Reference no: EM133075348

Questions -

Q1. KIR Co. was incorporated on January 1, 2021. The following were the transactions during the year:

Total consideration from share issuances amounted to 4,000,000.

A land and building were acquired through a lump sum payment of 800,000. A mortgage amounting to 200,000 was assumed on the land and building.

Total payments of 160,000 were made during the year on the mortgage assumed on the land and building. The payments are inclusive of interest amounting to 20,000.

Additional capital of 400,000 was obtained through bank loans. None of the bank loans were paid during the year. Half of the bank loans required a secondary mortgage on the land and building.

There is no accrued interest as of year-end.

Dividends declared during the year but remained unpaid amounted to 120,000.

No other transactions during the year affected liabilities.

Retained earnings as of December 31, 2021 is 240,000.

How much is the total assets as of December 31, 2021?

Q2. On January 1, 2021, P40,000 was borrowed from a bank and a note payable was signed. What are the two accounts affected by this transaction?

A. Cash (an asset) decreases by P40,000; Notes payable (a liability) decreases by P40,000

B. Cash (an asset) increases by P40,000; Notes payable (a liability) decreases by P40,000

C. Cash (an asset) decreases by P40,000; Notes payable (a liability) increases by P40,000

D. Cash (an asset) increases by P40,000; Notes payable (a liability) increases by P40,000

Q3. The working capital of KER Co. on December 31, 2021 are presented below:

Cash on hand - 200,000

Cash in bank - 108,000

Notes receivable - 250,000

Trade receivable - 600,000

Inventory - 650,000

Prepaid expenses - 45,000

Trade payables - 325,000

Notes payable (due annually at 500,000 payable every March 31) - 1,000,000

Accrued expenses - 40,000

How much total current assets should KER Co. present in its statement of financial position on December 31, 2021?