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Liabilities Practice Problems

The document outlines various financial transactions and liabilities for multiple companies as of December 31, 2023. It includes details on accounts payable, cash balances, and notes payable, as well as specific transactions affecting current and non-current liabilities. The document poses questions regarding the calculation of total current liabilities and the carrying amounts of notes payable for different companies.

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Roselene Lanson
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248 views1 page

Liabilities Practice Problems

The document outlines various financial transactions and liabilities for multiple companies as of December 31, 2023. It includes details on accounts payable, cash balances, and notes payable, as well as specific transactions affecting current and non-current liabilities. The document poses questions regarding the calculation of total current liabilities and the carrying amounts of notes payable for different companies.

Uploaded by

Roselene Lanson
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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DRILLS FOR LIABILITIES Dec. 20: Paid ₱800,000 on the Dec.

10
invoice.
1. The data below are from the records of Dec. 28: Purchased additional goods
ALMANOR, INC. On December 31, 2023: worth ₱500,000, terms 1/15, n/30.
Accounts Payable - P680,000; Cash Balance, ABC BAKS uses the gross method for recording
Bank - 1,240,000; Cash Overdraft with XYZ Bank purchases. What is the accounts payable balance on
- 80,000; Customers’ accounts with credit balances December 31, 2023?
- 25,000; Dividends in arrears on preference shares
- 400,000; Employees’ income tax payable -
100,000; Estimated warranty payable - 50,000; 7. On October 1, 2023, BALATON CORP. Issued a
Estimated premium claims outstanding - 90,000; P500,000, 12-month, 12%note to ABC Company in
Income Tax Payable - 400,000; Notes Payable payment of account. On the same date, the
(issued in 2023 maturing in 20 semi-annual company borrowed P1,000,000 from the Asian
installments beginning on April 1, 2024) - Bank by signing a 12-month, noninterest-bearing,
4,000,000; Salaries Payable - 400, 000. How much P1,120,000 note. What is the total/net liability to be
is the amount to be shown as total current liabilities reported on the December 31, 2023, statement of
on Almanor’s statement of financial position at financial position?
December 31, 2023?
8. On January 1, 2023, PAIK INC. acquired
2. On January 1, 2023, TERACOTA issued a 3-year, machinery by issuing a 4-year, 5% note with a face
non-interest-bearing note with a face value of value of ₱2,000,000. The market rate is 8%. On
₱1,200,000 in exchange for land. The note requires December 31, 2024, the machinery was deemed
three equal annual installment payments starting impaired, with a fair value of ₱1,400,000. What is
December 31, 2023. The prevailing market rate is the carrying amount of the note payable on
10%. What is the carrying amount of the note December 31, 2024, before impairment?
payable on December 31, 2024?
9. HAUGE’s December 31, 2023, records include the
3. SAIMAA CORP. Records its purchases at gross following: Accounts payable: ₱800,000; 12%
amounts but wishes to change to recording Notes payable (issued March 1, 2023; due March 1,
purchases recorded from January 1, 2024 to 2024): ₱500,000; Dividends declared on December
December 31, 2024, totaled P80,000. Of this 20, 2023, payable on January 15, 2024: ₱200,000;
amount, P8,000 is still available in the accounts Unearned revenue (to be earned evenly over 2024):
payable balance. The balances in Saimaa’s ₱600,000; Portion of long-term debt refinanced on
accounts as of and for the year ended December 31, December 1, 2023, now due December 1, 2024:
2024, before conversion are: Purchases P4,000,000; ₱1,000,000. What total amount should be reported
Purchase discounts - P32,000; Accounts Payable - as current liabilities?
P1,200,000. How much should the accounts
payable be reduced by?
10. NAMEKUS COMPANY has the following three
4. On December 31, 2020, BAIKAL COMPANY loans payable scheduled to be repaid in February of
acquired a piece of equipment from Seller next year. The company’s accounting year ends on
Company by issuing a P1,200,00 note, payable in December 31. The company intends to repay Loan
full on December 31, 2024. Baikal’s credit rating 1 for P100,000 when it comes due in February.
permits it to borrow funds from it several lines of
credit at 10%. The equipment is expected to have a In the following October, the company intends to
5-year life and a P150,000 salvage value. The get a new loan for P80,000 from the same bank.
present value of 1 at 10% for 4 periods is 0.68301. The company intends to refinance Loan 2 for
Compute for the Equipment’s book value and the P150,000 when it comes due in February. The
carrying value of the note as of December 31, 2022. refinancing agreement, for P180,000, will be
signed in April, after the financial statements for
5. OHRID COMPANY purchased machinery on this year have been authorized for issue.
December 31, 2010, paying P80,000 down and
agreeing to pay the balance in four equal The company intends to refinance Loan 3 for
installments of P60,000 payable each December 31. P200,000 before it comes due in February. The
Implicit in the purchase price is an assumed interest actual refinancing, for P175,000, took place in
of 12%. The following data are abstracted from the January, before the financial statements for this
present value tables: Present value of 1 at 12% for year have been authorized for issue.
4 periods - 0.63552; Present Value of an ordinary
annuity of 1 at 12% for 4 periods - 3.03735. a. As of December 31 of this year, the total current
liabilities to be reported on the company’s
6. BAKS COMPANY engaged in the following statement of financial position should be
transactions in December 2023: b. As of December 31 of this year, the total non-
Dec. 10: Purchased goods worth current liabilities to be reported on the company’s
₱2,000,000, terms 2/10, n/30. statement of financial position should be
Dec. 15: Returned defective goods worth
₱200,000.

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