Financial Accounting 2(ACCTY 4)

1. HI reported the following items on its December 31, 2005 trial balance:

· Accounts Payable, P1,089,000

· Advances to officers and employees, P45,000

· Unearned Income, P288,000

· Outstanding gift certificates issued, redeemable with merchandise, P258,000

· Cash surrender value of life insurance, P75,000

· Bonds payable, face value, P5,550,000

· Discounts on bond payable, P225,000

· Accrued interest receivable, P39,000

How much should be reported in the December 31, 2005 balance sheet as total liabilities?

a. 7,210,000 b. 7,005,000 c. 6,960,000 d. 6,672,000

2. On January 1, 2005, GC received P300,000 covering first 2 years’ rent and a deposit of

P150,000 which is returnable at the end of the ten year lease . The else contract

commenced January 1, 2005.

As Of December 31, 2005 balance sheet, how much should be reported by GC as its

liabilities with respect to the above transactions?

CURRENT NON-CURRENT

a. 0 300,000

b. 150,000 150,000
c. 75,000 150,000

d. 150,000 75,000

9. On October 31, 2006, X discounted its own P1,000,000, 12% note payable for one

year.

In its income statement for the year ended December 31, 2006, X should report

interest expense of

a. 17,600 b. 20,000 c. 26,400 d. 30,000