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    (Ust-Jpia) Quiz 1 Intermediate Accounting 2 Solution Manual

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    RENZ ALFRED ASTRERO
    This document provides a quiz reviewer for an Intermediate Accounting 2 course. It covers key accounting theories and concepts related to financial liabilities, notes payable, and accounting for interest. It also includes 7 problems to test understanding of accounting for accounts payable, notes payable, interest calculations, and amortization of bond premiums and discounts. The problems require calculation of account balances, interest expense, present values, and partial amortization tables. The reviewer is intended to help students prepare for the quiz through reviewing essential course material and working through practice problems.

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    Download as PDF, TXT or read online from Scribd

    (Ust-Jpia) Quiz 1 Intermediate Accounting 2 Solution Manual

    Uploaded by

    RENZ ALFRED ASTRERO
    94 views6 pages
    This document provides a quiz reviewer for an Intermediate Accounting 2 course. It covers key accounting theories and concepts related to financial liabilities, notes payable, and accounting for interest. It also includes 7 problems to test understanding of accounting for accounts payable, notes payable, interest calculations, and amortization of bond premiums and discounts. The problems require calculation of account balances, interest expense, present values, and partial amortization tables. The reviewer is intended to help students prepare for the quiz through reviewing essential course material and working through practice problems.

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    [UST-JPIA] QUIZ 1 INTERMEDIATE ACCOUNTING 2 SOLUTION MANUAL

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    This document provides a quiz reviewer for an Intermediate Accounting 2 course. It covers key accounting theories and concepts related to financial liabilities, notes payable, and accounting for interest. It also includes 7 problems to test understanding of accounting for accounts payable, notes payable, interest calculations, and amortization of bond premiums and discounts. The problems require calculation of account balances, interest expense, present values, and partial amortization tables. The reviewer is intended to help students prepare for the quiz through reviewing essential course material and working through practice problems.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    94 views6 pages

    (Ust-Jpia) Quiz 1 Intermediate Accounting 2 Solution Manual

    Uploaded by

    RENZ ALFRED ASTRERO
    This document provides a quiz reviewer for an Intermediate Accounting 2 course. It covers key accounting theories and concepts related to financial liabilities, notes payable, and accounting for interest. It also includes 7 problems to test understanding of accounting for accounts payable, notes payable, interest calculations, and amortization of bond premiums and discounts. The problems require calculation of account balances, interest expense, present values, and partial amortization tables. The reviewer is intended to help students prepare for the quiz through reviewing essential course material and working through practice problems.

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    INTERMEDIATE ACCOUNTING 2 (CA51010)

    QUIZ 1 REVIEWER
    Prepared by the Mentors’ Circle Committee of the UST – Junior Philippine Institute of Accountants

    I. THEORIES
    ANSWER EXPLANATION
    The issuance of warrants, options, and rights is classified as equity because
    1. B exercising the rights results in the entity obtaining additional resources from
    potential shareholders.
    Liability is a present obligation of an entity to transfer an economic resource
    2. B
    as a result of a past event.
    IFRS 9 (Financial Instruments) states that financial liabilities must be initially
    3. C recognized at fair value. Thus, if a financial liability is measured at amortized
    cost, directly attributable costs must be included in its initial measurement.
    All required disclosures must be present in an entity’s financial statements. If
    the financial liabilities are expected to be settled within the normal operating
    4. A
    cycle, then these must be presented as current liabilities. Otherwise, they should
    be treated as non-current liabilities.
    As provided by IFRS 9 Financial Instruments, financial liabilities are initially
    5. A
    recognized at fair value.
    6. B
    7. C
    If cash discounts are recorded when taken, then the accounting method used is
    8. C
    the gross method. Otherwise, net method.
    9. B Trade discounts are not recorded in the book of accounts.
    Statements I and V refer to trade discounts. For statement III, cash discounts not
    10. B taken by the company are debited to the purchase discount lost account under net
    method.
    Interest bearing notes are initially recorded at the present value of the future cash
    11. B
    outflow to settle the obligation.
    To find the total interest expense in a non-interest bearing note, the carrying
    12. A
    value of the notes payable is multiplied by the interest rate.
    A note payable is subsequently measured at amortized cost using the effective
    13. C interest method or at fair value if it is irrevocably designated as measured at fair
    value through profit or loss.
    Amortizing the discount on note payable gradually increases the carrying amount
    14. C
    of the liability over the term of the note.
    15. B Debit Discount on notes payable
    II. PROBLEM SOLVING

    PROBLEM 1 – WHALE COMPANY


    1. ANS: 0
    2. ANS: 3,247,500

    Accounts payable, unadjusted 2,500,000

    Written and recorded on December 20, 2021; mailed on January 10, 2022 400,000

    Purchased on December 21, 2021; recorded on January 9, 2022 300,000

    FOB Destination (lost in transit); not recorded as of December 31, 2021 0

    FOB Destination; shipped on December 26, 2021; received on December 29, 2021; 0
    recorded on December 31, 2021

    FOB Supplier; in transit on December 31, 2021 47,500

    ACCOUNTS PAYABLE, ADJUSTED 3,247,500

    PROBLEM 2 – JINA & REY INC.


    3. ANS: 86,400
    List Price 120,000
    X: Trade Discount @ 20% 0.8
    Initial Invoice Price 96,000
    X: Trade Discount @ 10% 0.9
    FINAL INVOICE PRICE 86,400

    4. ANS: 0
    By nature, trade discounts are NOT recorded in the book of accounts, only cash discounts.

    PROBLEM 3 – WOO YOUNG WOO CORP.


    5. ANS: 912,700
    Beg. Accounts Payable 645,000
    Jan. 18 Purchases (132,000 x 0.96) 126,720
    Freight 5,800
    Jan. 23 Purchases (144,000 x 0.97) 139,680
    Freight (4,500)
    END. ACCOUNTS PAYABLE 912,700
    6. ANS: 922,300

    Beg. Accounts Payable 645,000


    Jan. 18 Purchases 132,000
    Freight 5,800
    Jan. 23 Purchases 144,000
    Freight (4,500)
    END. ACCOUNTS PAYABLE 922,300

    PROBLEM 4 – SEN CORPORATION


    7. ANS: 2,950,380
    Periodic payments 600,000
    Present value factor of an ordinary annuity at 6% for 6 periods* x 4.9173
    PRESENT VALUE OF NOTE ON MARCH 1, 2021 2,950,380

    *Principal is payable in semi-annual payments.

    PROBLEM 5– SEN CORPORATION


    8. ANS: 3,000,000
    Due Date Principal Due Interest Due
    October 1, 2023 2,000,000 10M x 10% 1,000,000
    October 1, 2024 2,000,000 8M x 10% 800,000
    October 1, 2025 2,000,000 6M x 10% 600,000
    October 1, 2026 2,000,000 4M x 10% 400,000
    October 1, 2027 2,000,000 2M x 10% 200,000
    TOTAL INTEREST EXPENSE 3,000,000

    9. ANS: 2,100,000
    Interest payable from October – December 2025 = 400,000 x 3/12 = 100,000
    Notes payable = 2,000,000
    PROBLEM 6– SUN AND MOON CO.
    10. ANS: 3,214,968

    Down Payment 500,000

    Present Value of the Note


    (3,000,000 x PV Factor 0.6209) 1,862,700
    Present Value of Interest Payments
    (3,000,000 x 12% x PV Factor 3.7908) 1,364,688

    Cost of Office Equipment 3,727,388

    Present Value of the Note 1,862,700

    Present Value of Interest Payments 1,364,688

    Initial Carrying Value of Note Payable 3,227,388

    Partial Amortization Table:


    Date Nominal Interest Effective Interest Amortization of CV of Note
    (12%) (10%) Premium Payable

    9/1/2021 - - - 3,227,388

    8/31/2022 360,000 322,739 37,261 3,190,127

    8/31/2023 360,000 319,013 40,987 3,149,140

    Carrying Value of Note Payable, 9/1/2021 3,227,388

    Amortization – 9/1/2021 to 12/31/2021 [4 months]


    (37,261 x 4/12) (12,420)

    CARRYING VALUE OF NOTE PAYABLE, 12/31/2021 3,214,968


    11. ANS: 321,497

    Partial Amortization Table:


    Date Nominal Interest Effective Interest Amortization of CV of Note
    (12%) (10%) Premium Payable

    9/1/2021 - - - 3,227,388

    8/31/2022 360,000 322,739 37,261 3,190,127

    8/31/2023 360,000 319,013 40,987 3,149,140

    Interest - 1/1/2022 to 8/31/2022 [8 months]


    (322,739 x 8/12) 215,159

    Interest – 9/1/2022 to 12/31/2022 [4 months]


    (319,013 x 4/12) 106,338

    INTEREST EXPENSE, 12/31/2022 321,497

    PROBLEM 7 – WOO CORP.


    12. ANS: 4,534,968

    Principal Interest Future Cash PV of 1 Present


    Repayment Payment Payment @12% Value

    12/31/2022 1,000,000 400,000 1,400,000 .8929 1,250,060

    12/31/2023 1,000,000 320,000 1,320,000 .7972 1,052.304

    12/31/2024 1,000,000 240,000 1,240,000 .7118 882,632

    12/31/2025 1,000,000 160,000 1,160,000 .6355 737,180

    12/31/2026 1,000,000 80,000 1,080,000 .5674 612,792

    NP 12/31/2022 4,534,968
    13. ANS: 3,679,164

    Partial Amortization Table:


    Principal Interest Interest Discount Carrying
    Date Repayment Payment Expense Amortization Value
    1/1/2022 4,534,968

    12/31/2023 1,000,000 400,000 544,196 144,196 3,679,164

    or: (4,534,968 x 1.12) - 1,400,000 = 3,679,164

    PROBLEM 8 – HYPE BOY INC.


    14. ANS: 405,120
    CARRYING VALUE = [2,000,000 - (2,000,000 x 0.712)] – (2,000,000 x 0.712 x 12%) =
    405,120

    15. ANS: 191,386


    CARRYING VALUE = (2,000,000 x 0.712 x 1.12) x 12% = 191,386

    “Stick to the fight when you’re hardest hit –


    It’s when things seem worse that you must not quit.”
    - Don’t Quit by John Greenleaf Whittier

    Prepared by:
    Cabalog, Jane Nicole N. Hilario, Jen Margaret B. Carranza, Erika A.
    Panlilio, Julia Pae V. Ilao, Ma. Catherine I. Cervantes, Ronilo Jr. D.
    Labeña, Vince Emmanuel P. Paracad, Cezanne Nietzsche C. Chu, Denielle Ray S.
    Cortez, Jewel May D.R. Bagsik, Caroline Louise C. Malaga, Gwyneth P.
    Calle, Marc Danniell Alexie T. Bristol, Ana Zareah Gabrielle E. Santos, Patricia O.

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