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Our Lady of the Pillar College-Cauayan

Cauayan City, Isabela

INTEGRATED ACCOUNTING

Name:__________________________________________ SCORE: _______________________

AUDITING PROBLEMS
QUIZ NO. 6
MULTIPLE CHOICE - On a separate sheet of paper, please choose the best answer (letter of your choice) among the
choices given under each of the following theory questions. Strictly no erasures on your answer sheet; otherwise
answers will be invalidated.

PROBLEM NO. 1
You have been assigned to audit the financial statements of AYALA MERCHANTS CORPORATION
for the year 2017. The company is a dealer of appliances and has several branches in Metro
Manila. Its main office is located in Makati City. You were given by the company controller the
unadjusted balances of the items to be included in the company’s statement of financial position
and statement of income as of and for the year ended December 31, 2017. Audit findings are as
follows:

I. AUDIT OF CASH
A cash count was conducted by your staff on January 7, 2018. The petty cash fund of P60,000
maintained by the company on an imprest basis relected a balance of P22,750. Unreplenished
expenses totaled P37,250 of which P9,510 pertains to January 2018.

You were furnished a copy of the company’s bank reconciliation statement with Chartered Bank
as follows:
Balance per bank P277,994
Add: Deposit in transit 248,836
Bank debit memos 712,750
Returned check 63,000
Less: Outstanding checks (174,580)
Book error (72,000)
Balance per books P1,056,000

Your review of the reconciliation statement disclosed the following:

1. Postdated checks totaling P107,400 were included as part of the deposit in transit. These
represent collections from various customers whose accounts have been outstanding for less
than three months. These checks were actually deposited on January 8, 2018.

2. Included in the deposit in transit is a check from a customer for P63,000 which was returned
by the bank on December 27, 2017 for insufficiency of funds. This account has been
outstanding for over six months. The check was replaced by the customer on January 15,
2018.

3. The bank debited the account of Ayala Merchants for P710,000 as payment of notes payable
including interest of P10,000 due on December 26, 2017. This was not recorded as of year-
end.

4. A check was cleared by the bank as P30,900 but was recorded by the bookkeeper as
P102,900. This was in payment of accounts payable.

5. Bank service charges totaling P2,750 were not recorded.

II. AUDIT OF ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

1
It is the company’s policy to provide allowance for doubtful accounts as follows:

Less than 3 months P2,500,960 1%


3 to 6 months 843,200 5%
Over 6 months 274,500 10%
Total P3,618,660
An analysis of the accounts receivable schedule showed that several long outstanding accounts
for more than a year totaling P152,460 should be written-off.

III. AUDIT OF MARKETABLE SECURITIES – TRADING

The company’s equity portfolio as of year-end showed the following:


Total Market Value
Shares Cost per Share
Bacnotan Cement 7,000 P108,500 P16.00
Fil-Estate 10,000 195,000 19.75
Ionics 2,400 49,200 24.00
La Tondena 2,000 67,000 26.00
Selecta 8,000 31,600 1.20
Union Bank 1,600 50,880 27.50
P502,180
The securities are listed in the stock exchange. The company follows the fair value accounting.

IV. AUDIT OF NOTES RECEIVABLE

The note receivable amounting to P1,300,000 represents a loan granted to a subsidiary. This is
covered by a promissory note with interest at 15% per annum dated November 1, 2017. No
interest has been accrued on the note as of December 31, 2017.

V. AUDIT OF PREPAYMENTS
Prepaid expenses account consists of the following:
Prepaid advertising P 640,000
Prepaid insurance 490,000
Prepaid rent 420,000
Unused office supplies 361,000
P1,911,000
Ayala Merchants renewed its contract with an advertising agency for the annual promotion as
well as the regular advertisement of its products. It paid a total of P640,000, P100,000 of
which is for the Christmas promotion while the balance is for the regular promotion and which
will run for one year starting on August 1, 2017. Payment was made on July 20, 2017, and the
total amount was reflected as prepaid advertising.

The company leases the main office and store in Makati City at a monthly rental of P140,000.
On November 5, 2017, a check for P420,000 was issued in payment of three-month rental as
per renewal contract which was effective on November 1, 2017. Rental deposit remained at
three months and is included under other assets.

The company’s delivery equipment is insured with Fortune Insurance Corporation for a total
coverage of P2.4 million. Total payment made on November 16, 2017 for the renewal
amounted to P490,000 which covers the period from November 1, 2017 to November 1, 2018.
No adjustment has been made as of December 31, 2017.

To take advantage of volume discount ranging from 10% to 20%, the company buys office and
store supplies on a bulk basis. The staff-in-charge bought supplies worth P220,000 on June 10,
2017 and included the same in their office supplies inventory. As at year-end, unused office
supplies amount to P102,500.
2
VI. AUDIT OF INVENTORIES
A physical count of inventories was conducted simultaneously in all stores on December 29 and
20, 2017. Your review of the list submitted by the accountant disclosed the following:
1. Some deliveries made in December 2017 have not been invoiced and recorded as of year-
end. These items had a selling price of P146,940 with term of 15 days. The corresponding
cost was already deducted from the ending inventory.
2. Goods on consignment to Ayala Merchants totaling P356,000 were included in the inventory
list.
3. Some appliances worth P138,500 were recorded twice in the inventory list.
4. Goods costing P153,800 purchased and paid on December 26 was received on January 4,
2018. The goods were shipped by the supplier on December 28, FOB shipping point.

VII. AUDIT OF PROPERTY, PLANT AND EQUIPMENT


The company purchased additional equipment worth P268,000 on June 30, 2017. At the date
of purchase, it incurred the following additional costs which were charged to repairs and
maintenance account:
Freight-in P30,400
Installation cost 13,000
Total P43,400

The above equipment has an estimated useful life of ten years and estimated salvage value of
P20,000. Depreciation for the above equipment has been provided based on original cost.

The company discarded some store equipment on October 1, 2017, realizing no salvage value.
The cost of these equipment amounted to P165,520 with an accumulated depreciation of
P138,620 on December 31, 2017. Depreciation booked from October 1, 2017 to year-end was
P10,480. No entry was made on the disposal of the property.

VIII. AUDIT OF ACCRUED EXPENSES


Some expenses for December 2017 were recorded when paid in January 2018 which included
the following:
Electric bills P73,400
Commission of sales agents 57,000
Telephone charges 42,500
Minor repair of delivery equipment 21,340
Water bills 18,760
Total P213,000

IX. AUDIT OF LIABILITIES


Ayala Merchants obtained a one-year loan from Chartered Bank amounting to P2.6 million at an
interest rate of 16% per annum on October 1, 2017. Accrued interest on this loan was not
taken up at year-end.

X. OTHER AUDIT FINDINGS


A review of the minutes of meeting showed that a 10% cash dividend was declared to
shareholders of record as of December 15, 2017, payable on January 31, 2018.

Ayala Merchants Corporation


UNADJUSTED TRIAL BALANCE
December 31, 2017

Debit Credit
Petty cash fund P 60,000
Cash in bank 1,056,000

3
Trading securities 483,640
Accounts receivable – trade 3,618,660
Allowance for doubtful accounts P 110,360
Notes receivable 1,300,000
Inventories 7,274,900
Prepaid advertising 640,000
Prepaid insurance 490,000
Prepaid rent 420,000
Office supplies inventory 361,000
Furniture and fixtures 1,298,400
Delivery equipment 2,770,000
Accumulated depreciation 1,177,500
Other assets 548,000
Accounts payable – trade 2,356,320
Notes payable 3,300,000
Accrued expenses 169,040
Bonds payable 5,000,000
Discount on bonds payable 500,000
Ordinary share capital 5,400,000
Retained earnings 792,160
Sales 13,078,000
Cost of goods sold 8,034,000
Operating expenses 3,357,000
Other income 1,453,500
Other charges 625,280
P32,836,880 P32,836,880
Determine the adjusted balances of the following: (Ignore tax implications)
1. Petty cash fund
A. P37,250 B. P60,000 C. P22,750 D. P32,260

2. Cash in bank
A. P522,650 B. P450,650 C. P1,056,000 D. P244,850

3. Trading securities
A. P403,640 B. P502,180 C. P491,240 D. P472,700

4. Accounts receivable
A. P3,936,000 B. P3,618,660 C. P3,783,540 D. P3,613,140

5. Allowance for doubtful accounts


A. P110,360 B. P152,640 C. P130,316 D. P88,217

6. Notes and interest receivable


A. P1,331,960 B. P1,332,160 C. P1,332,500 D. P1,300,000

7. Inventories
A. P6,934,200 B. P7,274,900 C. P7,290,200 D. P6,780,400

8. Prepaid insurance
A. P449,167 B. P408,333 C. P490,000 D. P428,750

9. Prepaid rent
A. P140,000 B. P 0 C. P420,000 D. P280,000

10. Prepaid advertising


A. P325,000 B. P640,000 C. P373,334 D. P315,000

11. Office supplies inventory


4
A. P258,500 B. P117,500 C. P361,000 D. P102,500

12. Total current assets


A. P14,0333,612 B. P13,523,866 C. P13,677,666 D. P13,537,666

13. Property, plant, and equipment


A. P4,068,400 B. P2,905,228 C. P3,946,280 D. P3,902,880

14. Accumulated depreciation


A. P1,038,880 B. P1,041,050 C. P1,177,500 D. P1,179,672

15. Accounts payable


A. P2,525,360 B. P2,428,320 C. P2,597,360 D. P2,356,320

16. Interest payable


A. P104,000 B. P16,178 C. P4,000 D. P27,644

17. Total current liabilities


A. P6,803,798 B. P6,103,798 C. P6,054,360 D. P5,603,798

18. Sales
A. P13,068,440 B. P13,078,000 C. P13,224,940 D. P12,339,500

19. Cost of goods sold


A. P8,034,000 B. P8,236,200 C. P8,018,700 D. P8,374,700

20. Operating expenses


A. P4,296,514 B. P3,357,000 C. P4,341,514 D. P4,621,514

SOLUTION:
PROBLEM 1 – AYALA MERCHANTS CORPORATION

ADJUSTING JOURNAL ENRIES


December 31, 2017

1. Operating expenses 27,740


Petty cash fund 27,740
(P37,250 – P9,510)

2. Accounts receivable (P107,400 + P63,000) 170,400


Notes payable 700,000
Finance cost (Interest expense) 10,000
Other charges (Bank service charges) 2,750
Accounts payable 72,000
Cash in bank 811,150

3. Allowance for doubtful accounts 152,640


Accounts receivable (write-off) 152,640

4. Other charges (Unrealized loss – Trading securities) 10,940


Trading securities 10,940
Bacnotan Cement (P16, 7,000) P112,000
Fil-Estate (P19.75 x 10,000) 197,500
Ionics (P24 x 2,400) 57,600
La Tondena (P26 x 2,000) 52,000
Selecta (P1.20 x 8,000) 9,600
Union Bank (P27.50 x 1,600) 44,000
Total market value, Dec. 21, 2017 P472,700
Carrying value, Dec. 31, 2017 483,640
Unrealized loss – trading securities P 10,940

5. Interest receivable 32,500


Other income (Interest income) 32,500
(P1,300,000 x 15% 2/12)
5
6. Operating expenses (Advertising expense) 325,000
Prepaid advertising 325,000
Christmas promotion P100,000
Regular promotion (P640,000 – P100,000 = P540,000 x 5/12) 225,000
Total P325,000

7. Operating expenses (Rent expense) 280,000


Prepaid rent 280,000
(P420,000 x 2/3 or P140,000 x 2)

8. Operating expenses (Insurance expense) 81,667


Prepaid insurance 81,667
(P490,000 x 2/12)

9. Operating expenses (Office supplies expense) 258,500


Office supplies inventory 258,500
(P361,000 – P102,500)

10. Accounts receivable 146,940


Sales 146,940

11. Cost of goods sold 356,000


Inventories 356,000

12. Cost of goods sold 138,500


Inventories 138,500

13. Inventories 153,800


Cost of goods sold 153,800

14. Delivery equipment 43,400


Operating expenses 43,400

15. Operating expenses (Depreciation expense) 2,170


Accumulated depreciation 2,170
(P43,400/10 x 6/12)

16. Accumulated depreciation 10,480


Operating expenses (Depreciation expense) 10,480

17. Accumulated depreciation (P138,620 – P10,480) 128,140


Other charges (Loss) 37,380
Delivery equipment 165,520

18. Operating expenses 213,000


Accrued expenses 213,000

19. Finance cost (Interest expense) 104,000


Interest payable 104,000
(P2.6 million x 16% 3/12)

20. Retained earnings 540,000


Dividends payable 540,000
(P5,400,000 x 10%)

21. Operating expenses (Doubtful accounts expense) 130,317


Allowance for doubtful accounts 130,317

Required
Per Books Adjustments Per Audit % Allowance
Less than 3 months P2,500,960 P146,940
107,400 P2,755,300 1 P27,553
3 to 6 months 843,200 843,200 5 42,160
Over 6 months 274,500 63,000
(152,460) 185,040 10 18,504
P3,618,660 P3,783,540 P88,217

Allowance before adjustment (P110,360 – P152,460) P 42,100 debit


6
Required allowance 88,217
Adjustment P130,317

1. D Petty cash fund


Per books P60,000
AJE 1 (27,740)
Per audit P32,260

2. D Cash in bank
Per books P1,056,000
AJE 2 (811,150)
Per audit P 244,850

3. D Trading securities
Per books P483,640
AJE 4 (10,940)
Per audit P472,700

4. C Accounts receivable
Per books P3,618,660
AJE 2 170,400
3 (152,460)
10 146,940
Per audit P3,783,540

5. D Allowance for doubtful accounts


Per books P110,360
AJE 3 (152,460)
21 130,317
Per audit P 88,217

6. C Notes and interest receivable


Per books P1,300,000
AJE 5 32,500
Per audit P1,332,500

7. A Inventories
Per books P7,274,900
AJE 11 (356,000)
12 (138,500)
13 153,800
Per audit P6,934,200

8. B Prepaid insurance
Per books P490,000
AJE 8 (81,667)
Per audit P408,333

9. A Prepaid rent
Per books P420,000
AJE 7 (280,000)
Per audit P140,000

10. D Prepaid advertising


Per books P640,000
AJE 6 (325,000)
Per audit P315,000

11. D Office supplies inventory


Per books P361,000
AJE 9 (258,500)
Per audit P102,500

12. C Petty cash fund P 32,260


Cash in bank 244,850
Trading securities 472,700
Accounts receivable (P3,783,540 – P88,217) 3,695,323
Notes and interest receivable 1,332,500
Inventories 6,934,200
Prepaid insurance 408,333
7
Prepaid rent 140,000
Prepaid advertising 315,000
Office supplies inventory 102,500
Total current assets P13,677,666

13. C Property, plant, and equipment (PPE)


Per books P4,068,400
AJE 14 43,400
17 (165,520)
Per audit P3,946,280

14. B Accumulated depreciation


Per books P1,177,500
AJE 15 2,170
16 (10,480)
17 (128,140)
Per audit P1,041,050

15. B Accounts payable


Per books P2,356,320
AJE 2 72,000
Per audit P2,428,320

16. A Interest payable


Per books P0
AJE 19 104,000
Per audit P104,000

17. C Accounts payable – trade P2,428,320


Notes payable 2,600,000
Accrued expenses 382,040
Interest payable 104,000
Dividends payable 540,000
Total current liabilities P6,054,360

18. C Sales
Per books P13,078,000
AJE 10 146,940
Per audit P13,224,940

19. C Cost of goods sold


Per books P8,034,000
AJE 11 356,000
12 138,500
13, (153,800)
Per audit P8,374,700

20. D Operating expenses


Per books P3,357,000
AJE 1 27,740
6 325,000
7 280,000
8 81,667
9 258,500
14 (43,400)
15 2,170
16 (10,480)
18 213,000
21 130,317
Per audit P4,621,514

PROBLEM NO. 2 (32-9 (comprehensive)


You have been engaged to examine the financial statements of Josiah Company for the year 2015.
The client provides you the following information given below:

JOSIAH Company
Statement of Financial Position
For the Year ended December 31, 2015

8
Current Assets 540,000 Current Liabilities 730,000
Long-term Investments 176,000 Long-term Liabilities 380,000
Property Plant & Equipment 1,020,000 Contributed Capital 550,000
Intangible Assets 113,000 Unrealized Capital 108,000
Other Assets 131,000 Retained Earnings 212,000
Total Assets 1,980,000 Total Liab & Equities 1,980,000

Additional Information:
1.) Current assets include cash of P100,000, accounts receivable of P120,000, notes
receivable(Maturity date April 1, 2019) of P70,000 and land of P250,000.
2.) Long term investments include a P56,000 fair value through other comprehensive income
securities and a P120,000 investment in Long Company bonds that are expected to be held
until their December 31, 2021 maturity date
3.) Property Plant and Equipment include buildings costing P650,000, inventory costing
P70,000, and equipment costing P300,000
4.) Intangible assets include patents that cost P110,000 on which P20,000 amortization has
accumulated, and treasury shares that cost 23,000.
5.) Other assets include prepaid insurance (which expires on July 31, 2016), P24,000, sining
fund for bond retirement P70,000, and trademarks that cost P52,000 and on which P15,000
amortization has accumulated.
6.) Current liabilities include accounts payable of P250,000, bonds payable (maturity date
December 31, 2022) of P400,000 and accrued income taxes payable of P80,000.
7.) Long-term liabilities include accrued wages of P180,000 and mortgage payable (which is due
in five equal annual payments starting December 31, 2015) of P200,000.
8.) Contributed capital include ordinary shares (P5 par) P250,000 and preferred shares (P100
par) of P300,000.
9.) Unrealized capital includes premium on bonds payable of P40,000, premium on preference
shares of P25,000, premium on ordinary shares of P30,000 and unrealized increase in value
of fair value through other comprehensive income securities for P13,000.
10.) Retained earnings include unrestricted retained earnings of P105,000, allowance for
doubtful accounts of P12,000 and accumulated depreciation on buildings and equipment of
P65,000 and P30,000 respectively.

QUESTIONS:
Based on the above and the result of your audit, answer the following:
21. How much is the total current assets as of December 31,2015?
a. 372,000 b. 314,000 c. 302,000 d. 290,000
22. How much is the total noncurrent assets as of December 31, 2015?
a. 1,643,000 b. 1,548,000 c. 1,850,000 d. 1,571,000

23. How much is the total current liabilities as of December 31, 2015?
a. 550,000 b. 950,000 c. 598,000 d. 370,000

24. How much is the total noncurrent liabilities as of December 31, 2015?
a. 780,000 b. 600,000 c. 560,000 d. 740,000

25. How much is the total shareholder’s equity as of December 31, 2015?
a. 700,000 b. 1,453,000 c. 807,000 d. 735,000

PROBLEM NO. 3 (32-11)


You are given the following post closing trial balance of Isaiah Company for December 31, 2015
Debits Credits
Cash on hand and in bank 35,000
Accounts receivable 240,000
Allowance for doubtful accounts 8,000
Advances to employees 4,800
Interest receivable 3,000
Prepaid expenses 16,200
Merchandise inventory 180,000
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Land 200,000
Building 500,000
Accumulated Depreciation – Building 150,000
Equipment 192,000
Accumulated Depreciation – equipment 59,200
Utility deposits 15,000
Other assets 6,000
Accounts payable 260,000
Advances from customers 10,000
Interest payable 18,000
Accrued expenses 30,000
Mortgage Payable 600,000
Ordinary shares 400,000
Retained earnings 143,200
TOTALS 1,535,200 1,535,200

Your examination of the company’s accounts disclosed the following information:


1.) It was disclosed that goods costing P20,000 which where consigned to Annee Company for
sale at 140% above cost were recorded as sold upon shipment on November 1, 2015. The
goods were unsold at year-end.
2.) Equipment acquired for P10,000 on July 1, 2013 was sold for P9,000 cash on July 1, 2015.
The proceeds from the sale were credited to the equipment account. New equipment
purchased on October 1, 2015 for P20,000 was charged to repairs and Maintenance in error.
3.) The company depreciates the building at 5% a year and the equipment at 10% a year.
Depreciation for 2015 has not been recorded.
4.) The mortgage payable calls for annual payment of P100,000 on every September 30.
Amortizations, including interests at 12% per year, were paid as due. Interest was properly
accrued during the year.
5.) During the year, the excess of the amount received over the par value of the ordinary shares
issued of P40,000 was credited to Retained Earnings. No dividends were declared during
the year. The Retained Earnings beginning balance show a credit balance of P70,000.
6.) Based on past experience, the company should aintain the allowance for doubtful accounts
at 5% of the customer’s outstanding balances.

QUESTIONS:
Based on the above data, answer the following:
26. How much is the unadjusted net loss in 2015?
a. 73,200 b. 33,200 c. 253,200 d. 110,000

27. How much is the adjusted net loss in 2015?


a. 282,250 b. 281,250 c. 287,900 d. 280,850

28. How much is the adjusted total assets as of December 31, 2015?
a. 1,176,750 b. 1,150,150 c. 1,108,750 d. 1,140,100

29. How much is the adjusted current liabilities as of December 31, 2015?
a. 418,000 b. 318,000 c. 436,000 d. 336,000

30. How much is the adjusted total shareholder’s equity as of December 31, 2015?
a. 222,100 b. 240,750 c. 214,150 d. 190,750

PROBLEM NO. 4 (32-12)


Jeremiah company, manufacturer and dealer of a baby apparel, has not been subjected to audit for
the year 2015 and 2014. But due to the desire of the board of directors to evaluate company
operations, your services were engaged to audit both years. The following balances were given to
you for examination.
December 31
2015 2014
Petty cash fund 2,000 2.000
Cash 81,200 61,500
Accounts receivable 66,100 32,400
10
Inventories 164,900 98,500
Prepaid expenses 5,000 4,500
Machinery & Equipment, at cost 145,000 145,000
Accounts payable 35,000 54,100
Accrued expenses 3,000 4,000
Other payables 2,000 2,200
Share Capital 100,000 100,000
Retained Earnings, beginning 183,600 23,400
Sales 420,000 385,000
Cost of Sales 203,800 157,600
Operating Expenses 76,700 69,300
Other Income 1,100 2,100

Your audit disclosed the following:


2015 2014
1. Ending inventories, per summary, included items under 8,500 6,200
consignment
2. Salaries expense that was not accrued 17,300 14,600
3. Deposits made by customers were recorded as sales during the 800 1,700
year cash was receive
4. Unused supplies charged entirely to expense in the year of 200 180
acquisition
5. Advances to suppliers recognized as purchases in the year cash 4,600 3,200
is paid
6. Deliveries made at the end of the year recorded as sales the 4,000 2,5000
following year
7. Based on the analysis of accounts receivable aging schedule, an
allowance of 2% of accounts receivable must be set-up for both
years
8. Depreciation must also be provided using 10% rate

QUESTIONS:
Based on the above and the result of your audit, answer the following:
31. Adjusted sales for 2014
a. 387,500 b. 385,900 c. 385,800 d. 384, 200
32. Adjusted sales for 2015
a. 418,300 b. 422,600 c. 422,400 d. 419,100

33. Adjusted cost of sales 2014


a. 159,900 b. 151,400 c. 163,800 d. 160,600

34. Adjusted cost of sales 2015


a. 204,700 b. 202,400 c. 206,100 d. 202,900

35. Adjusted operating expenses 2015


a. 94,588 b. 95,286 c. 94,584 d. 92,068

36. Adjusted Retained Earnings, end, December 31, 2014


a. 151,782 b. 166,382 c. 8,418 d. 155,962

37. Book Value of Machinery & equipment, December 31, 2015


a. 145,000 b. 130,500 c. 116,000 d. 108,750

38. Adjusted inventories, December 31, 2015


a. 150,200 b. 156,400 c. 167,200 d. 164,900

39. Net realizable Value of Accounts Receivable, December 31, 2014


a. 31,752 b. 34,202 c. 35, 868 d. 33,418
11
40. Adjusted net income for year 2015
a. 123,714 b. 124,216 c. 125,718 d. 124,412

PROBLEM NO. 5 (33-6)


Data regarding the statement of financial position of Jamie Allison Co. follow:

ASSETS 2015 2014


Cash 5,760,109 5,000,000
Trading Securities 450,000 -
Accounts receivable 1,250,000 600,000
Allowance for doubtful accounts (160,000) (40,000)
Inventories 2,200,00 2,000,000
Investment in bonds – FA at amortized cost 4,138,798 4,198,907
Property Plant and Equipment 10,520,000 9,000,000
Accumulated Depreciation (3,900,000) (3,200,000)
Franchise, net 500,000 600,000
Total ASSETS 20,758,907 18,158,907

Liabilities and EQUITY


Accounts Payable 4,800,000 4,500,000
Dividends Payable 400,000 300,000
Deferred Tax Liability 700,000 500,000
Bonds Payable 1,000,000 -
Ordinary shares, P100 par value 11,000,000 10,000,000
Share premium 1,200,000 1,000,0000
Treasury shares at Cost (500,000) -
Retained Earnings 2,158,907 1,858,907
TOTAL LIABILITIES AND EQUITY 20,758,907 18,158,907

Additional Information:
1.) In 2015, Jamie Allison Co., acquired trading securities for P800,000 and sold trading
securities costing P500,000 and P650,000 cash. ON December 31, 2015, the fair value of the
remaining securities increased to P450,000.
2.) On January 1, 2014, Jamie Allison Co., acquired P4,253,552 4-year bonds with a face value
of P4,000,000 and stated interest of 12% per year payable annually on December 31. The
bonds were acquired to yield 10%. The bonds are to be appropriate classified as financial
asset at amortized cost.
3.) On January 2, 2015, Jamie Allison Co. sold an equipment costing P480,000 with
accumulated depreciation of P200,000 for P500,000.
4.) On June 5, 2015, Jamie Allison Co. issued 10,000 P100 par ordinary shares for P120 per
share.
5.) On July 1, 2015, Jamie Allison Co. acquired equipment costing P1,000,000 for cash.
6.) On December 31, 2015, Jamie Allsion Co., acquired land by issuing bonds payable at face
value P1,000,000.
7.) Jamie Allison Co. declared and paid cash dividends for 2014 and 2015 as follows
Declared Paid Amount
2014 December 20, 2014 February 20, 2015 P 300,000
2015 December 20, 2015 February 20, 2016 P 400,000

8.) At the end of year, Jamie Allison Co. Treasury shares at a cost of P500,000.
9.) During 2015, Jamie Allison Co. recorded sales for the year amounted to P5,000,000 cost of
goods sold of P2,000,000 and income tax expense of P300,000 and net income of P700,000.
Also during the year, Jamie Allison Co. writes off an account amounting to P20,000 that was
found to be worthless.

QUESTIONS:
Based on the following data, answer the following:
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41. How much is the total cash collections from customers n 2015?
a. 4,330,000 b. 5,600,000 c. 4,350,000 d. 5,000,000

42. How much is the total cash paid to suppliers in 2015?


a. 2,200,000 b. 1,900,000 c. 6,700,000 d. 300,000

43. How much is the net cash provided by (or used in) operating activities?
a. 860, 109 b. 800,000 c.960, 109 d. 900,000

44. How much is the net cash provided by (or used in) investing activities?
a. (1,000,000) b. (500,000) c. 500,000 d. (1,060,109)

45. How much is the net cash provided by (or used in) financing activities?
a. 900,000 b. (800,000) c. 700,000 d. 400,000

----- end of quiz 6 -----

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