AUDITING PROBLEMS First Pre-Board Examination questions. Mark only one answer for STRICTLY NO. ERASURES ARE ALLOWED. Uso p PROBLEM 1: were engaged to audit the financial st presented bel The Review School of Accountancy ‘Bel. No. 735-9807 & 734-3989 23 duly 2011 (Saturday) 3:00 PM - 5:00 PM MULTIPLE CHOICE INSTRUCTIONS: Select the correct answer for each of the following each item by shading the box encil no. 2 only. corresponding to the letter of your choice on the sheet provided. tements of ABC Corp. for the year ended December 31, 2011. The summary of the company’s cash transactions are returng and allowances, P260, 000 Rocéip 52920, 000} Gollections on Actes receiva 380,000 interest am = $20,000; Purchase returns and allowances (total 60, 000 ‘Additional investnent, “100, B00. Disbursements: Gash porcuases PL, 200, 500] Sales returns and allowances (tota 280, 090 gales 40, 000 0, 000. Office "360, 000 2, 160,000) ‘Gther expenses 260,000 400,000 Additional i mati changes balances Further analysis ompany's incomplete records revealed the foil: “increase (Decrease) P780, 000 $280,000 (400, 000) 80, 000 320,000, 120, 000) 80, 000) action affecting equipment and the depreciation. 4 Regniremonts: 1. Gross Sales a. 9,320,000 b. 9, 360,000 700, 800 | 10,500 owing =a] (120, 000) Tom the newly Determine the following accounts under accrual basis of accounting: 9,520,000 9,980,000 acquiredPROBLEM 2: operations early in 2003. 000,000 7 +. 4,940,000 b. 5,060,000 4. 4/500,000 3. Cost of Sales a. 4,420,000 ©. §,060,000 b. 4,400,000 a. 4/140,000 4. Groas' Profit a. 4,900,000 ec. 4,820,600 b. 4,360,000 a. 4,620,000 « Taterest incone a. 300,000 ©. 360,000 b. 340,000 a. 420,000 6. Depreciation expense a. 440,000 ce. 300,000 b. 360,000 a. 280,000 ~ Net Income + 1,680,000 ¢. 1,600,000 ~ B! 164s, 000 a! 1/580, 000 You are auditing for the first time the financia! 1 statements of Inc. for the period ended December 31, 2011. The company had begun Your audit revealed the following omissions and Recounts receivables instead of Astes recelwakles were debited in 2011. £40,000 Purchases account waa debited In 2011 Instead OF OFfICe 10,000 supplies (half of which renains unused at the end of the eat) The “physical inventory on December 31, 2009 was 20,000 overstated "The physisal inventory oa Decexbev 31,010 was 3, 000 onderstated &, Advances te suppliers were Tecorded aa purchases but tho merchandise Was received only in the ‘subsequent yess 2008 £0,000 2010 20,000 F. Advances From eustomers recorded as sales but the Goods were delivered only in the following veer, 2009 50,000 2o19 100,000 3, Tssikance premium for eheee years paid early im —Z00e and fully expensed im 2009 is 2 30,000 Br Unacerued salaries? 2008 : 60,000 2011 120,000 T. Rental collections for =o Qea=s Feces Ely 2010 credited entirely to income 1m 2010 20, 000 | Jo Unrscordea accrued Treerese zecelvable 2010 20,000 2013 - 50,000 K. Taprovenents on building Rad been charged to expense on Janvary 1, 2010. Tmprovenents have a useful 1ifo of 5 years. i 200,000 + On January T; 2010; an equipment costing P80,000 was sold for BADOODREENe date of oale the equipment had on accumslated depreciation cf P50,000. "the cash L____seceived was recorded as other income Ya. 2010 Requirements: 8. ‘The company reported net income at P3,000,000, P4,000,000 and ee stockholders at P1,200,000, P1,400,000 and respectively. 9, 2010 and 2011, respectively. ‘The company distributed 1,800,000 in 2009, dy lihat is the adjusted net income in 20092 $a a. 2,850,000 2,950, 000 b. 2,900, 000 a BS, 600/000 in’ dividends to 2010 and 2011,ae is the adjusted net income in 20107 oe a. 4,250,000 cc. 4,210,000 b. 4,230,000 4. 4,200, 900 10. What is the adjusted net income in 2011? a. 5,440,000 ¢. 5,480,000 b. 5,445,000 d. 5,485,000 11. What is the retroactive adjustment to the retained earnings at the baginning of 2011? a. 160,000 debit ¢. 140,000 credit b. 160,000 credit 4. 120,000 credit 22, What is the effect of the errors to the 2011 working capital? a. 50,000 understated c. 95,000 understated b. 60,000 overstated d. 65,000 overstated PROBLEM 3: You are auditing the financial statements of GHT Corp. for the first time since it started its operations in early 2008. The general ledger of the company’s Accumulated Profits accounts contained the following information: Date Particulars: bebit Credit ‘Balance 12/31/08 [Net income 650,000] 650, 000 1/31/09 [Dividends payments F200, 000 LF OF" 450, 000. 1/31/03 [Goodwill recognized as approved by the 800 500, 000 950, 000 Fair value of a building donated |to the company 1,200,000 | 2,150,000 730703 13731705 | Net_incame. = 900, 660 | 3, 050, 000 [1/31/10 | dividends payments 300, WEE OF 2,550,000 6/21/10 [Appropriation for Fire insurance 150,000 2,400,000 T3731 710 [Wet incens 7,300,000 [3,700,000 1/31/11 [Dividends payments 750,060 |= 10. 2,950, 000 9/31/11 [Proceeds from iasuance oF donated btocks 600,000} 3,550,000 (Berar 77 [wet incspe 1,500,000 | 5,080,000 pdit notes: | 2-The following accruals were consistently omitted at the end of each year: ade Sand salaries jalty expense g.follorina wouted cupie vere not sasagnied 2f the ead of each 2008 ‘2063 2010 |__ 20a 7 6, 000 10,000, 12,000 3,000 Was a donation from the government with a condition that the be using the building as one of its operating offices for 10 years. The asset was immediately used upon the receipt ernment. Depreciation was appropriately provided over ten : for fire insurance debited against accumulated Profits on June 31, 2010 was the related carrying values of the inventories which were lost to a fire in one of the company's warehouse in June of 2010, Dividends paid every January 31 of each year were declared at the end gf the prior years. ‘Total dividends declared by the end of 2011 was ?900,000 payable on January of the following year. Requirements: 13, What is the adjusted retained earnings in 2008? a. 481,000 c. 681,000 b. 541,000 d. 421,000 AUDITING PROBLEMS — FIRST PRE- BOARD EXAMINATION (BAT14. What is the correct retained earnings in 2009? a- 805,000 ce. 914,000 bs 875,000 a. 1,024, 000 15. What is the adjusted net income in 2010) a. 1,149,000 ce. 1,269,000 b. 1,299, 000 d. 1,419,000 16. What is the adjusted net income in 20112 a. 1,382,000 . 1,602,000 b. 1,502,000 a. 900 17. What is the an retained earnings ; Ee 6 following , 4 i ccounts and the related capital transactions ended December 31,-2011. Th studying the tran: 2,126 ,1 1,816, entries made by the client: ae se st year of operation ons you came across the [Date Particulare Debit Credit, Jan, 15 and 500; 000. Ordinary Shares 500, 500 To record the issuance of 50,000 shares of ordinary in exchange of a real property. Mar. 1 Subscription receivable #20, 000 Ordinary shares 420, 000 To record the subscription oF 20/000 shares of ordinary at P21 per share subscription price. Sp apo a ‘Ordinary Shares es 325, 000 Cash ip 125, 000 To record the acquisition of 5,000 shares of the company’s own ordinary shares. i Caak 7 Subscription receivable a To record the collection for the full payment of 602 of the subscribed shares on March | eaan Dees Grainary shares To record tha réissuance of If of the shares reacquired on June ited profits 750, 000. ms ire premium 780,000 fo record the grant of 10 ‘employees 5,000 share appreciation Fights on the grant date computed as: (20*5,900*P15) | Ragee Audit notes: 3. The company was authorized to issue 100,000 shares of ordinary at P10 par value. b. The real property received on January 15, PL,800,000, 30% of which is attributed to the the building which the company in were fairly valued at land with the balance to tends to use as a factory site. AUDITING PR se Ree Bio Sob, 1S ng #4Audi ¥ 23. What is the total stockholders! PROBLEM $: MNO Inc. reported the following liability portion of its Statement of Financial . The company declared a 4 for 1 share split up on August 31. ee cc, 10 of its key employees ny for 5 years from date €. On December 30, the Roard of Directors approved a Pi per share cash dividends to stockholders of record as of December 20 payable on January 30 of the subsequent year. ee £. After all the necessary adjusting entries, you ascertained that the correct net income for the year is at P1,500,000. Required: 48. What is the balance of the Ordinary share account as of December 31, 2011? a. 557,500 fe. 700,000 b. 620,000 a.” 1,060,000 79. What is the correct balance of the Stock Appreciation Rights Payable as December 31, 20117 oe c. 84,000 4d. 420,000 20. €ash dividends payable as of Decenber 31, 20117, a. ¢c. 270,000 ae 5 a! 280,000 2. Bitional Paid in Capital balance as of Decenber 31, 201127 a. 1,300,000 “¢? 1,520,000 b. 1,497,500 er pa 22. what is the Accumlated profits, unappropriated balance as of December 32, 20112 a. 1,500,000 ¢- 1,230,000 b. 1,477,500 1-207, 500 equity to be reported in the 2010 statement of financial position? a. 3,285,000 3,427, 500 b. 3,635,000 (3,365, 000 information in ite long-term Deferred Tax Liabi: ity, net 340, 000 t notes: Ghe bonds payable with a face value’ of PSM was issued with a éonversion Geeton into 20,000, P100 par value ordinary shares at any tine up to iis maturity on gune 30, 2015. These were issued on June 30, 2010 shen Gee goreveiling yield ‘rate “on atailSeUaeeeeccurity without the score ator cetion wae 108. The company recorded the transaction ass Gebit to Cash and credit to Bonds payable for thé total concldecacion and dune go nberests are being paid semi-annually every Decenber 31, are en ps and were recorded appropriately. No other. enteies ware made by the client affecting the carrying value of the bends, “4g 62S Position for the period ended December 31, 2010: . é 128 Bonds Payable P5, 500, 000 sbrEoy SoM 10% Note payable - Bank 2, 500, 000 Vee) gg,Half of the bonds were retired on December 31, 2011 at par value. The prevailing yield rate on similar debt instrument without the conversion option on this date was at 14%, The transaction is yet to be recorded at year end. The 108 ate payable to the bank is dated September 1, 2010. and is payable at the rate of P500,000, annually every September 1 of each |. Interests are also payable annually every he year resulted to the ctible amount 200,000 At the end of the year the balance of the cumulative temporary differences wore: Cumulative temporary difference creating future taxable amount P1,550, 090 Cumulative temporary difference creating future deductible amount 300,000 Income tax is at 408. Required: es 24. What is the equity portion of the Convertible Bonds? a. None // c. 120,921 b. 113,914 4. 500,000 25. How much should be recognized in the profit or loss as a result of the retirement of half of the bonds at the end of 2011? a. 144,659 c. 279,392 b. 201,618 a. 77,776 26. What is the total interest expense for 2011? a. 233,333 c. 167,261 b. 533,928 a. 770,407 27. Assuming that the total financial income after permanent difference is at P1,000,000, what is the total current tax expense for 20117 a. 100,000 e. 400,000 240,000 d. 560,000 much deferred tax should be presented separately in the noncurrent ity portion of the Statement of Financial Position? e. 500,000 4. 620,000 5 the total long-term liability to be presented in the 2011 £ Financial Position? ce. 4,644,659 4,764, 659 at P7, 500,000. The incremental borrowing rate for similar debt agreement is at 10% while the implicit lease rate known to beth parties was at 12%. nara16 Company accounted for the transaction as an operating lease charging rent expense for the semi-annual payments 30. What is the retroactive adjustment, if there ave any to the retained earnings at the beginning of 2011, in relation to your audit of the lease agreement? a, 296,264 c. 402,185 b. 130,093 a. $13,643 31. What is the effect of the error/s to the 2011 net income? a. 272,768 ©. 296,264 b. 214,569 a. 190,093 ia a 32. What is the current portion of lease 31, 20117 a. 239,996 c. a b. 226,410 a 33. What is the carrying value of any fixed @ 9 of © 31, 2011 recognized from the lease agreement? 2 a. 6,930,593 c. 6,322,646 b. 6,809, 008 6,565,825 . PROBLEM 7: stu Corporation was organized on January 1, 2009, and began operations immediately. Unfortunately, the company hired af ‘incompetent bookkeeper. For the years 2009 to 2011, the bookkeeper presented an annual balance sheet that reported only one amount of shareholders’ equity: 2009 P137, 700 2010 156, 600 2011 185,000 Moreover, the condensed income statement reported. for the same inclusive years were as follows: 2009, net toss P17, 500 2010, net income 22,000 2011, net incone 40,930, Based on the accumulated profits reported as of December 31, 2011, the president has recommended to the board of directors that a cash’ dividend of P35,000 be declared and paid during January 2012. ‘The outside director om the board has objected on the basis that the company’s financial statements may contain major errors as the books have never been audited. You have been engaged to clarify the situation. The single shareholders™ equity account, provided by the bookkeeper, appeared as follows: = Shareholders’ Raut: PI,300 [2008 Ordinary shares, par 5 20,000 shares issued — 17,800 | 2010 Net profit (inen “2003 Share issue cost 2009 Net loss 2010 Bought 100 shares of 706 | 2010 ordinary shares, 200 1,800 the Company new shares issued Depr expense (note a) 5,500 {2011 Sold 30 of reacquired 270 shares Cash shortages {note b) 5,000 | 2011 Net profit 40,930 2011 Cash loan to the 10,000 President “840, 005 E35, 00 Audit note la} the following were t income statements 2009 PL, 500 2010 1,700 201. 2,300 he recorded depreciation but were not shown in the{b] The following were cash shortages not shown in the income statements: Zoos Fa, 000 2030 21500 pot $00 34. What ia the tote! accumalated profit aa gf Deconber 31, 20117 221,000 S35, 430 2 2189 zi 45. What Ls the total additional paid-in capitals ef Deconber 31, 20117 2. 60,000 93/500 , BL $9)880 a 3 36. What is the correct stockholders’ equity a8 of December 31, 2011, before the declaration of cash dividends? a, 195,490 ce. 195,000 b. 195,430 d. 185,000 37. What is the maximum amount of dividend per share distributable on the ordinary shares? ‘a. 1.0000 ec. PL.214L b. P1.2099 a. Pi.3121 PROBLEM 8: You were assigned to audit various liability accounts of VWX Corp as of December 31, 2011. Jn the course of your audit you discovered the following: a. The company sells major household appliance service contracts for cash- The service contracts are for a one-year, two-year, or three year period. Cash receipts from contracts are credited to unearned service Contract revenue. This account had a balance of P1,440,000 at December 31, 2011 before any adjustments. Service contract cost are charged as ingurred to the service contract expense account, which had a balance of P360,000 at December 31, 2011. Outstanding service contracts at December 31, 2011 shall expire as follows: 2012 300, 000 2013 450, 000 2014 200,000 b. The company sells its product A under a 1-year warranty contract thet requires the company to replace defective parts and provide free labor on all repairs. During 2010, 100 units were sold at P9,000 each. In 2011, the company sold 90 units at P9,250 each. Based on past experience, the estimated 1-year warranty costs are P600 for parts and 150 for labor per unit. The balance of the Warranties Liability account, before any year-end adjustments amounted to P45,000. Actual warranty expenditures which the company debited to warranty expense 2010 P90, 000 2011 135,000 Recrual is yet to be made at the end of 2011 c. The company promotes its product B by offering premiums to customers who can present P10,000 worth of accumulated receipts from purchase of product @ and remittance of P200. The distribution cost per premium amounts to P100, Data ragarding this promotional campaign are: 2010 2011 Sales P1,200,000 1,500,000 Premium purchased at P800 oon 15ou Premiums distributed 10 108 Premiums expected to be distributed next period 25 40ReSA: The Review School of Accountancy Page 9 of 9 38. 39. it No premiums lisbility appeared in the company’s balance sheet either in 2010 or in 2011. Your further investigation revealed the following entries in 2010 and 2011 releting to the premiums distribution: 2010 Premium expense 49,000 cash 7,000 Premiums inventory 56,000 2011 Premiums expense 73,500 cash 10,500 Premiums inventory 84,000 Accrual were not made at each year end. ‘The company provides bonus to its key officer at 10% based on adjusted net income after tax and after bonus, The Unadjusted net income amounted to P1,507,000. Assume tax rate at P408 What is the correct balance of the unearned service contract revenue fer 2011? a. 950,000 ©. 650,000 b. 750,000 d. 499,000 What is the correct balance of the December 31, 20117 cimated Warranties Liability as of a. 76,300 b. 31,500 - What is the correct premiums exp a. 96,000 c. 84,000 b. 91,000 a. 73,500 what amount of bonus to key officers shall he recognized by the company in 20112 a. 113,208 ©. 113,037 b. 112,443 i a. 112,109Ans. A. ash Sales Collections from receivables Collections from notes increasein AR Decrease in NR Sales returs (no refund) Gross Sales Ans. A. (Cash purchases Payments of accounts Increase in accounts payable Purchase returns (na refund) Grose Purchase 3.Ans. A. Gross purchases Purchase returns (total) et purchases Increase in inventories Costof Sales 4.40.0, Gross Sales Sales returns (total) Net Sales (ost of Sates Gross Profit 5.Ans.D. Interest collected Increase in interest eceivable Decrease in uneamed interest Interest income 6.Ans.. Equipment acquired Inerease in equipment Depreciation 7.ans.c. Gross proft Interest income Insurance (80,000420,000! Depreciation Office expenses (2,760,000440,000) Other expenses Net income )BLEMA 2: DEF Unsdjsuted balances 3. AR instead of NR Purch instead of supplies 2002 ity, overstate 6.2010 invty, understated .2008, advances to suppliers 2010, advences to suppliers £2008, advances rom customers 1.2020, advances from customers 6. Insurance fully expense in 2009 + 2008, unacerued salaries 2011, unaccrued salaries 1.2 years rent fully tee. in 2020 J. 2010, scerued interest } 2013, acerved interest capitalizabieimorovernents ‘depreciation on improvernents |.overstatementin gan onsale Adjusted balances 4,200,000 30000 200,000 220,00, 5,000,000 5,000,000 (260,000) 7,740,000 (220,000), (260,000), 3,600,000 mizcoo__NI2000_Ni201__—«RE,beg 2011 we2011 3,000,000 400,000 5,620,000 5,000 (20,000) 20,000 30000 (30,000) 60,000 (60,000) ‘81000 (80,000) (50,000) 50,000 (400,000) 100,000 20,000 (10,000) (10,000) (60,000 60,000 (120,000) (9,000) 10,900, 20,000 (20,000) 50,000 200,000 (40.900) 40,000) (0,903) 2,350,000 4,210,000 5,765,000 Bans.C. 9: Ans.C 40. Bonus 30,000 180,000 (200,000) 10,000 (20,000) 20,000 200,000 (40,000), (30,000) 160,000, Ti Ans. 8. 5,000 (420,000) 50,000 (65,000) Ans. D.3: GHIINC. Unadjusted Balances a Salaries payable Royalties expense Unused supper Gain from government grants 2008 Net income 2008 Dividends declaration 2008 RE, enc 2009 Net income 2009 Dividends declaration 2009 RE, end 2010 Net income 2010 Dividends declaration 2010 RE, end 2011 Net income 2011 Dividends deciaration 2031 RE, end PROBLEM 4: KL CORP. ENTRIES: Land {2.8M"30%) Buiiding (.8M"70%) Ordinary Shares Share premium Sebsription receivable Ordinary shares subscribed Share premium “Treasury shares (5,000 sh) Cash cash ‘Sdoscrption receivable (ndinary share subscribed ‘Ordinarvsharee 200811 550,000 (25,000) (22,000) 8,000 E000 ~ 21,000 (200,009) ‘421,000, ‘954,000 500,000) "875,000 41,239,000 (730,009) 7,364,000, 11822,000 (900,000), 2,116,000 540,000 4,260,000 420.000 125,000 252,000 120,000 2003 Ni 900,000 25,000 (30,000) 32,000 (25,000) (8,000) 10,000 60,000 13.Ans.0. 14. Ans, Ans. A, 500,000 3,300,000 200,000 220,000 125,000 252,000 120,000 Emo} 2010 NI 1,300,000 30,200 (24,000) 15,000 (24,000) (20,000) 32,000 120,000 (159,000) 72,269,000 15. Ans. "MEMO: SPLIT: 62,000 shares nro 248,000 shares; P30 par value to P2SO par £8,000 shares subs into 32,000 shares subs: P21 subs price ta F5.25 subs price 5.000 5 ito 20,000 15; P25 cost per unit to 6.25 cost per unit cash RE Treasury shares (20,000%6,25) Compensation expense ‘SAR Payable (7°4,000"P15)/5yecrs Re Cash Dividends Payable ‘Shares Outstanding Shares subscribed Total ‘Multiply by cash dv rate Total Cash dividends Income Summary Re 20,000 22,500 84,000 270,000 2380c0 32,000 270,000 1.00 370,000 1,500,000 270,000 20. Ans.€. 1,500,000 2001NI 1,500,000 34,000 (32,000) 14,000 (21,000) 122,000) 9.000 120.000 27000 6. Ans.D.RE (125,000) (22,500) (270,000) 4,500,000. 1,207,500, 7. Ans.D. 2500 (62,500) 3,365,000 23. Ans. D. BAL 5,386,087 5,355,391 5,323,161 7.298,361 6,795,361, 6,703,082 6,605,267 6,501,582 6,391,675 6275,73 6,151,679 97% ‘5-Subs share Premiy ans- "509,000, 1,300,000, Ara 200,000 "220,000, ms 1200 20000) ga. 12/30- aya ‘Adjsuted balances, 20,000 20,000, i BAN. 6. 2. Ans. PROBLEM 5: MNOINC. 24 Ans. B. Proceeds from issuance of exnvertibie bonds 5,500,0¢0 Fair value of bonds without conversion option: '5,000,000°0.6138 3,068,568 300,000°7,7217 2316520 _ 5,386,086 Equity portion (APIC-Bond Conv. Priv.) 19 25.Ans.C. Total Bonds @ FV APIC Res, VAL) Retirement Price 2,500,000 2,365,267 136,733, (carrying Value** (one-half only) 2,915,659 56.957 PBL Loss/ Cap. Gain (279,882) 77,776 Profit/loss copa gain * 2500,¢00*.6227 1556874 150,000%5 3893, 208,203, Firvalue at retirement ‘Amortization table Nom int coir, mort. sono 37/31/10- 300,000 263,308 (30,696) 5/30/13 300,000 267,770 (32.230) ppv 300,000 266,158 (3,842), 26.Ans.c. Incorest from Bonds Payable fom 4/1 - 6/30 [see amortic) 267,770 from 7/1 - 12/31 (see amortiz) 533.928 Interest from Notes Payable from 1/1 -8/31 (2514*1094"8/:2) 166.657 from 9/3 - 12/31 (ann 10%6+4/12) 233,333 Total Interst expense e761 27. Ans.8. Fin. ne. after permanent diff 4,000 000 FOAAB for the perica 100,000 FTALE forthe petiog (500,000) Tavable income 600,000 Muiitoiy by tax rate 40% Current Tax Expense 240,009 28. Ans.D. ‘Cum. Temp Dif (FPALE) 2,550,000 ‘Mtiply tax rate 40% rLiabilty 0,000 29, Ans., ‘Bonds Payable (haif- see amor) 2,684,659 Notes payable long term 4,500,000 Deferred tax iabity 520,000, Total noncurrent liability 4764 559 PROBLEM 6: POR coRP, “Amortization table Per. Payment Interest Principal yyupo10- 0,000 00,000 Tape. 500.000 (407.722) s2.278 anion 00,000 (402,185) 97,815 7apao1. 500,001 (396,316) 103,685 yapoi2- 500.002 (390,095) 109,507 7Ano2- 500,003 (383,502) 436,502 waren. 500.0¢¢ (376510) 123,494Rent expense per booxs 4,000,000 Expense per audit: Interest expense 1/1 6/30 (see amort) 407.722 Interest expense 7/1-12/31 (see amort) __402.185 809,007 Depreciation: (7,295,361/15 ears) 486,357 ‘Overstated net income in 2010 ps62687 Ans. A Rent expense per books 3,000,000 Expense per audit: Interest expense 1/1 -6/30 (see amort) 395,316 Interestexpense 7/1-12/31 (sec amort) _ 390,095 786,812 Depreciation: (7,295, 361/35 years) 436,357 Overstated net income in 2011, (272,768) 32. Ans. 8. Current portion of lease Due on 1/1/2032 (se amort) Due on 7/1/2012 (eee amort) 33. Ans.c, capitalize Cost (PY of MP) 7,295,361 Mulitely by: Cond Yeas of 12/31/11 33.15 (carrying Value 12/31/12, 6,822,646 PROBLEM 7: STU CORPORATION 34 Ans. 8. ~- Thos NETLOss 17,500) 2010 NET INCOME 22,000 2011 NETINCOME 49,930, 2010 REVALUATION SURPLUS (20,000) 2003-2011 vePR (5.500) 2009-2021 CAS: SHORTAGE {,000) FE, 2011 adjusted 24930 35. ans.8, Proceeds PAR/COST Share Premium 2009 share ise 456,700 100,000 58,700 2010 share fue 1.300 34000 ‘800 2010 TS reissue 230 210 = Total APIC 39,560_ 36. Ans.c. Orcinary Shares (202005) 101,000 Share premium/APIC 59,560 Revaluation Surplu: 10,000 RE 20930 Tsatcost (499) Total SHE 735,009 37.Ans.c, Re Apprcp for Ts Max amount of div distributable Divide by oustanding shares Dividend per share PROBLEM 8: Vx coRP — 3BAns.A. 39. Ans.8. 40.Ans.¢. Number of premiums distin 2011, 105 ‘ess: prem forwarded from 2013 (5) ‘Add: 2011 prem to be distin 2012 40 Total “aan ‘Maltipiy by: (800-200+200) 700 ‘otal Premiums Expense ‘006 a1. Ans.A, Bonus = 10%(N1-B 19) 113,208 Te= 40x(N-8) 754.717 “Unadjusted Net income 430,000 (1,440,000 -950,000) 413,500 (45,000-31,500)