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Statement of Financial PositionSample Problems and Suggested AnswersThe accounts and balances shown below were gathered from Zechariah Corporation’sDividends Payable 14,Bonds Payable 550,A. The amount that should be reported as current assets on Zechriah Corporation’sB. The amount that should be rep...

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ACC 221- Intermediate Accounting 3 Statement of Financial Position Sample Problems and Suggested Answers JMF, CPA Problem 1 The accounts and balances shown below were gathered from Zechariah Corporation’s trial balance on December 31, 2020. All adjusting entries have been made: Wages Payable Cash Mortgage Payable Dividends Payable Prepaid Rent Inventory Sinking fund assets Short-term investments Premium on bonds payable Stock investment in Subsidiary Taxes Payable Accounts Payable Accounts Receivable Bonds Payable

P 25,600 17,700 151,600 14,000 13,600 81,800 52,400 15,200 4,600 102,400 22,800 24,800 36,600 550,000

A. The amount that should be reported as current assets on Zechriah Corporation’s statement of financial position is Suggested Answer: 164, 900 B. The amount that should be reported as current liabilities on Zechriah Corporation’s statement of financial position is Suggested Answer: 62, 400 CA Wages Payable Cash Mortgage Payable Dividends Payable Prepaid Rent Inventory Sinking fund assets Short-term investments Premium on bonds payable Stock investment in Subsidiary Taxes Payable Accounts Payable Accounts Receivable Bonds Payable Totals

NCA

CL 25,600.00

NCL

17,700.00 151,600.00 14,000.00 13,600.00 81,800.00 52,400.00 15,200.00 4,600.00 102,400.00 22,800.00 24,800.00 36,600.00 164,900.00

154,800.00

87,200.00

550,000.00 706,200.00

Problem 2 The accounts and balances shown below were taken from Basic Company’s trial balance on December 31, 2018. All adjusting entries have been made. Wages Payable, 250,000; Cash, 175,000; Bonds Payable, 600,000; Investment at amortized Cost, 140,000; Prepaid Rent, 136,000; Inventory, 820,000; Investment inSinking fund Assets, 525,000; Investment to Profit or Loss, 153,000; Discount on Bonds Payable, 48,000; Investment in Subsidiary, 1,020, 000; Taxes Payable, 228, 000; Accounts Payable, 248, 000; Accounts Receivable, 366,000; Property, Plant and Equipment, 1,200,000; Patents-Net, 150,000; Accumulated Depreciation- PPE, 400,000; Land held for future business site, 900,000. A. How much should be the reported current and non-current assets, respectively at year end? Suggested Answer: 1, 650, 000 and 3, 535, 000 B. How much should be the reported current and non-current liabilities, respectively at year end? Suggested Answer: 726, 000 and 552, 000 C. How much should be the reported shareholder’s equity at year end? Suggested Answer: 3, 907, 000 CA Wages Payable Cash Bonds Payable Investment at Amortized Cost Prepaid Rent Inventory Sinking fund assets Investment at Profit or Loss Discount on bonds payable Stock investment in Subsidiary Taxes Payable Accounts Payable Accounts Receivable PPE Patents- Net Acc. Dep- PPE Land held for future Business Use Totals

NCA

CL 250,000.00

NCL

Equity

175,000.00 600,000.00 140,000.00 136,000.00 820,000.00 525,000.00 153,000.00 (48,000.00) 1,020,000.00 228,000.00 248,000.00 366,000.00

1,650,000.00

1,200,000.00 150,000.00 (400,000.00) 900,000.00 3,535,000.00

726,000.00

552,000.00

3,907,000.00

Problem 3 On July 1, 2018, Simple Company acquired machinery worth 2,500,000 from Thorny Corporation. Terms of the contract calls for a down-payment of 500,000 and signing a 2 year 10% note payable for the balance. Interest is payable quarterly. The existing loan agreement does not carry a provision to refinance. During September Easy was experiencing financial difficulty and was unable to pay the periodic interest, thus breaching the agreed covenant. A. At what amount should the entity report current liabilities at year end? Suggested Answer: 2, 100, 000 B. At what amount should the entity report as current liabilities at year end, assuming the lender has provided a grace period of 1 year to rectify the breach? Suggested Answer: 100, 000

Problem 4 The following data rae provided by Moon Company on December 31, 2018. Cash in general checking account Sinking fund to be used to retire bonds in 2021 Cash held to pay value added taxes Note Receivable- Due February 2020 Accounts Receivable Inventory Prepaid Insurance Vacant land held as investment Equipment classified as “held for sale” Accounts Payable Note payable- Due July 2019 Note Payable- Due January 2020 Bonds Payable- Maturity 2021 Salaries Payable Value Added Tax Payable

500,000CA 1,200,000NCA 300,000CA 2,200,000NCA 2,100,000CA 1,500,000CA 300,000CA 5,000,000NCA 200,000CA 1,400,000CL 800,000CL 300,000NCL 4,600,000NCL 400,000CL 300,000CL

What amount of working capital on December 31, 2018?

Suggested Answer: 2, 000, 000 Problem 5 Easy Company provided the following information on December 31, 2019: Accounts Payable 350, 000 Accounts Receivable 450, 000 Property, Plant and Equipment 5, 600, 000 Accumulated Depreciation 1, 200, 000 Mortgage payable, due in 5 years 1, 500, 000 Share Capital, P100 par 4, 000, 000 Share Premium 500, 000 Cash and Cash Equivalents 800, 000 Accrued Expenses 100, 000 Inventories 900, 000 Long Term Investments 950, 000 Note Payable, long term debt 500, 000 Note payable, short term debt 200, 000 Office supplies unused 50, 000 Patent 800, 000 Prepaid Rent 150, 000 Retained Earnings 1, 350, 000 Compute for the total Assets, Liabilities and Equity respectively: Suggested Answer: Assets 8, 500, 000 Liabilities 2, 650, 000 Equity 5, 850, 000...