IA 2
1.) Manchester Company provides the following information on December 31, 2020:
Employee income taxes withheld 900,000
Cash balance at First State Bank 2,500,000
Cash overdraft at Harbor Bank 1,300,000
Account receivable with credit balance 750,000
Estimated expenses of meeting warranties 500,000
Estimated damages as a result of unsatisfactory performance on contract
1,500,000
Accounts payable 3,000,000
Deferred serial bonds, issued at par and bearing interest at 12%, payable in semiannual installments of
P500,000 due April 1 and October 1 of each year, the last bond to be paid on October 1, 2026. Interest is
also paid semiannually 5,000,000.What amount should be reported as total current liabilities on
December 31, 2020?
a. 8,100,000
2.) Use the following information for the next three questions.
Multinational Company provided the following balances on December 31, 2020:
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, 2022 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
• What is the amount of noncurrent liabilities on December 31, 2020?
a. 5,700,000
3.) What is the amount of retained earnings on December 31, 2020?
d. 5,000,000
4.) What is the total shareholders equity on December 31, 2020?
b. 13,500,000
5.) On July 1, 2020, the Quezon City government issued realty tax assessment for the fiscal year ended
June 30, 2021, on September 1, 2020, Zuma Company purchased a land in Quezon City. The purchase
price was reduced by a credit for accrued realty taxes. The entity does not record the entire year’s real
estate tax obligation but instead records tax expenses at the end of each month by adjusting prepaid
real estate taxes or real estate taxes payable as appropriate. On November 1, 2020, the entity paid the
first two equal installments of P600,000 for realty taxes. What amount of the payment should be
recorded as a debit to real estate taxes payable?
b. 400,000
6.) On January 1, 2020, Dome Company issued P4,000,000. 8% serial bonds, to be repaid in the amount
of P800,000 each year. Interest is payable annually on December 31. The bonds were issued to yield
10% a year. The entity amortized the bond discount by the interest method.
The bond proceeds totaled P3,805,600 based on the present value on January 1, 2020 of five annual
payment.
On December 31, 2020, what is the carrying amount of the bonds payable.
b. 3,066,160
1.) Manchester Company provides the following information on December 31, 2020:
Employee income taxes withheld 900,000
Cash balance at First State Bank 2,500,000
Cash overdraft at Harbor Bank 1,300,000
Account receivable with credit balance 750,000
Estimated expenses of meeting warranties 500,000
Estimated damages as a result of unsatisfactory performance on contract
1,500,000
Accounts payable 3,000,000
Deferred serial bonds, issued at par and bearing interest at 12%, payable in semiannual installments of
P500,000 due April 1 and October 1 of each year, the last bond to be paid on October 1, 2026. Interest is
also paid semiannually 5,000,000.What amount should be reported as total current liabilities on
December 31, 2020?
a. 8,100,000
2.) Use the following information for the next three questions.
Multinational Company provided the following balances on December 31, 2020:
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, 2022 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
• What is the amount of noncurrent liabilities on December 31, 2020?
a. 5,700,000
3.) What is the amount of retained earnings on December 31, 2020?
d. 5,000,000
4.) What is the total shareholders equity on December 31, 2020?
b. 13,500,000
5.) On July 1, 2020, the Quezon City government issued realty tax assessment for the fiscal year ended
June 30, 2021, on September 1, 2020, Zuma Company purchased a land in Quezon City. The purchase
price was reduced by a credit for accrued realty taxes. The entity does not record the entire year’s real
estate tax obligation but instead records tax expenses at the end of each month by adjusting prepaid
real estate taxes or real estate taxes payable as appropriate. On November 1, 2020, the entity paid the
first two equal installments of P600,000 for realty taxes. What amount of the payment should be
recorded as a debit to real estate taxes payable?
b. 400,000
6.) On January 1, 2020, Dome Company issued P4,000,000. 8% serial bonds, to be repaid in the amount
of P800,000 each year. Interest is payable annually on December 31. The bonds were issued to yield
10% a year. The entity amortized the bond discount by the interest method.
The bond proceeds totaled P3,805,600 based on the present value on January 1, 2020 of five annual
payment.
On December 31, 2020, what is the carrying amount of the bonds payable.
b. 3,066,160
