Intermediate Accounting vol 3 valix 2019 solution manual PDF

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FRANZ KYLLE POCSON

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Problem 1-1 Problem 1-2 Problem 1-3 Problem 1-4 Problem 1-5 Problem 1-6 Problem 1-7 1D 2A 3A 4D 5B

1D 2C 3B 4B 5B

1D 2D 3D 4D 5A

6 A 7 D 8 A 9 D 10 B

1B 2B 3C 4B 5C

1C 2A 3B 4D

1A 2D 3A 4C 5C

1C 2C 3C 4C 5D

Problem 2-1 Dillema Company Statement of Financial Position December 31, 2019 ASSETS Current Assets Cash Account Receivable—net Prepaid Expenses Inventory Financial Assets over Fair Value Total Current Assets

Notes P

800,000 700,000 160,000 1,000,000 440,000 P

Noncurrent Assets Property, Plant, and Equipment Intangible Asset Total Noncurrent Assets

(1) (2)

3,100,000

6,700,000 200,000 6,900,000

Total assets

P

10,000,000

LIABILITIES AND SHARESHOLDER’S EQUITY Current Liabilities Trade Payables Total Current Liabilities

(3)

1,200,000

Noncurrent Liabilities Notes Payable Bonds Payable—net Total Noncurrent Liabilities

250,000 1,800,000 2,050,000

Equity Share Capital Reserves Retained Earnings Treasury Shares Shareholder’s Equity

(4) (5)

114 INTERMEDIATE ACCOUNTING

3,000,000 250,000 3,750,000 (250,000) 6,750,000

Total Liabilities and Shareholder’s Equity Notes 1 Building Equipment Land

1,200,000

5,000,000 1,500,000 500,000

P

Accumulated Depreciation Property, Plant and Equipment

10,000,000

(300,000) 6,700,000

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2 Patent Intangible Asset

200,000 200,000

3 Accounts Payable Accrued Expenses Lawsuit Liability Trade and other Payables

900,000 200,000 100,000 1,200,000

4 Appropriated for Treasury Shares 250,000

5 Retained Earnings Canceled appropriation Treasury Appropriation Loss on Lawsuit Accrued Interest TOTAL

4,000,000 150,000 (250,000) (100,000) (50,000) 3,750,000

Retained Earnings 400,000 Interest Payable 50,000 Lawsuit Liability 100,000 Retained Earnings – Appropriated 250,000

Problem 2-2 Socorro Company Statement of Financial Position December 31, 2019 ASSETS Current Assets Cash and Cash Equivalents Account Receivable—net Store Supplies Inventory Restricted Cash Total Current Assets

Notes (1) P (2)

700,000 700,000 50,000 600,000 300,000 P

Noncurrent Assets Property, Plant and Equipment Long-term Investments Intangible Assets Advances to officers Total Noncurrent Assets

(3) (4) (5)

2,350,000

4,150,000 1,500,000 550,000 150,000 6,350,000

Total assets

P

8,700,000

LIABILITIES AND SHARESHOLDER’S EQUITY Current Liabilities Trade Payables Current Portion of Long-term debt Total Current Liabilities

(6)

850,000

Noncurrent Liabilities Serial Bonds Payable Unearned Income Total Noncurrent Liabilities Equity Share Capital Reserves Retained Earnings Treasury Shares Shareholder’s Equity

114 INTERMEDIATE ACCOUNTING

750,000 100,000

400,000 350,000 750,000

(7) (8) (9)

5,150,000 1,050,000 1,200,000 ( 300,000) 7,100,000

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P

Total Liabilities and Shareholder’s Equity Notes 1 Cash Money Market Total Cash and Cash Equivalents

500,000 200,000 700,000

2 Accounts Receivable Allowance for Doubtful accounts Total Cash and Cash Equivalents

750,000 50,000 700,000

4 Cash Money Market Total Cash and Cash Equivalents

500,000 200,000 700,000

5 Patent Trademark Intangible Assets

250,000 300,000 550,000

6 Accounts Payable Income Tax Payable Notes Payable Trade Payables

500,000 150,000 100,000 750,000

8,700,000

3 Building Equipment Land Accumulated Depreciation Property, Plant and Equipment

3, 500,000 1,000,000 400,000 (750,000) 4,150,000

7 Share Capital, beg Stock Dividend Share Capital, end

5,000,000 150,000 5,150,000

8 Share Premium Retained Earnings for Plant exp Retained Earnings for Treasury Reserves

250,000 500,000 300,000 1,050,000

9 Retained Earnings, beg Appropriation for Treasury Retained Earnings, end

1,500,000 300,000 1,200,000

Problem 2-3 Magna Company Statement of Financial Position December 31, 2019 ASSETS Current Assets Cash Accounts Receivable, net Inventories Prepaid Expenses Short Term Investment Total Current Assets Noncurrent Assets PPE Long Term Investments Intangible Assets Total Noncurrent Assets

Notes P (1)

400,000 700,000 800,000 100,000 100,000 P

(2) (3) (4)

5,650,000 1,800,000 300,000 7,750,000

Total assets LIABILITIES AND SHAREHOLDER’S EQUITY Current Liabilities Trade Payables (5) Total Current Liabilities

114 INTERMEDIATE ACCOUNTING

2,100,000

P

9,850,000

1,000,000 1,000,000

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Noncurrent Liabilities Notes Payable Bonds Payable, net (2,000,000 – 100,000) Total Noncurrent Liabilities

300,000 1,900,000 2,200,000

Equity Preference share, no par, P5 stated value, authorized 300,000 shares, issued 150,000 shares Ordinary share, P20 par value, authorized 400,000 Shares, issued 100,000 shares

750,000

Reserves Retained Earnings Total Shareholder’s Equity Total Liabilities and Shareholder’s Equity Notes: 1 Accounts Receivable Allowance for Doubtful accounts Total Cash and Cash Equivalents 2 Building Equipment Land Accumulated Depreciation Property, Plant and Equipment 3 Investment Property Investment in Securities Cash surrender value Total Cash and Cash Equivalents

(6)

2,000,000 1,450,000 2,450,000 P

750,000 50,000 700,000

4 Franchise Goodwill Intangible Assets

6,650,000 9,850,000

100,000 200,000 300,000

5,000,000 5 Accounts Payable 1,400,000 Income Tax Payable 1,250,000 Notes Payable (2,000,000) Trade Payables 5,650,000 6 Excess of Stated 1,500,000 Excess of Par Appropriation for Contingencies 250,000 Share Capital, end 50,000 1,800,000

400,000 150,000 450,000 1,000,000 250,000 1,000,000 200,000 1,450,000

Problem 2-4 Boracay Company Statement of Financial Position December 31, 2019 ASSETS Current Assets Cash Trade and other Receivables Financial Asset – Fair Value Inventory Office Supplies Total Current Assets Noncurrent Assets PPE, net Goodwill Total Noncurrent Assets Total assets

114 INTERMEDIATE ACCOUNTING

Notes (1) P (2)

1,200,000 1,000,000 400,000 1,000,000 50,000 P

(3)

3,650,000

3,950,000 100,000 4,050,000 P

7,700,000

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LIABILITIES AND SHAREHOLDER’S EQUITY Current Liabilities Trade Payables Other Payables (4) Total Current Liabilities Noncurrent Liabilities Mortgage Payable Total Noncurrent Liabilities

1,500,000 550,000 2,050,000

2,000,000 2,000,000

Equity 3,000,000 200,000 450,000

Ordinary share, P100 par value, issued 30,000 shares

Share Premium Retained Earnings Total Shareholder’s Equity Total Liabilities and Shareholder’s Equity

P

Notes: 1 Money Market – 3 mos Cash Total Cash and Cash Equivalents

500,000 700,000 1,200,000

2 Accounts Receivable Notes Receivable Trade and other Payable

800,000 200,000 1,000,000

3 Land Office Equipment Building Acc Dep – Building Property, Plant, & Equipment

1,000,000 250,000 3,000,000 (300,000) 3,950,000

4 Accrued Salaries Accrued Interest Tax Payable Other Payables

3,650,000 7,700,000

250,000 200,000 100,000 550,000

5 Net Assets - Equity Contributed Capital Excess, Retained Earnings Unrecorded Exp: Depreciation Accrued Salaries Adj, Retained Earnings

4,200,000 3,200,000 1,000,000 300,000 250,000 450,000

Problem 2-5 Dakak Company Statement of Financial Position December 31, 2019 ASSETS Current Assets Cash and Cash Equivalents Accounts Receivables Financial Asset – Trading Inventory Total Current Assets

Notes P

500,000 750,000 600,000 850,000 P

Noncurrent Assets PPE, net Long term Investments Total Noncurrent Assets Total assets

(1)

2,700,000

4,000,000 2,250,000 P

6,250,000 8,950,000

LIABILITIES AND SHAREHOLDER’S EQUITY Current Liabilities Trade & other Payables

114 INTERMEDIATE ACCOUNTING

(2)

1,500,000

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Currently Portion of Bonds Payable Total Current Liabilities

500,000 2,000,000

Noncurrent Liabilities Bonds Payable Notes Payable Advances from officers Total Noncurrent Liabilities

1,500,000 800,000 200,000 2,500,000

Equity Ordinary share, P100 par value, issued 50,000 shares

Share Premium Retained Earnings (deficit) Total Shareholder’s Equity Total Liabilities and Shareholder’s Equity

(3)

P

Notes: 1 Property, Plant, & Equipment Acc Dep PPE, Net

6,000,000 2,000,000 4,000,000

2 Accrued Expenses Customers’ Deposit Accounts Payable Other Payables

100,000 400,000 1,000,000 1,500,000

Problem 2-6 A. Cash Accounts Receivable Inventory FA – Trading Equipment held for sale TOTAL Problem 2-7 B. Cash and Cash Eq. Accounts Receivable: Trade Accounts ADA Claims Cost of Consigned Goods Inventory TOTAL Problem 2-8 B. Cash Accounts Receivable Inventory Prepaid Expenses TOTAL

114 INTERMEDIATE ACCOUNTING

P

5,000,000 500,000 (1,050,000)

3 Equity Contributed Capital Deficit, Retained Earnings Losses – Goodwill Adj, Retained Earnings

P

1,500,000 1,200,000 1,000,000 300,000 2,000,000 6,000,000

P

700,000

4,450,000 8,950,000

4,800,000 5,500,000 (700,000) (350,000) 1,050,000

930,000 (20,000) 30,000

P

P

P

200,000 600,000 2,440,000

[260,000 / 130%]

4,000,000 2,000,000 600,000 100,000 6,700,000

Excluding Cash Fund Excluding Consigned Goods Excluding Deposit on Inventory

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Problem 2-9 C. Equity Liabilities Assets

Problem 2-10 A. Cash Accounts Receivable: Trade Receivables ADA Cost of Consigned Goods Notes Receivable, net Inventory TOTAL Problem 2-11 A. Equity Liabilities Net Income TOTAL Problem 2-12 C. Accounts Payable Dividends Payable Income Tax Payable Notes Payable TOTAL Problem 2-13 A. Accounts Payable Accrued Expenses Credit Balances Estimated Expenses TOTAL Problem 2-14 1. B 2. C Current Liabilities: Accounts Payable Accrued Expenses Income Tax Payable Dividends Payable TOTAL Non Current Liabilities Bonds Payable Premium on Bonds Deferred Tax Liability Long Term Notes 6% 8% TOTAL

114 INTERMEDIATE ACCOUNTING

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P P

7,000,000 1,800,000 8,800,000

P

4,500,000

[5,000,000 + 2,500,000 – 500,000]

5,000,000 (500,000)

P

P

P

P

P

P

P

P

P

2,000,000 2,000,000 4,000,000 17,000,000

7,500,000 2,000,000 1,800,000 11,300,000

[8,200,000 – 6,400,000]

1,900,000 500,000 900,000 600,000 3,900,000

4,100,000 1,500,000 500,000 600,000 6,700,000

no offsetting

2,200,000 800,000 1,100,000 600,000 4,700,000

no offsetting

4,500,000 500,000 500,000

P

1,500,000 1,000,000 8,000,000

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Problem 2-15 1. A 2. C 3. A Adjusting Entry: Cash 300,000 Accounts Payable 300,000 To revert the undelivered check to cash Current Assets Cash Accounts Receivable Inventory Prepaid expenses Land held for sale TOTAL Current Liabilities Accounts Payable Accrued Expenses TOTAL Shareholders’ Equity Share Capital Share Premium Retained Earnings TOTAL

P

P

200,000 350,000 580,000 120,000 1,000,000 2,250,000

P

500,000 150,000 650,000

P

1,500,000 250,000 800,000 2,550,000

Undelivered Check, net of cash overdraft

{200,000 + 300,000}

Problem 2-16 1. C 2. B Current Assets Cash Accounts Receivable Inventory TOTAL Retained Earnings, beg Net Income before Tax Income Tax Retained Earnings, end

P

5,000,000 6,000,000

P

6,000,000 11,000,000

P

5,000,000 5,000,000 (1,500,000) 8,500,000

Excluding the 2,000,000 net of 2 semi annual payments of 500,000

Problem 2-17 1. B 2. A 3. C 4. C Retained Earnings, unappropriated Retained Earnings, restricted Net Income before Tax Income Tax Total Retained Earnings

114 INTERMEDIATE ACCOUNTING

P

P

900,000 160,000 1,500,000 (450,000) 2,110,000

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Current Assets Cash Accounts Receivable Cost in excess of billings TOTAL Shareholders’ Equity Share Capital Share Premium Retained Earnings TOTAL

P

P

600,000 3,500,000 1,600,000 5,700,000

P

750,000 2,030,000 2,110,000 4,890,000

Problem 2-18 1. D 2. A 3. C Current Assets Cash Accounts Receivable Inventory TOTAL Current Liabilities Accounts Payable & Accrued Liabilities Income Tax Payable TOTAL Retained Earnings, beg Net Income Income Tax Retained Earnings, end Problem 2-19 D. Accounts Payable Accrued Expenses Dividends Payable Accrued Interest Payable Income Tax Payable Current Liabilities Problem 2-20 A. Accounts Payable Bank Note Payable Mortgage Payable Bonds Accrued Interest: 10% - Bank 10% - Mortgage TOTAL

114 INTERMEDIATE ACCOUNTING

P

600,000 2,300,000

P

2,000,000 4,900,000

P

1,800,000 900,000 2,700,000

P

3,500,000 5,000,000 1,500,000 7,000,000

P

P

P

P

500,000 300,000 700,000 200,000 800,000 2,500,000

Excluding the 500,000 net of 4 quarterly payments of 125,000

Income Tax Payment of 600,000

Deduct 600,000

[ 5,000,000 x 8% x 6/12 ]

6,500,000 3,000,000 2,000,000 4,000,000 100,000 50,000 15,650,000

[ 3,000,000 x 10% x 4/12 ] Sept-Dec [ 2,000,000 x 10% x 3/12 ]

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Problem 2-21 1D 6 D 2C 7 D 3A 8 B 4D 9 D 5D 10 A

Problem 3-1 1D 2A 3C 4C 5B

Problem 3-2 1C 6 D 2C 7 C 3D 8 D 4B 9 C 5D 10 D

Problem 3-3 1A 5C 2C 6B 3B 7A 4D 8A

Problem 4-1 1D 2B 3D 4 D 5D

Problem 4-2 1D 6 B 2B 7 C 3C 8 D 4B 9 B 5D 10 C

Problem 3-3 1A 5C 2C 6B 3B 7A 4D 8A

Problem 5-1 Adjusting Entries: Dec 31,2019 Doubtful Accounts Accounts Receivable

P

Loss on Lawsuit Estimated Liability

3,000,000 3,000,000 500,000 500,000

DISCLOSURES Feb 14,2020 A shipping vessel of Caroline with carrying amount of P5,000,000 was completely lost at sea because of a hurricane. The financial statements of 2019 are authorized for issue on March 20,2020. Problem 5-2 B. P9,000,000

The event(s) is/are non adjusting, profit before tax is not affected

Problem 5-3 B. P3,500,000

Total estimated lawsuit liability amount

Problem 5-4 C. P1,000,000

Additional provision

Problem 5-5 D. Adjusting Events: Profit Share Payment Doubtful Accounts TOTAL

114 INTERMEDIATE ACCOUNTING

P P

200,000 900,000 1,100,000

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Problem 5-7 1D 2C 3C 4D 5D

Problem 5-6 1B 2D 3D 4C 5B

Problem 3-3 1A 5C 2C 6B 3B 7A 4D 8A

Problem 6-1 Masay Company Statement of Cost of Goods Manufactured Year Ended XX 2019

`

Raw Materials, beg. Add: Purchases Raw Materials Available for use Less: Raw Materials, end. Raw Materials Used Direct Labor Factory Overhead: Indirect Labor Superintendence Light, heat and power Rent – Factory Building Repair and Maintenance Factory Supplies used Depreciation – Machinery Cost of Manufacturing Goods in Process, beg. Cost of Goods in Process Less: Goods in Process, end. Cost of Goods Manufactured

P

200,000 3,000,000 3,200,000 280,000 2,920,000 950,000

250,000 210,000 320,000 120,000 50,000 110,000 60,000

1,120,000 4,990,000 240,000 5,230,000 (170,000) 5,060,000

P

Masay Company Income Statement (Functional Method) Year Ended XX 2019

Net Sales Less: Cost of Goods Sold Gross Profit Other Income Total Income Expenses: Distribution Costs Administrative Costs Other losses Income before Tax Income Tax Net Income

114 INTERMEDIATE ACCOUNTING

Notes (1) (2)

P

(3)

(4) (5) (6)

830,000 590.000 300,000

P

7,450,000 5,120,000 2,330,000 210,000 2,540,000

1,720,000 820,000 (320,000) 500,000

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Notes 1 Sales P7,500,000 Sales Return and Allowances (50,000) Net Sales P7,450,000 2 Cost of Goods Manufactured P5,060,000 Finished Goods, beg. 360,000 Cost of Goods Available for Sale P5,420,000 Finished Goods, end. (300,000) Cost of Goods Sold P5,120,000 3 Interest Income Gain on sale of equipment Gain from expropriation of Asset Other Income

P

10,000 100,000

100,000 P 210,000

4 Sales Salaries Advertising

P 400,000 160,000

Depreciation – Store Equipment 70,000 Delivery Expenses 200,000 Distribution Costs P 830,000 5 Office Salaries P 150,000 Depreciation – Office Equipment 40,000

Accounting and Legal Fees 150,000 Office Expenses 250,000 Administrative Costs P 590,000 6 Earthquake loss Other Losses

P 300,000 P 300,000

Masay Company Income Statement (Natural Method) Year Ended XX 2019 Notes (1) (2)

Net Sales Other Income Total Income Expenses: Decrease in Inventory Raw Materials Used Salaries Depreciation Advertising Office Expenses Delivery Expense Product Cost Accounting and Legal fees Other Losses Income before Tax Income Tax Net Income

Notes 1 Sales P7,500,000 Sales Return and Allowances (50,000) Net Sales P7,450,000 2 Interest Income Gain on sale of equipment Gain from expropriation of Asset Other Income

114 INTERMEDIATE ACCOUNTING

P

10,000 100,000

100,000 P 210,000

(3) (4) (5) (6)

(7) (8)

P