Reference no: EM132979512
DAVAO COMPANY had the following accounts taken from the balance sheet as of December 31, 2019:
Cash in bank (net of bank overdraft of P20,000) P500,000
Trade accounts receivable (net of credit balance on
ABC INC. amounting to P10,000) 200,000
Trade accounts payable (net of debit balances in supplier's
accounts of P15,000) 385,000
Accrued electric and power bills 40,000
Property dividends payable (at fair value) 150,000
Share dividends payable 130,000
Cash dividends payable (payable after 14 months) 120,000
Mortgage payable 250,000
8% Serial bonds payable -with 5 equal annual payments,
issued July 1 this year 500,000
Trade notes payable (15 months left before maturity) 150,000
Financial liabilities held for trading 145,000
Unearned rent income 50,000
Deferred income from service contracts 150,000
Accrued taxes payable 75,000
10% 5 year loans payable (October 1, 2019) 200,000
Deferred tax liability - expected reversal is early next year 90,000
Estimated premiums liability 110,000
Contested BIR tax assessment - possible obligation 60,000
Taxes withheld from employees 70,000
Loan of LANAO INC. guaranteed by DAVAO - possible that DAVAO will be liable 185,000
12% Notes Payable - maturing on October 31, 2020 1,500,000
10% Notes Payable - maturing on December 31, 2020 300,000
8% Loans Payable - maturing on July 1, 2021 500,000
15% Notes payable - maturing on April 1, 2021 1,000,000
Bonds payable 2,000,000
Additional Information:
- The cash in bank comprises 2 bank accounts in 2 different banks.
- In relation to the 12% Notes payable, the entity entered into a refinancing agreement with BPIDO Bank to refinance 75% of the notes on December 15, 2019.
- The whole 10% notes payable was refinanced on January 7, 2020. FOREVERMORE INC. has the discretion to roll over the liability for at least 12 months from December 31, 2019.
- The bank loan agreement on the 8% loans payable requires DAVAO to maintain a current ratio of 3:1. If the current ratio falls down below 3:1, the loan becomes automatically payable on demand. Unfortunately, DAVAO's current ratio on December 31, 2018 is 2:1. However, On January 2, 2020, the bank agreed not to collect the loan until after 13 months from December 31.
- The term of the 15% notes payable give the holder a right to demand immediate payment if the entity fails to make monthly interest payment within 10 days of the date the payment is due. On December 31, 2019, DAVAO is three months behind in paying its required interest payment. On December 31, 2019, the bank agreed to give DAVAO a 180 day grace period to pay the outstanding balance.
- The bonds payable are 5-year 12% bonds issued March 31, 2015. Interest is payable semi-annually on March 31 and September 30.
- Except for the 15% notes payable and bonds payable, all interests are payable annually. There were no interest accruals made on any interest bearing liability as of year-end.
REQUIREMENT:
Problem 1: How much is the total current liabilities to be presented on the balance sheet as of December 31, 2019?