Information relevant to four different companies follows:

The following costs were incurred by Simon Company related to inventory: After sales
warranty cost, P750,000; Brokerage commission to agents, P600,000; Delivery costs to
customers, P120,000; Freight, P2,000,000; Handling costs relating to imports, P300,000;
Import duties, P1,200,000; Insurance on inventories in transit, P1,000,000; Invoice cost of
merchandise inventory purchased, P15,000,000; Salary of accountants, P1,800,000; Sales
commission of sales agents, P900,000; Storage costs of finished goods, P540,000; VAT on
importation, P500,000
On January 1, 2021, Robert Company issued P10 million bonds that will mature in five
years. The bond indenture requires Robert to establish a sinking fund for the retirement of
these bonds, with annual deposit every January 1, starting January 1, 2021 up to January
1, 2026, in time for the maturity of the bonds. The fund is to be placed in a separate account
to be maintained in the company’s depository bank. Using an average annual interest rate of
10%, net of tax expected to be earned on this investment, the company determined that the
require annual deposit to be able to accumulate a total of P10 million is P1,489,070.20.
The following information was included in the bank reconciliation for Kenneth Company for
September.
Checks and charges recorded by bank in September, including a
September service charge of P30 P17,210
Service charge made by bank in August and recorded on the
books in September 20
Total credits to Cash in al journals during September 19,802
Customer’s NSF check returned as a bank charge in August (no
entry made on books) 100
Customer’s check returned in August and redeposited in
September (no entry made on books in either August or
September)
250
Outstanding checks at September 30 13,260
Deposit in transit at September 30 600
On April 30, 2021, Melanie Company purchased for cash 18,000 of the 60,000 voting shares
of Homer Company for P650,000. The amount exceeded the underlying equity acquired in
the net assets of Homer Company by P150,000. The excess is attributable to undervaluation
of Homer Company’s land and equipment by P250,000 and P100,000, respectively. At April
30, 2021, the equipment had a remaining useful life of 5 years. The remaining excess was
attributable to goodwill. During the year 2021, Homer Company reported profit of P600,000,
of which P120,000 was earned during January through April. Homer Company declared and
distributed dividend of P4 per share on June 30, 2021. Market price of Homer Company
shares at December 31, 2021 is P40 per share.
9. How much is the correct amount of inventory to be reported by Simon Company?
a. P17,100,000
b. P18,300,000
c. P19,500,000
d. P20,100,000
10. How much is the bond sinking fund balance at December 31, 2021, after making the
required year-end adjustment in the fund by Robert Company?
a. P1,489,070.20
b. P1,637,977.22
c. P1,629,842.80
d. P3,127,047.42
11. How much is the Outstanding checks of Kenneth Company at September 30?
a. P10,558
b. P10,658
c. P10,668
d. P15,962
FAR PROBLEMS Compiled by Vhin
12. What is the carrying amount of investment in associates reported in Melanie Company’s
statement of financial position at December 31, 2021?
a. P708,500
b. P716,000
c. P718,000
d. P720,000