Statement of Financial Position

STATEMENT OF FINANCIAL POSITION
Name:____________________________________________ Section:___________________
Summary of answers:
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PROBLEM 1: An entity reported the following current assets on December 31, 2019:
Cash in bank 4,000,000

Accounts receivable 7,000,000
Notes receivable 2,500,000
Notes receivable discounted (400,000)
Inventory 4,500,000
Financial asset – FVPL 1,000,000
Financial asset – FVOCI 1,500,000
Prepaid expenses 200,000
Deferred tax asset 2,500,000
Equipment classified as “held for sale” 2,000,000
Total 24,800,000
Customers’ accounts 5,000,000

Allowance for doubtful accounts (500,000)
Sale price of unsold goods out in consignment at 125%
of cost and excluded from ending inventory 2,500,000
Net accounts receivable 7,000,000
1. What amount should be reported as total current assets on December 31, 2019?
a. 20,300,000
b. 20,700,000
c. 21,800,000
d. 18,300,000
PROBLEM 2: An entity provided the following information on December 31, 2019:
Accounts payable 2,000,000

Accrued expenses 800,000
Bonds payable due December 31, 2020 2,500,000
Premium on bonds payable 300,000
Deferred tax liability 500,000
Income tax payable 1,100,000
Cash dividend payable 600,000
Share dividend payable 400,000
Note payable – 6% due March 1, 2020 1,500,000
Note payable – 8% due October 1, 2020 1,000,000
The financial statements for 2019 were issued on March 31, 2020. On March 1, 2020, the 6% note payable was refinanced
on a long-term basis. Under the loan agreement for the 8% note payable, the entity has the discretion to refinance the
obligation for at least twelve months after December 31, 2019.
2. What amount should be reported as total current liabilities?

a. 7,300,000
b. 9,800,000
c. 8,800,000
d. 9,200,000
PROBLEM 3: An entity was incorporated on January 1, 2019 with proceeds from the issuance of P7,500,000 in shares and
borrowed funds of P1,100,000. During the first year of operations, revenue from sales amounted to P820,000, and operating
costs and expenses totaled P640,000. On December 15, the entity declared a P30,000 cash dividend, payable to
shareholders on January 15, 2020. No additional activities affected owners’ equity in 2019. The liabilities increased to
P1,200,000 by December 31, 2019.
3. What amount should be reported as total assets on December 31, 2019?

a. 8,850,000
b. 8,820,000
c. 7,870,000
1|Statement of Financial Position

d. 8,750,000
PROBLEM 4: An entity provided the following information on December 31, 2019:
 Accounts payable amounted to P1,500,000.

 On December 15, 2019, the entity declared a cash dividend of P20 per share on 100,000 outstanding shares,
payable on January 15, 2020.
 On July 1, 2019, the entity issued P5,000,000, 8% bonds for P4,400,000 to yield 10%. The bonds mature on June
30, 2024 and pay interest annually every June 30.
 The pretax financial income was P8,500,000 and taxable income was P6,000,000. The difference is due to
P1,000,000 permanent difference and P1,500,000 taxable temporary difference to reverse 2020. The income tax
rate is 30%. The entity made estimated income tax payments during the current year P1,000,000.
4. What amount should be reported as total current liabilities on December 31, 2019?
a. 3,700,000
b. 5,500,000
c. 4,700,000
d. 4,500,000
PROBLEM 5: An entity reported the following data on December 31, 2019:
Cash in bank, net of bank overdraft of P100,000 1,200,000

Petty cash, including unreplenished petty cash P10,000 50,000
Notes receivable 750,000
Account receivable, net customers’ accounts with credit balances of P200,000 2,000,000
Inventory, excluding unrecorded purchase of P300,000 on account in transit
shipped FOB shipping point on December 31, 2019 2,500,000
Deferred charges 150,000
Accounts payable, net of suppliers’ accounts with debit balances of P400,000 3,000,000
Note payable, with annual installment of P500,000 payable every December 31 2,000,000
Accrued expenses 300,000
5. What amount should be reported as total current assets on December 31, 2019?
a. 7,490,000
b. 7,500,000
c. 7,640,000
d. 7,090,000
6. What amount should be reported as total current liabilities on December 31, 2019?
a. 4,800,000
b. 6,300,000
c. 4,200,000
d. 4,500,000
PROBLEM 6: Parent Company acquired 100% Subsidiary Company prior to 2019. During 2019, the individual entities
included in their financial statements the following:
Parent Subsidiary
Key officers’ salaries 750,000 500,000
Officers’ expenses 200,000 100,000
Loans to officers 1,250,000 500,0000
Intercompany sales 1,500,000
7. What total amount should be reported as related party disclosures in the notes to the 2019 consolidated financial?
a. 4,500,000
b. 1,250,000
c. 1,750,000
d. 3,000,000
PROBLEM 7: An entity provided the following information at year-end:
Accounts payable 1,100,000

Preference share capital, at par 2,000,000
Ordinary share capital, at par 3,000,000
Share premium 1,000,000
Sales 10,000,000
Total expenses 7,800,000
Treasury shares at cost – ordinary 500,000
Dividends 700,000
Retained earnings – beginning 1,000,000
8. What total shareholders’ equity should be reported at year-end?

a. 8,000,000
b. 8,500,000

c. 5,800,000
d. 8,700,000
PROBLEM 8: The end of reporting period of an entity is December 31, 2019 and the financial statements for 2019 are
authorized for issue on March 31, 2020.
 On December 31, 2019, the entity had a receivable of P500,000 from a customer that is due 60 days after the end
of reporting period. On January 15, 2020, a receiver was appointed for the said customer. The receiver informed
the entity that the P500,000 would be paid full by June 30, 2020.
 The entity had equity investments held for trading. On December 31, 2019, these investments were recorded at fair
value of P5,000,000. During the period up to February 15, 2020, there was a steady decline in the fair value of the
shares in the portfolio and on February 15, 2020, the fair value had fallen to P2,000,000.
 The entity had reported contingent liability on December 31, 2019 related to court case in which the entity was the
defendant. The case was not heard until the first week of February 2020. On March 1, 2020, the judge handed
down a decision against the entity. The judge determined that the entity was liable to pay damages and costs
totaling P3,000,000.
 On December 31, 2019 the entity had receivable from a large customer in the amount of P4,000,000. On March 15,
2020, the entity was advised in writing by the liquidator of the said customer that the customer was insolvent and
that only 10% of the receivable will be paid on December 31, 2020.
9. What total amount should be reported as “adjusting events” on December 31, 2019?
a. 6,600,000
b. 7,000,000
c. 9,600,000
d. 7,000,000
-END-
“Don’t fear failure. Fear being in the exact same place next year as you are today.”

Statement of Financial Position

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Statement of Financial Position

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STATEMENT OF FINANCIAL POSITION

Cash in bank 4,000,000

Customers’ accounts 5,000,000

PROBLEM 2: An entity provided the following information on December 31, 2019:

Accounts payable 2,000,000

2. What amount should be reported as total current liabilities?

3. What amount should be reported as total assets on December 31, 2019?

1|Statement of Financial Position

PROBLEM 4: An entity provided the following information on December 31, 2019:

 Accounts payable amounted to P1,500,000.

PROBLEM 5: An entity reported the following data on December 31, 2019:

Cash in bank, net of bank overdraft of P100,000 1,200,000

PROBLEM 7: An entity provided the following information at year-end:

Accounts payable 1,100,000

8. What total shareholders’ equity should be reported at year-end?

2|Statement of Financial Position

3|Statement of Financial Position

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