Part 2

Mikay Company reported the following liability account balances on December 31,
2017:

Accounts payable 1,900,000

Bonds payable, due December 31, 2018 3,400,000

Discount on bonds payable 200,000

Deferred tax liability 400,000

Dividends payable 500,000

Income tax payable 900,000

Note payable, due January 31, 2019 600,000

The deferred tax liability is based on temporary differences that will reverse in 2019.

21. On December 31, 2017, what total amount should be reported as current liabilities?

a. 7,100,000

b. 6,700,000

c. 6,500,000

d. 6,900,000

22. Bright Company provided the following information on December 31, 2017:

Accounts payable 550,000

Notes Payable, 8% unsecured, due July 1, 2018 4,000,000

Accrued expenses 350,000

Contingent liability 450,000

Deferred tax liability 250,000

Senior bonds payable, 7% due March 31, 2018 5,000,000

The contingent liability is an accrual for possible loss on a 1,000,000 lawsuit filed
against the entity.

The legal counsel expects the suit to be settled in 2018 and has estimated that the
entity will be liable for damages in the range of 450,000 to 750,000.

The deferred tax liability is not related to an asset for financial reporting and is
expected to reverse in 2018.

What total amount should be reported as current liabilities on December 31, 2017?

a. 10,350,000

b. 10,150,000

c. 9,900,000

d. 4,900,000

Burma Company disclosed the following information:

Accounts payable, after deducting debit balances

in suppliers’ accounts amounting to 100,000 4,000,000

Accrued expenses 1,500,000

Credit balances of customers’ accounts 500,000

Share dividend payable 1,000,000

Claims for increase in wages and allowance by employees of the

entity, covered in a pending lawsuit 400,000

Estimated expenses in redeeming prize coupons 600,000

23. What amount should be reported as total current liabilities?

a. 6,700,000

b. 6,600,000

c. 7,100,000

d. 7,700,000

24. Wilem Company reported the following liabilities on December 31, 2017:

Accounts payable 750,000

Short-term borrowings 400,000

Bonds payable 3,000,000

Premium on bonds payable 200,000

Mortgage payable, current portion 500,000 3,500,000

Bank loan, due June 30, 2018 1,000,000

The 1,000,000 bank loan was refinanced with a 5-year loan on December 31, 2017.
The financial statements were issued March 1, 2018.

What total amount should be reported as current liabilities on December 31, 2017?

a. 2,650,000

b. 2,850,000

c. 5,350,000

d. 4,850,000

24. On December 31, 2017, Jam Company had 4,000,000 note payable that is due on
February 28, 2018. The entity borrowed 3,000,000 on February 25, 2018 which has a
five year term and used the proceeds to pay down the note and used other case to pay
the balance. The financial statement were issued on March 31, 2018.

What amount of the note payable should be classified as current on December 31,
2017?

a. 4,000,000

b. 3,000,000

c. 1,000,000

d. 0

25. Kalinga Company provided the following information at yea-end:

Share capital 15,000,000

Share premium 5,000,000

Treasury shares, at cost 2,000,000

Actuarial loss on defined benefit plan 1,000,000

Retained earnings unappropriated 6,000,000

Retained earnings appropriated 3,000,000

Revaluation surplus 4,000,000

Cumulative translation adjustment- credit 1,500,000

What amount should be reported as total shareholders’ equity?

a. 31,500,000

b. 32,500,000

c. 28,500,000

d. 25,500,000

26. Silver Company provided the following information at year-end:

Share premium 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 10,000,000

Total expenses 7,800,000

Treasury shares at cost - ordinary 500,000

Dividends 700,000

Retained earnings - January 1 1,000,000

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

a. 8,000,000

b. 8,500.000

c. 5.800,000

d. 8,700,000

27. Mont Company reported net assets totalling 8,750,000 at year-end which included
the following:

Treasury shares of Mont Company at cost 250,000

Idle machinery 100,000

Trademark 150,000

Allowance for inventory writedown 200,000

What amount should be reported as net assets at year-end?

a. 8,500,000

b. 8,400,000

c. 8,300,000

d. 8,200,000

28. Peach Company reported total assets of 8,500,000 at year-end which included the
following:

Treasury shares of Peach Company at cost 500,000

Unamortized patent 300,000

Cash surrender value of life insurance 150,000

Cumulative translation loss 250,000

What amount should be reported as total assets at year-end?

a. 8,000,000

b. 7,750,000

c. 8,500,000

d. 8,250,000

Gold Company provided the following trial balance on December 31, 2017:

Cash overdraft 100,000

Accounts receivable 350,000

Inventory 600,000

Prepaid expenses 100,000

Land classified as held for sale 1,100,000

PPE 950,000

Accounts payable 200,000

Accrued expenses 150,000

Ordinary share capital 1,500,000

Share premium 250,000

Retained Earnings 800,000

3,000,000 3,000,000

Checks amounting to Php 300,000 were written to vendors and recorded on December
29, 2017 resulting in a cash overdraft of 100,000. The checks were mailed on January
15, 2018.

Land classified as held for sale was sold for cash on January 31, 2018.

The entity issued the financial statements on March 31, 2018.

29. What total amount should be reported as current assets?

a. 2,250,000

b. 2,050,000

c. 1,950,000

d. 1,250,000

30. What total amount should be reported as current liabilities?

a. 650,000

b. 500,000

c. 350,000

d. 300,000

31. What is the total shareholders’ equity?

a. 2,550,000

b. 1,750,000

c. 1,500,000

d. 2,300,000

32. During the current year, Jane Company engaged in the following transactions :

Key management personnel compensation 2,000,000

Sales to affiliated entities 3,000,000

What total amount should be included as related party disclosures in Jane Company’s
separate financial statements for the current year?

a. 5,000,000

b. 3,000,000

c. 2,000,000

d. 0

33. During 2017, Marian Company was sued by a competitor for 5,000,000 for
infringement of patent. Based on the advice of the legal counsel, the entity accrued the
sum of 3,000,000 as a provision on December 31, 2017.

Subsequently, on March 15, 2018, the Supreme Court decided in favour of the party
alleging infringement of the patent and ordered the defendant to pay the aggrieved
party a sum of 3,500,000.

The financial statements were prepared by management on February 15, 2018 and
approved by the board of directors on March 31, 2018.

What amount should be recognized as accrued liability on December 31, 2017?

a. 5,000,000

b. 3,500,000

c. 3,000,000

d. 1,500,000

34. What amount should be adjusted on December 31, 2017 in relation to this event?

a. 1,500,000

b. 3,000,000

c. 500,000

d. 0

35. Charlene Company provided the following events that occurred after December 31,
2017:

1.15.2018. 3,000,000 of accounts receivable was written off due to the bankruptcy

of a major customer.

2.14.2018 A shipping vessel of the entity with carrying among of 5,000,000 was

completely lost at sea because of a hurricane.

3.11.2018. A court case involving the entity as the dependant was settled and the

entity was obligated to pay the plaintiff 1,500,000. The entity previously

has not recognized a liability for the because management deemed it

possible that the entity would lose the case.

3.15.2018. One of the entity’s factories with a carrying amount of 4,000,000 was

completely razed by forest fire that erupted in the vicinity.

The management completed the draft of the FS for 2017 on February 10, 2018. On
March 20, 2018, the board of directors authorized the fs for issue.

The entity announced the profit and other selected information on March 22, 2018. The
financial statements were approved by shareholders on April 2, 2018 and filed with the
regulatory agency the very next day.

What total amount should be reported as adjusting events on December 31, 2017?

a. 9,500,000

b. 8,500,000

c. 9,000,000

d. 4,500,000