Quiz 1

The accountant for BSA Company prepares the following condensed balance sheet:

BSA Company
Condensed Balance Sheet
December 31, 2018

Current Assets P 53,415

Less: Current Liabilities 29,000
Working Capital P 24,415
Add: Other Assets 75,120
P 99,535
Less: Other Liabilities 3,600
Investment in Business P 95,935

A review of the account balances disclosed the following data:

a) An analysis of the current asset grouping revealed the following:
Cash P 10,600
Accounts receivable (fully collectible) 12,500
Notes receivable* 1,000
Investment securities - trading, at cost (Market value, P2,575) 4,250
Inventory 20,965
Cash surrender value of life insurance on officer’s lives 4,100
Total current assets P 53,415

*notes of customer who has been declared bankrupt and is unable to pay
anything on the obligations
The inventory account was found to include supplies costing P425, a
delivery truck acquired at the end of 2018 at a cost of P2,100, and fixtures at a
depreciated value of P10,400. The fixtures had been acquired in 2012 at a cost of
P12,500.

b) The total for other assets was determined as follows”

Land and buildings at cost of acquisition, July 1, 2016 P 92,000
Less balance due on mortgage, P16,000, and accrued
interest on mortgage, P880** 16,880
Total other assets P 75,120

**mortgage is payable in annual installments of P4,000 on July 1 of each

year together with interest for the year at that time at 11%

It was estimated that the land at the time of the purchase was worth
P30,000. Buildings as of December 31, 2018 were estimated to have a remaining
life of 17 ½ years.

c) Current liabilities represented balances that were payable to trade creditors.

 d) Other liabilities consisted of withholding, payroll, real estate, and other taxes
payable to the national and local governments. However, no recognition was
given the accrued salaries, utilities and other miscellaneous items totaling P350.
e) The company was originally organized in 2011 when 5,000 shares of no-par with
a stated value of P5 per share were issued in exchange for business assets that
were recognized on the books at their fair market value of P55,000.

Required: Prepare a corrected balance sheet with the items properly classified.