Problem 4. Masagana Corporation has a PI,500,000 credit balance of Accumulated Profits (Losses) in 20A. The following transactions are taken from the 20B operations: a) net loss, P250,000 b) purchase of treasury shares at cost, P120,000 c) overstatement of depreciation in 20A, P40,000. d) declaration of dividends, P450,000. e) reversal of appropriation reserve for plant expansion, P500,000. f) understatement of inventory in 20A; P75,000. Required: 1. Journalize the above transactions 2. Compute the adjusted accumulated profits (losses) at the end of the year
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- Unusual income statement items Assume that the amount of each of the following items is material to the financial statements. Classify each item as either normally recurring (NR) or unusual (U) items. If unusual item, then specify if it is a discontinued operations item (DO). a. Interest revenue on notes receivable. b. Gain on sale of segment of the company's operations that manufactures bottling equipment. c.Loss on sale of investments in stocks and bonds. d. Uncollectible accounts expense. e. Uninsured flood loss. (Hood insurance is unavailable because of periodic Hooding in the area.)8. An entity reported net income of P7,400,000 for the current year. The auditor raised questions about thefollowing amounts that had been included in net income:Equity in earnings of an associate – 25% interest 1,500,000Dividend received from the associates 400,000Unrealized loss on equity investment at FVOCI ( 550,000)Gain on early retirement of bonds payable 2,200,000Adjustment of profit of prior year for error in depreciation, net of tax effect ( 750,000)Loss from fire (1,400,000)Gain from change in fair value attributable to the credit risk of financialliability designated at FVPL 500,000 What amount should be reported as adjusted net income?a. 8,300,000 c. 9,500,000b. 7,800,000 d. 8,800,0003 - Profit for the Period 440.000Corporate Tax (96,800)Net Profit for the Period After Taxes 343,200Previous Year Losses (?)I. Order Legal Reserves (22.000)Distributable Net Profit for the Period 286,200 According to the information in the table, how much of the previous year's loss of the joint stock company has been deducted?A) 10,800B) 35,000C) 21,200D) It cannot be calculated.E) 25,000
- 1. The following information is available from the records of X, Corporation: Year 1Income(loss)before bad debts write off and recovery P100,000Bad debts write off P25,000 Year 2 Income(loss)before bad debts write off and recovery (P20,000)Bad debts write off P10,000Previous year’s write off, recover this year P30,000 Year 3Income(loss)before bad debts write off and recovery P50,000Bad debts write off P5,000Previous year’s write off, recover this year P8,000 For year 3 the total taxable income should be?4.Assume the following independent cases: (a) At the beginning of the year, a check was issued for P400,000 as payment for a piece of land and the buyer assumed the liability for unpaid taxes in arrears for the previous year, P10,000 and those assessed for the current year, P9,000.(b) A company issued 14,000 ordinary shares (P50 par) with a market value of P60 per share (based upon a recent sale of 100 shares) for the land. The land was recently appraised at P800,000 by independent and professional appraisers.(c) A company rejected an offer to purchase the land for P8,000,000 cash two years ago. Instead, the company issued 100,000 ordinary shares for the land (market value of the ordinary share, P78 each based on several recent large transactions and normal weekly stock trading volume).How much is the cost of land acquired in (a), (b), and (c), respectively? a. 419,000; 800,000; 7,800,000 b. 410,000; 800,000; 7,800,000 c. 410,000; 840,000; 7,800,000 d. 419,000; 840,000;…Bonita Industries reported net income of $537000 for the year ended 12/31/21. Included in the computation of net income were: depreciation expense, $90100; amortization of a patent, $48500; income from an investment in common stock of Sandhill Co., accounted for under the equity method, $71400; and amortization of a bond premium, $18400. Bonita also paid a $123000 dividend during the year. The net cash provided by operating activities would be reported at $365500. $488500. $585800. $462800.
- 9.The January 31, 2022 Statement of Financial Position of Pink Corporation follows: Cash 800,000 Accounts receivable ( net of P2,000 allowance for bad debts) 3,800,000 Inventory 1,600,000 Property, plant and equipment (net of P6,000,000 accumulated dep'n) 4,000,000 Total assets 10,200,000 Accounts payable 8,250,000 Ordinary shares 5,000,000 Retained earnings (Deficit) (3,050,000) Total Liabilities and Shareholders' equity…9.The January 31, 2022 Statement of Financial Position of Pink Corporation follows: Cash 800,000 Accounts receivable ( net of P2,000 allowance for bad debts) 3,800,000 Inventory 1,600,000 Property, plant and equipment (net of P6,000,000 accumulated dep'n) 4,000,000 Total assets 10,200,000 Accounts payable 8,250,000 Ordinary shares 5,000,000 Retained earnings (Deficit) (3,050,000) Total Liabilities and Shareholders' equity…Following particulars have been obtained from the accounts of a company.i) Remuneration of Managing Director 20,000ii) Provision for Bad debts 10,000iii)Provision for taxation 1,50,000iv) Depreciation written off 80,000v) Loss on sale of investments 70,000vi) Depreciation allowable according to Income-Tax Provisions 70,000vii) Net profit after considering the above items 4,50,000Calculate remuneration of Managing Director at 5% of net profit. The net profit should be as per provisions of Companies Act.
- 5. An entity provided the following data for the year ended December 1, 2019: Retained earnings unappreciated, January 1 P2 000 000 Overdepreciation of 2018 due to prior period, net of tax 400 000 Net Income 3 000 000 Retained earnings appreciated for treasury shares (original balance is P500 000 but reduced by P200 000 by reason of reissuance of the treasury shares) Retained earnings appropriated for contingencies (beginning balance P700 000 but increased by current appreciation of P100 000) Cash dividends paid to shareholders Change in accounting policy from FIFO to a average-credit, net of tax • What is the balance of unappreciated retained earnings on December 31, 2019?On January 1, 20X1, Hermione, Inc., an SME, paid cash of P600,000 for all the outstanding shares of Weasley Company. The carrying value of the assets and liabilities of Weasley on January 1, 20X1 follows:Accounts Receivable 90,000 Inventory 180,000Property & Equipment (net of Accumulated Depreciation of P220,000) 320,000Goodwill 100,000Liabilities 120,000Net income of Hemione and Weasley for 20X1 amounted to P200,000 and P80,000, respectively. Hermione received dividend of P25,000 from Weasley during 20X1. The Property & Equipment has original useful life of 10 years and was already held for 4 years as of date of acquisition.What is…17. Kiwi Corporation reports the following information: • Correction of overstatement of depreciation expense in prior years, net of tax- P215,000 • Dividends declared- P160,000 • Net income- P500,000 • Retained earnings, 1/1/21, as reported- P1,000,000 Kiwi should report retained earnings, December 31, 2021 at a. P1,555,000. b. P1,340,000. c. P1,125,000. d. P785,000.