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46. Adjusted retained earnings as of January 1, 2012

46. Adjusted retained earnings as of January 1, 2012

Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter9: Metric-analysis Of Financial Statements
Section: Chapter Questions
Problem 9.23E: Unusual income statement items Assume that the amount of each of the following items is material to...
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During the course of the audit, the following additional information was obtained:
a.
The trading securities were acquired on December 31, 2011. The securities have a fair value of P67,000 at
December 31, 2012.
b.
In discussion with the company officials, it was determined that the doubtful accounts expense rate based on net sales should be reduced to 2% from 3%, effective January 1, 2012.
c.
As a result of errors in the physical count, inventories were overstated by P12,000 at December 31, 2011 and by P17,500 at December 31, 2012.
d.
On January 1, 2011, the cost of equipment purchased for P30,000 was debited to repairs and maintenance. PRTC depreciates equipment of this type by the straight-line method over a five-year life with no residual value.
e.
On July 1, 2012, fully depreciated equipment purchased for P21,000, was sold as scrap for P2,500. The only entry PRTC made was to debit cash and credit property and equipment for the scrap proceeds. The property and equipment (net) had a current cost of P250,000 at December 31, 2012.
f.
Advertising and promotion expense for the year ended December 31, 2011 includes the P25,000 cost of
printing sales catalogs for a special promotional campaign held in January 2012.
g.
PRTC was named as a defendant in a lawsuit in October 2012. PRTC's counsel is of the opinion that PRTC has a good defense, and does not anticipate any impairment of PRTC's assets or that any significant liability will be incurred. Nevertheless, PRTC’s management wished to be conservative and, therefore, established a loss contingency of P100,000 at December 31, 2012.
 
QUESTIONS:
Based on the above and the result of your audit, compute for the following:
(Disregard income taxes)
46.
Adjusted retained earnings as of January 1, 2012
a. P266,000
c. P285,000
b. P297,000
d. P291,000
47.
Adjusted profit for the year ended December 31, 2012
a. P281,800
c. P287,800
b. P181,800
d. P306,800
48.
Adjusted current assets as of December 31, 2012
a. P1,226,760
c. P1,154,900
b. P1,190,300
d. P1,202,300
49.
Adjusted carrying amount of property and equipment as of December 31, 2012
a. P168,500
c. P178,000
b. P180,500
d. P192,500
50.
Adjusted shareholders’ equity as of December 31, 2012
a. P962,800
c. P974,800
b. P950,800
d. P862,800
 
 
PRTC, Inc. Statements of Financial Position December 31, 2012 and 2011 2011 2012 Assets Cash P 275,000 P150,000 Trading securities 78,000 487,000 78,000 392,000 Accounts receivable Allow. for doubtful accounts (50,000) (32,000) Inventories 425,000 307,000 Property and equipment Accumulated depreciation 310,000 217,000 (150,000) P1,375,000 (121,000) P 991,000 Total assets Liabilities and Equity Accounts payable and accrued liabilities P 420,000 P347,000 Estimated liability from lawsuit Share capital, P10 par 100,000 260,000 130,000 260,000 Share premium 130,000 Retained earnings Total liabilities and equity 465,000 P1,375,000 254,000 P 991,000 PRTC, Inc. Income Statements For the Years Ended December 31, 2012 and 2011 2012 2011 Net sales P1,580,000 P1,250,000 Operating expenses: Cost of sales P 755,000 P 690,000 Selling and admin. 485,000 365,000 Depreciation 29,000 18,000 Est. loss from lawsuit 100,000 P1,369,000 P 211,000 P1,073,000 P 177,000 Profit During the course of the audit, the following additional information was obtained:
Transcribed Image Text:PRTC, Inc. Statements of Financial Position December 31, 2012 and 2011 2011 2012 Assets Cash P 275,000 P150,000 Trading securities 78,000 487,000 78,000 392,000 Accounts receivable Allow. for doubtful accounts (50,000) (32,000) Inventories 425,000 307,000 Property and equipment Accumulated depreciation 310,000 217,000 (150,000) P1,375,000 (121,000) P 991,000 Total assets Liabilities and Equity Accounts payable and accrued liabilities P 420,000 P347,000 Estimated liability from lawsuit Share capital, P10 par 100,000 260,000 130,000 260,000 Share premium 130,000 Retained earnings Total liabilities and equity 465,000 P1,375,000 254,000 P 991,000 PRTC, Inc. Income Statements For the Years Ended December 31, 2012 and 2011 2012 2011 Net sales P1,580,000 P1,250,000 Operating expenses: Cost of sales P 755,000 P 690,000 Selling and admin. 485,000 365,000 Depreciation 29,000 18,000 Est. loss from lawsuit 100,000 P1,369,000 P 211,000 P1,073,000 P 177,000 Profit During the course of the audit, the following additional information was obtained:
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