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SUPPLEMENTARY NOTES:
Note 1: Net Sales
Gross sales 13,000,000
Less: Sales returns and allowances (520,000)
Sales discounts (250,000)
Net Sales 12,230,000
2. Ans. P2,025,000.
Cost of goods sold P1,800,000
Increase in inventory (P2,700,00-P1,575,000) 1,125,000
Purchases 2,925,000
Increase in accounts payable (P2,250,000-P1,350,000) (900,000)
Cash disbursed for purchases P2,025,000
3. Ans. P4,185,000.
Collections from customers P7,485,000
Cash disbursed for purchases (2,025,000)
Cash paid for operating expenses (1,275,000)
Cash provided by operating activities P4,185,000
4. Ans. P2,160,000.
Purchase of equipment (P2,700,000)1
Sale of land 495,000
Sale of equipment 45,000
Cash used in investing activities (P2,160,000)
P1,800,000
Add: Cost of equipment sold 900,000
Purchase of equipment P2,700,000
P90,000
Less: Loss on sale of equipment 45,000
Proceeds from sale of equipment 45,000
5. Ans. P1,350,000.
(P1,350,000)
2. Ans. P1,005,000.
Proceeds from sale of Building 350,000
Proceeds from sale of LT Investment 135,000
Purchase of Plant assets (P700,000+600,000-110,000) (1,190,000)
Purchase of Available for sale securities (300,000)
Cash used in investing activities (1,005,000)
3. Ans. P205,000.
Proceeds from share issuance 220,000
Proceeds from short-term bank debt 325,000
Payment of dividends (P500,000-160,000) (340,000)
Cash provided by financing activities 205,000
Summary:
Cash provided by operating activities 920,000
Cash used in investing activities (1,005,000)
Cash provided by financing activities 205,000
Increase in cash for the year 120,000
2. Ans. A.
Land P167,000
Building, net (375,000 45,000) 330,000
Furniture and fixtures, net (114,600 34,600) 80,000
Total PPE P577,000
3. Ans. C.
Accounts payable P23,595
Interest payable 8,405
Advances 12,000
Short term portion of serial bonds 50,000
Total Current liabilities P94,000
9. c.
4. Ans. C.
Unappropriated retained earnings P295,000
(3,125)
Appropriated for bond treatment 50,000
Total retained earnings P341,875
5. Ans. B.
Share capital (4,000*10) P40,000
Paid-in capital in excess of par 430,00
Total retained earnings 341,875
Total SHE P811,875
2. Ans. A.
Accounts payable and accrued liabilities 1,701,000
Income taxes payable (654,000-525,000) 129,000
Total current liabilities 1,830,000
3. Ans. C.
Retained earnings, 1/1/14 3,450,000
Net sales and other revenues 13,360,000
Costs and expenses 11,180,000
Net income before tax 2,180,000
Income tax expense (30%) (654,000)
Net Income for the year 1,526,000
Retained earnings, 12/31/14 4,976,000
Inventory 750,000
On consignment (P100,000 25%) 25,000 775,000
Investment 763,000
Financial Asset at Fair value through P&L 170,000 3. Ans B. (150,000)
Prepaid expense 30,000 (30,000)
Increase in value of AFS 50,000 633,000 LT Investment
Total 1,765,000 2,432,990
4. Ans. B. 5. Ans. D.
2. Ans. D.
Proceeds from sale of equipment P100,000
Loan to Ari Co. (750,000)
Principal collection of loan receivable 93,750
Net cash used in investing activities P556,250
3. Ans. A.
Net cash used in financing activities (Dividends paid) (P250,000)
2. Ans. A.
Accumulated profits, unapp., Jan 1, 2014 1,344,000
Less: Increase in appropriations for expansion (180,000)
Stock dividends declaration (237,600*30%)*P10 (712,800)
Accumulated profits, unapp. Dec. 31 (943,200)
Less: Net income for the year 528,000
Reversal of approp for Treasury 60,000
Cash dividend declaration 96,000
3. Ans. C.
Share capital, Dec. 31, 2014 4,312,800
Share premium, Dec. 31, 2014 1,392,000
Total 5,704,800
Less:
Share capital, Dec. 31, 2013 2,400,000
Share premium, Dec. 31, 2013 60,000
2,460,000
Increase in Share capital and share premium 3,244,800
Share dividends (237,600*30%)*10 (712,800)
Share premium from treasury shares reissue (12,000)
Proceeds from issuance of shares 2,520,000
4. Ans. B.
Decrease in Trading securities 360,000
Add:Gain on sale of Trading securities 144,000
Unrealized loss on trading securities (48,000)
Proceeds from sale of Trading securities 456,000
5. Ans. C.
Proceeds from sale of equipment 84,000
Add: Loss on sale of equipment 12,000
Carrying Value of eqiupment sold 96,000
6. Ans. D.
Equipment, end 3,732,000
Equipment, beg 2,040,000
Increase in equipment 1,692,000
Add: Cost of disposed equipment 180,000
Total equipment acquired during the year 1,872,000
Equipment acquired through note issuance (600,000)
Overhaul on equipment (72,000)
Total cash payment made for equipment acquisition] 1,200,000
7. Ans. A.
Decrase in treasury shares (120,000 - 60,000) 60,000
Share premium on treasury shares reissue 12,000
Proceeds from treasury shares reissue 72,000
8. Ans. C.
Net Income 528,000
Non cash expenses/income
Depreciation expense - Bldg 45,000
Depreciaiton expense - Equipment 303,000
Bad debt expense 36,000
Amortization of bond discount 6,000
Income tax benefit (Decrease in Def. tax liab) (75,600)
Non operating income/expense
Loss on sale of equipment 12,000
Changes in working capital
Trading security 360,000
Accounts receivable (576,000)
Inventories 108,000
Prepaid Insurance (6,000)
Accounts payable (60,000)
Accrued expenses 111,600
Income tax payable 300,000
Unearned Income (96,000)
Net cash provided by operating activities 996,000
9. Ans. B.
Purchase of equipment (1,200,000)
Overhaul of equipment (72,000)
Sale of equipment 84,000
(1,188,000)
10. Ans. A.
Payment of serial notes payable (240,000)
Share issuance 2,520,000
Treasury shares reissuance 72,000
Payment of dividends (96,000)
2,256,000
DISCUSSION PROBLEMS
CHAPTER 11-PROBLEM 1: SAFARI COMPANY
2012 NI 2013 NI 2014 NI 2014 RE, BEG 2014 RE, END 2014 WC
A. Accrued expense, under 2012 (15,000) 15,000
Accrued expense, under 2013 (7,000) 7,000 (7,000)
Accrued expense, under 2014 (22,000) (22,000) (22,000)
B. Accrued income, under 2012 8,000 (8,000)
Accrued income, under 2013 9,000 (9,000) 9,000
Accrued income, under 2014 5,000 5,000 5,000
C. Prepaid expense, under 2012 16,000 (16,000)
Prepaid expense, under 2013 12,000 (12,000) 12,000
Prepaid expense, under 2014 6,000 6,000 6,000
D. Unearned income, under 2012 (11,000) 11,000
Unearned income, under 2013 (13,000) 13,000 (13,000)
Unearned income, under 2014 (10,000) (10,000) (10,000)
EFFECT OF ERRORS (2,000) 3,000 (22,000) 1,000 (21,000) (21,000)
1. Ans. 2. Ans. 3. Ans. 4. Ans. 5. Ans. 6. Ans.