AUDI

TOFFI
NANCI
ALSTATEMENTS
PROBLEM 1
STATEMENTOFFI NANCI
ALPOSITION
ThebookkeeperforMagui
danao Comput
ersI
nc.
,repor
tst
hef
oll
owi
ng st
atementoff
inanci
al
posi
ti
onamounti
ngasofJune30,2020.

Currentassets 2,
440,
500
Noncur r
entasset s 6,
285,
500
Currentli
abili
ti
es 1,
386,
000
Noncur r
entl i
abil
it
ies 900,
000
Owner s'equity 6,
440,
000
Arevi
ewofaccountbalancesr evealsthefollowi
ngdata.
(
a)Ananal ysi
sofcurr
entasset sdisclosesthefoll
owi
ng:
Cash 422,
500
I
nvestmentsecurit
ies-tr
ading 600,
000
Tradeaccountsreceivabl
e 568,
000
I
nventori
es,i
ncludingadvertisi
ngsuppl i
esofP20,
000 850,
000

(
b)Noncur rentassetsi
ncludethefol
lowi
ng:
Propert
y,plantandequipment:
Depreciat
edbookval ue(costP6,560,
000) 5,
490,000
Depositwithasupplierf
ormer chandi
seorderedf
orAugustdeli
ver
y 21,500
Goodwillrecor
dedont hebookst ocancell
ossesi
ncurr
edbyt hecompanyi
npr
ioryear
s 774,000
P6,
285,500

(
c)Currentl
iabi
li
ti
esincludet
hefol
lowi
ng:
Payrol
lpayable 71,
500
Taxespayable 41,
500
Rentpayable 114,
000
Tradeaccountspayabl e(netofP15,000,6-mont
h note,recei
ved f
rom a
suppli
erwhopur chasedsomeusedequipmentonJune29,2020) 999,
000
Notespayable 160,
000
P1,
386,000

(
d)Noncurrentl
iabi
li
ti
esincl
udet
hefol
lowi
ng:
9% mor t
gage on propert
y,pl
antand equi
pment
,payabl
ein semi
-annual
inst
almentofP90,
000throught
oJune30,2025 P900,
000

(
e)Owner s’
equit
yincl
udesthefol
lowi
ng:
Pref
erencesharecapi
tal
,190,
000sharesout
standi
ng(P20parval
ue) 3,
800,
000
Ordi
narysharecapit
al,
1,600,
000shar
esatP1parvalue 1,
600,
000
Sharepremium 1,
040,
000
P6,
440,
000

(
f)Ordi
naryshar
eswereori
ginall
yissuedf
orP3,
910,
000,butt
hel
ossesoft
hecompanyf
ort
he
pastyear
swerechar
gedagainstshar
epr
emium.

Basedontheaboveandt her
esul
toft
heaudi
t,det
ermi
net
headj
ust
edamount
soft
hef
oll
owi
ng:
1. Cur
rentassets
a. 2,
462,000
b. 2,
440,500
c. 2,
477,000
d. 2,
435,500
2. Noncurr
entassets
a. 5,
490,000
b. 5,
511,500
c. 6,
560,000
d. 6,
264,000
3. Cur
rentli
abil
it
ies
a. 1,
401,000
b. 1,
581,000
c. 1,
602,500
d. 1,
491,000

1
 4. Noncurr
entl
iabil
it
ies
a. 720,
000
b. 810,
000
c. 900,
000
d. 880,
000
5. Equi
ty
a. 7,
710,000
b. 8,
750,000
c. 6,
440,000
d. 5,
666,000

PROBLEM 2
STATEMENTOFCOMPREHENSI VEINCOME
The alphabeti
call i
stofit
ems thatmay be r
elevantinthe pr
epar
ati
on ofa st
atementof
comprehensiveincomeofDadi
angasCor
por
ati
onisprovi
dedbel
ow:

Actuar i
algai nsondef inedbenef i
tpensionplansrecognizedout si
deprof
itorl
oss 1,
333
Decr easei ni nvent oriesoff i
nishedgoodsandwor kinprogress 107,
900
Depr eciationandamor tizati
onexpense 17,
000
Empl oyeebenef i
tsexpense 43,
000
Exchangedi fferencesgai nont ransl
ati
ngf orei
gnoper at
ions 10,
667
Financecost s 18,
000
Gainsonpr oper t
yr eval uati
on 3,
367
Incomet axexpense 32,
000
Incomet axr elati
ngt ocomponent sofothercompr ehensiveincome 9,
334
Lossf ort heyearf rom di scont inuedoper at
ions 30,
500
Otherexpenses 5,
500
Otheri ncome 11,
300
Rawmat erialandconsumabl esused 92,
000
Revenue 355,
000
Shar eofot hercompr ehensi vei ncomeofassoci ates(unreali
zedlossonavail
abl
e-
for-salefinanci alasset s) 700
Shar eofpr ofitofassoci at
es 30,
100
Unreal i
zedgai nonavai labl
e- for-salef
inancialassets 26,
667
Unreal i
zedl ossonder ivat i
vesi nanef fecti
vecashf lowhedge 4,
000
Wor kper for medbyt heent i
tyandcapi tali
zed 15,
000

Basedontheaboveandt heresultoftheaudi
t,det
ermi
net
hef
oll
owi
ng:
1. Theprofi
tfortheyear
a. 65,500
b. 64,800
c. 96,000
d. 281,300
2. Theothercompr ehensiveincomefortheyear
a. 93,500
b. 32,700
c. 28,700
d. 28,000
3. Tot
alcompr ehensiveincomef ort
heyear
a. 93,500
b. 92,800
c. 94,200
d. 28,000

PROBLEM 3
STATEMENTOFFI NANCI ALPOSI TI
ONANDI NCOMESTATEMENT
DigosCompanywasor ganizedonJanuar y1,2020.Ont hesamedat e,25,
000,P100 parval ue,
ordi
nar
yshar eswer eissuedi nexchangeforpr opert
y,plantandequi pmentvaluedatP3, 000,
000
andcashofP1, 000, 000.Thef ol
lowingdatasummar i
zeactivit
iesfor2020:
a. Prof
itfortheyearendedDecember31, 2020wasP1, 000,000.
b. Rawmat erialsonhandonDecember31, wereequalt o25%ofr awmat eri
alspurchased.
c. Manufact uringcost swer edist
ri
but
edasf oll
ows:
Mat erialsused 50%
Directl abor 30%
Fact oryover head 20%( i
ncludesdepr eciat
ionofbuil
ding,P100,000)

2
 d. Goodsi nprocessr emaininginthef actoryonDecember31wer eequalt
o1/ 3ofthegoods
fi
nishedandtransf er
redtostock.
e. Fi
nishedgoodsr emaininginstockonDecember31wer eequalt
o25%oft hecostofgoods
sold.
f. Operati
ngexpenseswer e30%ofsal es.
g. Costofgoodssol dwas150%oft heoper ati
ngexpensest
otal
.
h. Ninetyper
centofsal eswer ecoll
ecteddur i
ng2020.Thebalancewasconsider
edcoll
ect
ibl
e.
i
. Sevent yfi
veper centoft herawmat er
ialspurchasedwerepaidf
or.Ther
ewer enoexpense
accrual
sorpr epayment sattheendoft heyear .

Basedontheaboveandt heresultoft
heaudit
,computefort
hefol
lowing:
1. Sal
esf ortheyearendedDecember31, 2020
a. 4,000,000 c. 2,000,
000
b. 5,000,000 d. 3,000,
000
2. Totalmanufacturi
ngcostf ort
heyearendedDecember31,2020?
a. 4,166,667 c. 666,667
b. 3,000,000 d. 2,850,
000
3. CashasofDecember31, 2020
a. 1,900,000 c. 650,000
b. 1,150,000 d. 500,000
4. Totalcurr
entassetsasofDecember31, 2020
a. 4,000,000
b. 2,600,000
c. 2,575,000
d. 3,861,111
5. Totall
iabi
lit
iesandequityasofDecember31,2020
a. 5,761,111
b. 5,750,000
c. 5,500,000
d. 5,475,000

PROBLEM 4
STATEMENTOFCASHFLOWS
I
nconnect
ionwithyourauditoft
heEXCELCorpor
ati
onf
ort
heyearendedDecember31,2020,t
he
f
oll
owingf
inanci
ali
nfor
mationwerepr
esent
ed.

EXCELCorpor
ation
Stat
ementofFi
nancialPosi
ti
on
December31,
2020and2019

Asset s 2020 2019

Cashandcashequi val
ents 45,
000 15,
000
Account sr eceivable 75,
000 37,
500
Inventory 30,
000 22,
500
Avai l
able-for-salesecuri
ti
es 285,
000 285,
000
Proper t
y,plantandequi pment(netofaccumul
ated
depr eci
ationofP75, 000andP90,000asofDecember
31, 2020and2019r especti
vel
y) 105,
000 247,
500
Intangibleasset s,net 15,
000 22,
500
Tot alassets 555,
000 630,
000

Liabi
li
ties
Account spayabl
e 75,
000 187,
500
Incomet axespayabl
e 30,
000 15,
000
Deferr
edt axpayabl
e 45,
000 30,
000
Totall
iabil
iti
es 150,
000 232,
500

Equity
Sharecapit
al 97,
500 97,
500
Retai
nedearnings 307,
500 300,
000
Totalequi
ty 405,
000 397,
500
Totalli
abi
li
ti
esandequi
ty 555,
000 630,
000

3
 EXCELCorporat
ion
IncomeStat
ement
Fort
heyearendedDecember31,
2020

Sales 450,000
Costofsal es (150,000)
Grosspr ofit 300,000
Admi ni
strativeandsell
ingexpenses (30,000)
I
nter estexpense (30,000)
Depr eciati
onofpr opert
y,pl
antandequi
pment (30,000)
Amor ti
zationofintangi
bleasset (
7,500)
Dividendi ncome 45,000
Profitbefor eincometaxes 247,500
I
ncomet axesexpense (60,000)
Profit 1,875,000

Addi
ti
onalinf ormation:
 Thecompanypayssal ariesandotherempl oyeeduesbef oret heendofeachmont h.All
admi nistr
ationandsel l
ingexpensesi ncurredwerepai dbeforeDecember31, 2020.
 Di videndi ncomecompr iseddivi
dendsr eceivedfr
om available-for-sal
esecur
it
ies.Thiswas
receivedbef oreDecember31, 2020.Dividendsreceivedwer eclassifi
edunderi
nvest i
ng
acti
vitiesinlastyear’sstatementofcashf l
ows.
 Equi pmentwi thacar r
yingamountofP112, 500andcostofP157, 500wassoldforP112, 500.
 Thecompanydecl aredandpai ddividendsofp180, 000toi t
sshar eholder
sduri
ng2020.

Basedontheaboveandt heresultofyouraudit,
det
erminethef
oll
owing:
1. Cashcoll
ectionsfrom customers
a. 450,000 c. 487,
500
b. 412,500 d. 367,
500
2. Cashpaidtosuppl i
ersandempl oyees
a. 270,000 c. 300,
000
b. 330,000 d. 450,
000
3. Cashpaidforincomet axes
a. 30,
000 c. 45,
000
b. 75,
000 d. 90,
000
4. Netcashprovidedbyoper ati
ngact i
vit
ies
a. 82,
500 c. 52,
500
b. 37,
500 d. 0
5. Netcashusedi ninvesti
ngandf inanci
ngacti
vit
ies
a. 22,
500 c. 52,
500
b. 67,
500 d. 0