Quiz 1 - Balance Sheet

Problem A.
The following balance sheet items are available for the reports of the THE WEAKEST LINK Company as of
December 31.
Cash on Hand 60,000 Petty Cash Fund 10,000

Accrued Salaries 70,000 Common Stock 1,400,000
Patent 110,000 Notes Payable-250,000 due every Dec.1 1,000,000
Furniture and Fixtures 300,000 Land 500,000
Unexpired Insurance 21,000 Claims Receivable 25,000
Additional Paid in Capital 1,400,000 Goods in Process 160,000
Accrued Interest Expense 17,500 Raw Materials 125,000
Allowance for bad debts 24,000 Building 1,250,000
Bonds Payable-300,000 due annually 1,500,000 Notes Receivable 175,000
Cash in Bank 240,000 Accum.Depn.-Building 125,000
Marketable Equity Securities 165,000 Franchise 150,000
Accounts Receivable 400,000 Prepaid Rent 54,000
Retained Earnings 308,500 Factory Supplies 40,000
Investment in Bonds 600,000 Unearned Income 100,000
Finished Goods 165,000 Machinery 600,000
Accounts Payable 265,000 Accum.Depn.-Machinery 150,000
Accum.Depn.-Furniture and Fixtures 120,000 Unused Supplies 15,000
Trademark 90,000 Office Equipment 1,500,000
Long term advances to employees 450,000 Accum.Depn.-Office Equipment 225,000
1. Current assets:
2. Non-Current Assets:
3. Current Liabilities:
4. Non-Current Liabilities:
5. Equity:
Problem B
Magna Company reported the following statement of financial position on December 31, 2017.
Current assets 1,500,000 Current liabilities 1,000,000

Investments 400,000 Longterm liabilities 2,000,000
Tangible assets 7,150,000 Equity 6,450,000
Intangible 400,000
assets
9,450,000 9,450,000
 Equity has preference share capital, no par value, P5 stated value, authorized 300,000 shares,
issued 150,000 shares for P1,000,000 and ordinary share capital, P20 par value, authorized
400,000 shares, issued 100,000 shares of P30 per share.
 Tangible assets include building P5,000,000 less accumulated depreciation P1,600,000, equipment
P1,400,000 less accumulated depreciation P400,000, land P1,250,000, and land held for future
plant site P1,500,000.
 The current assets include: Cash P400,000, account receivable P750,000 less P50,000 for allowance
for doubtful accounts, inventories P300,000, and prepaid expenses P100,000.
 The investments include the cash surrender value of a life insurance contract P50,000, investment
in securities, short-time P100,000, and long-term, P250,000.
 Intangible assets include a franchise P100,000, goodwill P200,000 and discount on bonds payable
P100,000.
 Current liabilities include accounts payable P200,000, notes payable-short-term debt P250,000,
and long-term P200,000, taxes payable P150,00, and appropriation for contingencies P200,000.
 Long -term liabilities comprised solely of 12% bonds payable due on December 31, 2020.
Required:
Prepare in good form a properly classified statement of financial position with appropriate notes.
1. Current assets:
2. Non-Current Assets:
4. Non-Current Liabilities:
5. Reserves:
6. Equity:
Problem C
Boracay Company prepared the following condensed statement of financial position on December 31,
2017.
Current assets 4,000,000

Current liabilities 1,400,000
Working capital 2,600,000
Add: Other assets 1,800,000
Working capital plus other assets 4,400,000
Deduct other liabilities 100,000
Net assets 4,300,000
Money market placement-three months 500,000

Cash in bank 700,000
Accounts receivable 700,000
Notes receivable 200,000
Financial assets at fair value 400,000
Inventory 1,300,000
Goodwill 100,000
Total Current Assets 3,900,000
The inventory account was found to include the cost of office supplies of P50,000 and office equipment
acquired at the end of 2017 at a cost of P250,000.
Other assets include the land and building acquire on January 1, 2016 for P4,000,000, less mortgage of
P2,000,000 and accrued interest on the mortgage of P200,000. At the time of purchase, the land was
worth P1,000,000. The building on December 31, 2017 has a remaining life of 18 years.
Current liabilities represented balance that were payable to trade creditors. Other liabilities consisted
of withholding tax payable. However, no recognition was given to accrued salaries of P250,000.
The entity was originally organized in 2016 when 30,000 ordinary shares with par value of P100 were
issued in exchange for assets with fair value of P3,200,000.
6. Current assets:
7. Non Current Assets:
9. Non Current Liabilities:
10. Retained Earnings:
11. Equity:

Quiz 1 - Balance Sheet

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Problem A.

Cash on Hand 60,000 Petty Cash Fund 10,000

Current assets 1,500,000 Current liabilities 1,000,000

Current assets 4,000,000

Money market placement-three months 500,000

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