1

Module 10 Post-test
Financial Statements

1. The following unadjusted sections of the Statement of Financial Position of the Loeb Inc. as at
December 31, 2023 were presented to you.

Cash P 85,000
Accounts receivable 282,400
Merchandise inventory 92,000
Deferred charges- 8,600
Current assets P468,000

Trade accounts payable, net of P5,000 debit balance P125,000

Interest payable 3,000
Income tax payable 12,000
Money claims of Union pending final decision 45,000
Mortgage payable due in four annual installments 100,000
Current liabilities P285,000

A review of the above indicate that the Cash account of P85,000 included a customer’s check
returned by the bank marked NSF amounting to P1,250; and employee’s IOU of P2,000; and
P10,000 deposited with the courts for a case under litigation.

Accounts receivable totaling P282,400 is composed of: Customers, debit balances – P181,400;
Advances to subsidiaries – P20,000; Advances to suppliers – P15,000; Receivables from Loeb
officers – P18,000; Allowance for Bad Debts – (P8,000); and selling price of merchandise
invoiced at 140% of cost but not yet delivered – P56,000 (The goods were not included in
Merchandise Inventory).

Based on the above and the result of your audit, answer the following:

1. The correct total of Current Assets on December 31, 2023 is

a. P410,150 c. P413,400
b. P415,150 d. P418,400

2. The correct total of Current Liabilities on December 31, 2023 is

a. P170,000 c. P145,000
b. P160,000 d. P215,000

2. In connection with your audit of the Steven Co. for the year 2023, you were able to gather the
following accounts are from the unadjusted trial balance of the company on December 31, 2023:

Cash P170,000
Accounts receivable 525,000
Allowance for bad debts 4,000
Notes receivable 180,000
Prepaid rent expense 10,000
Trading securities 150,000
Merchandise inventory 450,000
Accounts payable 242,500
Note payable 100,000
Accrued expenses 22,000
Bonds payable (due semi-annually in June and
December at P30,000) 300,000
Income tax payable 30,000
SSS and HDMF premiums payable 12,000
Withholding tax payable 9,000
Mortgage payable, due July 31, 2025 200,000
Contingent liability 80,000
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Additional information:

 Cash consists of:

Cash in bank per bank statement

(outstanding checks, P12,000) P167,000
Petty cash, including unreplenished petty cash
expense vouchers of P150) 500
Customer’s advance deposit in check dated January
15, 2024 2,500
P170,000

 Accounts receivable includes P125,000 selling price of goods sent on consignment at 125%
of cost and not included in the inventory.

 Notes receivable include notes discounted of P80,000.

 Accounts payable includes P40,000 cost of purchases in transit FOB destination but not
included in the inventory. It also includes customer’s advance deposit in check dated
January 15, 2024 of P2,500.

 The Note Payable is a promissory note dated October 1, 2023, due March 31, 2024 with
18% interest p.a. This is in connection with a loan from a Chubby Bank. Accrued expenses
exclude the interest payable on the note.

Based on the above and the result of your audit, determine the amounts to be presented in
Steven’s statement of financial position as of December 31, 2023 for the following:

1. Cash
a. P167,500 c. P155,500
b. P155,350 d. P157,850

2. Trade and other receivables

a. P496,000 c. P576,000
b. P500,000 d. P498,500

3. Total current assets

a. P1,363,850 c. P1,361,350
b. P1,321,250 d. P1,261,350

4. Trade and other payables

a. P243,000 c. P277,500
b. P247,500 d. P250,000

5. Total current liabilities

a. P437,500 c. P433,000
b. P440,000 d. P377,500
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3. Your firm has been engaged to examine the financial statements of Steven Corporation for the
year 2023. The bookkeeper who maintains the financial records has prepared all the unaudited
financial statements for the corporation since its organization on January 2, 2022. The client
provides you with the information below.

Steven Corporation
Statement of financial position
December 31, 2023
Assets Liabilities
Current assets P1,881,100 Current liabilities P 962,400
Long-term
Other assets 5,171,400 liabilities 1,439,500
___________ Capital 4,650,600
P7,052,500 P7,052,500

 An analysis of current assets discloses the following:

Cash (restricted in the amount of P400,000 for plant

expansion) P 571,000
Investment in land 185,000
Accounts receivable less allowance of P30,000 480,000
Inventories 645,100
P1,881,100

 Other assets include:

Prepaid expenses P 47,400

Plant and equipment less accumulated depreciation
of P1,430,000 4,130,000
Cash surrender value of life insurance policy 84,000
Unamortized bond discount 49,500
Notes receivable (short term) 162,300
Goodwill 252,000
Land 446,200
P5,171,400

 Current liabilities include:

Accounts payable P510,000

Notes payable (due 2025) 157,400
Income tax payable 145,000
Share premium reserve 150,000
P962,400

 Long-term liabilities include:

Unearned revenue P 489,500

Dividends payable 200,000
8% bonds payable (due May 1, 2028) 750,000
P1,439,500

 Capital includes:

Retained earnings P2,810,600

Share capital, par value P10; authorized 200,0000
shares, 184,000 shares issued 1,840,000
P4,650,600

The supplementary information below is also provided.

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a. On May 1, 2023, the company issued at 93.4, P750,000 of bonds to finance plant
expansion. The long term bond agreement provided for the annual payment of interest
every May 1. The existing plant was pledged as security for the loan. Use straight-line
method for discount amortization.

b. The bookkeeper made the following mistakes:

1. In 2021, the ending inventory was overstated by P183,000. The ending inventories for
2022 and 2023 were correctly computed.

2. In 2023, accrued wages in the amount of P275,000 were omitted from the statement of
financial position and these expenses were not recognized in profit or loss.

3. In 2023, a gain of P175,000 (net of tax) on the sale of certain plant assets was credited
directly to retained earnings.

c. You learned on January 28, 2024, prior to completion of the audit, of heavy damage
because recent fire to one of Steven’s two plants; the loss will not be reimbursed by
insurance. The plant has a carrying amount of P1,200,000 on the date of fire.

Based on the above and the result of the audit, answer the following:

1. The adjusted current assets as of December 31, 2023 is

a. P1,296,100 c. P1,690,800
b. P1,505,800 d. P1,553,200

2. The adjusted current liabilities as of December 31, 2023 is

a. P1,619,500 c. P1,659,500
b. P1,130,000 d. P1,419,500

3. The adjusted noncurrent liabilities as of December 31, 2023 is

a. P907,400 c. P 857,900
b. P864,500 d. P1,554,000

4. The adjusted equity as of December 31, 2023 is

a. P4,525,600 c. P4,329,000
b. P4,519,000 d. P4,479,000

4. The bookkeeper for Shawn Computers, Inc., reports the following statement of financial position
amounts as of June 30, 2023.

Current assets P2,440,500

Noncurrent assets 6,285,500
Current liabilities 1,386,000
Noncurrent liabilities 900,000
Owners’ equity 6,440,000

A review of account balances reveals the following data.

(a) An analysis of current assets discloses the following:

Cash P 422,500
Investment securities – trading 600,000
Trade accounts receivable 568,000
Inventories, including advertising
supplies of P20,000 850,000
P2,440,500

(b) Noncurrent assets include the following:

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Property, plant and equipment:

Depreciated book value (cost P6,560,000) P5,490,000
Deposit with a supplier for merchandise ordered
for August delivery 21,500
Goodwill recorded on the books to cancel losses
incurred by the company in prior years 774,000*
P6,285,500

(c) Current liabilities include the following:

Payroll payable P 71,500

Taxes payable 41,500
Rent payable 114,000
Trade accounts payable (net of P15,000, 6-month
note, received from a supplier who purchased
some used equipment on June 29, 2023, 999,000
Notes payable 160,000
P1,386,000

(d) Noncurrent liabilities include the following:

9% mortgage on property, plant, and equipment,

payable in semiannual installment of P90,000
through to June 30, 2028 P900,000

(e) Owners’ equity includes the following:

Preference share capital: 190,000 shares

outstanding (P20 par value) P3,800,000
Ordinary share capital: 1,600,000 shares
at P1 par value 1,600,000
Share premium 1,040,000
P6,440,000

(f) Ordinary shares were originally issued for P3,910,000, but the losses of the company for the
past years were charged against share premium.

Based on the above and the result of the audit, determine the adjusted amounts of the following:

1. Current assets
a. P2,462,000 c. P2,477,000
b. P2,440,500 d. P2,435,500

2. Noncurrent assets
a. P5,490,000 c. P6,560,000
b. P5,511,500 d. P6,264,000

3. Current liabilities
a. P1,401,000 c. P1,602,500
b. P1,581,000 d. P1,491,000

4. Noncurrent liabilities
a. P720,000 c. P900,000
b. P810,000 d. P880,000

5. Equity
a. P7,710,000 c. P6,440,000
b. P8,750,000 d. P5,666,000
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5. In connection with your audit of the financial statements Shawn Corporation, you were provided
with the following statement of financial position as of December 31, 2023:

Shawn Corporation
Statement of Financial Position
December 31, 2023

Assets Liabilities and Equity

Current assets: Current liabilities:
Cash P 250,000 Accounts payable P 68,000
Trading Other current
securities 160,000 liabilities 40,000
Accts rec., net 427,000 Total P 108,000
Inventory 620,000
Other current
assets 284,000 Long-term liabilities 655,000
Total P1,741,000 Total liabilities P 763,000

Noncurrent assets: Equity:

Property, plant,
and equip.,
net P1,296,000 Share capital P1,000,000
Treasury 90,000 Retained earnings 1,636,000
shares
Other
noncurrent
assets 272,000 Total equity P2,636,000
Total P1,658,000
Total liabilities
Total assets P3,399,000 and equity P3,399,000

The following additional information relates to the December 31, 2023, statement of financial
position.

(a) Cash includes P80,000 that has been restricted for the purchase of manufacturing
equipment (a noncurrent asset).

(b) Trading securities include P55,000 of stock that was purchased in order to give the
company significant ownership and a seat on the board of directors of a major supplier.

(c) Other current assets include a P80,000 advance to the president of the company. No due
date has been set.

(d) Long-term liabilities also include bonds payable of P200,000. Of this amount, P50,000
represents bonds scheduled to be redeemed in 2024.

(e) Long-term liabilities also include a P140,000 bank loan. On May 15, 2024, the loan will
become due on demand.

(f) On December 21, dividends in the amount of P300,000 were declared to be paid to
shareholders of record on January 25. These dividends have not been reflected in the
financial statements.

(g) Cash in the amount of P380,000 has been placed in a restricted fund for the redemption of
preference shares in 2025. Both the cash and the shares have been removed from the
statement of financial position.

(h) Property, plant, and equipment includes land costing P160,000 that is being held for
investment purposes and that is scheduled to be sold in 2024.

Based on the above and the result of your audit, determine the adjusted amounts of the
following as of December 31, 2023
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1. Total current assets

a. P1,526,000 c. P1,686,000
b. P1,821,000 d. P1,606,000

2. Total noncurrent assets

a. P2,163,000 c. P1,488,000
b. P2,003,000 d. P2,083,000

3. Total current liabilities

a. P548,000 c. P458,000
b. P298,000 d. P598,000

4. Total noncurrent liabilities

a. P515,000 c. P605,000
b. P665,000 d. P465,000

5. Total liabilities
a. P1,063,000 c. P1,263,000
b. P 763,000 d. P1,443,000

6. Total equity
a. P2,926,000 c. P2,626,000
b. P2,246,000 d. P2,716,000

7. Total liabilities and equity

a. P3,309,000 c. P3,609,000
b. P3,689,000 d. P3,779,000

6. The following statement of financial position is submitted to you for inspection and review.

Kimberlie Corporation
Statement of Financial Position
December 31, 2023
Assets
Cash P 180,200
Accounts receivable 450,000
Inventories 816,000
Prepaid insurance 35,200
Property, plant, and equipment 1,507,200
Total assets P2,988,600

Liabilities and Equity

Miscellaneous liabilities P 14,400
Loan payable 304,800
Accounts payable 301,000
Share capital 536,000
Paid in capital 1,832,400
Total liabilities and equity P2,988,600

In the course of the review, you find the following data:

(a) The possibility of uncollectible accounts on accounts receivable has not been considered.
It is estimated that uncollectible accounts will total P19,200.

(b) The amount of P180,000 representing the cost of large-scale newspaper advertising
campaign completed in 2023 has been added to the inventory because it is believe that
this campaign will benefit sales of 2024. It is also found that inventories include
merchandise of P65,000 received on December 31 and has not been recorded as a
purchase.
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(c) The books show that property, plant and equipment have a cost of P2,227,200 with
accumulated depreciation of P720,000. However, these balances include fully
depreciated equipment of P340,000 that has been scrapped and is no longer on hand.

(d) Miscellaneous liabilities of P14,400 represent salaries payable of P38,000, less non
current advances of P23,600 made to company officials.

(e) Loan payable represents a loan from the bank that is payable in regular quarterly
installments of P25,000.

(f) Income tax payable not shown is estimated at P73,000.

(g) Deferred tax liability arising from temporary differences totals P178,200. This liability was
not included in the statement of financial position.

(h) Share capital consists of 6%, par P20, 25,000 preference shares and 36,000 ordinary
shares, par value P1.

(i) Share capital have been issued for a total consideration of P1,134,400; the amount
received in excess of the par values of the shares has been reported as Paid in capital.
Profit and dividends were recorded in Paid in capital.

Based on the above and the result of the audit, determine the adjusted amounts of the following:

1. Current assets
a. P1,347,200 c. P1,217,200
b. P1,282,200 d. P1,462,200

2. Noncurrent assets
a. P1,530,800 c. P1,507,200
b. P1,190,800 d. P1,167,200

3. Total assets
a. P2,878,000 c. P2,473,000
b. P2,789,400 d. P2,813,000

4. Current liabilities
a. P512,000 c. P577,000
b. P504,000 d. P600,600

5. Noncurrent liabilities
a. P383,000 c. P204,800
b. P406,600 d. P433,000

6. Total liabilities
a. P983,600 c. P895,000
b. P716,800 d. P960,000

7. Equity
a. P1,853,000 c. P2,096,200
b. P1,918,000 d. P2,368,400

7. The bookkeeper for the Kristine Company prepared the following income statement and
retained earnings statement for the year ended December 31, 2023:

Kristine Company
December 31, 2023
Expense and Profits

Sales (net ) P1,568,000

Less: Selling expenses ( 156,800)
Net sales 1,411,200
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Add: Interest revenue 18,400

Add: Gain on sale of equipment 25,600
Gross sales revenue 1,455,200
Less: Costs of operations
Cost of goods sold P960,800
Correction of overstatement in last
year's income due to error (net of
P13,200 income tax credit) 30,800
Dividend costs (P4 per share for
8,000 ordinary shares) 32,000
Loss due to earthquake 33,600 (1,057,200)
Taxable revenues 398,000
Less: Income tax on income from
continuing operations ( 99,840)
Net income 298,160
Miscellaneous deductions
Loss from operations of discontinued
Segment X44 (net of P7,200
income tax credit) 16,800
Administrative expenses 134,400 ( 151,200)
Net revenues P 146,960

Kristine Company
Retained Revenue Statement
For the Year Ended December 31, 2023

Beginning retained earnings P474,400

Add: Gain on sale of Segment X44 (net of P10,800
income taxes) 25,200
Recalculated retained earnings 499,600
Add: Net revenues 146,960
646,560
Less: Interest expense ( 27,200)
Ending: retained earnings P619,360

The preceding account balances are correct but have been incorrectly classified in certain
instances.

Based on the above and the result of the audit, answer the following:

1. The income from continuing operations for the year ended December 31, 2023 is
a. P207,760 c. P299,200
b. P199,360 d. P226,560

2 The income (loss) from discontinued operations for the year ended December 31, 2023 is
a. P 8,400 c. P25,200
b. (P16,800) d. P 0

3. The profit for the year ended December 31, 2023 is

a. P234,960 c. P209,760
b. P307,600 d. P207,760

4. The balance of retained earnings as of December 31, 2023 should be

a. P619,360 c. P650,160
b. P646,560 d. P709,360
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8. An entity reported the following data for the current year:

Net sales 9,500,000

Cost of goods sold 4,000,000
Selling expenses 1,000,000
Administrative expenses 1,200,000
Interest expense 700,000
Gain from expropriation of land 500,000
Income tax 800,000
Income from discontinued operations 600,000
Unrealized gain on equity investment at FVOCI 900,000
Unrealized loss on futures contract designated as a cash flow hedge 400,000
Increase in projected benefit obligation due to actuarial assumptions 300,000
Foreign translation adjustment – debit 100,000
Revaluation surplus 2,500,000

1. What amount should be reported as income from continuing operations?

a. 3,100,000
b. 2,300,000
c. 1,800,000
d. 2,900,000

2. What net amount should recognized in other comprehensive income for the year?
a. 2,600,000
b. 3,100,000
c. 3,400,000
d. 800,000

3. What net amount in OCI should be presented as “may not be recycled to profit or loss?
a. 3,400,000
b. 2,700,000
c. 3,700,000
d. 3,100,000

9. The alphabetical list of items that may be relevant in the preparation of a statement of
comprehensive income of Kimberlie Corporation is provided below:

Actuarial gains on defined benefit pension plans

recognized outside profit or loss P 1,333

Decrease in inventories of finished goods and work in

progress 107,900
Depreciation and amortization expense 17,000
Employee benefits expense 43,000
Exchange differences gain on translating foreign
operations 10,667
Finance costs 18,000
Gains on property revaluation 3,367
Income tax expense 32,000
Income tax relating to components of other
comprehensive income 9,334
Loss for the year from discontinued operations 30,500
Other expenses 5,500
Other income 11,300
Raw material and consumables used 92,000
Revenue 355,000
Share of other comprehensive income of associates
(Unrealized loss on available-for-sale financial assets) 700
Share of profit of associates 30,100
Unrealized gain on available-for-sale financial assets 26,667
Unrealized loss on derivatives in an effective cash flow
hedge 4,000
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Work performed by the entity and capitalized 15,000

Based on the above and the result of the audit, determine the following:

1. The profit for the year

a. P65,500 c. P 96,000
b. P64,800 d. P281,300

2. The other comprehensive income for the year

a. P93,500 c. P28,700
b. P32,700 d. P28,000

3. Total comprehensive income for the year

a. P93,500 c. P94,200
b. P92,800 d. P28,000

10. In your audit of Kristine Company’s statement of comprehensive income for the year ended
December 31, 2023, you noted that company reported profit of P10,000,000. You raised
questions about the following amounts that had been included in profit:

Unrealized loss on decline in value of available

for sale securities P 500,000
Loss on write-off of inventory due to a
government ban net of tax 1,500,000
Adjustment of profit of prior year net-debit 2,000,000

Loss from expropriation of property,

net of tax 3,500,000
Exchange differences gain on translating foreign
operations 4,500,000
Realized revaluation surplus 1,000,000

The loss from expropriation was unusual in occurrence in Kristine’s line of business.

Based on the above and the result of the audit, answer the following:

1. Kristine Company’s 2023 statement of comprehensive income should report profit at

a. P9,000,000 c. P7,000,000
b. P6,500,000 d. P8,500,000

2. Kristine Company’s 2023 statement of comprehensive income should total comprehensive

income at
a. P12,000,000 c. P5,000,000
b. P11,000,000 d. P4,000,000

11. The following trial balance of an entity on December 31, 2023 has been adjusted except for
income tax expense.

Cash 6,000,000
Accounts receivable 14,000,000
Inventory 10,000,000
Property, plant and equipment 25,000,000
Accounts payable 9,000,000
Income tax payable 6,000,000
Preference share capital 3,000,000
Ordinary share capital 15,000,000
Share premium 4,000,000
Retained earnings – January 1 9,000,000
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Net sales and other revenue 80,000,000

Cost of goods sold 48,000,000
Expenses 12,000,000
Income tax expense 11,000,000 __________
126,000,000 126,000,000

During the year, estimated tax payments of P5,000,000 were charged to income tax expense.
The tax rate is 30% on all types of revenue. Inventory and accounts payable included goods
purchased in transit, FOB destination, costing P500,000, and unsold goods held on
consignment at year-end, costing P300,000. The perpetual system is used. The preference
share capital is redeemable mandatorily on December 31, 2024.

1. What amount should be reported as current assets on December 31, 2023?

a. 29,200,000
b. 29,700,000
c. 29,500,000
d. 30,000,000

2. What amount should be reported as current liabilities on December 31, 2023?

a. 14,200,000
b. 17,200,000
c. 12,200,000
d. 9,200,000

3. What is the net income for 2023?

a. 20,000,000
b. 14,000,000
c. 23,000,000
d. 9,000,000

4. What amount should be reported as total shareholders’ equity on December 31, 2023?
a. 40,000,000
b. 37,000,000
c. 45,000,000
d. 42,000,000

12. Kelly Company was organized on January 1, 2023. On the same date, 25,000, P100 par value,
ordinary shares were issued in exchange for property, plant and equipment valued at
P3,000,000 and cash of P1,000,000. The following data summarize activities for 2023:

a) Profit for the year ended December 31, 2023 was P1,000,000.

b) Raw materials on hand on December 31 were equal to 25% of raw materials purchased.

c) Manufacturing costs were distributed as follows:

Materials used 50%

Direct labor 30%
Factory overhead 20% (includes depreciation of building,
P100,000)

d) Goods in process remaining in the factory on December 31 were equal to 1/3 of the goods
finished and transferred to stock (CGM).

e) Finished goods remaining in stock on December 31 were equal to 25% of the cost of goods
sold.

f) Operating expenses were 30% of sales.

g) Cost of goods sold was 150% of the operating expenses total.

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h) Ninety percent of sales were collected during 2023. The balance was considered
collectible.

i) Seventy five percent of the raw materials purchased were paid for. There were no expense
accruals or prepayments at the end of the year.

Based on the above and the result of the audit, compute for the following:

1. Sales for the year ended December 31, 2023

a. P4,000,000 c. P2,000,000
b. P5,000,000 d. P3,000,000

2. Total manufacturing cost for the year ended December 31, 2023
a. P4,166,667 c. P 666,667
b. P3,000,000 d. P2,850,000

3. Cash as of December 31, 2023

a. P1,900,000 c. P650,000
b. P1,150,000 d. P500,000

4. Total current assets as of December 31, 2023

a. P4,000,000 c. P2,575,000
b. P2,600,000 d. P3,861,111

5. Total liabilities and equity as of December 31, 2023

a. P5,761,111 c. P5,500,000
b. P5,750,000 d. P5,475,000

13. Kelly Corporation has recently decided to go public and has hired you as an independent CPA.
One statement that the entity is anxious to have prepared is a statement of cash flows.
Financial statements of Kelly Corporation for 2023 and 2022 are provided below.

Statements of Financial Position

12/31/2023 12/31/2022
Cash P153,000 P 72,000
Accounts receivable 135,000 81,000
Merchandise inventory 144,000 180,000
Property, plant and equipment (net of
accumulated depreciation of P120,000 and
P114,000 as of 12/31/2023 and 12/31/2022
respectively) 108,000 246,000
P540,000 P579,000

Accounts payable P 66,000 P 36,000

Income taxes payable 132,000 147,000
Bonds payable 135,000 225,000
Share capital 81,000 81,000
Retained earnings 126,000 90,000
P540,000 P579,000

Income Statement
For the Year Ended December 31, 2023

Sales P3,150,000
Cost of sales 2,682,000
Gross profit 468,000
Selling expenses P225,000
Administrative expenses 72,000 297,000
Income from operations 171,000
Interest expense 27,000
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Profit before taxes 144,000

Income taxes 36,000
Profit P 108,000

The following additional data were provided:

1.Dividends for the year 2023 were P72,000.

2.During the year, equipment was sold for P90,000. This equipment cost P132,000 originally
and had a book value of P108,000 at the time of sale. The loss on sale was incorrectly
charged to cost of sales.

3.All depreciation expense is in the selling expense category.

Based on the above and the result of your engagement, you are asked to provide the following
information) for the year ended December 31, 2023, for Kelly Corporation:

1. The net cash provided by operating activities is

a. P153,000 c. P108,000
b. P 90,000 d. P 75,000

2. The net cash provided (used) by investing activities is

a. (P132,000) c. P 18,000
b. P 90,000 d. P(108,000)

3. Under the direct method, the cash received from customers is

a. P3,204,000 c. P3,096,000
b. P3,150,000 d. P3,165,000

4. Under the direct method, the total taxes paid is

a. P36,000 c. P15,000
b. P21,000 d. P51,000

5. The net cash provided (used) by financing activities is

a. (P 90,000) c. P18,000
b. (P162,000) d. P72,000

14. In connection with your audit of the IVAN Corporation for the year ended December 31, 2023,
the following financial information were presented.

IVAN Corporation
Statements of Financial Position
December 31, 2023 and 2022

2023 2022
Assets
Cash and cash equivalents P 45,000 P 15,000
Accounts receivable 75,000 37,500
Inventory 30,000 22,500
Available-for-sale securities 285,000 285,000
Property, plant and equipment (net of
accumulated depreciation of P75,000 and
P90,000 as of December 31, 2023 and
2022, respectively) 105,000 247,500
Intangible asset, net 15,000 22,500
Total assets P555,000 P630,000

Liabilities
Accounts payable P 75,000 P187,500
Income taxes payable 30,000 15,000
Deferred taxes payable 45,000 30,000
Total liabilities 150,000 232,500
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Equity
Share capital 97,500 97,500
Retained earnings 307,500 300,000
Total equity 405,000 397,500
Total liabilities and equity P555,000 P630,000

IVAN Corporation
Income Statement
For the year ended December 31, 2023

Sales P450,000
Cost of sales (150,000)
Gross profit 300,000
Administrative and selling expenses (30,000)
Interest expense (30,000)
Depreciation of property, plant and equipment (30,000)
Amortization of intangible asset (7,500)
Dividend income 45,000
Profit before income taxes 247,500
Income tax expense (60,000)
Profit P187,500

Additional information:

 The Company pays salaries and other employee dues before the end of each month. All
administration and selling expenses incurred were paid before December 31, 2023.

 Dividend income comprised dividends received from available-for-sale securities. This was
received before December 31, 2023. Dividends received were classified under investing
activities in last year’s statement of cash flows.

 Equipment with a carrying amount P112,500 and cost of P157,500 was sold for P112,500.

 The company declared and paid dividends of P180,000 to its shareholders during 2023.

Based on the above and the result of your audit, determine the following:

1. Cash collections from customers

a. P450,000 c. P487,500
b. P412,500 d. P367,500

2. Cash paid to suppliers and employees

a. P270,000 c. P300,000
b. P330,000 d. P450,000

3. Cash paid for income taxes

a. P30,000 c. P45,000
b. P75,000 d. P90,000

4. Net cash provided by operating activities

a. P82,500 c. P52,500
b. P37,500 d. P 97,500

5. Net cash used in investing and financing activities

a. P22,500 c. P52,500
b. P67,500 d. P 0

15. Financial statements for Ivan Company are given below:

Ivan Company
Statement of Financial Position
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January 1, 2023
Assets Liabilities and Equity
Cash P 240,000 Accounts payable P 114,000
Accounts 216,000
receivable
Buildings and
equipment 900,000
Acc. depreciation (300,000) Share capital 690,000
Patents 108,000 Retained earnings 360,000
P1,164,000 P1,164,000

Ivan Company
Statement of Cash Flows
For the Year Ended December 31, 2023

Cash flows from operating activities

Net income P300,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation - buildings and equipment
P 90,000
Gain on sale of equipment (36,000)
Amortization of patents 12,000
Increase in accounts receivable (96,000)
Increase in accounts payable 48,000 18,000
Net cash provided by operating activities 318,000

Cash flows from investing activities

Sale of equipment 72,000
Purchase of land (150,000)
Purchase of buildings and equipment (288,000)
Net cash used by investing activities (366,000)

Cash flows from financing activities

Payment of cash dividend (90,000)
Sale of ordinary shares 240,000
Net cash provided by financing activities 150,000
Net increase in cash 102,000
Cash, January 1, 2023 240,000
Cash, December 31, 2023 P342,000

Additional information:

 Accumulated depreciation on the equipment sold was P84,000.

 All items that should be included in the cash flow statement were properly included.

Based on the above and the result of your audit, answer the following:

1. When the equipment was sold, the Buildings and Equipment account received a credit of
a. P72,000 c. P156,000
b. P84,000 d. P120,000

2. The carrying amount of the buildings and equipment at December 31, 2023 is
a. P912,000 c. P762,000
b. P726,000 d. P876,000

3. The total assets at December 31, 2023 is

a. P1,662,000 c. P1,650,000
b. P1,512,000 d. P1,578,000

4. The total equity at December 31, 2023 is

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a. P1,500,000 c. P1,416,000
b. P1,350,000 d. P1,488,000