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Multiple Choice Questions: Questions 1 Through 5 Are Based On The Following Information

The document provides financial information about Kuia Company for the year ended December 31, 2019. This includes details on share capital issued, bank balances and cash on hand, loans, expenses, inventory, accounts receivable, accounts payable, equipment purchases, and other balances. Based on this information, the audit determined that: 1) Merchandise purchases in 2019 were P2,436,000 2) Collections from sales in 2019 were P3,720,000 3) Net income for the year ended December 31, 2019 was P1,620,000 4) Shareholders' equity as of December 31, 2019 was P9,240,000 5) Total assets as of December 31,

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119 views2 pages

Multiple Choice Questions: Questions 1 Through 5 Are Based On The Following Information

The document provides financial information about Kuia Company for the year ended December 31, 2019. This includes details on share capital issued, bank balances and cash on hand, loans, expenses, inventory, accounts receivable, accounts payable, equipment purchases, and other balances. Based on this information, the audit determined that: 1) Merchandise purchases in 2019 were P2,436,000 2) Collections from sales in 2019 were P3,720,000 3) Net income for the year ended December 31, 2019 was P1,620,000 4) Shareholders' equity as of December 31, 2019 was P9,240,000 5) Total assets as of December 31,

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Multiple Choice Questions

Questions 1 through 5 are based on the following information:


Your audit of Ning Nong Nantes Company disclosed that your client kept very limited
records. Purchases of merchandise were paid for by check, but most other items were out
of cash receipts. The company’s collections were deposited weekly. No record was kept
of cash in the bank, nor was a record kept of sales. Accounts receivable were recorded
only by keeping a copy of ticket, and this copy was given to the customer when he paid
his account.
Additional information:
a. On January 2, 2019 Kuia Company started business and issued share capital, 72,000
shares with P100 par for the following considerations:
Cash P600,0000
Building(useful life, 15 years) 5,400,000
Land 1,800,000
P7,800,000
b. An analysis of the bank statements showed total deposits including the original cash
investment of P4,200,000. The balance in the bank statement on December 31, 2019
was P300,000 but there were checks amounting to P60,000 dated in December but
not paid by the bank until January 2020. Cash on hand on December 31,2019 was
P150,000 including customer’s deposit of P90,000.
c. During the year, Kuia borrowed P600,000 from the bank and repaid P150,000 and
P30,000 interest.
d. Disbursements paid in cash during the year were as follows:
Utilities P120,000
Salaries 120,000
Supplies 240,000
Dividends 180,000
P660,000
e. An inventory of merchandise taken on December 31,2019 showed P906,000 of
merchandise.
f. Tickets for accounts receivable totaled P1,080,000 but P60,000 of that amount may
prove uncollectible.
g. Unpaid suppliers invoices for merchandise amounted to P420,000.
h. Equipment with a cash price of P480,000 was purchased in early January on a one
year installment basis. During the year, checks for the down payment and all
maturing installments totaled P534,000. The equipment has a useful life of 5 years.

Required:
Based on the above and the result of your audit, determine the following: (disregard income
taxes)
1. Payment for merchandise purchases in 2019
a. P2,646,000 c. P2,436,000
b. P2,586,000 d. P3,246,000
2. Collections from sales in 2019
a. P3,720,000 c. P4,320,000
b. P3,000,000 d. P4,920,000
3. Net income for the year ended December 31,2019
a. P1,560,000 c. P1,770,000
b. P1,620,000 d. P960,000
4. Shareholders’ equity as of December 31, 2018
a. P9,180,000 c. P9,390,000
b. P9,240,000 d. P8,580,000
5. Total assets as of December 31, 2019
a. P9,540,000 c. P9,450,000
b. P9,583,200 d. P9,390,000

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