Docx3

1
E1
Trustee's Books
a.
b.
c.
d.
e.
f.
g.
h.
Purchases
Trustee's Certificates Payable
30,000
30,000
Accounts Receivable
Sales
160,000
160,000
Corporation Liability paid - Accounts Payable, Old

Cash
24,000
Trustee's Certificates Payable

Cash
17,000
Cash
Allowance for Doubtful Accounts, Old*
Accounts Receivable, Old
28,000
3,000
Cash
Allowance for Doubtful Accounts*
Accounts Receivable
92,000
1,300
Corporation Liability Paid - Notes Payable, Old

Corporation Liability Paid - Accrued Interest on NP, Old
Corporation - Interest Expense on NP, Old
Cash
30,000
300
600
Cash
Accumulated Depreciation - Furniture and Fixtures
Corporation - Loss on Sale of Furniture and Fixtures
Furniture and Fixtures
11,200
8,000
800
24,000
17,000
31,000
93,300
30,900
20,000
*Corporation Uncollectible Accounts Expense

may also be used.
Exercise 6 - 2
a.
b.
c.
d.
Trustee's Books
Rowina Co. - Debtor
Rowina Co. - Loss on Sale of Investments
32,000
32,000
Sales
Cost of Goods Sold
Operating Expenses
Income Summary
160,000
Income Summary
Rowina Co. - Debtor
20,000
Rowina Co. - Debtor

Liabilities Paid - Robinson co.
30,000
112,000
28,000
40,000
20,000
30,000
Company's Books
a.
b.
Loss on Sale of Investments

Henry Ly, Trustee
32,000
Henry Ly, Trustee
20,000
32,000
Chapter 6 AA2 (2014 edition)
page 2
Retained Earnings
c.
d.
20,000
Income Summary
Loss on Sale of Investments
Interest on Mortgage
37,000
Retained Earnings
Income Summary
37,000
32,000
5,000
37,000
Exercise 6 - 3
Trustee's Books
a.
b.
c.
d.
e.

Corporation Liability Paid - Accrued Int. on NP, Old
Golden City, Debtor
Cash
40,000
300
700
Cash
Investments
Golden City, Debtor
60,000
Corporation Liability Paid - Bonds Payable

Cash
Golden City, Debtor
Cash
Accumulated Depreciation - Plant and Equipment
Golden City, Debtor
Plant and Equipment
Income Summary
Golden City, Debtor
Golden City, Debtor
Corporation Liability Paid - Bonds Payable
a.
b.
c.
d.
e.
Company's Books
Notes Payable
Accrued Interest on Notes Payable
Interest Expense
Trustee
Trustee
Gain on Sale of Investments
Bonds Payable
Interest Expense
Trustee
Gain on Bond Retirement
Loss on Sale of Plant and Equipment
Trustee
41,000
45,000
15,000
100,000
63,500
36,500
3,200
3,200
5,600
12,000
12,400
12,400
140,300
40,000
300
100,000
40,000
300
700
41,000
15,000
15,000
100,000
1,500
63,500
38,000
5,600
5,600
Trustee
Profit from Trusteeship Operations
12,400
Gain on Sale of Investments

Gain on Bond Retirement
15,000
38,000
12,400
page 3
Profit from Trusteeship Operations

Loss on Sale of Plant and Equipment
Interest Expense
Retained Earnings
12,400
5,600
2,200
57,600
Exercise 6 - 4
Assignee's Books
a.
b.
c.
d.
Corporation Liability Paid - Mortgage Note, Old

Corporation - Loss on Settlement with Creditors
Land and Building
80,000
50,000
Corporation Liability Paid - Trade Accounts Payable

Cash
Corporation - Gain on Settlement with Creditors
Income Summary
Corporation - Gain on Settlement with Creditors
Corporation - Loss on Settlement with Creditors
70,000
Panther Co., Debtor

Corporation Liability Paid - Mortgage Note, Old
Corporation Liability Paid - Trade Accounts Payable
Income Summary
228,000
130,000
41,000
29,000
21,000
29,000
50,000
80,000
70,000
78,000
Company's Books
a.
b.
c.
d.
Trade Accounts Payable

Mortgage Note
E. Baylor, Assignee
70,000
80,000
Retained Earnings
E. Baylor, Assignee
78,000
Income Summary
Retained Earnings
3,000
Capital Stock
Retained Earnings
100,000
150,000
78,000
3,000
100,000
PROBLEMS
Problem 6 1
a.
b1
b2.
b3.
Cash
Notes Receivable, Old
Accrued Interest on Notes Receivable, Old
Merchandise Inventory
Dick Corp. Stock
Allowance for Uncollectible Accounts, Old
Accumulated Depreciation Furniture and Fixtures
Slowly Corp., Debtor
11,500
50,000
130,000
800
80,000
30,000
30,000
Accounts Receivable
Sales
280,000
Purchases
Accounts Payable
160,000
Cash
Sales Returns and Allowances
156,000
6,000
2,600
7,500
322,200
280,000
160,000
Sales Discount
Accounts Receivable
b4.
b5.
b6.
b7.
b8.
b9.
b10.
c1.
c2.
c3.
c4.
c5.
c6.
c7.
Cash
Corporation - Loss on Notes Receivable, Old
Corporation - Loss on Accrued Int. on NR, Old
Accrued Interest on Notes Receivable, Old
Interest Income
Cash
Allowance for Uncollectible Accounts, Old
Corporation - Loss from Uncollectible Accounts, Old
page 4
8,000
170,000
49,120
2,000
200
50,000
800
520
110,000
2,600
17,400
130,000
Cash
Dick corp. Stock (1,000 shares x P20)
Corporation - Gain on Sale of Dick Corp. Stock
24,000
Accounts Payable
Cash
Notes Payable
Purchase Returns and Allowances
Purchase Discounts
66,000
20,000
4,000
25,000
36,000
4,000
1,000
Corporation Liability Paid- Notes Payable, Old

Corporation - Interest Expense on Notes, Old
Cash
50,000
2,100
700
Corporation Liability Paid - Accounts Payable, Old

Cash
130,000
52,800
130,000
Selling Expenses
General Expenses
Cash
37,000
46,600
Income Summary
80,000
Income Summary
66,500
83,600
80,000
66,500
Uncollectible Accounts Expense (P110,000 x 2%)

Allowance for Uncollectible Accounts
2,200
Depreciation - Furniture and Fixtures

(P30,000 x 10% x 8/12)
2,000
2,200
2,000
Selling Expenses
General Expenses
Accrued Selling Expenses
Accrued General Expenses
500
600
Interest Expense
400
500
600
300
300
400
c8.
c9.
c10.
c11.
d.
Sales
Purchase Returns and Allowances
Purchase Discount
Interest Income
Purchases
Sales Returns and Allowances
Sales Discount
Selling Expenses
General Expenses
Uncollectible Accounts Expense
Interest Expense
Income Summary
Income Summary
Corporation - Gain on Sale of Dick Corp. Stock
Corporation - Loss on Notes Receivable, Old
Corporation - Loss on Accrued Int. on NR, Old
Corporation - Loss from Doubtful Accounts, Old
Income Summary
page 5
280,000
4,000
1,000
520
160,000
6,000
8,000
37,500
47,200
2,200
2,000
400
22,220
16,600
4,000
1,000
2,000
200
17,400
7,880
7,880

Corporation Liability Paid - Accounts Payable, Old
182,100

Notes Payable
Accounts Payable
Cash
Accounts Receivable
Dick Corp. Stock (500 shares)
132,220
2,200
9,500
36,000
94,000
500
600
700
50,000
2,100
130,000
59,220
110,000
66,500
30,000
10,000
Corporation's Books
(The transactions on the corporation's books are numbered to correspond
with the transactions on the trustee's books)
a.
AC Maayos, Trustee
Cash
Notes Receivable
Accounts Receivable
Accrued Interest on Notes Receivable
Dick Corp. Stock
322,200
2,600
7,500
11,500
50,000
130,000
800
80,000
30,000
30,000
b8.
b9.
c10.
d.
page 6
Notes Payable
AC Maayos, Trustee
50,000
2,100
52,100
Accounts Payable
AC Maayos, Trustee
130,000
Retained Earnings
AC Maayos Trustee
7,880
130,000
7,880
Cash
Accounts Receivable
Dick Corp. Stock (500 shares)
Allowance for Doubtful Accounts
Notes Payable
Accounts Payable
AC Maayos, Trustee
59,220
110,000
66,500
30,000
10,000
2,200
9,500
36,000
94,000
500
600
700
132,220
Problem 6 -1
Requirement 2 (a)
Slowly Corporation, Debtor
AC Maayos, Trustee
Statement of Financial Position
December 31, 2014
Assets
Current assets:
Cash
Accounts receivable
Less Allowance for doubtful accounts
Merchandise inventory
Furniture and fixtures
Less Accumulated depreciation
Investments:
Dick Corporation stock
Total assets
P59,220
P110,000
2,200
107,800
66,500
P30,000
9,500
P233,520
20,500
10,000
P264,020
Liabilities and Shareholders' Equity

Current liabilities:
Notes payable
Accounts payable
Accrued selling expenses
Accrued general expenses
Accrued interest on notes payable
Shareholders' equity:
Ordinary share capital
Retained earnings (P20,100 - P7,880)
Total shareholders' equity
P56,000
94,000
500
600
700
P151,800
P100,000
12,220
112,220
P264,020
page 7
Problem 6 -1
Requirement 2(b)
Slowly Corporation, Debtor
AC Maayos, Trustee
Income Statement
For the Period May 1 to December 31, 2014
Gross sales
Less: Sales returns and allowances
Sales discount
Net sales
Cost of goods sold:
Merchandise inventory, May 1
Purchases
Less: Purchase returns and allow. P4,000
Purchase discount
1,000
Merchandise available for sale
Less Merchandise inventory, December 31
Gross profit
Operating expenses:
Selling expenses
General expenses
Uncollectible accounts expense
Depreciation - furniture and fixtures
Operating income
Other revenue and expense items:
Interest income
Interest expense
Income from trustee's operations
Corporation revenue and expense items:
Corporation expenses:
Interest expense on notes, old
Corporation losses:
Loss on notes receivable, old
Loss on accrued int. on NR, old
Total corporation expenses and losses
Less corporation gains:
Gain on sale of Dick Corp. stock
Net corporation loss
Decrease in retained earnings
P280,000
P 6,000
8,000
14,000
P266,000
P 80,000
P160,000
5,000
155,000
P235,000
66,500
P 37,500
47,200
2,200
2,000
P
P 1,000
17,400
P2,000
200
520
400
168,500
P 97,500
88,900
P 8,600
120
P 8,720
P 18,400
2,200
P20,600
4,000
16,600
P 7,880
Problem 6 -2
Requirement 1
Trustee's Books
a.
b1.
Cash
Cash Surrender Value of Life Insurance
Cory and Fidel, Debtors
8,000
7,500
56,900
35,200
3,600
9,400
Accounts Receivable Pledged

40,000
600
120,000
40,000
b2
b3.
b4.
b5.
b6.
b7.
b8.
b9.
b10.
b11.
b12.
b13.
b14.
b15.
c1.
c2.
page 8
Cash
Interest and Finance Charges
Loan from Acro Finance Company
Loan: P28,800/(100% - 4%) = P30,000
28,800
1,200
Partnership Liability Paid - Notes Payable, Old

Partnership Liability Paid - Accrued Int. on NP
Partnership - Interest Expense on Notes, Old
Cash
15,000
600
100
Cash
Partnership - Uncollectible Accounts Expense
Accounts Receivable, Old (P56,900 - P40,000 pledged)
15,000
1,900
Cash
30,000
15,700
16,900
5,000
2,500
7,500
Partnership Liability Paid - Accounts Payable, Old

Cash
Installment Notes Payable
69,400
Cash
Accounts Receivable Pledged
40,000
Loan from Acro Finance Company

Cash
Interest = P30,000 x 6% x 2/12 = P300.
30,000
300
Purchases
Accounts Payable
80,000
31,000
38,400
40,000
30,300
80,000
Accounts Receivable
Sales
150,000
Operating Expenses
Cash
25,000
Installment Notes Payable (P3,200 x 11)

Partnership - Interest Expense on Installment Notes
Cash
FV of installment notes = P38,400/12 = P3,200
Interest = P3,200 x 5% [1/12(1+2+3+4+5+6+7+8+
9+10+11)] = P880
35,200
880
Trustee's Expenses and Fees

Cash
Due to Ferdie, Trustee
13,000
Cash
Accounts Receivable
Accounts Payable
Cash
Operating Expenses
Accrued Operating Expenses
Income Summary
150,000
25,000
36,080
7,000
6,000
122,800
122,800
56,000
56,000
1,520
1,520
35,200
35,200
c3.
c4.
c5.
c6.
c7.
c8.
c9.
c10.
d.
Income Summary
P27,200 x 5% = P1,360
Partnership - Interest Expense on Installment Notes
P3,200 x 5% = P160
Sales
Purchases
Operating Expenses
Trustee's Expenses and Fees
Income Summary
Income Summary
Partnership - Interest Expense on Notes, Old
Partnership - Interest on Installment Notes
page 9
33,000
33,000
360
360
1,360
1,360
160
160
150,000
80,000
26,520
13,000
360
1,360
1,500
27,260
5,540
100
4,400
1,040
Income Summary
Cornie and Fidelie, Debtor
19,520

Partnership Liability Paid - Notes Payable, Old
Partnership Liability Paid - Accrued Int. on NP
Partnership Liability Paid - Accounts Payable, Old
85,000

Accounts Payable
Accrued Interest on Installment Notes
Due to Ferdinie, Trustee
Cash
Accounts Receivable
54,520
24,000
3,200
160
1,520
6,000
1,360
960
19,520
15,000
600
69,400
18,520
27,200
33,000
3,600
9,400
Partnership Books
(The transactions on the partnership books are numbered to correspond with
the transactions on the trustee's books)

a.
Ferdinie, Trustee
Cash
Notes Receivable
Accounts Receivable
120,000
600
8,000
7,500
56,900
35,200
3,600
page 10

b3.
b6.
c.
d.
9,400
Notes Payable
Ferdinie, Trustee
15,000
600
Accounts Payable
Ferdinie, Trustee
69,400
Ferdinie, Trustee
Cornie, Capital (P19,520 x 20/35)
Fidelie, Capital (P19,520 x 15/35)
19,520
Cash
Accounts Receivable
Accounts Payable
Accrued Interest on Installment Notes
Due to Ferdie, Trustee
Ferdinie, Trustee
18,520
27,200
33,000
3,600
9,400
15,600
69,400
11,154
8,366
1,360
960
24,000
3,200
160
1,520
6,000
54,520
Problem 6 -2 Requirement 2(a)

Cornie and Fidelie,, Debtor
Ferdinie, Trustee
June 30, 2015
Assets
Current assets:
Cash
Accounts receivable
Long-term investment:
Cash surrender value of life insurance
Furniture and fixtures
Total assets
P 18,520
P27,200
1,360
25.840
33,000
P 77,360
9,400
P 3,600
960
2,640
P 89,400
Liabilities and Partners' Capital

Liabilities:
Accounts payable
Installment on notes payable
Accrued interest on installment notes
Due to Ferdinie, Trustee
Total liabilities
Partners' capital:
Cornie, capital
Fidelie, capital
Total partners' capital
Total liabilities and partners' capital
P 24,000
3,200
160
6,000
P 34,880
P 31,154
23,366
54,520
P 89,400
page 11
Problem 6 - 2 (Req. 2b)

Ferdinie, Trustee
Income Statement
For the Fiscal Year Ended June 30, 2015
Sales
Cost of goods sold:
Merchandise inventory, July 1, 2014
Purchases
Less Merchandise inventory, June 30, 2005
Gross profit
Operating expenses
Operating income
Other expenses:
Interest and finance charges
Partnership revenue and expense items:
Interest expense on notes, old
Interest expense on installment notes
Increase in partners' capital
P150,000
P 35,200
80,000
P115,200
33,000
82,200
P67,800
41,240
P26,560
1,500
P25,060
P 4,400
100
1,040
5,540
P19,520
Problem 6 - 3
Winala Stores, Inc. Debtor
Pamana, Trustee
Income Statement
For Six Months Ended December 31, 2014
Sales
Cost of goods sold:
Merchandise inventory, July 1
Purchases
Less Merchandise inventory, December 31
Gross profit
Operating expenses:
Selling expenses
General expenses
Depreciation
Trustee's expenses
Interest expense
Total corporation expenses
Increase in retained earnings
P401,000
P 50,600
252,800
P303,400
41,500
P 45,600
28,220
10,980
3,000
261,900
P139,100
87,800
P 51,300
P 8,000
15,000
23,000
P 28,300
page 12
Winala Stores, Inc. Debtor

Pamana, Trustee
December 31, 2014
Assets
Current assets:
Cash
Accounts receivable, old
Accounts receivable, new
Fixtures
Intangible asset:
Trademark
Total assets
P 56,840
75,600
79,360
41,500
P183,000
35,000
P253,300
148,000
25,000
P426,300
Liabilities
Accounts payable, new
Mortgage payable
Total liabilities
P 39,200
100,000
P139,200
Shareholders' Equity
Share capital
Less Deficit
Total shareholders' equity
Total liabilities and shareholders' equity
P300,000
12,900
287,100
P426,300
Problem 6-4
Universal Company, Debtor
P. Cesar, Trustee
Balance Sheet
November 20, 2014
Assets
Cash
Accounts receivable
Total assets
P268,400
P800
800
-----P268,400
Liabilities
Bank overdraft
Accounts Payable
Bank loans
Poker, Inc.
Acceptances
Total liabilities
P 2,000
226,000
210,000
60,000
46,000
P544,000
Shareholders' Equity (Deficiency)

Contributed capital:
Preference shares
Ordinary shares
Total contributed capital
Retained earnings - deficit
Total shareholders' equity (deficiency)
Total liabilities and shareholders' equity
Universal Company, Debtor
P200,000
200,000
P400,000
675,600
(275,600)
P268,400
page 13
P. Cesar, Trustee
Income Statement
For the Period April 28 to November 20, 2014
Sales
Cost of goods sold
Gross profit
Operating and general expenses (including materials and
supplies used, P18,000)
Operating loss
Other revenue:
Rental income
Unclaimed wages
Interest income
Loss from trustee's operations
Corporation losses:
Loss on cancellation of insurance
Loss on realization of goods and supplies
Loss on sale of machinery and equipment
Interest on city taxes
P150,000
120,000
P 30,000
140,000
P110,000
P 2,000
1,000
400
1,400
42,000
540,000
800
P584,200
Interest on mortgage
Less Corporation gains:
Proceeds from surrender of insurance
policy on life of manager
Gain from reduction of accounts payable
Gain on machinery lease settlement
Decrease in retained earnings
3,400
P106,600
4,000
800
P589,000
P2,000
14,000
4,000
20,000
569,000
P675,600

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1

Corporation Liability paid - Accounts Payable, Old

Trustee's Certificates Payable

Corporation Liability Paid - Notes Payable, Old

*Corporation Uncollectible Accounts Expense

Rowina Co. - Debtor

Loss on Sale of Investments

Henry Ly, Trustee

Chapter 6 AA2 (2014 edition)

Corporation Liability Paid - Notes Payable, Old

Corporation Liability Paid - Bonds Payable

Gain on Sale of Investments

Chapter 6 AA2 (2014 edition)

Profit from Trusteeship Operations

Corporation Liability Paid - Mortgage Note, Old

Corporation Liability Paid - Trade Accounts Payable

Panther Co., Debtor

Trade Accounts Payable

Chapter 6 AA2 (2014 edition)

Corporation Liability Paid- Notes Payable, Old

Corporation Liability Paid - Accounts Payable, Old

Uncollectible Accounts Expense (P110,000 x 2%)

Depreciation - Furniture and Fixtures

Chapter 6 AA2 (2014 edition)

Slowly Corp., Debtor

Slowly Corp., Debtor

Chapter 6 AA2 (2014 edition)

Liabilities and Shareholders' Equity

Chapter 6 AA2 (2014 edition)

Accounts Receivable Pledged

Chapter 6 AA2 (2014 edition)

Partnership Liability Paid - Notes Payable, Old

Partnership Liability Paid - Accounts Payable, Old

Loan from Acro Finance Company

Installment Notes Payable (P3,200 x 11)

Trustee's Expenses and Fees

Chapter 6 AA2 (2014 edition)

Cornie and Fidelie, Debtor

Cornie and Fidelie, Debtor

the transactions on the trustee's books)

Chapter 6 AA2 (2014 edition)

Cash Surrender Value of Life Insurance

Problem 6 -2 Requirement 2(a)

Liabilities and Partners' Capital

Chapter 6 AA2 (2014 edition)

Problem 6 - 2 (Req. 2b)

Chapter 6 AA2 (2014 edition)

Winala Stores, Inc. Debtor

Shareholders' Equity (Deficiency)

Chapter 6 AA2 (2014 edition)

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