Sheena Loryne O.

Ulap

BSA 2-5 “INTERMEDIATE ACCOUNTING 3”

Problem 15-1

Given:

1-Jan 31-Dec
5,000,00
Total Assets 0 7,500,000
2,000,00
Total Liabilities 0 3,200,000
3,000,00
Equity 0 4,300,000

Share Capital 500,000

Share Premium 300,000

Dividends Declared 250,000

What is Ask? Net income for the current year

Sol'n:

Increase in Equity 1,300,000

Dividend Paid 250,000

Total 1,550,000

Less: Price of Share Capital 500,000

Price of Share Premium 300,000 800,000

Net Income 750,000 C

Problem 15-2

Given:
 2018 2019

Share Capital 5,000,000 5,750,000

Share Premium 1,000,000 1,500,000

Retained Earnings 3,500,000 4,500,000

Cash Dividends Declared 1,000,000

What is Ask? Net income for the current year

Sol'n:

Increase in Share Capital 750,000

Increase in Share Premium 500,000

Share Dividend 1,250,000

RE- Dec 31,2019 4,500,000

Share Dividend 1,250,000

Cash Dividends Declared 1,000,000

Total 6,750,000

RE- Dec 31,2018 3,500,000

Net Income-2019 3,250,000 A

Problem 15-3

Given:

Shareholder's Equity 4,000,000

Overstatement of Inventory 200,000

Dividends Declared 400,000

Share Capital 3,000,000

Net Income 700,000

What is Ask? RE- beg (Jan 1)

Sol'n:

Total Shareholder's Equity 4,000,000

Less: Share Capital 3,000,000

RE- Dec 31,2019 1,000,000

RE- Dec 31,2019 1,000,000

Add:Dividends Declared 400,000

Total 1,400,000

Less: Net Income 700,000

Corrected beg bal. 700,000

Add: Overstatement of Inventory 200,000

RE-Jan 1 (squeeze) 900,000 B

Problem 15-4

Given:

Shareholder's Equity 5,000,000

Share Capital 3,000,000

Overdepreciation 100,000

Gain on sale- TS 300,000

Dividends Declared 600,000

Net Income 800,000

What is Ask? RE- beg (Jan 1)

Sol'n:

Total Shareholder's Equity 5,000,000

Less: Share Capital 3,000,000

Share premium -TS 300,000 3,300,000

RE- Dec 31,2019 1,700,000

RE- Dec 31,2019 1,700,000

Add:Dividends Declared 600,000

Total 2,300,000

Less: Net Income 800,000

Overdepreciation 100,000 900,000

RE-Jan 1 (squeeze) 1,400,000 A

Problem 15-5

Given:

Assets 8,900,000

Liabilities 2,700,000

Share Capital 6,000,000

Share Premium 600,000

Dividend Paid 1,300,000

What is Ask? Net income for the current year

Sol'n:

Increase in Assets 8,900,000

Decrease in Liability 2,700,000

Net Increase in Equity 6,200,000

Add: Dividends 1,300,000

Total 7,500,000

Less: Increase in Share Capital 6,000,000

Increase in Share Premium 600,000 6,600,000

Net Income 900,000 C

Problem 15-6

Given:

Cash 800,000

Accounts Receivable -400,000

Inventory 300,000

Equipment 950,000

Note Payable-bank 500,000

Accounts Payable -600,000

Share Capital 700,000

Share Premium 300,000

Cash Dividend 1,500,000

Understatement of Inventory 250,000

What is Ask? Net income for the current year

Sol'n:

Increase in Cash 800,000

Decrease in Accounts Receivable -400,000

Increase in Inventory 300,000

Increase in Equipment 950,000

Increase in Note Payable-bank -500,000

Decrease in Accounts Payable 600,000

Net Increase in Equity 1,750,000

Add: Cash Dividend 1,500,000

Understatement of Inventory 250,000

Total 3,500,000

Less: Increase in Share Capital 700,000

Increase in Share Premium 300,000 1,000,000

Net Income 2,500,000 B

Problem 15-7

Given:

Beg End Total

Assets 200,000
1,000,00
Liabilities 0 840,000

Owner's Equity 2,600,000

Excess of SC issued on Dividends Paid 240,000

What is ask? Net Income or Loss for the year

Sol'n:

Increase in Assets 200,000

Decrease in Liability 160,000

Increase in Owner's Equity 40,000

Less: Excess of SC issued on Div. Paid 240,000

Net Loss -200,000 C

Problem 15-8

Given:

Cash 800,000

Accounts Receivable,net 250,000

Inventory 1,250,000

Investment -500,000

Bonds Payable 900,000

Accounts Payable -400,000

Share Capital 1,000,000

Share Premium 100,000

Dividend Declared 300,000

What is Ask? Net income for the current year

Sol'n:

Increase in Cash 800,000

Increase in Accounts Receivable 250,000

Increase in Inventory 1,250,000

Decrease in Investment -500,000

Increase in Bonds Payable -900,000

Decrease in Accounts Payable 400,000

Net Increase in Equity 1,300,000

Add: Dividend Declared 300,000

Total 1,600,000

Less: Increase in Share Capital 1,000,000

Increase in Share Premium 100,000 1,100,000

Net Income 500,000 C

Problem 15-9
What is Ask? Net income for the current year
Sol'n:

Increase in Cash 1,500,000

Increase in Accounts Receivable 3,500,000
Increase in Inventory 3,900,000
-
Decrease in Investments 1,000,000
Increase in Equipment 3,000,000
Decrease in Accounts
Payable 800,000
-
Increase in Bonds Payable 2,000,000
Net Increase in Equity 9,700,000
Add: Dividends Paid 4,500,000
14,200,00
Total 0
Less: Increase in Contributed Capital (100,000 x
30) 3,000,000
Increase in Donated Capital 2,000,000
Income 9,200,000
4,000,00
Less: Borrowings 0
1,000,00
Payment-note 0 3,000,000
6,200,000
Less: Interest Expense 400,000
Interest Payable-beg 100,000 300,000
Net Income 5,900,000 C

Problem 15-10
Given:

Increase in Cash 450,000

Decrease in Accounts Receivable -300,000
Increase in Merchandise Inventory 200,000
Increase in Accounts Payable -100,000
Increase in Prepaid Expense 20,000
Increase in Accrued Expense -40,000
Decrease in Unearned Rental Revenue 30,000
Net Increase in Equity 260,000
Less: Financial Assets for the purchase
of
merchandise 500,000
Withdrawals 100,000 400,000
Net Loss -140,000 D

Problem 15-11
Given:

Net Loss 100,000

Total Assets -Dec
31 3,000,000
Share Capital- Dec 31 1,000,000
Share Premium 500,000
Dividends Declared 700,000
Debt to equity ratio (L/E) 50%

What is Ask? Retained Earnings on Jan 1

Sol'n:

Shareholder's Equity (3M/150%) 2,000,000

Contributed Capital:
Share Capital 1,000,000
Share Premium 500,000 1,500,000
Retained Earnings- Dec 31 500,000
Total Assets 3,000,000 150%
Total Liability 1,000,000 50%
Shareholder's
Equity 2,000,000 100%

Retained Earnings- Dec 31 500,000

Add: Dividends Declared 700,000
Net Loss 100,000 800,000
Retained Earnings- Jan 1 1,300,000 B

Problem 15-12 "JAVA COMPANY"

What is Ask? Net income for the current year
Sol'n:

Increase in Cash 1,500,000

Increase in Accounts Receivable 3,500,000
Increase in Inventory 3,900,000
Decrease in Investment -1,000,000
Increase in Equipment 3,000,000
Decrease in Accounts Payable 800,000
Increase in Bonds Payable -2,000,000
Net Increase in Equity 9,700,000
Add: Dividends Paid 1,500,000
Total 11,200,000
Less: Increase in Contributed Capital (100,000 x 30) 3,000,000
Increase in Donated Capital 2,000,000 5,000,000
Net Income 16,200,000 A

Problem 15-13

1. Purchases for the year

Sol'n

Accounts Payable- Dec 31 750,000

Add: Payments to creditors 2,000,000

Total Purchases 2,750,000 B

2. Less: Unadjusted debit balance of

 merchandise account 700,000

Sales for the year 2,050,000 B

3. Cash balance at year end

Sol'n

Cash- Jan 1 (Investment) 2,000,000

Collections of AR (2,050,000-600,000) 1,450,000

Total 3,450,000

Less: Payment of Accounts Payable 2,000,000

Payment of expenses 100,000 2,100,000

Cash-
December 31 1,350,000 A

4. Merchandise Inventory at year end

Sol'n

Sales

Cost of Sales 2,050,000

Purchases 2,750,000

MI-December 31 (squeeze) 450,000 B 2,300,000

Gross Loss -250,000

Expenses -100,000

Net Loss -350,000

Problem 15-14 "LANCER COMPANY"

Assets 31-Dec 1-Jan

Cash 1,600,000 1,200,000

Notes Receivable 1,200,000 400,000

Accounts Receivable 2,000,000 1,600,000

Merchandise Inventory 960,000 1,600,000

Equipment 1,120,000 1,200,000

Total 6,880,000 6,000,000

Liabilities

Notes Payable 480,000 720,000

Accounts Payable 1,040,000 1,200,000

Accrued Interest Payable 40,000 80,000

Unearned rent Income 40,000 120,000

Total 1,600,000 2,120,000

Capital Balance 5,280,000 3,880,000

Balance January 1 1,200,000

Receipts:

Accounts Receivable 3,000,000

Notes Receivable 960,000

Cash Sales 800,000

Rent Income 80,000

Sale of equiptment costing 200,000 120,000

and carrying amount of 100,000

Investment 600,000 5,560,000

Total 6,760,000

Payments:
Accounts Payable 1,520,000

Notes Payable 1,280,000

Cash purchases 600,000

Interest Expense 160,000

Expenses 800,000

Equipment 400,000

Withdrawals 400,000 5,160,000

Balance Dec 31 11,920,000

Accounts written off as uncollectible 120,000

Sales Returns 320,000

Purchase allowance on merchandise 80,000

Sol'n for Net Income

Capital- Dec 31 5,280,000

Add: withdrawals 400,000

Total 5,680,000

Less: Capital- Jan 1 3,880,000

Additional Investment 600,000 4,480,000

Net Income 1,200,000

LANCER COMPANY

INCOME STATEMENT
 For the year ended December 31, 2019

Net Sales (Note 1) 6,080,000

Cost of goods sold (Note 2) 3,640,000

Gross Income 2,440,000

Other Income (Note 3) 180,000

Total Income 2,620,000

Expenses:

Expenses 800,000

Depreciation 380,000

Bad debts 120,000

Interest Expense 120,000 1,420,000

Net Income 1,200,000

Note 1

Sales 6,400,000

Sales discounts 0

Sales returns 320,000

Net sales 6,080,000

Note 2
Merchandise Inventory-Jan
1 1,600,000

Purchases 3,080,000

Purchase D/A 80,000 3,000,000

Goods Available for sale 4,600,000

Less: MI- Dec 31 960,000

Cost of Goods Sold 3,640,000

Note 3

Rent Income 160,000

Gain on sale on equipment 20,000

Total Other Income 180,000

Problem 15-15 "COROLLA COMPANY''

Computation of Net Income

RE-Dec 31 600,000
Add: Dividends 400,000
1,000,00
Total 0
Less: RE-Jan 1 500,000
Net Income 500,000

Computation of Sales
Notes Receivable- Dec 31 210,000
Accounts Receivable- Dec 31 950,000
2,950,00
Collection from customers 0
Note Receivable Discounted 190,000
4,300,00
Total 0
Less: Notes Receivable- Jan 1 200,000
Accounts Receivable- Jan 1 740,000 940,000
3,360,00
Sales on Account 0

Computation of Purchases
Notes Payable- Dec 31 580,000
Less: Note Payable -bank 300,000
Notes Payable Trade 280,000
Add: Accounts Payable- Dec
31 750,000
2,850,00
Payment to creditors 2,100,000 0
Total 3,130,00
 0
Less:Notes Payable- Jan 1 750,000
1,350,00
Accounts Payable - Jan 1 600,000 0
1,780,00
Purchases on Account 0

Computation of Expenses
Expense Paid 790,000
Add: Prepaid Expenses- Jan 1 120,000
Accrued Expense- Dec 31 50,000 170,000
Total 960,000
Less: Prepaid Expenses- Dec
31 100,000
Accrued Expense- Jan 1 40,000 140,000
Expenses 820,000

Computation of Depreciation
1,000,00
Equipment- Jan 1 0

Add: Equipment acquired 280,000

1,280,00
Total 0
1,200,00
Less: Equipment- Dec 31 0

Depreciation 80,000

Computation of Interest Expense

Interest Accrued on bank note payable

(300,000 x 12% x 10/12 ) = 30,000

Loss on note discounting

FV of note discounted 200,000

Proceeds from discounting 190,000

Loss on discounting 10,000

Loss on sale of Investment

Sale Price 250,000

Less: Cost on Investment Sold

400,00
Investment- Jan 1 0
100,00
Investment- Dec 31 0 300,000

Loss on sale of Investment -50,000

COROLLA COMPANY
INCOME STATEMENT
For the year ended December 31, 2019

Sales 3,360,000
Cost of goods sold (Note
1) 1,880,000
Gross Income 1,480,000
Expenses:
Expenses 790,000
Depreciation 80,000
Loss in sale of investment 50,000
Loss on note discounting 10,000
Interest Expense 30,000 960,000
Net Income 500,000

Note 2
Inventory-Jan 1 1,600,000
Add: Purchases 1,780,000
Goods Available for sale 3,380,000
Less: Inventory- Dec 31 1,500,000
Cost of Goods Sold 1,880,000