ACCT 1 AND 2 PROBLEMS

PROBLEM A

Here are the selected accounts of MS partnership at 2013 and 2014:

Accounts Dec 31 2014 Dec 31 2013

Cash and cash equivalents ??? 450000
Accounts receivable 21000 75000
Utilities payable 2500 4600
Unearned income 35000 6400
Prepaid insurance 4600 2100
Prepaid rent 45000 8000
Interest expense 5600 8900
Allow. For doubtful accounts ??? 3700
Accounts payable 45000 11600
Inventory 7000 11000
Land 2000000 1500000
Income tax payable 1,500 3, 500
Additional information:

 Cash received for the year, 8, 950, 000.

 Cash disbursed for operating expenses, 5, 400, 000.
 Total cost of merchandise sold, 1, 900, 000.
 All sales are made on account.
 30% income tax.
 MS partnership has a notes payable worth 600, 000 with interest of 12%, acquired at March 25, 2014.
 On June 29, 2014, it acquired an equipment with a cost of 3, 250, 000, with a useful life of 20 yrs, installation
cost amounting to 150, 000, and freight and handling charge of 75, 000, and sold its equipment which sold at a
loss of 75, 000 with a cost of 1, 750, 000, which acquired on Jan 9, 2006 with no salvage value and a useful life of
10 years.
 Currently it has a building with a historical cost of 40, 000, 000 with a useful life of 40 yrs, which acquired on
October 21, 2001, with no salvage value.
 During the year, MS partnership bought a land costing 3, 500, 000 and sell one-fifths of its total cost of land at a
loss of 175, 000. Also, before the year-end, they sold a piece of land at its cost. (transactions are chronological)
 MS partnership has written off 5, 500 during the year but before the end of the year, it is recovered and the
payment is included on the cash received. The ending balance of the allowance for doubtful accounts is 10% of
the ending balance of accounts receivable.
 They have a P&L ratio of 60:40 for Mark and Stephen, respectively, and they equal ending balances.
 Mark and Stephen did not invest nor withdraw any assets during the year.
 Partners Stephen and Mark agreed on the following for the division of profit and loss: 10% interest for them,
quarterly salary of 30, 000 for Mark and 25, 000 for Stephen, and a bonus of 20% for Mark, the managing
partner for profit after interest and salaries, and the remainder is shared according to their P&L ratio.
 The ending cash includes 25, 000 deposit-in-transit, 35, 000 outstanding checks, 250, 000 allotted for the
purchase of machinery and 175, 000 allotted for the payment of a portion of accounts payable.
 Use the nearest month.

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Determine:

1. Sales for the year

2. Gross profit
3. Purchases
4. Total Accumulated depreciation, Dec 31, 2014
5. Total Depreciation expense
6. Working capital
7. Total operating expense
8. Net profit after tax and interest
9. Total current assets, Dec 31, 2014
10. Total non-current assets, Dec 31, 2014
11. Total liabilities, Dec 31, 2014
12. Ending partnership equity
13. Total share on profit of Mark
14. Total share on profit of Stephen
15. Net cash flow from operating activities
16. Net cash flow from investing activities
17. Net cash flow from financing activities
18. Increase / (decrease) in cash
19. Ending cash
20. Income tax expense

PROBLEM B:

BOKIA Corporation purchased 50000 treasury shares for 45 each. During the year, Bokia reissued 14000 treasury shares
for Php 51. Then, it reissued 12000 for Php 36. Then, the company approved the 3-in-1 share split. Then, it reissued
21000 shares for Php 17. Lastly, it retired 13500 shares when fair value of each share is Php 54 and the par value is Php
30.

Determine:

21. Treasury shares, ending

22. Change in retained earnings
23. Additional paid-in capital

PROBLEM C:

Here are the selected accounts of JOLLY BE manufacturing company:

Raw materials, beg – 45, 000 Finished goods invty, beg – 13, 600
Raw materials, end – 34, 500 Finished goods invty, end – 10, 500
Work-in-process invty, beg – 74, 500 Accounts payable –15, 700 – decrease
Work-in-process invty, end – 52, 000 Accounts receivable – 16, 000 – increase

Additional information:
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  Cash paid for raw material purchases – 850, 000
 Prime costs – 1, 500, 000
 Conversion cost – 1, 100, 000
 Gross profit is 25% on cost

Determine:

24. Total manufacturing cost

25. Direct materials
26. Factory overhead
27. Gross profit
28. Cost of goods sold
29. Cost of goods manufactured

PROBLEM D:

NFS Corporation has the following accounts the end of 2014:

10% preference shares, 100 par, liquidation value of 125 – Php 7, 500, 000
Ordinary shares, 50 par - 10, 500, 000
Share premium – ordinary 850, 000
Share premium – preference 950, 000
Retained earnings - 2, 600, 000
Dividends-in-arrears are in 3 years including the current year.

Determine the book value per ordinary shares if:

30. Cumulative and non-participating
31. Non-cumulative and fully participating
32. Cumulative and participating up to an additional 8%
33. Non-cumulative and participating up to 15%

GOOD LUCK AND GOD BLESS! :D

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