1.

Thomas Company does not keep a full set of business records, but the following information is available for the month of June 2014: Trade Receivables, June 1, 2014 Trade Receivables, June 30, 2014 Credit Sales Cash received from customers Bad Debts Written-Off General Provision for Doubtful Debts P 80, 000 P 55,000 P 680, 000 P 673, 000 P 4,000

P 10,000

Assuming no other transactions, how much discount was allowed to customers during the month of June? SOLUTION: Credit Sales Trade Receivables, June 1 TOTAL Less: Cash Received Bad Debts Written-Off Trade Receivables, June 30 P 673,000 P 4,000 P 55,000 P 732,000 P 680,000 P 80,000 P 760,000

Discount Allowed To Customers

P 28,000

2. The December 31, 2014 and 2013 comparative financial statements of World Gallery Company showed equipment with an original cost P 379,000 and P 344,000 with accumulated depreciation of P 153,000 and P 128,000, respectively. During 2014, the company purchased equipment costing P 50,000 and sold equipment with a carrying value of P 9,000. What amount should the company report as depreciation expense for the year ended December 31, 2014? SOLUTION: Accumulated depreciation, December 31, 2014 Add: Accumulated depreciation of asset sold TOTAL Less: Accumulated depreciation, Dec. 31, 2013 P 153,000 P6, 000* P 159,000 P 128,000

Depreciation, 2014
Equipment, December 2013 Add: Acquisition TOTAL Less: Equipment, December 2014 Cost of Equipment Disposed Of Less: Book Value of equipment disposed of Accumulated Depreciation of equipment disposed of P50, 000

P 31,000
P344, 000

P 394,000 P379, 000 P15, 000 P 9,000 P6, 000*

3. At September 1, 2013, the following existed in the records of Lauren Company: Plant and Equipment Accumulated Depreciation P8, 600,000 P3, 970, 000

During the year ended September 30, 2014, plant with a written down value of P370, 000 was sold P490, 000. The plant had originally cost P800, 000. Plant purchased during the year cost P1, 800,000. It is the companys policy to charge a full years depreciation in the year of acquisition of an asset and none in the year of sale, using a rate of 10% on the straight-line basis. What net amount should appear in Laurens statement of financial position at September 30, 2014 for plant and equipment? SOLUTION: September 1, 2013 balance Less: Disposal NET Add: Acquisitions September 1, 2014 balance Less: Accumulated Depreciation, September 1, 2014 P 8,600, 000 P 800, 000

P 7, 800, 000 P 1, 800, 000 P 9, 600, 000 P4, 500, 000

September 1, 2014, Net book value

P 5, 100, 000

Accumulated Depreciation: September 1, 2013 balance Less: Disposal (P 800, 000 P 370, 000) NET Depreciation during the year September 1, 2014 balance P 3, 970, 000 P 430, 000 P 3, 540, 000 P 960, 000 P 4, 500, 000

4. Mr. Franz started business on Jan. 01 2006 with the capital of P150, 000. He immediately purchased a motorcycle that costs Ph50, 000. On 30th June 2006 he borrowed from his friend P40, 000 at 10% interest and introduced a further capital of his own amounting to P20, 000. Mr. Franz drew at the rate of P2, 000 at the end of each month for household expenses on 31st December 2006. His position was as follow:

Cash in hand P80,000, Sundry Debtors P45,000, Stock P60,000, Bills Receivable P30,000, Sundry creditors P25,000 and owing for salary P10,000, motorcycle to be depreciated by 10%. Ascertain the profit or loss made by Mr. Franz during 2006.

SOLUTION:

Mr. Franz Statement of Affairs on 31st December 2006 Liabilities Sundry Creditors Outstanding salaries 10,000 P 25,000 Cash in hand Sundry Debtors 60,000 Loan 40,000 42,000 Add: Interest 2,000 Stock Bills Receivable 50,000 Motor Cycle 183,000 Capital 260,000 Total Total Less Depreciation 260,000 5,000 45,000 30,000 45,000 Assets P 80,000

Mr. Fraz Statement of Profit and loss For the year ended 30 December 2006

Capital on 31st December 2006 Add: Drawing Less: Fresh Capital Less: Capital on 1st January 2006

P183, 000 P 24, 000 P 20,000 P150, 000

Net Profit for the year

37,000

5. The following are the assets and liabilities of Mr. Farrukh at the beginning and end of the year 2006. During the year Mr. Farrukh had withdrawn P3, 500 in cash and P1, 000 in goods from

Beg. P 20,000 Cash at Bank 138,000 Sundry Debtors 72,500 Sundry Creditors 60,000 Loan from Bank 43,000 Outstanding Liabilities 15,000 Stock in Trade 8,000 Furniture and fixtures 30,000 Land and Building 48,000 Plant and Machinery

End. P 18,000

153,000

75,000

50,000

38,000

28,000

8,100

294,000

60,000

the business. He had also introduced P50, 000 as further capital. A machine book value P15, 000 had been sold during the year for P17, 500 and new machinery coasting P31,500 was purchased in placement. New furniture coasting P1, 000 was purchased during the year. REQUIRED: Prepare a statement of profit and loss for the year ended Dec. 31, 2006. Mr. Statement as on 31st Dec. 2006 of Profit and Farrukh Loss

Php133,500 Capital as on 31 of Dec. 2006 Php 4,500 Add Drawings Php 138,000
st

Php2,500 Less Profit on sale of Machinery Php50,000 Less: Additional Capital introduced during the year Php83,500 Less Capital as on 1ST of Jan. 2006 Php 136,000

Php 2,000 Net Profit