Dear 124 students,

Please submit by Friday in your respective time.

F/S Preparation following notes to FS and line item presentation of Encantadia Company.

Problem 1

The following relates to balances of Encantadia Company for December 31, 2018 before the additional
transactions below were provided:
Debit Credit

Freight in 20,000
Cash in Bank – savings 300,000
Cash in Bank – current 1,000,000
Claims receivable 300,000
Petty Cash Fund 30,000
Sales 3,888,000
Investment in Equity securities 10,000 shares 1,200,000
3 years time deposit – BPI 400,000
Trading Securities 500,000
Treasury Bills 600,000
Bondspayable due annually at 1,000,000 10,000,000
Notes receivable 1,100,000
Delivery expense 6,000
Accounts receivable 2,000,000
Allow. For doubtful accounts 200,000
Sales returns 60,000
Sales discount 40,000
Subscriptions receivable collectible currently 250,000
Advances of officers & employees (payroll deduction) 100,000
Purchase discounts 30,000
Advances to affiliates 1,000,000
Financial Asset at FV through OCI 1,350,000
Office supplies expense 2,000
Advances to suppliers 50,000
Merchandise inventory,Dec.31 500,000
Unused supplies 20,000
Prepaid advertising 60,000
Long term Refundable deposit 80,000
Sales salaries 130,000
Patent 300,000
Land held for speculation 1,000,000
Land 1,400,000
Depreciation expense(40% store,60% office eqpt) 800,000
Building 2,200,000
Furnitures and Fixtures 900,000
Store Supplies expense 3,000
Accumulated depreciation – F and F 200,000
Delivery Truck 1,800,000
Accumulated dep’n – Del. Truck 300,000
Loans payable - short term 300,000
Accumulated depreciation – building 300,000
Accrued expenses 50,000
Estimated liability for lawsuit 100,000
Light and water expense 4,000
Accounts payable 350,000
Taxes and licenses 3,000
Warranty Liability 40,000
SSS/PHIC/ payable 60,000
Purchase returns 70,000
VAT payable 100,000
Estimated Premiums liability 90,000
Bonds payable – 5 year term bonds 3,400,000
Deferred Tax liability that will reverse early in January, 2019 700,000
Ordinary Shares Par 100 1,800,000
Share premium 500,000
Purchases 2,300,000
Office salaries 120,000
Retained Earnings, Unappropriated ? Net Income result less approp
Retained Earnings appropriated (AJE # 3) ?
Investment in bonds, 2 year term, 12%, dated Jan.1, pays annual interest
Every December 31, Face value 1,000,000 purchased at 105 1,050,000

Additional transactions for November to December 31 are as follows; not yet reflected.
1. Trading securities has Fair market value on December 31, 2018 of 460,000.

2. 5,000 shares of Investment in equity securities has been sold for 700,000 on November 18,
2018. Cash is deposited in its savings account.
3. Appropriated 200,000 of retained earnings on December 31.
Suggested entry: Retained earnings - xxx
Appropriated retained earnings - xxx

4. Financial asset at fair value through OCI Fair market value is 1,500,000.
5. Amortization of bonds and the receipt of interest on December 31. (straight line
amortization)
6. Inventories net realizable value amounted to 485,000.
Suggested Adjustment: Loss on inventory writedown - xxx
Allowance for inventory writedown - xxx

Suggested line items:

For Current Assets:

Cash and cash equivalents
Trading Securities
Trade and Other receivables
Inventories
Prepaid Expenses

For Non Current Assets:

Property, plant, and equipment
Long-term investments
Investment Proprty
Intangible assets
Other noncurrent assets

For Current Liabilities:

Trade and other payable
Current portion of bonds payable
Loans payable – short term
Current provision

For Non current Liabilities:

Non current portion of LT debt
Deferred tax liability
Long term deferred revenues

For Shareholder’s equity:

Share capital, P100 par

Reserves
UG – OCI
Retained earnings