On January 1, 2020, PT A had the following equity accounts.

Share Capital - Ordinary $ 600,000

Share Premium - Ordinary $ 150,000
Retained Earnings $ 500,000
Treasury Shares - Ordinary $ 24,000

a. Journalize the transaction.

1-Feb-20 Cash $ 45,000

Share Capital - Ordinary
Share Premium - Ordinary
20-Mar-20 Treasury Shares $ 24,000
Cash

Issued 63000
Outstanding 59500
Treasury 2019 2000
Treasury 2020 1500

1-Apr-20 Cash Dividend $ 29,750

Dividends Payable
1-May-20 Dividends Payable $ 29,750
Cash
14-Jun-20 Cash $ 14,000
Treasury Shares
Share Premium - Treasury

Issued 63000
Outstanding 60500
Treasury 2019 1000
Treasury 2020 1500

5-Jul-20 Patent $ 78,000

Share Capital - Ordinary
Share Premium - Ordinary

Issued 68000
Outstanding 65500
 Treasury 2019 1000
Treasury 2020 1500

1-Aug-20 Share Dividend $ 55,675

Ordinary Share Dividends Distributable
Share Premium - Ordinary
1-Sep-20 Ordinary Share Dividends Distributable $ 32,750
Share Capital - Ordinary

Issued 71275
Outstanding 68775
Treasury 2019 1000
Treasury 2020 1500

31-Dec-20 Income Summary $ 200,000

Retained Earnings

b. Prepare the Closing Entries

31-Dec-20 Retained Earnings $ 62,500

Cash Dividends
Share Dividends
Ordinary Shares Treasury Shares
Par Value $ 10 Value $ 12
Issued 60000 Outstanding 2000
Outstanding 58000

c. Prepare equity section of SoFP as of 31 December 2020.

PT A
$ 30,000 Statement of Financial Position
$ 15,000 As of 31 December 2020

$ 24,000 Share Capital - Ordinary ($10 Par Value, $ 712,750

71.275 issued, 68.775 outstanding)
Share Premium - Ordinary $ 215,925
Share Premium - Treasury $ 2,000
Retained Earnings $ 637,500
Less: Treasury Shares (2500 shares) $ (36,000)
Total Equity $ 1,532,175

$ 29,750

$ 29,750

$ 12,000
$ 2,000

$ 50,000
$ 28,000
$ 32,750
$ 22,925

$ 32,750

$ 200,000

$ 29,750
$ 32,750
PT ABC
Comparative Adjusted Trial Balance

31-Dec-20 31-Dec-19 Difference

Cash and Bank 147,100 153,700 (6,600)
Investment 97,400 105,300 (7,900)
Accounts Receivable 280,800 381,600 (100,800)
Inventory 432,000 360,000 72,000
Prepaid Expenses 64,800 43,200 21,600
Fixed Assets 3,677,800 3,224,000 453,800
Acc. Depreciation (1,900,000) (1,080,000) 820,000
Patents 267,000 367,200 (100,200)
Accounts Payable 996,000 888,000 108,000
Salaries Payable 44,000 40,000 4,000
Tax Payable 27,300 31,200 (3,900)
Notes Payable 250,000 875,000 (625,000)
Bank Payable 1,238,400 973,600 264,800
Share Capital 403,200 403,200 -
Retained Earnings 108,000 344,000 (236,000)
Sales 5,205,000 4,337,500 867,500
Sales Returns 72,800 60,700 12,100
Cost of Goods Sold 2,722,000 2,352,200 369,800
Salaries Expense 1,018,200 848,500 169,700
Rent Expense 21,600 19,400 2,200
Utilities Expense 62,500 56,200 6,300
Depreciation Expense 1,020,000 952,000 68,000
Amortization Expense 100,200 45,400 54,800
Loss on Sale of Plant Assets 52,600 27,000 25,600
Interest Expense 199,500 166,300 33,200
Income Tax Expense 162,000 135,000 27,000

Additional Information
1. The company pruchased new equipment for $1.353.800 cash
2. The company sold an old forklift that cost $900.000 and accumulated
depreciation $200.000
3. No additional patent or other intangible assets is acquired/sold by the
company during 2020. The existing patent is amortized annually.
4. Cash dividends declared and fully paid for 2020, $9600.
Operating Activities CA, CL, Depreciation, Loss/Gain
Investing Activities Fixed Asset / PPE
Financing Activities Bonds, Stocks, Cash Dividends, Notes
 PT ABC
Statement of Cash Flows
For the Year Ended 2020
Indirect Method
Cash Flow from Operating Activities
Net Loss
Adjustments to reconcile NI to NC provided by OA
Depreciation Expense 1,020,000
Amortization Expense 100,200
Loss on Sale of Plant Assets 52,600
Decrease in Accounts Receivable 100,800
Increase in Inventory (72,000)
Increase in Prepaid Expenses (21,600)
Increase in Accounts Payable 108,000
Increase in Salaries Payable 4,000
Decrease in Tax Payable (3,900)
Net Cash Provided by Operating Activities

Cash Flow from Investing Activities

Purchase of Equipment (1,353,800)
Sale of Equipment (Forklift) 647,400
Sale of Investment 7,900
Net Cash Used by Investing Activities

Cash Flow from Financing Activities

Payment of Notes Payable (625,000)
Increase in Bank Payable 264,800
Payment of Cash Dividends (9,600)
Net Cash Used by Financing Activities

Increase/Decrease in Cash
Cash at Beginning of Year
Cash at Ending of Year
Direct Method
Cash Flows from Operating Activities
Cash Received from Customers
Sales Revenue 5,132,200
Decrease in Accounts Receivable 100,800
Cash Payments to Suppliers
COGS 2,722,000
 Increase in Inventory 72,000
Increase in Accounts Payable (108,000)
Cash Payment for Operating Activities
Utilities Expense 62,500
Rent Expense 21,600
Increase in Prepaid Expenses 21,600
Cash Payment for Income Taxes
Income Tax Expense 162,000
Decrease in Tax Payable 3,900
Cash Payment for Interest
Interest Expense 199,500
Cash Payment for Employees
Salaries Expense 1,018,200
Increase in Salaries Payable (4,000)
Net Cash Provided by Operating Activities
 Net Income
Sales 5,205,000
Sales Returns (72,800)
Cost of Goods Sold (2,722,000)
Salaries Expense (1,018,200)
(226,400) Rent Expense (21,600)
Utilities Expense (62,500)
Depreciation Expense (1,020,000)
Amortization Expense (100,200)
Loss on Sale of Plant Assets (52,600)
Interest Expense (199,500)
Income Tax Expense (162,000)
Net Income (226,400)

Sale of Equipment
Cash 647,400
1,061,700 Acc. Depreciation 200,000
Loss on Sale of Plant Asset 52,600
Equipment 900,000

Sale of Investment
Cash 7,900
(698,500) Investment 7,900

(369,800)

(6,600)
153,700
147,100

5,233,000
(2,686,000)

(105,700)

(165,900)

(199,500)

-
(1,014,200)
1,061,700
Presented below is an aging schedule for PT A as of December 31, 2019.

Number of days past due

Customer Total Not Yet Due 1-30 31-60
PT Q 30,000 16,500 13,500
PT X 22,500 22,500
PT Y 48,500 16,000 7,500 25,000
PT Z 34,000
Others 132,000 96,000 16,000 14,000
267,000 134,500 40,000 52,500
Estimated % Uncollectible 2% 10% 15%

Unadjusted
AFDA 2019 12,300 (Credit)

a. Calculate estimated BDE as of 31 December 2019

Number of days past due
Customer Total Not Yet Due 1-30 31-60
PT Q 30,000 16,500 13,500
PT X 22,500 22,500
PT Y 48,500 16,000 7,500 25,000
PT Z 34,000
Others 132,000 96,000 16,000 14,000
Total 267,000 134,500 40,000 52,500
Estimated % Uncollectible 2% 10% 15%
Uncollectibles 2,690 4,000 7,875

Uncollectibles 84,365

AFDA
12,300
72,065 BDE
84,365 Uncollectibles

BDE 72,065

b. Journal to record BDE.

Bad Debt Expense 72,065

Allowance for Doubtful Accounts 72,065
c. Prepare journal entries for 2020

1-Mar-20 Allowance for Doubtful Accounts 1,900

Accounts Receivable
2-Apr-20 Accounts Receivable 1,500
Allowance for Doubtful Accounts
Cash 1,500
Accounts Receivable

d. Prepare journal entries to record BDE at 31 December 2020

Unadjusted
AFDA 2020 2,100 (Debit)
Uncollectibles 43270

AFDA
2,100
1,900
1,500
45,770 BDE
43,270 uncollectibles

BDE 45,770

31-Dec-20 Bad Debt Expense 45,770

Allowance for Doubtful Accounts
mber 31, 2019.

mber of days past due

61-90 >90

34,000
6,000 34,000
6,000 68,000
30% 100%

mber of days past due

61-90 >90

34,000
6,000 34,000
6,000 68,000
30% 100%
1,800 68,000
 1,900

1,500

1,500

45,770
Problem 4.1

PT A incurred the following cash disbursement during 2020

1. Legal costs on land purchased 3,500
2. Cost of landscaping on property purchased 7,200
3. Architect's fees on self constructed office building 10,000
4. Sales tax on factory machinery purchased 5,000
5. Cost of clearing, draining, and filling land 13,000
6. Painting and lettering on truck immediately upon purchase 700
7. Installation and testing of factory machinery 2,000
8. Insurance premium paid for first year's insurance on new truck 800
9. Cost of paving parking lot for new building being constructed 17,900

Journals:
Land 16,500
Cash 16,500

Building 10,000
Cash 10,000

Machinery 7,000
Cash 7,000

Truck 700
Cash 700

Prepaid Insurance 800

Cash 800

Land Improvement - Parking Lot 17,900

Cash 17,900

Land Improvement - Landscaping 7,200

Cash 7,200
Problem 4.2

PT A has the following assets:

Coal Mine
Purchased date 1-Jun-18
Purchase cost 500,000
Residual value 30,000
Estimated useful life 200,000
tons
Depreciation method Units of Activity
Actual Extraction and sale of coal
2018 22,500 tons
2019 72,000 tons
2020 66,000 tons

a. Compute the accumulated depreciation/amortization/depletion at 31 December

Coal Mine

Units of Activity = (Depreciable Cost / Total UoA) x UoA That Year

Depletion 2018 52,875

Depletion 2019 169,200
Depletion 2020 155,100
Acc. Depletion 377,175

b. Calculate the NBV of each asset at 31 December 2020

Net Book Value = Purchase Cost - Acc. Depreciation

Coal Mine

Purchase Cost 500,000

Acc. Depletion (377,175)
NBV 122,825

c. Journalize depreciation/amortization/depletion for 2020

Coal Mine

Inventory 155,100
Accumulated Depletion

d. Journal entry for disposal of furniture at March 31, 2021

Sold at 50,000

Cash 50,000
Accumulated Depreciation 119,220
Gain on Sale of Equipment
Equipment / Furniture

Depreciation for 2021 3,420

Accumulated Depreciation 119,220
 Franchise Furniture
1-May-19 1-Feb-18
300,000 150,000
30,000 30,000
4 5
years years
Straight Line Double Declining

ization/depletion at 31 December 2020.

Franchise

oA) x UoA That Year

Amortization 2019 45,000
Amortization 2020 67,500
Acc. Amortization 112,500

Franchise

Purchase Cost 300,000

Acc. Amortization (112,500)
NBV 187,500
 Franchise

Amortization Expense 67,500

155,100 Franchise 67,500

h 31, 2021

19,220
150,000
Furniture

Double Declining = BV at beginning of year x Declining Balance Rate

Depreciation 2018 55,000 BV End of 2018

Depreciation 2019 38,000 BV End of 2019
Depreciation 2020 22,800 BV End of 2020
Acc. Depreciation 115,800

Furniture

Purchase Cost 150,000

Acc. Depreciation (115,800)
NBV 34,200
Furniture

Depreciation Expense 22,800

Accumulated Depreciation 22,800
nce Rate

95,000
57,000
34,200
Problem 5.1
On 1 January 2019, PT A sold a bond.
Bonds $ 4,000,000
Coupon 9%
Market 8.57%
Term 5 years
Interest semiannual
Sold at 102%
No interest accured on June 30.

a. Prepare the journal entry to record issuance.

Cash $ 4,080,000
Bonds Payable $ 4,080,000

b. Bond premium amortization schedule for the first 4 interest periods.

Date Interest Paid Interest Expense Amortization CA of Bond

1-Jan-19 $ 4,080,000
1-Jul-19 $ 180,000 $ 174,767 $ 5,233 $ 4,074,767
1-Jan-20 $ 180,000 $ 174,543 $ 5,457 $ 4,069,309
1-Jul-20 $ 180,000 $ 174,309 $ 5,691 $ 4,063,618
1-Jan-21 $ 180,000 $ 174,065 $ 5,935 $ 4,057,683
1-Jul-21 $ 180,000 $ 173,811 $ 6,189 $ 4,051,494
1-Jan-22 $ 180,000 $ 173,546 $ 6,454 $ 4,045,040
1-Jul-22 $ 180,000 $ 173,269 $ 6,731 $ 4,038,309
1-Jan-23 $ 180,000 $ 172,981 $ 7,019 $ 4,031,290
1-Jul-23 $ 180,000 $ 172,680 $ 7,320 $ 4,023,971
1-Jan-24 $ 180,000 $ 172,367 $ 7,633 $ 4,016,337
1-Jul-24 $ 180,000 $ 172,040 $ 7,960 $ 4,008,377
1-Jan-25 $ 180,000 $ 171,699 $ 8,301 $ 4,000,076

c. Prepare adjusting entries for interest and amortization on December 31, 2019

31-Dec-19 Interest Expense $ 174,543

Bonds Payable $ 5,457
Interest Payable $ 180,000

d. Prepare journal entries for interest payment on January 1, 2020.

 1-Jan-20 Interest Payable $ 180,000
Cash $ 180,000

e. On January 1, 2021, company calls the entire bonds.

Called at 120%

1-Jan-21 Bonds Payable $ 4,057,683

Loss on Bond Redemption $ 742,317
Cash $ 4,800,000
Problem 5.2
On March 1, 2020, ledger of PT A contains the following liability accounts.
Accounts Payable 52,450
Sales Tax Payable 7,700
Unearned Service Revenue 16,400

a. Journalize the transactions.

1-Mar-20 Cash 18,000

Notes Payable

Assume Interest Rate 12%

10-Mar-20 Sales Tax Payable 7,700

Cash
14-Mar-20 Accounts Receivable 139,150
Sales Revenue
Sales Tax Payable
22-Mar-20 Accounts Receivable 22,860
Sales Revenue
Sales Tax Payable
31-Mar-20 Unearned Service Revenue 4,100
Service Revenue

b. Adjusting entries for outstanding notes payable.

31-Mar-20 Interest Expense 180

Interest Payable

c. Prepare Current Liabilities section of Statement of Financial Position at March 3

PT A
Statement of Financial Position
As of March 31, 2020

Current Liabilities
Accounts Payable 41,690.00
Sales Tax Payable 14,728.18
Unearned Service Revenue 12,300.00
Notes Payable 18,000.00
 Interest Payable 180.00
Total Current Liabilities 86,898.18
ollowing liability accounts.

18,000

per year

7,700

126,500
12,650

20,782
2,078

4,100

180

nt of Financial Position at March 31