LIABILITIES

OLSON MUSIC EMPORIUM carries a wide variety of musical instruments,

sound reproduction equipment, recorded music, and sheet music. To promote
the sale of its products, Olson uses two promotion techniques
premiums and warranties.
PREMIUMS
The premium is offered on the recorded and sheet music. Customers
receive a coupon for each P10 spent on recorded music and sheet music.
Customers may exchange 200 coupons and P200 for a CD player. Olson
pays P340 for each CD player and estimates that 60% of the coupons
given to Customers will be redeemed. A total of 6,500 CD players used
in the premium program were purchased during the year and there were
1,200,000 coupons redeemed in 2014.
WARRANTIES
Musical instruments and sound reproduction equipment are sold with a
one-year warranty for replacement of parts and labor. The estimated
warranty cost, based on past experience, is 2% of sales. Replacement
parts and labor for warranty work totaled P1,640,000 during 2014.

Olson uses the accrual method to account for the warranty and premium
costs for financial reporting purposes. Olson's sales for 2014 totaled
P72,000,000- P54,000,000 from musical instruments and sound reproduction
equipment and P18,000,000 from recorded music and sheet music. The
balances in the accounts related to warranties and premiums on January 1,
2014, were as shown below:

Inventory of premium CD players P399,500

Estimated premium claims outstanding 448,000
Estimated liability from warranties 1,360,000

Based on the preceding information, determine the amounts that will be

shown on the 2014 financial statements for the following:

1. Warranty expense
A. P1,640,000 B. P1,080,000
C. P800,000 D. P360,000
2. Estimated liability from warranties
A. P1,920,000 B. P1,080,000.
C. P240,000 D. P800,000
3. Premium expense
A. P1,836,000 B. P840,000
C. P756,000 D. P2,189,500
4. Inventory of premium CD players
A. P399,500 B. P569,500
C. P2,210,000 D. P739,500
5. Estimated premium claims outstanding
A. P364,000 B. P840,000
C. P756,000 D. P672,000
 SOLUTION:

1) B.
Sales of musical instruments and sound P 54,000,000
reproduction equipment
Estimated warranty cost x 2%
Warranty expense for 2014 P 1,080,000
2) D.
Estimated liability from warranties,Jan. 1,2014 P 1,360,000
Add: 2014 warranty expense 1,080,000
Total P 2,440,000
Less: Actual warranty costs during 2014 1,640,000
Estimated liability from warranties,Dec. 31,2014 P 800,000
3) C.
Coupons issued(P18M/P10) P 1,800,000
Multiply by estimated redemption rate x 60%
Estimated number of coupons to be redeemed 1,080,000
Divide by exchange rate(200 coupons for a CD player) /200
Estimated number of CD players to be issued 5,400
Multiply by net cost of a CD player(P340-P200) x140
Premium expense for 2014 P 756,000
4) B.
Inventory of premium CD players P 399,000
Add: Premium CD players purhased during 2014(340x6,500) 2,210,000
Total P 2,609,500
Less: Premium CD players distributed to customers
During 2014(1,200,000/200=6,000xP340) 2,040,000
Inventory of premium CD players,Dec. 31,2014 P 569,500
5) A.
Estimated premium claims outstanding,Jan. 1,2014 P 448,000
Add: 2014 premium expense 756,000
Total 1,204,000
Less: 2014 actual redemptions(1,200,000/200=6,000x140) 840,000
Estimated premium claims outstanding P 364,000

LARIO COMPANY issued 10-year bonds on January 1,2014. The company’s

year-end is December 31, and financial statements are prepared annually.
The amortization and interest schedule below reflect the bonds issuance and
the subsequent interest payments and charges.
Date Interest paid Interest exp. Amount Carrying
Unamortized Value
01/01/14 - - P28,253 P471,747
12/31/14 P55,000 P56,610 26,643 473,357
12/31/15 55,000 56,803 24,840 475,160
12/31/16 55,000 57,019 22,821 477,179
12/31/17 55,000 57,261 20,560 479,440
12/31/18 55,000 57,533 18,027 481,973
12/31/19 55,000 57,837 15,190 484,810
12/31/20 55,000 58,177 12,013 487,987
12/31/21 55,000 58,558 8,455 491.545
12/31/22 55,000 58,985 4,470 495,530
12/31/23 55,000 59,470 - 500,000

REQUIREMENT:

1. The bonds were issued at

A. A premium B. A discount
C. Face value D. Par value
2. What amortization method is used in the amortization schedule presented?
A. Straight-line method B. Bonds outstanding meth0d
C.Effective interest method D. Declining balance method
3. What is the nominal (stated) interest rate of the bonds issued on January 1,
2014?
A. 11% B. 12%
C. 10% D. 6%
4. What is the effective interest rate of the bonds issued on January 1,
2014?
A. 11 % B. 12%
C. 10% D. 6%
5. On the basis of the schedule presented, what is the journal entry to
record the issuance of the bonds on January 1, 2014?
A. Cash 500,000
Bonds payable 500,000
B. Cash 471,747
Interest expense 28,253
Bonds payable 500,000
C. Cash 500,000
Premium on bonds payable 28,253
Bond payable 471,747
D. Cash 471,747
Discount on bonds payable 28,253
Bonds payable 500,000

SOLUTION:

1) B. The bonds were sold at a discount of P28,253. The issue price

P471,747 is less than the maturity value or face value of P500,000 on
December 31,2023.
2) C. The amortization schedule presents an increasing interest charge which
characterizes the effective interest method of amortizing bond premium or
discount.
3) A. P55,000/P500,000= 11%
4) B. P 56,610/P471,747= 12%
5) D.
Cash 471,747
Discount on bonds payable 28,253
Bonds payable 500,000

ELEANOR CORP. has been producing quality disposable diapers for more
than two decades. The company’s fiscal year runs from April 1 to March 31.
The following information relates to the obligations of Eleanor as of March
31,2014.
BONDS PAYABLE
Eleanor issued P10,000,000 OF 10% bonds on July 1,2012. The prevailing
market rate of interest for these bonds was 12% on the date of issue. The
bonds will mature on July 1,2022. Interest is paid semiannually on July 1 and
January 1. Eleanor uses the effective interest rate method to amortize bond
premium or discount.
The following present value factors are taken from present value tables:
Present value of 1 at 12% for 10 periods 0.32917
Present value of 1 at 6% for 20 periods 0.31180
Present value of an ordinary annuity of 1 at 12% for 10 periods 5.65022
Present value of an ordinary annuity of 1at 6% for 20 periods 11.46992
NOTES PAYABLE
Eleanor has signed several long term notes with financial institutions. The
maturities of these notes are given in the schedule below. The total unpaid
interest for all of these notes amounts to P600,000 on March 31,2014.
Due date Amount due
April 1,2014 P 400,000
July 1,2014 600,000
October 1,2014 300,000
January 1,2015 300,000
April 1,2015 - March 31,2016 1,200,000
April 1,2016 - March 31,2017 1,000,000
April 1,2017 - March 31,2018 1,400,000
April 1,2018 - March 31,2019 800,000
April 1,2019 - March 31,2020 1,000,000
P 7,000,000
ESTIMATED WARRANTIES
Eleanor has one year product warranty on some selected items in its product
line. The estimated warranty liability on sales made during the 2012-2013
fiscal year and still outstanding as of March 31,2013 amounted to P180,000.
The warranty costs on sales made from April 1, 2013 through March 31,2014,
are estimated at P520,000. The actual warranty costs incurred during 2013-
2014 fiscal year are as follows:
Warranty claims honored on 2012-2013 sales P 180,000
Warranty claims honored on 2012-2014 sales 178,000
Total warranty claims honored P 358,000
OTHER INFORMATION
1. TRADE PAYABLES
Accounts payable for supplies,goods and services purchased on open
account amount to P740,000 as of March 31,2014.
2. PAYROLL RELATED ITEMS
Accrued salaries and wages P 300,000
Withholding taxes payable 94,000
Other payroll deductions 10,000
Total P
404,000
3. MISCELLANEOUS ACCRUALS
Other accruals not separately classified amount to P150,000 as of March
31,2014.
4. DIVIDENDS
On March 15 ,2014, Eleanor’s board of directors declared a cash dividend of
P0.20 per ordinary share and a 10% share dividend. Both dividends were to
be distributed on April 12,2014, to the shareholders of record at the close of
business on March 31,2014. Data regarding Eleanor ordinary share capital
are as follows:
Par value P5 per share
Number of shares issued and outstanding 6,000,000 shares
Market value of ordinary shares:
March 15,2014 P22 per share
March 31,2014 21.50 per share
April 12,2014 22.50 per share

REQUIREMENTS:

1. How much was received by Eleanor from the sale of the bonds on July 1,
2012?
A. P8,852,960 B. P10,000,000
C. P10,500,000 D. P10,647,040
2. What is the current portion of Eleanor's notes payable at March 31,2014?
A. P2,800,000 B. P1,600,000
C. P1,300,000 D. P3,800,000
3. The balance of the estimated warranties payable at March 31, 2014, is?
A. P342,000 B. P18,000
C. P520,000 D. P180,000
4. On March 31, 2014, Eleanor's statement of financial position would report
total current liabilities of?
A. P5,286,000 B. P4,386,000
C. P5,336,000 D. P5,642,000
5. On March 31, 2014, Eleanor's statement of financial position would
report total non-current liabilities of?
A. P14,389,350 B. P14,352,217
C. P14,370,783 D. P14,252,960

SOLUTION:
1) A.
Present value of principal(10Mx.31180) P3,118,000
Present value of interest payments(10Mx5%x11.46992) 5,734,960
Issue price/Proceeds P8,552,960
2) B.
April 1,2014 P 400,000
July 1,2014 600,000
October 1,2014 300,000
January 1,2015 300,000
Total P 1,600,000
3) A.
Balance,April 1,2013 P 180,000
Add: Warranty expense for current year 520,000
Total 700,000
Less: Actual warranty costs 358,000
Balance, March 31,2014 P 342,000
4) A.
Notes payable-current portion P 1,600,000
Estimated warranties payable 342,000
Accounts payable 740,000
Payroll related accruals and deductions withheld 404,000
Miscellaneous accruals 150,000
Cash dividends payable 1,200,000
Accrued interest on:
Bonds payable(10Mx10%x3/12) 250,000
Notes payable 600,000
Total current liabilities P 5,286,000
5) C.
Date Interest paid Interest Discount Carrying
expense amortization Value
07/01/12 - - - P8,852,960
12/31/12 P500,000 P531,178 P31,178 8,884,138
07/01/13 500,000 533,048 33,048 8,917,186
12/31/13 500,000 535,031 35,031 8,952,217
07/01/14 500,000 537,133 37,133 8,989,350
Bonds payable:
Carrying Value,Jan 1,2014 P8,952,217
Add: Discount amortization:
Jan. 1-Mar. 31(P37,133x3/6) 18,566 P 8,970,783
Notes payable-non current portion:
(P7,000,000-P1,600,00 current portion) 5,400,000
Total non- current liabilities P 14,370,783

The following data pertain to the CARROLL COMPANY.

1. At December 31, 2014, the company has a P900,000 liability reported for
estimated litigation claims. This P900,000 balance represents amounts that
have been charged to income but are not tax deductible until they are paid.
The company expects to pay the claims and thus have, tax-deductible
amounts in the future in the following manner:
Year Payments
2017 P150,000
2018 690,000
2019 60,000
P900,000
2. The company uses different depreciation methods for financial reporting
and tax purposes. Consequently, at December 31, 2014, the company has a
cumulative temporary difference due to depreciable property of P2,400,000.
This P2,400,000 cumulative temporary difference is to result in taxable
amounts in future years in the following manner:
Year Amount
2015 P 480,000
2016 480,000
2017 480,000
2018 480,000
2019 480,000
P 2,400,000
3. The income tax rate is 30%.
4. Taxable income for 2014 is P2,400,000. The company expects to report
taxable income for the next five years.
5. No temporary differences existed at the end of 2013.

REQUIREMENT:

1. The deferred tax liability to be reported in Carroll's statement of financial

position at December 31, 2014, is?
A. P720,000 B. P480,000
C. P450,000 D. P270,000
2. The deferred tax asset to be reported in Carroll's statement of financial
position at December 31, 2014, is?
A. P270,000 B. P150,000
C. P450,000 D. P720,000
3. The amount of current income tax payable to be reported in Carroll's
Statement of financial position at December 31, 2014, is?
A. P630,000 B. P546,000
C. P540,000 D. P720,000
4. Caroll's pretax accounting income for 2014 is?
A. P3,900,000 B. P900,000
C. P2,874,000 D. P2,400,000
5. Carroll's net income for 2014 is?
A. P2,730,000 B. P3,630,000
C.P1,230,000 D. P4,350,000
SOLUTION:

1) A. Deferred tax liability,Dec. 31,2014(P480,000x5x30%) P 720,000

2) A. Deferred tax asset,Dec. 31,2014(P900,000x30%) P 270,000
3) D.
Taxable income for 2014 P 2,400,000
Tax rate x30%
Income tax payable for 2014 P 720,000
4) A.
Taxable income for 2014 P 2,400,000
Future taxable temporary difference-depreciation 2,400,000
Future deductible temporary difference-litigation (900,000)
Pre-tax accounting income for 2014 P 3,900,000
5) A.
Pre-tax accounting income P 3,900,000
Income tax expense:
Current P720,000
Deferred 450,000 1,170,000
Net income P2,730,000

CHANGE IN ACCOUNTING ESTIMATE AND PRIOR PERIOD ERRORS

The following information pertains to VANUATU COMPANY’s depreciable

assets:
1. Machine X was purchased for P150,000 on January 1, 2009. The entire
cost was expensed in the year of acquisition. The estimated useful life of this
machine is 15 years with no residual value.

2. Machine Y cost P525,000 and was acquired on January 1, 2010. On the

acquisition date, the expected useful life was 12 years with no residual value.
The straight-line depreciation method was used. On January 2,2014,It was
estimated that the remaining life of the asset would be 4 years and that there
would be a P25,000 residual value.

3. A building was purchased on January 3, 2011, for P3,000,000. The building

was expected to have a Useful life of 20 years with no residual value. The
straight-line depreciation method was used.On January 1, 2014, a change
was made to the sum-of-the-years-digits method of depreciation. No change
was made to the estimated useful life and residual value of the building.

REQUIREMENT:

1.The adjusting entry on January 1, 2014, relative to machine X should

include a credit to?
A. Accumulated depreciation of P60,000 B. Retained earnings of P100,000
C. Machinery of P150,000 D. No adjusting entry is necessary
2. What is the carrying value of machine Y on January 1, 2014?
A. P350,000 B. P325,000
C. P306,250 D. P525,000
3. What is the depreciation expense on machine Y for 2014?
A. P87,500 B. P77,083
C. P81,250 D. P41,667
4. What is the book value of the building at December 31, 2013?
A. P2,185,714 B. P2,550,000
C. P1,942,857 D. P2,266,667
5. What is the book value of the building on December 31, 2014?
A. P2,185,714 B. P2,550,000
C. P1,942,857 D. P2,266,667

SOLUTION:

1) B.
Machinery-X 150,000
Accumulated depreciation-machinery 50,000
Retained earnings 100,000
2) A.
Cost of machinery-Y P 525,000
Less:accumulated depreciation 175,000
Carrying value, Dec. 31,2013 P350,000
3) C.
Carrying value,Dec. 31,2013 P350,000
Less:salvage value 25,000
Remaining depreciable cost 325,000
Divide by revised remaining life /4
Depreciation for 2014 P 81,250
4) B.
Cost of the building P 3,000,000
Less: accumulated depreciation,Dec.31,2013 450,000
Book value of the building,Dec.31,2013 P2,550,000
5) D.
Book value of the building,Dec.31,2013 P2,550,000
Less:depreciation for 2014(2,550x17/153) 283,333
Book value of the building Dec. 31,2014 P 2,266,667

STATEMENT OF CASH FLOWS

SUDAN COMPANY uses the direct method to prepare its statement of cash
flows. Sudan’s trial balance at December 31,2014 and 2013 are shown below:
 2014 December 31 2013
Debits
Cash P105,000 P96,000
Accounts receivable 99,000 90,000
Inventory 93,000 141,000
Property,plant and equipment 300,000 285,000
Unamortized bond discount 13,500 15,000
Cost of goods sold 750,000 1,140,000
Selling expenses 424,500 516,000
General and administrative expenses 411,000 453,900
Interest expense 12,900 7,800
Income tax expense 61,200 183,600
P2,270,100 P2,928,300
Credits
Allowance for bad debts P3,900 P3,300
Accumulated depreciation 49,500 45,000
Accounts payable-trade 75,000 46,500
Income taxes payable 63,000 87,300
Deferred income taxes payable 15,900 13,800
8% bonds payable 135,000 60,000
Ordinary share capital 150,000 120,000
Share premium 27,300 22,500
Retained earnings 134,100 193,800
Sales 1,616,400 2,336,100
P2,270,100 P2,928,300
Additional data as follows:
1.Sudan purchased P15,000 in equipment during 2014.
2. One-third of Sudan's depreciation expense is allocated to selling expenses
and the remainder to general and administrative expenses.
3. Bad debt expense for 2014 was P15,000. During the year, uncollectible
accounts totaling P14,400 were written off. The company reports bad debts as
selling expense.

Required:Based on the preceding data, determine the amounts that should be

reported on Sudan's statement of cash flows for the year ended December
31, 2014, for the following:

1. Cash collected from customers

A. P1,593,000 B. P1,578,000
C. P1,607,000 D. P1,639,800
2. Cash paid to suppliers
A. P769,500 B. P826,500
C. P673,500 D. P730,500
3. Cash paid for interest
A. P14,400 B. P27,200
C. P600 D. P11,400
4. Cash paid for income taxes
A. P39,000 B. P83,400
 C. P87,400 D. P34,800
5. Cash paid for selling expenses
A. P408,000 B. P423,000
C. P405,000 D. P409,50

SOLUTION:

1) A.
Sales P1,616,400
Less: increase in accounts receivable,net of write-offs
(9,000+14,400) 23,400
Cash collected from customers P1,593,000
2) C.
Cost of goods sold P750,000
Less:decrease in inventory 48,000
Purchases 702,000
Less:increase in accounts receivable 28,500
Cash payments to suppliers P673,500
3) D.
Interest expense P12,900
Less: Decrease in unamortized bond discount 1,500
Cash paid for interest P11,400
4) B.
Income tax expense P61,200
Decrease in income tax payable 24,300
Increase in deferred tax liability (2,100)
Cash paid for income taxes P83,400
5) A.
Selling expenses P424,500
Depreciation (1,500)
Bad debt expense (15,000)
Cash paid for selling expenses P408,000

The schedule below shows the account balances of LESOTHO CO. At the
beginning and end of the year ended December 31,2014:

Debits Dec. 31,2014 Dec. 31,2013

Cash and cash equivalents P666,000 P150,000
Investment in trading securities 30,000 120,000
Accounts receivable 444,000 300,000
Inventories 873,000 900,000
Prepaid insurance 7,500 6,000
Land and building 585,000 585,000
Equipment 933,000 510,000
Discount on bonds payable 25,500 27,000
Treasury shares 15,000 30,000
Cost of goods sold 1,617,000
Selling and general expenses 861,000
Income taxes 105,000
Unrealized loss on trading securities 12,000
Loss on sale of equipment 3,000
Total Debits P6,177,000 P2,628,000
Credits
Allowance for bad debts P 24,000 P 15,000
Accumulated depreciation-building 78,750 67,500
Accumulated depreciation-equipment 137,250 82,500
Accounts payable 165,000 180,000
Notes payable-current 210,000 60,000
Accrued expense payable 54,000 26,100
Income taxes payable 105,000 30,000
Unearned revenue 3,000 27,000
Notes payable-non-current 120,000 180,000
Bonds payable 750,000 750,000
Deferred tax liability 141,000 159,000
Ordinary shares,P10 par 1,078,200 600,000
Retained earnings appropriated-TS 15,000 30,000
Retained earnings appropriated
(possible building expansion) 114,000 69,000
Unappropriated retained earnings 103,800 336,000
Share premium 348,000 15,000
Sales 2,694,000
Gain on sale of trading securities 36,000
Total credits P6,177,000 P2,628,000
ADDITIONAL INFORMATION:

1. All purchases and sales were on account.

2. Equipment with an original cost of P45,000 was sold for P21,000
3. Selling and general expenses include the following:
Building depreciation P11,250
Equipment depreciation 75,750
Bad debt expense 9,000
Interest expense 54,000
4. A six-month note payable for P150,000 was issued in connection with the
purchase of new equipment.
5. The non-current note payable requires the payment of P60,000 per year,
plus interest until paid.
6. Treasury shares were sold for P3,000 more than their cost.
7. During the year, a 30% stock dividend was declared and issued. At that
time, there were 60,000 of P10 par ordinary shares outstanding. However,
600 of these shares were held as treasury shares at that time and were
prohibited from participating in the stock dividend. Market value of ordinary
shares was P50 per share when the stock dividend was declared.
8. Equipment was overhauled, extending its useful life, at a cost of
P18,000. The cost was debited to Equipment.

Based on the given data, calculate the following.

1. Net income for 2014

A. P135,000 B. P150,900
C. P130,500 D. P132,000
2. Cash dividends declared and paid during 2014
A. P24,000 B. P156,000
C. P22,200 D. P0
3. Proceeds from issuance of ordinary shares during the year
A. P300,000 B. P330,000
C. P630,000 D. P808,200
4. Proceeds from sale of trading securities
A. P78,000 B. P114,000
C. P126,000 D. P42,000
5. Accumulated depreciation of equipment sold
A. P21,000 B. P45,000
C. P24,000 D. P27,000
6.Cash paid for purchase of equipment
A. P150,000 B. P318,000
C. P450,000 D. P300,000
7. Proceeds from sale of treasury shares
A. P18,000 B. P15,000
C. P12,000 D. P30,000
8. Net cash provided by operating activities
A. P135,000 B. P261,000
C. P249,000 D. P267,900
9. Net cash used in investing activities
A. P318,000 B. P297,000
C. P183,000 D. P279,000
10. Net cash provided by financing activities
A. P564,000 B. P561,000
C. P546,000 D. P318,000

SOLUTION:

1) D.
Sales P2,694,000
Gain on sale of trading securities 36,000
Cost of goods sold (1,617,000)
Selling and general expenses ( 861,000)
Income taxes ( 105,000)
Unrealized loss on trading securities ( 12,000)
Loss on sale of equipment ( 3,000)
Net income P132,000
2) A.
 Unappropriated retained earnings,Dec. 31,2013 P336,000
Net income 132,000
Decrease in appropriation for treasury shares 15,000
Increase in appropriation for possible building expansion (45,000)
Stock dividend declared@par (178,200)
Remaining unappropriated retained earnings 259,800
Unappropriated retained earnings,Dec. 31,2014,
including net income for 2014 235,800
Assumed cash dividends declared and paid during 2014 P 24,000
3) C.
Increase in ordinary shares (P1,078,200-P600,000) P 478,200
Less:stock dividend(P10x59,400x30%) 178,200
Par value of additional ordinary shares issued in 2014 300,000
Increase in share premium(P348,000-P15,000) 333,000
Less:Share premium from resale of treasury shares
@ more than cost 3,000
Share premium from shares issued in 2014 330,000
Proceeds from issuance of ordinary shares in 2014
(P300,000+P330,000) P630,000
4) B.
Net decrease in investment in trading securities P 90,000
Less: unrealized loss on trading securities 12,000
Carrying value of trading securities sold 78,000
Add: gain on sale of trading securities 36,000
Proceeds from sale of trading securities P114,000
5) A.
Proceeds from sale of equipment P 21,000
Add: loss on sale of equipment 3,000
Book value of equipment sold 24,000
Cost of equipment sold 45,000
Accumulated depreciation of equipment sold P 21,000
6) D.
Net increase in equipment(P933,000-P510,000) P423,000
Sale of equipment 45,000
Overhaul of equipment (18,000)
Purchase of equipment 450,000
Less:Note payable issued 150,000
Cash paid P300,000

EQUIPMENT
Bal. 12/31/13 510,000 45,000 Sale
Overhaul 18,000
Purchase
(squeeze) 450,000
Bal.12/31/14 933,000
7) A.
Cost of treasury shares sold(P30,000-P15,000) P 15,000
Share premium from sale of treasury shares 3,000
Proceeds from sale of treasury shares P 18,000
8) C.
Net income P132,000
Depreciation expense 87,000
Loss on sale of equipment 3,000
Unrealized loss on trading securities 12,000
Amortization of bond discount 1,500
Gain on sale of trading securities (36,000)
Proceeds from sale of trading securities 114,000
Decrease in deferred tax liability ( 18,900)
Increase in net accounts receivable (135,000)
Decrease in inventories 27,000
Increase in prepaid insurance (1,500)
Decrease in accounts payable (15,000)
Increase in accrued expenses payable 27,900
Increase in income taxes payable 75,000
Decrease in unearned revenue (24,000)
Net cash provided by operating activities P249,000
9) B.
Purchase of equipment P(300,000)
Overhaul of equipment (18,000)
Sale of equipment 21,000
Net cash used in investing activities P(297,000)
10) A.
Payment of cash dividends P(24,000)
Retirement of notes payable (60,000)
Sale of treasury shares 18,000
Issuance of ordinary shares 630,000
Net cash provided by financing activities P564,000