Professional Documents
Culture Documents
Problem 1
(Pine Company)
Adjusting Entries:
1. Land 740,000
Building 3,900,000
Equipment 1,160,000
Other Operating Expenses 5,000,000
Salaries and Commission Expense 800,000
Problem 2
(Gay Company)
Problem 3
Lakeside Company
b. Adjusting entries:
Machinery 1,579
Loss on Disposal of Old Machine 3,000
Purchase Discounts 4,000
Profit on Construction 24,000
Machinery Tools 15,000
Accumulated Depreciation – Machinery (old) 120,000
Factory Overhead Control 25,000
Provision for Machine Dismantling 22,579
Machinery (old) 120,000
Problem 4
Ethan Corporation
Adjusting Entries
Land 8,175,000
Building 18,195,000
Organization Expenses 180,000
Taxes Expense 25,000
Miscellaneous Revenues 25,000
Administrative Salaries 300,000
Land, Buildings and Equipment 26,900,000
Problem 5
Electro Corporation
Correct cost:
Down payment P50,000
PV of future payments P100,000 x 3.6048 360,480
Total cost P410,480
Adjusting Entries:
Problem 6
Flames Company
Machinery 50,000
Repairs Expense 50,000
Cost P200,000
Removed part ( 40,000)
Replacement 50,000
Revised gross cost P210,000
Accumulated depreciation, 12/31/11
200,000/10 x 5 100,000
Removed accumulated depreciation ( 20,000) (80,000)
Carrying value after overhaul P130,000
2015 depreciation
130000/(10-5+5) P 13,000
Recorded depreciaition 20,000
Adjustment P 7,000
Solutions – Chapter 7 NON-CURRENT OPERATING ASSETS
Problem 7
Silver Company
Equipment Accumulated
Depreciation
Adjusting Entries:
Equipment 7,000
Repairs and Maintenance 4,000
Freight In 3,000
Problem 8
Conquer Company
Equipment Accumulated
Depreciation
January 1 Balances P 500,000 P 225,000
May 1 Acquisition (P160,000 x .98)+5,000 161,800
Oct. 1 Sale (100,000)
100,000 x 10% x 4 ( 40,000)
Dec. 31 Depreciation
(500,000 – 100,000) x 10% P40,000
100,000 x 10% x ½ 5,000
161,800 x 10% x ½ 8,090 ___ 53,090
December 31, 2015 Balances P561,800 P 238,090
Solutions – Chapter 7 NON-CURRENT OPERATING ASSETS
Adjusting Entries
Equipment 1,800
Discounts Lost 3,200
Repairs and Maintenance 5,000
Problem 9
Berol Giant Corporation
Land 6,000,000
Building 24,000,000
Unearned Income from Government Grant 30,000,000
b. Adjusted balances:
1. Land P48,250,000
2. Land Improvements 500,000
3. Accumulated Depreciation – Land Improvements 25,000
4. Buildings 37,600,000
5. Accumulated Depreciation – Buildings 7,026,667
6. Machinery and Equipment 33,700,000
7. Accumulated Depreciation – Machinery and Equipment 18,055,000
8. Unearned Income from Government Grant 29,400,000
9. Depreciation Expense – Land Improvements 25,000
10. Depreciation Expense – Buildings 1,026,667
11. Depreciation Expense – Machinery and Equipment 3,610,000
12. Amortized Income from Government Grant 600,000
Problem 10
Malabon Company
A. Building
Method – 150% declining balance
Depreciation rate = 1.5/25 = 6%
Old (P12,000,000 – P2,654,000) x 6% P560,760
New P12,800,000 x 6% 768,000
2015 Depreciation – Building P1,328,760
D. Leasehold Improvements
Solutions – Chapter 7 NON-CURRENT OPERATING ASSETS
E. Land Improvements
Method – straight-line
Useful life – 12 years
b. Adjusted Balances:
1. Land P16,200,000
2. Land Improvements 1,920,000
3. Accumulated Depreciation – Land Improvements 120,000
4. Building 24,800,000
5. Accumulated Depreciation – Buildings 3,892,760
6. Machinery and Equipment 7,870,000
7. Accumulated Depreciation – Machinery and Equipment 2,611,250
8. Automobiles and Trucks 5,258,750
9. Accumulated Depreciation – Automobiles and Trucks 3,059,360
10. Leasehold Improvements 2,210,000
11. Accumulated Depreciation – Leasehold Improvements 1,326,000
Problem 11
Adjusting Entries
Problem 12
Gotham Company
As of December 31, 2013
Based on Cost Based on Balance of
Revalued Amt. Revaluation
Surplus
Land P15,000,000 P20,000,000 P5,000,000
Building, net of accumulated
depreciation 14,000,000 20,000,000 6,000,000
(c) Balance of revaluation surplus at December 31, 2015 statement of financial position =
Problem 13
(Ecstacy Company)
Adjusting Entries
Franchise 420,000
Prepaid Rent 280,000
Retained Earnings (54,000 + 150,000) 204,000
Patents 750,000
Research and Development Expense (1,000,000 – 90,000) 910,000
Formula (or Patent) 90,000
Legal Fees 80,000
Intangible Assets 2,734,000
Problem 14
(Cheryl Corporation)
Adjusting Entries
Problem 15
(Kookabar Enterprises)
Patents 4,975,000
Accumulated Amortization – Patents 4,975,000
To reinstate the gross cost of the patents and related
Accumulated Amortization
Solutions – Chapter 7 NON-CURRENT OPERATING ASSETS
Problem 16
(Yuka Sato Corporation)
Equipment 34,700
Patents 34,700
Equipment 15,000
Miscellaneous Receivables 6,100
Leasehold Improvements 21,100
Problem 17
Genuine Company
Patents 200,000
Accumulated Amortization – Patents 200,000
Franchise 16,602
Retained Earnings 16,602
Franchise 83,398
Accumulated Amortization 83,398
Problem 18
Multiple Choice
1. B 23. B
2. A 24. C
3. C 25. D
4. A 26. D
5. C 27. A
6. B 28. B
7. B 29. A
8. P16,830,000 30. D
9. P14,499,000 31. B
10. P144,990 32. C
11. D 33. C
12. B 34. C
13. D 35. B
14. D 36. A
15. C 37. B
16. C 38. C
17. B 39. C
Solutions – Chapter 7 NON-CURRENT OPERATING ASSETS
45. D
46. C
Supporting computations:
8. Land Building
Cash paid P12,000,000
FV of shares issued 40,000 x 107 4,280,000
Solutions – Chapter 7 NON-CURRENT OPERATING ASSETS
11 through 14
Audit Adjusting Entries:
18. C Equipment
P24,000,000 – 800,000 = P23,200,000
Summative Exercise
Elegant Builders
Audit Adjustments:
Sales 20,000
Accounts Receivable – current 20,000
Sales 145,000
Accounts Receivable – current 145,000
Purchases 60,000
Trade Payables 60,000
Equipment 14,600
Transportation Expense 3,600
Repairs and Maintenance 11,000
Answer
6. Petty cash fund 4,646
7. Cash in bank 3,471,200
8. Trading securities, at cost 650,000
9. Trading securities, at market 793,600
10. Unrealized gain or loss on trading securities 143,600 gain
11. Accounts receivable 4,614,200
12. Allowance for doubtful accounts 352,284
13. Other Receivables – current 30,600
14. Merchandise inventory 2,693,200
15. Prepaid expenses 60,920
16. Land 5,960,000
17. Equipment 934,600
18. Accumulated Depreciation – Equipment 691,825
19. Net book value of leasehold improvements 193,333
20. Other Non-current Financial Assets 120,000
21. Trade Payables and Accrued Expenses 1,681.475
22. Notes Payable and Accrued Interest 912,205
23. Dividends Payable 1,650,000
24. Income Tax Payable 142,354
25. Additional Paid in Capital 1,950,000
26. Retained Earnings 482,161
27 Net Sales 9,000,000
28 Net Purchases 5,887,200
29. Salaries and Commissions 1,226,350
30. Repairs and Maintenance 59,320
31. Supplies Expense 73,054
32. Bank Charges 14,100
33. Interest Expense 76,205
34 Other Operating Income 151,600
35 Transportation Expense 1,400
36 Depreciation and Amortization 135,492
37 Doubtful Accounts Expense 162,364
38. Representation & Advertising 325,200
39. Ordinary Share Capital 11,000,000
40. Profit 332,161