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Activity 2 - Problem Solving On Financial Position

This document provides information and questions to solve 5 problems related to company financial statements. It includes data on income statements, balance sheets, and calculations required to determine values such as gross sales, operating expenses, income before tax, gross profit, gross purchases, current/non-current liabilities, shareholders' equity, current assets and current liabilities. Computations are required to solve the multiple choice questions for each problem.

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3K views3 pages

Activity 2 - Problem Solving On Financial Position

This document provides information and questions to solve 5 problems related to company financial statements. It includes data on income statements, balance sheets, and calculations required to determine values such as gross sales, operating expenses, income before tax, gross profit, gross purchases, current/non-current liabilities, shareholders' equity, current assets and current liabilities. Computations are required to solve the multiple choice questions for each problem.

Uploaded by

Jica may
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Activity 2

Show your computations. No solutions no score. Good luck!

Problem 1.
Hanna Company reported that the financial records were destroyed by fire at the end of
the current year.
However, certain statistical data related to the income statement are available.

Interest expense 20,000


Cost of goods sold 2,000,000
Sales discount 100,000
The beginning inventory was P400,000 and decreased 20% during the year.
Administrative expenses are 25% of cost of goods sold but only 10% of gross sales.
Four-fifths of the operating expenses relate to sale activities.
1. What is the amount of gross sales?
a. 5,000,000
b. 7,000,000
c. 3,000,000
d. 4,000,000
2. What is the total amount of operating expenses?
a. 2,000,000
b. 2,500,000
c. 1,500,000
d. 2,520,000
3. What is the income before tax for the current year?
a. 380,000
b. 480,000
c. 330,000
d. 400,000
Problem 2.
Jerome Company showed net income of P480,000 for the year. Selling expenses were
equal to 15% of sales and also 25% of cost of goods sold. All other expenses were 13% of
sales.

What is the gross profit for the year?


a. 4,000,000
b. 2,400,000
c. 1,600,000
d. 2,000,000

Problem 3.
Diana Company provided the following information for the current year:

Beginning inventory 400,000


Freight in 300,000
Purchase returns 900,000
Ending inventory 500,000
Selling expenses 1,250,000
Sales discount 250,000

The cost of goods sold is six times the selling expenses.

What is the amount of gross purchases?


a. 6,500,000
b. 6,700,000
c. 8,000,000
d. 8,200,000

Problem 4.
Marriane Company provided the following balances on December 31, 2016:

Accounts payable 500,000


Accrued taxes 100,000
Ordinary share capital 5,000,000
Dividends-ordinary share 1,000,000
Dividends-preference share 500,000
Mortgage payable, P500,000 due in six months 4,000,000
Note payable, due January 31, 2018 2,000,000
Share premium 500,000
Preference share capital 3,000,000
Premium on note payable 200,000
Income Summary-credit balance 4,000,000
Retained earnings-January 1 2,500,000
Unearned rent income 150,000

1. What is the amount of noncurrent liabilities on December 31, 2016?


a. 5,700,000
b. 6,200,000
c. 5,500,000
d. 6,000,000
2. What is the amount of retained earnings on December 31, 2016?
a. 6,500,000 c. 1,000,000
b. 2,500,000 d. 5,000,000

3. What is the shareholders’ equity on December 31, 2016?


a. 15,000,000
b. 13,500,000
c. 9,500,000
d. 8,500,000

Problem 5.
Aroma Company provided the following information on December 31, 2016:

Cash 300,000
Accounts receivable 800,000
Inventory 1,650,000
Prepaid expenses 250,000
Property, plant and equipment 8,800,000
Accumulated depreciation 800,000
Accounts payable 1,250,000
Accrued expenses 250,000
Bonds payable 4,000,000
Share capital 5,000,000
Retained earnings 500,000

A P500,000 note payable to bank, due on June 30, 2017, was deducted from the balance
on deposit in the same bank.

The entity recorded checks of P200,000 in payment of accounts payable on December 31,
2016. These checks were still on hand on January 20, 2017.

An advance payment of P100,000 from a customer for goods to be delivered in 2016 was
deducted from accounts receivable.

1. What total amount should be reported as current assets on December 31, 2016.
a. 3,800,000
b. 3,600,000
c. 3,700,000
d. 3,900,000

2. What total amount should be reported as current liabilities on December 31,


2016.
a. 2,100,000
b. 2,300,000
c. 1,900,000
d. 2,200,000

hgt,cpa

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