d. The debit balance on suppliers account represents excess payment of an invoicedated December 1, 2021. The payment of invoice was made with the discountperiod. The 100,000 debit balance is the supposedly the amount of discountavailed.Note 3: Accrued payrollBased on your inquiry and inspection of related documents, the above balance ofaccrued payroll represents the net balance of the salaries of the employees who workedfor the period covered December 15 - 31, 2021. Total deduction includes amountwithheld for SSS, Philhealth, Pag-Ibig, 41,000 and employee taxes 25,000.Note 4: Liability for bonuses and profit sharingThe board of directors of Lavender authorized the bonus of key management personnelas an additional benefit. The bonus is 15% of the 3,400,000 adjusted net income afterbonus but before 30% tax.Note 5: Liability for income taxesOn January 5, 2022, the BIR assessed Lavender an additional income tax of 300,000 forthe 2020 taxable year. Company's attorney and tax accountants have stated that the BIRwill agree to a 100,000 settlement but the company has contested the matter with theBIR and no decision was released as of the date for authorized of issue of the financialstatement. The financial statement of Lavender was authorized for issuance on March30, 2022.Determine the following as a result of your audit:3. How much is the amount of liability for income tax that should be reported in itsDecember 31, 2021 statement of financial position?4. How much is the amount of "trade and other payables" that should be presentedon the face of its December 31, 2021 statement of financial position? Lavender Company had the following information related to its current liabilities for theyear ended, December 31, 2021. The results of your inquiry and observation weresummarized below:Notes Payable arising from 3 year bankloans, on which a securities valued at1,000,000 have been pledge as security,due on December 31, 2022. (Note 1)Accounts payable, net of debit balancesof P100,000 (Note 2)Accrued Payroll (Note 3)PhilHealth, and PAG-IBIG payableSSS payableEmployee income tax withheldBonus and profit sharing payable (Note 4)Liability for income taxes (Note 5)Cash dividends payableShare dividend payableDividend in arrears on preference sharesEstimated liability for damages800,0003,160,000240,00025,00016,00025,000?300,000120,000150,000200,000130,000The following audit notes were summarized by the audit staff:Note 1: Notes payable arising from bank loansThe notes payable from bank loan is dated December 31, 2019 due on December 31,2022 with annual interest rate of 12%. Interest is payable every December 31 of eachуear.Note 2: Accounts payableThe unpaid voucher file included in the following items that had been recorded as ofDecember 31, 2021:a. From Bamboo Company - 240,000 merchandise shipped on December 31, 2021,FOB shipping point; received on January 3, 2022.b. B. From Lockwood, Inc. - 210,000 merchandise shipped on December 26, 2021,FOB destination; received on January 6, 2022c. On December 27, 2021, a supplier authorized Lavender to return goods billed at300,000 which were shipped on December 30, 2021, but the result of inspectionrevealed that the 300,000 credit memo was not received until January 6, 2022,where it is recorded.

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Determine the following as a result of your audit: 3. How much is the amount of liability for income tax that should be reported in its December 31, 2021 statement of financial position? 4. How much is the amount of "trade and other payables" that should be presented on the face of its December 31, 2021 statement of financial position?

Determine the following as a result of your audit: 3. How much is the amount of liability for income tax that should be reported in its December 31, 2021 statement of financial position? 4. How much is the amount of "trade and other payables" that should be presented on the face of its December 31, 2021 statement of financial position?

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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