On January 1, 2021, COVID
Hospital issued a P250,000, 10 percent, 5-year bond for
P231,601. Interest is payable on June 30 and December 31. Felipe uses the effective-
interest method to amortize all premiums and discounts. The effective interest rate
was 12 percent based on your inquiry with the bank and other financial institution for the
same transaction . The accounting department recorded interest expense of
P12,500for the fiscal year ended JUNE 30, 2021. How much interest expense must be
adjusted to correct the interest expense recorded as of June 30, 2021?
Group of answer choices
P1,500.00
No adjustment, correctly recorded.
(P564.86)
P2,229.82
A P50,000 bond with a carrying value of P52,000 was called at 103 and retired. Your
audit
disclosed that the issuing company recorded and recognized P500 gain on retirement.
What should be the amount to record and recognize for any gain or loss?
Group of answer choices
Correctly recorded and recognized
record a P1,500 loss.
record no gain or loss.
record a P2,000 gain.
On January 1, 2021, COVID Hospital issued a P250,000, 10 percent, 5-year bond for
P231,601. Interest is payable on June 30 and December 31. Felipe uses the effective-
interest method to amortize all premiums and discounts. The effective interest rate
was 12 percent based on your inquiry with the bank and other financial institution for the
same transaction . The accounting department recorded interest expense of
P12,500for the fiscal year ended JUNE 30, 2021.
The accountant amortized the discount on December 31, 2021 at P1,839.9.
What should be the correct amortization of the discount?
a.
Group of answer choices
Correctly amortized
P1,480
P2,230
P1,396
Foster Corporation issued a P100,000, 10-year, 10 percent bond on January 1, 2020,
for P112,000. Foster uses the straight-line method of amortization that is immaterial in
amount compared to effective interest method for practical recording. On April 1, 2023,
Foster reacquired the bonds for retirement when they were selling at 102 on the open
market.
How much gain or loss should Foster recognize on the retirement of the bonds?
Group of answer choices
P6,100 gain
P3,900 gain
P8,200 loss
P2,000 loss
In auditing a P1,000, 9 percent, 10-year bond that was issued at 96 plus accrued
interest one month after the authorization date, you noticed that the cash was recorded
by your client at P967.50.
What should be the correct cash to be recorded by your client?
Group of answer choices
P1,007.50
P960.00
Correctly recorded
P992.50
9. Your are reviewing the articles of incorporation of your client Wyatt
Corporation. And as a follow up you also reviewed the minutes of the
meeting with the attached board resolution.
In 2021, Wyatt Corporation issued for P110 per share, 15,000 shares of P100 par value
convertible preference share. One share of preference share may be converted into
three shares of Wyatt's P25 par value ordinary share at the option of the preference
shareholder. On December 31, 2022, all of the preference share was converted into
ordinary share. The market value of the ordinary share at the conversion date was P40
per share.
The corporation reported P1,800,000 as the amount of ordinary share on December 31,
2022.
As auditor, what amount should be credited to the ordinary share account on December
31, 2022?
Group of answer choices
P1,500,000
Correctly reported
P1,125,000
P1,650,000
Next
9. COVAX Corporation was organized on January 1, 2020, at which date it
issued 100,000 shares of P10 par ordinary share at P15 per share.
During the period January 1, 2020, through December 31, 2022, COVAX
reported net income of P450,000 and paid cash dividends of P230,000.
On January 10, 2022, COVAX purchased 6,000 shares of its ordinary
share at P12 per share. On December 31, 2022, COVAX sold 4,000
treasury shares at P8 per share. COVAX uses the cost method of
accounting for treasury shares.
What is COVAX's total shareholders' equity on December 31, 2022?
Group of answer choices
P1,704,000
P1,720,000
P1,688,000
P1,680,000
9. On February 24, BMC Company purchased 4,000 shares of Winn Corp.'s
newly issued 6 percent cumulative P75 par preferred stock for P304,000.
Each share carried one detachable stock warrant entitling the holder to
acquire at P10 one share of Winn no-par common stock. On February 25, the
market price of the preferred stock ex-warrants was P72 per share, and the
market price of the stock warrants was P8 per warrant.
On December 29, BMC sold all the stock warrants for P41,000. The gain on the sale of
the stock warrants was recorded at P10,600.
What should be the correct gain on sale of the the stock warrants.
Group of answer choices
P1,000.
P0.
P9,000.
Correctly recorded
Beldon Co. was organized on January 2, 2020, with the following capital structure:
10 percent cumulative preference share, par value P100,
and liquidation value P105; issued and outstanding
2,000 shares ........................................ P200,000
ordinary share, par value P25; authorized 100,000 shares;
issued and outstanding 20,000 shares ................ 500,000
Beldon's net income for the year ended December 31, 2020, was P900,000, but no
dividends were declared. Beldon's balance sheet would report Dividends Payable at
December 31, 2020, of
Group of answer choices
P0.
P2,000.
P20,000.
P90,000.
On September 20, 2020, Nozzle Corporation declared the distribution of the following
dividend to its shareholders of record as of September 30, 2020:
Investment in 100,000 shares of Astro Corporation share, carrying value
• P600,000; fair market value on September 20, P1,450,000; fair market value
on September 30, P1,575,000.
The entry to record the declaration of the property dividend would include a debit to
Retained Earnings of
Group of answer choices
P1,575,000.
P850,000.
P600,000.
P1,450,000.
The shareholders' equity section of Dolphin Corporation as of December 31, 2020,
contained the following accounts:
ordinary share, 25,000 shares authorized; 10,000 shares
issued and outstanding .............................. P 30,000
Capital contributed in excess of par .................. 40,000
Retained earnings ..................................... 80,000
P150,000
Dolphin's board of directors declared a 10 percent share dividend on April 1, 2021,
when the market value of the share was P7 per share. Accordingly, 1,000 new shares
were issued. All of Dolphin's share has a par value of P3 per share.
Assuming Dolphin sustained a net loss of P12,000 for the quarter ended March 31,
2021, what amount should Dolphin report as retained earnings as of April 1, 2021?
Answer in figures, ignore peso sign.
61000
17. You were engaged to audit SINOBA CO. and on June 30, 2020, the
company declared and issued a 10 percent share Prior to this dividend,
SINOBA had 60,000 shares of P10 par value ordinary share issued and
outstanding. The market value of SINOBA Co.'s ordinary share on June 30,
2020, was P24 per share.
As a result of this share dividend, you were asked by the board at what amount would
SINOBA's total shareholders' equity increase (decrease)?
Ans zero
On December 31, 2020, the shareholders' equity section of Addyson Co. was as
follows:
ordinary share, par value P10; authorized, 60,000 shares;
issued and outstanding, 18,000 shares ............... P180,000
Additional paid-in capital ............................ 232,000
Retained earnings ..................................... 192,000
Total shareholders' equity ............................ P604,000
On March 31, 2021, Addyson declared a 10 percent share dividend, and accordingly
1,800 additional shares were issued, when the fair market value of the share was P16
per share. For the three months ended March 31, 2021, Addyson sustained a net loss
of P64,000. The balance of Addyson's Retained Earnings as of March 31, 2021, should
be _____________
99200
The following data are extracted from the shareholders' equity section of the balance
sheet of Guthrie Corporation:
12/31/19 12/31/20
ordinary share (P1 par value) ............... P50,000 P51,000
Paid-In capital in excess of par .......... 25,000 29,000
Retained earnings ......................... 50,000 52,300
During 2020, the corporation declared and paid cash dividends of P7,500 and also
declared and issued a share dividend. There were no other changes in share issued
and outstanding during 2020. Net income for 2020 was ______________
Answer in figures, ignore peso sign.
14800
The following was abstracted from the accounts of the Oak Corp. at year-end:
Total income since incorporation ...................... P420,000
Total cash dividends paid ............................. 130,000
Proceeds from sale of donated share ................... 45,000
Total value of share dividends distributed ............ 30,000
Excess of proceeds over cost of treasury share sold ... 70,000
What should be the current balance of Retained Earnings?
260,000
