Audit of Investments - Equity Securities Supplementary Problems
Audit of Investments - Equity Securities Supplementary Problems
On December 31, 2009 GINEBRA Company’s statement of financial position showed the following balances related
to its securities accounts:
Profit/Loss securities P 738,750
OCI securities 590,000
Interest receivable – Jawo water bonds 6,250
Unrealized gain – OCI 50,000
GINEBRA’s securities portfolio on December 31, 2009, was made up of the following securities:
March 1 Purchased 1,500 additional shares of Japhet for P 114,750 classified as held for trading
October 30 Purchased 7,500 shares of Eman stock for P 416,250, classified as held for trading
The fair values of the shares and bonds on December 31, 2010, are as follows:
Japhet P 76.60
LA 68.50
Eman 55.25
Jawo water bonds 102,775
Greg 61.00
Mark 27.00
Based on the above and the result of your audit, determine the following:
Problem 2
The statement of financial position of WHOOPS KERRI WHOOPS on December 31, 2012 reports Trading Securities at
fair value of P 670,770. Supporting records of the company show the following debt and equity securities:
Interest on bonds is paid semiannually on January 1 and July 1. WHOOPS KERRI WHOOPS uses the income approach
to record the acquisition of bonds with accrued interest. The following transactions occurred during 2013:
1. What is the gain on the sale of P 180,000 Floater Co. bonds on April 1
a. P 1,875 b. P 165 c. P 765 d. P 2,610
2. What is the gain (loss) on the sale of Sinker Co. bonds on July 1, 2013?
a. P 1,800 b. P (5,700) c. P 1,050 d. P (4,950)
3. What is the total interest income on bonds that should be reported in WHOOPS KERRI WHOOPS’ income
statement for the year ended December 31, 2013?
a. P 25,275 b. P 27,275 c. P 34,650 d. P 34,025
4. What is the unrealized gain (loss) on trading securities that should be reported in WHOOPS KERRI WHOOPS’
income statement for the year ended December 31, 2013?
a. P (8,625) b. P 8,100 c. P (1,854) d. P (6,360)
5. What is the accrued interest receivable on bonds that should be reported in WHOOPS KERRI WHOOPS’
statement of financial position at December 31, 2013?
a. P 12,750 b. P 21,900 c. P 19,500 d. P 8,750