1. You are evaluating the balance sheet for Goodmans Bees Corporation.

The balance sheet you find the following balances: Cash and marketable securities Accounts receivable Inventory Accrued wages and taxes Accounts payable Notes payable Calculate Goodman Bees net working capital. Solution: CURRENT ASSETS: Cash and marketable securities Accounts receivable Inventory TOTAL CURRENT ASSETS P 400,000 P1,200,000 P2,100,000 P3,700,000 P 400,000

P1,200,000 P2,100,000 P 500,000 P 800,000 P 600,000

CURRENT LIABILITIES: Accrued wages and taxes Accounts payable Notes payable P 500,000 P 800,000 P 600,000 P1,900,000

TOTAL CURRENT LIABILITIES

Net Working Capital = Current Assets - Current Liabilities. = P3,700,000 - P1,900,000

Net Working Capital = P1,800,000

2. Zoeckler Mowing & Landscapings year-end 2009 balance sheet lists current assets of P256,000, fixed assets of P324,000, current liabilities of P245,000, and long-term debt of P185,000. Calculate Zoecklers total stockholders equity. Solution: Assets = Liabilities + Equity. Rearranging this equation: Equity = Assets Liabilities. Thus, the balance sheets would appear as follows: Book value Assets Current assets P 256,000 Fixed assets P324,000 Book value Liabilities and Equity Current liabilities Long-term debt Stockholders equity Total P580,000 Total P245,000 P185,000 P150,000 P580,000

3. Brendas Bar and Grill has total assets of P15 million of which P5 million are current assets. Cash makes up 10 percent of the current assets and accounts receivable makes up another 40 percent of current assets. Brendas gross plant and equipment has a book value of P11.5 million and other long-term assets have a book value of P500,000. Using this information, what is the balance of inventory and the balance of depreciation on Brenda Bar and Grills balance sheet?

Solution: Current assets: Cash and marketable Securities (.10 x P5, 000, 000) Accounts receivable (.4 0 x P5, 000, 000) Inventory Total Fixed assets: Gross plant and Equipment Less: Depreciation step 4. P11, 500, 000 P 2, 000, 000 (P11, 500, 000 - P9, 500,000) step 1 (P5, 000, 000 - P500, 000 - P2, 000, 000) P 500, 000

P2, 000, 000 P2, 500, 0000 P5, 000, 000

Net plant and Equipment Other long-term assets Total

step 3.

P9, 500, 000 500, 000

(P10, 000, 000 P500, 000)

step 2.

P10, 000, 000 (P15, 000, 000 5, 000, 000)

Total assets

P15, 000, 000

4. The draft financial statements of Unleashed Company, for the year ended December 31, 2014 are currently under consideration by the Directors. The Shareholders Equity for the year is show as P2, 600,000.00. Since December 31, 2014 the following events have occurred, but have not been reflected in any way in the draft financial statements to that date.

Item A: It was discovered that an error was made in arriving at the inventory figure at December 31, 2014. Inventory which had a cost of P30, 000.00 with a Net Realizable Value of P400, 000.00 were committed.

Item B: In December 2014, plans to merge with Sahara Company were announced and the company will be issuing ordinary shares with a total value of P3, 000,000.00.

What is the adjusted amount of Shareholders Equity should Unleashed Company report in its December 31, 2014 statement of financial position?

Solution:

Report amount of Shareholders Omission of Inventory ADJUSTED VALUE OF SHAREHOLDERS EQUITY

2,600,000.00 300,000.00 2,900,000.00

5. For the year ended December 31, 2014, Transformers Inc. reported the following: 600,000.00 100,000.00 20,000.00 10,000.00 800,000.00 400,000.00 50,000.00

Net Income Preference Share Capital dividends Declared Ordinary Shares Capital dividends Declared Unrealized holding loss, net of tax Retained Earnings, Beginning Balance Ordinary Share Capital Accumulated Other Comprehensive Income, Beg. Balance

What would Transformers report as the ending balance of Retained Earnings?

Solution: Beginning Balance Net Income Dividends Declared (100,000 + 20,000) Ending Balance 800,000.00 600,000.00 (120,000.00) 1,280,000.00