P1-2010

1-2

Vedah company’s trial balance reflected the following account balances on December 31, 20B:
Accounts Receivable 800,000
Financial asset at fair value through profit or loss 250,000
Financial asset at amortized cost 650,000
Cash 550,000
Inventory 1,500,000
Equipment and furniture 1,250,000
Accumulated depreciation 750,000
Patent 200,000
Prepaid expenses 50,000
Land held for future business site 900,000
In Vedah’s December 31, 20B statement of financial position, what amount should be shown as current
assets?
a. 4,700,000
b. 3,150,000
c. 4,000,000
d. 3,800,000

1-5
Clarissa company’s accounting records provided the following information:
1/1/20B 12/31/20B
Current assets 120,000 ?
Property, plant and equipment 800,000 850,000
Current liabilities ? 65,000
Noncurrent liabilities 290,000 ?
All assets and liabilities of the entity are reported in the schedule above. Working capital of P46,000
remained unchanged from 20A to 20B. Net income in 20B was P32,000. No dividends were declared
during 20B and there were no other changes in owners’ equity. What amount should be reported as
noncurrent liabilities on December 31, 20B?
a. 170,000
b. 216,000
c. 290,000
d. 308,000

Working capital = Current assets – current liabilities

1/1/20B
C/A-CL = WC
120,000 - ? = 46,000
CL = 74,000

A=L + OE
Beg. 120,000 + 800,000 = 74,000 + 290,000 + OE?
920,000 = 364,000 + OE
OE=556,000 beg.

556,000 + 32,000 = 588,000 OE, end

12/31/20B
Current assets – current liabilities = working capital
? - 65,000 = 46,000
C/A= 111,000 12/31/20B

Assets = L + OE
111,000 +850,000 = 65,000 + ?NCL + 588,000
961,000 = 653,000 + NCL
NCL = 308,000

1-17
An analysis of Breechie company’s liabilities disclosed the following:
Accounts payable, after deducting debit balances in suppliers’ accounts
amounting to P120,000 4,800,000
Accrued expenses 1,800,000
Credit balances of customers’ accounts 600,000
Share dividend payable 1,200,000
Claims for increase in wages and allowance by employees of the entity,
Covered in a pending lawsuit 480,000
Estimated expenses in redeeming prize coupons 720,000
How much should be presented as total current liabilities?
a. 8,040,000
b. 7,920,000
c. 8,520,000
d. 9,240,000

1-18
The following data pertain to Gliezel company on December 31, 20B:
Trade accounts payable, including cost of goods received on consignment of P180,000 1,620,000
Accrued taxes payable 150,000
Customers’ deposit 120,000
Cherry company as guarantor 240,000
Bank overdraft 66,000
Accrued electric and power bills 72,000
Reserve for contingencies 180,000
How much should be shown as total current liabilities?
1,620,000 – 180,000 = 1,440,000

a. 2,208,000
b. 2,088,000
c. 1,980,000
d. 1,848,000

1-19

1-25
Solid company provided the following information on December 31, 20B:
Share premium 1,200,000
Accounts payable 1,320,000
Preference share capital, at par 2,400,000
Ordinary share capital, at par 3,600,000
Sales 12,000,000
Total expenses 9,360,000
Treasury shares-ordinary 600,000
Dividends 840,000
Retained earnings-January 1 1,200,000
What is the total shareholders’ equity that should be reported on December 31, 20B?
a. 9,600,000
b. 10,200,000
c. 6,960,000
d. 10,440,000

Preference share capital 2,400,000

Ordinary share capital 3,600,000
Share premium 1,200,000
Retained earnings, end 3,000,000
Total 10,200,000
Less: Treasury shares 600,000
Shareholders’ equity 9,600,000

Retained Earnings, beg 1,200,000

Add: net Income 2,640,000
 Total 3,840,000
Less: dividends 840,000
Retained earnings, end 3,000,000

1-26
When preparing a draft of its 20B statement of financial position, Megs company reported net assets
totaling P10,500,000. Included in the assets section were the following:
Treasury shares of Megs company at cost, which approximate market value on December 31 300,000
Idle machinery 120,000
Trademark 150,000
Allowance for inventory writedown 240,000
At what amount should Megs’ net assets be reported in the December 31, 20B statement of financial
position?
a. 10,200,000
b. 10,080,000
c. 9,960,000
d. 9,840,000

Assets – Liabilities = net assets (owner’s equity)