Problem No. 1

AACA Corporation was incorporated on Dec. 1, 2021, and began operations one week later. Before closing the books for the fiscal year ended Nov. 30, 2022, the controller prepared the following financial statements:

AACA Corporation Statement of Financial Position November 30, 2022
Assets
Current assets
Cash	P150,000
Marketable securities, at cost	60,000
Accounts receivable	450,000
Allowance for doubtful accounts	( 59,000)
Inventories	430,000
Prepaid insurance	15,000
Total current assets	1,046,000
Property, plant and equipment	426,000
Less accumulated depreciation	( 40,000)
Property, plant and equipment, net	386,000
Research and development costs	120,000
Total assets	P1,552,000
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued expenses	P 592,000
Income taxes payable	224,000
Total current liabilities	816,000
Shareholders' equity
Share capital, P10 par value	400,000
Retained earnings	336,000
Total shareholders' equity	736,000
Total liabilities and shareholders' equity	P1,552,000
AACA Corporation Statement of Income For the Fiscal Year Ended November 30, 2022
Net sales	P2,950,000
Operating expenses:
Cost of sales	1,670,000
Selling and administrative	650,000
Depreciation	40,000
Research and development	30,000
	2,390,000
Income before income taxes	560,000
Provision for income taxes	224 000
Net income	P 336,000

AACA is in the process of negotiating a loan for expansion purposes, and the bank has requested audited financial statements. During the course of the audit, the following additional information was obtained:

1. The investment portfolio consists of short-term investments in marketable equity securities with a total fair value of P55,050 as of Nov. 30, 2022.
2. Based on an aging of the accounts receivable as of Nov. 30, 2022, it was estimated that P36,000 of the receivables will be uncollectible.
3. Inventories at Nov. 30, 2022 did not include work in process inventory costing P12,000, sent to an outside processor on Nov. 29, 2022.
4. A P3,000 insurance premium paid on Nov. 30, 2022 on a policy expiring one year later was charged to insurance expense.
5. On June 1, 2022, a production machine purchased for P24,000 was charged to repairs and maintenance. AACA depreciates machines of this type on the straight-line method over a five-year life with no salvage value, for financial and tax purposes.
6. Research and development costs of P150,000 were incurred the development of a patent, which AACA expects to be granted during the fiscal year ending Nov. 30, 2023. AACA initiated a five-year amortization of the P150,000 total cost during the fiscal year ended Nov. 30, 2022.
7. During Dec. 2022, a competitor company filed suit against AACA for patent infringement claiming P200,000 damages. AACA's legal counsel believes that an unfavorable outcome is probable. A reasonable estimate of the court's award to the plaintiff is P72,500.
8. The 40% effective tax rate was determined to be appropriate for calculating the provision for income taxes for the fiscal year ended Nov. 30, 2022. Ignore computation of the deferred portion of income taxes.

Based on the given information and the result of your audit, determine the following as of and for the fiscal period ended Nov. 30, 2022 (Input your answers in figures, do not put peso sign, comma, decimals or extra spaces):

1. Net income
2. Current assets
3. Total assets
4. Total liabilities
5. Total equity