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[CMACPA]

Questions 37 through 39 are based on the following information.The condensed balance sheet as of December 31, 1982 of MASBATE INC. is given below. Figuresshown by a question mark (?) may be computed from the additional information given:ASSETS LIAB. & STOCKHOLDERS’ EQUITYCash P 60,000 Accounts payable P ?Trade receivable-net ? Current notes payable 40,000Inventory ? Long-term payable ?Fixed assets-net 252,000 Common stock 140,000Retained earnings ?Total Assets P 480,000 Total L & SHE P 480,000Additional information:Current ratio (as of Dec . 31, 1982) 1.9 to 1Ratio of total liabilities to total stockholders’ equity 1.4Inventory turnover based on sales and ending inventory 15 timesInventory turnover based on cost of goods sold and ending inventory 10 timesGross margin for 1982 P500,00037. The balance of accounts payable of MASBATE as of December 31, 1982 isA. P40,000 C. P95,000B. P80,000 D. P280,00038. The balance of retained earnings of MASBATE as of December 31, 1982 isA. P60,000 C. P200,000B. P140,000 D. P360,00039. The balance of inventory of MASBATE as of December 31, 1982 isA. P68,000 C. P168,000B. P100,000 D. P228,000

 

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To solve for the missing values and answer the questions, we can use the information provided as well as some accounting ratios and formulas.

1. Current Ratio:
Given: Current Ratio = Current Assets / Current Liabilities = 1.9
From the balance sheet:
Current Assets = Cash + Trade receivable-net + Inventory = P60,000 + ? + ?
Current Liabilities = Accounts payable + Current notes payable = ? + P40,000
Given Current Ratio = 1.9, we can set up an equation:
(Current Assets) / (Current Liabilities) = 1.9
(P60,000 + ? + ?) / (? + P40,000) = 1.9
Solving this equation will give us the values of missing current assets and accounts payable.

2. Ratio of Total Liabilities to Total Stockholders' Equity:
Given: Ratio of total liabilities to total stockholders' equity = 1.4
From the balance sheet:
Total Liabilities = Current Liabilities + Long-term payable = (? + P40,000) + ?
Total Stockholders' Equity = Common Stock + Retained Earnings = P140,000 + Retained Earnings
Given Ratio of total liabilities to total stockholders' equity = 1.4, we can set up an equation:
(Total Liabilities) / (Total Stockholders' Equity) = 1.4
((? + P40,000) + ?) / (P140,000 + Retained Earnings) = 1.4
Solving this equation will give us the value of retained earnings.

3. Inventory Turnover:
a. Inventory Turnover based on Sales and Ending Inventory = 15 times
Given: Gross Margin for 1982 = P500,000
Using the formula: Gross Margin = Sales - Cost of Goods Sold
We can calculate the Cost of Goods Sold.
Then, Inventory Turnover based on Sales and Ending Inventory = Sales / Ending Inventory = 15
These calculations will help us find the value of Ending Inventory.

b. Inventory Turnover based on Cost of Goods Sold and Ending Inventory = 10 times
Knowing the Cost of Goods Sold from the previous step, we can calculate the value of Ending Inventory.

Having solved for these missing values, we can then answer the questions:
37. The balance of accounts payable of MASBATE as of December 31, 1982 is
38. The balance of retained earnings of MASBATE as of December 31, 1982 is
39. The balance of inventory of MASBATE as of December 31, 1982 is

By following the steps outlined above and performing the necessary calculations, we can find the answers to these questions.