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1. Current Assets
Pope Corporation’s trial balance contained the following account balances at December 31, 2019:

Trading Securities 150,000

Prepaid insurance 30,000
Cash 330,000
Inventory 900,000
Equipment and furniture, net 990,000
Patent 120,000
Accounts receivable (net) 480,000
Land (held for capital appreciation) 1,200,000

How much is the total current assets in Pope’s December 31, 2019 balance sheet?
a) ₱1,890,000
b) ₱2,010,000
c) ₱2,190,000
d) ₱2,430,000

2. Total Liabilities
Integrity, Inc. reported the following items in its December 31, 2019 trial balance:

Accounts Payable ₱1,089,000

Advances to Employees 45,000
Unearned Rent Revenues 288,000
Estimated liability under warranties 258,000
Cash Surrender Value of Officer’s Life Insurance 75,000
Bonds Payable 5,000,000
Discounts on Bonds Payable 255,000
Trademark 390,000

How much should Integrity report as total in its December 31, 2019 balance sheet?
a) ₱6,410,000
b) ₱6,800,000
c) ₱6,845,000
d) ₱7410,000

3. Current Liabilities
Jake Company prepared a draft of its 2019 Statement of Financial Position. The draft statement
reported current liabilities totaling ₱2,000,000. However, none of following items were included in
this preliminary total at December 31, 2019.

Accounts payable ₱300,000

Bonds payable, due 2020 500,000
Discounts on Bonds Payable, due 2020 60,000
Dividends payable – January 31, 2020 160,000
Notes payable, due 2021 400,000
Bond issue costs 20,000
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At which amount should Jake’s current liabilities be correctly reported in the December 31, 2019
balance sheet?
a) ₱2,880,000
​ b) ₱2,900,000
c) ₱2,960,000
d) ₱3,020,000

4. Total Assets
Diamonds Company began operations on January 1, 2016 with ₱1,000,000 from the issuance of
shares and borrowed funds of ₱450,000. Net income for 2016 is ₱300,000 and Diamonds paid a
₱225,000 cash dividend on December 19, 2016. No additional transactions affected owners’ equity
in 2016. At December 31, 2016, liabilities of the company had increased to ₱597,000.

In Diamonds’ December 31, 2016 balance sheet, how much should be reported as its total assets?
a) ₱1,525,000
b) ₱1,672,000
c) ₱1,750,000
d) ₱1,760,000

5. Shareholders’ Equity
Prime Company reported total assets of ₱1,050,000 and total liabilities of ₱680,000 in its December
31, 2018 balance sheet. The following transactions occurred during 2019:

● On August 1, Prime Company issued an additional 5,000 ordinary shares at ₱25 per share.
● The company paid dividends totaling ₱80,000.
● Net income during the year was ₱110,000.
● Reacquired treasury shares of 2,000 at ₱30; subsequently, reissued 1,000 for ₱39 per
share.
● No other changes occurred in Shareholders’ Equity during the year.

What is the balance of Prime’s Shareholders’ Equity section in its December 31, 2019 balance
sheet?
a) ₱400,000
b) ₱504,000
c) ₱525,000
d) ₱685,000

6. Shareholder’s Equity
Kaizen Company’s adjusted trial balance at December 31, 2019 includes the following accounts
balances:

Ordinary share capital, ₱3 par ₱3,000,000

Subscription Receivable due 2020 300,000
Share premium 4,000,000
Treasury shares, at cost 250,000
Net realizable holding loss on available for sale securities 100,000
Reserve for uninsured earthquake losses 750,000
Accumulated profits 1,000,000
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Ordinary shares subscribed 500,000

Reserve for treasury share 250,000

What amount should Kaizen report as total owner’s equity in its December 31, 2019 balance sheet?
a) ₱8,400,000
b) ₱8,900,000
c) ₱9,150,000
d) ₱9,200,000

7. Shareholders’ Equity
Dynamics Company provided the following account balances on December 31, 2019:

Accounts payable, ₱125,000; Accrued taxes, ₱50,000; Cash surrender value, ₱30,000;
Ordinary share capital, ₱1,000,000; Dividends-preference, ₱150,000; Mortgage payable
(₱200,000 due in six months), ₱1,200,000; Notes payable-20%, due on January 2, 2020,
₱1,500,000; Shares premium, ₱250,000; Preference share capital, ₱450,000; Income
summary-credit balance, ₱500,000; Accumulated profits-December 31, 2019, ₱550,000;
Unearned rent income, ₱25,000; Dividends-ordinary, ₱100,000.

How much should Dynamics Company report as Shareholders’ equity on December 31, 2019?
a) ₱1,450,000
b) ₱1,650,000
c) ₱2,250,000
d) ₱2,500,000

8. Profit or Loss Computation

Presented below is selected information pertaining to the Stellar Company:

Cash balance, January 1, 2019 13,000

Accounts receivable, January 1, 2019 19,000
Collections from customers in 2019 210,000
Capital account balance, January 1, 2019 38,000
Total assets, January 1, 2019 75,000
Cash investments added, July 1, 2019 5,000
Total assets, December 31, 2019 101,000
Cash balance, December 31, 2019 20,000
Accounts receivable, December 31, 2019 36,000
Merchandise taken for personal use during 2019 11,000
Total liabilities, December 31, 2019 41,000

How much is the net income for 2019?

a) ₱22,000
b) ₱26,000
c) ₱28,000
d) ₱30,000

9. Cost of Sales
The following information pertains to Buhi Company’s 2019 cost of sales:
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Inventory, January 1 ₱3,000,000

Inventory, December 21 900,000
Purchase 9,000,000
Write-off of obsolete inventory 1,050,000

What amount should the company report as cost of sales?

a) ₱10,050,000
b) ₱10,950,000
c) ₱11,100,000
d) ₱12,100,000

10. Administrative Costs

The following item were among those that were reported on Escudero Company’s income
statement for the year ended December 31, 2019:

Legal and audit fees ₱340,000

Rent for office space 480,000
Interest expense 420,000
Loss on sale of equipment 70,000
Office staff salaries 400,000

The office space is used equally by Escudero’s sales and accounting departments.

What amount of the above-listed items should be classified as general and administrative expenses
in Escudero’s income statements?
a) ₱980,000
b) ₱1,050,000
c) ₱1,000,000
d) ₱1,220,000