PRESENTATION OF FS Problems Answer Key

Bachelor of Science in Accountancy
Holy Cross of Davao College, Inc.

Sta. Ana Avenue, Davao City
PRESENTATION OF FINANCIAL STATEMENTS
Problem 1
ANSWER: 2,780,000
Solution:
Inventory 1,000,000
Trade receivables 1,200,000
Prepaid insurance 80,000
Investment held for trading 200,000
Cash 300,000
Total current assets 2,780,000
In the absence of statement of the contrary, financial assets at fair value through other comprehensive
income shall be classified as noncurrent. PAS 1 and PAS 2 provide that the deferred tax asset is a noncurrent
asset. The bank overdraft is classified as current liability.
Problem 2
ANSWER: 6,300,000
Solution:
Accounts receivable 1,600,000

Financial assets at fair value through profit or loss 500,000
Cash 1,100,000
Inventory 3,000,000
Prepaid expenses 100,000
The financial assets at amortized cost shall be classified as noncurrent. Financial assets at amortized cost include
investment in bonds and other debt instrument.
Problem 3
ANSWER: 1,750,000
Solution:
Cash 200,000
Prepaid rent 100,000
Inventory 800,000
Short-term investment 300,000
Accounts receivable 350,000
Problem 4
ANSWER: 2,900,000
Solution:
Cash ( 600,000 + 100,000) 700,000

Trading securities (2,000,000 - 500,000) 1,500,000
Inventories ( 800,000 - 200,000) 600,000
Prepaid expenses ( 150,000 - 50,000) 100,000
JOPO_TAN 1
Problem 5
ANSWER: 616,000
Solution:
Current assets – January 1, 2020 240,000

Property, plant, and equipment – January 1, 2020 1,600,000
Total assets – January 1, 2020 1,840,000

Current liabilities(240,000 – 92,000) ( 148,000)
Noncurrent liabilities ( 580,000)
Equity – January 1, 2020 1,112,000

Net income in 2011 64,000
Equity – December 31, 2020 1,176,000
Current assets – December 31, 2011(130,000 + 92,000) 222,000

Property, plant and equipment – December 31, 2020 1,700,000
Total assets – December 31, 2020 1,922,000

Current liabilities – December 31, 2020 ( 130,000)
Noncurrent liabilities – December 31, 2020 (SQUEEZE) ( 616,000)
Equity – December 31, 2020 1,176,000
Problem 6
ANSWER: 8,800,000
Solution:
Liabilities 1,800,000
Share capital 5,000,000
Retained earnings(net income of P2,500,000
less dividends of P500,000) 2,000,000
Total liabilities and shareholders’ equity 8,800,000
Problem 7
ANSWER: 11,000,000
Solution:
Liabilities 2,000,000
Retained earnings (8,200,000 - 6,400,000 - 300,000) 1,500,000
Total Liabilities and shareholders’ equity 11,000,000
Problem 8
ANSWER: 2,250,000
Solution:
Cash (300,000 – 100,000 overdraft) 200,000

Inventory 580,000
Prepaid expenses 120,000
Land classified as “held for sale” 1,000,000
JOPO_TAN 2
Problem 9
ANSWER: 14,800,000
Solution:
Cash 4,300,000
Allowance for doubtful accounts ( 500,000)
Inventory(4,000,000 + 2,000,000) 6,000,000
The selling price of the unsold good out on consignment is excluded from accounts receivable but the cost of the
goods shall be included in inventory. The cost of goods out of consignment is P3,000,000 divided by 150% or
P2,000,000.
Problem 10
ANSWER: 7,900,000
Solution:
Cash (2,000,000 – 500,000) 1,500,000

Notes receivable 1,200,000
Note receivable discounted ( 700,000)
Accounts receivable – unassigned 3,000,000
Accounts receivable – assigned 800,000
Allowance for doubtful accounts ( 100,000)
Inventory (2,800,000 – 600,000) 2,200,000
The equity of the assignee in assigned accounts shall not be offset

against the assigned accounts receivable but included in current
liabilities.
Problem 11
ANSWER: 4,830,000
Solution:
Current assets per book 5,100,000

Outstanding checks ( 70,000)
Customers’ deposit 50,000
Overstatement of accounts receivable ( 750,000)
Understatement of inventory 500,000
Correct amount of current assets 4,830,000
Problem 12
ANSWER: 7,740,000
Solution:
Cash 3,200,000
Allowance for uncollectible accounts ( 120,000)
Receivable from employees 240,000
Claim receivable 200,000
Inventory 2,800,000
The advances to subsidiary shall be classified as noncurrent investment. The deferred charges are considered
noncurrent because technically they expire in more than one year from the end of reporting period.
JOPO_TAN 3
Problem 13
ANSWER: 5,400,000
Solution:

Bank overdraft 300,000
Cash set aside for plant site (2,000,000)
Goods held on consignment ( 150,000)
Cash surrender value ( 50,000)
Adjusted current assets 5,400,000
The bank overdraft is not “netted” against the cash in bank but shall be classified as current liability.
The writeoff of the accounts receivable has no effect on current assets.
The cash surrender value is a noncurrent investment.
Problem 14
ANSWER: 4,500,000
Solution:
Accounts payable 1,500,000

Bonds payable 2,500,000
Discounted on bonds payable ( 300,000)
Dividends payable 800,000
Total current liabilities 4,500,000
Problem 15
ANSWER: 3,900,000
Solution:

Dividends payable 500,000
Income tax payable 900,000
Note payable 600,000
Under PAS 1 and PAS 12, a deferred tax liability shall be classified as noncurrent.
In the absence of any contrary statement, the bonds payable plus the premium on bonds payable shall be classified as
noncurrent.
Problem 16
ANSWER: 9,900,000
Solution:
Accounts payable 550,000

Unsecured note payable 4,000,000
Accrued expenses 350,000
Senior bonds payable 5,000,000
Problem 17
ANSWER: 6,700,000
Solution:
JOPO_TAN 4
Accounts payable(4,000,000 + 100,000) 4,100,000
Accrued expenses 1,500,000
Credit balances in customers’ accounts 500,000
Estimated liability for coupons 600,000
The stock dividend payable is not an accounting liability but presented as part of shareholders’ equity as an additional
to share capital.
Problem 18
ANSWER: 1,540,000
Solution:
Accounts payable (1,350,000 – 150,000) 1,200,000

Accrued taxes payable 125,000
Customers’ deposit 100,000
Accrued electric and power bills 60,000
Problem 19
ANSWER: 2,500,000
Solution:

Dividends payable (100,000 x 7) 700,000
Accrued interest payable (5,000,000 x 8% x 6/12) 200,000
Current tax expense (6,000,000 x 30%) 1,800,000

Estimated tax payment (1,000,000)
Problem 20
ANSWER: 4,000,000
Solution:
The 10% note payable is classified as noncurrent.
PAS 1, paragraph 73, provides that if an entity has the discretion to refinance or roll over an obligation for at least
twelve months after the reporting period under an existing loan facility, the obligation shall be classified as
noncurrent, even if it would otherwise be due within a shorter period.
The 12% note payable is classified as current.
PAS 1, paragraph 72 provides that an obligation that matures within one year from the end of reporting period is
classified as current even if it is refinanced on a long-term basis after the reporting period and before issuance of
the financial statements.
In this case, the 12% note payable is refinanced on March 1, 2020 and therefore classified as current.
Problem 21
ANSWER: 15,650,000
Solution:
JOPO_TAN 5
Bank note payable – 10% 3,000,000
Interest payable 150,000
Mortgage note payable 2,000,000
Bonds payable – due June 30, 2021 4,000,000
PAS 1 provide that if the refinancing occurs on or before the end of the reporting period, the refinancing is an
adjusting event, meaning, the obligation is classified as noncurrent liability. In this case, the 11 % note payable is
refinanced on December 31, 2020 and therefore classified as noncurrent.
Problem 22
ANSWER: 8,100,000
Solution:
Employee income taxes withheld 900,000

Cash overdraft 1,300,000
Accounts receivable with credit balance 750,000
Estimated warranty liability 500,000
Estimated – damages payable 1,500,000
Accrued interest on bonds payable from October 1 to
December 31, 2020 (5,000,000 x 12% x 3/12) 150,000
Problem 23
ANSWER: 7,200,000
Solution:
Total shareholder’ equity (7,500,000 – 300,000) 7,200,000
Problem 24
ANSWER: 31,500,000
Solution:

Share premium 5,000,000
Retained earnings unappropriated 6,000,000
Retained earnings appropriated 3,000,000
Revaluation surplus 4,000,000
Cumulative translation adjustment – credit 1,500,000
Actuarial loss fully recognized through other
comprehensive income (1,000,000)
Treasury shares, at cost (2,000,000)
Total shareholders’ equity 31,500,000
The credit in the cumulative translation adjustment account is a translation gain. If the account has debit balance, it
is a translation loss.
Problem 25
ANSWER: 8,000,000
Solution:
Sales 10,000,000
Total expenses ( 7,800,000)
Net income 2,200,000

Retained earnings – January 1 1,000,000
Dividends ( 700,000)
Retained earnings – December 31 2,500,000
JOPO_TAN 6
Preference share capital 2,000,000

Ordinary share capital 3,000,000
Share premium 1,000,000
Retained earnings 2,500,000
Treasury shares ( 500,000)
Problem 26
ANSWER: 8,500,000
Solution:
Reported net assets 8,750,000

Treasury share ( 250,000)
Adjusted net assets 8,500,000
Problem 27
ANSWER: 4,213,000
Solution:
Total assets per book 4,375,000

Treasury share ( 120,000)
Cumulative translation loss ( 42,000)
Adjusted total assets 4,213,000
Problem 28
ANSWER: QUESTION 1- 24,040,000
SOLUTION FOR QUESTION 1:
Cash in bank (5,000,000 + 500,000) 5,500,000

Petty cash (50,000 – 10,000) 40,000
Notes receivable 4,000,000
Accounts receivable (6,000,000 + 1,500,000) 7,500,000
Inventory 3,000,000
Bond sinking fund 3,000,000
Debit balances in accounts payable 1,000,000
The bond sinking fund is classified as current asset because the bond payable is already classified as current liability.
The classification of the fund should parallel the classification of the related liability.

Credit balances in accounts receivable 1,500,000
Accounts payable (7,000,000 + 1,000,000) 8,000,000
Notes payable 4,000,000
Bond Payable 3,000,000
Accrued expenses 2,000,000
Problem 29
JOPO_TAN 7
Cash (800,000 – 380,000 – 100,000 + 240,000) 560,000

Accounts receivable (4,000,000 + 400,000) 4,400,000
Inventory (1,000,000 + 60,000) 1,060,000

Notes payable 400,000
Loan payable 200,000
The interest of P40,000 is not a current liability on December 31, 2020 because it pertains to January 2021.
Problem 30
ANSWER: QUESTION 1-
Cash 600,000

Noncurrent portion (125,000 + 125,000) ( 250,000)
Current portion 1,400,000
The prepaid taxes of P300,000 actually represent the current tax expense for 2020 and therefore should be charged
to income tax expense.
Revenue 3,600,000
Expenses ( 2,600,000)
Income before income tax 1,000,000

Income tax (30% x 1,000,000) ( 300,000)
Net income 700,000

Retained earnings-January 1 630,000
Total retained earnings 1,330,000
The debit balance in the foreign currency translation adjustment is a component of other comprehensive income and
a deduction from total shareholders’ equity because it is a translation loss.
Problem 31
Earnings from long term contract 6,680,000

Costs and expenses (5,180,000)

Income tax (30% x 1,500,000) ( 450,000)

Retained earnings unappropriated 900,000
Retained earnings restricted 160,000
JOPO_TAN 8
Total retained earnings 2,110,000
ANSWER : QUESTION 2- 1,620,000
Note payable-noncurrent 1,620,000
The “billings in excess of cost on long term contracts account” is a current liability.
Cash 600,000
Cost in excess of billings 1,600,000
The prepaid taxes of P450,000 represent the tax expense for 2020.
Problem 32
Mortgage payable (4,000,000 – 500,000) 3,500,000

Note payable due January 31, 2013 2,000,000
Unamortized issue cost ( 50,000)
Premium on note payable 200,000
Total noncurrent liabilities 5,650,000
Under PAS 39, the unamortized issue cost is a deduction from the related financial liability.

Dividends – ordinary share (1,000,000)
Dividends – preference share ( 500,000)
The net income is derived from the credit balance of the income summary account. Needless to say, if this account
has debit balance, it is a net loss.
Preference share capital 3,000,000

Ordinary share capital 5,000,000
Share premium 500,000
Retained earnings 5,000,000
Problem 33
JOPO_TAN 9
ANSWER : 1,500,000
SOLUTION:
The following adjustments are necessary to arrive at correct balances:
a. Cash 500,000
Note payable-bank 500,000
b. Cash 200,000
c. Accounts receivable 100,000

Advances from customer 100,000
Current assets:
Cash 1,000,000
Inventory 1,650,000
Prepaid expenses 250,000 3,800,000
Current liabilities:
Note payable-bank 500,000
Advances from customers 100,000 2,300,000
Working capital 1,500,000
Problem 34
ANSWER : 26,500,000
SOLUTION:
Current assets:
Cash 5,000,000
Allowance for doubtful accounts ( 1,000,000)
Merchandise inventory 13,000,000
Prepaid insurance 2,500,000 39,500,000
Short-term note payable 3,000,000
Wages payable 2,000,000 13,000,000
Problem 35
ANSWER : 2,000,000
SOLUTION :
Current assets:
Cash in general checking account 500,000
Cash held to pay value added taxes 300,000
Inventory 1,500,000
Prepaid insurance 300,000
Equipment classified as held for sale 200,000 4,900,000
Note payable – due July 2021 800,000
Salaries payable 400,000
Value added taxes payable 300,000 2,900,000
JOPO_TAN 10
Problem 36
Cash 675,000
Inventory 2,185,000

Noncurrent portion (125,000 x 4) ( 500,000)
Adjusted current portion 2,195,000
Accounts payable and accrued liabilities 1,800,000

Income tax payable (1,500,000 – 600,000) 900,000
The estimated tax payment of P600,000 should be adjusted as follows:

Income tax expense 600,000
Net sales and other revenue 15,000,000

Costs and expenses (10,000,000)

Income tax (30% x 5,000,000) ( 1,500,000)

Problem 37

Deposit with court (200,000)
Outstanding checks (250,000)
Advances to subsidiary (400,000)
Selling price of undelivered merchandise (600,000)
Cost of undelivered merchandise (600,000 / 120%) 500,000
Debit balance in accounts payable 50000
Accounts payable (2,450,000 + 50,000) 2,500,000

Interest payable 150,000
Mortgage payable – current portion (2,000,000 / 4) 500,000
Total current liability 3,450,000
JOPO_TAN 11
Problem 38
ANSWER: 5,000,000
SOLUTION:
PAS 24, paragraph 16, requires disclosures of key management personnel compensation.
The sales to affiliated entities shall be disclosure in Jane’s separate financial statements but eliminated in consolidated
financial statements.
Problems 39
ANSWER: 3,500,000
SOLUTION:
All, except reimbursement of travel expenses.
Problem 40
ANSWER: 3,000,000
SOLUTION:
Loans to officers:
Dean 1,250,000
Morey 500,000
Key officers’ salaries:
Dean 750,000
Morey 500,000
Total 3,000,000
Intercompany sales are no longer disclosed when consolidated financial statements are prepared.
Problem 41
ANSWER: 1,200,000
SOLUTION:
Doubtful accounts (900,000-100,000) 800,000

Loss on claim receivable _400,000
Total adjusting events 1,200,000
Problem 42
ANSWER: 6,150,000
SOLUTION:
Litigations loss 3,000,000

Bad debt expense (3,500,000 x 90%) 3,150,000
Total amount of adjusting events 6,150,000
The receivable of P400, 000 no adjusting event because the amount is still collectible although a longer term has been
given but not so long as to cause it to be reclassified as noncurrent.
The investments in trading securities are measured at fair value which must be determined at the end of each
reporting period. The change in the fair value on February 15, 2021 shall be recognized in the next reporting period,
not on December 31, 2020.
Problem 43
ANSWER: 690,000
SOLUTION:
Contractual profit share payments 350,000
JOPO_TAN 12
Bad debts loss 340,000
Total adjusting events 690,000
Problem 44
ANSWER: 9,000,000
SOLUTION:
The profit remains at P9, 000,000. The fire occurring on January 15, 2012 is a no adjusting event on December 31,
2011.
Problem 45
ANSWER: 800,000
SOLUTION:
Actual liability 2,800,000

Provision already recognized 2,000,000
Increase in liability 800,000
Problem 46
ANSWER: 3,500,000
SOLUTION:
Accrued liability – December 31, 2011 3,500,000
The actual amount of P3, 500,000 should be accrued as liability because the suit was decided on March 15, 2021
which is prior to the issuance of the financial statements on March 31, 2021.
Needles to say, since the amount of P3,000,000 is already accrued as a provision, an additional provision of P500,000
shall be adjusted because the actual liability is P3,500,000.
Problem 47
ANSWER: 4,500,000
SOLUTION
Accounts written off 3,000,000

Provision for lawsuit 1,500,000
Total adjusting events 4,500,000
Problem 48
ANSWER: 4,800,000
SOLUTION:
Advertising 1,500,000
Freight out 800,000
Rent (2,200,000 x ½) 1,100,000
Sales salaries and commissions 1,400,000
Total distribution cost 4,800,000
Problem 49
ANSWER: 2,900,000
SOLUTION:
Legal and audit fees 1,700,000

Rent (2,400,000 x ½) 1,200,000
JOPO_TAN 13
Total general and administrative expenses 2,900,000
Problem 50
ANSWER: 2,600,000
SOLUTION:
Accounting and legal fees 250,000

Officers’ salaries 1,500,000
Insurance 850,000
Total general and administrative expenses 2,600,000
Problem 51
ANSWER: 4,650,000
SOLUTION:
Beginning inventory 1,600,000

Purchases 5,300,000
Purchase discounts (100,000)
Goods available for sale 6,800,000

Ending inventory (2,150,000)
Cost of goods sold 4,650,000
Problem 52
ANSWER: 6,500,000
SOLUTION:
Disbursements for purchases 5,800,000

Increase in trade accounts payable 500,000
Purchases 6,300,000
Decrease in inventory 200,000
Problem 53
ANSWER: 150,000
SOLUTION:
Net sales = Average accounts receivable x accounts receivable turnover

= 950,000 x 5
= 4,750,000
Cost of sales = Average inventory x inventory turnover
= 1,150,000 x 4
= 4,600,000
Gross margin = 4,750,000 – 4,600,000
= 150,000
Problem 54
ANSWER: 8,200,000
SOLUTION:
Beginning inventory 400,000

Gross purchases (SQUEEZE) 8,200,000
Freight in 300,000
Purchase returns (900,000)
JOPO_TAN 14
Ending inventory (500,000)
Cost of goods sold (1250000 x 6) 7,500,000
Problem 55
ANSWER: 8,500,000
SOLUTION:
Inventory –January 1 2,000,000

Purchases 7,500,000
Purchase returns and allowances (500,000)

Inventory –December 31 (2,800,000)
Net sales (6200000/ 80%) 7,750,000

Sales returns and allowances 750,000
Gross sales 8,500,000
Problem 56
ANSWER: 9,500,000
SOLUTION:
Raw materials purchased ` 4,300,000

Increase in raw materials ( 150,000)
Raw materials used 4,150,000

Direct labor 2,000,000
Factory overhead 3,000,000
Cost of goods manufactured 9,150,000

Decrease in finished goods 350,000
Problem 57
ANSWER: 32,000,000
SOLUTION:
Raw materials purchased 20,000,000

Freight in 2,300,000
Decrease in raw materials 500,000

Factory overhead 4,000,000
Total manufacturing cost 31,800,000

Increase in good process (800,000)

Decrease in finished goods 1,000,000
Problem 58
ANSWER: 5,340,000
SOLUTION:
JOPO_TAN 15
Beginning raw materials 400,000
Purchase of raw materials 2,300,000
Raw materials available for use 2,700,000

Ending raw materials ( 340,000)

Factory over head:
Depreciation on factory building 320,000
Factory supervisor’s salary 560,000
Indirect labor 360,000 1,240,000
Beginning goods in process 760,000
Total goods in process 6,340,000

Ending goods in process (1,000,000)
Problem 59
ANSWER: 7,100,000
SOLUTION:
Raw material purchases 4,000,000

Beginning raw materials 300,000
Ending raw materials (450,000)

Factory overhead:
Indirect labor 800,000
Factory repairs and maintenance 200,000
Taxes on factory building 100,000
Depreciation – factory building 300,000
Utilities (60% x 500,000) 300,000 1,700,000

Beginning work in process 400,000
Ending work in process (350,000)
Beginning finished goods 500,000

Ending finished goods (700,000)
Problem 60
ANSWER: 2,000,000
SOLUTION:
Finished goods inventory – January 1 4,000,000

Cost of goods manufactured (SQUEEZE) 2,000,000

Finished goods inventory – December 31 (3,600,000)
Cost of sales 2,400,000
The cost of goods manufactured is “squeezed” by working back from the cost of sales.
Problem 61
JOPO_TAN 16
Accounts receivable – 2019 580,000

Credit sales – 2020 6,400,000
Total 6,980,000
Accounts receivable – 2020 ( 840,000)
Collections in 2020 6,140,000
Inventory – 2019 420,000

Purchases (SQUEEZE) 5,240,000

Inventory – 2020 ( 660,000)
Cost of foods sold in 2020 5,000,000
Accounts payable – 2019 440,000

Purchases in 2020 5,240,000
Total 5,680,000
Accounts payable – 2020 ( 530,000)
Payment of accounts payable in 2020 5,150,000
ANSWER : QUESTION 3- 110,000
Net income 400,000

Increase in accounts receivable ( 260,000)
Increase in inventory ( 240,000)
Decrease in prepaid expenses 50,000
Depreciation (110,000 - 50,000) 60,000
Increase in accounts payable 90,000
Increase in accrued expenses 10,000
Net cash provided by operating activities 110,000
Proceeds from note payable 500,000

Proceeds from issue of share capital
(1,200,000 – 900,000) 300,000
Dividend paid in 2010 (see below) ( 100,000)
Net cash provided by financing activities 700,000
Retained earnings – 2019 330,000

Net income for 2020 400,000
Total 730,000
Retained earnings – 2020 ( 560,000)
Dividend declared in 2020 170,000

Dividend payable – 2020 ( 70,000)
Dividend paid in 2020 100,000
ANSWER : QUESTION 5- ( 610,000)
JOPO_TAN 17
Purchase of long term investment ( 80,000)

Purchase of PPE (1,130,000 – 600,000) (530,000)
Net cash used in investing activities ( 610,000)
Problem 62

Increase in accounts receivable ( 2,000,000)
Decrease in inventory 3,500,000
Increase in accounts and notes payable 4,000,000
Decrease in income tax payable ( 4,500,000)
Depreciation and amortization 1,500,000
Gain on sale of equipment ( 500,000)
Net cash provided – operating 10,000,000
ANSWER : QUESTION 2- (5,000,000)
Purchase of equipment for cash ( 7,000,000)

Proceeds from sale of equipment 2,000,000
Net cash used – investing ( 5,000,000)
Increase in long-term debt 5,000,000

Purchase of treasury shares ( 1,000,000)
Proceeds from issuance of share capital 4,000,000
Payment of cash dividend ( 2,500,000)
Net cash provided – financing 5,500,000
Cash balance – January 1 6,000,000

Net cash provided – operating 10,000,000
Net cash used – investing ( 5,000,000)
Net cash provided – financing 5,500,000
Cash balance – December 31 16,500,000
Problem 63
Accounts receivable – 2019 840,000

Sales – 2020 12,000,000
Total 12,840,000
Accounts receivable – 2020 ( 780,000)
Writeoff ( 50,000)
Cash collections in 2020 12,010,000
JOPO_TAN 18
Inventory – 2010 1,500,000

Purchases (SQUEEZE) 8,300,000

Inventory – 2020 ( 1,400,000)
Cost of good sold 8,400,000
Accounts payable – 2019 950,000

Purchases 8,300,000
Total 9,250,000
Accounts payable – 2020 ( 980,000)
Payment of accounts payable in 2020 8,270,000
Fixed expenses 1,000,000

Depreciation ( 350,000)
Bad debt expense ( 50,000)
Fixed expenses paid in 2020 600,000
Variable expenses paid in 2020
2020 (1,200,000 x 50%) 600,000

2019 (1,100,000 x 50%) 550,000
Total cash disbursement for expenses 1,750,000
Variable ratio (1,200,000 / 12,000,000) 10%

2019 variable expenses (10% x 11,000,000) 1,100,000
Problem 64
Net income 600,000

Gain on sale if investment ( 250,000 – 150,000) ( 100,000)
Depreciation ( 600,000 – 450,000) 150,000
Increase in accounts receivable (1,400,000 – 920,000) ( 480,000)
Increase in accounts payable ( 950,000 – 750,000) 200,000
Net cash provided by operating activities 370,000
ANSWER : QUESTION 2: (250,000)
Sale of investment 250,000

Purchase of plant (1,800,000 – 1,300,000) ( 500,000)
Net cash used in investing activities ( 250,000)
Issue of share capital (1,500,000 – 1,000,000) 500,000

Dividend paid ( 470,000)
JOPO_TAN 19
Problem 65

Increase in inventory ( 160,000)
Gain on sale of long term investment (270,000-200,000) 70,000
Depreciation 500,000
Amortization of patent 20,000
Increase in accounts payable and accrued liabilities 210,000
Purchase of trading securities ( 600,000)
Net cash provided by operating activities 1,280,000
Net change in accumulated depreciation 0

Add: Accumulated depreciation on equipment sold
(800,000 – 300,000) 500,000
Total depreciation 500,000
ANSWER : QUESTION 2- (1,630,000)
Sale of long-term investments 270,000

Purchase of property, plant and equipment (2,200,000)
Sale of equipment 300,000
Net cash used in investing activities (1,630,000)
Property, plant and equipment – 2019 2,000,000

Purchase of PPE (SQUEEZE) 2,200,000
Total 4,200,000
Cost of equipment sold (800,000)
Property, plant and equipment – 2020 3,400,000
Proceeds from short-term debt 650,000

Issue of shares (10,000 x 44) 440,000
Cash dividend paid (480,00)
JOPO_TAN 20

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PRESENTATION OF FS Problems Answer Key

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Bachelor of Science in Accountancy

Holy Cross of Davao College, Inc.

PRESENTATION OF FINANCIAL STATEMENTS

Total current assets 2,780,000

Accounts receivable 1,600,000

Total current assets 6,300,000

Total current assets 1,750,000

Cash ( 600,000 + 100,000) 700,000

Total current assets 2,900,000

Current assets – January 1, 2020 240,000

Total assets – January 1, 2020 1,840,000

Equity – January 1, 2020 1,112,000

Equity – December 31, 2020 1,176,000

Current assets – December 31, 2011(130,000 + 92,000) 222,000

Total assets – December 31, 2020 1,922,000

Equity – December 31, 2020 1,176,000

Total Liabilities and shareholders’ equity 11,000,000

Cash (300,000 – 100,000 overdraft) 200,000

Total current assets 2,250,000

Total current assets 14,800,000

Cash (2,000,000 – 500,000) 1,500,000

Total current assets 7,900,000

The equity of the assignee in assigned accounts shall not be offset

Current assets per book 5,100,000

Correct amount of current assets 4,830,000

Total current assets 7,740,000

Current assets per book 7,300,000

Adjusted current assets 5,400,000

The writeoff of the accounts receivable has no effect on current assets.

The cash surrender value is a noncurrent investment.

Accounts payable 1,500,000

Total current liabilities 4,500,000

Accounts payable 1,900,000

Total current liabilities 3,900,000

Accounts payable 550,000

Total current liabilities 9,900,000

Total current liabilities 6,700,000

Accounts payable (1,350,000 – 150,000) 1,200,000

Total current liabilities 1,540,000

Accounts payable 500,000

Total current liabilities 2,500,000

Current tax expense (6,000,000 x 30%) 1,800,000

Income tax payable 800,000

The 10% note payable is classified as noncurrent.

The 12% note payable is classified as current.

Accounts payable 6,500,000

Total current liabilities 15,650,000

Employee income taxes withheld 900,000

Total current liabilities 8,100,000

Total shareholder’ equity (7,500,000 – 300,000) 7,200,000

Share capital 15,000,000

Total shareholders’ equity 31,500,000

Net income 2,200,000

Retained earnings – December 31 2,500,000

Preference share capital 2,000,000

Total shareholders’ equity 8,000,000

Reported net assets 8,750,000