ACC 311

Assignment 2

Presented below is the statement of financial position of Wakanda Company on

December 31, 2019.

Current assets P 435,000

Investments 640,000
Property, plant and equipment 1,720,000
Intangible assets 305,000
Current liabilities 330,000
Long-term liabilities 1,000,000
Shareholders’ equity 1,770,000

 The current assets include cash of P100,000; accounts receivable of P170,000 less
P10,000 for allowance for doubtful accounts; inventories amounting to P180,000; and
unearned revenue of P5,000. The cash balance is composed of P114,000 less a bank
overdraft of P14,000.
 The investments include cash surrender value of a life insurance contract amounting to
P40,000; investment in shares (short-term-trading) of P80,000; and long-term (available for
sale) of P270,000; and bond sinking fund of P250,000.
 Property, plant and equipment include buildings amounting to P1,040,000 less accumulated
depreciation P360,000; equipment amounting to P450,000 less accumulated depreciation
P180,000; land amounting to P500,000; and land held for undetermined use amounting to
P270,000.
 Intangible assets include a franchise of P165,000; goodwill of P100,000; and discount on
bonds payable of P40,000.
 Current liabilities include accounts payable of P90,000; notes payable (short-term) of
P80,000; and long-term liabilities amounting to P120,000; and taxes payable of P40,000.
 Long-term liabilities comprise solely of 10% bonds payable due on year 2026.
 Shareholders’ equity has preference shares, no par, authorized 200,000 shares, issued
70,000 shares for P450,000, and ordinary shares P1 par, authorized 400,000 shares, issued
100,000 shares at an average price of P10. In addition, the entity has retained earnings of
P320,000.

Required:
Reconstruct the balances in the Statement of Financial Position of Wakanda Company
for December 31, 2019 (i.e. determine the correct balances for the items presented).
Show supporting computations for the adjusted balances.