ACCOUNTING 105

ACTIVITY 1: MASTERING ADJUSTING ENTRIES

Question 1

Jackson Cement Corporation reported P35 million for sales when

it only had P20 million of actual sales. Which of the following
qualities of useful information has Jackson most likely
violated?

Consistency

Comparability

Relevance

Faithful representation

Question 2

If prepaid expenses are initially recorded in expense accounts

and have not all been used at the end of the accounting period,
then failure to make an adjusting entry will cause

contra-expenses to be overstated.

assets to be understated.

expenses to be understated.

assets to be overstated.
Question 3

Failure to prepare an adjusting entry at the end of a period to

record an accrued revenue would cause

net income to be overstated.

an understatement of assets and an understatement of

revenues.

an understatement of revenues and an understatement of

liabilities.

an understatement of revenues and an overstatement of

liabilities.

Question 4

Y-B-2 Inc. pays its rent of P90,000 annually on January 1. If

the February 28 monthly adjusting entry for prepaid rent is
omitted, which of the following will be true?

Failure to make the adjustment does not affect the

February financial statements.

Assets will be overstated by 7,500 and net income and

equity will be overstated by 7,500.

Assets will be overstated by 15,000 and net income and

equity will be understated by 15,000.
 Expenses will be overstated by 7,500 and net income and
equity will be understated by 7,500.

Question 5

Iron Inn is a resort located in Cebu City. During December 2019

Wave Inn collects P200,000 cash related to a conference booked
by the Spin Jammers. The conference is scheduled for February 12
and 13, 2020. Which of the following is true regarding how this
transaction is reported on the December 31, 2019 statement of
financial position?

. Iron Inn reports unearned revenue of 200,000.

All of these answer choices are correct.

Spin Jammers reports unearned revenue of 200,000.

Iron Inn reports a prepaid asset of 200,000.

Question 6

A document prepared to prove the equality of debits and credits

after all adjustments have been prepared is the

adjusted financial statements.

adjusted trial balance.

post-closing trial balance.

 adjusted statement of financial position.

Question 7

The revenue recognition principle dictates that revenue be

recognized in the accounting period

in which the performance obligation is satisfied.

before it is earned.

after it is earned.

in which it is collected.

Question 8

Sail & Surf Cruises purchased a five-year insurance policy for

its ships on April 1, 2020 for P120,000. Assuming that April 1
is the effective date of the policy, the adjusting entry on
December 31, 2020 is

Prepaid
Insurance...............................................
................ 18,000

Insurance
Expense.................................................
..... 18,000
 Insurance
Expense.................................................
............ 6,000

Prepaid Insurance
.......................................................
6,000

Insurance
Expense.................................................
............ 24,000

Prepaid Insurance
.......................................................
24,000

Insurance
Expense..................................................
........... 18,000

Prepaid Insurance
.......................................................
18,000

Question 9

The periodicity assumption states

the life of a business can be divided into artificial

time periods and that useful reports covering those
periods can be prepared.

only those things that can be expressed in money are

included in the accounting records.
 the business will remain in operation for the
foreseeable future.

every economic entity can be separately identified and

accounted for.

Question 10 0 / 1 point

Which of the following statements is false regarding adjusting

entries?

Each adjusting entry affects one revenue account and one

expense account.

Each adjusting entry affects one statement of financial

position account and one income statement account.

Adjusting entries involve accruals or deferrals.

Cash is neither debited nor credited as a result of

adjusting entries.

Question 11 1.5 / 1.5 points

Employees at Julian Corporation are paid P20,000 cash every

Friday for working Monday through Friday. The calendar year
accounting period ends on Wednesday, December 31. How much
salary expense should be recorded two days later on January 2?

20,000
 None, matching requires the weekly salary to be accrued
on December 31.

12,000

8,000

Question 12 1.5 / 1.5 points

Bread Basket provides baking supplies to restaurants and grocery

stores. During December 2019, Bread Basket’s employees worked
2,400 hours at an average rate of P15 per hour. At December 31,
2019, Bread Basket has paid P21,000 of salary expense. If Bread
Basket fails to make the appropriate adjusting entry, which of
the following is true regarding its December 31, 2019 statement
of financial position?

Liabilities are overstated by 21,000

Equity is overstated by 21,000.

Liabilities are understated by 15,000.

Equity is understated by 15,000.

Question 13 1.5 / 1.5 points

Bread Basket provides baking supplies to restaurants and grocery

stores. On November 1, 2019, Bread Basket signed a P700,000,
6-month note payable. The note requires Bread Basket to pay
interest at an annual rate of 6%. Bread Basket’s accountant is a
recent college graduate who lacks practical experience.
Therefore, the appropriate adjusting entry is not made. What is
the impact on its December 31, 2019 statement of financial
position?
 Liabilities are understated by 21,000.

Equity is overstated by 21,000.

Liabilities are understated by 7,000.

Assets are overstated by 21,000.

Question 14 1.5 / 1.5 points

On January 2, 2020, National Credit and Cash purchased a general

liability insurance policy for P6,000 for coverage for the
calendar year. The entire P6,000 was charged to Insurance
Expense on January 2, 2020. If the firm prepares monthly
financial statements, the proper adjusting entry on January 31,
2020, will be:

Prepaid
Insurance...............................................
................ 500

Insurance Expense
.................................................... 500

Prepaid
Insurance................................................
............... 5,500

Insurance Expense
....................................................
5,500
 Insurance
Expense.................................................
............ 5,500

Prepaid
Insurance...............................................
....... 5,500

Insurance
Expense.................................................
............ 500

Prepaid
Insurance...............................................
....... 500

Question 15 1.5 / 1.5 points

Myron is a barber who does his own accounting for his shop. When
he buys supplies he routinely debits Supplies Expense. Myron
purchased P3,000 of supplies in January and his inventory at the
end of January shows P800 of supplies remaining. What adjusting
entry should Myron make on January 31?

Supplies Expense
........................................................
....... 2,200

Supplies
........................................................
............. 2.200

Supplies Expense
........................................................
....... 800

Supplies
........................................................
............. 800
 Supplies Expense
........................................................
....... 3,000
Cash....................................................
....................... 3,000

Supplies.................................................
............................. 800

Supplies
Expense..................................................
..... 800

Question 16 1 / 1 point

Accounts often need to be adjusted because

there are never enough accounts to record all the

transactions.

many transactions affect more than one time period.

there are always errors made in recording transactions.

management can't decide what they want to report.

Question 17 1 / 1 point

Alternative adjusting entries do not apply to

unearned revenues.
 prepaid expenses and unearned revenues.

prepaid expenses.

accrued revenues and accrued expenses.

Question 18 1 / 1 point

Betty Carson has performed P500 of accounting services for a

client but has not billed the client as of the end of the
accounting period. What adjusting entry must Betty make?

Debit Cash and credit Unearned Service Revenue

Debit Unearned Service Revenue and credit Service

Revenue

Debit Accounts Receivable and credit Unearned Service

Revenue

Debit Accounts Receivable and credit Service Revenue

Question 19 0 / 1.5 points

Wave Inn is a resort located in Canada. Wave Inn collects cash

when guests make a reservation. During December 2019, Wave Inn
collected P90,000 of cash and recorded the receipt by
recognizing revenue. By the end of the month Wave Inn had earned
one third of this amount, the other two thirds will be earned
during January 2020. The adjusting entry required at December
31, 2019 would impact the statement of financial position by
 Increased Assets 90,000.

Decreased Equity 60,000.

Increased Equity 30,000.

Decreased Liabilities 60,000.

Question 20 1 / 1 point

If unearned revenues are initially recorded in revenue accounts

and have not all been earned at the end of the accounting
period, then failure to make an adjusting entry will cause

liabilities to be overstated.

revenues to be understated.

accounts receivable to be overstated.

revenues to be overstated.

Question 21 1.5 / 1.5 points

Iron Inn is a resort located in Canada. During December 2020

Spin Jammers held its annual conference at the resort. The
charges related to the conference total P400,000, of which 25%
has been paid by Spin Jammers. When Iron Inn makes the
appropriate adjusting entry, which of the following is a part of
the adjustment made to its December 31, 2020 statement of
financial position?
 Credit Cash 300,000.

Debit Cash 300,000.

Debit Cash and credit revenue 300,000.

Credit revenues 300,000.

Question 22 0 / 1.5 points

RAS Corporation issued a one-year, 6%, P400,000 note on August

31, 2020. Interest income for the year ended December 31, 2020
was

None

10,000

8,000

6,000

Question 23 1 / 1 point

Expenses paid and recorded as assets before they are used are
called

unearned expenses.
 accrued expenses.

prepaid expenses.

interim expenses.

Question 24 1.5 / 1.5 points

CHS Company purchased a truck from JLS Corp. by issuing a

6-month, 8% note payable for P45,000 on November 1. On December
31, the accrued expense adjusting entry is

Interest
Expense..................................................
............... 600

Interest
Payable..................................................
......... 600

Interest
Expense.................................................
................ 7,200

Interest
Payable.................................................
.......... 7,200

No entry is required.

Interest
Expense.................................................
................ 3,600
 Interest
Payable.................................................
.......... 3,600

Question 25 0 / 1.5 points

Cara, Inc. purchased supplies costing P7,500 on January 1, 2020

and recorded the transaction by debiting an expense. At the end
of the year P3,000 of the supplies are still on hand. If Cara,
Inc. does not make the appropriate adjusting entry, what is the
impact on its statement of financial position at December 31,
2020?

Equity understated by 4,500.

Equity overstated by 3,000.

Assets understated by 3,000.

Assets understated by 4,500.

Question 26 1.5 / 1.5 points

Turner Company collected P26,000 in September of 2019 for 5

months of service which would take place from October of 2019
through February of 2020. The revenue reported from this
transaction during 2019 would be

15,600

0
 10,400

26,000

Question 27 1 / 1 point

A new accountant working for Unitas Company records P800

Depreciation Expense on store equipment as follows:

Depreciation Expense
............................................ 800

Cash
..............................................................
800

The effect of this entry is to

understate total assets on the statement of financial

position as of December 31.

overstate the book value of the depreciable assets at

December 31.

understate the book value of the depreciable assets as

of December 31.

adjust the accounts to their proper amounts on December

31.

Question 28 1 / 1 point
 Can financial statements be prepared directly from the adjusted
trial balance?

They can because that is the only reason that an

adjusted trial balance is prepared.

. Yes, adjusting entries have been recorded in the

general journal and posted to the ledger accounts.

No, the adjusted trial balance merely proves the

equality of the total debit and total credit balances in
the ledger after adjustments are posted. It has no other
purpose.

They cannot. The general ledger must be used.

Question 29 1.5 / 1.5 points

A company shows a balance in Salaries and Wages Payable of

P48,000 at the end of the month. The next payroll amounting to
P54,000 is to be paid in the following month. What will be the
journal entry to record the payment of salaries?

Salaries and Wages

Expense.............................................
6,000

Salaries and Wages

Payable..............................................
48,000
Cash ............................................
54,000
 Salaries and Wages
Expense.............................................
54,000

Salaries and Wages Payable

..................................... 54,000

Salaries and Wages

Expense.............................................
6,000

Cash
........................................................
.................. 6,000

Salaries and Wages

Expense.............................................
54,000

Cash
........................................................
.................. 54,000

Question 30 1 / 1 point

If a business has several types of Non-current assets such as

equipment, buildings, and trucks,

all the long-term asset accounts will be recorded in one

general ledger account.

there should be a separate accumulated depreciation

account for each type of asset.

there won't be a need for an accumulated depreciation

account.
 there should be only one accumulated depreciation
account.

Question 31 1.5 / 1.5 points

USJR sold season tickets for the 2019 football season for
P400,000. A total of 8 games will be played during September,
October and November. In September, three games were played. The
adjusting journal entry at September 30

is not required. No adjusting entries will be made until

the end of the season in November.

will include a debit to Unearned Ticket Revenue and a

credit to Ticket Revenue for 150,000.

will include a debit to Cash and a credit to Ticket

Revenue for 100,000.

will include a debit to Ticket Revenue and a credit to

Unearned Ticket Revenue for 133,333.

Question 32 1.5 / 1.5 points

Sele, Inc. purchased a building on January 1, 2020 for

P1,200,000. The useful life of the building is 10 years. What
impact will the appropriate adjusting entry at December 31, 2020
have on its statement of financial position at December 31,
2020?

Decreased Assets 120,000.

Increased Liabilities 120,000.

 Since the adjusting entry has offsetting debits and
credits, there is no impact on the statement of
financial position.

Increased Equity 120,000.

Question 33 1.5 / 1.5 points

On July 1, Runner’s Sports Store paid P12,000 to Acme Realty for

4 months rent beginning July 1. Prepaid Rent was debited for the
full amount. If financial statements are prepared on July 31,
the adjusting entry to be made by Runner’s Sports Store is

Debit Rent Expense, 12,000; Credit Prepaid Rent, 12,000.

Debit Prepaid Rent, 3,000; Credit Rent Expense, 3,000

Debit Rent Expense, 3,000; Credit Prepaid Rent, 3,000.

Debit Rent Expense, 12,000; Credit Prepaid Rent, 3,000.

Question 34 1.5 / 1.5 points

Mike Conway is a lawyer who requires that his clients pay him in
advance of legal services rendered. Mike routinely credits
Service Revenue when his clients pay him in advance. In June
Mike collected P20,000 in advance fees and completed 75% of the
work related to these fees. What adjusting entry is required by
Mike's firm at the end of June?
 Unearned Service Revenue
............................................... 5,000

Service Revenue
.......................................................
5,000

Unearned Service Revenue

............................................... 15,000

Service Revenue
.......................................................
15,000

Service Revenue
.........................................................
....... 5,000

Unearned Service Revenue

....................................... 5,000

Cash
........................................................
.......................... 20,000

Service Revenue
.......................................................
20,000

Question 35 1 / 1 point

For prepaid expense adjusting entries

prior to adjustment, expenses are overstated and assets

are understated.
 none of these.

an expense—liability account relationship exists.

the adjusting entry results in a debit to an expense

account and a credit to an asset account.

Question 36 1 / 1 point

Betty Carson, an accountant, has billed her clients for services

performed. She subsequently receives payments from her clients.
What entry will Betty make upon receipt of the payments?

Debit Unearned Service Revenue and credit Service

Revenue

Debit Cash and credit Service Revenue

Debit Accounts Receivable and credit Service Revenue

Debit Cash and credit Accounts Receivable

Question 37 1 / 1 point

An expense is recorded under the cash basis only when

services are performed.

it is earned.
 it is incurred.

cash is paid.

Question 38 1.5 / 1.5 points

Jenni’s Music Store borrowed P60,000 from the bank signing a 7%,
3-month note on September 1. Principal and interest are payable
to the bank on December 1. If the company prepares monthly
financial statements, the adjusting entry that the company
should make for interest on September 30, would be

Debit Interest Expense, 350; Credit Interest Payable,

350.

Debit Note Payable, 4,200; Credit Cash, 4,200

Debit Cash, 1,050; Credit Interest Payable, 1,050.

Debit Interest Expense, 4,200; Credit Interest Payable,

4,200.

Question 39 1 / 1 point

Valuing assets at their fair value rather than at their cost is

inconsistent with the:

periodicity assumption.

historical cost principle.

 economic entity assumption.

full disclosure principles.

Question 40 1 / 1 point

If a resource has been consumed but a bill has not been received
at the end of the accounting period, then

an expense should be recorded when the cash is paid out.

it is optional whether to record the expense before the

bill is received.

an adjusting entry should be made recognizing the

expense.

an expense should be recorded when the bill is received.

1.) The account balances shown below were taken from Basic Company’s trial balance on December 31, 2020.
All adjusting entries has been made.

Wages payable, P250,000; Cash, P175,000; Bonds Payable, P600,000; Dividends Payable, P140,000;
Prepaid Rent, P136,000; Inventory,P820,000; Investment in- Sinking Fund Assets, P525,000; Investment
to Profit or loss securities, P153,000; Premium on Bonds Payable, P48,000; Investment in Subsidiary,
P1,020,000; Taxes Payable, P228,000; Accounts Payable, P248,000; Accounts Receivable, P366,000; Property
Plant & Equipment, P1,020,000; Patents, P150,000; Accumulated Depreciation – PPE, P400,000; Land held for
future business site P900,000.

How much should be reported in Basic’s December 31, 2020 statement of financial position as non-current
liabilities?

 640,000
 648,000 (answer)
 630,000
 552,000

2.) Mr. Macario Medalla bought a machine on account costing P500,000. The machine is depreciated annually
and with P50,000 scrap value at the end of its 5-year life. The machine was acquired on October 30, 2020.
(Double Declining Method) Cut-off December 31, 2020.

How much depreciation expense that should be recorded at the end of the accounting period?

 43,333.33
 53,333.33
 33,333.33 (answer)
 23,333.33

3.) Beloved Corporation’s trial balance contained the following account balances at December 31, 2020:

Equity investment to profit or loss, at cost 150, 000

Prepaid insurance 30, 000
Cash and Cash Equivalents 330, 000
Inventory 900, 000
Equipment and furniture, net 990, 000
Patent, net 120,000
Accounts receivable 480, 000
Land (held for capital appreciation) 1, 200, 000

How much is the total current assets in Beloved’s December 31, 2020 statement of financial position?

 2,010,000
 1,890,000 (answer)
 2,430,000
 2,190,000
4.) The account balances shown below were taken from Basic Company’s trial balance on December 31, 2020.
All adjusting entries has been made.

Wages payable, P250,000; Cash, P175,000; Bonds Payable, P600,000; Dividends Payable, P140,000;
Prepaid Rent, P136,000; Inventory,P820,000; Investment in- Sinking Fund Assets, P525,000; Investment
to Profit or loss securities, P153,000; Premium on Bonds Payable, P48,000; Investment in Subsidiary,
P1,020,000; Taxes Payable, P228,000; Accounts Payable, P248,000; Accounts Receivable, P366,000; Property
Plant & Equipment, P1,020,000; Patents, P150,000; Accumulated Depreciation – PPE, P400,000; Land held for
future business site P900,000.

How much should be reported in Basic’s December 31, 2020 statement of financial position as current
liabilities?

 860,000
 770,000
 776,000
 866,000 (answer)

5.) Halo, Inc. reported the following items in its December 31, 2020 trial balance

Accounts Payable P 1,089,000

Advances to Employees 45,000
Unearned Rent Revenue 288,000
Estimated Warranties Liability 258,000
Cash Surrender Value of Life’s Insurance 75,000
Bonds Payable 5,000,000
Discounts on Bonds Payable 225,000
Trademark 390,000

How much Halo report as total liabilities in its December 31, 2020 statement of financial position?

 6,845,000
 6,410,000 (answer)
 7,410,000
 6,800,000

6.) On July 15, 2019, Ms. Cristina Jumawan collected in advance cash of P48,000 from tenant of her building,
This represents rental which covers from the period August 1, 2019 to August 1, 2021 (two-year contract).

How much is earned portion of the rental collected in advance for the year ended December 31, 2019?

 12,000
 9,000
 10,000 (answer)
 11,000
7.) The account balances shown below were taken from Basic Company’s trial balance on December 31, 2020.
All adjusting entries has been made.

Wages payable, P250,000; Cash, P175,000; Bonds Payable, P600,000; Dividends Payable, P140,000;
Prepaid Rent, P136,000; Inventory,P820,000; Investment in- Sinking Fund Assets, P525,000; Investment
to Profit or loss securities, P153,000; Premium on Bonds Payable, P48,000; Investment in Subsidiary,
P1,020,000; Taxes Payable, P228,000; Accounts Payable, P248,000; Accounts Receivable, P366,000; Property
Plant & Equipment, P1,020,000; Patents, P150,000; Accumulated Depreciation – PPE, P400,000; Land held for
future business site P900,000.

How much should be reported in Basic’s December 31, 2020 statement of financial position as total assets?

 5,045,000 (answer)
 5,040,000
 5,050,000
 5,035,000

8.) The account balances shown below were taken from Basic Company’s trial balance on December 31, 2020.
All adjusting entries has been made.

Wages payable, P250,000; Cash, P175,000; Bonds Payable, P600,000; Dividends Payable, P140,000;
Prepaid Rent, P136,000; Inventory,P820,000; Investment in- Sinking Fund Assets, P525,000; Investment
to Profit or loss securities, P153,000; Premium on Bonds Payable, P48,000; Investment in Subsidiary,
P1,020,000; Taxes Payable, P228,000; Accounts Payable, P248,000; Accounts Receivable, P366,000; Property
Plant & Equipment, P1,020,000; Patents, P150,000; Accumulated Depreciation – PPE, P400,000; Land held for
future business site P900,000.

How much should be reported in Basic’s December 31, 2020 statement of financial position as current assets?

 1,750,000
 1,600,000
 1,700,000
 1,650,000 (answer)
9.) The account balances shown below were taken from Basic Company’s trial balance on December 31, 2020.
All adjusting entries has been made.

Wages payable, P250,000; Cash, P175,000; Bonds Payable, P600,000; Dividends Payable, P140,000;
Prepaid Rent, P136,000; Inventory,P820,000; Investment in- Sinking Fund Assets, P525,000; Investment
to Profit or loss securities, P153,000; Premium on Bonds Payable, P48,000; Investment in Subsidiary,
P1,020,000; Taxes Payable, P228,000; Accounts Payable, P248,000; Accounts Receivable, P366,000; Property
Plant & Equipment, P1,020,000; Patents, P150,000; Accumulated Depreciation – PPE, P400,000; Land held for
future business site P900,000.

How much should be reported in Basic’s December 31, 2020 statement of financial position as non-current
assets?

 2,225,000
 3,795,000
 2,375,000
 3,395,000 (answer)

10.) Bride Company began operations on January 1, 2020 with P1,000,000 from the issuance of shares and
borrowed funds of P450,000. Net income for 2020 was P300,000 and Bride paid a P225,000 cash dividend on
December 19, 2020. No additional transactions affected owner’s equity in 2014. At December 31, 2020,
liabilities of the company had increased to P597,000. In Bride’s December 31, 2020 statement of financial
position, how much should be reported as its total assets?

 1,750,000
 1,672,000 (answer)
 1,525,000
 1,760,000

Solution:

1,000,000 + 597,000 + 300,000 = 1,897,000 – 225,000 = 1,672,000

Question 1 3 / 3 points
Presented below is the statement of Financial Position prepared by bookkeeper of
Diamond Company on December 31, 2020:

Current Assets

Inventory P 600,000

Accounts Receivable 590,000

Cash 230,000

Treasury Shares (at cost) 330,000

Long Term Investments

Financial Assets at fair value through P/L 320,000

Financial Assets at fair value through OCI 1,030,000

Property and Equipment

Land 810,000

Office Supplies 80,000

Building and Equipment 3,560,000

Intangible Assets

Patents (net) 470,000

Prepaid Insurance 50,000

Deferred tax Assets 70,000

Discounts on Bonds Payable 100,000

Total Assets P 8,240,000

Current Liabilities

Accounts Payable 990,000

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 Revenue (3months) 90,000

Equity

Retained Earnings 2,300,000

Acc. Depreciation Building & Equipment 920,000

Shares Premium 1,040,000

Ordinary Share Capital 1,200,000

Accumulated holding gains through OCI 120,000

Total Credits P8,240,000

What is the total of corrected current assets as of December 31, 2020 of Diamond
Company?

Answer: 1,790,000

Question 2
SME provide the following data on December 31, 2020:

Cash P 25,000

Accounts Receivable 530,000

Prepayments 60,000

Inventories 60,000

Investment in Associate 110,000

Property, plant and equipment 3,250,000

Accumulated depreciation and impairment 700,000

Software - net of amortization and impairment 10,000

Deferred Tax Asset 5,000

Bank Overdraft 80,000

Bank Loan, payable in 2023 50,000

Trade Payable 430,000

Interest Payable 2,000

Current Tax Liability 270,000

Provision for Warranty 4,000

Employee Benefit Obligation (P4,000 current) 10,000

Finance Lease Liability (P20,000 current) 44,000

Share Capital 30,000

Retained Earnings 2,430,000

What is the total amount of current assets?

Answer: 675,000

Question 3
Presented below is the statement of Financial Position prepared by bookkeeper of
Diamond Company on December 31, 2020:

Current Assets

Inventory P 600,000

Accounts Receivable 590,000

Cash 230,000

Treasury Shares (at cost) 330,000

Long Term Investments

Financial Assets at fair value through P/L 320,000

Financial Assets at fair value through OCI 1,030,000

Property and Equipment

Land 810,000

Office Supplies 80,000

Building and Equipment 3,560,000

Intangible Assets

Patents (net) 470,000

Prepaid Insurance 50,000

Deferred tax Assets 70,000

Discounts on Bonds Payable 100,000

Total Assets P 8,240,000

Current Liabilities

Accounts Payable 990,000

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 Revenue (3months) 90,000

Equity

Retained Earnings 2,300,000

Acc. Depreciation Building & Equipment 920,000

Shares Premium 1,040,000

Ordinary Share Capital 1,200,000

Accumulated holding gains through OCI 120,000

Total Credits P8,240,000

What is the corrected total assets as of December 31, 2020 of Diamond Company?

Answer: 6,810,000

Question 4 3 / 3 points
Presented below is the statement of Financial Position prepared by bookkeeper of
Diamond Company on December 31, 2020:

Current Assets

Inventory P 600,000

Accounts Receivable 590,000

Cash 230,000

Treasury Shares (at cost) 330,000

Long Term Investments

Financial Assets at fair value through P/L 320,000

Financial Assets at fair value through OCI 1,030,000

Property and Equipment

Land 810,000

Office Supplies 80,000

Building and Equipment 3,560,000

Intangible Assets

Patents (net) 470,000

Prepaid Insurance 50,000

Deferred tax Assets 70,000

Discounts on Bonds Payable 100,000

Total Assets P 8,240,000

Current Liabilities
 Accounts Payable 990,000

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 Revenue (3months) 90,000

Equity

Retained Earnings 2,300,000

Acc. Depreciation Building & Equipment 920,000

Shares Premium 1,040,000

Ordinary Share Capital 1,200,000

Accumulated holding gains through OCI 120,000

Total Credits P8,240,000

What is the total of corrected non-current liabilities as of December 31, 2020 of

Diamond Company?

Answer: 1,000,000

Question 5 3 / 3 points
Presented below is the statement of Financial Position prepared by bookkeeper of
Diamond Company on December 31, 2020:

Current Assets

Inventory P 600,000

Accounts Receivable 590,000

Cash 230,000

Treasury Shares (at cost) 330,000

Long Term Investments

Financial Assets at fair value through P/L 320,000

Financial Assets at fair value through OCI 1,030,000

Property and Equipment

Land 810,000

Office Supplies 80,000

Building and Equipment 3,560,000

Intangible Assets

Patents (net) 470,000

Prepaid Insurance 50,000

Deferred tax Assets 70,000

Discounts on Bonds Payable 100,000

Total Assets P 8,240,000

Current Liabilities

Accounts Payable 990,000

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 Revenue (3months) 90,000

Equity

Retained Earnings 2,300,000

Acc. Depreciation Building & Equipment 920,000

Shares Premium 1,040,000

 Ordinary Share Capital 1,200,000

Accumulated holding gains through OCI 120,000

Total Credits P8,240,000

What is the corrected total shareholders equity as of December 31, 2020 of Diamond
Company?

Answer: 4,330,000

Question 6
SME provide the following data on December 31, 2020:

Cash P 25,000

Accounts Receivable 530,000

Prepayments 60,000

Inventories 60,000

Investment in Associate 110,000

Property, plant and equipment 3,250,000

Accumulated depreciation and impairment 700,000

Software - net of amortization and impairment 10,000

Deferred Tax Asset 5,000

Bank Overdraft 80,000

Bank Loan, payable in 2023 50,000

Trade Payable 430,000

Interest Payable 2,000

Current Tax Liability 270,000

Provision for Warranty 4,000

Employee Benefit Obligation (P4,000 current) 10,000

Finance Lease Liability (P20,000 current) 44,000

Share Capital 30,000

Retained Earnings 2,430,000

What is the total amount of stockholders equity?

Answer: 2,460,000

Question 7 3 / 3 points
SME provide the following data on December 31, 2020:

Cash P 25,000

Accounts Receivable 530,000

Prepayments 60,000

Inventories 60,000

Investment in Associate 110,000

Property, plant and equipment 3,250,000

Accumulated depreciation and impairment 700,000

Software - net of amortization and impairment 10,000
Deferred Tax Asset 5,000
Bank Overdraft 80,000
Bank Loan, payable in 2023 50,000
Trade Payable 430,000

Interest Payable 2,000

Current Tax Liability 270,000

Provision for Warranty 4,000

Employee Benefit Obligation (P4,000 current) 10,000

Finance Lease Liability (P20,000 current) 44,000

Share Capital 30,000

Retained Earnings 2,430,000

What is the total amount of total assets?

Answer: 3,350,000

Question 8
Presented below is the statement of Financial Position prepared by bookkeeper of
Diamond Company on December 31, 2020:

Current Assets

Inventory P 600,000

Accounts Receivable 590,000

Cash 230,000

Treasury Shares (at cost) 330,000

Long Term Investments

Financial Assets at fair value through P/L 320,000

Financial Assets at fair value through OCI 1,030,000

Property and Equipment

Land 810,000

Office Supplies 80,000

Building and Equipment 3,560,000

Intangible Assets

Patents (net) 470,000

Prepaid Insurance 50,000

Deferred tax Assets 70,000

Discounts on Bonds Payable 100,000

Total Assets P 8,240,000

Current Liabilities
 Accounts Payable 990,000

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 Revenue (3months) 90,000

Equity

Retained Earnings 2,300,000

Acc. Depreciation Building & Equipment 920,000

Shares Premium 1,040,000

Ordinary Share Capital 1,200,000

Accumulated holding gains through OCI 120,000

Total Credits P8,240,000

What is the total of corrected current liabilities as of December 31, 2020 of Diamond
Company?

Answer: 1,480,000

Question 9 3 / 3 points
SME provide the following data on December 31, 2020:

Cash P 25,000

Accounts Receivable 530,000

Prepayments 60,000

Inventories 60,000

Investment in Associate 110,000

Property, plant and equipment 3,250,000

Accumulated depreciation and impairment 700,000

Software - net of amortization and impairment 10,000

Deferred Tax Asset 5,000

Bank Overdraft 80,000

Bank Loan, payable in 2023 50,000

Trade Payable 430,000

Interest Payable 2,000

Current Tax Liability 270,000

Provision for Warranty 4,000

Employee Benefit Obligation (P4,000 current) 10,000

Finance Lease Liability (P20,000 current) 44,000

Share Capital 30,000

Retained Earnings 2,430,000

What is the total amount of current liabilities?

Answer: 810,000

Question 10 3 / 3 points
Presented below is the statement of Financial Position prepared by bookkeeper of
Diamond Company on December 31, 2020:

Current Assets

Inventory P 600,000

Accounts Receivable 590,000

Cash 230,000

Treasury Shares (at cost) 330,000

Long Term Investments

Financial Assets at fair value through P/L 320,000

 Financial Assets at fair value through OCI 1,030,000

Property and Equipment

Land 810,000

Office Supplies 80,000

Building and Equipment 3,560,000

Intangible Assets

Patents (net) 470,000

Prepaid Insurance 50,000

Deferred tax Assets 70,000

Discounts on Bonds Payable 100,000

Total Assets P 8,240,000

Current Liabilities

Accounts Payable 990,000

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 Revenue (3months) 90,000

Equity

Retained Earnings 2,300,000

Acc. Depreciation Building & Equipment 920,000

Shares Premium 1,040,000

Ordinary Share Capital 1,200,000

Accumulated holding gains through OCI 120,000

Total Credits P8,240,000

What is the total of corrected non-current assets as of December 31, 2020 of Diamond
Company?

Answer: 5,020,000