Professional Documents
Culture Documents
2. D
3. D
4. B
5. B
6. A
PROBLEMS
Problem 1
Audit Adjusting Entries:
Retained Earnings (950 90) 50,000
Ordinary Shares
Ordinary Share Dividend Distributable
Paid in Capital in Excess of Stated Value
9,500 x 10% = 950
35,500
50,000
240,000
47,500
38,000
240,000
Problem 2
Total income since incorporation
Cash dividends paid
Total value of bonus issue distributed
Correct balance of retained earnings
P630,000
( 195,000)
( 45,000)
P 390,000
Problem 3
Balance, January 1
Profit for the year
Dividends
Retained Earnings, December 31
P1,590,000
860,000
( 750,000)
P1,700,000
P 150,000
1,550,000
P 1,700,000
P400,000
400,000
117,700
P917,700
235,400
P1,153,100
19,800
P 1,133,300
P49,000
12,000
52,000
4,700
P117,700
Retained earnings:
Accumulated profit
Cash dividends paid
Bonus issue ( 1,000 x 62)
Total Retained Earnings
P610,000
( 312,600)
( 62,000)
P235,400
Problem 5
Date
1/1/12
1/15/12
2/1/12
3/15/12
4/15/12
4/30/12
5/1/12
5/31/12
9/15/12
12/31/12
12/31/12
balances
Preference Share
Shares Amount
800
Ordinary Share
Shares Amount
15,000 300,000
40,000
1,500
30,000
APIC
4,160,000
4,000
33,000
Retained
Earnings
1,100,000
Treasury Shares
Shares Amount
4,000 150,000
(18,750)
10,000
2,230
800
40,000
28,730
200,000
44,600
574,600
200,000
78,050
41,100
4,516,150
(122,650)
(43,220)
( 39,995)
500,000
1,415,380
200
8,600
(2,150)
(81,450)
2,050
77,150
26,500
( 4,200)
22,300
P122,650
( 44,600)
P 78,050
P122,550
P6,450
75,000
September 15 dividends:
On ordinary share : (28,730 - 2,050) x P1.50 =
On preference share: 8% x 40,000 =
Total
81,450
P 41,100
P40,020
3,200
P43,220
Problem 6
Entries for the quasi-reorganization:
Retained Earnings
180,000
Inventory (215,000 190,000)
25,000
Property, Plant and Equipment (875,000 720,000)
Cash
155,000
600,000
Additional Paid in Capital
600,000
2,500,000
1,500,000
1,000,000
930,000
930,000
Shareholders Equity
Ordinary Share Capital, P15 par, 100,000 shares
Additional Paid in Capital (1,750,000 + 600,000 + 1,000,000
- 930,000)
Total Shareholders Equity
P1,500,000
2,420,000
P3,920,000
Problem 7
LTC Company
Statement of Comprehensive Income
For the Years Ended December 31, 2012 and 2011
Sales
Cost of goods sold
Gross profit
Selling expenses
General and administrative expenses
Profit before income tax
Income tax expense
Profit
2012
P3,000,000
1,420,000
P1,580,000
(350,000)
(260,000)
P 970,000
291,000
P 679,000
2011
P2,540,000
1,150,000
P1,390,000
(210,000)
(220,000)
960,000
336,500
P 623,500
P1,140,000
30,000
( 20,000)
P 1,150,000
P 339,500
( 3,000)
P 336,500
LTC Company
Statement of Changes in Equity
For the Years Ended December 31, 2010 and 2009
Ordinary Share
Balances, January 1, 2011
Cumulative effect of changing from FIFO
costing to weighted average, net of
applicable income tax of P9,000
(30,000 x 70%)
Dividends
Profit for the year
Balance, December 31, 2011
P 1,000,000
Retained
Earnings
P600,000
P1,000,000
21,000
(400,000)
623,500
P 844,500
P1,000,000
679,000
P1,523,500
Problem 8
Reported profit
Loss from fire
Write off of goodwill
Loss on sale of equipment
Gain on early retirement of bonds
Gain on insurance policy settlement
Corrected profit
P120,000
( 2,625)
( 26,250)
( 24,150)
7,525
5,250
P 79,750
P263,200
( 70,000)
( 35,000)
( 162,750)
25,025
79,750
P100,225
Total
P1,600,000
21,000
(400,000)
623,500
P
1,844,500
679,000
P2,523,500
P 750,000
13,500
2. C
P 480,000
600,000
( 26,000)
P 1,054,000
3. B
Issue price
Attributable to the debt
PV of face = P2,000,000 x 0.32197 = P 643,940
PV of interest = P200,000 x 5.65022
1,130,044
Amount credited to equity
P2,000,000
4. B
P 159,659
5. C
6. A
P760,000
P 250,000
7. C
74,550
12,000
P 850,050
1,773,984
P 226,016
P159,659
150,000
P 9,659
1,773,984
P1,783,645
8. D
Ordinary share
Additional paid in capital
Retained earnings
Revaluation surplus (appraisal increase)
Total shareholders equity
P2,000,000
250,000
760,000
300,000
P3,310,000
9. A
P5,200,000
P5,000,000
11. B
P3,300,000
( 240,000)
45,000
96,000
P3,201,000
200,000
12,000
188,000
P2,200,000
( 80,000)
1,850,000
P3,970,000
90,000
1,400
550
91,950
P 2
P183,900
P1,820,00
58,800
24,200
P1,903,000
P 92,700
87,300
P 5,400
3,300
22,000
1,100
24,200
P 26,000
39,000
P 13,000
22,500
P 9,500
P92,700
87,300
P 5,400
( 3,300)
P 2,100
D
D
B
C
A
B
C
A
D
P 72,600
( 39,000)
P 33,600
Date
1/1/12
1/6/12
1/31
2/22
2/28
4/30
5/31
8/31
9/14
11/30
12/15
12/31
12/31
12/31
bal.
Preference Share
Shares Amount
9,000
P900,000
Ordinary Share
Shares
Amount
Retained
Earnings
APIC
600,000
22,500
P600,000
22,500
P1,200,000
348,750
40,500
21,000
21,000
525,000
Treasury Shares
Shares Amount
P3,198,000
7,500
P180,000
(12,000)
(3,000)
(72,000)
(1,278,900)
( 54,000)
(42,000)
1,800,000
P2,691,100
4,500
P108,000
(920,000)
450
9,000
P900,000
643,950
450
P643,950
(1,350)
5,400
P2,118,300
January 31:
Value assigned to warrants 1,350,000 x (98% - 95%) = P40,500 (classified as APIC)
Entry on Sept. 14
Cash (450 x 10)
Share Warrants Outstanding (APIC)
Ordinary Share
Share Premium Ordinary Share
4,500
1,350
450
5,400
2,200
Materials Inventory
Materials Acquisition Fund
9,000
Cash
12,000
2,200
9,000
Salaries Payable
12,000
900
Operating Expenses
Cash
1,000
Notes Payable
Interest Expense
900
1,000
300,000
18,000
318,000
350,000
350,000
6,600
Dividend Receivable
Other Income
2,000
Trading Securities
Unrealized Gain on Trading Securities
12,800
Installment Sales
Cost of Installment Sales
Deferred Gross Profit
610,000
108,500
6,600
2,000
12,800
396,500
213,500
108,500
70,000
52,000
122,000
18,000
18,000
69,600
69,600
30,000
20,000
12,000
Retained Earnings
Other Assets
36,000
Interest Receivable
Other Income
16,200
Interest Expense
Operating Expenses
67,500
Interest Expense
22,500
50,000
10,800
1,200
36,000
16,200
67,500
22,500
80,000
80,000
250,000
250,000
Retained Earnings
Dividends Payable
348,000
348,000
Operating Expenses
Accrued Operating Expenses
115,000
115,000
747,600
11,600
736,000
11,600
11,600
P2,800,000
1,948,400
P 851,600
108,500
P 960,100
(
8,000)
P 952,100
( 609,500)
71,600
12,800
( 36,500)
P 390,500
158,000
P 232,500
69,750
P 162,750
P1,015,900
214,800
340,000
16,200
2,000
45,000
486,500
40,000
P2,160,400
P5,409,200
186,000
P5,223,200
485,000
5,708,200
P7,868,600
P 508,000
12,000
538,000
115,000
348,000
22,500
119,000
69,750
P1,732,250
1,000,000
P2,732,250
P2,900,000
1,450,000
692,350
5,042,350
P7,774,600