PROBLEMS

3-1.The December 31, 2017 balance sheet accounts of Gates Company are shown
below in alphabetical order:

Accounts Payable 236,000

Accounts Receivable 115,000
Accumulated Amortization – Patents 22,000
Accumulated Amortization – Trademarks 17,000
Accumulated Depreciation-Buildings 530,000
Accumulated Depreciation-Equipment 351,000
Allowance for Bad Debts 8,000
Appropriated Retained Earnings 45,000
Bonds Payable (due in 2019) 770,000
Buildings 1,440,000
Cash and Cash Equivalents 35,000
Discount on Bonds Payable 69,000
Equipment 624,000
Inventory 322,000
Investments in Associates 250,000
Land (including land with an undetermined

future use acquired in December 2017

for P1,000,000) 1,300,000

Ordinary Share, P10 par 1,300,000
Share Premium - Preference 81,000
Share Premium - Ordinary 240,000
Patents 120,000
Preference Share, P100 par 210,000
Retained Earnings 462,000
Salaries Payable 20,000
Share Dividends Distributable 24,000
Trademarks 60,000
Trading Securities 61,000
 Withholding Taxes Payable 80,000

Required: Prepare a properly classified Balance Sheet for Gates Company as of

December 31, 2017 with appropriate notes.

3-1 (Gates Company)

Gates Company
Statement of Financial Position
December 31, 2009

Assets
Current assets: Note
Cash and cash equivalents P 35,000
Trading securities 61,000
Trade receivables (1) 107,000
Inventory 322,000 P 525,000
Non-current assets:
Property, plant and equipment (2) P1,483,000
Investment Property 1,000,000
Investments in associates 250,000
Intangibles (3) 141,000 2,874,000
TOTAL ASSETS P3,399,000

Liabilities and Shareholders’ Equity

Current liabilities:
Trade and other payables (4) P 336,000
Noncurrent liabilities:
Bonds payable (5) 701,000
Shareholders’ equity:
Share capital (6) P 1,534,000
Reserves (7) 366,000
Retained earnings 462,000 2,352,000
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY P3,399,000

Note 1 – Trade receivables

Accounts receivable P115,000
Less Allowance for doubtful accounts 8,000
Net trade receivables P107,000

Note 2 – Property, plant and equipment

Land P 300,000
Buildings P1,440,000
Less accumulated depreciation 530,000 910,000
Equipment P 624,000
Less accumulated depreciation 351,000 273,000
Total property, plant and equipment P1,483,000
 Note 3 – Intangibles
Patents, net of accumulated amortization of P22,000 P 98,000
Trademarks, net of accumulated amortization of P17,000 43,000
Total P141,000

Note 4 – Trade and other payables

Accounts payable P236,000
Salaries payable 20,000
Withholding taxes payable 80,000
Total P336,000

Note 5 – Bonds payable

Bonds payable (due 2009) P 770,000
Less discount on bonds payable 69,000
Total P701,000

Note 6 – Share capital

Preference share, P100 par P 210,000
Ordinary share, P10 par 300,000
Share dividends distributable 24,000
Total P 534,000

Note 7 – Reserves
Share Premium -preference P 81,000
Share premium f-ordinary 240,000
Appropriated retained earnings 45,000
Total P366,000

3-2. Listed below and on the next page, in random order, are the balance sheet accounts and
related ending balances of the Starbucks Corporation as of December 31, 2017:

Income Taxes Payable 247,000

Prepaid Expenses 31,000
Cash Surrender Value of Life Insurance 89,000
Preference Share 400,000
Premium on Bonds Payable 48,000
Cash and Cash Equivalents 116,000
Property, Plant, & Equipment 2,293,000
Accounts Payable 580,000
Ordinary Share 628,000
Retained Earnings 1,234,000
Land held for Future Use 195,000
Trading Securities 160,000
 Bonds Payable 800,000
Share Premium - Ordinary 303,000
Inventories 985,000
Accounts Receivable 323,000
Patents 182,000
Held to Maturity Securities – XYZ Bonds 250,000
Share Premium – Preference 234,000
Unearned Revenues 62,000
Provision for Product Warranty 73,000
Allowance for Bad Debts 15,000

Additional information:

a. The company uses control accounts for inventories and property, plant, and
equipment and lists the latter at its book value.

b. The straight-line method is used to depreciate buildings, machinery, and

equipment based upon their cost and estimated residual values and lives. A
breakdown of property, plant, and equipment shows the following: Land at a
cost of P320,000; Buildings at a cost of P1,824,000 and a book value of
P1,202,000; Machinery at a cost of P639,000 and related Accumulated
Depreciation of P186,000, and Equipment (40% depreciated) at a cost of
P530,000. Included in Machinery is a unit costing P320,000 and with
accumulated depreciation of P80,000 included in the balance of Accumulated
Depreciation, that qualifies as “Held for Sale”. This unit of asset has an
estimated sales price of P250,000; cost of P40,000 is expected to be incurred on
its sale. The sale is highly probable and is expected to be consummated in May
2018.

c. Patents are amortized on a straight-line basis directly to the patents account.

The cost of the patent is P200,000 while its accumulated amortization is
P18,000.

d. Inventories are listed at the lower of cost and net realizable value using an
average cost. The inventories include Raw Materials of P222,000, Goods in
Process of P347,000, and Finished Goods of P416,000.

e. The ordinary share has a P10 par value per share, 120,000 are authorized,
62,800 shares have been issued.
 f. Preference share has a P100 par value per share, 10,000 shares are authorized,
4,000 shares have been issued.

g. Trading Securities are listed above at market values; their aggregate cost is
P150,000.

h. The Bonds Payable mature on December 31, 2020.

i. The company attaches a one-year warranty on all products it sells.

Required: Prepare the December 31, 2017 balance sheet of the Starbucks Corporation
(including appropriate notes and parenthetical notations).

3-2 (Starbucks Company)

Starbucks Company
Statement of Financial Position
December 31, 2009

Current assets: Note

Cash and cash equivalents P 116,000
Trading securities (1) 160,000
Trade receivables (2) 308,000
Inventories (3) 985,000
Prepaid expenses 31,000 P1,600,000
Non-current assets:
Property, plant and equipment (4) P2,248,000
Other financial assets (5) 339,000
Patents 182,000 2,769,000
Non-current Asset Held for Sale (6) 210,000
TOTAL ASSETS P4,579,,000
Liabilities and Shareholders’ Equity
Current liabilities:
Trade payables P 580,000
Income tax payable 247,000
Unearned revenues 62,000
Liability for product warranty 73,000 P 962,000
Noncurrent liabilities:
Bonds payable (7) 848,000
Stockholders’ equity:
Share capital (8) P1,028,000
Reserves (9) 537,000
Retained earnings 1,204,000 2,76,000
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY P4,579,000
Note 1 – Temporary investments
The trading securities, costing P150,000, are reported at market values.

Note 2 – Trade receivables

Accounts receivable P323,000
Less Allowance for doubtful accounts 15,000
Net trade receivables P308,000

Note 3 – Inventories (at lower of cost or NRV)

Finished Goods P416,000
Goods in process 347,000
Raw materials 222,000
Total P985,000

Note 4 – Property, plant and equipment

Land P320,000
Land Held for Future Use* 195,000
Buildings P1,824,000
Less accumulated depreciation 622,000 1,202,000
Machinery P 319,000
Less accumulated depreciation 106,000 213,000
Equipment P 530,000
Less accumulated depreciation 212,000 318,000
Total P2,248,000

 Land Held for Future Use, which conventionally was classified as long-term investment, is not
qualified to be reported as Investment Property under par. 9 of PAS 40. Thus, property held for
future development and subsequent use as owner-occupied property is part of property, plant
and equipment.

Note 5 – Other financial assets

Held to Maturity Securities, at amortized cost P250,000
Cash surrender value of life insurance 89,000
Total P339,000

Note 6 – Non-current Assets Held for Sale

This classification represents a unit of machinery with carrying
amount of P240,000 and fair value less cost to sell of P210,000.
The sale is expected to be consummated in May 2018.

Note 7 – Bonds payable

Bonds payable P800,000
Add Premium on bonds payable 48,000
Total P848,000

Note 8 – Share Capital

Preference share P400,000
Ordinary share 628,000
Total P1,028,000
Note 9 – Reserves
Paid-in capital in excess of par-preferred P234,000
Paid-in capital in excess of par-common 303,000
Total P537,000

Retained earnings is adjusted by a decrease of P30,000 representing loss from measurement to fair value
less cost to sell of asset held for sale, thus retained earnings balance is P1,204,000.

3-3. On December 31, 2017 the Bill Company bookkeeper prepared the erroneously
classified balance sheet presented below.

Bill Company

Balance Sheet

For Year Ended December 31, 2017

Current Assets:
Inventory P 600,000
Accounts Receivable 590,000
Cash 230,000
Treasury Shares (at cost) 330,000
Non-Current Assets
Long-term Investments:
Trading Securities 320,000
Available for Sale Securities 1,030,000
Property, Plant and Equipment:
Land 810,000
Office Supplies 80,000
Buildings and Equipment (net) 3,560,000
Intangible Assets:
Patents (net) 470,000
Prepaid Insurance 120,000
Discount on Bonds Payable 100,000
Total assets P8,240,000

Current Liabilities:
 Accounts Payable P990,000
Allowance for Uncollectible Accounts 80,000
Salaries Payable 150,000
Taxes Payable 250,000
Long-term Liabilities:
Bonds Payable (due 2022) 1,100,000
Unearned Rent (for 3 months) 90,000
Owners’ Equity:
Retained Earnings 2,420,000
Accumulated Depreciation on
Buildings and Equipment 920,000
Share Premium 1,040,000
Ordinary Share Capital, P10 par 1,200,000
Total credits P8,240,000

Required: Prepare a properly classified Balance Sheet as of December 31, 2017. Use line
items as prescribed by PFRS.

3-3 (Bill Company)

Bill Company
Statement of Financial Position
December 31, 2009

Assets

Current assets: Note

Cash P 230,000
Trading securities 320,000
Trade receivables (1) 510,000
Inventories 600,000
Prepaid expenses (2) 200,000 P1,860,000
Noncurrent assets:
Property, plant and equipment (3) P3,450,000
Available for sale securities 1,030,000
Patents 470,000 4,950,000
TOTAL ASSETS P6,810,000

Liabilities and Shareholders’ Equity

Current liabilities:
 Trade and other payables (4) P1,390,000
Unearned rent 90,000 P1,480,0900
Noncurrent liabilities:
Bonds payable (5) 1,000,000
Shareholders’ equity:
Ordinary Share Capital, P10 par P1,200,000
Share Premium 1,040,000
Retained earnings 2,420,000
Total P4,660,000
Less Treasury shares, at cost 330,000 4,330,000
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY P6,810,000

Note 1 – Trade receivables

Accounts receivable P590,000
Less Allowance for doubtful accounts 80,000
Net trade receivables P510,000

Note 2 – Prepaid expenses

Office supplies P 80,000
Prepaid insurance 120,000
Total P200,000

Note 3 – Property, plant and equipment

Land P 810,000
Buildings and equipment P3,560,000
Less accumulated depreciation 920,000 2,640,000
Total P3,450,000

Note 4 – Trade and other payables

Accounts payable P 990,000
Salaries payable 150,000
Taxes payable 250,000
Total P1,390,000

Note 5 – Bonds payable

Bonds payable P1,100,000
Less discount on bonds payable 100,000
Net P1,000,000

3-4. The Net Company presents the following December 31, 2017 balance sheet in condensed
format.

Net Company

Balance Sheet

For Year Ended December 31, 2017

 Current Assets P 4,430,000
Long-term Investments 1,360,000
Property and Equipment 12,350,000
Intangible Assets 770,000
Other Assets 1,360,000
Total Assets P20,270,000
Current Liabilities P 6,660,000
Long-term Liabilities 2,410,000
Contributed Capital 1,700,000
Unrealized Capital 2,250,000
Retained Earnings 7,250,000
Total Equities P20,270,000

The following information is also available:

a. Current assets include Cash P380,000, Accounts Receivable P1,850,000, Notes

Receivable (maturity date July 1, 2018) P1,000,000, and Land P1,200,000.

b. Long-term investments include a P460,000 trading securities and a P900,000

Investment in Day Corporation Bonds that are expected to be held until their
December 31, 2013 maturity date. Net Company demonstrates an ability to hold
the bonds until their maturity.

c. Property and Equipment include Buildings costing P6,340,000, Inventory costing

P3,050,000, and Equipment costing P2,960,000.

d. Intangible Assets include Patents that cost P820,000 and on which P230,000
amortization has accumulated and Treasury Shares that cost P180,000.
e. Other Assets include Prepaid Insurance (which expires on November 30, 2018)
P290,000, Sinking Fund for Bond Retirement P700,000, and Trademarks that cost
P520,000 on which P150,000 amortization has accumulated.

f. Current Liabilities include Accounts Payable P1,940,000, Bonds Payable (maturity

date December 31, 2024) P4,000,000 and Income Taxes Payable P720,000.

g. Long-term Liabilities include Accrued Wages P410,000 and Mortgage Payable (which
is due in five equal annual payments starting December 31, 2018 P2,000,000.

h. Contributed Capital includes Ordinary Shares (P50 par) P1,100,000 and Preference
Shares P600,000.
 i. Unrealized Capital includes Premium on Bonds Payable P430,000 and Share
Premium of P1,820,000.
j. Retained Earnings includes Unrestricted Retained Earnings P3,780,000, Allowance
for Bad Debts P70,000, and Accumulated Depreciation on Buildings and Equipment
of P2,100,000 and P1,300,000, respectively.

Required: Based on the preceding information, prepare a correct December 31, 2017
Balance Sheet for Net Company with accounts properly classified.

3-4 (Net Company)

Net Company
Statement of Financial Position
December 31, 2009

Assets
Current assets: Note
Cash P 380,000
Trading securities 485,000
Trade receivables (1) 2,780,000
Inventories 3,050,000
Prepaid insurance 290,000 P 6,985,000
Noncurrent assets:
Property, plant and equipment (2) P 7,100,000
Other financial assets (3) 1,600,000
Intangibles (4) 960,000 9,660,000
TOTAL ASSETS P16,645,000

Liabilities and Shareholders’ Equity

Current liabilities:
Trade and other payables (5) P 2,750,000
Income taxes payable 720,000
Provision for warranties 200,000 P 3,670,000
Noncurrent liabilities:
Bonds payable (6) P 4,430,000
Mortgage payable 1,600,000 6,030,000
Total Liabilities P 9,700,000
Shareholders’ equity:
Share capital (7) P 1,700,000
Paid-in capital in excess of par 1820,000
Retained earnings 3,605,000
Total P 7,125,000
Less Treasury stock, at cost 180,000 6,945,000
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY P16,645,000

Unrestricted retained earnings, before adjustment P3,580,000

Unrealized gain on trading securities 25,000
Retained earnings P3,605,000
Note 1 – Trade receivables
Accounts receivable , P1,850,000 + Notes
receivable of P1,000,000) P2,850,000
Less Allowance for doubtful accounts 70,000
Net trade receivables P2,780,000

Note 2 – Property, plant and equipment

Land P1,200,000
Buildings P6,340,000
Less accumulated depreciation 2,100,000 4,240,000
Equipment P2,960,000
Less accumulated depreciation 1,300,000 1,660,000
Total P7,100,000
Note 3 – Other financial assets
Investment in Day Corporation bonds P 900,000
Sinking fund for bond retirement 700,000
Total P1,600,000

Note 4 – Intangibles
Patents P820,000
Less accumulated amortization 230,000 P 590,000
Trademarks P520,000
Less accumulated amortization 150,000 370,000
Total P960,000

Note 5 – Trade and other payables

Accounts payable P1,940,000
Wages payable 410,000
Current portion of mortgage payable 400,000
Total P2,750,000

Note 6 – Bonds payable

Bonds payable P4,000,000
Add premium on bonds payable 430,000
Total P4,430,000

Note – Share capital

Preference share P600,000
Ordinary share 1,100,000
Total P1,700,000

3-5. The accounts below were taken from the unadjusted trial balance of Makati Company
as at December 31, 2017:

Cash and Cash Equivalents – P1,240,000; Trading Securities, at cost – P870,000;

Available for Sale Securities, P2,500,000; Notes Receivable – P920,000; Trade Accounts
Receivable – P1,220,000; Allowance for Bad Debts – P60,000; Merchandise Inventory –
P1,360,000; Notes Payable – P1,500,000; Trade Accounts Payable – P750,000;
Employees Income Tax Withheld – P40,000; Bonds Payable – P2,500,000; Share
Dividends Distributable – P150,000; Income Tax Payable – P280,000.
 An analysis of the above accounts disclosed the following:

a. Included in Cash is a 120-day, P500,000, Certificate of Time Deposit dated

September 17, 2017 and maturing on January 15, 2018.

b. Trade Accounts Receivable was net of customers’ deposit of P70,000.

c. Merchandise worth P150,000 received December 30, 2017 was included in the
inventory but was not recorded as a purchase.

d. Accounts Payable was net of accounts with debit balance of P120,000.

e. A bank loan of P300,000 due December 31, 2009 was included in the Notes
Payable balance.
f. Bonds Payable, which was issued in 2017, will mature in five annual
installments beginning June 1, 2018.

g. Trading Securities have a market value of P900,000 while Available for Sale
Securities have market value of P2,420,000.

Required: Determine the total current assets and total current liabilities of Makati
Company at December 31, 2017.

3.5 (Makati Company)

Current assets consist of:

Cash (1,240,000 – 500,000) P 740,000
Trading securities (900,000 + 500,000) 1,400,000
Trade accounts receivable (net of P60,000 allowance for
bad debts) 1,220,000 + 50,000 – 60,000 1,210,000
Notes receivable 920,000
Creditor’s account with debit balance 100,000
Merchandise inventory 1,360,000
Total current assets P 5,730,000

Current liabilities consist of:

Trade accounts payable (750,000 + 150,000 + 100,000) 1,000,000
Customer deposit 70,000
Notes payable (1,500,000 – 300,000) 1,200,000
Current portion of bonds payable 500,000
Income taxes payable 280,000
Employees income tax withheld 40,000
Total current liabilities P 3,090,000
3-6. Following selected account balances and supplemental information were taken
from the accounting records of Internet Company as of December 31, 2017:

Sales P9,675,000
Mortgage Note Payable 1,300,000
Bank Notes Payable 300,000
Accounts Payable 270,000
Share Dividends Distributable 200,000
Withholding Tax Payable 120,000

Supplemental information:

a. Mortgage note was refinanced on its due date, February 15,

2018 with a new 5-year mortgage note after paying
P300,000 cash on the principal balance. The refinancing
scheme was planned long before its due date. There was
no unpaid interest as of December 31, 2017.

b. The bank notes are payable in semi-annual installments of

P50,000 on February 1 and August 1 of each year. Unpaid
interest for 2017 of P7,500 has not been taken up. This
was paid on January 5, 2018.

c. On August 1, 2017, a suit was filed by a dismissed

employee against the company asking for P1,000,000
damages. The company’s lawyer believes it is probable that
the suit will result in a loss to the company, but the amount
could not be reasonably estimated as of December 31,
2017.
d. The sales account included the 12% VAT corresponding to
the sales for the month of December of P2,688,000
(inclusive of VAT). This was remitted to the BIR on January
20, 2018.

e. Total income tax due for 2017 amounted to P86,500.

Quarterly remittances to BIR during the year for income tax
totaled to P55,000. The balance due as of December 31,
2017 has not been taken up in the books.
 Required: Determine the total current liabilities at December 31, 2017.

3-6 (Internet Company)

Current liabilities consist of:
Accounts payable P 270,000
Mortgage notes payable 1,300,000
Bank notes payable 100,000
Interest payable 7,500
VAT payable (2,688,000/1.12) x .12 288,000
Withholding tax payable 120,000
Income taxes payable (86,500 – 55,000) 31,500
Provision for damages 650,000
Total current liabilities P2,767,000

Note: The entire amount of Mortgage notes payable is classified as current liabilities because as of
December 31, 2009, the company has no discretion yet to refinance the obligation on a long-term basis.
The refinancing of the mortgage payable in 2010 is non-adjusting event that requires disclosure in the
notes to the financial statements.

3-7. Presented below are account balances and related information on December 31, 2017
for Jig Company:

Cash on Hand and in Bank P2,480,000

Accounts Receivable 800,000
Allowance for Bad Debts ( 150,000)
Inventories 1,200,000
Prepaid Insurance 250,000
Total Current Assets P4,580,000

Related information is as follows:

The Cash balance consists of the following:

Cash in Bank, net of bank overdraft of P20,000

maintained in a separate bank account
P 400,000
Cash set aside by the Board of Directors for the
purchase of a plant site
1,500,000
Petty Cash (unreplenished expenses are P5,000)
40,000
General Cash 540,000
 The Merchandise Inventory includes goods held on consignment amounting to P40,000
and goods of P80,000 received on December 31, 2017. Neither of these items has been
recorded as a purchase. The Prepaid Insurance includes cash surrender value of life
insurance in the amount of P50,000.

Required: Determine the total current assets at December 31, 2017.

3-7 (Jig Company)

Current assets consists of:
Cash (400,000 + 20,000 - 30,000 + + 25,000
+ 540,000) P 955,000
Accounts receivable (net) 800,000 + 30,000
– 150,000 680,000
Inventories (1,200,000 – 40,000) 1,160,000
Prepaid insurance (250,000 – 50,000) 200,000
Total current assets at December 31, 2009 P2,995,000

or
Reported total P4,580,000
Bank overdraft 20,000
Cash for purchase of plant site (1,500,000)
Unreplenished petty cash expenses ( 15,000)
Goods held on consignment ( 40,000)
Cash surrender value of life insurance ( 50,000)
Total current assets at December 31, 2009 P2,995,000

3-8.The following totals are taken from the December 31, 2017 balance sheet of
Streamer Company:

Current assets - P3,500,000; Non-current assets - P8,000,000; Current liabilities -

P2,400,000; Non-current liabilities - P2,700,000.

Additional information:

(a) Cash of P380,000 has been placed in a fund for the retirement of long-term
debt. The cash and long-term debt have been offset and are not reflected in the
financial statements.

(b) Long-term assets include P500,000 in treasury shares.

 (c) Cash of P140,000 has been set aside to pay taxes due. The cash and taxes
payable have been offset and do not appear in the financial statements.

(d) Advances on salespersons’ commissions in the amount of P210,000 have been

made. Also, sales commissions payable total P240,000. The net liability of
P30,000 is included in current liabilities.
Required: Make the necessary adjustments and determine the following:
1. Total current assets
2. Total non-current assets
3. Total current liabilities
4. Total non-current liabilities

3-8 (Streamer Company)

Current Non-current Current Non-current
assets assets liabilities liabilities
Reported totals P3,500,000 P8,000,000 P2,400,000 P2,700,000
(a) Retirement fund cash 380,000 380,000
(b) Treasury shares (500,000)
(c) Cash fund for taxes 140,000 140,000
(d) Advances and
commissions payable 210,000 210,000
(e) Provision for
damages 168,000
Correct totals P3,850,000 P7,880,000 P2,918,000 P3,080,000

3-9.The current asset section of the balance sheet prepared by the accountant of
Ping Company as of December 31, 2017 follows:

Cash – P536,000; Accounts Receivable – P3,285,000; Trading Securities – P500,000;

Inventory – P3,500,000; Other Assets – P140,000

The company determines its inventory at year end by physical count. An

examination of the accounts showed the following:

(a) On December 28, 2017, the company issued and recorded a check payable to a
vendor dated January 15, 2018 in the amount of P80,000.

(b) Accounts receivable includes selling price of goods invoiced to a customer on

December 27, 2017. The goods cost P120,000 and were billed to the customer
at 150% of cost. The goods were shipped FOB destination on December 27,
2017 and were received by the customer on January 5, 2018.

(c) There were goods out on consignment at sales price of P225,000. The
company’s gross profit on consigned goods is 40% of sales price.
 (d) Other assets include the amortized cost of long-term advances to officers.

Required: Determine the correct balances of Cash, Accounts Receivable and Inventories
at December 31, 2017.

3-9 (Ping Company)

Cash Accounts Receivable Inventories
Reported amounts P536,000 P3,285,000 P3,500,000
(a) Post dated check recorded 80,000 80,000
(b) Goods shipped FOB destination (180,000) 120,000
(c) Goods out on consignment 135,000
Correct balances, Dec. 31, 2006 P616,000 P3,105,000 P3,835,000

3-10. Your review of the ledger of Lime Co. at December 31, 2017 reveals the
following
Amounts Due from Customers 148,000
350,000
Land for Future Plant Site

Amounts Due to Suppliers 124,000

Income Taxes owed BIR 16,000

Citibank – current account 98,000

Advances From Suppliers 150,000

Accrued Interest on Bonds Payable 17,000

Sinking Fund for Bond Retirement 30,000

Allowance for Bad Debts 12,000

Provision for Warranties 60,000

Inventories including Office Supplies of P3,500 221,000

Required: Determine the company’s working capital at December 31, 2017.

3-10 (Lime Company)

Current assets:
Accounts receivable (net) P136,000
Citibank current account 98,000
Inventories 217,500
Office supplies 3,500
Total current assets P455,000
Current liabilities:
Accounts payable P124,000
Income tax payable 16,000
Advances from suppliers 150,000
Accrued interest on bonds payable 17,000
Provision for warranties 60,000 367,000
Working capital P 88,000