CHAPTER 2

(Statement of Financial Position)

PROBLEM 2-1
Dilemma Company
Statement of Financial Position
Dec. 31, 2020

ASSETS
Current Assets: Notes
Cash and Cash Equivalent P 800,000
Financial Assets at Fair Value 440,000
Trade and Other receivable 1 700,000
Inventory 1,000,000
Prepaid Expenses 160,000
Total current assets 3,100,000

Noncurrent Assets:
Property, plant and equipment 2 6,700,000
Intangible assets 3 200,000
Total noncurrent assets 6,900,000
Total Assets 10,000,000

LIABILITIES AND SHAREHOLDERS EQUITY

Current Liabilities:
Trade and other payables 4 1,200,000

Noncurrent Liabilities:
Bonds payable 5 1,800,000
Notes Payable to Bank, due 7/1/22 250,000
Total noncurrent liabilities 2,050,000

Shareholders Equity:
Share Capital, P100 par, 40,000 shares authorized
30,000 shares issued 3,000,000
Reserves 6 250,000
Retained Earnings 7 3,750,000
Treasury Shares, at cost, 2,000 shares -250,000
Total shareholders equity 6,750,000
Total Liabilities and Shareholders Equity 10,000,000

PROBLEM 2-2
Socorro Company
Statement of Financial Position
Dec. 31, 2020

ASSETS
Current Assets: Notes
Cash and Cash Equivalent 1 P 700,000
Trade and Other receivable 2 700,000
Inventories 600,000
Prepaid Expenses 3 50,000
Total current assets 2,050,000

Noncurrent Assets:
Property, plant and equipment 4 4,150,000
Long-term investment 5 1,000,000
Investment property 6 500,000
Intangible assets 7 550,000
Other noncurrent Assets 8 450,000
Total noncurrent assets 6,650,000
Total Assets 8,700,000

LIABILITIES AND SHAREHOLDERS EQUITY

Current Liabilities:
Trade and other payables 9 820,000
Serial bonds payable-current portion 100,000
Total Current Liabilities 920,000

Noncurrent Liabilities:
Serial bonds payable-remaining portion 400,000
Unearne leasehold income-remaining portion 280,000
Total noncurrent liabilities 680,000

Shareholders Equity:
Share Capital 10 5,150,000
Reserves 11 1,050,000
Retained Earnings 12 1,200,000
 Treasury Shares, at cost 300,000
Total shareholders equity 7,100,000
Total Liabilities and Shareholders Equity 8,700,000

PROBLEM 2-3
Magna Company
Statement of Financial Position
Dec. 31, 2020

ASSETS
Current Assets: Notes
Cash P 400,000
Financial Assets at Fair Value 100,000
Trade and Other receivable 1 700,000
Inventories 800,000
Prepaid Expenses 100,000
Total current assets 2,100,000

Noncurrent Assets:
Property, plant and equipment 2 7,150,000
Long-term investment 3 300,000
Intangible assets 4 300,000
Total noncurrent assets 7,750,000
Total Assets 9,850,000

LIABILITIES AND SHAREHOLDERS EQUITY

Current Liabilities:
Trade and other payables 5 550,000
Notes Payable-short term 450,000
Total Current Liabilities 1,000,000

Noncurrent Liabilities:
Bonds payable 6 1,900,000
Notes Payable-long term 300,000
Total noncurrent liabilities 2,200,000

Shareholders Equity:
Share Capital 7 2,750,000
 Reserves 8 1,450,000
Retained Earnings 2,450,000
Total shareholders equity 6,650,000
Total Liabilities and Shareholders Equity 9,850,000

PROBLEM 2-4
Boracay Company
Statement of Financial Position
Dec. 31, 2020

ASSETS
Current Assets: Notes
Cash and Cash Equivalent 1 1,200,000
Financial Assets at Fair Value 400,000
Trade and Other receivable 2 1,000,000
Inventory 1,000,000
Prepaid Expenses 3 50,000
Total current assets 3,650,000

Noncurrent Liabilities:
Property, plant and equipment 4 3,950,000
Goodwill 100,000
Total noncurrent assets 4,050,000
Total Assets 7,700,000

LIABILITIES AND SHAREHOLDERS EQUITY

Current Liabilities:
Trade and other payables 5 2,050,000

Noncurrent Liabilities:
Mortgage Payable 2,000,000

Shareholders Equity:
Ordinary share capital, P100 par 3,000,000
Share premium 200,000
Retained Earnings 6 450,000
Total shareholders equity 3,650,000
Total Liabilities and Shareholders Equity 7,700,000
PROBLEM 2-1 DILEMMA

NOTE 1: TRADE AND OTHER RECEIVABLES NOTE 6: RESERVES

Accounts receivable 750,000
Allowance for Doubful Accounts -50,000
Total 700,000 NOTE 7: RETAINED EARNING
unadjusted balance
NOTE 2: PPE add:
Land 500,000 Total
Building in Process 5,000,000 less:
Machinery and Equipment 1,200,000
Accumulated Depreciation -300,000
Total 6,700,000
Unappropriated retained er
NOTE 3: INTANGIBLE ASSETS
Patent 200,000

NOTE 4: TRADE AND OTHER PAYABLE

Accounts payable 900,000
Accrued expenses 150,000
Accrued interest on bonds payable 50,000
Liability for laws on lawsuit 100,000
Total 1,200,000

NOTE 5: BONDS PAYABLE

Bond Payable 2,000,000
Discount on Bonds Payable -200,000
Total 1,800,000
PROBLEM 2-2 SOCORRO

NOTE 1: CASH AND CASH EQUIVALENT

Cash 500,000 NOTE 8: OTHER NONCURRE
Money market placement 200,000
Total 700,000

NOTE 2: TRADE AND OTHER RECEIVABLES

Accounts receivable 750,000 NOTE 9: TRADE AND OTHER
Allowance for Doubful Accounts -50,000
Total 700,000

NOTE 3: PREPAID EXPENSE

Store supplies 50,000

NOTE 4: PPE NOTE 10: COMMON STOCK

Land 400,000
Building 3,500,000
Equipment 1,000,000
Accumulated Depreciation -750,000
Total 4,150,000 NOTE 11: RESERVES

NOTE 5: LONG-TERM INVESTMENT

Investment in bonds 1,000,000

NOTE 6: INVESTMENT PROPERTY

LAnd held undetermined use 500,000 NOTE 12: RETAINED EARNIN

NOTE 7: INTANGIBLE ASSETS

Trademark 300,000
Patent 250,000
 Total 550,000

PROBLEM 2-3 MAGNA

NOTE 1: TRADE AND OTHER RECEIVABLES NOTE 6: BONDS PAYABLE

Accounts receivable 750,000
Allowance for Doubful Accounts -50,000
Net realizable value 700,000

NOTE 2: PPE NOTE 7: SHARE CAPITAL

Land 1,250,000
Land for futureplant site 1,500,000
Building 5,000,000
Accumulated Depreciation 1,400,000
Total -2,000,000

NOTE 3: LONG-TERM INVESTMENT

Investment in equity securities 250,000
Cash surrender value 50,000 NOTE 8: RESERVES
Total 300,000

NOTE 4: INTANGIBLE ASSET

Franchise 100,000
GoodwilL 200,000
Total 300,000

NOTE 5: TRADE AND OTHER PAYABLE

Accounts PAyable 400,000
Tax payable 150,000
Total 550,000
PROBLEM 2-4 BORACAY

NOTE 1: CASH AND CASH EQUIVALENT NOTE 5: TRADE AND OTHER

Cash in bank 700,000
Money market placement 500,000
Total 1,200,000

NOTE 2: TRADE AND OTHER RECEIVABLES

Accounts receivable 800,000
Notes receivable 200,000 NOTE 6: RETAINED EARNING
Total 1,000,000

NOTE 3: PREPAID EXPENSE

Office supplies 50,000

NOTE 4: PPE
Land 1,000,000
Building 3,000,000
Office equipment 250,000
Accumulated Depreciation 300,000
Total 3,950,000
NOTE 6: RESERVES
Retained ernings appropriated for treasury shares 250,000

NOTE 7: RETAINED EARNINGS

unadjusted balance 4,000,000
cancelation of appropriation for contigencies 150,000
4,150,000

Interest accrued on bonds payable 50,000

Appropriated for treasury stock 250,000
Actual loss on law suit 100,000 400,000
Unappropriated retained ernings 3,750,000
NOTE 8: OTHER NONCURRENT ASSETS
Advances to officers 150,000
Restricted foreign deposits 300,000
Total 450,000

NOTE 9: TRADE AND OTHER PAYABLE

Accounts PAyable 500,000
Notes payable 100,000
Income Tax Payable 150,000
Unearned leasehold income-current portion 70,000
Total 820,000

NOTE 10: COMMON STOCK

Share capital issue 5,000,000
Stock Dividend payable 150,000
Total 5,150,000

NOTE 11: RESERVES

Share premium 250,000
Retained ernings appropriated for plant expansion 500,000
Retained ernings appropriated for treasury shares 300,000
Total 1,050,000

NOTE 12: RETAINED EARNING

Retained ernings unappropriated 1,500,000
Appropriated for teasury share -300,000
Adjusted balance 1,200,000
NOTE 6: BONDS PAYABLE
Bonds payable, due 12/21/2023 2,000,000
Discount on bonds payable -100,000
Total 1,900,000

NOTE 7: SHARE CAPITAL

Preference Share capital P5 stated value
300,000 share authorized, 150,000 share
issued 750,000
Ordinary share capital, P20 par value
400,000 share authorized, 100,000 2,000,000
share issued
Total 2,750,000

NOTE 8: RESERVES
Share premium-preference 250,000
Share premium-ordinary 1,000,000
Retained earnings appropriated for contigencies 200,000
Total 1,450,000
NOTE 5: TRADE AND OTHER PAYABLE
Accounts PAyable 1,500,000
Withholding tax 100,000
Accrued salaries payable 250,000
Accrued interest payable 200,000
Total 2,050,000

NOTE 6: RETAINED EARNINGS

Net assets per book 4,200,000
Contributed capital 3,200,00
Unadjusted retained earnings 1,000,000
Unrecorded expenses:
Salaries 250,000
Depreciation on building 300,000 550,000
Total 450,000
PROBLEM 2-1 DILEMMA

NOTE 1: TRADE AND OTHER RECEIVABLES NOTE 6: RESERVES

Accounts receivable 750,000 Retained ernings appropriated for treasury sh
Allowance for Doubful Accounts -50,000
Total 700,000 NOTE 7: RETAINED EARNINGS
unadjusted balance
NOTE 2: PPE add: cancelation of appropriation for contigencies
Land 500,000 Total
Building in Process 5,000,000 less:
Machinery and Equipment 1,200,000 Interest accrued on bonds payable
Accumulated Depreciation -300,000 Appropriated for treasury stock
Total 6,700,000 Actual loss on law suit
Unappropriated retained ernings
NOTE 3: INTANGIBLE ASSETS
Patent 200,000

NOTE 4: TRADE AND OTHER PAYABLE

Accounts payable 900,000
Accrued expenses 150,000
Accrued interest on bonds payable 50,000
Liability for laws on lawsuit 100,000
Total 1,200,000

NOTE 5: BONDS PAYABLE

Bond Payable 2,000,000
Discount on Bonds Payable -200,000
Total 1,800,000

PROBLEM 2-2 SOCORRO

NOTE 1: CASH AND CASH EQUIVALENT

Cash 500,000 NOTE 8: OTHER NONCURRENT ASSETS
Money market placement 200,000 Advances to officers
Total 700,000 Restricted foreign deposits
Total
NOTE 2: TRADE AND OTHER RECEIVABLES
Accounts receivable 750,000 NOTE 9: TRADE AND OTHER PAYABLE
Allowance for Doubful Accounts -50,000 Accounts PAyable
Total 700,000 Notes payable
Income Tax Payable
NOTE 3: PREPAID EXPENSE Unearned leasehold income-current portion
Store supplies 50,000 Total

NOTE 4: PPE NOTE 10: COMMON STOCK

Land 400,000 Share capital issue
Building 3,500,000 Stock Dividend payable
Equipment 1,000,000 Total
Accumulated Depreciation -750,000
Total 4,150,000 NOTE 11: RESERVES
Share premium
NOTE 5: LONG-TERM INVESTMENT Retained ernings appropriated for plant expa
Investment in bonds 1,000,000 Retained ernings appropriated for treasury sh
Total
NOTE 6: INVESTMENT PROPERTY
LAnd held undetermined use 500,000 NOTE 12: RETAINED EARNING
Retained ernings unappropriated
NOTE 7: INTANGIBLE ASSETS Appropriated for teasury share
Trademark 300,000 Adjusted balance
Patent 250,000
Total 550,000

PROBLEM 2-3 MAGNA

NOTE 1: TRADE AND OTHER RECEIVABLES NOTE 6: BONDS PAYABLE

Accounts receivable 750,000 Bonds payable, due 12/21/2023
Allowance for Doubful Accounts -50,000 Discount on bonds payable
Net realizable value 700,000 Total

NOTE 2: PPE NOTE 7: SHARE CAPITAL

Land 1,250,000 Preference Share capital P5 stated value
Land for futureplant site 1,500,000 300,000 share authorized, 150,000 shar
Building 5,000,000 issued
Accumulated Depreciation 1,400,000 Ordinary share capital, P20 par value
Total -2,000,000 400,000 share authorized, 100,000
share issued
NOTE 3: LONG-TERM INVESTMENT Total
Investment in equity securities 250,000
Cash surrender value 50,000 NOTE 8: RESERVES
Total 300,000 Share premium-preference
Share premium-ordinary
NOTE 4: INTANGIBLE ASSET Retained earnings appropriated for contigenc
 Franchise 100,000 Total
GoodwilL 200,000
Total 300,000

NOTE 5: TRADE AND OTHER PAYABLE

Accounts PAyable 400,000
Tax payable 150,000
Total 550,000

PROBLEM 2-4 BORACAY

NOTE 1: CASH AND CASH EQUIVALENT NOTE 5: TRADE AND OTHER PAYABLE
Cash in bank 700,000 Accounts PAyable
Money market placement 500,000 Withholding tax
Total 1,200,000 Accrued salaries payable
Accrued interest payable
NOTE 2: TRADE AND OTHER RECEIVABLES Total
Accounts receivable 800,000
Notes receivable 200,000 NOTE 6: RETAINED EARNINGS
Total 1,000,000 Net assets per book
Contributed capital
NOTE 3: PREPAID EXPENSE Unadjusted retained earnings
Office supplies 50,000 Unrecorded expenses:
Salaries
NOTE 4: PPE Depreciation on building
Land 1,000,000 Total
Building 3,000,000
Office equipment 250,000
Accumulated Depreciation 300,000
Total 3,950,000
gs appropriated for treasury shares 250,000

4,000,000
appropriation for contigencies 150,000
4,150,000

d on bonds payable 50,000

or treasury stock 250,000
100,000 400,000
ined ernings 3,750,000

NCURRENT ASSETS
150,000
300,000
450,000

OTHER PAYABLE
500,000
100,000
150,000
 hold income-current portion 70,000
820,000

5,000,000
150,000
5,150,000

250,000
gs appropriated for plant expansion 500,000
gs appropriated for treasury shares 300,000
1,050,000

gs unappropriated 1,500,000
or teasury share -300,000
1,200,000

due 12/21/2023 2,000,000

-100,000
1,900,000

re capital P5 stated value

hare authorized, 150,000 share
750,000
capital, P20 par value
hare authorized, 100,000 2,000,000

2,750,000

250,000
1,000,000
ngs appropriated for contigencies 200,000
 1,450,000

OTHER PAYABLE
1,500,000
100,000
250,000
200,000
2,050,000

4,200,000
3,200,00
ained earnings 1,000,000

250,000
on on building 300,000 550,000
450,000