PROBLEM NO.

1
In connection with your audit of the Harvey Corporation, the companys bookkeeper prepared a statement of financial
position at December 31, 2017 which was presented with total assets aggregating P1,965,500 and total liabilities and equity
for the same amount.

Your verification disclosed the following:

Assets
Cash (including paid expenses of P100 and a P4,000 contribution to a special fund for the acquisition of
fixed assets) P 80,000
Advances by employees 1,000
Certificates of Xero preference shares (not held for trading) 2,000
Petty cash fund 1,000
Marketable equity securities intended for long-term income earnings 52,000
Promissory note from a corporate officer (renewed for the past two years) 14,000
Merchandise inventory (including P1,000 worth of obsolete items and P4,000 merchandise received on
consignment which was included in accounts payable) 489,500
Accounts receivable (including P3,000 ascertained to be uncollectible. Of the amount collectible, a
provision for bad debts of 1% should be set up) 188,000
Harvey Corporation shares at cost 10,000
Prepaid insurance (including P800 cash surrender value of life insurance on the president; the company
is the beneficiary 2,000
Prepaid rental (covering the period January 1, 2017 to December 31, 2018 6,000
Building (net of P60,000 allowance for depreciation; current years depreciation of P5,000 net yet entered) 1,000,000
Equipment, at cost (prior and current years depreciation amounted to P10,000) 120,000
Total Assets P1,965,500

Liabilities and Equity

Serial bonds (ten-year bonds issued on 1/1/15 maturing on 12/31/24 at P25,000 a year) P 150,000
Accounts payable (of this total, P2,000 pertains to creditors with debit balances deducted there-from) 210,000
Notes payable (due 7/1/19) 10,000
Accrued taxes 5,500
Premium on share capital 10,000
Appropriated retained earnings for plant expansion 20,000
Cash dividends payable 30,000
Share dividends payable 30,000
Share capital, at par value 1,000,000
Retained earnings 500,000
Total Liabilities and Equity P1,965,500

QUESTIONS:
Based on the above and the result of your audit, compute the adjusted amount of the following as of December 31, 2017:
1. Total current assets

2. Total noncurrent assets

3. Total current liabilities

4. Total liabilities

5. Total equity

A.Y. 2017-2018
PROBLEM NO. 2
The following data were taken from the records of Jose Company for the year 2017:
Sales P5,590,000
Sales returns 55,000
Inventories, January 1:
Raw materials 131,000
Work in process 238,350
Finished goods 442,000
Inventories, December 31:
Raw materials 145,500
Work in process 175,720
Finished goods 412,000
Direct labor 1,050,300
Purchases 2,051,500
Purchase returns 17,150
Purchase discounts 12,550
Freight in 8,250
Freight out 200,000
Allowance for doubtful accounts 25,000
Sales salaries 445,000
Office salaries 155,000
Depreciation factory building 44,000
Depreciation office equipment 44,000
Depreciation store equipment 77,000
Depreciation machinery and equipment 25,500
Amortization patents 33,000
Bad debts expense 20,000
Factory supplies expense 75,550
Accrued manufacturing expenses payable 34,500
Indirect labor 35,300
Interest income 116,240
Interest receivable 34,250
Factory light and power 65,000
Property taxes and insurance factory building 13,200
Prepaid insurance expense 18,750
Royalties on production 13,200
Supervision expense 65,000
Tools expense 10,500
Miscellaneous factory expense 50,150
Dividends paid 70,000

QUESTIONS:
Based on the above and the result of your audit, answer the following:
6. The total manufacturing costs is

7. The cost of goods sold is

8. Total selling expenses is

9. The income before income taxes is

A.Y. 2017-2018
PROBLEM NO. 3
The following financial statements are for Irma Company.
Irma Company
Comparative Statements of Financial Position
December 31, 2017 and 2016
2017 2016
Assets
Cash P 4,000 P 3,400
Accounts receivable 25,000 18,000
Inventory 30,000 34,000
Prepaid general expenses 5,700 5,000
Property, plant, and equipment 305,000 320,000
Accumulated depreciation (103,500) (128,900)
Patent 36,000 40,000
Total assets P302,200 P291,500

Liabilities and Equity

Accounts Payable P 25,000 P 22,000
Wages Payable 12,000 10,300
Interest Payable 2,800 4,000
Dividends Payable 14,000 -
Income taxes Payable 1,600 1,200
Bonds Payable 100,000 120,000
Share capital 50,000 50,000
Retained Earnings 96,800 84,000
Total Liabilities and Shareholders Equity P302,200 P291,500

Irma Company
Statement of Cash Flows
For the Year Ended December 31, 2017

Cash flows from operating activities:

Cash collected from customers P685,300
Cash payments for:
Inventory purchases P300,000
General expenses 102,000
Wages expense 150,000
Interest expense 11,000
Income tax expense 23,900 586,900
Net cash provided by operating activities P 98,400
Cash flows from investing activities:
Sale of property, plant & equipment P 27,200
Purchase of property, plant & equipment ( 60,000)
Net cash used in investing activities (32,800)
Cash flows from financing activities:
Retirement of bonds payable P (23,000)
Payment of dividends (42,000)
Net cash used in financing activities (65,000)
Net increase in cash P 600
Cash at the beginning of the year 3,400
Cash at the end of the year P 4,000

Consider the following additional information:

a. All accounts payable relate to inventory purchases.
b. Property, plant, and equipment sold had an original cost of P75,000 and a carrying amount of P22,000.

A.Y. 2017-2018
QUESTIONS:
Based on the foregoing, compute the following for the year ended December 31, 2017:
10. Cost of goods sold

11. Depreciation expense

12. Total operating expenses

13. Loss on retirement of bonds payable

14. Net income

PROBLEM NO. 4
Maring Corp. uses the direct method to prepare its statement of cash flows. Marings trial balances at December 31, 2017
and 2016 are as follows:
12/31/17 12/31/16
Debits
Cash P 35,000 P 32,000
Accounts receivable 33,000 30,000
Inventory 31,000 47,000
Property, plant, and equipment 100,000 95,000
Unamortized bond discount 4,500 5,000
Cost of goods sold 250,000 380,000
Selling expenses 141,500 172,000
General & administrative expenses 137,000 151,300
Interest expense 4,300 2,600
Interest tax expense 20,400 61,200
P756,700 P976,100
Credits
Allowance for uncollectible accounts P 1,300 P 1,100
Accumulated depreciation 16,500 15,000
Trade accounts payable 25,000 17,500
Income taxes Payable 21,000 27,100
Deferred tax liability 5,300 4,600
8% callable bonds payable 45,000 20,000
Share capital 50,000 40,000
Share premium 9,100 7,500
Retained Earnings 44,700 64,600
Sales 538,800 778,700
P756,700 P976,100
Maring purchased P5,000 in equipment during 2017.
Maring allocated one-third of its depreciation expense to selling expenses and the remainder to general and
administrative expenses.

QUESTIONS:
Based on the foregoing, what amounts should Maring report in its statement of cash flows for the year ended December 31,
2017 for:
15. Cash collected from customers?

16. Cash paid for goods to be sold?

17. Cash paid for interest?

18. Cash paid for income taxes?

19. Cash paid for selling expenses?

A.Y. 2017-2018