NAME: Date:

Professor: Section: Score:

INTERMEDIATE ACCOUNTING 3
SECOND GRADING QUIZ
The unadjusted trial balance of SAY-ON RA Co. on December 31, 20x1 is shown below:
Accounts Debits Credits
Cash on Hand 450,000
Cash in Bank 4,800,000
Money Market placements 1,700,000
Cash Surrender Value 860,000
Accounts receivable 3,900,000
Allowance for bad debts 920,000
Inventories 2,3000,000
Bond Sinking Fund 800,000
Current Tax Asset 750,000
Investment in equity securities-FVOCI 1,600,0000
Land and Building 2,800,000
Land 1,600,000
Building 4,500,000
Accumulated Depreciation-Building 450,000
Equipment 1,400,000
Accumulated Depreciation-Equipment 400,000
Patent 900,000
Accumulated Amortization -
Accounts Payable 890,000
Loans Payable 2,000,000
Bonds Payable 8,000,000
Interest Payable 1,040,000
Accrued Liabilities 360,000
Ordinary Share Capital 6,000,000
Retained Earnings 4,544,000
Sales 16,800,000
Cost of Sales 7,200,000
Freight out 870,000
Interest expense 1,040,000
Sales Commissions 504,000
Salaries of administrative personnel 2,820,000
Salaries of sales personnel 870,000
Unrealized gain on equity securities-FVOCI 260,000
Totals 41,664,000 41,664,000
Additional Information:
a. The amount of cash in bank shown on the trial balance is the general ledger amount.
Deposit in transit and outstanding checks on December 31, 20x1 are P1,000,000 and
P800,000 respectively. The money market placements are acquired three months before
their scheduled maturity date.
b. The investments in equity securities measured at FVOCI are acquired during the year and
are stated at year-end fair value.
c. The amount of inventories shown on the trial balance is derived from the year end
physical count. Not included in the count is an unrecorded in transit shipment of
inventories costing P200,000 purchased FOB shipping point. The entity uses a perpetual
inventory system.
d. The “Land and building” account pertains to property being rented out to various tenants.
This property is measured at fair value. The fair value of this property at year end is
P2,900,000.
e. The building, which is one year old at the start of the year, is being depreciated under the
double declining balance method. The building has a residual value of P150,000.
f. The equipment, which is also one year old at the start of the year, has a useful life of 5
years and a residual value of P200,000. Depreciation for the current year is not yet
recognized. All depreciation expenses pertain to administration.
g. The patent is acquired on July 1, 20x1. The previous owner of the patent has held it for
five years prior to SAY-ON RA Co. acquisition. SAY-ON RA Co.’s estimate of the
useful life of the patent is 17 years for acquisition date. Assume patent amortization is
charged to administrative expenses.
h. The loans payable account consists of a 12% bank loan, taken on January 1, 20x1 to
finance the production of custom-built machinery that is held as inventory. It takes a
substantial period of time to get the inventory ready for its intended condition for sale and
it is not routinely manufactured or mass produced. The production started on January 1
and was substantially completed on December 31, 20x1.The total production cost is
P1,800,000, incurred evenly during the year. The loan matures in 5 equal annual
installments beginning January 1, 20x1. Interest is also due every year. The inventory is
on hand at year-end
i. The bonds payable are issued on January 1, 20x1 at a yield to maturity interest of 14%.
SAY-ON RA Co. recorded the bond issue as debit to cash in bank and credit to bonds
payable at face amount. The face rate on the bonds is 10%. The bonds mature in lump
sum on January 1, 20x5; however, interest are due annually every January 1.

j. Utility bills in December 20x1 amounting to P360,000 were paid on January 20x2. This
is not reflected on the trial balance. One-half of the utilities pertain to the sales
department; the other half to administration.
k. The quarterly income taxes paid during the year are debited to the “Current tax Asset”
account. The income tax rate is 30%. (Assume there are no temporary differences during
the year).

Requirement: Prepare a statement of profit or loss and other comprehensive income for the year
ended December 31, 20x1.
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