b. In discussion with the company officials, it was determined that the doubtfulaccounts expense rate based on net sales should be reduced to 2% from 3%,effective January 1, 2015c. As a result of errors in the physical count, inventories were overstated byP12,000 at December 31, 2014 and by P17,500 at December 31, 2015d. On January 1, 2014, the cost of equipment purchased for P30, 000 wasdebited to repairs and maintenance. Bulls depreciates equipment of this typeby straight-line method over five-year life with no residual value.e. On July 1, 2015, fully depreciated equipment purchased for P21, 000 was soldas scrap for P2,500. The only entry Bulls made was to debit cash and creditproperty and equipment for the scrap proceeds. The property and equipment(net) had a current cost of P250, 000 at December 31, 2015.f. Advertising and promotion expense for the year ended December 31, 2014includes the P25,000 cost of printing sales catalogs for a special promotionalcampaign held in January 2015g. Bulls was named as defendant in a lawsuit in October 2015. Bulls' counsel isof the opinion that Bulls has good defense, and does not anticipate anyimpairment of Bulls 'management wished liability will be incurred.Nevertheless, Bulls' management wished to be conservative and, thereforeestablished a loss contingency of P100,000QUESTIONSBased on the above and the result of your audit, compute for the following:(Disregard income taxes)1. Adjusted retained Earnings as of January 1, 2015a. P266,000b. P297,000c. P285,000d. P291,0002. Adjusted profit for the year ended December 31, 2015a. P281,800b. P181,800c. P287,800d. P306,8003. Adjusted current assets as of December 31, 2015a. P1,266,760b. P1,190,300c. P1,154,900d. P1,202,3004. Adjusted carrying amount of property and equipment as of December 31,2015a. P168,500b. P180,500c. P178,000d. P192,500 PROBLEM NO. 9 - Statement of financial postion and statement of profit or lossBulls, Inc., a nonpublic enterprise, is negotiating a loan for expansion purposes andthe bank requires audited financial statements. Before closing the accountingrecords for the year ended December 31, 2015, Bulls' controller prepared thefollowing comparative financial statements for 2015 and 2014.Bulls, Inc.Statement of Financial PositionDecember 31, 2015 and 201420152014AssetsCashP 275,000P 150,000Trading Secutities78.00078,000Accounts Receivable487,000392,000(50,000)(32,000)Allow. For doubtful accountsInventories425,000307,000Property, plant, and equipment310,000217,000(150,000)(121,000)Accumulated depreciationTotal assetsP 1,375,000P991,000Liabilities and EquityP 420,000P 347,000Accounts payable and accruedliabilitiesEstimated liability from lawsuit100,000260,000260,000Share capital, P10 parShare premiumRetained earnings130,000130,000465,000254,000Total liabilities and equityP 1,375,000P 991,000Bulls, Inc.Statement of Profit or LossFor the Years Ended December 31, 2015 and 201420152014Net SalesP1580,000P1,250,000Operating expenses:Cost of SalesP755,000P690,000Selling and admin.485,000365,000Depreciation29,00018,000Estimated loss form lawsuit100,000P1,369,000P1,073,000P 177,000ProfitP 211,000During the course of the audit, the following additional information was obtained:a. The trading securities were acquired on December 31, 2014. The securitieshave a fair value of P67, 000 at December 31, 2015.

Bulls Inc. a Non public enterprise is negotiating a loan for the purpose of expansion, for which the…

Based on the above and the result of your audit, compute for the following: (Disregard income taxes) 1. Adjusted retained Earnings as of January 1, 2015 a. P266,000 b. P297,000 c. P285,000 d. P291,000 2. Adjusted profit for the year ended December 31, 2015 a. P281,800 b. P181,800 c. P287,800 d. P306,800 3. Adjusted current assets as of December 31, 2015 a. P1,266,760 b. P1,190,300 c. P1,154,900 d. P1,202,300

Based on the above and the result of your audit, compute for the following: (Disregard income taxes) 1. Adjusted retained Earnings as of January 1, 2015 a. P266,000 b. P297,000 c. P285,000 d. P291,000 2. Adjusted profit for the year ended December 31, 2015 a. P281,800 b. P181,800 c. P287,800 d. P306,800 3. Adjusted current assets as of December 31, 2015 a. P1,266,760 b. P1,190,300 c. P1,154,900 d. P1,202,300

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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