount hould be reported a Tcah and cah e7ui4alentT at the end of the year
a. b. c. d3
9,''0,000 9,6'0,000 ',6'0,000 .+.+
Solution Chec#ing Account 6,'00,000 ? '0,000 6,6'0,000 5etty cah fund '0,000
Sa4ing depoit 1,000,000 otal cah and cah e7ui4alent ','00,000 WWWMou ha4e to catch the chec# of 5'0,000 i added bac# to chec#ing account becaue it i a potdated chec# to a upplier deli4ered only on December 31. he time depoit i a noncah e7ui4alent becaue the term i one year and becaue of that, it i claified eparately in the current aet a mar#etable ecuritie. Should the srcinal term i 90 day or le, it hould be treated a cah e7ui4alent. In thi cae, although the time depoit i due within 90 day from balance heet date, you hould remember that the point of rec#oning i the srcinal maturity period which i, in thi cae, 1 year. $). (n December 31,2011, the trial balance of Diego "antay Company re4eal the following account balance! 5etty cah fund /inance 60,000 :e4ol4ing fund (peration 20,000 Current account Citiban# 3,000,000 Current account >S"C o4erdraft 2'0,000 =oney mar#et placement 5 =organ 2,000,000 ime depoit Duetche "an# 2,000,000 ote that the petty cah fund include unreplenihed December 2011 petty cah e+pene 4oucher for 510,000 and an employee chec# for 5',000 dated anuary 31, 2012. hereU a chec# for 56',000 that wa drawn againt Citi"an# current account dated and recorded December 29, 2006 but deli4ered to payee on anuary 1', 200'. And latly, the Duetche "an# time depoit i et aide for plant e+panion in /ebruary 2012. he December 31, 2011 balance heet hould report Tcah and cah e7ui4alentT at
a. )3 c. d.
3,090,000 .+6+ ',09',000 3,0$0,000
Solution 5etty cah fund 60,000 10,000 ',000 2',000 :e4ol4ing fund 20,000 Current account Citiban# 3,000,000 ? 6',000 3,06',000 =oney mar#et placement 5 =organ 2,000,000 otal cah and cah e7ui4alent ',090,000 WWWhe ban# o4erdraft in the >S"C i hould be claified a current liability. ote that money mar#et placement i included. >ere i a tip. If there i no contrary tatement regarding money mar#et placement, time depoit and treaury bill in the problem gi4en, they are to be conidered a hortterm in4etment of three month or le. Duetche "an# time depoit hould be noncurrent aet becaue it i et aide for plant e+panion on a future date. CAS7 8LOWS
$9. (n the tatement of cah flow in which the operating acti4itie ection i prepared under the indirect method, depreciation i treated a an ad-utment to reported net earning becaue depreciation
a. I a direct inflow of cah from in4eting acti4itie. b. :educe reported net earning and in4ol4e an inflow of cah. c3 Red&ces reorted "et ear"i"#s )&t does "ot i"volve a" o&tflo9 of cas$3 d. I an inflow of cah to a reer4e account for replacement of aet. WWWDepreciation i deducted in the calculation of net earningO howe4er, it i a noncah e+pene item and a uch doe not affect
cah. herefore, it would be added bac# in to net earning on the tatement of cah flow when uing the indirect method. %0. he amortiFation of bond premium on longterm debt hould be preented in a tatement of cah flow uing indirect approach for operating acti4itie a an
a.
Addition to net income.
)3 c. d.
:ed&ctio" fro! "et i"co!e3 In4eting acti4ity. /inancing acti4ity.
WWWIf bond are old at a dicount or premium, the interet e+pene for the period will differ from the change in cah reulting from payment of interet e+pene. 8hen the premium i amortiFed, the interet e+pene included in income determination i not a large a the interet paid or becoming payable in the period. "ecaue the cah outflow i larger than the deduction in arri4ing at net income, a deduction from net income i neceary to determine cah pro4ided by operating acti4itie when uing the indirect approach of preenting cah flow from operating acti4itie. %1. A lo on the ale of machinery in the ordinary coure of buine hould be preented in a tatement of cah flow uing indirect approach for operating acti4itie a an
a. )3 c. d.
(utflow of cah. Additio" to "et i"co!e . Deduction from net income. Inflow and outflow of cah.
WWWhe lo decreae net income, but doe not reduce cah. herefore, the lo mut be added bac# to net income to determine cah flow from operating acti4itie. %2. 8ould the following be added bac# to net income when reporting operating acti4itie& cah flow by the indirect method .......+ce of treaury toc# ac7uiition cot o4er ale proceed
cot method ................... "ond dicount amortiFation A. .............Me ............................................................Me ". .............o ..............................................................o C. .............o ..............................................................Me D. .............Me .............................................................o
WWWGnder the indirect method of reporting cah flow from operation, income from continuing operation i ad-uted for change in operatingrelated account and noncah e+pene, re4enue, loe, and gain. oncah item that were ubtracted in determining net income mut be added bac#, including amortiFation of bond dicount ince it i a charge againt income but doe not increae cah. he e+ce of treaury toc# ac7uiition cot would not be added bac# to net income when determining operating acti4itieU cah flow becaue it repreent a financing acti4ity. %3. In a tatement of cah flow in which the operating acti4itie ection i prepared under the indirect method, a gain on the ale of an in4etment in a4ailableforale ecuritie hould be preented a an
a. b. c. d3
Inflow and outflow of cah. (utflow of cah. Addition to net income. :ed&ctio" fro! "et i"co!e3
WWWAny gain on the ale of an in4etment other than trading ecuritie hould be included a part of the total proceed reported in in4eting acti4itie. >owe4er, thi gain ha been included in net income. Gnder the indirect method, net income i ad-uted for item which affect income but not cah. herefore, the amount of the gain mut be deducted from net income to remo4e the boo# gain from the cah flow from operating acti4itie, thereby a4oiding double counting the gain. 543 In a tatement of cah flow, interet payment to lender and other creditor hould be claified a cah outflow for
a. b. c. d3
/inancing acti4itie. @ending acti4itie. "orrowing acti4itie. Oerati"# activities3
WWWInteret payment to lender and other creditor are e+pene of the companyO hence, they are categoriFed a cah flow from operating acti4itie. 5.3 In a tatement of cah flow, payment to ac7uire debt intrument of other entitie other than cah e7ui4alent which will be held until maturity hould be claified a cah outflow for a. )3 c. d.
@ending acti4itie. I"vesti"# activities3 (perating acti4itie. /inancing acti4itie.
WWWIn4eting acti4itie include ma#ing and collecting loan and ac7uiring and dipoing of debt or e7uity intrument and property, plant, and e7uipment. Cah flow from tranaction in heldto maturity and a4ailableforale ecuritie are to be claified a cah flow from in4eting acti4itie. Con4erely, amount related to ecuritie held for trading are claified a operating acti4itie. %$. Cheeeca#e =anufacturing Co. purchaed a 3month reaury bill. In preparing Cheeeca#e& tatement of cah flow, thi purchae would a3 b. c. d.
7ave "o effect3 "e treated a an outflow from financing acti4itie. "e treated a an outflow from lending acti4itie. "e treated a an outflow from in4eting acti4itie.
WWW(n the tatement of cah flow, the purchae of a 3month reaury bill i an ac7uiition of a ecurityO howe4er, it i conidered a cah e7ui4alent and thu would not be included in in4eting acti4itie. a#e note that the e+change of cah for cah e7ui4alent would reult in no net change in cah and cah e7ui4alent.
%%. In a tatement of cah flow, receipt from ale of property, plant, and e7uipment and other producti4e aet hould generally be claified a cah inflow from a. )3 c. d.
(perating a cti4itie. I"vesti"# activities3 /inancing acti4itie. Selling acti4itie.
WWWIn4ol4ed here i 55, which i a noncurrent aet. :eceipt from ale of property, plant, and e7uipment and other producti4e aet are categoriFed a cah flow from in4eting acti4itie. %). he purchae for cah of treaury toc# hould be preented in a tatement of cah flow a an ..... In4eting acti4ity ... /inancing acti4ity A. ............. o ..................... o ". ............. o ..................... Me C. ............. Me .................... o D. ............. Me .................... Me
WWWranaction which in4ol4e either an outlay of cah for treaury toc# or an inflow of cah from the reiue of treaury toc# hall be reported a a financing acti4ity. he purchae of treaury toc# would not be claified a an in4eting acti4ity becaue treaury toc# i a S> item. In4eting acti4itie include ma#ing and collecting loan, a well a ac7uiring and dipoing of debt or e7uity intrument of other entitie, property, plant, and e7uipment and other producti4e aet. %9. In a tatement of cah flow, proceed from iuing e7uity intrument hould be claified a cah inflow from
a.
@ending acti4itie.
b. c3 d.
(perating a cti4itie. 8i"a"ci"# a ctivities3 In4eting acti4itie.
WWWA S> item... /inancing acti4itie include obtaining reource from owner and pro4iding them with a return on, and a return of, their in4etment. 5roceed from iuing e7uity intrument are pecifically identified a cah inflow from financing acti4itie. )0. In a tatement of cah flow, which of the following item i reported a a cah outflow from financing acti4itie
I. 5ayment to retire mortgage note. II. Interet payment on mortgage note. III. Di4idend payment.
a. )3 c. d.
I, II, and III. I a"d III3 I only. II and III.
WWW=ortgage ote i a long term liability, while di4idend payment affect S>. Interet payment on mortgage i an e+pene hence operating. WWW5ayment to retire mortgage note are conidered cah outflow from financing acti4itie. Interet payment on mortgage note are included in cah outflow from operating acti4itie becaue thee payment are e+pene and included in the determination of net income. Di4idend payment are included in cah outflow from financing acti4itie. )1. he retirement of longterm debt by the iuance of common toc# hould be preented in a tatement of cah flow a a ... /inancing acti4ity ... In4eting acti4ity A. ...... Me ......................... o ". ...... o ......................... Me C. ...... o ......................... o D. ...... Me ......................... Me
D. MS and MS A. MS and ( C3 NO a"d NO ". ( and MS WWW/inancing and in4eting acti4itie which ha4e no effect on cah flow hall be hown either in a eparate chedule of noncah financing and in4eting acti4itie or in narrati4e form in the footnote, not in the body of the tatement. )2. he following information i a4ailable from Sand Corp.& accounting record for the year ended December 31, 2009! Cah recei4ed from cutomer ............... 5)%0,000 :ent recei4ed ......................................... 10,000 Cah paid to upplier and employee .. '10,000 a+e paid ............................................. 110,000 Cah di4idend paid .............................. 30,000 et cah flow pro4ided by operation for 200) wa
a3 b. c. d.
P-0+ 52'0,000 5230,000 5220,000
Solution! Cah recei4ed from cutomer ............... 5)%0,000 AddDeduct :ent recei4ed ......................................... 10,000 Cah paid to upplier and employee .. '10,000 a+e paid ............................................. 110,000 WWWhe anwer i 2$0,000. Di4idend payment i not included becaue it i a S> item and therefore included under financing acti4itie.
)3. =ademoielle Co. ha pro4ided the following 2009 current account balance for the preparation of the annual tatement of cah flow! ACC(GS .................. anuary 1 ........ December 31 Account recei4able ...... 511,'00 .......... 516,'00 Allowance for G
a3 b. c. d.
P5.+5 5%2,%00 5%6,300 5%','00
et Income...................................................................%',000 AddDeduct Change in 8or#ing Capital Account! Increae in Account :ecei4able..................................3,000 Increae in Allowance for Gncollectible Account..............100 Decreae in 5repaid :ent..............................................2,100 Increae in Account 5ayable........................................1,'00 et Cah from (perating Acti4itie i...........................%',%00 he increae in A: i deducted from net income becaue it indicate that cah collected i le than ale re4enue. he increae in the allowance account i added to net income becaue it reflect an e+pene bad debt e+pene which wa not a cah payment. he decreae in prepaid rent i added becaue it too reflect an e+pene rent e+pene which wa not a cah payment it wa an allocation of pre4iouly recorded prepaid rent. /inally, the increae in A5 i added becaue it alo repreent an e+pene cot of good old which wa not yet paid.
)6. :omantic Corp.& tranaction for the year ended December 31, 2009, included the following! 5urchaed real etate for 5''0,000 cah which wa borrowed from a ban#. Sold a4ailableforale in4etment ecuritie for 5'00,000. 5aid di4idend of 5$00,000. Iued '00 hare of common toc# for 52'0,000. 5urchaed machinery and e7uipment for 512',000 cah. 5aid 56'0,000 toward a ban# loan. :omantic& net cah ued in in4eting acti4itie for 2009 wa
a3 b. c. d.
P(5.+ 53%',000 5$%',000 5'0,000
5urchae of real etate...................................''0,000 Sale of in4etment ecuritie...........................'00,000 5urchae of machinery and e7uipment...........12',000 otal cah ued in in4eting acti4itie...............1%',000 he ban# borrowing 5''0,000, di4idend payment 5$00,000, iuance of toc# 52'0,000, and ban# loan payment 56'0,000 are financing acti4itie.
,.. =atatag Corp.& tranaction for the year ended December 31, 2009, included the following! 5aid 56'0,000 toward a ban# loan. Iued '00 hare of common toc# for 52'0,000. 5urchaed machinery and e7uipment for 512',000 cah. 5urchaed real etate for 562',000 cah which wa borrowed from a
ma-ority toc#holder. Sold a4ailableforale in4etment ecuritie for 532',000. 5aid di4idend of 5300,000.
=atatag& net cah ued in financing acti4itie for 2009 wa
a. b. c3 d.
5'00,000 51,3'0,000 P5.+ 5%'0,000
5ayment for ban# loan..............................................6'0,000 Iuance of '00 hare of common toc#......................2'0,000 Di4idend paid thi year................................................300,000 Ad4ance from Stoc#holder ued to buy real etate....62',000 et cah ued in financing acti4itie i.............................%',000
)$. In 2010, a tornado completely detroyedand a building belonging to >ollyfield Corp. he building cot 5100,000 had depreciated 4alue of 56),000 at the time of the lo. >ollyfield recei4ed a cah ettlement from the inurance company and reported an e+traordinary lo of 521,000. In >ollyfield& 2010 cah flow tatement, the net change reported in the cah flow from in4eting acti4itie ection hould be a
a. b. c. d3
510,000 increae 521,000 decreae 5'2,000 decreae P*(+ i"crease
"uilding Cot...............................................100,000 Accumulated Depreciation.............................6),000 et boo# 4alue.............................................'2,000 +traordinary lo reported.........................21,000
et cah flow from in4eting acti4itie i 31,000.
,53 @a0 Fe Co. had net cah pro4ided by operating acti4itie of 53'1,000O net cah ued by in4eting acti4itie of 5620,000O and cah pro4ided by financing acti4itie of 52'0,000. @a0 Fe& cah balance wa 52%,000 on anuary 1. During the year, there wa a ale of land that reulted in a gain of 52',000 and proceed of 560,000 were recei4ed from the ale. 8hat wa @a0 Fe& cah balance at the end of the year
Anwer! 520),000 o calculate the cah balance at the end of the year, you hould combine effectand of the change in operating, in4eting, and financing the acti4itie, add the beginning cah balance. et Cah pro4ided from (perating Acti4itie.........53'1,000 et Cah ued from in4eting acti4itie...............5620,000 et cah pro4ided by financing acti4itie..............52'0,000 et change in cah...............................................51)1,000 Add! "eginning cah balance..................................52%,000 nding Cah "alance.............................................520),000 QQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ
)). During 2012, 5ampanga& Bood, Inc. engaged in the following related party tranaction!
Sale to affiliated companie XX 3,'$0,%30 op management peronnel compenation XX 2,22','10 8hich of the two tranaction would be dicloed a related party tranaction in the Company& 2012 financial tatement
a. ) c. d.
he Eey management compenation tranaction only Bot$ tra"sactio"s he Sale to Affiliated Companie tranaction only either tranaction
)9. he following unad-uted account balance ha4e been reported on the financial tatement by arlac ruc#ing Company on December 31, 2012! Cah in ban# X 6,000,000O 5etty cah fund X %0,000O ote recei4able X 3,000,000O Account recei4able X ',000,000O In4entory X 2,000,000O Deferred charge X 3'0,000O Cah in ban# i net of a chec#ing account& ban# o4erdraft amounting 2'0,000. 5etty cah e+pene ha4e not been replenihed for 20,000. ote recei4able include dicounted note of )00,000 while Account recei4able balance i net of account with credit balance of $'0,000.
he total current aet for the "alance Sheet a of December 31, 2012 hould be
a. )3 c. d.
12,9'0,000 (4+(.+ 12,)'0,000 13,200,000
90. he following unad-uted account balance ha4e been reported on the financial tatement by =arilag "icuit Company on December 31, 2012! Cah in ban# 6,000,000O ote recei4able 3,000,000O
Account recei4able ',000,000O In4entory 2,000,000O Deferred charge 3'0,000O Account payable 2,'00,000O ote payable 6,000,000O Accrual 1,'00,000O Cah in ban# i net of a chec#ing account& ban# o4erdraft amounting 2'0,000. ote recei4able include dicounted note of )00,000 while Account recei4able balance i net of account with credit balance of $'0,000. Account payable i alo net of account with debit balance of '00,000. he total current liabilitie to be reported a of December 31, 2012 hould be a. b. c. d3
),900,000 ),'00,000 ),000,000 6+4+
6(3 he following information i e+tracted from the accounting record of Breat Mear CompanyU in the computation of cot of good old! In4entory, anuary 1 ',$00,000 5urchae %,600,000 @o on in4entory writedown 1,900,000 In4entory, December 31 1,%00,000 here wa une+pected in4entory obolecence of recently purchaed toc# due to technological ad4ance that prompted the Company to writedown ome of it in4entorie. 8hat amount hould the Company report a cot of good old on it year end Income Statement
a3 b. c. d.
((+*+ %,'00,000 13,200,000 9,600,000
6-3 (n anuary 1, 2012, the management of =ilan Company determined that a re4iion in the etimate aociated with the depreciation of plant facilitie wa neceary. he facilitie, purchaed on anuary 1, 2010, for %,'00,000, had been depreciated uing the traightline method with an etimated reidual 4alue of '00,000 and an etimated ueful life of 1' year. =anagement ha determined from recent appraial report that the e+pected remaining ueful life of the facilitie i only 10 year and the etimated reidual 4alue hould be increaed by 200,000. 8hat i the depreciation e+pene that hould be recogniFed for the year 2012
a. b. c. d3
'3$,$$% $33,333 293,333 .,0+005
6*3 =arangal /urniture Corporation wa incorporated on anuary 1, 2009. In it audited financial tatement for the year ended December 31, 2011, the Company ued the following srcinal cot and ueful li4e for it property plant and e7uipment. "uilding 12,000,000 12 year =achinery 9,000,000 10 year /urniture 3,000,000 $ year (n anuary 1, 2012 the company decided to re4iew the ueful li4e of the property, plant and e7uipment and cone7uently hired independent 4aluation e+pert who can certify the remaining ueful li4e of the property, plant and e7uipment. he reult are a follow! "uilding 10 year =achinery % year /urniture 6 year he Company ue the traight line method of depreciation.
8hat i the amount of depreciation e+pene for 2012
a. )3 c. d.
2,600,000 -+(5.+ 2,'2),'%1 ',%62,)'%
9%. Selected information from the accounting record of =abini Company i a follow! Account recei4able at anuary 1 1,200,000 Account recei4able at December 31 1,100,000 Account recei4able turno4er $ to 1 In4entory at anuary 1 )00,000 In4entory at December 31 1,600,000 In4entory turno4er ' to 1 8hat wa the gro margin for end of year a3 b. c. d.
(+4+ 1,300,000 1,200,000 1,'00,000
9). Euliglig Company pro4ided the following income tatement information relating to the current year! et income 6,200,000 GnrealiFed gain on a4ailable for ale ecuritie 3'0,000 Debit balance foreign currency tranlation ad-utment %',000 Surplu on re4aluation 1,0'0,000 he amount of recogniFed gain and loe for the current year hould how net amount at
a. b.
',2'0,000 6,6%',000
c3 d.
.+.-.+ ',$%',000
99. =adel Corporation wa etablihed on anuary 1, 2009. (n anuary 1, 2011, the Company purchaed plant e7uipment at a cot of 3,'00,000 for it e+panding pro4incial operation. It i the Company policy that thi e7uipment hould be depreciated on the traight line method o4er a fi4eyear period with no reidual 4alue. In the year 2011, the newly hired accountant made an error not to recogniFe depreciation in the Company& financial tatement. During the preparation of the Company& 2012 financial tatement, the error wa dico4ered by the auditor. 8hat hould be the Depreciation e+pene on thi machine for the year 2012 a. b. c. d3
3'0,000 2,100,000 1,600,000 5+
100.Eaperahan Corporation had the following account balance on December 31, 2012! Cah in ban# current account 6,000,000 Cah in ban# payroll account 2,000,000 Cah on hand 600,000 Cah in ban# reer4ed 2,000,000 reaury bill 2,'00,000 he cah on hand include a 100,000 chec# payable to the Company, dated anuary 2, 2013. he cah in ban# reer4ed i etablihed for the purchae of cutommade e7uipment that i e+pected to be conummated in 2012. reaury bill were purchaed on o4ember 30, 2012 and are due on =arch 1, 2013. 8hat amount hould be reported a Tcah and cah e7ui4alentT on December 31, 2012
a. )3 c. d.
10,)00,000 ,+,+ ),900,000 10,900,000
