Accounting For
Accounting For
FINANCIAL STATEMENTS
1. Faith Company provided the following balances on December 31,2020
Cash and cash equivalents 1,200,000
Inventory 650,000
Prepayments 120,000
Investment in associate 440,000
Deferred tax asset 200,000
Intangıble assets 380,000
Further analysis of Faith Company's accounts revealed the following:
The deferred tax asset was due to a future deductible amount of which
40% will reverse in 2021 and the rest evenly from 2022 to 2022
Intangible assets includes goodwill of P70,000; P50,000 was recorded
in relation to its acquisition of Tenacity Company, while P20,000 was
recorded in relation to cost incurred in improving the initial goodwill
recognized.
a. The amount reported as current assets on December 31, 2020 is
b. The amount reported as noncurrent assets on December 31 2020
Debit Credit
Cash 104,000
Trade accounts receivable 400,000
Inventories 60,000
Prepaid expenses (selling and general) 10,000
Accrued expenses (75% of related to 32,000
manufacturing activities and 25% to general
operating activities)
Income taxes payable 48,000
Trade accounts payable 140,000
Deprecation on plant and equipment for the year totaled P600,000; 70%
was related to manufacturing activities and 30% to general and
administrative activities.
a. Collections from customers
b. Cash payments in relation to manufacturing activities
c. Net cash inflow (outflow) from operating activities
9. The following information was provided by Grace Company
Amortization of patent P4,000
Depreciation expense 7,000
Issuance of common stock 25,000
Issuance of new bonds payable 30,000
Net income 55,000
Decrease in accounts receivable 2,000
Increase in inventory 1,500
Payment of dividends 22,500
Purchase of equipment 33,000
Retirement of long term debt 40,000
Sale of land (includes P6,000) gain 35,000
Cash balance, January 1,2020 82,800
Increase in accounts payable 1,500
Net income for the year was l43,000, which was transferred in equal
amounts o the partners accounts. Further changes in capital were from
additional investments and withdrawals by the partners. The changes in
the furniture and fixtures account arose from a purchase of additional
furniture; part of the purchase price was paid in cash and a long-term note
was issued for the balance.
a. Net cash provided br (used for) operating activities
b. Net cash provided by (used for) investing activities
c. Net cash provided by (used for) financing activities
3. Compute the weighted average number of shares outstanding for EV Company which has a
simple capital structure, assuming the following transactions in common stock occurred
during the calendar year.
Date Transactions in Ordinary Number of Shares
Shares P10 Par Value
January 1 Shares outstanding 480,000
February 1 Issued for cash 120,000
March 1 20% share dividend
May 1 Acquisition of treasury shares 100,000
October 1 Sale of treasury shares 40,000
December 31 Issued a 3-for-1 share split
10. On January 2, 2021, Kred Company 1ssued P3,000,000 of its 10% bonds
convertible in total into 200,000 shares of Kred Company's common stock.
The bonds were issued in a way the selling price was equal to the debt
instrument's par value and fair value ot the equity component. No bonds
were converted during 2021. in addition, Kred Company had 500,000 shares
of common stock outstanding.
Kred Company's 2021 net income was P5,500,000.
The enacted tax rate during 2021 was 30%.
a. Basic eatnings per share b. Diluted earnings per share
11. In 2021, Dev Company issue, at par, 60, P1,000 par value, 8% bonds, each
convertible into 50 shares of common stock.
Dev Company had revenues of P17,500 and expenses other than interest
and taxes of P8,400 for 2017 (tax rate 30%).
Throughout 2021, 2,000 shares of common stock were outstanding, none
of the bonds was converted.
a. Compute the basic and diluted earnings per share in 2021.
b. Assuming the bonds were issued on September 1, 2021 and none
have been converted; compute the basic and diluted earnings per
share in 2021
12. On January 1, 2020, 1DJB Company had 400,000 shares of common
outstanding. On October 1, 202I DJB Company sold 100,000.
In addition DJB Company had the following debt and equity securities
outstanding at year end.
75,000 share options; exercise price P25, average market value P40