POST TEST 2

1. Entity A had total assets, liabilities, and equity of ₱150M, ₱90M and ₱60M,
respectively, at the beginning of the period. During the period, Entity A’s total liabilities
decreased to ₱40M, while its profit was ₱25M. There were no other transactions or
events that affected equity during the period. How much is Entity A’s ending total
assets?
Solution:
Assets = Liabilities + Equity
₱150M = ₱90M + ₱60M

LIABILITIES
₱90M - ₱50M = ₱40M
Total Liabilities = ₱40M

EQUITY
₱60M + ₱25M = ₱85M
Total equity=₱85M

Total Assets = Total Liabilities + Equity

Total Assets = ₱40M + ₱85M
End. Total Assets = ₱125M

2. Entity A had total assets and total liabilities of ₱150M and ₱80M, respectively, at the
beginning of the period. During the period, Entity A earned total income of ₱60 and
incurred total expenses of ₱40. Entity A’s total assets decreased to ₱130M by year-end.
There were no additional contributions by, or distributions to, the owner during the
period. How much is Entity A’s ending total liabilities?
Solution:
Income ₱60M
Less: Expense ₱40M
Net Income ₱20M

Total Assets – Liabilities = Owners Equity

₱150M - ₱80M = ₱70M
Owner’s equity = ₱70M

Net Income ₱20M

Owner’s Equity ₱70M
Total Equity ₱90M

End. Assets – Equity = End. Liabilities

₱130M - ₱90M = ₱40M
End. Liabilities = ₱40M

3. Entity A had total assets of ₱120M and total liabilities of ₱80M at the beginning of the
period. If at the end of the period, total assets increased by ₱30M, while total liabilities
remained the same, Entity A’s total equity at the end of the period would be
Solution:
End. Assets - Total Liabilities = Total Equity
₱150M - ₱80M = ₱70M
Total Equity = ₱70M

4. Entity A had total assets and total liabilities of ₱120M and ₱85M, respectively, at the
beginning of the period. During the period, Entity A earned total income of ₱60 and
incurred total expenses of ₱45. How much is Entity A’s ending total equity?
Solution:
Total Assets – Total Liabilities = Total Equity
₱120M - ₱85M = ₱35M
Total Equity= ₱35M

Total Income – Total Expense = Net Income

₱60M - ₱45M = ₱15M
Net Income = ₱15M

Beg. Equity ₱35M

Net Income ₱15M
End. Total Equity ₱50M

5. Entity A had total assets, liabilities, and equity of ₱130M, ₱80M and ₱50M,
respectively, at the beginning of the period. During the period, Entity A’s total liabilities
decreased by ₱20M, while its profit was ₱25M. There were no other transactions or
events that affected equity during the period. How much is Entity A’s ending total
assets?
Solution:
Liabilities
₱80M - ₱20M = ₱60M

Equity
₱50M + 25M = ₱75M

Total Equity + Total Liabilities = Total Assets

₱75M + ₱60M = ₱135M
Total assets = ₱135M