DOMALAON, LORIE JAE E.

May 25, 2017

ACT 123 Q1- FINALS SOLUTIONS
SOLUTIONS
PROBLEM 1

1. Loan 1 100,000
Loan 2 300,000
Loan 3 500,000
Short term obligations: 250,000
3,600,000
Long term Current portion 1,000,000
Callable 700,000
TOTAL CURRENT LIABILITIES P6,450,000

2. Long term- Non-current portion 3,000,000

Long-term 2,500,000
TOTAL NON-CURRENT LIABILITIES 5,500,000

PROBLEM 2
3. AP Unadjusted 1,500,000
Trade creditors, dr bal 63,000
Goods received on consignment (41,000)
Invoice not received (45,000)
AP Adjusted P1,477,000

4. Trade Creditors (P63,000)

5. Misc. , beg 3,000

Loss from purchase 8,000
Goods lost in transit 7,000
Misc. loss P18,000

6. Advances to Zambales worth 24,000

PROBLEM 3

7. 6,200,000 X 2% = P124,000
8. Warranty Liability, beg 272,000
Warranty Expense 124,000
Inventory (464,000)
Warranty Liability, end P68,000

9. Coupons to be redeemed ( P1900K/60%) 1,140,000

divide exchange rate 4,000
Est. number to be issued 285
X Net cost (800-600) 600
PREMIUM EXPENSE P171,000
DOMALAON, LORIE JAE E. May 25, 2017
ACT 123 Q1- FINALS SOLUTIONS
10. Inventory Premium, beg 464,000
Purchased (6500 X 800) 5,200,000
Distributed ( 24,800K / 4K = 6,200 X 800) 4,960,000
Inventory Premium, end P704,000

11.
12.

PROBLEM 4

13. Date Interest Paid Interest Expense Amortization

CV
(7.5%) (6%)

1/1/15
1,172,044
12/31/15 75,000 70,322.64 4677.36
1,167,366.64
1/2/16 75,000 70,042 4958
1,162408.64
7/1/16 75,000 69,744.52 5255.48
1,157153.16
12/31/16 75,000 69,429.19 5570.81
1,151582.35

14. Cash paid 265,000

Interest (200K X 7.5%) (15,000)
Redemption Price 250,000
CA of bonds redeemed (1,151,583 X 200/1000) (230,317)
LOSS ON BOND REDEMPTION P19,683

15. 800,000 X 7.5% = P 60,000

16. 69,744.52 + 69,429.19 = P 139,173.71

PROBLEM 5

21. Pretax Financial income 427,500

Goodwill 87,500
PRETAX SUBJECT TO INCOME TAX P 515,000

22. 2017 275,000

2018 300,000
DOMALAON, LORIE JAE E. May 25, 2017
ACT 123 Q1- FINALS SOLUTIONS
2019 200,000
Total 775,000 X 30% = 232,500
2016 1,300,000 X 30% = (390,000)
INCOME TAX PAYABLE P 157,500

PROBLEM 6

23. Beg 2,500,000

Contribution 500,000
Total Actual return on plan asset 300,000
Expected return (45,000)
Fair value of the plan asset, end P3,255,000

24. Total actual return 300,000

Interest Income (2,500,000 X 6%) (150,000)
TOTAL ACTUAL RETURN- P/L P150,000

25. Cumulative taxable 2,300,000

870,000/ 30% (2,900,000)
600,000
Cumulative Deductible 1,000,000
570,000/ 30% (1,900,000)
900,000

Taxable Income 2016 2,600,000

Deductible 900,000
Taxable (600,000)
PRETAX FINANCIAL INCOME 2016 P 2,900,000