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Cash 20,000
Trade accounts receivable (net of 20,000 credit balance in accounts) 80,000
Held for trading securities 160,000
Financial assets designated at FVPL 60,000
Investment in equity securities at FVOCI 140,000
Investment in bonds measured at amortized cost (due in 3 years) 120,000
Prepaid assets 20,000
Deferred tax asset (expected to reverse in 20x2) 24,000
Investment in Associate 72,000
Investment property 92,000
Sinking fund 76,000
Property, plant, and equipment 200,000
Goodwill 56,000
Totals 1,120,000

How much is the total current assets?

Bank overdraft 20,000
Trade accounts payable (net of 20,000 debit balance in accounts) 80,000
Notes payable (due in 20 semi-annual payments of 8,000) 160,000
Interest payable 60,000
Bonds payable (due on March 31, 20x2) 140,000
Discount on bonds payable (60,000)
Dividends payable 20,000
Share dividends payable 24,000
Deferred tax liability (expected to reverse in 20x2) 72,000
Income tax payable 88,000
Contingent liability 200,000
Reserve for contingencies 56,000
Totals 860,000

How much is the total current liabilities?

The ledger of COURIER MESSENGER Co. as of December 31, 20x1 includes the following:
10% Note payable 160,000
12% Note payable 240,000
14% Mortgage note payable 120,000
Interest payable -

Additional information:
COURIER Co.s financial statements were authorized for issue on April 15, 20x2.
The 10% note payable is due on July 1, 20x2 and pays semi-annual interest every July 1 and December 31. On
January 28, 20x2, COURIER Co. entered into a refinancing agreement with a bank to refinance the entire note by
issuing a long-term obligation.
The 12% note payable is due on March 31, 20x2 and pays annual interest every March 31. On January 31, 20x2,
COURIER Co. extended the maturity of the note to March 31, 20x3 under the existing loan agreement. The
extension of maturity date is at the option of COURIER.
The 14% mortgage note is due on December 31, 20x9. Per agreement with the creditor, COURIER is to pay
quarterly interests on the note, failure to do so will render the note payable on demand. COURIER failed to pay
the 3rd and 4th quarterly interests on the note during 20x1.
How much is the total current liabilities?

The ledger of SQUAMOUS SCALY Co. as of December 31, 20x1 includes the following:
15% Note payable 100,000
16% Bonds payable 200,000
18% Serial bonds payable 400,000
Interest payable -

Additional information:
SQUAMOUS Co.s financial statements were authorized for issue on April 15, 20x2.
The 15% note payable was issued on January 1, 20x1 and is due on January 1, 20x5. The note pays annual interest
every year-end. The agreement with the lender provides that SQUAMOUS Co. shall maintain an average current
ratio of 2:1. If at any time the current ratio falls below the agreement, the note payable will become due on
demand. As of the 3rd quarter in 20x1, SQUAMOUSs average current ratio is 0.50:1. Immediately, SQUAMOUS
informed the lender of the breach of the agreement. On December 31, 20x1, the lender gave SQUAMOUS a grace
period ending on December 31, 20x2 to rectify the deficiency in the current ratio. SQUAMOUS promised the
creditor to liquidate some of its long-term investments in 20x2 to increase its current ratio.
The 16% bonds are 10-year bonds issued on December 31, 1992. The bonds pay annual interest every year-end.
The 18% serial bonds are issued at face amount and are due in semi-annual installments of 40,000 every April 1
and September 30. Interests on the bonds are also due semi-annually. The last installment on the bonds is due
on September 30, 20x7.

How much is the total current liabilities?

Below are the account balances prepared by the bookkeeper for REEDY SLENDER Company as of December 31, 20x1:
Assets Liabilities
Cash 60,000 Accounts payable 80,000
Accounts receivable, net 176,000 Notes payable 400,000
Inventory 160,000
Prepaid income tax 32,000
Prepaid assets 20,000
Investment in subsidiary 40,000
Land held for sale 112,000
Property, plant, and
Totals 800,000 480,000

Additional information:
Cash consists of the following:
Petty cash fund (unreplenished petty cash expenses, 6,000) 8,000
Cash in bank (40,000)
Payroll fund 56,000
Tax fund 28,000
Cash to be contributed to a sinking fund set up for the
retirement of bonds maturing on December 31, 20x3 8,000
Total Cash 60,000
Checks amounting to 122,000 were written to suppliers and recorded on December 30, 20x1, resulting to a
bank overdraft of 40,000. The checks were mailed on January 5, 20x2.
Accounts receivable consists of the following:
Accounts receivable 160,000
Allowance for uncollectibility ( 20,000)
Credit balance in customers accounts ( 12,000)
Selling price of unsold goods sent on consignment
to FRAIL, Inc. at 120% of cost and excluded from
REEDYs inventory 48,000
Accounts receivable, net 176,000

The inventory includes cost of goods amounting to 40,000 that are expected to be sold beyond 12 months but
within the ordinary course of business. Also, the inventory includes cost of consigned goods received on
consignment from WEAK Co. amounting to 20,000.
Prepaid income tax represents excess of payments for quarterly corporate income taxes during 20x1 over the
actual annual corporate income tax as of December 31, 20x1.
Prepaid assets includes a 8,000 security deposit on an operating lease which is expected to expire on March 31,
20x3. The security deposit will be received on lease expiration.
The land qualified for classification as asset held for sale under PFRS 5 Non-current Assets Held for Sale and
Discontinued Operations as of December 31, 20x1.
Accounts payable is net of 24,000 debit balance in suppliers accounts. Accounts payable includes the cost of
goods held on consignment from WEAK Co. which were included in inventory.
The notes payable are dated July 1, 20x1 and are due on July 1, 20x4. The notes payable bears an annual interest
rate of 10%. Interest is payable annually.

How much is the adjusted working capital?

The ledger of NEOPHYTE BEGINNER Co. as of December 31, 20x1 includes the following:
Petty cash fund 28,000
Cash in bank Banco De Oro 60,000
Cash in bank Metrobank 20,000
Accounts receivable (including 60,000 pledged accounts) 140,000
Accounts receivable assigned 100,000
Equity in assigned receivables 40,000
Notes receivable (including 80,000 notes receivable discounted) 180,000
Notes receivable discounted 80,000
Advances to subsidiary 128,000
Held for trading securities 80,000
Inventory 248,000
Deferred charges 72,000
Cash surrender value 24,000
Bond sinking fund 400,000
Total assets 1,600,000

Accounts payable 160,000
Estimated warranty liability 56,000
Loans payable related to assigned receivables (due in 12 months) 60,000
Accrued expenses 52,000
Bonds payable (due on December 31, 20x2) 400,000
Premium on bonds payable 32,000
Total liabilities 760,000

Additional information:
Petty cash fund includes IOUs from employees amounting to 8,000. The remaining balance of 20,000
represents bills and coins.
Cash in bank Banco de Oro represents the balance per bank statement. As of December 31, 20x1, deposits in
transit amounted to 40,000 while outstanding checks amounted to 12,000. Included in the bank statement as
of December 31, 20x1 is an NSF check amounting to 32,000.
Cash in bank Metrobank represents the balance per ledger. As of December 31, 20x1, deposits in transit
amounted to 8,000 while outstanding checks amounted to 4,000.
Accounts receivable (unassigned) includes uncollectible past due accounts of 16,000 which need to be written-
Also included in accounts receivable (unassigned) is a 20,000 receivable from a customer which was given a
special credit term. Under the special credit term, the customer shall pay the 20,000 receivable in equal
quarterly installments of 2,500. The last payment is due on December 31, 20x3.
The held for trading securities include the reacquisition cost of NEOPHYTE Co.s shares amounting to 16,000.
Inventory includes 120,000 goods in transit purchased FOB Destination but excludes 48,000 goods in transit
purchased FOB Shipping point.

How much is the working capital?

Reconstruction of financial statement

Use the following information for the next three questions:
The ledger of NAVE UNAFFECTEDLY SIMPLE Co. in 20x1 includes the following:
Jan. 1, 20x1 Dec. 31, 20x1
Current assets 2,400,000 ?
Noncurrent assets 8,000,000 ?
Current liabilities 1,800,000 2,000,000
Noncurrent liabilities ? 6,000,000

Additional information:
NAVEs working capital as of December 31, 20x1 is twice as much as the working capital as of January 1, 20x1.
Total equity as of January 1, 20x1 is 3,400,000. Profit for the year is 4,800,000 while dividends declared
amounted to 2,000,000. There were no other changes in equity during the year.

How much is the noncurrent liabilities as of January 1, 20x1?

How much is the current assets as of December 31, 20x1?
How much is the noncurrent assets as of December 31, 20x1?

Reconstruction of financial statements

The ledger of LOQUACIOUS TALKATIVE Co. in 20x1 includes the following:
Cash 400,000
Accounts receivable 800,000
Inventory 2,000,000
Accounts payable 600,000
Note payable 200,000

During the audit of LOQUACIOUSs 20x1 financial statements, the following were noted by the auditor:
Cash sales in 20x2 amounting to 40,000 were inadvertently included as sales in 20x1. LOQUACIOUS recognized
gross profit of 12,000 on the sales.
A collection of an 80,000 accounts receivable in 20x2 was recorded as collection in 20x1. A cash discount of
4,000 was given to the customer.
During January 20x2, a short-term bank loan of 100,000 obtained in 20x1 was paid together with 10,000
interest accruing in January 20x2. The payment transaction in 20x2 was inadvertently included as a 20x1

How much is the adjusted working capital as of December 31, 20x1?

Use the following information for the next two questions:
The following are among the expenses incurred by GYRATE REVOLVE Co. during the year.
in 000s
Interest expense 48
Cost of inventories sold 1,200
Insurance expense 200
Advertising expense 40
Freight-out 20
Freight-in 8
Loss on sale of equipment 4
Legal and other professional fees 24
Rent expense (one-half occupied by sales department) 16
Sales commission expense 28
Doubtful accounts expense 32

How much are the distribution costs or selling expenses?

How much are the administrative expenses?

The records of MARAUD PLUNDER Co. showed the following information:

Increase in accounts receivable 200,000
Collections on accounts 1,600,000
Cash sales 240,000
Increase in inventory 80,000
Freight-in 28,000
Freight-out 26,000
Decrease in accounts payable 120,000
Disbursements for purchases 960,000
Purchase discounts 8,000

How much is the gross profit for the year?

The records of DEADLOCK STANDSTILL Co. showed the following information:

Accounts receivable, net, Jan. 1, 20x1 80,000
Accounts receivable, net, Dec. 31, 20x1 320,000
Accounts receivable turnover 4:1
Inventory, Jan. 1, 20x1 240,000
Inventory, Dec. 31, 20x1 120,000
Inventory turnover 3:1

How much is the gross profit for the year?

The records of CANDOR FAIRNESS Co. showed the following information:

Decrease in accounts payable 120,000
Disbursements for purchases 880,000
Increase in raw materials 200,000
Direct labor is 50% of raw materials used in production
Manufacturing overhead is 20% of prime costs
Increase in work-in-process inventory 80,000
Decrease in finished goods inventory 100,000

How much is the cost of goods sold?




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