Olivarez College

Financial Accounting and Reporting III

Answer Key - Refresher
1)

Petty cash fund (P5,000-1,000)

Checking account (P255,000-25,000)
Undeposited receipts (P120,000-5,000)
Currencies and coins
* Bond sinking fund is long term investment
** NSF is shown as non-trade receivables

2)

Beg inventory
Add: purchases
Goods available for sales
Less: Ending inventory
Cost of goods sold
Add: Gross profit on sales
Sales
Less: Cash sales
Total sales on account
Add: Beginning AR
Total receivables
Less: Collection of AR
Accounnts receivable, 12/31

3)

Invoice price (P150,000*70%*80%)

Less: Cash discount (P84,000*2%)
Net
Add: Freight cost
Remittance

4)

Inventory per count

Item C [(P24,400-1,000)/130%)
Item D (P48,000+3,000)
Item E [(P36,400/130%)+2,000]

5)

Shares received
Multiply: Market value of share
Dividend income
* Share dividend in lieu of cash dividend is considered as income and should be measured
by the market vaue of the share.

6)

Acquisition cost
Share in net income (P1,800,000*30%)
Share in dividend (P200,000*30%)

Share in unrealized loss (P300,000*30%)

Share in revaluation surplus (P800,000*30%)

7)

Cash paid
Fair value of van transferred
* When the cash flows of the asset differ from the cash flows of the asset transferred,
the exchange has the necessary commercial substance; therefore, the asset received
is measured at its fair market value.

8)

First year (P150,000*1/2)

Second to fifth year (P187,500*4)
Additional incentive
Total rental
Divide: Lease period
Annual rent income

9)

Fair value of plan assets - end

Add:Payment of benefits
Less:
Fair value of plan assets beginning
Employer contributions
Actual return on plan assets

525,000.00
85,000.00
350,000.00
110,000.00

10) Dividend paid

Less: Balance of accumulated profit
Liquidating dividend
* Under a wasting asset doctrine, declaration of liquidating dividend is allowed,
provided, it does not exceed the total amount of accumulated depletion.
11) Total face amount of coupons issued to be redeemed (P600,000*70%
Add: Handling cost
Total
Less: Actual reimbursement
Estimated liability for unredeemed coupons
12) Cost
Divide: Useful life
Annual amortization
Multiply:
Accumulated amortization
Cost
Less: Accumulated amortization

NBV
NBV
FV
Lower of CV and FV
13) Cash price/fair value
Add: Installation cost
Cost of the new asset

4,000.00
230,000.00
115,000.00
55,000.00
404,000.00

2,880,000.00
4,800,000.00
7,680,000.00
(2,640,000.00)
5,040,000.00
2,160,000.00
7,200,000.00
(1,200,000.00)
6,000,000.00
1,920,000.00
7,920,000.00
(6,240,000.00)
1,680,000.00
84,000.00
(1,680.00)
82,320.00
6,000.00
88,320.00
947,800
18,000
51,000
30,000
1,046,800
2,000.00
60.00
120,000.00

come and should be measured

2,580,000.00
540,000.00
(60,000.00)

(90,000.00)
240,000.00
3,210,000.00

50,000.00
450,000.00
500,000.00
ws of the asset transferred,
erefore, the asset received

75,000.00
750,000.00
(8,000.00)
817,000.00
5.00
163,400.00

610,000.00

460,000.00
150,000.00
1,600,000.00
(1,200,000.00)
400,000.00

dividend is allowed,
ed depletion.
420,000.00
42,000.00
462,000.00
(220,000.00)
242,000.00
5,000,000.00
10
500,000.00
2
1,000,000.00
5,000,000.00
(1,000,000.00)

4,000,000.00
4,000,000.00
2,800,000.00
2,800,000.00
950,000.00
30,000.00
980,000.00