AE14-CFAS

ACTIVITY -1

PROBLEMS

1. Pampanga Company’s December 31, 2023 statement of financial position reported the following current
assets:

Cash 3,000,000
Accounts receivable 5,200,000
Inventory 2,000,000
Prepaid expenses 700,000
Equipment used and held for resale 100,000
11,000,000

An analysis of the accounts receivable disclosed that accounts receivable comprised the following:

Trade accounts receivable 4,000,000

Allowance for doubtful accounts ( 300,000)
Selling price of Pampanga Company’s unsold goods sent to
XYZ Company on consignment at 125% of cost and excluded
from Pampanga’s ending inventory 1,500,000
5,200,000

At December 31, 2014, the total current assets should be

A. P10,600,000 C. P10,700,000
B. P 9,800,000 D. P 9,900,000

2. The trial balance of Arayat Company reflected the following liability account balances on December 31,
2023:

Accounts payable 4,000,000

Bonds payable, due 2023 8,000,000
Discount on bonds payable 1,000,000
Deferred tax liability 1,500,000
Dividends payable 3,000,000
Income tax payable 500,000
Note payable, due 1/15/2025 2,500,000

In its December 31, 2023 statement of financial position, Arayat should report current liabilities at
A. P16,000,000 C. P17,000,000
B. P14,500,000 D. P16,500,000

3. Candaba Company was incorporated on January 1, 2023, with proceeds from the issuance of P15,000,000 in
common stock and borrowed funds of P5,000,000. During the first year of operations, revenue from sales
and consulting amounted to P20,000,000, and operating costs and expenses totalled P12,000,000. On
December 15, Candaba declared a P2,000,000 cash dividend payable to stockholders on January 15, 2024.
No additional activities affected owners’ equity in 2023. Candaba’s liabilities increased to P7,000,000 by
December 31, 2023. On December 31, 2023 statement of financial position, total assets should be reported
at:
A. P30,000,000 C. P22,000,000
B. P21,000,000 D. P28,000,000
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ACTIVITY -1

4. The following items were among those that were reported on Bulacan Company’s income statement for the
year ended December 31, 2023:

Legal and audit fees 2,000,000

Rent for office space 6,000,000
Interest on acceptances payable 1,000,000
Loss on abandoned data processing equipment 500,000
Insurance 200,000

The office space is used equally by the sales and accounting departments. What amount should be classified
as general and administrative expenses?
A. P8,200,000 C. P6,200,000
B. P5,200,000 D. P5,000,000

5. The following information pertains to Malolos Company’s 2023 cost of goods sold:

Inventory, January 1 10,000,000

Purchases 40,000,000
Writeoff of obsolete inventory 5,000,000
Inventory, December 31 3,000,000

What amount should Malolos report as cost of goods sold?

A. P42,000,000 C. P47,000,000
B. P45,000,000 D. P50,000,000

6. The following information was taken from Hagonoy Company’s accounting records for the year ended
December 31, 2023:

Decrease in raw materials inventory 1,000,000

Increase in goods in process inventory 3,000,000
Increase in finished goods inventor 2,000,000
Raw materials purchased 40,000,000
Direct labor payroll 10,000,000
Factory overhead 6,000,000
Freight out 4,000,000
Freight in 5,000,000

The cost of goods sold is

A. P59,000,000 C. P61,000,000
B. P57,000,000 D. P63,000,000

7. Clark Co.’s advertising expense account had a balance of P146,000 at December 31, 2023, before any
necessary year-end adjustment relating to the following:

• Included in the P146,000 is the P15,000 cost of printing catalogs for a sales promotional campaign in
January 2015.
• Ratio advertisements broadcast during December 2023 were billed to Clark on January 2, 2024. Clark
paid the P9,000 invoice on January 11, 2024.
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What amount should Clark report as advertising expense in its income statement for the year ended December
31, 2023?
A. P122,000 C. P140,000
B. P131,000 D. P155,000
8. An analysis of Thrift Corp.’s unadjusted prepaid expense account at December 31, 2023, revealed the
following:

• An opening balance of P1,500 for Thrift’s comprehensive insurance policy. Thrift had paid an annual
premium of P3,000 on July 1, 2022.
• A P3,200 annual insurance premium payment made July 1, 2023.
• A P2,000 advance rental payment for a warehouse thrift leased for one year beginning January 1, 2024.

In its December 31, 2023 statement of financial position, what amount should Thrift report as prepaid
expenses?
A. P5,200 C. P2,000
B. P3,600 D. P1,600

9. On October 1, 2023, Acme Fuel Co. sold 100,000 gallons of heating oil to Karn Co. at P3 per gallon. Fifty
thousand gallons were delivered on December 15, 2023, and the remaining 50,000 gallons were delivered on
January 15, 2015. Payment terms were: 50% due on October 1, 2014, 25% due on first delivery, and the
remaining 25% due on second delivery. What amount of revenue should Acme recognize from this sale
during 2023?
A. P 75,000 C. P225,000
B. P150,000 D. P300,000

10. The beginning of the year total equity for a firm was P40,000. During the year, the firm issued ordinary
shares for total proceeds of P20,000, earned P20,000 net income, and paid P5,000 in cash dividends. If ending
total liabilities are P100,000, what is the ending total assets?
A. P165,000 C. P45,000
B. P175,000 D. P25,000