On January 1, 20x1, DOLEFUL SAD Co. took a 3-year, ₱4,000,000 loan from a bank. The loan agreement requires DOLEFUL  to  maintain a  current ratio of  2:1.  If  the current ratio  falls below 2:1,  the  loan  becomes payable  on demand. As of December 31, 20x1, DOLEFUL's current ratio is 1.8:1. On December 31, 20x1, the bank agreed not to collect the loan in 20x2 and gave DOLEFUL 12 months to rectify the breach of loan agreement. How much is presented as current liability in relation to the loan in DOLEFUL's 20x1 year-end financial statements?

5.  On  December  31,  20x1,  INTIMIDATE  FRIGHTEN  Co.  has  accounts  payable  of  ₱4,000,000  before  possible 

adjustment for the following: 

•  Goods  in  transit  from  a  vendor  to  INTIMIDATE  on  December  31,  20x1  with  an  invoice  cost  of  ₱200,000 

purchased FOB shipping point was not yet recorded. 

•  Goods  shipped  FOB  shipping point from a  vendor  to INTIMIDATE was  lost  in transit. The invoice  cost  of 

₱80,000 was not yet recorded.  

•  Goods  shipped  FOB  shipping  point  from  a  vendor  to  INTIMIDATE  on  December  31,  20x1  amounting  to 

₱32,000 was recorded and included in the year-end physical count as "goods in transit." 

•  Goods  in  transit  from  a  vendor  to  INTIMIDATE  on  December  31,  20x1  with  an  invoice  cost  of  ₱40,000 

purchased FOB destination was not yet recorded. The goods were received in January 20x2. 

•  Goods with invoice cost of ₱60,000 was recorded and included in the year-end physical count as "goods in 

transit." It was found out that the goods were shipped from a vendor under FOB destination. 

•  Checks  drawn  but not yet  released  to  payees  amounted  to ₱48,000  while  checks  drawn  and  released  to 

payees but were postdated amounted to ₱20,000. 

•  On December 28, 20x1, a vendor authorized INTIMIDATE to return for full credit goods shipped and billed at 

₱100,000 on December 14, 20x1. INTIMIDATE shipped the returned goods on December 31, 20x1 but the 

credit memo was received and recorded only on January 3, 20x2. 

•  Goods shipped FOB shipping point, freight prepaid from a vendor on December 28, 20x1 was recorded at 

invoice cost at shipment date. The invoice cost is ₱56,000 while the freight cost is ₱12,000.  

•  Goods shipped FOB destination,  freight collect  were received on December 29, 20x1.  The invoice cost of 

₱160,000 was credited to accounts payable on date of receipt and the related freight of ₱20,000 was debited 

to an expense account.  

 

How much is the adjusted accounts payable on December 31, 20x1? 

6.  QUIDDITY ESSENCE Co. has a 10%, ₱4,000,000 loan payable as of December 31, 20x1 that is maturing on July 1, 20x2. Interest on the loan is due every July 1 and December 31. On February 1, 20x2, QUIDDITY Co. entered into a refinancing agreement with a bank to refinance the loan on a long-term basis. Both parties are financially capable of honoring the agreement's provisions. QUIDDITY has the discretion to refinance or roll over the loan for at least twelve months from December 31, 20x1 under an existing loan facility. QUIDDITY's financial statements were authorized for issue on March 15, 20x2. How much is presented as current liability in relation to the loan in QUIDDITY's 20x1 year-end financial statements? 

Answer rating: 100% (QA)

ANSWER 5 To determine the adjusted accounts payable on December 31 ... View the full answer