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Liabilities-Practice-problems

The document outlines various financial scenarios involving different companies and their liabilities, including calculations for current liabilities, notes payable, and accounts payable. It provides specific figures and terms for each scenario, requiring analysis to determine amounts for financial statements. The scenarios cover a range of accounting principles and practices relevant to financial reporting as of December 31, 2023.

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Niki Dimaano
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15 views

Liabilities-Practice-problems

The document outlines various financial scenarios involving different companies and their liabilities, including calculations for current liabilities, notes payable, and accounts payable. It provides specific figures and terms for each scenario, requiring analysis to determine amounts for financial statements. The scenarios cover a range of accounting principles and practices relevant to financial reporting as of December 31, 2023.

Uploaded by

Niki Dimaano
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1. The data below are from the records of ALMANOR, INC.

On December 31,
2023: Accounts Payable - P680,000; Cash Balance, ABC Bank - 1,240,000;
Cash Overdraft with XYZ Bank - 80,000; Customers’ accounts with credit
balances - 25,000; Dividends in arrears on preference shares - 400,000;
Employees’ income tax payable - 100,000; Estimated warranty payable -
50,000; Estimated premium claims outstanding - 90,000; Income Tax Payable
- 400,000; Notes Payable (issued in 2023 maturing in 20 semi-annual
installments beginning on April 1, 2024) - 4,000,000; Salaries Payable - 400,
000. How much is the amount to be shown as total current liabilities on
Almanor’s statement of financial position at December 31, 2023?

2. On January 1, 2023, TERACOTA issued a 3-year, non-interest-bearing note


with a face value of ₱1,200,000 in exchange for land. The note requires three
equal annual installment payments starting December 31, 2023. The prevailing
market rate is 10%. What is the carrying amount of the note payable on
December 31, 2024?

3. SAIMAA CORP. Records its purchases at gross amounts but wishes to change
to recording purchases recorded from January 1, 2024 to December 31, 2024,
totaled P80,000. Of this amount, P8,000 is still available in the accounts
payable balance. The balances in Saimaa’s accounts as of and for the year
ended December 31, 2024, before conversion are: Purchases P4,000,000;
Purchase discounts - P32,000; Accounts Payable - P1,200,000. How much
should the accounts payable be reduced by?

4. On December 31, 2020, BAIKAL COMPANY acquired a piece of equipment


from Seller Company by issuing a P1,200,00 note, payable in full on
December 31, 2024. Baikal’s credit rating permits it to borrow funds from it
several lines of credit at 10%. The equipment is expected to have a 5-year life
and a P150,000 salvage value. The present value of 1 at 10% for 4 periods is
0.68301. Compute for the Equipment’s book value and the carrying value of
the note as of December 31, 2022.

5. OHRID COMPANY purchased machinery on December 31, 2010, paying


P80,000 down and agreeing to pay the balance in four equal installments of
P60,000 payable each December 31. Implicit in the purchase price is an
assumed interest of 12%. The following data are abstracted from the present
value tables: Present value of 1 at 12% for 4 periods - 0.63552; Present Value
of an ordinary annuity of 1 at 12% for 4 periods - 3.03735.

6. BAKS COMPANY engaged in the following transactions in December 2023:


Dec. 10: Purchased goods worth ₱2,000,000, terms 2/10, n/30.
Dec. 15: Returned defective goods worth ₱200,000.
Dec. 20: Paid ₱800,000 on the Dec. 10 invoice.
Dec. 28: Purchased additional goods worth ₱500,000, terms 1/15, n/30.
BAKS uses the gross method for recording purchases. What is the accounts
payable balance on December 31, 2023?
7. On October 1, 2023, BALATON CORP. Issued a P500,000, 12-month,
12%note to ABC Company in payment of account. On the same date, the
company borrowed P1,000,000 from the Asian Bank by signing a 12-month,
noninterest-bearing, P1,120,000 note. What is the total/net liability to be
reported on the December 31, 2023, statement of financial position?

8. On January 1, 2023, PAIK INC. acquired machinery by issuing a 4-year, 5%


note with a face value of ₱2,000,000. The market rate is 8%. On December 31,
2024, the machinery was deemed impaired, with a fair value of ₱1,400,000.
What is the carrying amount of the note payable on December 31, 2024,
before impairment?

9. HAUGE’s December 31, 2023, records include the following: Accounts


payable: ₱800,000; 12% Notes payable (issued March 1, 2023; due March 1,
2024): ₱500,000; Dividends declared on December 20, 2023, payable on
January 15, 2024: ₱200,000; Unearned revenue (to be earned evenly over
2024): ₱600,000; Portion of long-term debt refinanced on December 1, 2023,
now due December 1, 2024: ₱1,000,000. What total amount should be
reported as current liabilities?

10. NAMEKUS COMPANY has the following three loans payable scheduled to
be repaid in February of next year. The company’s accounting year ends on
December 31. The company intends to repay Loan 1 for P100,000 when it
comes due in February.

In the following October, the company intends to get a new loan for P80,000
from the same bank. The company intends to refinance Loan 2 for P150,000
when it comes due in February. The refinancing agreement, for P180,000, will
be signed in April, after the financial statements for this year have been
authorized for issue.

The company intends to refinance Loan 3 for P200,000 before it comes due in
February. The actual refinancing, for P175,000, took place in January, before
the financial statements for this year have been authorized for issue.

a. As of December 31 of this year, the total current liabilities to be reported on the


company’s statement of financial position should be
b. As of December 31 of this year, the total non-current liabilities to be reported on
the company’s statement of financial position should be

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