RAMON MAGSAYSAY MEMORIAL COLLEGES
PIONEER AVENUE, GENERAL SANTOS CITY
COLLEGE OF ACCOUNTANCY
ACCOUNTING 43
AUDITING AND ASSURANCE CONCEPTS AND APPLICATIONS PART 2
Problem 1
Harden Company reported the following information on December 31, 2021:
Bonds Payable
P 5,000,000
Discount on Bonds Payable
500,000
Loans Payable, with P500,000 payable semi-annually starting 06/30/2022
2,500,000
Accounts Payable
1,000,000
Unearned rent income
300,000
Income Tax Payable
250,000
Cash Dividends Payable
100,000
Cash surrender value of officer’s life insurance
75,000
Patent
50,000
Advances to employees
45,000
Deferred tax liability
15,000
Loan of James, guaranteed by Harden ( it is possible that James will be held liable for the
guarantee
500,000
Shared Dividends Payable
150,000
Bank Overdraft- Part of Cash Management
10,000
What is the amount of total liabilities to be reported in the company’s December 31, 2021 statement of
financial position? ____________________________________
Problem 2
An analysis of Howard Company’s liabilities on December 31, 2021 disclosed the following information:
Accounts Payable, after deducting debit balances in suppliers’ accounts amounting
P100,000 and postdated checks of P50,000
P 4,000,000
Bonds Payable
1,000,000
Premium on Bonds Payable
100,000
Mortgage Payable
850,000
Share Dividends Payable
750,000
Credit Balances in Customers’ Accounts
500,000
Premiums payable
600,000
Deferred Tax Liability
200,000
Deferred revenue
175,000
Accrued Expenses
150,000
The deferred tax liability is based on temporary differences that will reverse in 2022.
What is the amount of current liabilities in the statement of financial position on December 31, 2021 of
Howard Company? ______________________
Problem 3
On December 31, 2021, data for Determined Co. includes the following:
1.
Accounts Payable
P 450,000
2.
Accounts Receivable
300,000
3.
Accrued interest expense
54,000
4.
Accumulated Depreciation
150,000
5.
Accumulated profits- appropriated for plant expansion
1,500,000
6.
Accumulated profits- unappropriated
9,600,000
7.
Advances from customers
48,000
8.
Allowance for bad debts
30,000
9.
Biological Assets
360,000
10.
Bonds Payable
360,000
11.
Cash and cash equivalents
210,000
12.
Cash dividends payable
81,000
13.
Cash surrender value
180,000
14.
Claims for tax refund
135,000
15.
Deferred tax assets
180,000
16.
Deferred tax liabilities
57,000
17.
Discount on bonds payable
45,000
18.
Finance lease liability
135,000
19.
Income taxes payable
27,000
20.
Intangible assets
90,000
21.
Interest receivable
63,000
22.
Investment in associate
135,000
23.
Investment in bonds
510,000
24.
Investment in equity instruments
375,000
25.
Investment in subsidiary
210,000
26.
Issued redeemable preference shares (with mandatory redemption)
300,000
27.
Merchandise inventories
399,000
28.
Notes receivable
450,000
29.
Philhealth contributions payable
18,000
30.
Prepaid interest ( not a valuation account to financial liability)
60,000
31.
Prepaid rent
60,000
32.
Security deposit
90,000
33.
Share premium
105,000
34.
Sinking fund
120,000
35.
SSS Contributions Payable
15,000
36.
Stock Appreciation Rights Payable (SARs Payable)
360,000
37.
Treasury Shares
69,000
38.
Unearned interest on receivables
15,000
39.
Unearned rent income
24,000
40.
Utilities Payable
750,000
41.
Warranty obligations
39,000
Based on the above data, determine the following:
1. Financial liabilities
2. Non-financial liabilities
Problem 4
Included in Dwight Company’s liability balances on December 31, 2021 are:
10% note payable, maturing 03/31/2022
P 10,000,000
12% note payable, maturing 06/30/2022
6,000,000
7% guaranteed debentures, due 2023
2,000,000
Additional Information:
• On January 31, 2022, the entire P 10,000,000 note was refinanced through issuance of a long-
term obligation payable lump sum.
• For the P 6,000,000 note, under the loan agreement, the entity has the discretion to refinance
the obligation for at least 12 months after December 31, 2021.
