CHAPTER 2: STATEMENT OF FINANCIAL POSITION

Problem 2-1
Required: Prepare statement of financial position
DILEMMA COMPANY
Statement of Financial Position
December 31, 2021

DILEMMA COMPANY
Statement of Financial Position
December 31, 2021

ASSETS

Current assets: Note

Cash and cash equivalents P 800,000
Financial asset at fair value 440,000
Trade and other receivables (1) 700,000
Inventories 1,000,000
Prepaid expenses 160,000
Total current assets P 3,1,00,000

Noncurrent assets:
Property, plant and equipment (2) 6,700,000
Intangible assets (3) 200,000
Total noncurrent assets 6,900,000
Total assets P 10,000,000

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Trade and other payables (4) 1,200,000
Total current liabilities 1,200,000

Noncurrent liabilities:
Notes payable 250,000
Bonds payable (5) 1,800,000
Total noncurrent liabilities 2,050,000

Shareholders’ equity:
Share capital, P100 par 3,000,000
Reserves (6) 250,000
Retained Earnings (7) 3,750,000
Treasury shares (250,000)
Total shareholders’ equity 6,750,000

Total liabilities and shareholders’ equity P 10,000,000

Note 1 –Trade and other receivables

Accounts receivable 750,000
 Allowance for doubtful accounts (50,000)
Total trade and other receivables 700,000

Note 2 – Property, plant and equipment

Land 500,000
Building in process 5,000,000
Machinery and equipment 1,500,000
Total 7,000,000
Accumulated depreciation (300,000)
Carrying amount 6,700,000

Note 3 – Intangible assets

Patent 200,000
Total intangible asset 200,000

Note 4 – Trade and other payables

Accounts payable 900,000
Accrued expenses 150,000
Accrued interest on bonds payable (2M x 10% x 3/12) 50,000
Liability for loss on law suit 100,000
Total trade and other payables 1,200,000

Note 5 – Bonds Payable

Bonds payable 2,000,000
Discount on bonds payable (200,000)
1,800,000
Note 6 – Reserves
Appropriated for treasury shares 250,000
Total reserves 250,000

Note 7 – Retained earnings

Retained earnings 4,000,000
Canceled appropriation 150,000
Treasury appropriation (250,000)
Loss on lawsuit (100,000)
Accrued interest on bonds payable (2,000,000 x 10% / 12 x 3) (50,000)
Total retained earnings 3,750,000

PROBLEM 2 – 2
Required: Prepare statement of financial position with supporting notes and computation
SOCORRO COMPANY
 Statement of Financial Position
December 31, 2021

ASSETS

Current assets: Note

Cash and cash equivalents (1) P 700,000
Trade and other receivables (2) 700,000
Inventories 600,000
Prepaid expenses (3) 50,000
Total current assets P 2,050,000

Noncurrent assets:
Property, plant and equipment (4) 4,150,000
Long – term investment (5) 1,000,000
Investment property (6) 500,000
Intangible assets (7) 550,000
Other noncurrent assets (8) 450,000
Total noncurrent assets 6,650,000
Total assets P 8,700,000

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Trade and other payables (9) 820,000
Current portion of long-term debt 100,000
Total current liabilities 920,000

Noncurrent liabilities:
Noncurrent portion of long-term debt 400,000
Long-term deferred revenue – remaining 280,000
portion
Total noncurrent liabilities 680,000

Shareholders’ equity:
Share capital, P100 par (10) 5,150,000
Reserves (11) 1,050,000
Retained Earnings (12) 1,200,000
Treasury shares (300,000)
Total shareholders’ equity 7,100,000

Total liabilities and shareholders’ equity P 8,700,000

Note 1 – Cash and cash equivalents

Cash 500,000
Money market placement 200,000
Total 700,000

Note 2 –Trade and other receivables

Accounts receivable 750,000
Allowance for doubtful accounts 50,000
Total 700,000

Note 3 – Prepaid expenses

Store supplies 50,000
Total 50,000

Note 4 – Property, plant and equipment

Land 400,000
Building 3,500,000
Accumulated depreciation - building (500,000)
Equipment 1,000,000
Accumulated depreciation - equipment 250,000
Total 4,150,000

Note 5 – Long-term investment

Financial assets at amortized cost 1,000,000
Total 1,000,000

Note 6 – Investment property

Land held for undetermined use 500,000
Total 500,000

Note 7 – Intangible assets

Trademark 250,000
Patent 300,000
Total 550,000

Note 8 – Other noncurrent assets

Advances to officers 150,000
Restricted foreign deposit 300,000
Total 450,000

Note 9 – Trade and other payables

Accounts payable 500,000
Note payable 100,000
Income tax payable 150,000
Unearned leasehold income- current portion 70,000
Total 820,000

Note 10 – Share capital

Share capital, P100 par 5,000,000
Stock dividends payable 150,000
Total 5,150,000

Note 11 - Reserves
Share premium 250,000
Retained earnings appropriated for plant expansion 500,000
Retained earnings appropriated for treasury share 300,000
Total 1,050,000

Note 12 – Retained Earnings

Retained earnings 1,500,000
Appropriation for treasury shares (300,000)
Total 1,200,000
PROBLEM 2 - 3
Prepare in good form a properly classified statement of financial position with appropriate notes
MAGNA COMPANY
Statement of Financial Position
December 31, 2021

ASSETS

Current assets: Note

Cash and cash equivalents P 400,000
Financial assets at fair value 100,000
Trade and other receivables (1) 700,000
 Inventories 800,000
Prepaid expense 100,000
Total current assets P 2,100,000

Noncurrent assets:
Property, plant and equipment (2) 7,150,000
Long – term investment (3) 300,000
Intangible assets (4) 300,000
Total noncurrent assets 7,750,000
Total assets P 9,850,000

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Trade and other payables (5) 550,000
Notes payable – short term 450,000
Total current liabilities 1,000,000

Noncurrent liabilities:
Bonds payable (6) 1,900,000
Notes payable – Long term 300,000
Total noncurrent liabilities 2,200,000

Shareholders’ equity:
Share capital (7) 2,750,000
Reserves (8) 1,450,000
Retained Earnings 2,450,000
Total shareholders’ equity 6,650,000

Total liabilities and shareholders’ equity P 9,850,000

Note 1 –Trade and other receivables

Accounts receivable 750,000
Allowance for doubtful accounts 50,000
Total 700,000

Note 2 – Property, plant and equipment

Land 1,250,000
Land for future plant site 1,500,000
Building 5,000,000
Accumulated depreciation - building (1,600,000)
Equipment 1,400,000
Accumulated depreciation - equipment (400,000)
Total 7,150,000

Note 3 – Long-term investment

Investment in securities – short term 250,000
Cash surrender value of life insurance contract 50,000
Total 300,000

Note 4 – Intangible assets

Franchise 100,000
Goodwill 200,000
Total 300,000
 Note 5 – Trade and other payables
Accounts payables 400,000
Taxes payable 150,000
Total 550,000

Note 6 – Bonds payable

Bonds payable 2,000,000
Discount on bonds payable (100,000)
Total 1,900,000

Note 7 – Share capital

Preference share capital, P5 stated value 750,000
300,000 shares authorized, 150,000 shares issued
Ordinary share capital, P20 par value 2,000,000
400,000 shares authorized, 100,000 shares issued
Total 2,750,000

Note 8 - Reserves
Share premium - preference 250,000
Share premium - ordinary 1,000,000
Retained earnings appropriated for contingencies 200,000
Total 1,450,000

PROBLEM 2 – 4
Required: Prepare a statement of financial position
BORACAY COMPANY
Statement of Financial Position
December 31, 2021

ASSETS

Current assets: Note

Cash and cash equivalents (1) P 1,200,000
Financial assets at fair value 400,000
Trade and other receivables (2) 1,000,000
Inventories 1,000,000
Prepaid expense (3) 50,000
Total current assets P 3,650,000

Noncurrent assets:
Property, plant and equipment (4) 3,950,000
 Goodwill 100,000
Total noncurrent assets 4,050,000
Total assets P 7,700,000

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
Trade and other payables (5) 2,050,000
Total current liabilities 2,050,000

Noncurrent liabilities:
Mortgage payable 2,000,000
Total noncurrent liabilities 2,000,000

Shareholders’ equity:
Share capital 3,000,000
Reserves 200,000
Retained Earnings (6) 450,000
Total shareholders’ equity 3,650,000

Total liabilities and shareholders’ equity P 7,700,000

Note 1 – Cash and cash equivalents

Cash in bank 700,000
Money market placements – three months 500,000
Total 1,200,000

Note 2 – Trade and other receivables

Accounts receivable 800,000
Notes receivable 200,000
Total 1,000,000

Note 3 – Prepaid expense

Office supplies 50,000
Total 50,000

Note 4 – Property, plant and equipment

Land 1,000,000
Building 3,000,000
Accumulated depreciation - building ( 3M/ 20 x 2) (300,000)
Equipment 250,000
Total 3,950,000

Note 5 – Trade and other payables

Accounts payable 1,500,000
Withholding tax payable 100,000
Accrued salaries 250,000
Accrued interest payable 200,000
Total 2,050,000

Note 6 – Retained earnings

Net assets per book 4,200,000
 Contributed capital 3,200,000
Unadjusted retained earnings 1,000,000
Unrecorded expenses:
Salaries (250,000)
Depreciation on building (300,000)
Adjusted retained earnings 450,000

PROBLEM 2 – 5
Required: Prepare a properly classified statement of financial position
DAKAK COMPANY
Statement of Financial Position
December 31, 2021

ASSETS

Current assets: Note

Cash and cash equivalents 500,000
Financial assets held for trading 600,000
Trade and other receivables 750,000
Inventories 850,000
Total current assets 2,700,000

Noncurrent assets:
Property, plant and equipment (1) 4,000,000
Long-term investment (2) 2,250,000
Total noncurrent assets 6,250,000
Total assets 8,950,000

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:
 Trade and other payables (3) 1,500,000
Bonds payable – current portion 500,000
Total current liabilities 2,000,000

Noncurrent liabilities:
Bonds payable – remaining portion 1,500,000
Notes payable – due Dec. 31, 2023 800,000
Other noncurrent liability (4) 200,000
Total noncurrent liabilities 2,500,000

Shareholders’ equity:
Share capital, P 100 5,000,000
Share premium 500,000
Retained Earnings (5) 1,050,000
Total shareholders’ equity 4,450,000

Total liabilities and shareholders’ equity 8,950,000

Note 1 – Property, plant and equipment

Property, plant and equipment 6,000,000
Accumulated depreciation 2,000,000
Total 4,000,000

Note 2 – Long-term investment

Advances to subsidiary 2,250,000

Note 3 – Trade and other payables

Accounts payable 1,000,000
Accrued expenses 100,000
Customers’ deposit 400,000
Total 1,500,000

Note 4 – Other noncurrent liability

Advances from officers, not payable currently 200,000

Note 5 – Retained Earnings

Equity per book 4,800,000
Contributed capital 5,500,000
Unadjusted retained earnings (700,000)
Writeoff of goodwill (350,000)
Deficit (1,050,000)