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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
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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b. In discussion with the company officials, it was determined that the doubtful accounts expense rate based on net sales should be reduced to 2% from 3%, effective January 1, 2015 c. As a result of errors in the physical count, inventories were overstated by P12,000 at December 31, 2014 and by P17,500 at December 31, 2015 d. On January 1, 2014, the cost of equipment purchased for P30, 000 was debited to repairs and maintenance. Bulls depreciates equipment of this type by straight-line method over five-year life with no residual value. e. On July 1, 2015, fully depreciated equipment purchased for P21, 000 was sold as scrap for P2,500. The only entry Bulls made was to debit cash and credit property 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, 2014 includes the P25,000 cost of printing sales catalogs for a special promotional campaign held in January 2015 g. Bulls was named as defendant in a lawsuit in October 2015. Bulls' counsel is of the opinion that Bulls has good defense, and does not anticipate any impairment of Bulls 'management wished liability will be incurred. Nevertheless, Bulls' management wished to be conservative and, therefore established a loss contingency of P100,000 QUESTIONS 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 4. Adjusted carrying amount of property and equipment as of December 31, 2015 a. P168,500 b. P180,500 c. P178,000 d. P192,500
Transcribed Image Text:b. In discussion with the company officials, it was determined that the doubtful accounts expense rate based on net sales should be reduced to 2% from 3%, effective January 1, 2015 c. As a result of errors in the physical count, inventories were overstated by P12,000 at December 31, 2014 and by P17,500 at December 31, 2015 d. On January 1, 2014, the cost of equipment purchased for P30, 000 was debited to repairs and maintenance. Bulls depreciates equipment of this type by straight-line method over five-year life with no residual value. e. On July 1, 2015, fully depreciated equipment purchased for P21, 000 was sold as scrap for P2,500. The only entry Bulls made was to debit cash and credit property 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, 2014 includes the P25,000 cost of printing sales catalogs for a special promotional campaign held in January 2015 g. Bulls was named as defendant in a lawsuit in October 2015. Bulls' counsel is of the opinion that Bulls has good defense, and does not anticipate any impairment of Bulls 'management wished liability will be incurred. Nevertheless, Bulls' management wished to be conservative and, therefore established a loss contingency of P100,000 QUESTIONS 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 4. Adjusted carrying amount of property and equipment as of December 31, 2015 a. P168,500 b. P180,500 c. P178,000 d. P192,500
PROBLEM NO. 9 - Statement of financial postion and statement of profit or loss Bulls, Inc., a nonpublic enterprise, is negotiating a loan for expansion purposes and the bank requires audited financial statements. Before closing the accounting records for the year ended December 31, 2015, Bulls' controller prepared the following comparative financial statements for 2015 and 2014. Bulls, Inc. Statement of Financial Position December 31, 2015 and 2014 2015 2014 Assets Cash P 275,000 P 150,000 Trading Secutities 78.000 78,000 Accounts Receivable 487,000 392,000 (50,000) (32,000) Allow. For doubtful accounts Inventories 425,000 307,000 Property, plant, and equipment 310,000 217,000 (150,000) (121,000) Accumulated depreciation Total assets P 1,375,000 P991,000 Liabilities and Equity P 420,000 P 347,000 Accounts payable and accrued liabilities Estimated liability from lawsuit 100,000 260,000 260,000 Share capital, P10 par Share premium Retained earnings 130,000 130,000 465,000 254,000 Total liabilities and equity P 1,375,000 P 991,000 Bulls, Inc. Statement of Profit or Loss For the Years Ended December 31, 2015 and 2014 2015 2014 Net Sales P1580,000 P1,250,000 Operating expenses: Cost of Sales P755,000 P690,000 Selling and admin. 485,000 365,000 Depreciation 29,000 18,000 Estimated loss form lawsuit 100,000 P1,369,000 P1,073,000 P 177,000 Profit P 211,000 During the course of the audit, the following additional information was obtained: a. The trading securities were acquired on December 31, 2014. The securities have a fair value of P67, 000 at December 31, 2015.
Transcribed Image Text:PROBLEM NO. 9 - Statement of financial postion and statement of profit or loss Bulls, Inc., a nonpublic enterprise, is negotiating a loan for expansion purposes and the bank requires audited financial statements. Before closing the accounting records for the year ended December 31, 2015, Bulls' controller prepared the following comparative financial statements for 2015 and 2014. Bulls, Inc. Statement of Financial Position December 31, 2015 and 2014 2015 2014 Assets Cash P 275,000 P 150,000 Trading Secutities 78.000 78,000 Accounts Receivable 487,000 392,000 (50,000) (32,000) Allow. For doubtful accounts Inventories 425,000 307,000 Property, plant, and equipment 310,000 217,000 (150,000) (121,000) Accumulated depreciation Total assets P 1,375,000 P991,000 Liabilities and Equity P 420,000 P 347,000 Accounts payable and accrued liabilities Estimated liability from lawsuit 100,000 260,000 260,000 Share capital, P10 par Share premium Retained earnings 130,000 130,000 465,000 254,000 Total liabilities and equity P 1,375,000 P 991,000 Bulls, Inc. Statement of Profit or Loss For the Years Ended December 31, 2015 and 2014 2015 2014 Net Sales P1580,000 P1,250,000 Operating expenses: Cost of Sales P755,000 P690,000 Selling and admin. 485,000 365,000 Depreciation 29,000 18,000 Estimated loss form lawsuit 100,000 P1,369,000 P1,073,000 P 177,000 Profit P 211,000 During the course of the audit, the following additional information was obtained: a. The trading securities were acquired on December 31, 2014. The securities have a fair value of P67, 000 at December 31, 2015.
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