Answered: Additional information: a.…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Below are the account balances prepared by the bookkeeper for Torres Company as of December 31, 2021:

Cash Accts receivable, net	Php1,765,000 930,007
Inventories	750,000
Investments, cost	763,000

Additional information:

a. Included in the cash account are the following: compensating cash fund legally restricted for withdrawal of P300,000; Cash for the retirement of bonds payable of P600,000; Contingency fund of P500,000; Three-months money market funds of P250,000; short term operating funds of P50,000; currencies and coins on hand in various denominations, P65,000.

b. The receivable includes, among others; Customers’ account with credit balance of P45,000; Share subscription receivable of P100,000 collectibles within two years from initial recognition. Shares were originally subscribed on June 2, 2020. Also, it included a P600,000 (which had been past due for 6 months) charged to the account of an officer who at the moment is experiencing financial difficulty but promised to pay in full with in a period of three years. The delivery of the full amount will be as follows: P100,000 at the end of 2022; P200,000 at the end of 2020 and P300,000 at the end of 2024. Torres Company agreed to the terms of payment and charges no interest for the future recovery of recognized receivable. Implicit rate of interest for a similar financial asset at the time the receivable was originally recognized is 9%.

c. Inventories do not include goods costing P100,000 sent to a consignee, however, Torres Company charged the consignee for the total sales value of the goods. The goods were marked to sell at 25% on cost. The “account sales” (report from the consignee) revealed that 75% of the goods were already sold. Charges of the consignee are as follows: 8% commission on the sales value of merchandise sold and P3,000 delivery cost for merchandise sold.

d. The investment account included among others the following: Prepaid operating costs, P30,000; Investment in equity to profit or loss, P150,000; Investment in equity to other comprehensive income, P200,000; Investment in associate, P383,000.

The fair value of the investment in equity to profit or loss is P170,000 while the investment in equity through other comprehensive income of P250,000. The other investments had no determinable fair value at the end of year 2021.

How much of the above accounts should be reported as current assets for the year ended December 21,
2021?

Group of answer choices

P1,915,000

P1,665,007

P1,815,000

P1,765,000

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