Professional Documents
Culture Documents
Chapter 22
1. B
2. B
3. Solution:
1,000,00 1,700,00
Cash Accounts payable
0 0
2,700,00
Accounts receivable Income tax payable 800,000
0
(250,000
Allowance for bad debts Accrued liabilities 60,000
)
Investment in bonds 2,000,00 Cash dividends
150,000
(amortized cost) 0 payable
3,000,00
Cash surrender value 800,000 Bonds payable
0
Discount on bonds (200,000
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)
6,250,00 5,510,00
Total monetary assets
0 Total monetary liab. 0
Hill Co.
Statement of profit or loss
For the year ended December 31, 20x1
(Restated in terms of December 31, 20x1 current pesos)
Fractio
Historical n Restated
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(a)
The loss on net monetary position is computed as follows:
Cash (historical) 1,210,000
Accounts receivable (historical)
500,000
Allowance for bad debts (historical)
(70,000)
Accounts payable (historical)
(600,000)
Bonds payable (historical)
(1,000,000)
Discount on bonds payable (historical)
180,000
Net monetary assets, Dec. 31, 20x1 - Historical: 220,000
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(18,30
Loss on net monetary position
0)
RECONCILIATION:
Retained earnings
beg. - deficit (restated) 218,182
Dividends (restated) 120,000 648,301 Profit (restated)
end. (restated) 310,119
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3. C
Solution:
Net proceeds 400,000
Restated carrying amt. (300K x 140/120) (350,000)
Gain on sale 50,000
4. D
Solution:
Net proceeds 200,000
Restated carrying amt. (300K x 140/100* x 6/10) (252,000)
Gain on sale 52,000
* The problems states that the general price indices are as of the end of each
year and that the equipment was purchased on January 1, 20x6. Thus, the
denominator used is 100 – the general price index on December 31, 20x5.
5. B
Solution:
6. C
Solution:
Investment 60,000
Long-term debt
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80,000
7. D
Solution:
1,000,00
Net monetary assets, end (Historical) (given) 0
(1,100,000
Net monetary assets, end (Restated) (1M x 220/200) )
(100,000
Purchasing power loss )
8. B
Solution:
3,000,00
Net monetary assets, end (Historical) (given) 0
(3,600,000
Net monetary assets, end (Restated) (3M x 150/125) )
(600,000
Purchasing power loss )
10. D
Solution:
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9,000
Current cost per unit 71
11. A
Solution:
12. D
Solution:
Sales 1,000,000
13. D
Solution:
Replacement cost (another term for current cost) -
12/31/x8 10.00
Purchase price 8.00
Holding gain per unit 2.00
14. B
Solution:
Units sold 70,000
Average current cost [(72 + 58) ÷ 2] 65
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15. C
Solution:
Total 240,000
Divide by: 2
16. B
Solution:
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1. Solution:
Cash 1,080,000 Accounts payable 2,550,000
Accounts receivable 1,800,000 Income tax payable 1,200,000
Allowance for bad debts (300,000) Accrued liabilities 108,000
Investment in bonds Cash dividends
840,000 225,000
(amortized cost) payable
Cash surrender value 300,000 Bonds payable 3,600,000
Discount on bonds (300,000)
Total monetary assets 3,720,000 Total monetary liab. 7,383,000
2. Solutions:
Requirement (a):
Skadden, Inc.
SCHEDULE TO ANALYZE EQUIPMENT FOR CONSTANT DOLLAR
RESTATEMENT
Dec. 31, 2000
Yr. Restate
acquired Amount Conversion d
(126.7/116.8
1998 490,000(a) 1.085 ) 531,650
(126.7/121.8
1999 10,000 1.040 ) 10,400
2000 150,000 1.000 150,000
650,000 692,050
(a)
(550,000 acquired in 1998 less 60,000 retired) = 490,000
Requirement (b):
Skadden, Inc.
SCHEDULE TO ANALYZE EQUIPMENT--ACCUMULATED
DEPRECIATION
(Historical cost) Dec. 31, 2000
650,000 164,000
Requirement (c):
Skadden, Inc.
SCHEDULE TO ANALYZE EQUIPMENT--ACCUMULATED
DEPRECIATION
(Constant dollars) Dec. 31, 2000
Yr. Accum.
acquired Deprciation Conversion Restated
1998 147,000 1.085 (126.7/116.8) 159,495
1999 2,000 1.040 (126.7/121.8) 2,080
2000 15,000 1.000 15,000
164,000 176,575
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