3 STATEMENT OF FINANCIAL POSITION

Technical Knowledge

• To identify the components of financial statements.

• To understand the objective of financial statements.
• To understand the objective and use of a statement of financial position.
• To understand the current and noncurrent classification of assets and liabilities.
• To know the components of equity in a corporate type of business.
• To know the forms of presenting the statement of financial position.

A. Definition of Financial Statement

Financial statements are the means by which the information accumulated and processed in financial
accounting is periodically communicated to the users.

The financial statements are the end product or main output of the financial accounting process

General purpose financial statements or simply referred to as financial statements are those intended
to meet the needs of users who are not in a position to require and entity to prepare reports
tailored to their particular information needs.

In other words, general purpose financial statements are directed to all common users and not to
specific users.

B. Components of Financial Statements

A complete set of financial statements comprises the following components:

1. Statement of financial position

2. Income statement
3. Statement of comprehensive income
4. Statement of changes in equity
5. Statement of cash flows
6. Notes comprising a summary of significant accounting policies and other explanatory notes

C. Objective of Financial Statement

The objective of financial statements is to provide information about the financial position, financial
performance and cash flows of an entity that is useful to a wide range of users in making economic
decisions.

To meet this objective, financial statements provide information about the following:

a. Asset d. Income and expenses

b. Liabilities e. Contribution by and distribution to owners in their capacity as owners
c. Equity f. Cash flows

D. Statement of Financial Position

A statement of financial position is a formal statement showing the three elements comprising financial
position: assets, liabilities, and equity

d1. Assets
An asset is defined as resource controlled by the entity as a result of past events and from which
future economic benefits are expected to flow to the entity.

The essential characteristics of an asset are:

a. The asset is controlled by the entity.

b. The asset is the result of past transaction or event.
c. The asset provided future economic benefits.
d. The cost of the asset can be measured reliably.

d1a. Classification of assets

Assets are classified into two : current assets and noncurrent assets
dd1. Current assets

An entity shall classify an asset as current when:

a. The asset is cash or cash equivalent unless the asset is restricted from being exchanged
or used to settle a liability for at least twelve months after the reporting period.
b. The entity holds the asset primarily for the purpose of trading.
c. The entity expects to realized the asset within twelve months after the reporting period.
d. The entity expects to realized the asset or intends to sell or consume it within the entity's
normal operating cycle.
Example : a. Cash and cash equivalent
b. Financial assets at fair value such as trading securities and other
investments
c. Trade and other receivables
d. Inventories
e. Prepaid expenses

dd2. Noncurrent assets

Example: a. Property, plant and equipment
b. Long-term investment
c. Intangible assets
d. Deferred tax assets
e. Other noncurrent assets

Property, plant and equipment are tangible assets which are held by an entity for use in
production or supply of goods or services, for rental to others, or for administrative purposes
and are expected to be used during more than one period.

Examples: Land, building, machinery, equipment, furniture and fixtures, patterns, mold,
dies, tools

Most plant, property and equipment, except land, are presented at cost less accumulated
depreciation.

Long-term investments are assets held by an entity for the accretion of wealth through
capital distribution, such as interest, royalties, dividends and rentals, for capital appreciation or
for other benefits to the investing entity such as those obtained through trading relationship.
 Intangible assets is simply defined ad an identifiable nonmonetary asset without physical
substance.

Examples : Identifiable intangible assets

Patent, franchise, copyright, lease right, trademark, computer software

Examples : Unidentifiable intangible assets

Goodwill

Other noncurrent assets are those assets that do not fit into the definition of the previously
mentioned noncurrent assets.

Examples : Long-term advances to officers, directors, shareholders and employees,

Abandoned property, long-term refundable deposit

d2. Liabilities

A liability is defined as present obligation of an entity arising from past events, the settlement of
which is expected to result in an outflow from the entity of resources embodying economic
benefit.

The essential characteristics of a liability are:

a. The liability is the present obligations of a particular entity.

b. The liability arises from past transaction or event.
c. The settlement of the liability requires the outflow of resources embodying economic benefits.

d2a. Current liabilities

Liabilities are current when:

a. The entity expects to settle the liability within the entity's normal operating cycle.
b. The entity holds the liability primarily for the purpose of trading.
c. The liability is due to be settled within twelve months after the reporting period.
d. The entity does not have an unconditional right to defer settlement of the liability for at
least twelve months after the reporting period.

Examples : a. Trade and other payables

b. Current provisions
c. Short-term borrowings
d. Current portion of long-term debt
e. Current tax liability

d2b. Noncurrent liabilities

Noncurrent liabilities is the residual definition, meaning that all liabilities not classified as
current are classified as noncurrent.

Examples : a. Noncurrent portion of long-term debt

b. Finance lease liability
c. Deferred tax liability
d. Long-term obligations to company officers
e. Long-term deferred revenue
d3. Equity

The term equity is the residual interest in the assets of the entity after deducting all of its liabilities.
Simply stated, equity means net asset or total asset minus total liabilities.

The terms used in reporting the equity of an entity depending on the form of business organization
are:
a. Owner's equity in a proprietorship.
b. Partners' equity in a partnership.
c. Shareholders' equity in a corporation.

d3a. Shareholders' equity

Shareholders' equity is the residual interest of owners in the net asset of a corporation
measured by the excess of assets over liabilities.

Generally, the elements constituting shareholders' equity are:

a. Share capital e. Share premium

b. Subscribed share capital f. Accumulated profit (loss)
c. Preference share capital g. Appropriation reserve
d. Ordinary share capital h. Revaluation reserve
i. Treasury share

d4. Notes to Financial Statements

Notes to financial statements provide narrative description or disaggregation of items presented in

the financial statements and information about items that do not qualify for recognition.

Notes contain information in addition to that presented in the statement of financial position,
income statement, statement of comprehensive income, statement of changes in equity and
statement of cash flows.

In other words, notes to financial statement are used to report information that does not fit into
the body of financial statements in order to enhance the understandability of the financial
statements..

The purpose of the notes to financial statements is "to provide the necessary disclosures
required.

d5. Forms of Statement of Financial Position

a. Report form
This form sets forth the three major sections in a downward sequence of asset, liabilities and
equity

b. Account form
The presentation follows of an account, meaning the assets are shown on the left side and
liabilities and equity on the right side of the statement of financial position

Report Form

SINGLE COMPANY
 Statement of Financial Position
December 31, 2017
(in USDollar)

ASSETS
Note
Current Assets:
Cash and cash equivalent (1) 500,000
Financial asset at fair value 200,000
Trade and other receivables (2) 700,000
Inventories (3) 900,000
Prepaid expenses (4) 50,000
Total current assets 2,350,000

Noncurrent Assets:
Plant, property and equipment (5) 5,000,000
Investment in associate, at equity 1,000,000
Long-term investments (6) 5,100,000
Intangible assets (7) 2,000,000
Other noncurrent assets (8) 100,000
Total noncurrent assets 13,200,000
TOTAL ASSETS 15,550,000

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
Trade and other payables (9) 750,000
Note payable-short-term debt 400,000
Current portion of bonds payable 200,000
Warranty liability 50,000
Total current liabilities 1,400,000

Noncurrent Liabilities:
Bonds payable-remaining portion 1,800,000
Note payable-due July 1, 2019 600,000
Deferred tax liability 100,000
Total noncurrent liabilities 2,500,000
TOTAL LIABILITIES 3,900,000

Shareholders' Equity
Share capital, $100 par 5,000,000
Reserves (10) 3,000,000
Retained earnings 3,650,000
Total SHAREHOLDERS' EQUITY 11,650,000
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 15,550,000

Note 1 - Cash and cash equivalents

Cash on hand 40,000

Cash in bank 300,000
Petty cash fund 10,000
RNS Treasury bill, purchased on December 1, 2017, due March 2, 2018 150,000
Total cash and cash equivalent 500,000
Note 2 - Trade and other receivables
Accounts receivable 580,000
Allowance for doubtful accounts (20,000)
Notes receivable 100,000
Accrued interest on notes receivable 10,000
Advances to employees, collectible currently 30,000
Total trade and other receivables 700,000

Note 3 - Inventories
Finished goods 300,000
Goods in process 400,000
Raw materials 150,000
Manufacturing supplies 50,000
Total inventories 900,000

Note 4 - Prepaid expenses

Office supplies unused 30,000

Prepaid insurance 20,000
Total prepaid expenses 50,000

Note 5 - Property, plant and equipment

Land 1,500,000
Building 4,500,000
Machinery and equipment 1,000,000
Furniture and fixtures 300,000
Patterns, molds, dies and tools, (net) 100,000
Total 7,400,000
Accumulated depreciation (2,400,000)
Carrying amount 5,000,000

Accumulated depreciation:
Building 1,900,000
Machinery and equipment 350,000
Furniture and fixtures 150,000
Total accumulated depreciation 2,400,000

Note 6 - Long-term investments

Plant expansion fund 2,000,000
Investment in bonds 3,000,000
Cash surrender value 100,000
Total long-term investments 5,100,000

Note 7 - Intangible assets

Patent 500,000
Franchise 1,500,000
Total intangible assets 2,000,000

Note 8 - Other noncurrent assets

Long-term refundable deposit 20,000
 Long-term advances to officers 80,000
Total other noncurrent assets 100,000

Note 9 - Trade and other payables

Accounts payable 350,000

Notes payable 150,000
Accrued interest on note payable 15,000
Income tax payable 50,000
Dividends payable 100,000
Accrued expenses 85,000
Total trade and other payables 750,000

Note 10 - Reserves
Share premium 2,000,000
Retained earnings appropriated for contingencies 1,000,000
Total reserves 3,000,000

Account Form

SINGLE COMPANY
Statement of Financial Position
December 31, 2017
(in USDollar)

ASSETS LIABILITIES AND SHAREHOLDERS' EQ

Current Assets: Current Liabilities:

Cash and cash equivalent (1) 500,000 Trade and other payables
Financial asset at fair value 200,000 Note payable-short-term debt
Trade and other receivables (2) 700,000 Current portion of bonds paya
Inventories (3) 900,000 Warranty liability
Prepaid expenses (4) 50,000 Total current liabilities
Total current assets 2,350,000
Noncurrent Liabilities:
Noncurrent Assets: Bonds payable-remaining port
Plant, property and equipment (5) 5,000,000 Note payable-due July 1, 2019
Investment in associate, at equity 1,000,000 Deferred tax liability
Long-term investments (6) 5,100,000 Total noncurrent liabilities
Intangible assets (7) 2,000,000 TOTAL LIABILITIES
Other noncurrent assets (8) 100,000
Other noncurrent assets 13,200,000 Shareholders' Equity
Share capital, $100 par
Reserves
Retained earnings
Total Shareholders' Equity

TOTAL LIABILITIES AND SHAREHOLDE

TOTAL ASSETS 15,550,000 EQUITY
 SINGLE COMPANY
tatement of Financial Position
December 31, 2017
(in USDollar)

LIABILITIES AND SHAREHOLDERS' EQUITY

(9) 750,000
Note payable-short-term debt 400,000
Current portion of bonds payable 200,000
50,000
1,400,000

Bonds payable-remaining portion 1,800,000

Note payable-due July 1, 2019 600,000
100,000
Total noncurrent liabilities 2,500,000
3,900,000

5,000,000
(10) 3,000,000
3,650,000
11,650,000

TOTAL LIABILITIES AND SHAREHOLDERS'

15,550,000
3 LEARNING CHECK
1. What are financial statements?

2. What are the components of financial statements?

3. Explain the objective of financial statements.

4. Define a statement of financial position.

5. What are the classification of assets? Define each.

6. What are the essential characteristics of a liability?

7. What are the classification of liabilities? Define each.

8. What are the elements comprising the equity of a corporation?

9. What is the meaning of "notes to financial statements"?

10. Explain the two forms of statement of financial position.

 3 problems
Problem 3-1
The following account balances are available from the records of Simple Company
at December 31, 2017:

Share capital $ 5,000,000

Share premium 500,000
Retained earnings 880,000
Serial bonds payable ($500,000 due every July 1 of each year) 2,500,000
Employees income tax payable 20,000
Note payable 100,000
Accrued expenses payable 30,000
Accrued interest on note payable 10,000
Income tax payable 60,000
Allowance for doubtful accounts 50,000
Advances from customers 100,000
Accounts receivable 500,000
Accumulated depreciation-building 1,600,000
Accumulated depreciation-machinery 1,300,000
Investment in bonds 1,500,000
Land 1,500,000
Machinery 2,000,000
Factory supplies 50,000
Notes receivable 150,000
Building 4,000,000
Cash 420,000
Claim receivable 20,000
Finished goods 400,000
Franchise 200,000
Goods in process 600,000
Prepaid insurance 20,000
Raw materials 200,000
Trading securities 250,000
Tools 40,000
Goodwill 100,000
Plant expansion fund 500,000
Accounts payable 300,000

Required:
Prepare a properly classified statement of financial position on December 31, 2017.
Problem 3-2
Summer Company provided the following account balances on December 31, 2017:

Accounts receivable $ 400,000

Advances to officers-not currently collectible 100,000
Sinking fund 400,000
Building 5,000,000
Long-term refundable deposit 50,000
Cash and cash equivalents 500,000
Cash surrender value 60,000
Equipment 1,000,000
Lease rights 100,000
Accrued interest on notes receivable 10,000
Inventories 1,300,000
Land 1,500,000
Land held for speculation 500,000
Notes receivable 250,000
Computer software 3,250,000
Prepaid expenses 70,000
Trading securities 280,000
Unearned rent income 40,000
Retained earnings (deficit) (1,800,000)
Share premium-preference 500,000
Premium on bonds payable 1,000,000
Preference share capital 2,000,000
Share premium-ordinary 200,000
Notes payable 300,000
Withholding tax payable 10,000
Accounts payable 400,000
Accrued salaries payable 100,000
Accumulated depreciation-building 2,000,000
Accumulated depreciation-equipment 200,000
Allowance for doubtful accounts 20,000
Bonds payable 5,000,000
Dividend payable 120,000
Ordinary share capital 5,000,000
Accrued salaries payable 30,000
Preference share redemption fund 350,000

Required:
Prepare a properly classified statement of financial position on December 31, 2017.
 Problem 3-3 Multiple Choice
1. Which of the following is a current asset?

a. Cash surrender value of a life insurance policy of which the company is the
beneficiary.
b. Investment in marketable securities for the purpose of controlling the issuing
company.
c. Cash designated for the purchase of tangible fixed assets.
bisa jadi D jg d. Trade installments receivable normally collectible in 18 months.

2. Working capital is

a. The group of assets which enables the business to operate profitably.

b. Capital which has been reinvested in the business.
c. Unappropriated retained earnings.
d. Current assets less current liabilities.

3. The basis for classifying assets as current or noncurrent is the period of time
normally elapsed from the time the accounting entity expends cash to the time it
converts

a. Inventory back into cash, or 12 months, whichever is shorter.

b. Receivables back into cash, or 12 months whichever is longer.
c. Tangible fixed assets back into cash, or 12 months, whichever is longer.
d. Inventory back into cash, or 12 months, whichever is longer.

4. The distinction between current and noncurrent assets and liabilities is now based
primarily on

a. One year; no exceptions.

b. One year or operating cycle whichever is shorter.
c. One year or operating cycle whichever is longer.
d. Operating cycle; no exceptions.

5. A deficit is synonymous with

a. A net loss for the current period.

b. A cash overdraft at the bank.
c. Negative working capital at the end of the period.
d. A debit balance in retained earnings at the end of the period.

6. Which of the following items should never be included in the current sections of
the statement of financial position?
 a. Premium paid over the face amount of bond investment.
b. Receivable from customer not collectible for over one year.
c. Deferred income taxes resulting from interperiod income tax allocation
d. Funded serial bonds.

7. As generally used, the term "net assets" represents

a. Retained earnings of a corporation.

b. Current assets less current liabilities.
c. Total paid-in capital of a corporation.
d. Total assets less total liabilities.

8. The operating cycle of a business is that span of time which

a. Coincides with the economy's business cycle which runs from one of the
economy's business activity to the next.
b. Corresponds with its natural business year which runs from one of the
particular firm's business activity to the next.
c. Is set by the industry's trade association usually on an average length of time
of all firms which are members of the association.
d. Runs from cash disbursement for items of inventory through their sale to the
realization of cash from sale.

9. For accounting purposes the term "current assets" is used to designate cash and
and other assets or resources commonly identified as:

a. Those which can be liquidated in the normal course of business during the
following fiscal year.
b. Those which will realized in cash or sold or consumed during the normal
operating cycle of the business.
c. Those which are reasonably expected to be realized in cash or sold or
consumed during the normal operating cycle of the business.
d. those which can be used for the payment of current liabilities or consumed
during the normal operating cycle of the business.

10. Which of the following items is current liability?

a. Bonds (for which there is an adequate sinking fund classified as long-term

investment).
b. Bonds due in five years.
c. Bonds due in eleven months.
d. Bonds to be refunded when due in eight months, there being no doubt about
the marketability of the refunding issue.

Problem 3-4
Following where taken from the books and records of Sussex Company as of December
31, 2017:

Dividends in arrears on preferred shares $ 20,000

Employees income tax withheld 3,000
Bonds payable, issued in current year and maturing in five annual
installments commencing April 1, 2018 200,000
Income tax payable 27,000
Contested tax assessment under litigation 50,000
Deferred income tax payable 8,000
Debtor's accounts with debit balance 5,000
Customers' accounts with credit balance 10,000
Cash overdraft 15,000

Required:
What is the amount of current liabilities on December 31, 2017?

Problem 3-5
The following data were provided by Adele Company:

Cash, including NSF customer's check of $3,000 $ 48,000

Accounts receivable, including the sales price of $6,000 of goods
consigned out at a profit of 140% on cost, still unsold by consignee 96,000
Inventory, including goods in transit purchased FOB shipping point,
$2,000 62,000
Prepaid expenses 1,500

Required:
What is the total current assets considering the data above for Adele Company?

Problem 3-6
The December 31, 2017 trial balance of Triple Company among others, includes the following:

Notes receivable, which have been reduced by notes discounted of

$10,000 that are not yet due and on which the company is
contingently liable (Not Included) $ 50,000

Accounts receivable, which include accounts with credit balances

of $5,000 and past due accounts of $3,000 on which a loss of
80% is anticipated (Included) (Customers Account with Credit Balanc 100,000

Merchandise inventory, which includes goods held on consignment,

$4,000 and goods received on December 31, $6,000. Neither
 of these items have been recorded as a purchase(Included) 90,000

Rent received in advance (included) 8,000

Notes payable, which are trade notes with the exception of $20,000
note payable to bank on June 30, 2018 60,000
Accounts payable, which include accounts with debit balance of $1,000 40,000

Mortgage notes, which are payable in annual installments of $5,000

on February 1 of each year 30,000

Required:
What is the amount of current liabilities on December 31, 2017?

Problem 3-7
The statement of financial position of Cindy Company on December 31, 2017 contained
the following data:

Cash, including sinking fund of $50,000 with trustee $ 150,000

Accounts receivable 300,000
Inventory, including $20,000 cost of goods in transit purchased
FOB point of destination. The goods are received Jan. 5, 2018 200,000
$ 650,000

The balance of accounts receivable disclosed the following:

Trade accounts $ 250,000

Advances to employees 10,000
Equity in $125,000 of accounts receivable assigned 5,000
Sales price of goods invoiced to customers at 40% profit on sales
on December 26, 2017 but delivered on January 3, 2018, and
not included in reported inventory 35,000
$ 300,000
Required:
What is the correct amount of current assets on December 31, 2017?

Problem 3-8
The following data were taken from the December 31, 2017 trial balance of Amex Company:

Retained earnings-free $ 200,000

Reserve for pending lawsuit 100,000
Reserve for depreciation 60,000
Reserve for warranties 20,000
Donated capital 10,000
 Treasury shares, cost 40,000
Excess over par 75,000
Share capital-authorized 500,000
Share capita-unissued 125,000
Share dividend distributable 50,000

Required:
Based on the foregoing, prepare shareholders' equity section on statement of financial
position as of December 31, 2017.

Problem 3-9
The following information pertains to Island company on December 31, 2017:

Overdraft with First Bank $ 5,000

Accounts payable 150,000
Dividends in arrears-Preference share 20,000
Share dividend payable 45,000
Accrued expenses 10,000
Mortgage payable-due December 31, 2022 100,000
Customers' deposits 15,000
Reserve for contingencies 25,000
Total liabilities $ 370,000

Required:
What is the correct amount of liabilities for accounting purposes on December 31, 2017?
Employees income tax withheld
Bonds payable, issued in current year and maturing in five annual
installments commencing April 1, 2018
Income tax payable
Customers' accounts with credit balance
Cash overdraft

Cash, including NSF customer's check of $3,000

Accounts receivable, including the sales price of $6,000 of goods
consigned out at a profit of 140% on cost, still unsold by consignee
Inventory, including goods in transit purchased FOB shipping point,
$2,000
Prepaid expenses
5,000
(Dividends in arrears on cumulative preferred stock: are considered to be a non-current liability)

(long-term liabilities)
(Customer deposit accounting means that the funds will be credited. It follows the accounting principle; the deposit is
(non current liabilities or retained earnings)
 3,000

(200.000/5) 40,000
27,000
10,000
15,000
95,000

$ 48,000 45000

96,000 8,400

62,000 6000
1,500 59400
$ 207,500
unting principle; the deposit is a current liability that is debited and sales revenue credited. A customer deposit could also be the
deposit could also be the amount of money)
Problem 3-1
The following account balances are available from the records of Simple Company
at December 31, 2017:

Share capital $ 5,000,000

Share premium 500,000

Retained earnings 880,000

Serial bonds payable ($500,000 due every July 1 of each year) 2,500,000
Employees income tax payable 20,000
Note payable 100,000
Accrued expenses payable 30,000
Accrued interest on note payable 10,000
Income tax payable 60,000
Allowance for doubtful accounts 50,000
Advances from customers 100,000
Accounts receivable 500,000
Accumulated depreciation-building 1,600,000
Accumulated depreciation-machinery 1,300,000
Investment in bonds 1,500,000
Land 1,500,000
Machinery 2,000,000
Factory supplies 50,000
Notes receivable 150,000
Building 4,000,000
Cash 420,000
Claim receivable 20,000
Finished goods 400,000
Franchise 200,000
Goods in process 600,000
Prepaid insurance 20,000
Raw materials 200,000
Trading securities 250,000
Tools 40,000
Goodwill 100,000
Plant expansion fund 500,000
Accounts payable 300,000

Required:
Prepare a properly classified statement of financial position on December 31, 2017.
 SIMPLE COMPANY
Statement of Financial Position
December 31, 2017

ASSETS
Note

Current Assets:
Cash (1) 420,000
Trading securities 250,000
Trade and other receivables (2) 600,000
Inventories (3) 900,000
Prepaid expenses (4) 50,000
Total current assets

Noncurrent Assets:
Plant, property and equipment (5) 4,700,000
Investment in associate, at equity 1,000,000
Long-term investments (6) 5,100,000
Intangible assets (7) 2,000,000
Other noncurrent assets (8) 100,000
Total noncurrent assets
TOTAL ASSETS

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
Trade and other payables (9) 750,000
Note payable-short-term debt 400,000
Current portion of bonds payable 200,000
Warranty liability 50,000
Total current liabilities

Noncurrent Liabilities:
Bonds payable-remaining portion 1,800,000
Note payable-due July 1, 2019 600,000
Deferred tax liability 100,000
Total noncurrent liabilities
TOTAL LIABILITIES

Shareholders' Equity
Share capital, $100 par 5,000,000
Reserves (10) 3,000,000
 Retained earnings 3,650,000
Total SHAREHOLDERS' EQUITY
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

Note 1 - Cash

Total Cash

Note 2 - Trade and other receivables

Accounts receivable
Allowance for doubtful accounts
Notes receivable
Total trade and other receivables

Note 3 - Inventories

Finished goods
Goods in process
Raw materials
Manufacturing supplies
Total inventories

Note 4 - Prepaid expenses

Office supplies unused

Prepaid insurance
Total prepaid expenses

Note 5 - Property, plant and equipment

Land
Building
Machinery and equipment
Patterns, molds, dies and tools, (net)
Total
Accumulated depreciation
Carrying amount

Accumulated depreciation:
Building
Machinery and equipment
Total accumulated depreciation
Note 6 - Long-term investments

Plant expansion fund

Investment in bonds
Cash surrender value
Total long-term investments

Note 7 - Intangible assets

Patent
Franchise
Total intangible assets

Note 8 - Other noncurrent assets

Long-term refundable deposit

Long-term advances to officers
Total other noncurrent assets

Note 9 - Trade and other payables

Accounts payable
Notes payable
Accrued interest on note payable
Income tax payable
Dividends payable
Accrued expenses
Total trade and other payables

Note 10 - Reserves

Share premium
Retained earnings appropriated for contingencies
Total reserves
 ASSETS
Current Assets :
Cash
Claim Receivable
Account Receivable
2,220,000 Factory Supplies
Allowance for Doubtful Account

Finished Goods
Goods in Process
Prepaid Insurance
Raw Materials
Trading Securities
12,900,000 Notes Receivable
15,120,000 Total Current Asset

Non Current Assets :

Investment in bonds
Land
Machinery
Building
Franchise
Goodwill
1,400,000 Plant Expansion Fund
Tools
Accumulated Depreciation
Building
Machinery

2,500,000 Total Non Current Asset

3,900,000
TOTAL ASSETS

LIABILITIES AND SHAREHOLDER'S EQUI

 Current Liabilities :
11,650,000 Note Payable
15,550,000 Accrued Expenses Payable
Accrued Interest on Note Payable
Income Tax Payable
Emploees Income Tax Payable
420,000 Accounts Payable
Advances from customers

Non Current Liabilities :

500,000 Serial Bonds Payable
(50,000) Total Liabilities
150,000
600,000 Shareholder's Equity :
Share Capital
Share Premium
Retained Earnings
400,000 Total Shareholder's Equity
600,000
200,000 TOTAL LIABILITIES & SHAREHOLDER'S EQUITY
50,000
1,250,000

30,000
20,000
50,000

1,500,000
4,000,000
2,000,000
100,000
7,600,000
2,900,000
4,700,000

1,600,000
1,300,000
2,900,000
2,000,000
3,000,000
100,000
5,100,000

500,000
1,500,000
2,000,000

20,000
80,000
100,000

350,000
150,000
15,000
50,000
100,000
85,000
750,000

2,000,000
1,000,000
3,000,000
 ASSETS

420,000
20,000
500,000
50,000
tful Account - 50,000

400,000
600,000
20,000
200,000
250,000
150,000
2,560,000

1,500,000
1,500,000
2,000,000
4,000,000
200,000
100,000
500,000
40,000

1,600,000
1,300,000
2,900,000
6,940,000

9,500,000

HAREHOLDER'S EQUITY
 100,000
30,000
Note Payable 10,000
60,000
20,000
300,000
100,000 Advance from customer is a liability account, in which is stored all payments from

2,500,000
3,120,000

5,000,000
500,000
880,000
6,380,000

LDER'S EQUITY 9,500,000

stored all payments from customers for goods or services that have not yet been delivered.
Problem 3-2
Summer Company provided the following account balances on December 31, 2017:

Accounts receivable
Advances to officers-not currently collectible
Sinking fund
Building
Long-term refundable deposit
Cash and cash equivalents
Cash surrender value
Equipment
Lease rights
Accrued interest on notes receivable
Inventories
Land
Land held for speculation
Notes receivable
Computer software
Prepaid expenses
Trading securities
Unearned rent income
Retained earnings (deficit)
Share premium-preference
Premium on bonds payable
Preference share capital
Share premium-ordinary
Notes payable
Withholding tax payable
Accounts payable
Accrued salaries payable
Accumulated depreciation-building
Accumulated depreciation-equipment
Allowance for doubtful accounts
Bonds payable
Dividend payable
Ordinary share capital
Accrued salaries payable
Preference share redemption fund

Required:
Prepare a properly classified statement of financial position on December 31, 2017.

Summer COMPANY
 STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 2017
ASSETS
Current Assets: Note
Cash and Cash equivalents $ 500,000.00
Trading securities $ 280,000.00
Trade and other receivables 1 $ 640,000.00
Inventories $ 1,300,000.00
Prepaid expenses $ 70,000.00
Total Current Assets $ 2,790,000.00
Non current Assets:
Property, plant and equipement 2 $ 5,300,000.00
Long term investments 3 $ 1,310,000.00
Intangible assets 4 $ 3,350,000.00
Other non current assets 5 $ 150,000.00
Total non current assets $ 10,110,000.00
Total Assets $ 12,900,000.00
LIABILITIES and SHAREHOLDER'S EQUITY
Current Liabilities:
Trade and other payable 6 $ 1,000,000.00
Total current Liabilities $ 1,000,000.00

Non current Liabilities:

Bond payable $ 5,000,000.00 ga ada notesnya
Premium on bonds payable $ 1,000,000.00
Total non current liabilities $ 6,000,000.00
Total Liabilities $ 7,000,000.00

Shaereholder's Equity:
Share Capital 7 $ 7,000,000.00
Reserves 8 $ 700,000.00
Retained Earnings (deficit) $ -1,800,000.00
Total shareholder's equity $ 5,900,000.00
Total Liabilities and Shareholder's Equity $ 12,900,000.00

Note 1 - Trade and Other Receivable

Account Receivable $ 400,000.00
Allowance for doubtful accounts $ -20,000.00
Notes Receivable $ 250,000.00
Accrued interest on notes receivable $ 10,000.00
Total $ 640,000.00

Note 2 - Property, Plant and Equipment

 Cost Accum. Depr Book Value
$
Land 1.500.000 $ 1,500,000.00
$
Building 5.000.000 $ 2.000.000 $ 3,000,000.00
$
Equipment 1.000.000 $ 200.000 $ 800,000.00
$
Total 7.500.000 $ 2.200.000 $ 5,300,000.00

Note 3 - Long term Investment

Land held for speculation $ 500,000.00
Sinking fund $ 400,000.00
Preference redemption fund $ 350,000.00
Cash surrender value $ 60,000.00
Total $ 1,310,000.00

Note 4 - Intangible Assets

Computer software $ 3,250,000.00
Lease rights $ 100,000.00
Total $ 3,350,000.00

Note 5 - Other non current assets

Advances to officers, not collectible currently $ 100,000.00
Long term refundable deposit $ 50,000.00
Total $ 150,000.00

Note 6 - Trade and Other Payable

Accounts payable $ 400,000.00
Notes payable $ 300,000.00
Unearned rent income $ 40,000.00
Withholding tax payable $ 10,000.00
Accrued salaries $ 130,000.00
Dividens payable $ 120,000.00
Total $ 1,000,000.00

Note 7 - Share Capital

Preference share capital $ 2,000,000.00
Ordinary share capital $ 5,000,000.00
Total $ 7,000,000.00

Note 8 - Reserves
Share premium - preference $ 500,000.00
Share premium - ordinary $ 200,000.00
Total $ 700,000.00
$ 400,000
100,000
400,000
5,000,000
50,000
500,000
60,000
1,000,000
100,000
10,000
1,300,000
1,500,000
500,000
250,000
3,250,000
70,000
280,000
40,000
(1,800,000)
500,000
1,000,000
2,000,000
200,000
300,000
10,000
400,000
100,000
2,000,000
200,000
20,000
5,000,000
120,000
5,000,000
30,000
350,000
ga ada notesnya
Problem 3-5
The following data were provided by Adele Company:

Cash, including NSF customer's check of $3,000

Accounts receivable, including the sales price of $6,000 of goods
consigned out at a profit of 140% on cost, still unsold by consignee
Inventory, including goods in transit purchased FOB shipping point,
$2,000
Prepaid expenses

Required:
What is the total current assets considering the data above for Adele Company?

Cash, including NSF customer's check of $3,000 $ 45,000

Accounts receivable, including the sales price of $6,000 of goods $ 93,000
consigned out at a profit of 140% on cost, still unsold by consignee
Inventory, including goods in transit purchased FOB shipping point, $ 62,000
$2,000
Prepaid expenses $ 1,500
$ 201,500

Cash, including NSF customer's check of $3,000 $ 48,000

Accounts receivable, including the sales price of $6,000 of goods $ 90,000
consigned out at a profit of 140% on cost, still unsold by consignee
Inventory, including goods in transit purchased FOB shipping point, $ 62,000
$2,000
Prepaid expenses $ 1,500
$ 201,500
$ 48,000

96,000

62,000
1,500
Problem 3-4
Following where taken from the books and records of Sussex Company as of December
31, 2017:

Dividends in arrears on preferred shares

Employees income tax withheld
Bonds payable, issued in current year and maturing in five annual
installments commencing April 1, 2018
Income tax payable
Contested tax assessment under litigation
Deferred income tax payable
Debtor's accounts with debit balance
Customers' accounts with credit balance
Cash overdraft

Required:
What is the amount of current liabilities on December 31, 2017?

Cash overdraft
Customers' accounts with credit balance
Income tax payable
Bonds payable, issued in current year and maturing in five annual
installments commencing April 1, 2018
Employees income tax withheld

employees income tax withheld 3000

income tax payable 27000
Bonds Payable 40000 200000:5
Customer account with credit balance 10000
Cash Overdraft 15000
95000
$ 20,000
3,000

200,000
27,000
50,000 (idk, ga banyak informasi tentang ini)
8,000 (Deferred income tax can be classified as either a current or long-term liability.)
5,000 (example account receivable)
10,000 (a “credit balance” refers to an amount that a business owes to a customer. It's when a customer has
15,000

15,000
10,000
27,000

200,000
3,000
. It's when a customer has paid you more than the current invoice stipulates. You can locate credit balances on the right side of
balances on the right side of a subsidiary ledger account or a general ledger account.)
Problem 3-6
The December 31, 2017 trial balance of Triple Company among others, includes the following:

Notes receivable, which have been reduced by notes discounted of

$10,000 that are not yet due and on which the company is
contingently liable

Accounts receivable, which include accounts with credit balances

of $5,000 and past due accounts of $3,000 on which a loss of
80% is anticipated

Merchandise inventory, which includes goods held on consignment,

$4,000 and goods received on December 31, $6,000. Neither
of these items have been recorded as a purchase

Rent received in advance

Notes payable, which are trade notes with the exception of $20,000
note payable to bank on June 30, 2018

Accounts payable, which include accounts with debit balance of $1,000

Mortgage notes, which are payable in annual installments of $5,000

on February 1 of each year

Required:
What is the amount of current liabilities on December 31, 2017?

accounts receivable 1000000

notes payable 60000
Accounts payable 40000

Notes Payable 60000

Accounts Payable 40000
100000
 (Not Included)

$ 50,000

(Included) (Customers Account with Credit Balances)

100,000

(Not Included)

90,000

8,000 (Not Included)

60,000 (included)

40,000 (included)

30,000 (Not Included)

Problem 3-7
The statement of financial position of Cindy Company on December 31, 2017 contained
the following data:

Cash, including sinking fund of $50,000 with trustee

Accounts receivable
Inventory, including $20,000 cost of goods in transit purchased
FOB point of destination. The goods are received Jan. 5, 2018

The balance of accounts receivable disclosed the following:

Trade accounts
Advances to employees
Equity in $125,000 of accounts receivable assigned
Sales price of goods invoiced to customers at 40% profit on sales
on December 26, 2017 but delivered on January 3, 2018, and
not included in reported inventory

Required:
What is the correct amount of current assets on December 31, 2017?
Cash, including sinking fund of $50,000 with trustee $ 150,000
Accounts receivable 300,000
Inventory, including $20,000 cost of goods in transit purchased
FOB point of destination. The goods are received Jan. 5, 2018 200,000
Trade accounts $ 250,000
$ 900,000
$ 150,000 include
300,000 include
include
200,000
$ 650,000

$ 250,000 include
10,000
5,000

35,000
$ 300,000
Problem 3-8
The following data were taken from the December 31, 2017 trial balance of Amex Company:

Retained earnings-free
Reserve for pending lawsuit
Reserve for depreciation
Reserve for warranties
Donated capital
Treasury shares, cost
Excess over par
Share capital-authorized
Share capita-unissued
Share dividend distributable

Required:
Based on the foregoing, prepare shareholders' equity section on statement of financial
position as of December 31, 2017.

Share Capital issued $375,000

Excess Over par $75,000
Donated Capital $10,000
Total Paid Up Capital $460,000

Retained Earnings free $200,000

Reserve for pending lawsuit $100,000
Reserve for depreciation $60,000
Reserve for waarranties $20,000
Trasury stock, cost -$40,000
$340,000
Total $800,000
$ 200,000
100,000
60,000 cadangan penyusutan
20,000 garansi untuk customer (contingent liability)
10,000
40,000
75,000
500,000
125,000
50,000
Problem 3-9
The following information pertains to Island company on December 31, 2017:

Overdraft with First Bank $ 5,000

Accounts payable 150,000
Dividends in arrears-Preference share 20,000
Share dividend payable 45,000
Accrued expenses 10,000
Mortgage payable-due December 31, 2022 100,000
Customers' deposits 15,000
Reserve for contingencies 25,000
Total liabilities $ 370,000

Required:
What is the correct amount of liabilities for accounting purposes on December 31, 2017?

Overdraft with First Bank $ 5,000

Accounts payable $ 150,000
Share dividend payable $ 45,000
Accrued expenses $ 10,000
Customers' deposits $ 15,000
Total liabilities $ 225,000
(Dividends in arrears on cumulative preferred stock: are considered to be a non-current liability)

(long-term liabilities)
(Customer deposit accounting means that the funds will be credited. It follows the accounting principle; the deposit is
(non current liabilities or retained earnings)
nting principle; the deposit is a current liability that is debited and sales revenue credited. A customer deposit could also be the
er deposit could also be the amount of money)