Far Eastern University – Manila ACT111 HO No.

STATEMENT OF FINANCIAL POSITION

Intermediate Accounting 3

Case 1. On December 31, 2020, Khaleeya Duelist Inc.’s cash and cash equivalents account balances per ledger amounting to P5,700,000 includes the
following:

Cash and Cash Equivalents Amount Remarks

Manager’s check 70,000
Traveler’s check 100,000
Treasury note 50,000
Treasury shares, purchased 12/1/2020, to be
reissued on 3/2/2021
150,000
Escrow deposit 200,000
Bank drafts 20,000
Postal money orders 20,000
Demand deposits 100,000
Treasury bills, purchased 12/16/2020 due
3/15/2021
50,000
160-days treasury bill 30,000
Time deposit – PCIB, 1 yr, due 3/31/2021 180,000
Time deposit – PNB 90 days 170,000
Time deposit – BPI 120 days 45,000
Money market instrument – due 2/28/2021 40,000
Money market instrument – due 6/1/2021 70,000
Cash in bank – Metrobank, which includes
compensating balance, not legally restricted, of 1,050,000
P50,000 for short term borrowing arrangement.
Cash in bank – Metrobank (100,000)
Cash in bank – Allbank, which includes
compensating balance of P50,000 for long-term
borrowing arrangement. The Compensating
450,000
balance is legally restricted as to withdrawal.
Cash in bank – HSBC (60,000)
Cash in bank – Security Bank, which includes a
compensating balance of P40,000 for short term
borrowing arrangement. The compensating
150,000
balance is legally restricted as to withdrawal.
Cash in bank – Mukbank, which includes a
compensating balance of P40,000 for short term 250,000
borrowing arrangement.
Petty cash fund, which includes an unreplenished
voucher of P4,000
10,000
Payroll fund 100,000
Travel fund 20,000
Interest fund 40,000
Tax fund 30,000
Sinking fund 420,000
Preferred redemption fund 100,000
Contingent fund 200,000
Insurance fund 500,000
Fund for acquisition of Property, Plant and
Equipment expected to be disbursed in 2021
800,000
IOU from officers 20,000
Customer’s PDC 70,000
Customer’s check returned by bank as NSF 20,000
Redeemable preferred shared – acquired 3 months
to maturity date
15,000
Unused credit line 200,000
Revolving fund 100,000
Visa card-credit limit 20,000
TOTAL 5,700,000

Requirement:
1. What is the total cash and cash equivalents that should be shown in the statement of financial position?

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Far Eastern University – Manila ACT111 HO No. 2

Case 2. On December 31, 2020, Bailey Co.’s Accounts Receivable balance per ledger of P1,250,000 includes:

Accounts Receivables Amount Current Non-Current Remarks

Mastercard or VISA credit card sale of merchandise
to customer
P10,000
Overpayment to supplier for inventory purchased on
account
20,000
Insurance claim on automobile accident 2,000
Advance to sales manager due in one year 4,000
5-year note receivable due from company president
(issued by president for loan granted to him)
300,000
Interest due on 5-year note from company president,
interest payable annually
6,000
Acceptance of 6-month note for past due-account
arising from sale of inventory
5,000
Accrued interest receivable on the 6-month note 100
Overpayment by customer of an account receivable (5,000)
Accounts receivable from customers uncollectible 4,000
Other trade accounts receivable – unassigned 50,000
Trade accounts receivable – assigned 10,000
Notes receivable customer (for cash loan made by
customer collectible in 3 years)
30,000
Claim for tax refund from last year 3,000
Prepaid insurance – 4 months remaining in the policy 4,000
Advances to receivables from stockholders (P100,000
currently collectible)
250,000
Advances to affiliates 125,000
Subscription receivable 150,000
Special deposit on contract bids 30,000
Dividends receivables 10,000
Notes receivables dishonored 5,000
Accrued rent receivables 6,000
Claims against common carriers 4,900
Acceptance of 8-month note from employee arising
from sale of inventory
6,000
Trade installment receivable due within 16 months,
gross of unearned interest income of P20,000
220,000
TOTAL 1,250,000

Requirements:

1. What should be the balance of Trade Accounts Receivable as of December 31, 2020?
2. What should be the balance of Trade Notes receivable as of December 31, 2020?
3. What should be the balance of Trade and other receivables to be presented in the current asset section of the balance sheet?
4. What should be the balance of Non-current receivables to be presented in the balance sheet?
5. What is the total Non-trade receivables as of December 31, 2020?

Case 3. An entity reported the following current assets on December 31, 2021:

Cash in bank 4,000,000

Accounts receivables 7,000,000
Notes receivable 2,500,000
Note receivable discounted (400,000)
Inventory 4,500,000
Financial asset – FVPL 1,000,000
Financial asset – FVOCI 1,500,000
Prepaid expenses 200,000
Deferred tax assets 2,500,000
Equipment classified as “held for sale” 2,000,000
Total 24,800,000

Customers’ accounts 5,000,000

Allowance for doubtful accounts (500,000)
Sale price of unsold goods out on 2,500,000
consignment at 125% of cost and excluded
from ending inventory
Net Accounts Receivables 7,000,000

Requirement:

1. What amount should be reported as total current assets on December 31, 2021?

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Far Eastern University – Manila ACT111 HO No. 2

Case 4. The current section of the unadjusted statement of financial position of Senyora Company on December 31, 2020 are as follows:

Current Assets Current Liabilities

Cash 2,000,000 Trade accounts payable, net of debit balance of P50,000 2,450,000
Accounts Receivable 3,000,000 Interest payable 100,000
Inventory 1,900,000 Income tax payable 300,000
Deferred charges 100,000 Money claims of the union, pending final decision 500,000
Mortgage payable, due in 3 annual installments 3,000,000
Total current assets 7,000,000 Total current liabilities 6,350,000

A review of the accounts showed that the cash balance of P2,000,000 included a customer’s check amounting to P100,000 returned by the bank
marked NSF, and an employee’s IOU of P50,000. Annual installments on the mortgage are due every December 31, starting on December 31,
2020.

Accounts receivable balance of P3,000,000 is composed of:

Customer’s debit balances 1,600,000

Advances to subsidiary 400,000
Advances to suppliers 200,000
Advances to officers currently collectible 300,000
Allowance for doubtful accounts (100,000)
Selling price of items invoiced at 120% cost but
not yet delivered and excluded from inventory 600,000

Requirements:
1. What amount of current assets should be reported on December 31, 2020?
2. What amount of current liabilities should be reported on December 31, 2020?

Case 5. An entity provided the following information on December 31, 2020:

Current Liabilities
Accounts payable 2,000,000
Accrued expenses 800,000
Bonds payable due on December 31, 2021 2,500,000
Premium on bonds payable 300,000
Deferred tax liability 500,000
Income tax payable 1,100,000
Cash dividends payable 600,000
Share dividend payable 400,000
Note payable – 6% due March 1, 2020 1,500,000
Note payable – 8% due on October 1, 2020 1,000,000
TOTAL

The financial statements for 2019 were issued on March 31, 2020. On March 1, 2020, the 6% note payable was refinanced on a long-term basis.
Under the loan agreement for the 8% note payable, the entity has the discretion to refinance the obligation for at least twelve months after
December 31, 2019.

Requirement:
1. What amount should be reported as total current liabilities?

Case 6. An entity was incorporated on January 1, 2020 with proceeds from the issuance of P7,500,000 in shares and borrowed funds of P1,100,000.
During the first year of operations, revenue from sales amounted to P820,000 and operating costs and expenses totaled P640,000. On December 15,
the entity declared a P30,000 cash dividend, payable to shareholders on January 15, 2020. No additional activities affected owner’s equity in 2019.
The liabilities increased to P1,200,000 by December 31, 2020.

Requirement:

1. What amount should be reported as total assets on December 31, 2020?

Case 7. An entity provided the following information on December 31, 2020:

• Accounts payable amounted P1,500,000

• On December 15, 2020, the entity declared a cash dividend of P20 per share on 100,000 outstanding shares, payable on January 15, 2020.
• On July 1, 2020, the entity issued P5,000,000, 8% bonds for P4,400,000 to yield 10%. The bonds mature on June 30, 2025 and pay interest
annually every June 30.
• The pretax financial income was P8,500,000 and taxable income was P6,000,000. The difference is due to P1,000,000 permanent
difference and P1,500,000 taxable temporary difference to reverse in 2021. The income tax rate is 30%. The entity made estimated income
tax payments during the current year of P1,000,000.

Requirement:

1. What should be reported as total current liabilities on December 31, 2020?

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Far Eastern University – Manila ACT111 HO No. 2

Case 8. An entity reported to following data on December 31, 2020:

Cash in bank, net of bank overdraft of P100,000 1,200,000

Petty cash, including unreplenished petty cash expense P10,000 50,000
Notes receivable 750,000
Accounts receivable, net customers’ account with credit balances of 2,000,000
P200,000
Inventory, excluding unrecorded purchase of P300,000 on account in 2,500,000
transit shipped FOB shipping point on December 31, 2020
Deferred charges 150,000
Accounts payable, net of suppliers’ accounts with debit balances of 3,000,000
P400,000
Note payable, with annual installments of P500,000 payable every 2,000,000
December 31
Accrued expenses 300,000

Requirements:

1. What amount should be reported as total current assets on December 31, 2020?
2. What amount should be reported as total current liabilities on December 31, 2020?

Case 9. The Omega Company provided the following balances on December 31, 2020:

Accounts payable 500,000

Accrued taxes 100,000
Ordinary share capital 5,000,000
Dividends – Ordinary shares 1,000,000
Dividends – Preference share 500,000
Mortgage payable (P500,000 due in 6 months) 4,000,0000
Note payable, due January 31, 2022 2,000,000
Share premium 500,000
Preference share capital 3,000,000
Premium on note payable 200,000
Income summary – Credit balance 4,000,000
Retained earnings – January 1 2,500,000
Unamortized issue cost on note payable 50,000
Unearned rent income 150,000

Requirements:
1. What is the amount of noncurrent liabilities on December 31, 2020?
2. What is the amount of retained earnings on December 31, 2020?
3. What is the total shareholders’ equity on December 31, 2020?

Case 10. Presented below is the trial balance of Waltz Design Corporation at December 31, 2020.

Cash in Bank – BDO P 200,000

Accounts receivables 750,000
Inventory 600,000
Prepaid Insurance 120,000
Prepaid Rent (120,000 per year for the next 3 years) 360,000
Financial assets at FVTPL 150,000
Financial assets at FVTOCI 300,000
Financial assets at Amortized Cost 500,000
Deferred tax assets 75,000
Bank overdraft – BDO 125,000
Machinery 400,000
Accumulated depreciation – machinery 100,000
Noncurrent assets held for sale – land 325,000
Building used as a plant site 460,000

Requirements:

1. How much is the total current assets for the year ended December 31, 2020?
2. How much is the total non-current assets for the year ended December 31, 2020?

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Far Eastern University – Manila ACT111 HO No. 2

Case 11. Loowee Oppa Corporation’s trial balance reflected the following account balances for the year ended December 31, 2020.

Cash, net of company’s postdated check of P50,000 P 470,000

Bank overdraft – Sec Bank 90,000
Accounts Receivable, net of customer’s credit balance
220,000
of P30,000
Accounts payable, net of debit balance in supplier’s
325,000
accounts amounting to P25,000
Bonds payable 1,700,000
Discount on bonds payable 100,0000
Deferred tax liability 200,000
Property dividends payable 200,000
Income tax payable 150,000
Note Payable, due January 31, 2022 250,000
Contingent liability 75,000
Share dividend payable 160,000
Cash dividend payable 40,000
Financial liabilities at FVTPL 65,000
Reserve for contingencies 215,000
Estimated expenses of meeting warranties 167,500
Estimated damages because of unsatisfactory
134,000
performance
Mortgage payable 500,000
Loans payable (payable in 4 equal annual installments) 250,000

Requirements:
1. How much is the total current liabilities for the year ended December 31, 2020?
2. How much is the total noncurrent liabilities for the year ended December 31, 2020?

Case 12. Xavier Corporation’s trial balance reflected the following account balances on December 31, 2020.

Ordinary Share Capital P5,000,000

Share Premium 500,000
Subscribed ordinary shares 50,000
Subscription receivables 20,000
Treasury shares, at cost 1,000,000
Unrealized loss on FVTOCI securities 500,000
Retained earnings, unappropriated 3,000,000
Retained earnings appropriated for building expansion 1,500,000
Revaluation surplus 2,000,000
Cumulative translation adjustment – credit 750,000

Requirement:

1. How much is the total shareholder’s equity for the year ended December 31, 2020?

Don’t stop until you’re proud

Anonymous

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