Chapter 8 CFAS

Problem 8-1 Page 162

SIMPLE COMPANY
Statement of Financial Position
December 31,2020

ASSETS
Current Assets Note
Cash and cash equivalents 1 420,000.00
Trade and other receivables 2 870,000.00
Inventories 3 1,250,000.00
Prepaid Expenses 4 20,000.00
Total current assets 2,560,000.00

Noncurrent Assets
Property, plant and equipment 5 4,640,000.00
Long-term investments 6 2,000,000.00
Intangible assets 7 300,000.00
Total noncurrent assets 6,940,000.00

Total assets 9,500,000.00

LIABILITIES AND SHAREHOLDER’S EQUITY

Note 1 – Cash and Cash Equivalents
Current liabilities
Cash on hand P420,000
TotalTrade andcash
cash and other payables
equivalents 8 620,000.00
P420,000
Total current liabilities 620,000.00
Noncurrent
Note 2 – Tradeliabilities
and other receivables
Accounts Receivable
Bonds Payable P500,000
2,500,000.00
Allowance for doubtful accounts (50,000)
Notes Receivable
Total noncurrent liabilities 150,000
3,120,000.00
Trade Securities 250,000
Claims receivableequity
Shareholder’s 20,000
TotalShare
tradecapital
and other receivables P870,000
5,000,000.00
Reserves 9 500,000.00
Note 3 - Inventoriesi
Retained
Finished goodsearnings 880,000.00
P400,000
Goods in process Total shareholder’s equity 600,000 6,380,000.00
Raw materials 200,000
Factory supplies 50,000
Total liabilities and shareholder’s equity 9,500,000.00
Total Inventories P1,250,000

Note 4 – Prepaid Expenses

Prepaid Insurance P20,000
Total Prepaid expenses P20,000
Problem 8-2 Page 163
Note 5 – Property, Plant and equipment EXEMPLAR COMPANY
Land Statement of Financial Position P1,500,000
Building December 31,2020 4,000,000
Machinery and Equipment 2,000,000
Patterns, molds dies and tools etc. 40,000
Total ASSETS P7,540,000
Accumulated Depreciation
Current Assets Note (2,900,000)
Carrying amount
Cash and cash equivalents P4,640,000
500,000.00
Accumulated Depreciation
Trade and other receivables 1 920,000.00
Building P1,600,000
Inventories
Machinery and Equipment 1,300,000.00
1,300,000
Prepaid
Total ExpensesDepreciation
Accumulated 2 70,000.00
P2,900,000
Total current assets 2,790,000.00
Note 6 - Long term investments
Plants expansion fund P500,000
Noncurrent
Investment in Assets
bonds 1,500,000
CashProperty,
surrenderplant
valueand equipment 3 8,550,000.00
TotalLong-term
other long-term investments
investments 4 P2,000,000
1,310,000.00
Intangible assets 5 100,000.00
Note 7 – Intangible assets
Other noncurrent assets
Goodwill 6 150,000.00
P100,000
Franchise Total noncurrent assets 200,000 10,110,000.00
Total Intangible assets P300,000
Total assets 12,900,000.00
Note 8 – Trade and other payables
Accounts payable P300,000
Advances from customers LIABILITIES AND SHAREHOLDER'S EQUITY 100,000
Notes Payable
Current liabilities 100,000
Accrued
Tradeinterest on note
and other payable
payables 7 970,000.0010,000
Income tax payable 60,000
Premium
Employees Taxon bonds payable
payable 1,000,000.0020,000
Withholding
Accrued expensestax payable 30,000.0030,000
Total trade and otherTotal
payables
current liabilities P620,000 2,000,000.00
Noncurrent liabilities
Note 9- Reserves
Share premium P500,000
Total reserves P500,000
 Bonds Payable 5,000,000.00
Total noncurrent liabilities 5,000,000.00
Shareholder's equity
Ordinary Share capital 8 7,000,000.00
Reserves 9 700,000.00
Retained earnings (1,800,000.00)
Total shareholder's equity 5,900,000.00

Total liabilities and shareholder's equity 12,900,000.00

Note 1 – Trade and other receivables

Accounts Receivable 400,000
Allowance for doubtful accounts (20,000)
Notes Receivable 250,000
Trade Securities 280,000
Accrued interest on notes receivable 10,000
Total trade and other receivables 920,000

Note 2 – Prepaid Expenses

Prepaid Insurance 70,000
Total Prepaid expenses 70,000

Note 3 – Property, Plant and equipment

Land 1,500,000
Building 5,000,000
Equipment 1,000,000
Computer software 3,250,000
Total 10,750,000
Accumulated Depreciation (2,200,00)
Carrying amount 8,550,000
Accumulated Depreciation
Building 2,000,000
Equipment Note 4 - Long term investments 200,000
Total Accumulated Depreciation Sinking fund 2,200,000 400,000
Preference Share Redemption Fund 350,000
Land held for speculations 500,000
Cash surrender value 60,000
Total other long-term investments 1,310,000

Note 5 – Intangible assets

Patent 100,000
Total Intangible assets 100,000

Note 6 - Other noncurrent assets

Advances to officers- not currently collectible 100,000
Long term refundable deposit 50,000
Total Other noncurrent assets 150,000

Note 7 – Trade and other payables

Accounts payable 400,000
Unearned rent income 40,000
Notes Payable 300,000
SSS payable 10,000
Accrued salaries 100,000
Dividend payable 120,000
Total trade and other payables 970,000

Note 8- Share Capital

Ordinary Share capital 5,000,000
Preference share capital 2,000,000
Total reserves 7,000,000

Note 9 - Reserves
Share premium - ordinary 200,000
Share premium prference 500,000
Total reserves 700,000
Problem 8-3 page 164
Relax Company
Statement of Financial Position
December 31, 2020

ASSETS

Current assets
Cash and cash equivalents 400,000
Trade and other receivables (1) 750,000
Inventories 1,000,000
Prepaid expenses 100,000
Total current assets 2,250,000

Noncurrent assets
Property, plant and equipment (2) 5,600,000
Investment in associate, at equity 1,300,000
Intangible assets (3) 350,000
Total noncurrent assets 7,250,000
Total assets 9,500,000

LIABILITIES and SHAREHOLDERS’ EQUITY

Current liabilities
Trade and other payable (4) 1,350,000
Mortage note payable-current 400,000
Total 1,750,000
Noncurrent liabilities
Mortgage payable, remaining portion 1,600,000
Bank loan payable, due June 30,2022 500,000
Total 2,100,000
Shareholders’ equity
Share capital 3,000,000
Reserves (5) 1,400,000
Retained earnings 1,250,000
Total shareholders’ equity 5,650,000
Total liabilities and shareholders’ equity 9,500,000

Note 1 – Trade and other receivable

Account receivable 800,000
Allowance for doubtful accounts (50,000)
Trade and other receivable 750,000

Note 2 – Property, plant and equipment

Land 500,000
Building 5,000,000
Machinery 3,000,000
Equipment 400,000
Total 8,900,000
Accumulated Depreciation (3,300,000)
Carrying Amount 5,600,000
Accumulated Depreciation:
Building 2,000,000
Machinery 1,200,000
 Equipment 100,000
Total Accumulated Depreciation 3,300,000

Note 3 – Intangible assets

Trademark 150,000
Secret processes & formulas 200,000
Total 350,000

Note 4 – Trade and other payable

Notes payable 750,000
Accounts payable 350,000
Accrued expenses 60,000
Estimated liability for damages 140,000
Total 1,350,000

Note 5 – Reserves
Share premium 300,000
RE appropriated for plant expansion 1,000,000
RE appropriated for contingencies 100,000
Total 1,400,000

SUMMA COMPANY
Statement of Financial Position
December 31,2020

ASSETS
Current Assets Note
Cash and cash equivalents 1 700,000
Trade and other receivables 2 830,000
Inventories 1,200,000
Prepaid Expenses 100,000
Total current assets 2,830,000

Noncurrent Assets
Property, plant and equipment 5 5,500,000
Long-term investment 6 2,700,000
Intangible assets 7 370,000
Total noncurrent assets 8,570,000

Total assets 11,400,000

LIABILITIES AND SHAREHOLDER’S EQUITY

Current liabilities
Trade and other payables 8 2,050,000
Bonds payable due June 30, 2021 2,000,000
Total current liabilities 4,050,000

Noncurrent
liabilities
Deferred tax liability 650,000
Total noncurrent liabilities 650,000

Shareholder’s
equity
Share capital 9 3,500,000
Reserves 500,000
Retained earnings 2,700,000
Total shareholder’s equity 6,700,000

Total liabilities and shareholder’s equity 11,400,000

Note 1 – Cash and Cash Equivalents

Cash on hand 50,000
Cash on bank 650,000
Total cash and cash equivalents 700,000

Note 1 – Trade and other receivables

Accounts Receivable 650,000
Allowance for doubtful accounts (50,000)
Notes Receivable 200,000
Accrued interest receivable 30,000
Total trade and other receivables 830,000

Note 3 – Property, Plant and equipment

Land 1,000,000
Building 5,500,000
Furniture and Equipment 2,400,000
Total 8,900,000
Accumulated Depreciation (3,400,000)
Carrying amount 5,500,000
Accumulated Depreciation
Building 2,500,000
Furniture and Equipment 900,000
Total Accumulated Depreciation 3,400,000

Note 4 - Long term investments

Bond sinking fund 2,000,000
Investment Property 700,000
Total other long-term investments 2,700,000

Note 5 – Intangible assets

Patent 370,000
Total Intangible assets 370,000

Note 7 – Trade and other payables

Accounts payable 1,000,000
Notes Payable 850,000
Accrued taxes 50,000
Other accrued liabilities 150,000
Total trade and other payables 2,050,000
Note 8- Share Capital
Authorized share capital, 50,000 shares, P100 par 5,000,000
Unissued share capital (2,000,000)
Issued share capital 3,000,000
Subscribe share capital, 2,000 shares 1,000,000
Share subscription receivable (500,000)
Total reserves 3,500,000
Note 9 - Reserves
Share premium 300,000
Retained earnings appropriated for contingencies 200,000
Total reserves 500,000

Problems 8-5
1. C
2. D
3. A
4. A
5. D
Problem 8-6
1. C 6. A
2. A 7. A
3. D 8. A
4. D 9. D
5. A 10. C
Problem 8-7
1. D 6. C
2. A 7. A
3. C 8. D
4. D 9. D
5. A 10. D
Problem 8-8
1. A 6. D
2. D 7. D
3. D 8. C
4. B 9. D
5. D 10. D
Problem 8-9
1. a
2. d
3. c
4. d
5. b
Problem 8-10
1. A
 2. D
3. B
4. D
5. A
Problem 8-11
1. C 6. C
2. B 7. D
3. B 8. B
4. B 9. D
5. D 10. A
Problem 8-12
1. C
2. D
3. D
4. D
5. B