Balance Sheet Valix C1Valix

PRACTICAL ACCOUNTING 1 BALANCE SHEET Bogo Company trial balance reflected the following account balances at December 31, 2006: Accounts receivable 1,600,000 Trading securities 500,000 Accumulated depreciation on equipment and 1,500,000 furniture Cash 1,100,000 Inventory of merchandise 3,000,000 Equipment and furniture 2,500,000 Patent 400,000 Prepaid expenses 100,000 Land held for future business site 1,800,000 1. In Bogo Company’s December 31, 2006 balance sheet, the current assets total is a. 8,100,000 b. 7,300,000 c. 6,700,000 d. 6,300,000 The following information pertains to Alena Company on December 31 of the current year: Property, plant and equipment 35,000,000 Accounts receivable 20,000,000 Prepaid insurance 2,500,000 Short-term note payable 3,000,000 Cash 5,000,000 Bonds payable 40,000,000 Total assets 101,500,000 Land 20,000,000 Accounts payable 8,000,000 Allowance for doubtful accounts 1,000,000 Merchandise inventory 13,000,000 Available for sale securities – to be held indefinitely 7,000,000 Wages payable 2,000,000 Total liabilities 56,000,000 Premium on bonds payable 3,000,000 2. The December 31 working capital is a. 46,500,000 b. 33,500,000 c. 26,500,000 d. 35,500,000 Rice Company was incorporated on January 1, 2006, with P5,000,000 from the issuance of stock and borrowed funds of P1,500,000. During the first year of operations, net income was P2,500,000. On December 15, Rice paid a P500,000 cash dividend. No additional activities affected owners’ equity in 2006. At December 31, 2006, Rice’s liabilities had increased to P1,800,000. 3. In Rice’s December 31, 2006 balance sheet, total assets should be reported at a. 6,500,000 b. 9,300,000

c. 8,800,000 d. 6,800,000 Mirr Company was incorporated on January 1, 2006, with proceeds from the issuance of P7,500,000 in stock and borrowed funds of P1,100,000. During the first year of operation, revenues from sales and consulting amounted to P8,200,000, and operating costs and expenses totaled P6,400,000. On December 15, Mirr declared a P300,000 dividend, payable to stockholders on January 15, 2007. No additional activities affected owners’ equity in 2006. Mirr’s liabilities increased to P2,000,000 by December 31, 2006. 4. On Mirr’s December 31, 2006 balance sheet, total assets should be reported at a. 11,000,000 b. 11,300,000 c. 10,100,000 d. 12,100,000 The following is Gold Company’s June 30, 2006, trial balance: Cash overdraft 100,000 Accounts receivable, net 350,000 Inventory 580,000 Prepaid expenses 120,000 Land classified as “held for sale” 1,000,000 Property, plant and equipment, net 950,000 Accounts payable and accrued 320,000 expenses Common stock 250,000 Additional paid-in capital 1,500,000 Retained earnings 830,000 3,000,000 3,000,000 Checks amounting to P300,000 were written to vendors and recorded on June 29,2006, resulting in cash overdraft of P100,000. The checks were mailed on July 9, 2006. Land classified as held for sale was sold for cash on July 15, 2006. Gold issued its financial statements on July 31, 2006. 5. In its June 30, 2006 balance sheet, what amount should Gold report as current assets? a. 2,250,000 b. 2,050,000 c. 1,950,000 d. 1,250,000 Arabian Company’s December 31, 2006 balance sheet reported the following current assets: Cash 4,000,000 Accounts receivable 7,500,000 Inventory 4,000,000 Deferred tax asset 1,200,000 Equipment used and held for resale 300,00 17,000,000 An analysis of the accounts receivable disclosed the accounts receivable comprised the following Trade accounts receivable 5,000,000 Allowance for doubtful accounts (500,000) Selling price of Arabian Company’s unsold goods

sent to Tar Company on consignment at 150% of cost and excluded from Arabian’s ending inventory 6. a. b. c. d.

3,000,000 7,500,000 At December 31, 2006, the total current assets should be 16,000,000 15,700,000 14,500,000 14,800,000

The following data pertains to Caticlan Company on December 31, 2006: Cash, including sinking fund of P500,000 with trustee 2,000,000 Notes receivable (P200,000 pledged) 1,200,000 Accounts receivable – unassigned 3,000,000 Accounts receivable – assigned 800,000 Notes receivable discounted 700,000 Equity of assignee in accounts receivable assigned 500,000 Inventory, including P600,000 cost of goods in transit purchased FOB destination. The goods were received on January 3, 2007 2,800,000 Allowance for doubtful accounts 100,000 7. How much current assets should be shown in the balance sheet on December 31, 2006? a. 7,900,000 b. 8,000,000 c. 7,400,000 d. 7,700,000 Presented below are account balances and related information on December 31, 2006 for Daet Company: Cash and cash equivalents 3,700,000 Accoounts receivable 1,500,000 Allowance for doubtful accounts (200,000) Inventory 2,000,000 Prepaid insurance 300,000 7,300,000 • The cash and cash equivalents include the following: Cash in bank, net of bank overdraft of P300,000 Maintained in a separate bank 1,000,000 Cash set aside by the Board of Directors for the Purchase of a plant site 2,000,000 Petty cash 10,000 Cash withheld from wages for income tax of employees 190,000 General cash 500,000 3,700,000 ======= = • The accounts receivable balance includes past due account in the amount of P100,000 on which a loss of 50% is anticipated. The account should be written off. • The merchandise inventory includes goods held on consignment amounting to P150,000 and goods of P200,000 purchased and received on December 31, 2006. Neither of these items have been recorded as a purchase.

• 8. a. b. c. d.

The prepaid-insurance includes cash surrender value of life insurance of P50,000. The adjusted balance of current assets should be 5,400,000 5,100,000 5,300,000 5,200,000

The trial balance of Mill Company included the following account balances at December 31, 2006: Accounts payable 1,500,000 Bonds payable, due 2007 2,500,000 Discounts on bonds payable 2007 300,000 Dividends payable 800,000 Note payable, due 2008 2,000,000 9. What amount should be included in the current liability section of Mill’s December 31, 2006 balance sheet? a. 4,500,000 b. 5,100,000 c. 6,500,000 d. 7,800,000 The trial balance of Gar Company reflected the following liability account balances at December 31, 2006: Accounts payable 1,900,000 Bonds payable 3,400,000 Deferred tax liability 400,000 Dividends payable 500,000 Income payable 900,000 Note payable, due January 31, 2007 600,000 Discount on bands payable 200,000 The deferred tax liability is based on temporary differences that will reverse equally in 2007 and 2008. 10. In Gar’s December 31, 2006 balance sheet, the current liabilities total was a. 7,100,000 b. 4,300,000 c. 3,900,000 d. 4,100,000 Brite Company had the following liabilities at December 31, 2006: Account payable 550,000 Unsecured note, 8%, due July 1, 2007 4,000,000 Accrued expenses 350,000 Contingent liability 450,000 Deferred tax liability 250,000 Senior bonds, 7%, due March 31, 2007 5,000,000 The contingent liability is an accrual for possible loss on a P1,000,000 lawsuit filed against Brite. Brite’s legal councel expects the suit to be settled in 2007 and has estimasted that Brite will be liable for damages in the amount of 450,000 The deferred tax liability is not related to an asset for financial reporting and is expected to reverse in 2007 11. What amount should Brite report in its December 31, 2006 balance sheet for current liabilities? a. 10,350,000

b. 10,150,000 c. 9,900,000 d. 4,900,000 An analysis of Burma Company’s liabilities disclosed the following Accounts payable, after deducting debit balances In suppliers’ accounts amounting to P100,000 4,000,000 Accrued expenses 1,500,000 Credit balances of customers’ accounts 500,000 Stock dividend payable 1,000,000 Claims for increase in wages and allowance by Employees of the company, covered in a pending lawsuit 400,000 Estimated expenses in redeeming prize coupons Presented by customers 600,000 12. How much should be presented as total current liabilities on the balance sheet? a. 6,700,000 b. 6,600,000 c. 7,100,000 d. 7,700,000 The trial balance of Brazil Company reflected the following liability account balances on December 31, 2006: Accounts payable 5,000,000 Bonds payable, due December 30, 2007 10,000,000 Premium on bonds payable 500,000 Deferred tax liability 2,500,000 Dividends payable 4,500,000 Income tax payable 1,500,000 Note payable – bank 4,000,000 The bank note payable matures on June 30, 2007. On March 1, 2007, the entire balance of the bank payable was refinanced on a long-term basis. Brazil’s financial statements were issued on March 31, 2007. 13. In its December 31, 2006, Brazil Company should report current liabilities at a. 21,500,000 b. 24,000,000 c. 25,500,000 d. 28,000,000 The following information about Manchester Company is available at December 31, 2006: Employee income taxes withheld 900,000 Cash balance at first state Bank 2,500,000 Cash overdraft at Harbor Bank 1,300,000 Accounts receivable with credit balance 750,000 Estimated expenses of meeting warranties on merchandise previously sold 500,000 Estimated damages as a result of unsatisfactory performance on a contact 1,500,000 Accounts payable 3,000,000 Deferred serial bonds, issued at par and bearing interest at 12%, payable in semiannual installments of P500,000 due April 1 and October 1 of each year,

the last bond to be paid on October 1, 2012. Interest is also paid semiannually. Stock dividend payable

5,000,000 2,000,000

14. The December 31, 2006 balance sheet should report current liabilities at a. 8,100,000 b. 7,950,000 c. 9,100,000 d. 7,350,000 The December 31, 2006 balance sheet of East Company contained the following current assets: Cash 3,200,000 Accounts receivable 2,000,000 Inventory 2,800,000 Deferred charges 200,000 8,200,000 An examination revealed that accounts receivable consisted of the following items: Customers’ accounts 1,420,000 Employees’ account-current 240,000 Advances to subsidiary 260,000 Allowance for uncollectible accounts (120,000) Claims against shipper for goods lost in transit 200,000 2,000,000 15. On December 31, 2006, East Company should report total current assets at a. 7,740,000 b. 7,780,000 c. 7,940,000 d. 8,200,000 The unadjusted current assets section and stockholders’ equity section of United Company on December 31, 2006 are as follows: Current assets Cash 600,000 Trading securities (including P300,000 of United Company common stock) 1,000,000 Trade accounts receivable 3,500,000 Inventory 1,500,000 Total 6,600,000 Stockholders’ equity Common stock 5,000,000 Retained earnings 500,000 Total 5,500,000 16. In its 2006 statement of stockholders’ equity, United’s total amount of stockholders’ equity at December 31, 2006 is a. 5,000,000 b. 5,500,000 c. 5,800,000 d. 5,200,000 The adjusted trial balance of Zinc Company at December 31, 2006, includes the following account balances:

Common stock 6,000,000 Additional paid-in capital 1,000,000 Treasury stock, at cost 500,000 Net unrealized loss on available for sale securities 200,000 Retained earnings appropriated 1,500,000 Retained earnings unappropriated 2,000,000 17. What amount should Zinc report as total stockholders’ equity in its December 31, 2006 balance sheet? a. 10,000,000 b. 10,500,000 c. 9,800,000 d. 9,300,000 When preparing a draft of its 2006 balance sheet, Mont Company reported net assets totaling P8,750,000. Included in the asset section of the balance sheet were the following: Treasury stock of Mont Company at cost, which approximate market value on December 31 250,000 Idle machinery 100,000 Cash surrender value of life insurance on corporate executives 150,000 Allowance for inventory writedown 200,000 18. At what amount should Mont’s net assets be reported in the December 31, 2006 balance sheet? a. 8,500,000 b. 8,400,000 c. 8,300,000 d. 8,200,000 During 2006, Jane Company engaged in the following transactions: Key management personnel compensation 2,000,000 Sales to affiliated entities 3,000,000 19. Which of the two transactions would be disclosed as related party transactions in Jane’s 2006 financial statements? a. Neither transaction b. The P2,000,000 transaction only c. The P3,000,000 transaction only d. Both transactions Dean Company acquired 100% of Morey Company prior to 2006. During 2006, the individual companies included in their financial statements the following: Dean Morey Key officers’ salaries 750,000 500,000 Officers’ expenses 200,000 100,000 Loans to officers 1,250,000 500,000 Intercompany sales 1,500,000 20. What amount should be reported as related party disclosure in the notes to Dean’s 2006 consolidated financial statements? a. 1,500,000 b. 1,550,000 c. 1,750,000 d. 3,000,000 The accounts below were taken form the unadjusted trial balance of Kasie Company as at December 31, 2006:

Cash, net of bank overdraft of P150,000 600,000 Notes receivable (including discounted note of 500,000 P100,000) Trade accounts receivable, net of customers’ credit balances of P50,000 700,000 Merchandise inventory 800,000 Trade accounts payable, net of creditors’ debit balances of P100,000 800,000 21. What is the correct amount of current assets on December 31, 2006? a. 2,800,000 b. 2,700,000 c. 2,600,000 d. 2,900,000 The following accounts and their balances appear in an unadjusted trial balance of Grand Company as of December 31, 2006: Cash 800,000 Accounts receivable 4,000,000 Inventory 1,000,000 Accounts payable 600,000 Notes payable 400,000 Additional information gathered for adjustment follows: • The cash account includes collection in January 2007 of P400,000 account from customer who was given a cash discount of P20,000. • The cash account also includes a January 2007 cash sales of P100,000. Gross profit on the sale was 40%. • From the amount collected, the company paid a bank loan of P200,000 with interest of P40,000 accruing January 2007. 22. The correct amount of current assets on December 31, 2006 should be a. 5,960,000 b. 6,020,000 c. 5,780,000 d. 5,800,000 23. The correct amount of current liabilities on December 31, 2006 should be a. 1,200,000 b. 1,000,000 c. 1,240,000 d. 1,160,000 The following amounts were taken from the unadjusted trial balance of Tank Company on December 31, 2006: Accounts payable 900,000 Accounts receivable 800,000 Accrued interest payable 50,000 Cash 200,000 Dividends payable 250,000 Income tax payable 100,000 Trading securities 1,000,000 Notes receivable 1,500,000 Merchandise inventory 750,000

Bonds payable, P500,000 due September 30 annually 2,000,000 Contingent liabilities 400,000 Accrued expenses 350,000 The accounts receivable balance includes customers’ deposit of P200,000. The market value of the trading securities is P700,000. The balance of the notes receivable includes P300,000 of note discounted for which the company is contingently liable. 24. What is the total current assets? a. 4,150,000 b. 3,850,000 c. 3,650,000 d. 4,250,000 25. What is total current liabilities? a. 1,850,000 b. 2,350,000 c. 2,150,000 d. 2,750,000 The following trial balance of Trey Company at December 31, 2006 has been adjusted except for income tax expense: Cash 550,000 Accounts receivable, net 1,650,000 Prepaid taxes 350,000 Accounts payable 140,000 Common stock 500,000 Additional paid in capital 680,000 Retained earnings 630,000 Foreign currency translation adjustment 400,000 Revenue 3,600,000 Expenses 2,600,000 5,550,000 5,550,000 During 2006, estimated tax payments of P350,000 were charged to prepaid taxes, Trey has not yet recorded income tax expense. There were no differences between financial and taxable income. Trey’s tax rate is 35%. Included in accounts receivable is P500,000 due from a customer. Special terms granted to this customer require payment in equal semiannual installments of P125,000 every April 1 and October 1. 26. In Trey’s December 31, 2006 balance sheet, what amount should be reported as total current assets? a. 1,950,000 b. 2,200,000 c. 2,300,000 d. 2,550,000 27. In Trey’s December 31, 2006 balance sheet, what amount should be reported as total retained earnings? a. 1,680,000 b. 1,200,000 c. 1,280,000 d. 1,630,000 The following trial balance of Mint Company at December 31, 2006, has been adjusted except for income tax expense: Cash 600,000

Accounts receivable, net Cost in excess of billings on long-term contracts Billings in excess of cost on long-term contracts Prepaid taxes Property, plant and equipment, net Note payable – noncurrent Common stock Additional paid-in capital Retained earnings unappropriated Retained earnings restricted for note payable Earnings from long-term contracts Costs and expenses

3,500,000 1,600,000 700,000 525,000 1,435,000 1,620,000 750,000 2,030,000 900,000 160,000

6,680,000 5,180,000 12,840,000 12,840,000 • Mint uses the percentage-of-completion method to account for long-term construction contracts for financial statement and income tax purposes. All receivables on these contracts are considered to be collectible within 12 months. • During 2006, estimated tax payments of P525,000 were charged to prepaid taxes. Mint has not recorded income tax expense. There were no temporary or permanent differences. The tax rate is 35%. In Mint’s December 31, 2006 balance sheet, what amount should be reported as 28. Total retained earnings? a. 1,875,000 b. 2,035,000 c. 2,400,000 d. 2,560,000 29. Total noncurrent liabilities? a. 1,620,000 b. 1,780,000 c. 2,320,000 d. 2,480,000 30. Total current assets? a. 5,000,000 b. 4,100,000 c. 5,700,000 d. 6,225,000 Multinational Company provided the following balances on December 31, 2006: Accounts payable 500,000 Accrued taxes 100,000 Common stock 5,000,000 Dividends – common stock 1,000,000 Dividends – preferred stock 500,000 Mortgage payable (P500,000 due six months) 4,000,000 Note payable, due January 31, 2008 2,000,000 Additional paid in capital 500,000 Preferred stock 3,000,000 Premium on note payable 200,000 Income summary – credit balance 4,000,000

Retained earnings – 1/1/2006 2,500,000 Unamortized issue cost on note payable 50,000 Unearned rent income 150,000 31. What is the amount of noncurrent liabilities on December 31, 2006? a. 5,700,000 b. 6,200,000 c. 5,500,000 d. 5,650,000 32. What is the retained earnings account balance on December 31, 2006? a. 6,500,000 b. 2,500,000 c. 1,000,000 d. 5,000,000 33. What is the total stockholders’ equity on December 31, 2006? a. 15,000,000 b. 13,500,000 c. 9,500,000 d. 8,500,000 The balance sheet accounts of Aroma Company on December 31, 2006 follow: Cash 300,000 Accounts receivable, net allowance of P50,000 800,000 Inventory 1,650,000 Prepaid expenses 250,000 Property, plant and equipment 8,800,000 Accumulated depreciation 800,000 Accounts payable 1,250,000 Accrued expenses 250,000 Bonds payable 4,000,000 Common stock 5,000,000 Retained earnings 500,000 A P500,000 note payable to bank, due on June 30, 2007, was deducted from the balance on deposit in the same bank. The company recorded checks of P200,000 in payment of accounts payable on December 31, 2006. These checks were still on hand on January 20, 2007. An advance payment of P100,000 from a customer for goods to be delivered in 2007 was deducted from accounts receivable. 34. What is the working capital on December 31, 2006? a. 1,500,000 b. 3,800,000 c. 1,400,000 d. 2,000,000 The following trial balance of Shaw Company at December 31, 2006 has been adjusted except for income tax expense: Cash 675,000 Accounts receivable (net) 2,695,000 Inventory 2,185,000 Property, plant and equipment 10,245,000

Accounts payable and accrued liabilities Income tax payable Deferred tax liability Common stock Additional paid in capital Retained earnings, 1/1 Net sales and other revenue Costs and expenses Income tax expense

1,800,000 1,750,000 750,000 2,500,000 3,000,000 3,350,000 15,000,00 0 10,000,000 2,350,000 28,150,000

28,150,00 0 Included in accounts receivable ins P1,000,000 due from a customer and payable in quarterly installments of P125,000. The last payment is due December 30, 2008. the balance in the deferred tax liability account pertains to a temporary difference that arose in a prior year, of which P150,000 is expected to reverse in 2007. During the year, estimated tax payment of P600,000 was charged to income tax expense. The income tax rate is 35% on all types of income. In Shaw’s December 31, 2006 balance sheet 35. The current assets total is a. 6,030,000 b. 5,555,000 c. 5,530,000 d. 5,055,000 36. The current liabilities total is a. 2,950,000 b. 3,550,000 c. 4,300,000 d. 3,700,000 37. The final retained earnings balance is a. 8,350,000 b. 3,350,000 c. 6,600,000 d. 6,150,000 The current sections of the unadjusted balance sheet of Camarines Sur Company on December 31, 2006 were as follows: CURRENT ASSETS

Cash

2,000,000

Accounts receivable Merchandise inventory Deferred charges

3,000,000 1,900,000 100,000

Total current assets

7,000,000

CURRENT LIABILITIES Trade accounts payable, net of a debit balance of P50,000 2,450,000 Interest payable 150,000 Income tax payable 300,000 Money claims of the union, pending final decision 500,000 Mortgage payable, due in four annual installments 2,000,000 Total current liabilities 5,400,000

A review of the accounts showed that the cash balance of P2,000,000 included a customer’s check amounting to P100,000 returned by the bank marked NSF, an employee’s IOU of P50,000, and the amount of P200,000 deposited with the court for a case under litigation. The cash in bank portion of P1,650,000 is the balance per bank statement. On December 31, 2006, outstanding checks amounted to P250,000. Accounts receivable balance of P3,000,000 is composed of:

Customers’ debit balances Advances to subsidiary Advances to suppliers Receivables from officers Allowances for doubtful accounts Selling price of merchandise invoiced at 120% of cost, not yet delivered and excluded from ending inventory

1,600,000 400,000 200,000 300,000 (100,000)

600,000 3,000,000 38. The correct total of current assets on December 31, 2006 should be a. 5,950,000 b. 6,000,000 c. 5,450,000 d. 5,500,000 39. The correct total of current liabilities on December 31, 2006 should be a. 3,450,000 b. 3,400,000 c. 3,950,000 d. 3,700,000 Madre Company provided the following schedule of liabilities as of December 31, 2006. Accounts payable 650,000 Notes payable – trade 190,000 Notes payable – bank 800,000 Accrued expenses 15,000 Interest payable 145,000 Mortgage note payable – 10% 600,000 Mortgage note payable – 12% 1,500,000 Bonds payable 2,000,000  Bank note payables include two notes payable to First Bank. A P300,000, 10% note issued March 1, 2004, payable on demand. Interest is payable every six months.  A 1 – year, P500,000, 11% note issued January 1, 2006. On December 30, 2006, Madre negotiated a written agreement with First Bank to replace the note with a 2 –year, P500,000 10% note to be issued January 1, 2007.  The 10% mortgage note was issued October 1, 2003, with a term of 10 years. Terms of the note give the holder the right to demand immediate payment if the company fails to make a monthly interest payment within 10 days of the date the payment is due. As of December 31, 2006, Madre is three months behind in paying its required interest payment.  The 12% mortgage note was issued May 1, 2000, with a term of 20 years. The current principal amount due is P1,500,000. Principal and interest are payable annually on April 30. A payment of P220,000 is due April 30, 2007. The payment includes interest of P180,000.  The bonds payable are 10-year, 8% bonds, issued June 30, 1997. Interest is payable semiannually on June 30 and December 31. 40. The amount of current liabilities on December 31, 2006 should be a. 3,940,000 b. 4,440,000 c. 1,940,000

d. 3,900,000