ATENEO DE DAVAO UNIVERSITY ACC 6 FINANCIAL ACCOUNTING 3 QUIZ 1 ACCOUNTING FOR INCOME TAX AND EMPLOYEE BENEFITS NAME:

_______________________________________________ General Instructions: 1. Provide what is required. 2. Write all final answers in the space provided. 3. No need to show your solutions. 4. Minimize erasures. 5. Use only black or blue pen. 6. No shortcuts allowed. 7. Round off final answers to the nearest whole number. Round off PV factors to 4 decimal places. 8. NFI will automatically give you no credit.

Problem The unadjusted financial statements of Morning Chow, Inc.'s first year of operations are as follows: MORNING CHOW, INC. STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED DECEMBER 31, 2013 Notes Sales Cost of Sales Gross Profit Add: Other Income Total Profit Less: Operating Expenses Salaries and Wages Rent Expense Gas and Oil, and Other Utilities Taxes and Licenses Depreciation Doubtful Accounts Expense Miscellaneous Income before Tax 10,000,000 4,000,000 6,000,000 600,000 6,600,000 1,200,000 960,000 800,000 600,500 300,000 80,000 660,000 1,999,500

2 3 4 5 6 7

MORNING CHOW, INC. STATEMENT OF FINANCIAL POSITION AS OF THE PERIOD ENDED DECEMBER 31, 2013 Notes 8 9 10 11 12

Cash and Cash Equivalents Trade Receivables, net Fair Value through Profit or Loss Prepaid Assets Capital Assets, net Total Assets Trade Payables Share Capital Share Premium Retained Earnings Total Liabilities and Equity

2,799,300 800,000 3,000,000 160,000 2,700,000 9,459,300 200,000 5,000,000 2,259,800 1,999,500 9,459,300

NOTES TO THE FINANCIAL STATEMENTS 1 Other Income Unrealized Gain - Fair Value through Profit or Loss Gain on Sale of Capital Asset Interest Income on Cash in Bank (subject to 10% final tax) Total 2 Salaries and Wages Salaries and Wages to Employees Contribution made to Retirement Benefits Plan Total 3 Rent Expense Monthly rent payment is subject to 12% VAT. However, rent expense shown in the financial statements is exclusive of Output VAT. Also, 5% of rent is withheld every month subject to 1601-E remittance. 960,000 240,000 1,200,000 300,000 180,000 120,000 600,000

4 Taxes and Licenses Business Permit and other licenses Tax penalties and surcharges BIR registration 5 Depreciation Capital Assets have a useful life of 10 years with nominal residual value. 6 Doubtful Accounts Expense Doubtful Accounts Expense is 2% of credit sales which is 40% of total sales. 7 Miscellaneous Life Insurance Premium (entity is beneficiary) Kitchen Miscellaneous Supplies Office Supplies Total 8 Cash and Cash Equivalents Cash in Bank Cash on Hand Total 9 Trade and Other Receivables, net Accounts written off in 2013 amounted to 10 Fair Value through Profit or Loss Investments in Equity Securities classified as Fair Value through Profit or Loss. Purchased at 11 Prepaid Assets Two months advance for the leased building 12 Capital Assets, net The Company sold an equipment in 2013. Details of the sale are as follows: Selling Price Original Cost of Asset 160,000 2,700,000 32,000 2,659,335 139,965 2,799,300 495,000 99,000 66,000 660,000 400,000 200,000 500 600,500

1,800,000 2,160,000

Additional information: 1 Note that financial statements are prepared according to the accrual basis and Income subject to Income Tax is to be prepared according to the cash basis. 2 Income tax is yet to be computed. 3 Reflected in the Salaries and Wages is the amount contributed to the Defined Benefit Plan. However, an adjustment is still to be made to reflect the correct retirement benefit expense. On January 1, 2013, the memorandum records in relation to a defined benefit plan showed the following: Fair value of plan assets Projected benefit obligation Prepaid/accrued benefit cost During the current year, the following transactions are gathered: Current service cost Past service cost Actual return on plan assets Contribution to the plan Benefits paid Actuarial loss due to increase in PBO Discount rate 4 Deductible depreciation expense for tax purposes is 1,200,000 300,000 800,000 240,000 900,000 10% 270,000 5,000,000 7,000,000 (2,000,000)

Required 1 Refer to the Company's Defined Benefit Plan a. Compute for the interest cost. b. Compute for the expected return. c. Compute for the amortization of actuarial gain. d. Compute for the total benefit expense. e. What is the debit /(credit) to Employee benefit expense to reflect the adjustment. f. Compute for the Fair value of plan assets as of December 31, 2012. g. Compute for the Projected benefit obligation as of December 31, 2012. h. Compute for the actuarial gain/(loss) during the year. i. Compute for the unamortized actuarial gain as of December 31, 2012. j. Compute for the balance of the prepaid/accrued benefit cost. State whether it is debit or credit. k. What is the debit/(credit) to Net remeasurement loss - OCI to reflect the adjustment. l. What is the debit/(credit) to Prepaid/accrued benefit cost to reflect the adjustment. Compute for the deductible salaries expense for tax purposes. Compute for the deductible depreciation expense for tax purposes. Compute for the deductible taxes and licenses for tax purposes. Compute for the deductible rent expense for tax purposes. Compute for the deductible doubtful accounts expense for tax purposes. Compute for the deductible miscellaneous expense for tax purposes. Compute for the accounting income subject to tax. Compute for the deductible temporary differences. Compute for the taxable temporary differences. Compute for the taxable income. Compute for a. The current tax expense b. The deferred tax asset c. The deferred tax liability 13 Compute for the net income after tax. 2 3 4 5 6 7 8 9 10 11 12 ***END***

ATENEO DE DAVAO UNIVERSITY ACC 6 FINANCIAL ACCOUNTING 3 QUIZ 1 ACCOUNTING FOR INCOME TAX AND EMPLOYEE BENEFITS NAME: _______________________________________________ General Instructions: 1. Provide what is required. 2. Write all final answers in the space provided. 3. No need to show your solutions. 4. Minimize erasures. 5. Use only black or blue pen. 6. No shortcuts allowed. 7. Round off final answers to the nearest whole number. Round off PV factors to 4 decimal places. 8. NFI will automatically give you no credit.

Problem The unadjusted financial statements of Morning Chow, Inc.'s first year of operations are as follows: MORNING CHOW, INC. STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED DECEMBER 31, 2013 Notes Sales Cost of Sales Gross Profit Add: Other Income Total Profit Less: Operating Expenses Salaries and Wages Rent Expense Gas and Oil, and Other Utilities Taxes and Licenses Depreciation Doubtful Accounts Expense Miscellaneous Income before Tax 8,000,000 3,200,000 4,800,000 480,000 5,280,000 960,000 768,000 640,000 480,500 240,000 64,000 528,000 1,599,500

2 3 4 5 6 7

MORNING CHOW, INC. STATEMENT OF FINANCIAL POSITION AS OF THE PERIOD ENDED DECEMBER 31, 2013 Notes 8 9 10 11 12

Cash and Cash Equivalents Trade Receivables, net Fair Value through Profit or Loss Prepaid Assets Capital Assets, net Total Assets Trade Payables Share Capital Share Premium Retained Earnings Total Liabilities and Equity

2,239,440 640,000 2,400,000 128,000 2,160,000 7,567,440 160,000 4,000,000 1,807,940 1,599,500 7,567,440

NOTES TO THE FINANCIAL STATEMENTS 1 Other Income Unrealized Gain - Fair Value through Profit or Loss Gain on Sale of Capital Asset Interest Income on Cash in Bank (subject to 10% final tax) Total 2 Salaries and Wages Salaries and Wages to Employees Contribution made to Retirement Benefits Plan Total 3 Rent Expense Monthly rent payment is subject to 12% VAT. However, rent expense shown in the financial statements is exclusive of Output VAT. Also, 5% of rent is withheld every month subject to 1601-E remittance. 768,000 192,000 960,000 240,000 144,000 96,000 480,000

4 Taxes and Licenses Business Permit and other licenses Tax penalties and surcharges BIR registration 5 Depreciation Capital Assets have a useful life of 10 years with nominal residual value. 6 Doubtful Accounts Expense Doubtful Accounts Expense is 2% of credit sales which is 40% of total sales. 7 Miscellaneous Life Insurance Premium (entity is beneficiary) Kitchen Miscellaneous Supplies Office Supplies Total 8 Cash and Cash Equivalents Cash in Bank Cash on Hand Total 9 Trade and Other Receivables, net Accounts written off in 2013 amounted to 10 Fair Value through Profit or Loss Investments in Equity Securities classified as Fair Value through Profit or Loss. Purchased at 11 Prepaid Assets Two months advance for the leased building 12 Capital Assets, net The Company sold an equipment in 2013. Details of the sale are as follows: Selling Price Original Cost of Asset 128,000 2,160,000 25,600 2,127,468 111,972 2,239,440 396,000 79,200 52,800 528,000 320,000 160,000 500 480,500

1,440,000 1,728,000

Additional information: 1 Note that financial statements are prepared according to the accrual basis and Income subject to Income Tax is to be prepared according to the cash basis. 2 Income tax is yet to be computed. 3 Reflected in the Salaries and Wages is the amount contributed to the Defined Benefit Plan. However, an adjustment is still to be made to reflect the correct retirement benefit expense. On January 1, 2013, the memorandum records in relation to a defined benefit plan showed the following: Fair value of plan assets Projected benefit obligation Prepaid/accrued benefit cost During the current year, the following transactions are gathered: Current service cost Past service cost Actual return on plan assets Contribution to the plan Benefits paid Actuarial loss due to increase in PBO Discount rate 4 Deductible depreciation expense for tax purposes is 1,200,000 300,000 800,000 192,000 900,000 10% 216,000 5,000,000 7,000,000 (2,000,000)

Required 1 Refer to the Company's Defined Benefit Plan a. Compute for the interest cost. b. Compute for the expected return. c. Compute for the amortization of actuarial gain. d. Compute for the total benefit expense. e. What is the debit /(credit) to Employee benefit expense to reflect the adjustment. f. Compute for the Fair value of plan assets as of December 31, 2012. g. Compute for the Projected benefit obligation as of December 31, 2012. h. Compute for the actuarial gain/(loss) during the year. i. Compute for the unamortized actuarial gain as of December 31, 2012. j. Compute for the balance of the prepaid/accrued benefit cost. State whether it is debit or credit. k. What is the debit/(credit) to Net remeasurement loss - OCI to reflect the adjustment. l. What is the debit/(credit) to Prepaid/accrued benefit cost to reflect the adjustment. Compute for the deductible salaries expense for tax purposes. Compute for the deductible depreciation expense for tax purposes. Compute for the deductible taxes and licenses for tax purposes. Compute for the deductible rent expense for tax purposes. Compute for the deductible doubtful accounts expense for tax purposes. Compute for the deductible miscellaneous expense for tax purposes. Compute for the accounting income subject to tax. Compute for the deductible temporary differences. Compute for the taxable temporary differences. Compute for the taxable income. Compute for a. The current tax expense b. The deferred tax asset c. The deferred tax liability 13 Compute for the net income after tax. 2 3 4 5 6 7 8 9 10 11 12 ***END***

ATENEO DE DAVAO UNIVERSITY ACC 6 FINANCIAL ACCOUNTING 3 QUIZ 1 ACCOUNTING FOR INCOME TAX AND EMPLOYEE BENEFITS NAME: _______________________________________________ General Instructions: 1. Provide what is required. 2. Write all final answers in the space provided. 3. No need to show your solutions. 4. Minimize erasures. 5. Use only black or blue pen. 6. No shortcuts allowed. 7. Round off final answers to the nearest whole number. Round off PV factors to 4 decimal places. 8. NFI will automatically give you no credit.

Problem The unadjusted financial statements of Morning Chow, Inc.'s first year of operations are as follows: MORNING CHOW, INC. STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED DECEMBER 31, 2013 Notes Sales Cost of Sales Gross Profit Add: Other Income Total Profit Less: Operating Expenses Salaries and Wages Rent Expense Gas and Oil, and Other Utilities Taxes and Licenses Depreciation Doubtful Accounts Expense Miscellaneous Income before Tax 6,400,000 2,560,000 3,840,000 384,000 4,224,000 768,000 614,400 512,000 384,500 192,000 51,200 422,400 1,279,500

2 3 4 5 6 7

MORNING CHOW, INC. STATEMENT OF FINANCIAL POSITION AS OF THE PERIOD ENDED DECEMBER 31, 2013 Notes 8 9 10 11 12

Cash and Cash Equivalents Trade Receivables, net Fair Value through Profit or Loss Prepaid Assets Capital Assets, net Total Assets Trade Payables Share Capital Share Premium Retained Earnings Total Liabilities and Equity

1,791,552 512,000 1,920,000 102,400 1,728,000 6,053,952 128,000 3,200,000 1,446,452 1,279,500 6,053,952

NOTES TO THE FINANCIAL STATEMENTS 1 Other Income Unrealized Gain - Fair Value through Profit or Loss Gain on Sale of Capital Asset Interest Income on Cash in Bank (subject to 10% final tax) Total 2 Salaries and Wages Salaries and Wages to Employees Contribution made to Retirement Benefits Plan Total 3 Rent Expense Monthly rent payment is subject to 12% VAT. However, rent expense shown in the financial statements is exclusive of Output VAT. Also, 5% of rent is withheld every month subject to 1601-E remittance. 614,400 153,600 768,000 192,000 115,200 76,800 384,000

4 Taxes and Licenses Business Permit and other licenses Tax penalties and surcharges BIR registration 5 Depreciation Capital Assets have a useful life of 10 years with nominal residual value. 6 Doubtful Accounts Expense Doubtful Accounts Expense is 2% of credit sales which is 40% of total sales. 7 Miscellaneous Life Insurance Premium (entity is beneficiary) Kitchen Miscellaneous Supplies Office Supplies Total 8 Cash and Cash Equivalents Cash in Bank Cash on Hand Total 9 Trade and Other Receivables, net Accounts written off in 2013 amounted to 10 Fair Value through Profit or Loss Investments in Equity Securities classified as Fair Value through Profit or Loss. Purchased at 11 Prepaid Assets Two months advance for the leased building 12 Capital Assets, net The Company sold an equipment in 2013. Details of the sale are as follows: Selling Price Original Cost of Asset 102,400 1,728,000 20,480 1,701,974 89,578 1,791,552 316,800 63,360 42,240 422,400 256,000 128,000 500 384,500

1,152,000 1,382,400

Additional information: 1 Note that financial statements are prepared according to the accrual basis and Income subject to Income Tax is to be prepared according to the cash basis. 2 Income tax is yet to be computed. 3 Reflected in the Salaries and Wages is the amount contributed to the Defined Benefit Plan. However, an adjustment is still to be made to reflect the correct retirement benefit expense. On January 1, 2013, the memorandum records in relation to a defined benefit plan showed the following: Fair value of plan assets Projected benefit obligation Prepaid/accrued benefit cost During the current year, the following transactions are gathered: Current service cost Past service cost Actual return on plan assets Contribution to the plan Benefits paid Actuarial loss due to increase in PBO Discount rate 4 Deductible depreciation expense for tax purposes is 1,200,000 300,000 800,000 153,600 900,000 10% 172,800 5,000,000 7,000,000 (2,000,000)

Required 1 Refer to the Company's Defined Benefit Plan a. Compute for the interest cost. b. Compute for the expected return. c. Compute for the amortization of actuarial gain. d. Compute for the total benefit expense. e. What is the debit /(credit) to Employee benefit expense to reflect the adjustment. f. Compute for the Fair value of plan assets as of December 31, 2012. g. Compute for the Projected benefit obligation as of December 31, 2012. h. Compute for the actuarial gain/(loss) during the year. i. Compute for the unamortized actuarial gain as of December 31, 2012. j. Compute for the balance of the prepaid/accrued benefit cost. State whether it is debit or credit. k. What is the debit/(credit) to Net remeasurement loss - OCI to reflect the adjustment. l. What is the debit/(credit) to Prepaid/accrued benefit cost to reflect the adjustment. Compute for the deductible salaries expense for tax purposes. Compute for the deductible depreciation expense for tax purposes. Compute for the deductible taxes and licenses for tax purposes. Compute for the deductible rent expense for tax purposes. Compute for the deductible doubtful accounts expense for tax purposes. Compute for the deductible miscellaneous expense for tax purposes. Compute for the accounting income subject to tax. Compute for the deductible temporary differences. Compute for the taxable temporary differences. Compute for the taxable income. Compute for a. The current tax expense b. The deferred tax asset c. The deferred tax liability 13 Compute for the net income after tax. 2 3 4 5 6 7 8 9 10 11 12 ***END***

ATENEO DE DAVAO UNIVERSITY ACC 6 FINANCIAL ACCOUNTING 3 QUIZ 1 ACCOUNTING FOR INCOME TAX AND EMPLOYEE BENEFITS NAME: _______________________________________________ General Instructions: 1. Provide what is required. 2. Write all final answers in the space provided. 3. No need to show your solutions. 4. Minimize erasures. 5. Use only black or blue pen. 6. No shortcuts allowed. 7. Round off final answers to the nearest whole number. Round off PV factors to 4 decimal places. 8. NFI will automatically give you no credit.

Problem The unadjusted financial statements of Morning Chow, Inc.'s first year of operations are as follows: MORNING CHOW, INC. STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED DECEMBER 31, 2013 Notes Sales Cost of Sales Gross Profit Add: Other Income Total Profit Less: Operating Expenses Salaries and Wages Rent Expense Gas and Oil, and Other Utilities Taxes and Licenses Depreciation Doubtful Accounts Expense Miscellaneous Income before Tax 5,120,000 2,048,000 3,072,000 307,200 3,379,200 614,400 491,520 409,600 307,700 153,600 40,960 337,920 1,023,500

2 3 4 5 6 7

MORNING CHOW, INC. STATEMENT OF FINANCIAL POSITION AS OF THE PERIOD ENDED DECEMBER 31, 2013 Notes 8 9 10 11 12

Cash and Cash Equivalents Trade Receivables, net Fair Value through Profit or Loss Prepaid Assets Capital Assets, net Total Assets Trade Payables Share Capital Share Premium Retained Earnings Total Liabilities and Equity

1,433,242 409,600 1,536,000 81,920 1,382,400 4,843,162 102,400 2,560,000 1,157,262 1,023,500 4,843,162

NOTES TO THE FINANCIAL STATEMENTS 1 Other Income Unrealized Gain - Fair Value through Profit or Loss Gain on Sale of Capital Asset Interest Income on Cash in Bank (subject to 10% final tax) Total 2 Salaries and Wages Salaries and Wages to Employees Contribution made to Retirement Benefits Plan Total 3 Rent Expense Monthly rent payment is subject to 12% VAT. However, rent expense shown in the financial statements is exclusive of Output VAT. Also, 5% of rent is withheld every month subject to 1601-E remittance. 491,520 122,880 614,400 153,600 92,160 61,440 307,200

4 Taxes and Licenses Business Permit and other licenses Tax penalties and surcharges BIR registration 5 Depreciation Capital Assets have a useful life of 10 years with nominal residual value. 6 Doubtful Accounts Expense Doubtful Accounts Expense is 2% of credit sales which is 40% of total sales. 7 Miscellaneous Life Insurance Premium (entity is beneficiary) Kitchen Miscellaneous Supplies Office Supplies Total 8 Cash and Cash Equivalents Cash in Bank Cash on Hand Total 9 Trade and Other Receivables, net Accounts written off in 2013 amounted to 10 Fair Value through Profit or Loss Investments in Equity Securities classified as Fair Value through Profit or Loss. Purchased at 11 Prepaid Assets Two months advance for the leased building 12 Capital Assets, net The Company sold an equipment in 2013. Details of the sale are as follows: Selling Price Original Cost of Asset 81,920 1,382,400 16,384 1,361,580 71,662 1,433,242 253,440 50,688 33,792 337,920 204,800 102,400 500 307,700

921,600 1,105,920

Additional information: 1 Note that financial statements are prepared according to the accrual basis and Income subject to Income Tax is to be prepared according to the cash basis. 2 Income tax is yet to be computed. 3 Reflected in the Salaries and Wages is the amount contributed to the Defined Benefit Plan. However, an adjustment is still to be made to reflect the correct retirement benefit expense. On January 1, 2013, the memorandum records in relation to a defined benefit plan showed the following: Fair value of plan assets Projected benefit obligation Prepaid/accrued benefit cost During the current year, the following transactions are gathered: Current service cost Past service cost Actual return on plan assets Contribution to the plan Benefits paid Actuarial loss due to increase in PBO Discount rate 4 Deductible depreciation expense for tax purposes is 1,200,000 300,000 800,000 122,880 900,000 10% 138,240 5,000,000 7,000,000 (2,000,000)

Required 1 Refer to the Company's Defined Benefit Plan a. Compute for the interest cost. b. Compute for the expected return. c. Compute for the amortization of actuarial gain. d. Compute for the total benefit expense. e. What is the debit /(credit) to Employee benefit expense to reflect the adjustment. f. Compute for the Fair value of plan assets as of December 31, 2012. g. Compute for the Projected benefit obligation as of December 31, 2012. h. Compute for the actuarial gain/(loss) during the year. i. Compute for the unamortized actuarial gain as of December 31, 2012. j. Compute for the balance of the prepaid/accrued benefit cost. State whether it is debit or credit. k. What is the debit/(credit) to Net remeasurement loss - OCI to reflect the adjustment. l. What is the debit/(credit) to Prepaid/accrued benefit cost to reflect the adjustment. Compute for the deductible salaries expense for tax purposes. Compute for the deductible depreciation expense for tax purposes. Compute for the deductible taxes and licenses for tax purposes. Compute for the deductible rent expense for tax purposes. Compute for the deductible doubtful accounts expense for tax purposes. Compute for the deductible miscellaneous expense for tax purposes. Compute for the accounting income subject to tax. Compute for the deductible temporary differences. Compute for the taxable temporary differences. Compute for the taxable income. Compute for a. The current tax expense b. The deferred tax asset c. The deferred tax liability 13 Compute for the net income after tax. 2 3 4 5 6 7 8 9 10 11 12 ***END***

ATENEO DE DAVAO UNIVERSITY ACC 6 FINANCIAL ACCOUNTING 3 QUIZ 1 ACCOUNTING FOR INCOME TAX AND EMPLOYEE BENEFITS NAME: _______________________________________________ General Instructions: 1. Provide what is required. 2. Write all final answers in the space provided. 3. No need to show your solutions. 4. Minimize erasures. 5. Use only black or blue pen. 6. No shortcuts allowed. 7. Round off final answers to the nearest whole number. Round off PV factors to 4 decimal places. 8. NFI will automatically give you no credit.

Problem The unadjusted financial statements of Morning Chow, Inc.'s first year of operations are as follows: MORNING CHOW, INC. STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED DECEMBER 31, 2013 Notes Sales Cost of Sales Gross Profit Add: Other Income Total Profit Less: Operating Expenses Salaries and Wages Rent Expense Gas and Oil, and Other Utilities Taxes and Licenses Depreciation Doubtful Accounts Expense Miscellaneous Income before Tax 10,000,000 4,000,000 6,000,000 600,000 6,600,000 1,200,000 960,000 800,000 600,500 300,000 80,000 660,000 1,999,500

2 3 4 5 6 7

MORNING CHOW, INC. STATEMENT OF FINANCIAL POSITION AS OF THE PERIOD ENDED DECEMBER 31, 2013 Notes 8 9 10 11 12

Cash and Cash Equivalents Trade Receivables, net Fair Value through Profit or Loss Prepaid Assets Capital Assets, net Total Assets Trade Payables Share Capital Share Premium Retained Earnings Total Liabilities and Equity

2,799,300 800,000 3,000,000 160,000 2,700,000 9,459,300 200,000 5,000,000 2,259,800 1,999,500 9,459,300

NOTES TO THE FINANCIAL STATEMENTS 1 Other Income Unrealized Gain - Fair Value through Profit or Loss Gain on Sale of Capital Asset Interest Income on Cash in Bank (subject to 10% final tax) Total 2 Salaries and Wages Salaries and Wages to Employees Contribution made to Retirement Benefits Plan Total 3 Rent Expense Monthly rent payment is subject to 12% VAT. However, rent expense shown in the financial statements is exclusive of Output VAT. Also, 5% of rent is withheld every month subject to 1601-E remittance. 960,000 240,000 1,200,000 300,000 180,000 120,000 600,000

4 Taxes and Licenses Business Permit and other licenses Tax penalties and surcharges BIR registration 5 Depreciation Capital Assets have a useful life of 10 years with nominal residual value. 6 Doubtful Accounts Expense Doubtful Accounts Expense is 2% of credit sales which is 40% of total sales. 7 Miscellaneous Life Insurance Premium (entity is beneficiary) Kitchen Miscellaneous Supplies Office Supplies Total 8 Cash and Cash Equivalents Cash in Bank Cash on Hand Total 9 Trade and Other Receivables, net Accounts written off in 2013 amounted to 10 Fair Value through Profit or Loss Investments in Equity Securities classified as Fair Value through Profit or Loss. Purchased at 11 Prepaid Assets Two months advance for the leased building 12 Capital Assets, net The Company sold an equipment in 2013. Details of the sale are as follows: Selling Price Original Cost of Asset 160,000 2,700,000 32,000 2,659,335 139,965 2,799,300 495,000 99,000 66,000 660,000 400,000 200,000 500 600,500

1,800,000 2,160,000

Additional information: 1 Note that financial statements are prepared according to the accrual basis and Income subject to Income Tax is to be prepared according to the cash basis. 2 Income tax is yet to be computed. 3 Reflected in the Salaries and Wages is the amount contributed to the Defined Benefit Plan. However, an adjustment is still to be made to reflect the correct retirement benefit expense. On January 1, 2013, the memorandum records in relation to a defined benefit plan showed the following: Fair value of plan assets Projected benefit obligation Prepaid/accrued benefit cost During the current year, the following transactions are gathered: Current service cost Past service cost Actual return on plan assets Contribution to the plan Benefits paid Actuarial loss due to increase in PBO Discount rate 4 Deductible depreciation expense for tax purposes is 1,200,000 300,000 800,000 240,000 900,000 10% 270,000 5,000,000 7,000,000 (2,000,000)

Required 1 Refer to the Company's Defined Benefit Plan a. Compute for the interest cost. b. Compute for the expected return. c. Compute for the amortization of actuarial gain. d. Compute for the total benefit expense. e. What is the debit /(credit) to Employee benefit expense to reflect the adjustment. f. Compute for the Fair value of plan assets as of December 31, 2012. g. Compute for the Projected benefit obligation as of December 31, 2012. h. Compute for the actuarial gain/(loss) during the year. i. Compute for the unamortized actuarial gain as of December 31, 2012. j. Compute for the balance of the prepaid/accrued benefit cost. State whether it is debit or credit. k. What is the debit/(credit) to Net remeasurement loss - OCI to reflect the adjustment. l. What is the debit/(credit) to Prepaid/accrued benefit cost to reflect the adjustment. Compute for the deductible salaries expense for tax purposes. Compute for the deductible depreciation expense for tax purposes. Compute for the deductible taxes and licenses for tax purposes. Compute for the deductible rent expense for tax purposes. Compute for the deductible doubtful accounts expense for tax purposes. Compute for the deductible miscellaneous expense for tax purposes. Compute for the accounting income subject to tax. Compute for the deductible temporary differences. Compute for the taxable temporary differences. Compute for the taxable income. Compute for a. The current tax expense b. The deferred tax asset c. The deferred tax liability 13 Compute for the net income after tax. 2 3 4 5 6 7 8 9 10 11 12 ***END***

dr

dr

700,000 500,000 2,300,000 1,460,000 6,040,000 10,100,000 (600,000) 300,000 (4,060,000) (600,000) (4,060,000) 1,200,000 270,000 400,500 1,235,200 32,000 165,000 519,300 1,738,000 1,040,000 1,217,300 377,190 521,400 377,190 371,710

ATENEO DE DAVAO UNIVERSITY ACC 6 FINANCIAL ACCOUNTING 3 QUIZ 1 ACCOUNTING FOR INCOME TAX AND EMPLOYEE BENEFITS NAME: _______________________________________________ General Instructions: 1. Provide what is required. 2. Write all final answers in the space provided. 3. No need to show your solutions. 4. Minimize erasures. 5. Use only black or blue pen. 6. No shortcuts allowed. 7. Round off final answers to the nearest whole number. Round off PV factors to 4 decimal places. 8. NFI will automatically give you no credit.

Problem The unadjusted financial statements of Morning Chow, Inc.'s first year of operations are as follows: MORNING CHOW, INC. STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED DECEMBER 31, 2013 Notes Sales Cost of Sales Gross Profit Add: Other Income Total Profit Less: Operating Expenses Salaries and Wages Rent Expense Gas and Oil, and Other Utilities Taxes and Licenses Depreciation Doubtful Accounts Expense Miscellaneous Income before Tax 8,000,000 3,200,000 4,800,000 480,000 5,280,000 960,000 768,000 640,000 480,500 240,000 64,000 528,000 1,599,500

2 3 4 5 6 7

MORNING CHOW, INC. STATEMENT OF FINANCIAL POSITION AS OF THE PERIOD ENDED DECEMBER 31, 2013 Notes 8 9 10 11 12

Cash and Cash Equivalents Trade Receivables, net Fair Value through Profit or Loss Prepaid Assets Capital Assets, net Total Assets Trade Payables Share Capital Share Premium Retained Earnings Total Liabilities and Equity

2,239,440 640,000 2,400,000 128,000 2,160,000 7,567,440 160,000 4,000,000 1,807,940 1,599,500 7,567,440

NOTES TO THE FINANCIAL STATEMENTS 1 Other Income Unrealized Gain - Fair Value through Profit or Loss Gain on Sale of Capital Asset Interest Income on Cash in Bank (subject to 10% final tax) Total 2 Salaries and Wages Salaries and Wages to Employees Contribution made to Retirement Benefits Plan Total 3 Rent Expense Monthly rent payment is subject to 12% VAT. However, rent expense shown in the financial statements is exclusive of Output VAT. Also, 5% of rent is withheld every month subject to 1601-E remittance. 768,000 192,000 960,000 240,000 144,000 96,000 480,000

4 Taxes and Licenses Business Permit and other licenses Tax penalties and surcharges BIR registration 5 Depreciation Capital Assets have a useful life of 10 years with nominal residual value. 6 Doubtful Accounts Expense Doubtful Accounts Expense is 2% of credit sales which is 40% of total sales. 7 Miscellaneous Life Insurance Premium (entity is beneficiary) Kitchen Miscellaneous Supplies Office Supplies Total 8 Cash and Cash Equivalents Cash in Bank Cash on Hand Total 9 Trade and Other Receivables, net Accounts written off in 2013 amounted to 10 Fair Value through Profit or Loss Investments in Equity Securities classified as Fair Value through Profit or Loss. Purchased at 11 Prepaid Assets Two months advance for the leased building 12 Capital Assets, net The Company sold an equipment in 2013. Details of the sale are as follows: Selling Price Original Cost of Asset 128,000 2,160,000 25,600 2,127,468 111,972 2,239,440 396,000 79,200 52,800 528,000 320,000 160,000 500 480,500

1,440,000 1,728,000

Additional information: 1 Note that financial statements are prepared according to the accrual basis and Income subject to Income Tax is to be prepared according to the cash basis. 2 Income tax is yet to be computed. 3 Reflected in the Salaries and Wages is the amount contributed to the Defined Benefit Plan. However, an adjustment is still to be made to reflect the correct retirement benefit expense. On January 1, 2013, the memorandum records in relation to a defined benefit plan showed the following: Fair value of plan assets Projected benefit obligation Prepaid/accrued benefit cost During the current year, the following transactions are gathered: Current service cost Past service cost Actual return on plan assets Contribution to the plan Benefits paid Actuarial loss due to increase in PBO Discount rate 4 Deductible depreciation expense for tax purposes is 1,200,000 300,000 800,000 192,000 900,000 10% 216,000 5,000,000 7,000,000 (2,000,000)

Required 1 Refer to the Company's Defined Benefit Plan a. Compute for the interest cost. b. Compute for the expected return. c. Compute for the amortization of actuarial gain. d. Compute for the total benefit expense. e. What is the debit /(credit) to Employee benefit expense to reflect the adjustment. f. Compute for the Fair value of plan assets as of December 31, 2012. g. Compute for the Projected benefit obligation as of December 31, 2012. h. Compute for the actuarial gain/(loss) during the year. i. Compute for the unamortized actuarial gain as of December 31, 2012. j. Compute for the balance of the prepaid/accrued benefit cost. State whether it is debit or credit. k. What is the debit/(credit) to Net remeasurement loss - OCI to reflect the adjustment. l. What is the debit/(credit) to Prepaid/accrued benefit cost to reflect the adjustment. Compute for the deductible salaries expense for tax purposes. Compute for the deductible depreciation expense for tax purposes. Compute for the deductible taxes and licenses for tax purposes. Compute for the deductible rent expense for tax purposes. Compute for the deductible doubtful accounts expense for tax purposes. Compute for the deductible miscellaneous expense for tax purposes. Compute for the accounting income subject to tax. Compute for the deductible temporary differences. Compute for the taxable temporary differences. Compute for the taxable income. Compute for a. The current tax expense b. The deferred tax asset c. The deferred tax liability 13 Compute for the net income after tax. 2 3 4 5 6 7 8 9 10 11 12 ***END***

700,000 500,000 2,300,000 1,508,000 5,992,000 10,100,000 (600,000) 300,000 (4,108,000) (600,000) (4,108,000) 960,000 216,000 320,500 988,160 25,600 132,000 75,340 1,730,400 832,000 973,740 301,722 519,120 249,600 59,298

ATENEO DE DAVAO UNIVERSITY ACC 6 FINANCIAL ACCOUNTING 3 QUIZ 1 ACCOUNTING FOR INCOME TAX AND EMPLOYEE BENEFITS NAME: _______________________________________________ General Instructions: 1. Provide what is required. 2. Write all final answers in the space provided. 3. No need to show your solutions. 4. Minimize erasures. 5. Use only black or blue pen. 6. No shortcuts allowed. 7. Round off final answers to the nearest whole number. Round off PV factors to 4 decimal places. 8. NFI will automatically give you no credit.

Problem The unadjusted financial statements of Morning Chow, Inc.'s first year of operations are as follows: MORNING CHOW, INC. STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED DECEMBER 31, 2013 Notes Sales Cost of Sales Gross Profit Add: Other Income Total Profit Less: Operating Expenses Salaries and Wages Rent Expense Gas and Oil, and Other Utilities Taxes and Licenses Depreciation Doubtful Accounts Expense Miscellaneous Income before Tax 6,400,000 2,560,000 3,840,000 384,000 4,224,000 768,000 614,400 512,000 384,500 192,000 51,200 422,400 1,279,500

2 3 4 5 6 7

MORNING CHOW, INC. STATEMENT OF FINANCIAL POSITION AS OF THE PERIOD ENDED DECEMBER 31, 2013 Notes 8 9 10 11 12

Cash and Cash Equivalents Trade Receivables, net Fair Value through Profit or Loss Prepaid Assets Capital Assets, net Total Assets Trade Payables Share Capital Share Premium Retained Earnings Total Liabilities and Equity

1,791,552 512,000 1,920,000 102,400 1,728,000 6,053,952 128,000 3,200,000 1,446,452 1,279,500 6,053,952

NOTES TO THE FINANCIAL STATEMENTS 1 Other Income Unrealized Gain - Fair Value through Profit or Loss Gain on Sale of Capital Asset Interest Income on Cash in Bank (subject to 10% final tax) Total 2 Salaries and Wages Salaries and Wages to Employees Contribution made to Retirement Benefits Plan Total 3 Rent Expense Monthly rent payment is subject to 12% VAT. However, rent expense shown in the financial statements is exclusive of Output VAT. Also, 5% of rent is withheld every month subject to 1601-E remittance. 614,400 153,600 768,000 192,000 115,200 76,800 384,000

4 Taxes and Licenses Business Permit and other licenses Tax penalties and surcharges BIR registration 5 Depreciation Capital Assets have a useful life of 10 years with nominal residual value. 6 Doubtful Accounts Expense Doubtful Accounts Expense is 2% of credit sales which is 40% of total sales. 7 Miscellaneous Life Insurance Premium (entity is beneficiary) Kitchen Miscellaneous Supplies Office Supplies Total 8 Cash and Cash Equivalents Cash in Bank Cash on Hand Total 9 Trade and Other Receivables, net Accounts written off in 2013 amounted to 10 Fair Value through Profit or Loss Investments in Equity Securities classified as Fair Value through Profit or Loss. Purchased at 11 Prepaid Assets Two months advance for the leased building 12 Capital Assets, net The Company sold an equipment in 2013. Details of the sale are as follows: Selling Price Original Cost of Asset 102,400 1,728,000 20,480 1,701,974 89,578 1,791,552 316,800 63,360 42,240 422,400 256,000 128,000 500 384,500

1,152,000 1,382,400

Additional information: 1 Note that financial statements are prepared according to the accrual basis and Income subject to Income Tax is to be prepared according to the cash basis. 2 Income tax is yet to be computed. 3 Reflected in the Salaries and Wages is the amount contributed to the Defined Benefit Plan. However, an adjustment is still to be made to reflect the correct retirement benefit expense. On January 1, 2013, the memorandum records in relation to a defined benefit plan showed the following: Fair value of plan assets Projected benefit obligation Prepaid/accrued benefit cost During the current year, the following transactions are gathered: Current service cost Past service cost Actual return on plan assets Contribution to the plan Benefits paid Actuarial loss due to increase in PBO Discount rate 4 Deductible depreciation expense for tax purposes is 1,200,000 300,000 800,000 153,600 900,000 10% 172,800 5,000,000 7,000,000 (2,000,000)

Required 1 Refer to the Company's Defined Benefit Plan a. Compute for the interest cost. b. Compute for the expected return. c. Compute for the amortization of actuarial gain. d. Compute for the total benefit expense. e. What is the debit /(credit) to Employee benefit expense to reflect the adjustment. f. Compute for the Fair value of plan assets as of December 31, 2012. g. Compute for the Projected benefit obligation as of December 31, 2012. h. Compute for the actuarial gain/(loss) during the year. i. Compute for the unamortized actuarial gain as of December 31, 2012. j. Compute for the balance of the prepaid/accrued benefit cost. State whether it is debit or credit. k. What is the debit/(credit) to Net remeasurement loss - OCI to reflect the adjustment. l. What is the debit/(credit) to Prepaid/accrued benefit cost to reflect the adjustment. Compute for the deductible salaries expense for tax purposes. Compute for the deductible depreciation expense for tax purposes. Compute for the deductible taxes and licenses for tax purposes. Compute for the deductible rent expense for tax purposes. Compute for the deductible doubtful accounts expense for tax purposes. Compute for the deductible miscellaneous expense for tax purposes. Compute for the accounting income subject to tax. Compute for the deductible temporary differences. Compute for the taxable temporary differences. Compute for the taxable income. Compute for a. The current tax expense b. The deferred tax asset c. The deferred tax liability 13 Compute for the net income after tax. 2 3 4 5 6 7 8 9 10 11 12 ***END***

700,000 500,000 2,300,000 1,546,400 5,953,600 10,100,000 (600,000) 300,000 (4,146,400) (600,000) (4,146,400) 768,000 172,800 256,500 790,528 20,480 105,600 (279,828) 1,724,320 665,600 778,892 241,348 76,268 199,680 (190,632)

ATENEO DE DAVAO UNIVERSITY ACC 6 FINANCIAL ACCOUNTING 3 QUIZ 1 ACCOUNTING FOR INCOME TAX AND EMPLOYEE BENEFITS NAME: _______________________________________________ General Instructions: 1. Provide what is required. 2. Write all final answers in the space provided. 3. No need to show your solutions. 4. Minimize erasures. 5. Use only black or blue pen. 6. No shortcuts allowed. 7. Round off final answers to the nearest whole number. Round off PV factors to 4 decimal places. 8. NFI will automatically give you no credit.

Problem The unadjusted financial statements of Morning Chow, Inc.'s first year of operations are as follows: MORNING CHOW, INC. STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED DECEMBER 31, 2013 Notes Sales Cost of Sales Gross Profit Add: Other Income Total Profit Less: Operating Expenses Salaries and Wages Rent Expense Gas and Oil, and Other Utilities Taxes and Licenses Depreciation Doubtful Accounts Expense Miscellaneous Income before Tax 5,120,000 2,048,000 3,072,000 307,200 3,379,200 614,400 491,520 409,600 307,700 153,600 40,960 337,920 1,023,500

2 3 4 5 6 7

MORNING CHOW, INC. STATEMENT OF FINANCIAL POSITION AS OF THE PERIOD ENDED DECEMBER 31, 2013 Notes 8 9 10 11 12

Cash and Cash Equivalents Trade Receivables, net Fair Value through Profit or Loss Prepaid Assets Capital Assets, net Total Assets Trade Payables Share Capital Share Premium Retained Earnings Total Liabilities and Equity

1,433,242 409,600 1,536,000 81,920 1,382,400 4,843,162 102,400 2,560,000 1,157,262 1,023,500 4,843,162

NOTES TO THE FINANCIAL STATEMENTS 1 Other Income Unrealized Gain - Fair Value through Profit or Loss Gain on Sale of Capital Asset Interest Income on Cash in Bank (subject to 10% final tax) Total 2 Salaries and Wages Salaries and Wages to Employees Contribution made to Retirement Benefits Plan Total 3 Rent Expense Monthly rent payment is subject to 12% VAT. However, rent expense shown in the financial statements is exclusive of Output VAT. Also, 5% of rent is withheld every month subject to 1601-E remittance. 491,520 122,880 614,400 153,600 92,160 61,440 307,200

4 Taxes and Licenses Business Permit and other licenses Tax penalties and surcharges BIR registration 5 Depreciation Capital Assets have a useful life of 10 years with nominal residual value. 6 Doubtful Accounts Expense Doubtful Accounts Expense is 2% of credit sales which is 40% of total sales. 7 Miscellaneous Life Insurance Premium (entity is beneficiary) Kitchen Miscellaneous Supplies Office Supplies Total 8 Cash and Cash Equivalents Cash in Bank Cash on Hand Total 9 Trade and Other Receivables, net Accounts written off in 2013 amounted to 10 Fair Value through Profit or Loss Investments in Equity Securities classified as Fair Value through Profit or Loss. Purchased at 11 Prepaid Assets Two months advance for the leased building 12 Capital Assets, net The Company sold an equipment in 2013. Details of the sale are as follows: Selling Price Original Cost of Asset 81,920 1,382,400 16,384 1,361,580 71,662 1,433,242 253,440 50,688 33,792 337,920 204,800 102,400 500 307,700

921,600 1,105,920

Additional information: 1 Note that financial statements are prepared according to the accrual basis and Income subject to Income Tax is to be prepared according to the cash basis. 2 Income tax is yet to be computed. 3 Reflected in the Salaries and Wages is the amount contributed to the Defined Benefit Plan. However, an adjustment is still to be made to reflect the correct retirement benefit expense. On January 1, 2013, the memorandum records in relation to a defined benefit plan showed the following: Fair value of plan assets Projected benefit obligation Prepaid/accrued benefit cost During the current year, the following transactions are gathered: Current service cost Past service cost Actual return on plan assets Contribution to the plan Benefits paid Actuarial loss due to increase in PBO Discount rate 4 Deductible depreciation expense for tax purposes is 1,200,000 300,000 800,000 122,880 900,000 10% 138,240 5,000,000 7,000,000 (2,000,000)

Required 1 Refer to the Company's Defined Benefit Plan a. Compute for the interest cost. b. Compute for the expected return. c. Compute for the amortization of actuarial gain. d. Compute for the total benefit expense. e. What is the debit /(credit) to Employee benefit expense to reflect the adjustment. f. Compute for the Fair value of plan assets as of December 31, 2012. g. Compute for the Projected benefit obligation as of December 31, 2012. h. Compute for the actuarial gain/(loss) during the year. i. Compute for the unamortized actuarial gain as of December 31, 2012. j. Compute for the balance of the prepaid/accrued benefit cost. State whether it is debit or credit. k. What is the debit/(credit) to Net remeasurement loss - OCI to reflect the adjustment. l. What is the debit/(credit) to Prepaid/accrued benefit cost to reflect the adjustment. Compute for the deductible salaries expense for tax purposes. Compute for the deductible depreciation expense for tax purposes. Compute for the deductible taxes and licenses for tax purposes. Compute for the deductible rent expense for tax purposes. Compute for the deductible doubtful accounts expense for tax purposes. Compute for the deductible miscellaneous expense for tax purposes. Compute for the accounting income subject to tax. Compute for the deductible temporary differences. Compute for the taxable temporary differences. Compute for the taxable income. Compute for a. The current tax expense b. The deferred tax asset c. The deferred tax liability 13 Compute for the net income after tax. 2 3 4 5 6 7 8 9 10 11 12 ***END***

700,000 500,000 2,300,000 1,577,120 5,922,880 10,100,000 (600,000) 300,000 (4,177,120) (600,000) (4,177,120) 614,400 138,240 205,300 632,422 16,384 84,480 (563,962) 1,719,456 532,480 623,014 193,048 163,045 159,744 (390,575)

Set A Solutions Employee Benefits Cost Current Service Cost Past Service Cost Interest Cost Expected Return Total Expense Remeasurement gain - PA Actuarial loss - PBO Net Remeasurement loss Total Benefit Cost Adjusting entry: Salaries and Wages Remeasurement loss - OCI Share Premium Prepaid/Accrued Benefit Cost

1,200,000 300,000 700,000 (500,000) 1,700,000 300,000 (900,000) (600,000) 2,300,000

1,460,000 600,000 2,000,000 4,060,000

Working Paper Sales Cost of Sales Gross Profit Add: Other Income Total Profit Less: Operating Expenses Salaries and Wages Rent Expense Gas and Oil, and Other Utilities Taxes and Licenses Depreciation Doubtful Accounts Expense Miscellaneous Income before Tax Tax expense Net income Cash and Cash Equivalents Trade Receivables, net Fair Value through Profit or Loss

Unadj. Bal. 10,000,000 4,000,000 6,000,000 600,000 6,600,000 1,200,000 960,000 800,000 600,500 300,000 80,000 660,000 1,999,500 1,999,500 2,799,300 800,000 3,000,000

Adjustments 1,460,000 115,200 (115,200) (1,460,000) 167,790 (1,627,790) -

Prepaid Assets Deferred Tax Asset Capital Assets, net Total Assets Trade Payables Tax Payable Deferred Tax Liability Prepaid/Accrued Benefit Cost Remeasurement gain/(loss) Share Capital Share Premium Retained Earnings/(Deficit) Total Liabilities and Equity

160,000 2,700,000 9,459,300 200,000 5,000,000 2,259,800 1,999,500 9,459,300

521,400 521,400 377,190 312,000 4,060,000 (600,000) (2,000,000) (1,627,790) 521,400

Final Bal. 10,000,000 4,000,000 6,000,000 600,000 6,600,000 2,660,000 1,075,200 800,000 485,300 300,000 80,000 660,000 539,500 167,790 371,710 2,799,300 800,000 3,000,000

Tax Basis 9,120,000 3,800,000 5,320,000 5,320,000 1,200,000 1,235,200 800,000 400,500 270,000 32,000 165,000 1,217,300 377,190 840,110

Accounting Income Permanent Differences: UG-FVTPL Gain on Sale Interest Income - 10% Tax penalties Life insurance Accounting Income subject to tax Temporary Differences: Sales Purchases Employee Benefits Rent Expense Depreciation Doubtful Accounts Expense Taxable Income Adjusting Entry: Tax expense Deferred tax asset

160,000 521,400 2,700,000 9,980,700 200,000 377,190 312,000 4,060,000 (600,000) 5,000,000 259,800 371,710 9,980,700

Tax payable Deferred tax liability

539,500 (300,000) (180,000) (120,000) 84,800 495,000 519,300 (880,000) 200,000 1,460,000 (160,000) 30,000 48,000 1,217,300

161,850 (90,000) (54,000) (24,000) 25,440 148,500 167,790 (264,000) 60,000 438,000 (48,000) 9,000 14,400 377,190

167,790 521,400

377,190 312,000

Set B Solutions Employee Benefits Cost Current Service Cost Past Service Cost Interest Cost Expected Return Total Expense Remeasurement gain - PA Actuarial loss - PBO Net Remeasurement loss Total Benefit Cost Adjusting entry: Salaries and Wages Remeasurement loss - OCI Share Premium Prepaid/Accrued Benefit Cost

1,200,000 300,000 700,000 (500,000) 1,700,000 300,000 (900,000) (600,000) 2,300,000

1,508,000 600,000 2,000,000 4,108,000

Working Paper Sales Cost of Sales Gross Profit Add: Other Income Total Profit Less: Operating Expenses Salaries and Wages Rent Expense Gas and Oil, and Other Utilities Taxes and Licenses Depreciation Doubtful Accounts Expense Miscellaneous Income before Tax Tax expense Net income Cash and Cash Equivalents Trade Receivables, net Fair Value through Profit or Loss

Unadj. Bal. 8,000,000 3,200,000 4,800,000 480,000 5,280,000 960,000 768,000 640,000 480,500 240,000 64,000 528,000 1,599,500 1,599,500 2,239,440 640,000 2,400,000

Adjustments 1,508,000 92,160 (92,160) (1,508,000) 32,202 (1,540,202) -

Prepaid Assets Deferred Tax Asset Capital Assets, net Total Assets Trade Payables Tax Payable Deferred Tax Liability Prepaid/Accrued Benefit Cost Remeasurement gain/(loss) Share Capital Share Premium Retained Earnings/(Deficit) Total Liabilities and Equity

128,000 2,160,000 7,567,440 160,000 4,000,000 1,807,940 1,599,500 7,567,440

519,120 519,120 301,722 249,600 4,108,000 (600,000) (2,000,000) (1,540,202) 519,120

Final Bal. 8,000,000 3,200,000 4,800,000 480,000 5,280,000 2,468,000 860,160 640,000 388,340 240,000 64,000 528,000 91,500 32,202 59,298 2,239,440 640,000 2,400,000

Tax Basis 7,296,000 3,040,000 4,256,000 4,256,000 960,000 988,160 640,000 320,500 216,000 25,600 132,000 973,740 301,722 672,018

Accounting Income Permanent Differences: UG-FVTPL Gain on Sale Interest Income - 10% Tax penalties Life insurance Accounting Income subject to tax Temporary Differences: Sales Purchases Employee Benefits Rent Expense Depreciation Doubtful Accounts Expense Taxable Income Adjusting Entry: Tax expense Deferred tax asset

128,000 519,120 2,160,000 8,086,560 160,000 301,722 249,600 4,108,000 (600,000) 4,000,000 (192,060) 59,298 8,086,560

Tax payable Deferred tax liability

91,500 (240,000) (144,000) (96,000) 67,840 396,000 75,340 (704,000) 160,000 1,508,000 (128,000) 24,000 38,400 973,740

27,450 (72,000) (43,200) (19,200) 20,352 118,800 32,202 (211,200) 48,000 452,400 (38,400) 7,200 11,520 301,722

32,202 519,120

301,722 249,600

Set C Solutions Employee Benefits Cost Current Service Cost Past Service Cost Interest Cost Expected Return Total Expense Remeasurement gain - PA Actuarial loss - PBO Net Remeasurement loss Total Benefit Cost Adjusting entry: Salaries and Wages Remeasurement loss - OCI Share Premium Prepaid/Accrued Benefit Cost

1,200,000 300,000 700,000 (500,000) 1,700,000 300,000 (900,000) (600,000) 2,300,000

1,546,400 600,000 2,000,000 4,146,400

Working Paper Sales Cost of Sales Gross Profit Add: Other Income Total Profit Less: Operating Expenses Salaries and Wages Rent Expense Gas and Oil, and Other Utilities Taxes and Licenses Depreciation Doubtful Accounts Expense Miscellaneous Income before Tax Tax expense Net income Cash and Cash Equivalents Trade Receivables, net Fair Value through Profit or Loss

Unadj. Bal. 6,400,000 2,560,000 3,840,000 384,000 4,224,000 768,000 614,400 512,000 384,500 192,000 51,200 422,400 1,279,500 1,279,500 1,791,552 512,000 1,920,000

Adjustments 1,546,400 73,728 (73,728) (1,546,400) (76,268) (1,470,132) -

Prepaid Assets Deferred Tax Asset Capital Assets, net Total Assets Trade Payables Tax Payable Deferred Tax Liability Prepaid/Accrued Benefit Cost Remeasurement gain/(loss) Share Capital Share Premium Retained Earnings/(Deficit) Total Liabilities and Equity

102,400 1,728,000 6,053,952 128,000 3,200,000 1,446,452 1,279,500 6,053,952

517,296 517,296 241,348 199,680 4,146,400 (600,000) (2,000,000) (1,470,132) 517,296

Final Bal. 6,400,000 2,560,000 3,840,000 384,000 4,224,000 2,314,400 688,128 512,000 310,772 192,000 51,200 422,400 (266,900) (76,268) (190,632) 1,791,552 512,000 1,920,000

Tax Basis 5,836,800 2,432,000 3,404,800 3,404,800 768,000 790,528 512,000 256,500 172,800 20,480 105,600 778,892 241,348 537,544

Accounting Income Permanent Differences: UG-FVTPL Gain on Sale Interest Income - 10% Tax penalties Life insurance Accounting Income subject to tax Temporary Differences: Sales Purchases Employee Benefits Rent Expense Depreciation Doubtful Accounts Expense Taxable Income Adjusting Entry: Deferred tax asset Tax savings

102,400 517,296 1,728,000 6,571,248 128,000 241,348 199,680 4,146,400 (600,000) 3,200,000 (553,548) (190,632) 6,571,248

Tax payable Deferred tax liability

(266,900) (192,000) (115,200) (76,800) 54,272 316,800 (279,828) (563,200) 128,000 1,546,400 (102,400) 19,200 30,720 778,892

(80,070) (57,600) (34,560) (15,360) 16,282 95,040 (76,268) (168,960) 38,400 463,920 (30,720) 5,760 9,216 241,348

517,296 76,268

241,348 199,680

Set C Solutions Employee Benefits Cost Current Service Cost Past Service Cost Interest Cost Expected Return Total Expense Remeasurement gain - PA Actuarial loss - PBO Net Remeasurement loss Total Benefit Cost Adjusting entry: Salaries and Wages Remeasurement loss - OCI Share Premium Prepaid/Accrued Benefit Cost

1,200,000 300,000 700,000 (500,000) 1,700,000 300,000 (900,000) (600,000) 2,300,000

1,577,120 600,000 2,000,000 4,177,120

Working Paper Sales Cost of Sales Gross Profit Add: Other Income Total Profit Less: Operating Expenses Salaries and Wages Rent Expense Gas and Oil, and Other Utilities Taxes and Licenses Depreciation Doubtful Accounts Expense Miscellaneous Income before Tax Tax expense Net income Cash and Cash Equivalents Trade Receivables, net Fair Value through Profit or Loss

Unadj. Bal. 5,120,000 2,048,000 3,072,000 307,200 3,379,200 614,400 491,520 409,600 307,700 153,600 40,960 337,920 1,023,500 1,023,500 1,433,242 409,600 1,536,000

Adjustments 1,577,120 58,982 (58,982) (1,577,120) (163,045) (1,414,075) -

Prepaid Assets Deferred Tax Asset Capital Assets, net Total Assets Trade Payables Tax Payable Deferred Tax Liability Prepaid/Accrued Benefit Cost Remeasurement gain/(loss) Share Capital Share Premium Retained Earnings/(Deficit) Total Liabilities and Equity

81,920 1,382,400 4,843,162 102,400 2,560,000 1,157,262 1,023,500 4,843,162

515,837 515,837 193,048 159,744 4,177,120 (600,000) (2,000,000) (1,414,075) 515,837

Final Bal. 5,120,000 2,048,000 3,072,000 307,200 3,379,200 2,191,520 550,502 409,600 248,718 153,600 40,960 337,920 (553,620) (163,045) (390,575) 1,433,242 409,600 1,536,000

Tax Basis 4,669,440 1,945,600 2,723,840 2,723,840 614,400 632,422 409,600 205,300 138,240 16,384 84,480 623,014 193,048 429,966

Accounting Income Permanent Differences: UG-FVTPL Gain on Sale Interest Income - 10% Tax penalties Life insurance Accounting Income subject to tax Temporary Differences: Sales Purchases Employee Benefits Rent Expense Depreciation Doubtful Accounts Expense Taxable Income Adjusting Entry: Deferred tax asset Tax savings

81,920 515,837 1,382,400 5,358,998 102,400 193,048 159,744 4,177,120 (600,000) 2,560,000 (842,738) (390,575) 5,358,998

Tax payable Deferred tax liability

(553,620) (153,600) (92,160) (61,440) 43,418 253,440 (563,962) (450,560) 102,400 1,577,120 (81,920) 15,360 24,576 623,014

(166,086) (46,080) (27,648) (12,288) 13,025 76,032 (163,045) (135,168) 30,720 473,136 (24,576) 4,608 7,373 193,048

515,837 163,045

193,048 159,744