Reference no: EM133027060

Question - White Company provided the following information on December 31, 2021.

Cash in bank, net of bank overdraft of P500,000 in another bank 5,000,000

Notes receivable, net of discounted note of P500,000 4,000,000

Accounts receivable, net customers' accounts with credit balances P1,500,000 6,000,000

Inventory, excluding unrecorded purchases on account P300,000 in transit FOB

shipping point on December 31, 2021 3,000,000

Bond sinking fund set aside for bond payable due December 31, 2022 3,000,000

Accounts payable, net of supplier's accounts with debit balances of P1,000,000 7,000,000

Note payable due December 31, 2023 4,000,000

Bond payable due December 31, 2022 3,000,000

Claims from wages covered in a pending lawsuit 400,000

Estimated expenses in redeeming prize coupons 600,000

Accrued expenses 2,000,000

Blue Company reported the following information for the year ended December 31, 2021.

Sales 7,750,000

Cost of goods sold 2,400,000

Administrative expenses 700,000

Loss on sale of equipment 100,000

Sales commissions 500,000

Interest revenue 450,000

Freight out 150,000

Loss on early extinguishment of long-term debt 200,000

Doubtful accounts expense 150,000

At year-end, Blue Company committed to a plan to discontinue the operations of Underwear Division.

Blue Company estimated that the division's operating loss for 2022 would be P500,000. The fair value of the facilities of the division was P200,000 less than carrying amount on December 31, 2021. The division's operating loss for 2021 was P1,400,000 and the division was actually sold for P300,000 less than carrying amount in 2022. The income tax rate is 25%.

Red Company reported operating expenses other than interest expense for the year at 40% of cost of goods sold but only 20% of sales. Interest expense is 5% of sales. The amount of purchases in 120% cost of goods sold. Ending inventory is twice as much as the beginning inventory. The net income for the year was P3,000,000. The income tax rate is 25%.

1. What amount should White Company report as total current assets on December 31, 2021?

a. 21,300,000

b. 24,800,000

c. 24,000,000

d. 24,300,000

2. What amount should White Company report as total current liabilities on December 31, 2021?

a. 12,600,000

b. 15,900,000

c. 16,000,000

d. 12,900,000

3. What amount should Blue Company report as net income for 2021?

a. 3,000,000

b. 1,800,000

c. 1,425,000

d. 1,575,000

4. What amount should Red Company report as sales for the year?

a. 12,000,000

b. 20,000,000

c. 19,200,000

d. 16,000,000