December-12

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UNIVERSITY OF LUZON

COLLEGE OF ACCOUNTANCY
DAGUPAN CITY

PRELIMINARY EXAMINATION IN FAR 3

INSTRUCTION: Show the solution in good form.

NAME: ________________________________ SCORE:________________


SCHEDULE: ____________________________ PERMIT #:______________

INSTRUCTION: Show the solution in good form.


1. The following information pertains to Alena Company on December 31, of the current year:

Property, Plant and Equipment P 35,000,000


Accounts receivable 20,000,000
Prepaid insurance 2,500,000
Short-term note payable 3,000,000
Cash 5,000,000
Bonds payable 40,000,000
Land 20,000,000
Accounts payable 8,000,000
Allowance for doubtful accounts 1,000,000
Merchandise inventory 13,000,000
Wages payable 2,000,000
Premium on bonds payable 3,000,000

What is the correct amount of current assets and current liabilities?


What is the working capital?

2. The following data are provided by Moonlight on December 31, 2017:

Cash in general checking amount P 500,000


Sinking fund to be used to retire bonds in 2020 1,200,000
Cash held to pay value added taxes 300,000
Note receivable-due February 2019 2,200,000
Accounts receivable 2,100,000
Inventory 1,500,000
Prepaid insurance 300,000
Vacant land held as investment 5,000,000
Equipment classified as “held for sale” 200,000
Accounts payable 1,400,000
Value added taxes payable 300,000
Salaries payable 400,000
Note payable –due July 2018 800,000

What is the amount of working capital?

3. Ordinary share capital P 500,000


Dividends-ordinary share 1,000,000
Dividends-preference share 500,000
Share premium 1,000,000
Preference share capital 3,000,000
Income summary-credit balance 4,000,000
Retained earnings-January 1 2,500,000
Unearned rent income 150,000
Accrued expenses 200,000

What is the amount of retained earnings on December 31, 2017?


What is the total stockholders’ equity on December 31, 2017?
4. Gold Company provided the following information on December 31, 2017:

Share premium P 1,000,000


Accounts payable 1,100,000
Preference share capital, at par 2,000,000
Ordinary share capital, at par 3,000,000
Sales 15,000,000
Total expenses 7,800,000
Treasury shares-ordinary 500,000
Dividends 500,000
Retained earnings, January 1,000,000

What is the amount of retained earnings on December 31, 2017?


What total shareholders’ equity should be reported on December 31, 2017?

5. The adjusted trial balance of Benguet Company on December 31, 2017 include the following accounts:

Share capital P15,000,000


Share premium 5,000,000
Treasury shares, at cost 2,000,000
Actuarial loss fully recognized through other comprehensive 1,000,000
income
Retained earnings unappropriated 7,000,000
Retained earnings appropriated 4,000,000
Revaluation surplus 5,000,000
Cumulative translation adjustment- credit 2,000,000

What amount should be reported as total shareholders’ equity?

6. An analysis of Mexico Company’s liabilities disclosed the following:

Accounts payable, after deducting debit balances in suppliers’ P4,000,000


accounts amounting to P100,000
Accrued expenses 2,00,000
Credit balances of customers’ accounts 500,000
Stock dividends payable 1,000,000
Claims for increase in wages and allowances by employees of the 400,000
entity, covered in a pending lawsuit
Estimated expenses in redeeming prize coupons 600,000

What amount should be reported as total current liabilities?

7. The trial balances of Grand Company reflected the following liability account balances on December 31, 2017

Accounts payable P1,900,000


Bonds payable 3,400,000
Premium on bonds payable 200,000
Deferred tax liability 400,000
Dividends payable 700,000
Income tax payable 900,000
Note payable, due January 31, 2018 800,000

The deferred tax liability is based on temporary differences that will reverse in 2019?
In Grand’s December 31, 2017 statement of financial position, what amount should be reported as cuurent
liabilities?

8. The following account balances were gathered from Company’s adjusted trial balance on December 31, 2017:

Wages payable P 250,000


Cash 500,000
Mortgage payable 1,500,000
Dividends payable 150,000
Prepaid rent 100,000
Inventory 900,000
Dinking fund 500,000
Short-term investments 300,000
Taxes payable 220,000
Accounts receivable 550,000
Accounts payable 240,000

What total amount should be reported as current assets in Pandora Company’s statement of financial position?

9. The December 31, 2017 statement of financial position of Southern Company contained the following current
assets:

Cash P3,200,000
Accounts receivable 2,000,000
Inventory 2,800,000
Deferred charges 200,000

The accounts receivable consisted of the following items:

Customers’ accounts 1,420,000


Employees’ account-curent 240,000
Advances to subsidiary 2 60,000
Allowance for uncollectible accounts 120,000
Claim against shipper for goods lost In transit 200,000
2,000,000

What amount should Southern Company report as total current assets?

10. The following information is available from the records of Hondoras Company for the current year:

Beginning inventory P 400,000


Freight in 200 000
Purchase returns 800 000
Ending inventory 500,000
Selling expenses 1,250,000
Sales discount 250,000

The cost of goods sold is six times the selling expenses

What is the amount of gross purchases?

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