CHAPTER 31

EXERCISE 31-5
Cash and Cash Equivalents 001 211,000.00
Trade and Other Receivables 002 1,984,000.00
Inventory 003 1,683,000.00
Other Current Assets 141,000.00
Total Current Assets 4,019,000.00

Investment in Listed Companies - FVTOCI - 52,000.00

Property, Plant and Equipment 004 6,174,000.00
Intangible Assets 005 2,640,000.00
Total Non-Current Assets 8,866,000.00

Total Assets 12,885,000.00

Current Liabilities 006 3,885,000.00

Non-Current Liabilities 007 3,913,000.00
Total Liabilities 7,798,000.00

Share Capital - 3,500,000.00

Retained Earnings - 1,481,000.00
Investments Revaluation Reserve - 25,000.00
Land Revaluation Reserve - 81,000.00
Total Equity 5,087,000.00

Total Liabilities and Equity - 12,885,000.00

001 Cash 175,000.00

Deposits, at call 36,000.00
Cash and Cash Equivalents 211,000.00

002 Trade Debtors 1,744,000.00

Sundry Debtors 320,000.00
Allowance for Bad Debts (80,000.00)
Trade and Other Receivables 1,984,000.00

003 Raw Materials Inventory 490,000.00

Finished Goods Inventory 1,042,000.00
Work in Process Inventory 151,000.00
Inventory 1,683,000.00

004 Land 250,000.00

Building 1,030,000.00
Leased Assets 775,000.00
Equipment 8,275,000.00
Accumulated Depreciation - Building (120,000.00)
Accumulated Depreciation - Leased Assets (310,000.00)
Accumulated Depreciation - Equipment (3,726,000.00)
Property, Plant and Equipment 6,174,000.00

005 Goodwill 2,530,000.00

Patent 110,000.00
Intangible Assets 2,640,000.00

006 Bank Overdraft 350,000.00

Debentures 300,000.00
Income Tax Payable 152,000.00
Leased Liability 125,000.00
Provision for Employment Benefits 192,000.00
Provision for Restructuring 412,000.00
Provision for Warranty 22,000.00
Sundry Creditors and Accruals 715,000.00
Trade Creditors 1,617,000.00
Current Liabilities 3,885,000.00
 007 Bank Loans 2,215,000.00
Debentures 375,000.00
Deferred Tax Liability 420,000.00
Leased Liability 225,000.00
Provision for Employment Benefits 83,000.00
Provision for Warranty 20,000.00
Other Loans 575,000.00
Non-Current Liabilities 3,913,000.00

EXERCISE 31-6
Cash and Cash Equivalents - 114,000.00
Trade and Other Receivables 001 160,000.00
Inventory - 180,000.00
Investment in Ordinary Shares - Trading - 80,000.00
Other Current Assets
Total Current Assets 534,000.00

Property, Plant and Equipment 002 1,450,000.00

Intangible Assets 003 265,000.00
Other Assets 004 830,000.00
Total Non-Current Assets 2,545,000.00

Total Assets 3,079,000.00

Current Liabilities 005 229,000.00

Non-Current Liabilities 006 1,080,000.00
Total Liabilities 1,309,000.00

Preference Share Capital - 450,000.00

Ordinary Share Capital - 1,000,000.00
Retained Earnings 320,000.00
Total Equity 1,770,000.00

Total Liabilities and Equity - 3,079,000.00

001 Accounts Receivable 170,000.00

Allowance for Bad Debts (10,000.00)
Trade and Other Receivables 160,000.00

002 Land 500,000.00

Building 1,040,000.00
Equipment 450,000.00
Accumulated Depreciation - Building (360,000.00)
Accumulated Depreciation - Equipment (180,000.00)
Property, Plant and Equipment 1,450,000.00

003 Franchise 165,000.00

Goodwill 100,000.00
Intangible Assets 265,000.00

004 Cash Surrender Value 40,000.00

Investment in Ordinary Shares - FVTOCI 270,000.00
Bond Sinking Fund 250,000.00
Land Held for Future Use 270,000.00
Other Assets 830,000.00

005 Bank Overdraft 14,000.00

Accounts Payable 90,000.00
Notes Payable 80,000.00
Taxes Payable 40,000.00
Unearned Revenue 5,000.00
Current Liabilities 229,000.00

006 Notes Payable 120,000.00

Bonds Payable 1,000,000.00
Discount on Bonds Payable (40,000.00)
 Non-Current Liabilities 1,080,000.00

EXERCISE 31-7
Cash 595,000.00
Accounts Receivable 683,000.00
Notes Receivable 50,000.00
Deposits from Customer 107,000.00
Inventory 1,275,000.00
Investment in Securities 400,000.00
Total Current Assets 3,110,000.00

Property, Plant and Equipment 7,750,000.00

Accumulated Depreciation (2,205,000.00)
Total Non-Current Assets 5,545,000.00

Total Assets 8,655,000.00

Accounts Payable 1,113,000.00

Payroll Payable 125,500.00
Taxes Payable 88,700.00
Rent Payable 77,000.00
Notes Payable 320,000.00
Mortgage Payable 400,000.00
Total Liabilities 2,124,200.00

Mortgage Payable 1,600,000.00

Total Liabilities 1,600,000.00

Preference Share Capital 3,000,000.00

Ordinary Share Capital 1,750,000.00
Share Premium 834,800.00
Retained Earnings (654,000.00)
Total Equity 4,930,800.00

Total Liabilities and Equity - 8,655,000.00

CHAPTER 32

EXERCISE 32-5
Net Sales 001 5,535,000.00
Cost of Goods Sold 002 (3,545,380.00)
Gross Profit 1,989,620.00
Expenses 003 (984,500.00)
Net Income from Operation 1,005,120.00
Interest Income 116,240.00
Net Income before Income Tax 1,121,360.00
Income Tax Expense (336,408.00)
Net Income after Income Tax 784,952.00

001 Sales 5,590,000.00

Sales Returns (55,000.00)
Net Sales 5,535,000.00

002 Raw Materials, beginning 131,000.00

Net Purchases 2,030,050.00
Raw Materials Available for Use 2,161,050.00
Raw Materials, ending (145,500.00)
Raw Materials Used 2,015,550.00
Direct Labor 1,050,300.00
Factory Overhead 386,900.00
Total Manufacturing Costs 3,452,750.00
Work in Process, beginning 238,350.00
Total Costs Put into Process 3,691,100.00
Work in Process, ending (175,720.00)
Cost of Goods Manufactured 3,515,380.00
 Finished Goods, beginning 442,000.00
Goods Available for Sale 3,957,380.00
Finished Good, ending (412,000.00)
Cost of Goods Sold 3,545,380.00

003 Freight Out 200,000.00

Sales Salaries 445,000.00
Office Salaries 155,000.00
Depreciation - Office Equipment 44,000.00
Depreciation - Store Equipment 77,000.00
Amortization - Patent 33,000.00
Bad Debt Expense 20,000.00
Tools Expense 10,500.00
Expenses 984,500.00

EXERCISE 32-6
Net Sales 390,000.00
Cost of Goods Sold (227,400.00)
Gross Profit 162,600.00
Expenses (98,400.00)
Net Income from Operation 64,200.00
Dividend Income 3,600.00
Loss on Sale of Land (8,000.00)
Net Income before Income Tax 59,800.00
Income Tax Expense (23,920.00)
Net Income after Income Tax 35,880.00

CHAPTER 33

EXERCISE 33-3
Issued Share Capital 3,200,000.00
Subscribed Share Capital 360,000.00
Share Premium 1,400,000.00
Treasury Shares (144,000.00)
Retained Earnings 1,120,000.00
Revaluation Surplus 800,000.00
Unrealized Loss (96,000.00)
Total Equity 6,640,000.00

EXERCISE 33-4
Share Capital - Preference 950,000.00
Share Capital - Ordinary 5,000,000.00
Share Premium - Preference 47,500.00
Share Premium - Ordinary 200,000.00
Retained Earnings 397,500.00
Treasury Shares (48,000.00)
Share Premium - Treasury 4,000.00
Total Equity 6,551,000.00

EXERCISE 33-5
Share Capital - Preference 250,000.00
Share Capital - Ordinary 109,000.00
Share Premium 201,500.00
Retained Earnings 639,400.00
Treasury Shares (80,000.00)
Total Equity 1,119,900.00

EXERCISE 33-6
2020 2021
Share Capital - Preference - 1,000,000.00
Share Capital - Ordinary 100,000.00 143,000.00
Share Premium - 2,600,000.00 4,333,000.00
Retained Earnings 222,000.00 501,000.00
Treasury Shares - (442,000.00)
Total Equity 2,922,000.00 5,535,000.00
EXERCISE 33-7
2020 2021
Share Capital - Preference 720,000.00 720,000.00
Share Capital - Ordinary 735,500.00 966,500.00
Share Premium 57,600.00 95,600.00
Retained Earnings 302,250.00 606,050.00
Treasury Shares - -
Total Equity 1,815,350.00 2,388,150.00

CHAPTER 34

EXERCISE 34-3
Cash Flows from Operating Activities
Cash receipts from customers 535,800.00
Cash payment to supplier of goods (226,500.00)
Cash payment of selling expenses (141,000.00)
Cash payment of general and administrative expenses (136,000.00)
Cash payment of interest (3,800.00)
Cash payment of income tax (25,800.00)
Net cash provided by/(used in) operating activities 2,700.00

Supporting Computations:
Accounts Receivable, beginning 30,000.00
Sales on Account 538,800.00
Accounts Receivable, ending (33,000.00)
Cash receipts from customers 535,800.00

Cost of Goods Sold 250,000.00

Inventory, ending 31,000.00
Inventory, beginning (47,000.00)
Purchases on Account 234,000.00
Accounts Payable, beginning 17,500.00
Accounts Payable, ending (25,000.00)
Cash payment to supplier of goods 226,500.00

Selling Expenses 141,500.00

Less: Depreciation (1,500 x 1/3) (500.00)
Cash payment of selling expenses 141,000.00

General and Administrative Expenses 137,000.00

Less: Depreciation (1,500 x 2/3) (1,000.00)
Cash payment of general and administrative expenses 136,000.00

Interest Expense 4,300.00

Less: Amortization of bond discount (500.00)
Cash payment of interest 3,800.00

Income Tax Expense 20,400.00

Income Tax Payable, beginning 27,100.00
Income Tax Payable, ending (21,000.00)
Deferred Tax Liability, beginning 4,600.00
Deferred Tax Liability, ending (5,300.00)
Cash payment of income tax 25,800.00

EXERCISE 34-4
Cash Flows from Operating Activities
Profit before income tax 880,000.00
Adjustments for:
Depreciation 250,000.00
Impairment Loss 150,000.00
Unrealized Foreign Exchange Gains (60,000.00)
Fair Value Adjustment Gain (FA at FVTPL) (130,000.00)
Fair Value Adjustment Loss (Investment Property) 190,000.00
Share of Profit of Associate (220,000.00)
 Gain on Sale of FA at AC (85,000.00)
Loss on Sale of Equipment 70,000.00
Gain on Debt Extinguishment (125,000.00)
Gain on Distribution of NCA to Owners (40,000.00)
Interest Income (80,000.00)
Interest Expense 150,000.00 70,000.00
Operating Income (Loss) before working capital changes 950,000.00
(Increase)/Decrease in Current Assets:
Accounts Receivable (350,000.00)
Inventory 100,000.00
Increase/(Decrease) in Current Liabilities:
Accounts Payable 300,000.00
Net Cash Generated from Operation 1,000,000.00
Interest Paid (200,000.00)
Interest Received 90,000.00
Income Tax Paid (260,000.00)
Net cash provided by/(used in) operating activities 630,000.00

Supporting Computations:
Interest Payable, beginning 100,000.00
Interest Expense 150,000.00
Interest Payable, ending (50,000.00)
Interest Paid 200,000.00

Interest Receivable, beginning 30,000.00

Interest Income 80,000.00
Interest Receivable, ending (20,000.00)
Interest Received 90,000.00

EXERCISE 34-5
Cash Flows from Operating Activities
Profit 80,000.00
Adjustments for:
Depreciation 40,000.00
Gain on sale of equipment (11,000.00)
Amortization 20,000.00 49,000.00
Operating Income (Loss) before working capital changes 129,000.00
(Increase)/Decrease in Current Assets:
Accounts Receivable (17,000.00)
Inventory 30,000.00
Increase/(Decrease) in Current Liabilities:
Accounts Payable 14,000.00
Deferred Tax Payable 5,000.00
Salaries Payable (21,000.00)
Net cash provided by/(used in) operating activities 140,000.00

Cash Flows from Investing Activities

Purchase of Equipment (205,000.00)
Sale of Equipment 28,000.00
Purchase of FA at AC (130,000.00)
Net cash provided by/(used in) investing activities (307,000.00)

Cash Flows from Financing Activities

Issuance of ordinary shares 120,000.00
Payment of dividends (36,000.00)
Issuance of notes 150,000.00
Net cash provided by/(used in) financing activities 234,000.00

EXERCISE 34-6
Sales 692,300.00
Cost of Goods Sold (307,000.00)
Gross Profit 385,300.00
Less: Expenses
General expenses 101,300.00
Salaries expenses 151,700.00
Interest expenses 9,800.00
 Depreciation expenses 27,600.00
Impairment Loss 4,000.00 294,400.00
Net Income (Loss) from Operation 90,900.00
Gain on sale of equipment 5,200.00
Loss on retirement of bonds payable (3,000.00)
Net Income before tax 93,100.00
Income Tax Expense 24,300.00
Net Income after Tax 68,800.00

Supporting Computations:
Cash collected from customers 685,300.00
Accounts Receivable, beginning (18,000.00)
Accounts Receivable, ending 25,000.00
Sales 692,300.00

Cash payment for inventory purchases 300,000.00

Accounts Payable, beginning (22,000.00)
Accounts Payable, ending 25,000.00
Purchases on account 303,000.00
Inventory, beginning 34,000.00
Inventory, ending (30,000.00)
Cost of Goods Sold 307,000.00

Cash payment for general expenses 102,000.00

Prepaid general expense, beginning 5,000.00
Prepaid general expense, ending (5,700.00)
General expenses 101,300.00

Cash payment for salaries expense 150,000.00

Salaries Payable, beginning (10,300.00)
Salaries Payable, ending 12,000.00
Salaries expenses 151,700.00

Cash payment for interest expense 11,000.00

Interest Payable, beginning (4,000.00)
Interest Payable, ending 2,800.00
Interest expenses 9,800.00

Accumulated Depreciation - 12/31/2021 103,500.00

Less: Accumulated Depreciation Balance
Accumulated Depreciation - 12/31/2020 128,900.00
Disposal of equipment (53,000.00) 75,900.00
Depreciation expenses 27,600.00

Patent - 12/31/2020 40,000.00

Patent - 12/31/2021 36,000.00
Impairment Loss 4,000.00

Proceeds on sale of equipment 27,200.00

Book Value 22,000.00
Gain on sale of equipment 5,200.00

Carrying value of bonds payable 20,000.00

Payment on retirement of bonds payable 23,000.00
Loss on retirement of bonds payable (3,000.00)

Cash payment for income tax 23,900.00

Income Tax Payable, beginning (1,200.00)
Income Tax Payable, ending 1,600.00
Income Tax Expense 24,300.00

CHAPTER 41

EXERCISE 41-1
Sales 500,000.00
 Cost of Goods Sold (200,000.00)
Operating Expenses (140,000.00)
Net Income - Cash Basis 160,000.00

Sales 500,000.00
Cost of Goods Sold (200,000.00)
Operating Expenses (140,000.00)
Depreciation Expense (50,000.00)
Net Income - Modified Cash Basis 110,000.00

Sales 001 485,000.00

Cost of Goods Sold 002 (205,000.00)
Operating Expenses 003 (142,000.00)
Depreciation Expense (50,000.00)
Net Income - Accrual Basis 88,000.00

001 Cash Collected 500,000.00

Accounts Receivable, ending 35,000.00
Accounts Receivable, beginning (50,000.00)
Sales 485,000.00

002 Cash Payment to Supplier 200,000.00

Accounts Payable, ending 27,000.00
Accounts Payable, beginning (20,000.00)
Purchases 207,000.00

Beginning Inventory 42,000.00

Purchases 207,000.00
Ending Inventory (44,000.00)
Cost of Goods Sold 205,000.00

003 Cash Payment for Operating Expenses 140,000.00

Prepaid Expenses, beginning 5,000.00
Prepaid Expenses, ending (7,000.00)
Accrued Expense, ending 19,000.00
Accrued Expense, beginning (15,000.00)
Operating Expenses 142,000.00

EXERCISE 41-2
Cash Basis Accrual Basis Difference
Sales a 2,016,000.00 2,240,000.00 (224,000.00)
Salaries Expense b (624,000.00) (712,000.00) 88,000.00
Rent Expense c (360,000.00) (288,000.00) (72,000.00)
Utilities Expense d (232,000.00) (253,600.00) 21,600.00
Equipment e (240,000.00) - (240,000.00)
Commission Expense f (302,400.00) (332,400.00) 30,000.00
Insurance Expense g (48,000.00) (24,000.00) (24,000.00)
Interest Expense h (24,000.00) (32,000.00) 8,000.00
Bad Debt Expense i - (24,000.00) 24,000.00
Depreciation Expense j - (48,000.00) 48,000.00
Net Income 185,600.00 526,000.00 (340,400.00)

a Accounts Receivable 224,000.00

Sales 224,000.00

b Salaries Expense 88,000.00

Salaries Payable 88,000.00

c Prepaid Rent 72,000.00

Rent Expense 72,000.00

d Utilities Expense 21,600.00

Utilities Payable 21,600.00

e Equipment 240,000.00
Equipment Expense 240,000.00
 f Commission Expense 30,000.00
Commission Payable 30,000.00

g Prepaid Insurance 24,000.00

Insurance Expense 24,000.00

h Interest Expense 8,000.00

Interest Payable 8,000.00

i Bad Debt Expense 24,000.00

Allowance for Bad Debts 24,000.00

j Depreciation Expense 48,000.00

Accumulated Depreciation 48,000.00

EXERCISE 41-3
Sales 001 381,800.00
Cost of Goods Sold 002 (80,000.00)
Gross Profit 301,800.00
Salaries Expense 003 (129,600.00)
Utilities Expense 004 (23,950.00)
Insurance Expense (16,500.00)
Rent Expense (36,000.00)
Depreciation Expense (22,000.00)
Interest Expense (4,000.00)
Net Income before Tax 69,750.00
Income Tax Expense (17,437.50)
Net Income after Tax 52,312.50

Cash 005 118,400.00

Accounts Receivable 69,800.00
Inventory 8,000.00
Prepaid Insurance 1,500.00
Equipment 220,000.00
Accumulated Depreciation (22,000.00)
Total Assets 395,700.00

Accounts Payable 11,200.00

Salaries Payable 5,600.00
Utilities Payable 1,950.00
Due to Suppliers 40,000.00
Interest Payable 1,600.00
Income Tax Payable 17,437.50
Share Capital 265,600.00
Retained Earnings 52,312.50
Total Liabilities and Equity 395,700.00

001 Cash Collected from Customers 80,000.00

Accounts Receivable, ending 69,800.00
Accounts Receivable, beginning -
Credit Sales 149,800.00
Cash Sales 232,000.00
Total Sales 381,800.00

002 Payments to Suppliers 80,800.00

Accounts Payable, ending 11,200.00
Accounts Payable, beginning (28,000.00)
Purchases 64,000.00
Beginning Inventory 24,000.00
Ending Inventory (8,000.00)
Cost of Goods Sold 80,000.00

003 Salaries Paid to Employees 124,000.00

Salaries Payable, ending 5,600.00
Salaries Expense 129,600.00
004 Payment for Utilities 22,000.00
Utilities Payable, ending 1,950.00
Utilities Expense 23,950.00

005 Cash beginning 49,600.00

Cash Collected from Customers 312,000.00
Payments to Suppliers (80,800.00)
Salaries Paid to Employees (124,000.00)
Payment for Utilities (22,000.00)
Cash Advance from Supplier 40,000.00
Payment for Interest (2,400.00)
Payment for Insurance (18,000.00)
Payment for Rent (36,000.00)
Cash ending 118,400.00