STATEMENT OF FINANCIAL POSITION

Exercise 2 – Problems

1. The following are the debit (credit) balances of accounts in the books of KGA CORP. as
of December 31, 2020. Cash and Cash Equivalents P20,000, Trade and Other
Receivables P30,000, Land Held for Sale P40,000, Merchandise Inventories P45,000,
Building P500,000, Goodwill P150,000, Accounts Payable P40,000, Mortgage Payable
(P100,000), VAT Payable (P50,000). The cash and cash equivalents include investments
in equity securities through profit or loss amounting to P5,000.

How much is to be presented as current assets in the Statement of Financial Position of

KGA CORP. as of December 31, 2020?

a. 130,000
b. 135,000
c. 175,000
d. 60,000

2. POGI CORP. presented the following debit (credit) balances on its statement of financial
position:

Cash and Cash Equivalents (Net of Bank Overdraft of P10,000) P150,000; Accounts
Receivable (includes credit balances on one of its customer accounts amounting to
P20,000 and non-trade receivable due in 2 years from reporting date amounting to
P15,000) P200,000; Land Held for Sale P250,000; Merchandise Inventories P50,000;
Land Used in Operations P150,000, Patent and Trademark P130,000; Accounts Payable
(P400,000), net of debit balances amounting to P10,000; Mortgage Payable (P330,000);
VAT Payable (P200,000).

What amount is to be presented as current assets in the balance sheet for the year ended?

a. 665,000
b. 670,000
c. 675,000
d. 645,000
3. POGI CORP. presented the following debit (credit) balances on its statement of financial
position:

Cash and Cash Equivalents (Net of Bank Overdraft of P10,000) P150,000; Accounts
Receivable (includes credit balances on one of its customer accounts amounting to
P20,000 and non-trade receivable due in 2 years from reporting date amounting to
P15,000) P200,000; Land Held for Sale P250,000; Merchandise Inventories P50,000;
Land Used in Operations P150,000, Patent and Trademark P130,000; Accounts Payable
(P400,000), net of debit balances amounting to P10,000; Mortgage Payable (P330,000);
VAT Payable (P200,000).

What amount is to be presented as current liabilities in the balance sheet for the year
ended?

a. 640,000
b. 610,000
c. 600,000
d. 930,000

4. The accounts and balances shown below were taken from FOREVER CORP.’s trial
balance on December 31, 2020. All adjusting entries have been made.

Wages Payable P250,000; Cash P175,000; Bonds Payable P600,000; Dividends Payable
P140,000; Prepaid Rent P136,000; Inventory P820,000; Investment in – Sinking Fund
Assets P525,000; Investment to Profit or Loss Securities P153,000; Premium on Bonds
Payable P48,000; Investment in Subsidiary P1,020,000; Taxes Payable P228,000;
Accounts Payable (net of P15,000 debit balances on supplier accounts) P248,000;
Accounts Receivable P366,000; Property, Plant and Equipment P1,200,000; Patents net
P150,000; Accumulated Depreciation-PPE P400,000; Land Held for Sale P900,000.

How much should be reported in FOREVER’s December 31, 2020 statement of financial
position as current assets?

a. P2,565,000
b. P1,650,000
c. P2,550,000
d. P1,665,000

5. The accounts and balances shown below were taken from FOREVER CORP.’s trial
balance on December 31, 2020. All adjusting entries have been made.
 Wages Payable P250,000; Cash P175,000; Bonds Payable P600,000; Dividends Payable
P140,000; Prepaid Rent P136,000; Inventory P820,000; Investment in – Sinking Fund
Assets P525,000; Investment to Profit or Loss Securities P153,000; Premium on Bonds
Payable P48,000; Investment in Subsidiary P1,020,000; Taxes Payable P228,000;
Accounts Payable (net of P15,000 debit balances on supplier accounts) P248,000;
Accounts Receivable P366,000; Property, Plant and Equipment P1,200,000; Patents net
P150,000; Accumulated Depreciation-PPE P400,000; Land Held for Sale P900,000.

How much should be reported in FOREVER’s December 31, 2020 statement of financial
position as non-current assets?

a. P2,754,000
b. P3,395,000
c. P3,235,000
d. P2,495,000

6. The accounts and balances shown below were taken from FOREVER CORP.’s trial
balance on December 31, 2020. All adjusting entries have been made.

Wages Payable P250,000; Cash P175,000; Bonds Payable P600,000; Dividends Payable
P140,000; Prepaid Rent P136,000; Inventory P820,000; Investment in – Sinking Fund
Assets P525,000; Investment to Profit or Loss Securities P153,000; Premium on Bonds
Payable P48,000; Investment in Subsidiary P1,020,000; Taxes Payable P228,000;
Accounts Payable (net of P15,000 debit balances on supplier accounts) P248,000;
Accounts Receivable P366,000; Property, Plant and Equipment P1,200,000; Patents net
P150,000; Accumulated Depreciation-PPE P400,000; Land Held for Sale P900,000.

How much should be reported in FOREVER’s December 31, 2020 statement of financial
position as current liabilities?

a. P776,000
b. P866,000
c. P916,000
d. P961,000

7. The accounts and balances shown below were taken from FOREVER CORP.’s trial
balance on December 31, 2020. All adjusting entries have been made.

Wages Payable P250,000; Cash P175,000; Bonds Payable P600,000; Dividends Payable
P140,000; Prepaid Rent P136,000; Inventory P820,000; Investment in – Sinking Fund
Assets P525,000; Investment to Profit or Loss Securities P153,000; Premium on Bonds
 Payable P48,000; Investment in Subsidiary P1,020,000; Taxes Payable P228,000;
Accounts Payable (net of P15,000 debit balances on supplier accounts) P248,000;
Accounts Receivable P366,000; Property, Plant and Equipment P1,200,000; Patents net
P150,000; Accumulated Depreciation-PPE P400,000; Land Held for Future Business Site
P900,000.

How much should be reported in FOREVER’s December 31, 2020 statement of financial
position as non-current liabilities?

a. P552,000
b. P648,000
c. P640,000
d. P684,000

8. FOREVERMORE COMPANY reported the following as balances for the year ended
December 31, 2020:

Cash and Cash Equivalents (net of bank overdraft of P10,000) P300,000

Trade Accounts Receivable (due in 14 months) 500,000
Non-trade Accounts Receivable (due in 12 months) 300,000
Investment through Profit or Loss 250,000
Investment through OCI 200,000
Deferred Tax Assets 300,000
Patent 350,000
Land Held for Sale (mortgage related for such is P30,000; due in 2019) 50,000
Office Building – net 1,000,000
Trade Accounts Payable 850,000
Cash Dividends Payable (due in 16 months) 400,000
Stock Dividends Payable 500,000
Estimated Premiums Liability 150,000
Bonds Payable (due 2022) 3,000,000
Notes Payable 1,500,000
Discount on Bonds Payable 200,000

The Shareholder’s Equity as of December 31, 2017 is as follows:

Share Capital (100,000 shares) P3,500,000

Share Premium 1,500,000
Retained Earnings 800,000
Redeemable Preference Shares 100,000
Additional information:
  During 2020, the company declared a cash dividends on its redeemable preference
shares amounting to P50,000. This amount is recorded but not included in the
amount above.
 The bank-overdraft above is related to an overdraft in FOREVERMORE’s BPI
account. That is the only account maintained for such bank.
 The company’s normal operating cycle is 15 months.

What amount is to be reported as Current Assets for the year ended December 31, 2020?

a. 1,410,000
b. 1,600,000
c. 1,400,000
d. 1,110,000

9. FOREVERMORE COMPANY reported the following as balances for the year ended
December 31, 2020:

Cash and Cash Equivalents (net of bank overdraft of P10,000) P300,000

Trade Accounts Receivable (due in 14 months) 500,000
Non-trade Accounts Receivable (due in 12 months) 300,000
Investment through Profit or Loss 250,000
Investment through OCI 200,000
Deferred Tax Assets 300,000
Patent 350,000
Land Held for Sale (mortgage related for such is P30,000; due in 2019) 50,000
Office Building – net 1,000,000
Trade Accounts Payable 850,000
Cash Dividends Payable (due in 16 months) 400,000
Stock Dividends Payable 500,000
Estimated Premiums Liability 150,000
Bonds Payable (due 2022) 3,000,000
Notes Payable 1,500,000
Discount on Bonds Payable 200,000

The Shareholder’s Equity as of December 31, 2017 is as follows:

Share Capital (100,000 shares) P3,500,000

Share Premium 1,500,000
Retained Earnings 800,000
Redeemable Preference Shares 100,000

Additional information:
  During 2020, the company declared a cash dividends on its redeemable preference
shares amounting to P50,000. This amount is recorded but not included in the
amount above.
 The bank-overdraft above is related to an overdraft in FOREVERMORE’s BPI
account. That is the only account maintained for such bank.
 The company’s normal operating cycle is 15 months.

What amount is to be reported as Current Liabilities for the year ended December 31,
2020?

a. 2,500,000
b. 2,590,000
c. 2,660,000
d. None of the above

10. FOREVERMORE COMPANY reported the following as balances for the year ended
December 31, 2020:

Cash and Cash Equivalents (net of bank overdraft of P10,000) P300,000

Trade Accounts Receivable (due in 14 months) 500,000
Non-trade Accounts Receivable (due in 12 months) 300,000
Investment through Profit or Loss 250,000
Investment through OCI 200,000
Deferred Tax Assets 300,000
Patent 350,000
Land Held for Sale (mortgage related for such is P30,000; due in 2019) 50,000
Office Building – net 1,000,000
Trade Accounts Payable 850,000
Cash Dividends Payable (due in 16 months) 400,000
Stock Dividends Payable 500,000
Estimated Premiums Liability 150,000
Bonds Payable (due 2022) 3,000,000
Notes Payable 1,500,000
Discount on Bonds Payable 200,000

The Shareholder’s Equity as of December 31, 2017 is as follows:

Share Capital (100,000 shares) P3,500,000

Share Premium 1,500,000
Retained Earnings 800,000
Redeemable Preference Shares 100,000
 Additional information:
 During 2020, the company declared a cash dividends on its redeemable preference
shares amounting to P50,000. This amount is recorded but not included in the
amount above.
 The bank-overdraft above is related to an overdraft in FOREVERMORE’s BPI
account. That is the only account maintained for such bank.
 The company’s normal operating cycle is 15 months.

The total amount of Shareholder’s Equity as of December 31, 2017 is.

a. 5,900,000
b. 4,400,000
c. 5,800,000
d. Answer not given

11. The ledger of CPA IN THE MAKING CORP. shows the following information regarding
its accounts for the year ended December 31, 2018:

Cash and cash equivalents P600,000

Trade receivable (15 months) – net of P10,000 credit balance 350,000
Notes receivable 150,000
Dividend receivable (13 months) 50,000
Deferred tax asset (reversal is next year) 50,000
Equipment held for sale (with mortgage payable in 2025 – P60,000) 200,000
Patent 100,000
Inventories 200,000
Trade payable (net of P5,000 debit balance) 300,000
Premiums payable 25,000
VAT payable 40,000
Bonds payable – 2019 200,000
Premium in bonds payable 15,000
Deferred tax liability 100,000
Notes payable – 2021 60,000

What are the total current assets?

a. 1,500,000
b. 1,215,000
c. 1,515,000
d. 1,015,000
12. The ledger of CPA IN THE MAKING CORP. shows the following information regarding
its accounts for the year ended December 31, 2018:

Cash and cash equivalents P600,000

Trade receivable (15 months) – net of P10,000 credit balance 350,000
Notes receivable 150,000
Dividend receivable (13 months) 50,000
Deferred tax asset (reversal is next year) 50,000
Equipment held for sale (with mortgage payable in 2025 – P60,000) 200,000
Patent 100,000
Inventories 200,000
Trade payable (net of P5,000 debit balance) 300,000
Premiums payable 25,000
VAT payable 40,000
Bonds payable – 2019 200,000
Premium in bonds payable 15,000
Deferred tax liability 100,000
Notes payable – 2021 60,000

What are the total current liabilities?

a. 1,500,000
b. 1,215,000
c. 1,515,000
d. 1,015,000