a.  The following information pertains to Prince Company as of December 31, 2020:
Accounts payable ₱ 480,000
Notes payable, including note payable to bank on 12/31/20 858,000
Share dividend distributable 75,000
Bonds payable due on 12/31/2025 3,000,000
Accrued interest on bonds payable 20,000
Accrued salaries expense 40,000
Unearned rent income 18,000
Compute the total current liabilities on December 31, 2020.

b. On January 1, 2020, Gillian Co. issued its 10% bonds at face amount of
₱3,000,000, which will mature on January 1, 2025. The bonds were issued for ₱3,405,000 to
yield 8%, resulting in bond premium of ₱405,000. Gillian uses the effective-interest method
of amortizing bond premium. Interest is payable annually on December 31.

What is the issue price of the bonds?
What should be the carrying value of the bonds at December 31, 2020?

c. On January 1, Dion Inc. issued ₱5,000,000, 9% bonds for ₱4,695,000. The
market rate of interest for these bonds is 10%. Interest is payable annually on December 31.
Dion uses the effective-interest method of amortizing bond discount.
How much is the interest expense for year?
What amount should be reported as bonds payable at the end of the first year?

d. Liabilities. The following data pertain to PO Company as of June 30, 2020:
a. Accounts payable arising from purchased of goods, ₱115,000.
b. Cash dividends payable, ₱30,000.
c. Income tax payable, ₱18,000.
d. Accrued salaries payable, ₱20,000.
e. Customer’s deposits, ₱9,900.
f. Provision for warranty, ₱5,200,
g. Reserve for contingencies, ₱50,000
h. Mortgage payable, ₱2,000,000
Based on the above data, what is the total amount of actual liabilities to be reported on the
statement of financial position of June 30, 2020?

e. Liquidity and Solvency Ratio. Presented below is information available for Martin
Company.
Total current assets ₱2,800,000
Total assets 8,500,000
Total current liabilities 1,200,000
Total liabilities 3,000,000
Income before income taxes 690,000
Interest expense 150,000

What is the working capital of Martin Company?
What is the current ratio of Martin Company?
Is the company liquid, able to pay current maturing obligations?
What is the debt to total assets ratio of the company?
What is the times interest earned ratio of the company?
Is the company solvent?

Answer rating: 100% (QA)

a As per the given information total current liabilities Account Payable Notes Payable including note payable to bank Accrued interest on bonds payabl... View the full answer