An entity was incorporated on January 1, 2020 with proceeds from the issuance of P5,000,000 in shares and borrowed funds of P1,000,000. During the first year of operations, revenue from sales amounted to P8,000,000 and operating costs and expenses totaled P6,000,000. On December 15, the entity declared a P500,000 cash dividend, payable to shareholders on January 15, 2021. No additional activities affected owners’ equity in 2020. The liabilities increased to P1,800,000 by December 31, 2020. What amount should be reported as total assets on December 31, 2020?

An entity was incorporated on January 1, 2020 with proceeds from the issuance of P5,000,000 in shares and borrowed funds of P1,000,000. During the first year of operations, revenue from sales amounted to P8,000,000 and operating costs and expenses totaled P6,000,000. On December 15, the entity declared a P500,000 cash dividend, payable to shareholders on January 15, 2021. No additional activities affected owners’ equity in 2020. The liabilities increased to P1,800,000 by December 31, 2020. What amount should be reported as total assets on December 31, 2020?

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 25E

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