Cash And Cash Equivalent Latest

CASH AND CASH EQUIVALENT 1. Campbell Company had the following account balances on December 31, 2016: Petty cash fund Cash in bank- current account Cash in bank- payroll account Cash in bank – sinking fund Cash on hand Cash in bank – restricted account for plant addition And expected to be disbursed in 2017 Treasury bills

50,000 4,000,000 1,200,000 2,000,000 500,000 1,500,000 1,000,000

The petty cash fund included unreplenished December 2016 petty cash expense vouchers P 5,000 and employee IOU P 5,000. The cash on hand included a P 100,000 customer check payable to Campbell dated January 15, 2017. In exchange for a guaranteed line of credit, the entity has agreed to maintain a minimum balance of P 200,000 in the unrestricted current bank account. The sinking fund is set aside to settle a bond payable that is due on June 30, 2017. What total amount should be reported as cash and cash equivalents on December 31, 2016? a. 8,640,000 b. 7,440,000 c. 7,640,000 d. 5,640,000 2. Yasmin Company provided the following information on December 31, 2016: Petty cash fund Current account – First bank Current account – Second bank ( overdraft) Money market placement – Third Bank Time deposit – Fourth Bank   

50,000 4,000,000 ( 250,000 ) 1,000,000 2,000,000

The petty cash fund included unreplenished December 2016 petty cash expense vouchers for P 15,000 and an employee check for P 5,000 dated January 31, 2017. A check for P 100,000 was drawn against First Bank current account dated and recorded December 29, 2016 but delivered to payee on January 15, 2017. The Fourth Bank time deposit is set aside for land acquisition in December 31, 2017.

What total amount should be reported as cash and cash equivalents on December 31, 2016?

a. b. c. d.

5,130,000 5,150,000 4,130,000 4,880,000

3. Carla Company provided the following information on December 31, 2016: Cash on hand Petty cash fund Security Bank current account PNB Current account No. 1 PNB Current account No. 2 ( overdraft ) BSP treasury bill – 60 days  

500,000 20,000 1,000,000 400,000 ( 50,000 ) 3,000,000

The cash on hand included a customer postdated check of P 100,000 and postal money order of P 40,000. A check for P 200,000 was drawn against Security Bank account, dated January 15,2016, delivered to the payee and recorded December 31, 2016.

What total amount of cash and cash equivalents should be reported on December 31, 2016? a. 4,970,000 b. 6,970,000 c. 4,770,000 d. 1,970,000 4. On December 31, 2016, Erika Company reported cash account balance per ledger of P 3,600,000 which included the following: Cash in bank – demand deposit Time deposit – 30 days NSF check of customer Money market placement due on June 30, 2017 Saving deposit IOU from an employee Pension fund Petty cash fund Customer check dated January 31, 2017 Customer check outstanding for 18 months   

1,500,000 500,000 20,000 1,000,000 50,000 30,000 400,000 10,000 60,000 30,000 3,600,000 Check of P 100,000 in payment of accounts payable was dated and recorded on December 31, 2016 but mailed to creditors on January 15, 2017. Check of P 50,000 dated January 31, 2017 in payment of accounts payable was recorded and mailed December 31, 2016. The cash receipts journal was open until January 15, 2017, during which time P 200,000 was collected and recorded on December 31, 2016.

What total amount should be reported as cash and cash equivalents on December 31, 2016? a. b. c. d.

2,010,000 1,960,000 1,860,000 1,510,000

5. Celine Company provided the following information on December 31, 2016: Cash on hand Philippine Bank current account Manila Bank current account City Bank current account ( bank overdraft) Asia Bank saving account for equipment acquisition Asia Bank time deposit, 90 days

200,000 5,000,000 4,000,000 ( 100,000 ) 250,000 2,000,000

Included among the checks drawn by Celine against the Philippine Bank current account and recorded in December 2016 are:  

Check written and dated December 23, 2016 and delivered to payee on January 3, 2017, P 100,000. Check written December 26, 2016, dated January 30, 2017, delivered to payee on December 28, 2016, P 150,000.

What total amount should be reported as cash and cash equivalents on December 31,2016? a. b. c. d. 6.

11,200,000 11,450,000 10,950,000 11,700,000 On December 31, 2016, Roma Company reported cash of P 3,350,000 with the following details:

Undeposited collections

60,000

Cash in bank – BDO checking account

500,000

Cash in bank- PNB ( overdraft)

( 50,000)

Undeposited NSF check received from customer, Dated December 1, 2016

15,000

Undeposited check from a customer, dated January 15, 2017

25,000

Cash in bank – BDO fund for payroll

150,000

Cash in bank – BDO saving deposit

100,000

Cash in bank – BDO money market instrument, 90 days

2,000,000

Cash in foreign bank restricted

100,000

Cash in bank – BDO value added tax account

450,000

Total

3,350,000

On December 31, 2016, what total amount should be reported as cash and cash equivalents? a. b. c. d. 7.

2,910,000 2,810,000 2,760,000 3,260,000 Dove Company reported checkbook balance on December 31, 2016 at P 4,000,000.  

 

A customer check amounting to P 200,000 dated January 2, 2017 was included in the December 31, 2016 checkbook balance. Another customer check for P 500,000 deposited on December 22, 2016 was included in the checkbook balance but returned by the bank for insufficiency of fund. This check was redeposited on December 30, 2016 and cleared two days later. A P 400,000 check payable to supplier dated and recorded on December 30, 2016 was mailed on January 16, 2017. A petty cash fund of P 50,000 comprised the following on December 31, 2016: Coins and currencies Petty cash vouchers Return value of 20 cases of soft drinks



5,000 43,000 2,000 50,000 A check of P 43,000 was drawn on December 31, 2016 payable to Petty Cash.

What total amount should be reported as “cash” on December 31, 2016? a. b. c. d.

4,248,000 4,200,000 4,205,000 3,748,000 BANK RECONCILIATION

1. In preparing the bank reconciliation for the month of August, Apex Company provided the following information: Balance per bank statement Deposit in transit Return of customer’s check for insufficient fund Outstanding checks

1,805,000 325,000 60,000 275,000

Bank service charge for August a. b. c. d.

10,000

1,855,000 1,795,000 1,785,000 1,755,000

2. In preparing the bank reconciliation for the month of December, Case Company provided the following data: Balance per bank statement Deposit in transit Amount erroneously credited by bank to Case’s account Bank service charge for December NSF check Outstanding checks

3,800,000 520,000 40,000 5,000 50,000 675,000

1. What is the adjusted cash in bank? a. 3,685,00 b. 3,645,000 c. 3,600,000 d. 3,605,000 2. What is the unadjusted cash in bank balance per book? a. 3,550,000 b. 3,660,000 c. 3,610,000 d. 3,655,000 3. Mindanao Company provided the following data for the month of December: Balance per book Bank service charges Outstanding checks Deposit in transit Customer note collected by bank Interest on customer note Customer check returned NSF Depositor’s payment of note payable charged to account 1. What is the adjusted cash in bank? a. 1,575,000 b. 1,065,000 c. 1,075,000

1,000,000 3,000 235,000 300,000 375,000 15,000 62,000 250,000

d. 1,325,000 2. What is the unadjusted cash in bank per bank statement? a. 1,310,000 b. 1,010,000 c. 775,000 d. 945,000 3. Core Company provided the following data for the purpose of reconciling the cash balance per book with the balance per bank statement on December 31, 2016:

Balance per book

850,000

Balance per bank statement

2,000,000

Outstanding checks, including certified check of P 100,000

500,000

Deposit in transit

200,000

December NSF checks ( of which P 50,000 had been Redeposited and cleared on December 27)

150,000

Erroneous credit to Core’s account, representing Proceeds of loan granted to another company

300,000

Proceeds of note collected by bank for Core, net of Service charge of P 20,000

750,000

What amount should be reported as cash in bank on December 31, 2016? a. b. c. d.

1,500,000 1,400,000 1,800,000 1,450,000

4. Aries Company kept all cash in a checking account. An examination of the accounting records and bank statement for the month of June revealed the following information:     

The cash balance per book on June 30 is P 8,500,000. A deposit of P 1,000,000 that was placed in the bank’s night depository on June 30 does not appear on the bank statement. The bank statement shows on June 30, the bank collected note for Aries and credited the proceeds of P 950,000 to the entity’s account. Checks outstanding on June 30 amount to P 300,000 Aries discovered that a check written in June for P 200,000 in payment of an account payable, had been recorded in the entity’s records as P 20,000.

 

Included with the June bank statement was NSF check for P 250,000 that Aries had received from a customer on June 26. The bank statement shows a P 20,000 service charge for June 30.

What amount should be reported as cash in bank on June 30? a. 9,000,000 b. 8,300,000 c. 9,360,000 d. 9,180,000 5. Able Company received the bank statement for the month of March. However, the closing balance of the account was unreadable. Attempts to contact the bank after hours did not secure the desired information. February 28 book balance Note collected by bank Interest earned on note NSF check of customer Bank service charge on NSF check Other bank service charges Outstanding checks Deposit of February 28 placed in night depository Check issued by Axle Company charged to Able’s account

1,460,000 100,000 10,000 130,000 2,000 3,000 202,000 85,000 20,000

What is the cash balance per bank statement? a. 1,435,000 b. 1,532,000 c. 1,338,000 d. 1,557,000 6. Stellar Company provided the bank statement for the month of December which included the following information: Ending balance, December 31 Bank service charge for December Interest paid by bank to Stellar Company for December

2,800,000 12,000 10,000

In comparing the bank statement to its own cash records, the entity found the following: Deposits made but not yet recorded by the bank Checks written and mailed but not yet recorded by the bank

350,000 650,000

In addition, the entity discovered that it had drawn and erroneously recorded a check for P 46,000 that should have been recorded for P 64,000. What is the cash balance per ledger on December 31? a. b. c. d.

2,500,000 2,520,000 2,540,000 2,800,000

7. Letty Company provided the bank statement for the month of April which included the following information: Bank service charge for April Check deposited by Letty during April was not collectible And been marked “NSF” by the bank and returned

15,000 40,000

In comparing the bank statement to its own records, the entity found the following: Deposits made but not yet recorded by bank Checks written and mailed but not yet by bank

130,000 100,000

All deposits in transit and outstanding checks have been properly recorded in the entity’s books. A customer check for P 35,000 payable to Letty Company had not yet been deposited and had not been recorded by the entity. The cash in bank account balance per ledger is P 920,000. What is the adjusted cash in bank on April 30? a. b. c. d.

900,000 865,000 930,000 965,000

8. Gallant Company showed a cash account balance of P 4,500,000 at the month-end. The bank statement did not include a deposit of P 230,000 made on the last day of the month. The bank statement showed a collection by the bank of P 94,000 for the depositor and a customer check for P 32,000 returned because it was NSF.

A customer check for P 45,000 was recorded by the depositor as P 54,000, and a check written for P 79,000. What amount should be reported as cash in bank? a. 4,765,000 b. 4,571,000 c. 4,819,000 d. 4,801,000

BANK RECONCILIATION COMPREHENSIVE PROBLEM

1. Divine Company prepared the following bank reconciliation on December 31, 2016: Balance per bank statement Add: Deposit in transit Checkbook printing charge Error made by Divine in recording Check issued in December NSF check Total Less: outstanding check Note collected by the bank Including P 15,000 interest Balance per book

2,800,000 195,000 5,000 35,000 110,000

345,000 3,145,000

100,000 215,000

315,000 2,830,000

The entity had cash on hand P 500,000 and petty cash fund P 50,000 on December 31, 2016. 1. What amount should be reported as cash in bank on December 31, 2016? a. 2,930,000 b. 3,095,000 c. 2,895,000 d. 3,130,000 2. What total amount of cash should be reported on December 31, 2016? A. 3,395,000 B. 3,350,000 C. 3,445,000 D. 3,380,000

3. Margar Company kept all cash in a checking account. An examination of the accounting records and bank statement for the month of December revealed a bank statement balance of P 8,470,000 and a book balance of P 8,525,000. A deposit of P 950,000 placed in the bank’s night depository on December 29 does not appear on the bank statement. Checks outstanding on December 31 amount to P 270,000. The bank statement showed that on December 25 the bank collected a note for Margar Company and credited the proceeds of P 935,000 to the entity’s account which included P 35,000 interest. Margar Company discovered that a check written in December for P 183,000 in payment of an account had been recorded as P 138,000. Included with the December 31 bank statement was an NSF check for P 250,000 that Margar Company had received from a customer on December 20. The bank statement showed a P 15,000 service charge for December. What is the adjusted cash in bank on December 31? a. 9,150,000 b. 9,240,000 c. 9,195,000 d. 9,215,000 4. Ron Company provided the following data for the month of January: Balance per book, January 31 Balance per bank statement, January 31 Collection on January 31 but undeposited NSF check received from a customer returned by the Bank on February 5 with the January bank statement Checks outstanding on January 31 Bank debit memo for safety deposit box rental not Recorded by depositor A creditor check for P 30,000 was incorrectly Recorded in the depositor’s book as A customer check for P 200,000 was recorded by the Depositor as The depositor neglected to make an entry in its books For a check drawn in payment of an account payable What is the adjusted cash in bank on January 31?

3,130,000 3,500,000 550,000 50,000 650,000 5,000 300,000 20,000 125,000

a. 3,130,000 b. 3,500,000 c. 3,400,000 d. 2,950,000 5. In reconciling the cash balance on December 31 with that shown in the bank statement, Sam Company provided the following information: Balance per bank statement Balance per book Outstanding checks Deposit in transit Service charge Proceeds of bank loan, December 1, discounted for 6 Months at 12%, not recorded on Sam Company’s books Customer check charged back by bank as absence Of counter signature Deposit of P 100,000 incorrectly recorded by bank as Check of Sim Company charged by bank against Sam account

4,000,000 2,700,000 600,000 475,000 10,000 940,000 50,000 10,000 150,000

Customer’s note collected by bank in favour of Sam Company. Face 400,000 Interest 40,000 Total 440,000 Collection fee 5,000 435,000 Erroneous debit memo of December 28, to charge Sam account with settlement of bank loan Deposited of Sim Company credited to Sam account

200,000 300,000

What is the adjusted cash in bank on December 31? a. b. c. d.

4,315,000 3,925,000 3,075,000 4,015,000

6. Susan Company showed the following information on August 31: Balance of cash in bank account Balance of bank statement Outstanding checks, August 31 : Number 555 761

1,300,000 1,200,000 10,000 55,000

762 763 764 765 Receipts of August 31, deposited September 1 Service charge for August NSF check received from customer

40,000 25,000 65,000 70,000 275,000 5,000 85,000

The cashier – bookkeeper had misappropriated P 30,000 and an additional P 10,000 by charging sales discounts and crediting accounts receivable. The stub for check number 765 and the invoice relating thereto showed that it was for P 50,000. It was recorded incorrectly in the cash disbursements journal as P 70,000. This check was drawn in payment of an account payable. Payment has been stopped on check number 555 which was drawn in payment of an account payable. The payee cannot be located. What is the adjusted cash in bank on August 31? a. b. c. d.

1,240,000 1,230,000 1,210,000 1,200,000

7. Mcbride Company provided the following data pertaining to the cash transactions and bank account for the month of May: Cash balance per accounting record Cash balance per bank statement Bank service charge Debit memo for the cost of printed checks delivered by the Bank; the charge has not been recorded in the accounting Record Outstanding checks Deposit of May 30 not recorded by bank until June 1 Proceeds of a bank loan on May 30, not recorded in the Accounting record, net of interest of P 30,000 Proceeds from a customer promissory note, principal amount P 800,000 collected by the bank not taken up in the Accounting record with interest Check No. 1086 issued to a supplier entered in the

1,719,000 3,195,000 10,000

12,000 685,000 500,000 570,000

810,000

Accounting record as P 210,000 but deducted in the bank Statement at an erroneous amount of 120,000 Stolen check lacking an authorized signature deducted From Mcbride’s account by the bank in error 80,000 Customer check returned by the bank marked NSF, Indicating that the customer balance was not Adequate to cover the check; no entry has been made In the accounting record to record the returned check 77,000 What is the adjusted cash in bank? a. b. c. d.

3,000,000 2,910,000 3,080,000 2,990,000

8. Grass Company provided the following information: Balance per bank statement July 31 Balance per ledger, July 31 Deposit of July 30 not recorded by bank Debit memo – service charges Credit memo – collection of note by bank for Grass Outstanding checks

 

1,240,000 750,000 280,000 10,000 300,000 550,000

An analysis of the canceled checks returned with the bank statement revealed the following: Check for purchase of supplies was drawn for P 60,000 but was recorded as P 90,000. The manager wrote a check for travelling expenses of P 100,000 while out of town. The check was not recorded. What amount of cash in bank should be reported on July 31? a. 970,000 b. 270,000 c. 550,000 d. 610,000 9. Carefree Company prepared the following bank reconciliation on March 31: Book balance Add: Deposit in transit Collection of note Interest on note Total

1,405,000 750,000 2,500,000 150,000

3,400,000 4,805,000

Less: Careless Company deposited credited To our account Bank service charge Adjusted book balance Bank balance Add: Error by depositor on recording check Total Less: Preauthorized payments for water bills NSF customer check Outstanding checks Adjusted bank balance

1,100,000 45,000

1,145,000 3,660,000 5,630,000 45,000 5,675,000

205,000 220,000 1,650,000

2,075,000 3,600,000

The check erroneously recorded by the depositor was made for the proper amount of P 249,000 in payment of account. However it was entered in the cash payments journal as P 294,000. The entity authorized the bank to automatically pay its water bills as submitted directly to the bank . What amount should be reported as cash in bank on March 31? a. 3,660,000 b. 3,600,000 c. 3,630,000 d. 2,880,000 PROOF OF CASH 1. Lazer Company had the following bank reconciliation on June 30: Balance per bank statement, June 30 Deposit in transit Total Outstanding checks Balance per book, June 30

3,000,000 400,000 3,400,000 ( 900,000) 2,500,000

The bank statement for the month of July showed the following: Deposits, including P 200,000 note collected for Lazer Disbursements, including P 140,000 NSF customer check And P 10,000 service charge

9,000,000 7,000,000

All reconciling items on June 30 cleared through the bank in July. The outstanding checks totalled P 600,000 and the deposit in transit amounted to P 1,000,000 on July 31.

1. What is the adjusted cash in bank on July 31? a. 2,500,000 b. 5,400,000 c. 2,900,000 d. 5,000,000 2. What is the cash balance per book on July 31? a. 5,400,000 b. 5,350,000 c. 5,550,000 d. 4,500,000 3. What is the amount of cash receipts per book in July? a. 9,400,000 b. 9,600,000 c. 8,600,000 d. 9,800,000 4. What is the amount of cash disbursements per book in July? a. 6,550,000 b. 6,700,000 c. 7,300,000 d. 6,850,000 2. Chris Company presented the following bank reconciliation for the month of November: Balance per bank statement, November 30 Add: deposit in transit Less: Outstanding checks Bank credit recorded in error Balance per book, November 30

3,600,000 800,000 4,400,000 1,200,000 200,000

1,400,000 3,000,000

Data per bank statement for the of December follow: December deposits, including note collected of P 1,000,000 for Chris December disbursements, including NSF customer check P 350,000 and service charge P 50,000

5,500,000 4,400,000

All items that were outstanding on November 30 cleared through the bank in December, including the bank credit. In addition, checks amounting to P 500,000 were outstanding and deposits of P 700,000 were in transit on December 31.

1. What is the adjusted cash in bank on December 31? a. 4,700,000 b. 4,900,000 c. 4,500,000 d. 3,200,000 2. What is the cash balance per ledger on December 31? a. 4,100,000 b. 4,900,000 c. 4,700,000 d. 4,300,000 3. What is the amount of cash receipts per book in December? a. 5,400,000 b. 4,400,000 c. 5,500,000 d. 6,400,000 4. What is the amount of cash disbursements per book in December a. 3,700,000 b. 3,300,000 c. 3,100,000 d. 3,500,000 3. Lira Company prepared the following bank reconciliation on June 30: Balance per bank Deposits in transit Outstanding checks Balance per book

9,800,000 400,000 ( 1,400,000 ) 8,800,000

There were total deposits of P 6,500,000 and charges for disbursements of P 9,000,000 for July per bank statement. All reconciliation items on June 30 cleared the bank on July 31. Checks outstanding amounted to P 1,000,000 and deposits in transit totalled P 1,200,000 on July 31. 1. What is the amount of cash disbursements per book in July? a. 8,600,000 b. 7,600,000 c. 9,400,000 d. 8,400,000 2. What is the adjusted cash in bank on July 31? a. 7,300,000 b. 6,300,000 c. 7,500,000 d. 6,500,000

4. Oro Company had the following bank reconciliation on March 31: Balance per bank statement, March 31

4,650,000

Add: Deposit in transit

1,030,000

Total

5,680,000

Less: outstanding checks

1,260,000

Balance per book, March 31

4,420,000

Data per bank statement for the Month of April: Deposits

5,840,000

Disbursements

4,970,000

All reconciliation items on March 31 cleared through the bank in April. Outstanding checks on April 30 totaled P 700,000 and there were no deposits in transit on April 30. What is the cash balance per book on April 30? a. b. c. d.

4,820,000 5,290,000 5,520,000 5,850,000 4. Queen Company reported the following bank reconciliation for the month of November: Balance per bank statement November 30 Deposit in transit Outstanding checks Bank credit recorded in error Balance per book, November 30

1,804,000 415,000 ( 630,000 ) ( 2,000 ) 1,587,000

Data per bank for the month of December: December deposits December disbursements

2,610,000 2,242,000

All items that were outstanding on November 30 cleared through the bank in December, including the bank credit. In addition, checks of P 250,000 were outstanding on December 31. What is the balance of cash per book on December 31? a. 1,922,000 b. 1,924,000 c. 2,172,000

d. 2,422,000 5. Jam Company provided the following bank reconciliation on May 31: Balance per bank statement Deposits outstanding Checks outstanding Correct cash balance Balance per book Bank service charge Correct cash balance Data for the month of June: Checks recorded Deposits recorded Collection by bank ( P 400,000 Note plus interest) NSF check returned with June 30 Statement Balances

2,100,000 300,000 ( 30,000 ) 2,370,000 2,372,000 ( 2,000 ) 2,370,000 Bank 2,300,000 1,620,000

Book 2,360,000 1,800,000

420,000

_

10,000 1,830,000

1,810,000

1. What is the amount of checks outstanding on June 30? a. 30,000 b. 90,000 c. 60,000 d. 0 2. What is the amount of deposits in transit on June 30? a. 480,000 b. 120,000 c. 180,000 d. 680,000 3. What is the adjusted cash in bank on June 30? a. 1,810,000 b. 2,220,000 c. 2,240,000 d. 2,780,000

ACCOUNTS RECEIVABLE 1. Roxy Company provided the following information relating to accounts receivable for the current year: Accounts receivable on January 1 Credit sales

1,300,000 5,400,000

Collections from customers, excluding recovery Accounts written off Collection of accounts written off in prior year ( customer credit was not re-established ) Estimated uncollectible receivables per aging Of receivables at December 31

4,750,000 125,000 25,000 165,000

What is the balance of accounts receivable, before allowance for doubtful accounts on December 31? a. b. c. d.

1,825,000 1,850,000 1,950,000 1,990,000

2. Jay Company provided the following data relating to accounts receivable for the current year: Accounts receivable, January 1 Credit sales Sales returns Accounts written off Collections from customers Estimated future sales returns at December 31 Estimated uncollectible accounts at 12/31 per aging

650,000 2,700,000 75,000 40,000 2,150,000 50,000 110,000

What amount should be reported as net realizable value of accounts receivable on December 31? a. 1,200,000 b. 1,125,000 c. 1,085,000 d. 925,000 3. Infra provided the following data for the current year: Sales on account Notes received to settle accounts Provision for doubtful accounts Accounts receivable written off Purchases on account Payments to creditors Discounts allowed by creditors Merchandise returned by customer Collections received to settle accounts Notes given to creditors in settlement of accounts

3,600,000 400,000 90,000 25,000 3,900,000 3,200,000 260,000 15,000 2,450,000 250,000

Merchandise returned to suppliers Payments on notes receivable Discounts taken by customers Collections received in settlement of notes

70,000 100,000 40,000 180,000

What is the net realizable value of accounts receivable at year – end? a. b. c. d.

605,000 890,000 825,000 670,000

4. When examining the accounts of Brute Company, it is ascertained that balances relating to both receivables and payables are included in a single controlling account called “ receivables control” with a debit balance of P 4,850,000. An analysis of the make- up of this account revealed the following: Debit Accounts receivable – customers

7,800,000

Trade accounts receivable – officers

500,000

Debit balances – creditors

300,000

Postdated checks from customers

400,000

Subscriptions receivable

800,000

Credit

Accounts payable for merchandise

4,500,000

Credit balances in customers’ accounts

200,000

Cash received in advance from customers

100,000

Expected bad debts

150,000

After further analysis of the aged accounts receivable, it is determined that the allowance for doubtful accounts should be P 200,000. 1. What is the net realizable value of accounts receivable? a. 8,000,000 b. 8,500,000 c. 8,300,000 d. 8,550,000 2. What is the balance of accounts payable? a. 4,200,000

b. 4,700,000 c. 4,500,000 d. 4,800,000 5. On December 31, 2016, Miami Company reported that the current receivables consisted of the following: Trade accounts receivable Allowance for uncollectible accounts Claim against shipper for goods lost in transit In November Selling price of unsold goods sent by Miami on consignment at 130% of cost and not included in Miami’s ending inventory Security deposit on lease of warehouse used for Storing some inventories Total

930,000 ( 20,000 ) 30,000 260,000 300,000 1,500,000

On December 31, 2016, what total amount should be reported as trade reported as trade and other receivables under current assets? a. b. c. d.

940,000 1,200,000 1,240,000 1,500,000

6. Faith Company provided the following information relating to current operations: Accounts receivable, January 1 Accounts receivable collected Cash sales Inventory, January 1 Inventory, December 31 Purchases Gross margin on sales What is the balance of accounts received on December 31? a. b. c. d.

8,200,000 6,200,000 2,000,000 4,200,000

4,000,000 8,400,000 2,000,000 4,800,000 4,400,000 8,000,000 4,200,000

7. Honduras Company revealed a balance of P 8,200,000 in the accounts receivable control account at year – end. An analysis of the accounts receivable showed the following: Accounts known to be worthless Advance payments to creditors on purchase orders Advances to affiliated entities Customers’ accounts reporting credit balances arising From sales returns Interest receivable on banks Trade accounts receivable – unassigned Subscription receivable due in 30 days Trade accounts receivable - assigned ( Finance Company’s equity in Assigned accounts is P 500,000) Trade instalments receivable due 1- 18 months, including unearned Finance charge of P 50,000 Trade accounts receivable from officers, due currently Trade accounts on which postdated checks are held and no entries Were made on receipt of checks Total

100,000 400,000 1,000,000 ( 600,000 ) 400,000 2,000,000 2,200,000 1,500,000 850,000 150,000 200,000 8,200,000

What amount should be reported as trade accounts receivable at year- end. a. 4,650,000 b. 4,700,000 c. 4,150,000 d. 4,050,000 8. Von Company provided the following data for the current year in relation to accounts receivable: Debits January 1 balance after deducting credit balance of P 30,000 Charge sales Charge of goods out on consignment Shareholders’ subscriptions Accounts written off but recovered Cash paid to customer for January 1 credit Goods shipped to cover January 1 credit balance Deposit on contract Claim against common carrier Advances to supplier

530,000 5,250,000 50,000 200,000 10,000 25,000 5,000 120,000 15,000 155,000

Credits Collections from customers, including over payment of P 50,000 Write off Merchandise returns Allowances to customers for shipping damages Collection on carrier claim Collection on subscription

5,200,000 35,000 25,000 15,000 10,000 50,000

What is the balance of accounts receivable on December 31? a. 565,000 b. 595,000 c. 545,000 d. 495,000 9. Wonder Company provided the following transactions affecting accounts receivable during the current year: Sales ( cash and credit ) Cash received from credit customers, all of whom took advantage Of the discount feature of the credit terms 4/30, n/30 Cash received from cash customers Accounts receivable written off as worthless Credit memorandum issued to credit customers for sales Returns and allowances Cash refunds given to cash customers for returns and allowances Recoveries on accounts receivable written off as uncollectible in prior Periods not included in cash received from customers stated above

5,900,000 3,024,000 2,100,000 50,000 250,000 20,000 80,000

The balance on January 1 were as follows: Accounts receivable Allowances for doubtful accounts

950,000 100,000

The entity provided for uncollectible account losses by crediting allowance for doubtful accounts in the amount of P 70,000 for the current year. 1. What is the balance of accounts receivable on December 31? a. 1,300,000 b. 1,426,000 c. 1,280,000 d. 1,220,000 2. What is the balance of allowance for doubtful accounts on December 31?

a. b. c. d.

120,000 200,000 250,000 170,000

ESTIMATION OF DOUBTFUL ACCOUNTS 1. Orr Company prepared an aging of accounts receivable on December 31, 2016 and determined that the net realizable value of the accounts receivable was P 2,500,000. Allowance for doubtful accounts on January 1 Accounts written off as uncollectible Accounts receivable on December 31 Uncollectible accounts recovery

280,000 230,000 2,700,000 50,000

What amount should be recognized as doubtful accounts expense for the current year? a. b. c. d.

230,000 200,000 150,000 100,000

2. Seiko Company reported the following balances after adjustment at year- end:

Accounts receivable Net realizable value

2016 5,250,000 5,100,000

2015 4,800,000 4,725,000

During 2016, the entity wrote off accounts totalling P 160,000 and collected P 40,000 on accounts written off in previous year. What amount should be recognized as doubtful accounts expense for the year ended December 31, 2016? a. 195,000 b. 150,000 c. 120,000 d. 150,000 3. Roanne Company used the allowance method of accounting for uncollectible accounts. During the current year, the entity had charged P 800,000 to bad debt expense, and wrote off accounts receivable of P 900,000 as uncollectible. What was the decrease in working capital?

a. 900,000 b. 800,000 c. 100,000 d. 0 4. Tara Company provided the following information pertaining to accounts receivable on December 31, 2016: Days Outstanding 0- 60

estimated Amount 1,200,000

Estimated uncollectible 1%

61 – 120

900,000

2%

Over 120

1,000,000

60,000

3,100,000 During the current year, the entity wrote off P 70,000 in accounts receivable and recovered P 40,000 that had been written off in prior years. On January 1, 2016, the allowance for uncollectible accounts was P 100,000. Under the aging method, what amount of allowance for uncollectible accounts should be reported on December 31, 2016? a. 190,000 b. 100,000 c. 130,000 d. 90,000 5. Mill Company’s allowance for doubtful accounts was P 1,000,000 at the end of 2016 and P 900,000 at the end of 2015. For the year ended December 31, 2016, the entity reported doubtful accounts expense of P 160,000 in the income statement. What amount was debited to the appropriate account to write off uncollectible accounts in 2016? a. 60,000 b. 100,000 c. 160,000 d. 260,000 6. At the end of first year of operations, Wonder Company had a net realizable value of accounts receivable of P 5,000,000. During the year, the entity recorded charges to bad debt expense of P 800,000 and wrote off as uncollectible accounts receivable of P 200,000.

What is the year – end accounts receivable balance before the allowance for doubtful accounts? a. 5,600,000 b. 5,200,000 c. 5,000,000 d. 6,000,000 7. Marian Company used the allowance method of accounting for bad debts. The following summary schedule was prepared from an aging of accounts receivable outstanding on December 31: Number of days Outstanding 0 – 30 days 31 – 60 days Over 60 days

Probability of collection .98 .90 .80

Amount 5,000,000 2,000,000 1,000,000

The following additional information is available for the current year: Net credit sales for the year Allowance for doubtful accounts: Balance, January 1 Balance before adjustment, December 31

40,000,000 450,000 ( cr ) 20,000 ( dr )

The entity based the estimated of doubtful accounts on the aging of accounts receivable. What amount should be recognized as doubtful accounts expense for the current year? a. b. c. d.

470,000 480,000 500,000 520,000

8. Delta Company sold goods to wholesalers on terms 2/15, net 30. The entity had no cash sales but 50% of the customers took advantage of the discount. The entity used the gross method of recording sales and accounts receivable. An analysis of the trade accounts receivable at year- end revealed the following: Age 0 – 15 days 16 – 30 days 31 – 60 days

Amount 2,000,000 1,400,000 400,000

Collectible 100% 95% 90%

Over 60 days

200,000 4,000,000

50%

1. What amount should be reported as allowance for sales discount at year – end? a. 20,000 b. 32,400 c. 33,500 d. 40,000 2. What amount should be reported as allowance for doubtful accounts at year- end? a. 230,000 b. 210,000 c. 190,000 d. 200,000 3. What is the net realizable value of accounts receivable? a. 4,000,000 b. 3,750,000 c. 3,770,000 d. 3,790,000

ESTIMATION OF DOUBTFUL ACCOUNTS 1. From inception of operations, Axis Company carried no allowance for doubtful accounts. Uncollectible accounts were expense as written off and recoveries were credited to income as collected. During 2016, management recognized that the accounting policy with respect to doubtful accounts was not correct and determined that an allowance for doubtful accounts was necessary, A policy was established to maintain an allowance for doubtful accounts based on historical bad debt loss percentage applied to year – end accounts receivable. The historical bad debt loss percentage is to be recomputed each year based on all available past years up to a maximum of five years. Year 2012 2013 2014 2015 2016

Credit sales 1,500,000 2,250,000 2,950,000 3,300,000 4,000,000

Write offs 15,000 38,000 52,000 65,000 83,000

Recoveries 0 2,700 2,500 4,800 5,000

The entity reported accounts receivable of P 1,250,000 on December 31, 2015 and P 2,000,000 on December 31, 2016. 1. What is the bad debt rate in 2015? a. 1.6 percent b. 1.7 percent c. 1.8 percent d. 2.0 percent 2. What is the bad debt rate in2016? a. 1.6 percent b. 1.7 percent c. 1.8 percent d. 2.0 percent 3. What is the allowance for doubtful accounts on December 31, 2015? a. 20,000 b. 21,250 c. 22,500 d. 25,000 4. What is the allowance for doubtful accounts on December 31, 2016? a. 32,000 b. 34,000 c. 36,000 d. 40,000 5. What is the doubtful accounts expense for 2016? a. 97,000 b. 78,000 c. 83,000 d. 92,000 2. From inception of operation, Murr Company provided for uncollectible accounts expense under the allowance method. Provisions were made monthly at 2% of credit sales, bad debts written off were charged to the allowance account and recoveries of bad debts previously written off were credited to the allowance account. No year – end adjustments to the allowance account were made. The allowance for doubtful accounts was P 120,000 on January 1, 2016.

During the current year, credit sales totalled P 9,000,000, interim provisions for doubtful accounts were made at 2% of credit sales, P 90,000 of bad debts were written off, and recoveries of accounts previously written off amounted to P 15,000. The entity prepared an aging of accounts receivable for the first time on December 31, 2016 Classification November – December July – October January – June Prior to January 1, 2016

Balance 2,000,000 600,000 400,000 200,000 3,200,000

Uncollectible 2% 10% 25% 75%

Based on the review of collectability of the account balances in the “prior to January 1, 2016 “ aging category, additional accounts totalling P 60,000 are to be written off on December 31, 2016. Effective with the year ended December 31, 2016, the entity adopted a new accounting method for estimating the allowance for doubtful accounts at the amount indicated by the year- end aging analysis of account receivable. 1. What is the required allowance for doubtful accounts on December 31, 2016? a. 350,000 b. 470,000 c. 425,000 d. 305,000 2. What amount was recorded as doubtful accounts expense for 2016? a. 180,000 b. 270,000 c. 300,000 d. 90,000 3. What amount should be reported as doubtful accounts expense in the income statement for 2016? a. 320,000 b. 180,000 c. 260,000 d. 185,000 4. What is the year- end adjustment to the allowance for doubtful accounts on December 31, 2016? a. 305,000 b. 180,000 c. 320,000 d. 140,000

3. On January 1, 2016, Easy Company reported accounts receivable P 2,070,000 and allowance for doubtful accounts P 80,000. The entity provided the following data: Credit sales

Write offs

Recoveries

2013

11,100,000

260,000

22,000

2014

12,250,000

295,000

37,000

2015

14,650,000

300,000

36,000

2016

15,000,000

310,000

40,000

The collections from the customers during 2016 totaled P 14,000,000, excluding recoveries. Doubtful accounts are provided for as a percentage of credits sales. The entity calculated the percentage annually by using the experience of three years prior to the current year. 1. What amount should be reported as doubtful accounts expense for 2016? a. 310,000 b. 300,000 c. 222,000 d. 378,000 2. What amount should be reported as allowance for doubtful accounts on December 31, 2016? a. 110,000 b. 378,000 c. 300,000 d. 478,000 3. What is the net realizable value of accounts receivable on December 31, 2016? a. 2,650,000 b. 2,690,000 c. 2,760,000 d. 2,800,000 4. Sigma Company began operations on January 1, 2015. On December 31, 2015, the entity provided for doubtful accounts based on 1 % of annual credit sales. On January 1, 2016, the entity changed the method of determining the allowance for doubtful accounts by aging of accounts receivable. Days past invoice date 0 – 30 31 – 90

Percentage uncollectible 1 5

91 – 180 Over 180

20 80

In addition, the entity wrote off all accounts receivable that were over 1 year old. The following additional information related to the years ended December 31, 2016 and 2015:

Credit sales Collections, including recovery Accounts written off Recovery of accounts previously Written off

2016 3,000,000 2,915,000 27,000

2015 2,800,000 2,400,000 none

7,000

none

300,000 80,000 60,000 25,000

250,000 90,000 45,000 15,000

Days past invoice date at December 31 0 – 30 31 –90 91- 180 Over 180

1. What is the allowance for doubtful accounts on December 31, 2015? a. 28,000 b. 24,000 c. 26,000 d. 0 2. What is the allowance for doubtful accounts on December 31, 2016? a. 30,000 b. 39,000 c. 29,150 d. 27,000 3. What amount should be reported as doubtful accounts expense for 2016? a. 39,000 b. 31,000 c. 38,000 d. 11,000

ASSIGNMENT AND FACTORING 1. Moon Company assigned P 3,000,000 of accounts receivable as collateral for a P 2,000,000 loan with bank. The bank assessed a 4% finance fee and charged 6% interest on the note at maturity.

What would be the journal entry to record the transaction? a. Debit cash P 1,920,000, debit finance charge P 80,000, and credit note payable P 2,000,000. b. Debit cash P 1,920,000, debit finance charge P 80,000, and credit accounts receivable P 2,000,000. c. Debit cash P 1,920,000, debit finance charge P 80,000, debit due from bank P 1,000,000, and credit accounts receivable P 3,000,000. d. Debit cash P 1,880,000, debit finance charge P 120,000, and credit note payable P 2,000,000. 2. Star Company assigned P 4,000,000 of accounts receivable as collateral for a P 2,000,000 6% loan with bank. The entity also paid a finance fee of 5% on the transaction upfront. What amount should be recorded as a gain or loss on the transfer of accounts receivable? a. 200,000 loss b. 100,000 loss c. 240,000 gain d. 0 3. On December 1, 2016, Bamboo Company assigned specific accounts receivable totalling P 4,000,000 as collateral on a P 3,000,000, 12% note from a certain bank. The entity will continue to collect the assigned accounts receivable. In addition to the interest on the note, the bank also charged a 5% finance fee deducted in advance on the P 3,000,000 value of the note. The December collections of assigned accounts receivable amounted to P 2,000,000 less cash discounts of P 100,000. On December 31, 2016, the entity remitted the collections to the bank in payment for the interest accrued on December 31, 2016 and the note payable. The entity accepted sales returns of P 150,000 on the assigned accounts and wrote off assigned accounts of P 200,000. 1. What amount of cash was received from the assignment of accounts receivable on December 1, 2016? a. 4,000,000 b. 3,000,000 c. 3,800,000 d. 2,850,000 2. What is the carrying amount of note payable on December 31, 2016? a. 1,000,000 b. 1,100,000 c. 1,130,000 d. 1,460,000

3. What is the balance of accounts receivable – assigned on December 31, 2016?

a. b. c. d.

2,100,000 2,000,000 1,650,000 1,850,000

4. What amount should be disclosed as the equity of Bamboo Company in assigned accounts on December 31, 2016? a. 550,000 b. 870,000 c. 520,000 d. 970,000

5. Zeus Company factored P 6,000,000 of accounts receivable to a finance entity at the end of current year. Control was surrendered by Zeus Company. The factor assessed a fee of 3% and retained a hold back equal to 5% of the accounts receivable. In addition, the factor charged 15% interest computed on a weighted average time to maturity of the accounts receivable of 54 days. 1. What is the amount of cash initially received from the factoring? a. 5,296,850 b. 5,386,850 c. 5,476,850 d. 5,556,850 2. If all accounts are collected, what is the cost of factoring the accounts receivable? a. 313,150 b. 180,000 c. 433,150 d. 613,150

6. Cynthia Company factored P 750,000 of accounts receivable at year – end. Control was surrendered. The factor accepted the accounts receivable subject to recourse for nonpayment. The factor assessed a fee of 2% and retained a hold back equal to 4% of the accounts receivable. In addition, the factor charged 12% interest computed on a weighted – average time to maturity of fifty- one days. The fair value of the recourse obligation is P 15,000.

1. What is the amount of cash initially received from the factoring? a. 692,425 b. 720,000 c. 722,425 d. 705,000 2. Assuming all accounts receivable are collected, what is the cost of factoring the accounts receivable? a. 12,575 b. 15,000 c. 27,575 d. 42,575

7. Carter Company factored without recourse P 2,000,000 of accounts receivable with bank. The finance charge is 3%, and 5% was retained to cover sales discounts, sales returns and sales allowances. 1. What amount of cash was received on the sale of accounts receivable? a. 1,940,000 b. 1,900,000 c. 1,840,000 d. 2,000,000 2. What amount should be recognized as loss on factoring? a. 100,000 b. 160,000 c. 60,000 d. 0 8. Daisy Company sold accounts receivable without recourse with face amount of P 6,000,000. The factor charged 15% commission on all accounts receivable factored and withheld 10% of the accounts factored as protection against customer returns and other adjustments. The entity had previously established an allowance for doubtful accounts of P 200,000 for these accounts. By year- end, the entity had collected the factor’s holdback there being no customer returns and other adjustments. 1. What amount of cash was initially received from factoring? a. 4,500,000 b. 5,400,000 c. 5,100,000 d. 6,000,000

2. What is the loss on factoring? a. 700,000 b. 900,000 c. 200,000 d. 0

DISCOUNTING OF NOTE RECEIVABLE 1. Roth Company received from a customer a one – year, P 500,000 note bearing annual interest of 8%. After holding the note for six months, the entity discounted the note without recourse at 10%. What amount of cash was received from the bank? a. 540,000 b. 523,810 c. 513,000 d. 495,238

2. On July 1, 2016, Lee Company sold goods in exchange for P 2,000,000, 8 – month, noninterest – bearing note receivable. At the time of the sale, the market rate of interest was 12%. The entity discounted the note at 10% on September 1, 2016? 1. What is the cash received from discounting? a. 1,940,000 b. 1,938,000 c. 1,900,000 d. 1,880,000 2. What is the loss on note receivable discounting? a. 100,000 b. 75,000 c. 25,000 d. 0 3. Apex Company accepted from a customer P 1,000,000 face amount, 6 – month, 8% note dated April 15, 2016. On the same date, the entity discounted the note without recourse at 10% discount rate. 1. What amount of cash was received from the discounting? a. 1,040,000

b. 990,000 c. 988,000 d. 972,000 2. What is the loss on note receivable discounting? a. 50,000 b. 40,000 c. 52,000 d. 12,000

3. On June 30,2016, Ray Company discounted at the bank a customer P 6,000,000, 6 – month, 10% note receivable dated April 30, 2016. The bank discounted the note at 12% without recourse. 1. What is the amount received from the note receivable discounting? a. 5,640,000 b. 5,760,000 c. 6,048,000 d. 6,174,000 2. What is the loss on note receivable discounting? a. 252,000 b. 152,000 c. 52,000 d. 48,000 3. Rand Company accepted from a customer a P 4,000,000, 90 – days, 12% interest – bearing note dated August 31, 2016. On September 30, 2016, the entity discounted the note with recourse at the Apex State Bank at 15%. However, the proceeds were not received until October 1, 2016. The discounting with recourse is accounted for as a conditional sale with recognition of a contingent liability. 1. What is the amount received from the discounting of note receivable? a. 4,017,000 b. 4,120,000 c. 4,103,000 d. 3,965,500 2. What is the loss on note receivable discounting? a. 40,000 b. 23,000 c. 17,000

d. 20,000 3. On April 1, 2016, Shalimar Company discounted with recourse a 9 – month, 10% noted dated January 1, 2016 with face of P 6,000,000. The bank discount rate is 12%. The discounting transaction is accounted for as a conditional sale with recognition of contingent liability. On October 1, 2016, the maker dishonoured the note receivable. The entity paid the bank the maturity value of the note plus protest fee of P 50,000. On December 31, 2016, the entity collected the dishonoured note in full plus 12% annual interest on the total amount due. 1. What amount was received from the note discounting on April 1, 2016? a. 6,063,000 b. 6,450,000 c. 6,150,000 d. 5,963,000 2. What amount should be recognized as loss on note discounting? a. 450,000 b. 387,000 c. 87,000 d. 63,000 3. What is the total amount collected from the customer on December 31, 2016? a. 6,450,000 b. 6,500,000 c. 6,695,000 d. 6,662,500 4. If the discounting is a secured borrowing, what is included in the journal entry to record the transaction? a. Debit loss on discounting P 87,000 b. Debit interest expense P 87,000 c. Credit liability for note discounted P 6,063,000 d. Credit interest income P 63,000

NOTES RECEIVABLE 1. On June 1, 2016, Yola Company loaned Dale P 500,000 on a 12% note, payable in five annual instalments of P 100,000 beginning January 1, 2017.

In connection with this loan, Dale was required to deposit P 5,000 in a noninterest – bearing escrow account. The amount held in escrow is to be returned to Dale after all principal and interest payments through November 1, 2016. On January 1, 2017, Yola received payment of the first principal instalment plus all interest due.

a. b. c. d.

On December 31, 2016, what is the accrued interest receivable on the loan? 0 5,000 10,000 15,000

2. Frame Company has an 8% note receivable dated June 30, 2016, in the original amount of P 1,500,000. Payments of P 500,000 in principal plus accrued interest are due annually on July 1, 2017, 2018, and 2019. 1. What is the balance of the note receivable on July 1, 2017? a. 1,500,000 b. 1,000,000 c. 500,000 d. 0 2. In the June 30, 2018 statement of financial position, what amount should be reported as a current asset for interest on the note receivable? a. 120,000 b. 40,000 c. 80,000 d. 0 3. On December 31, 2016, Park Company sold used equipment with carrying amount of P 2,000,000 in exchange for a noninterest bearing note of P 5,000,000 requiring ten annual payments of P 500,000. The first payments was made on December 31, 2017. The market interest for similar note was 12%. The present value of an ordinary annuity of 1 at 12% is 5.65 for ten periods and 5.33 for nine periods. 1. What is the carrying amount of the note receivable on December 31, 2016? a. 5,000,000 b. 2,285,000 c. 2,665,000

d. 4,500,000 2. What is the gain on sale of equipment to be recognized in 2016? a. 3,000,000 b. 2,175,000 c. 825,000 d. 0 3. What amount should be recognized as interest income for 2017? a. 600,000 b. 339,000 c. 319,800 d. 300,000 4. What is the carrying amount of the note receivable on December 31, 2017? a. 2,664,000 b. 4,500,000 c. 2,825,000 d. 2,325,000

4. Pangasinan Company is a dealer in equipment. On December 31, 2016, the entity sold an equipment in exchange for a non interest bearing note requiring five annual payments of P 500,000. The first payment was made on December 31, 2017. The market interest for similar notes was 8%. The PV of 1 at 8% for 5 periods is .68, and the PV of an ordinary annuity of 1 at 8% for 5 periods is 3.99. 1. On December 31, 2016, what is the carrying amount of the note receivable? a. 2,500,000 b. 1,995,000 c. 1,700,000 d. 1,495,000 2. What amount of interest income should be reported for 2017? a. 505,000 b. 101,000 c. 159,600 d. 119,600 3. What is the carrying amount of the note receivable on December 31, 2017? a. 1,654,600 b. 2,000,000 c. 2,154,600 d. 1,495,000

4. On December 31, 2016, Flirt Company sold for P 3,000,000 an old equipment having an original cost of P 5,400,000 and carrying amount of P 2,400,000. The terms of the sale were P 600,000 down payment and P 1,200,000 payable each year on December 31 of the next two years. The sale agreement made no mention of interest. However, 9% would be a fair rate for this type of transaction. The present value of an ordinary annuity of 1 at 9% for two years is 1.76. 1. What is the interest income for 2017? a. 216,000 b. 190,080 c. 108,000 d. 106,000 2. What is the carrying amount of the note receivable on December 31, 2017? a. 1,200,000 b. 1,102,080 c. 2,302, 080 d. 1,009,920

5. On January 1, 2016, Emme Company sold equipment with a carrying amount of P 4,800,000 in exchange for a P 6,000,000 noninterest bearing note due January 1, 2019. There was no established exchange price for the equipment. The prevailing rate of interest for note of this type on January 1, 2016 was 10%. The present value of 1 at 10% for three periods is 0.75. 1. What amount should be reported as interest income for 2016? a. 90,000 b. 450,000 c. 500,000 d. 600,000 2. What amount should be reported as gain or loss on sale of equipment? a. 300,000 loss b. 300,000 gain c. 1,200,000 gain d. 2,700,000 gain

6. Ayala Company sold an equipment with carrying amount of P 800,000, receiving a noninterest – bearing note due in three years with a face amount of P 1,000,000. There is no established market value for the equipment. The interest rate on similar obligations is estimated at 12%. The present value of 1 at 12% for three periods is .712. 1. What amount should be reported as gain or loss on sale of equipment? a. 200,000 gain b. 200,000 loss c. 88,000 gain d. 88,000 loss 2. What amount should be reported as interest income for first year? a. 288,000 b. 120,000 c. 96,000 d. 85,440 7. Alamo Company sold a factory on January 1, 2016 for P 7,000,000. The entity received a cash down payment of P 1,000,000 and a 4-year, 12% note for the balance. The note is payable in equal annual payments of principal and interest of P 1,975,400 payable on December 31 of each year until 2019. 1. What is the interest income for 2016? a. 840,000 b. 720,000 c. 120,000 d. 975,400 2. What is the carrying amount of the note receivable on December 31, 2016? a. 4,500,000 b. 4,744,600 c. 4,624,600 d. 4,025,600

LOAN RECEIVABLE 1. Appari bank granted a loan to a borrower on January 1, 2016. The interest rate on the loan is 10% payable annually starting December 31, 2016. The loan matures in five years on December 31, 2020. Principal amount Origination fee received from borrower

4,000,000 350,000

Direct origination cost incurred

61,500

The effective rate on the loan after considering the direct origination cost incurred and origination fee received is 12%. 1. What is the carrying amount of the loan receivable on January 1, 2016? a. 4,000,000 b. 4,650,000 c. 4,411,500 d. 3,711,500 2. What is the interest income for 2016? a. 400,000 b. 558,000 c. 529,380 d. 445,380 3. What is the carrying amount of the loan receivable on December 31, 2016? a. 4,000,000 b. 3,756,880 c. 4,243,120 d. 3,600,000

2. National Bank granted a loan to a borrower on January 1, 2016. The interest on the loan is 10% payable annually starting December 31, 2016. The loan matures in three years on December 31, 2018. Principal amount Origination fee charged against the borrower Direct origination cost incurred

4,000,000 342,100 150,000

After considering the origination fee charged against the borrower and the direct origination cost incurred, the effective rate on the loan is 12%. 1. What is the carrying amount of the loan receivable on January 1, 2016? a. 4,000,000 b. 3,807,900 c. 4,150,000 d. 3,657,900 2. What is the interest income for 2016? a. 400,000 b. 380,900

c. 456,948 d. 480,000 3. What is the carrying amount of the loan receivable on December 31, 2016? a. 4,000,000 b. 3,807,900 c. 3,864,848 d. 3,750,932 4. What is the interest income for 2017? a. 480,000 b. 400,000 c. 386,485 d. 463,782

3. Philippine Bank granted a loan to a borrower on January 1, 2016. The interest on the loan is 8% payable annually starting December 31, 2016. The loan matures in three years on December 31, 2018. Principal amount Origination fee charged against the borrower Direct origination cost incurred

3,000,000 100,000 260,300

After considering the fee charged to the borrower and the direct origination cost incurred, the effective rate on the loan is 6% . 1. What is the carrying amount of the loan received on January 1, 2016? a. 3,160,300 b. 3,260,300 c. 2,900,000 d. 3,000,000 2. What is the interest income for 2016? a. 240,000 b. 189,618 c. 252,824 d. 180,000 3. What is the carrying amount of the loan receivable on December 31, 2016? a. 3,000,000 b. 3.160,300 c. 3,109,918 d. 3,210,682

4. What is the interest income for 2017? a. 240,000 b. 180,000 c. 248,793 d. 186,595

5. On December 1, 2016, Nicole Company gave Dawn Company a P 2,000,000, 12% loan. Nicole Company paid proceeds of P 1,940,000 after the deduction of a P 60,000 nonrefundable loan origination fee. Principal and interest are due in sixty monthly instalments of P 44,500, beginning January 1, 2017. The repayments yield an effective interest rate of 12% at a present value of P 2,000,000 and 13.4% at a present value of P 1,940,000. 1. What amount of interest income should be reported in 2016? a. 22,333 b. 19,400 c. 21,663 d. 20,000 2. What amount should be reported as accrued interest receivable on December 31, 2016? a. 44,500 b. 60,000 c. 20,000 d. 0

6. National Bank granted a 10 –year loan to Abbo Company in the amount of P 1,500,000 with a stated interest rate of 6%. Payments are due monthly and are computed to be P 16,650. National Bank incurred P 40,000 of direct loan origination cost.in addition, National Bank charged Abbo Company a 4 – point non-refundable loan origination fee. 1. What is the initial carrying amount of the loan receivable on the part of National Bank? a. 1,440,000 b. 1,480,000 c. 1,500,000 d. 1,520,000 2. What is the initial carrying amount of the loan payable on the part of Abbo Company?

a. b. c. d.

1,440,000 1,480,000 1,500,000 1,520,000

INVENTORY COST FLOW 1. Lagoon Company accumulated the following data for the current year. Raw materials – beginning inventory Purchases Purchases

90,000 units @ P 7.00 75,000 units @ P 8.00 120,000 units @ P 8.50

The entity transferred 195,000 units of raw materials to work in process during the year. Work in progress – beginning inventory Direct labor Manufacturing overhead Work in process – ending inventory

50,000 units @ P 14.000 3,100,000 2,950,000 48,000 units @ P 15.00

The entity used the FIFO method for valuing inventory. 1. What is the cost of raw materials used? a. 1,485,000 b. 2,250,000 c. 1,530,000 d. 3,015,000 2. What is the total manufacturing cost? a. 8,300,000 b. 7,535,000 c. 7,580,000 d. 9,065,000 3. What is the cost of goods manufactured for the current year? a. 7,535,000 b. 8,235,000 c. 7,515,000 d. 8,280,000

2. Yakal Company reported that a flood recently destroyed many of the financial records. The entity used an average cost inventory valuation system. The entity made a physical count at the

end of each month in order to determine monthly ending inventory value. By examining various documents, the following data are gathered: Ending inventory at July 31 Total cost of units available for sale in July Cost of goods sold during July Gross profit on sales for July

July

5 11 15 16

Total

Units 55,000 53,000 45,000 47,000 200,000

60,000 units 1,452,100 1,164,100 935,900 Unit cost 5.10 5.00 5.50 5.30

Total cost 280,500 265,000 247,500 249,100 1,042,100

1. What is the number of units on July 1? a. 102,500 b. 140,000 c. 76,500 d. 60,000 2. How many units were sold during the month of July? a. 242,500 b. 140,000 c. 302,500 d. 260,000 3. What is the cost of the inventory on July 31? a. 288,000 b. 410,000 c. 312,600 d. 240,000

4. Corolla Company incurred the following costs: Materials Storage costs of finished goods Delivery to customers Irrecoverable purchase taxes At what amount should the inventory be measured? a. 880,000 b. 760,000

700,000 180,000 40,000 60,000

c. 980,000 d. 940,000 5. Eagle Company incurred the following costs in relation to a certain product: Direct material and labor Variable production overhead Factory administrative costs Fixed production costs

180,000 25,000 15,000 20,000

What is the correct measurement of the product? a. 205,000 b. 225,000 c. 195,000 d. 240,000 6. Fenn Company provided the following information for the current year: Merchandise purchased for resale Freight in Freight out Purchase returns Interest on inventory loan

4,000,000 100,000 50,000 20,000 200,000

What is the inventoriable cost 0f the purchase? a. 4,280,000 b. 4,030,000 c. 4,080,000 d. 4,130,000 7. On December 28, 2016, Kerr Company purchased goods costing P 500,000 FOB destination. These goods were received on December 31, 2016. The costs incurred in connection with the sale and delivery of the goods were: Packaging for shipment Shipping Special handling charges

10,000 15,000 25,000

On December 31, 2016, what total cost should be included in inventory? a. 540,000 b. 535,000 c. 550,000 d. 500,000

8. Hero Company reported inventory on December 31, 2016 at P 6,000,000 based on a physical count of goods priced at cost and before any necessary year – end adjustments relating to the following : 



Included in the physical count were goods billed to a customer FOB shipping point on December 30, 2016. These goods had a cost of P 125,000 and were picked up by the carrier on January 7, 2017. Goods shipped FOB SHIPPING point on December 28, 2016, from a vendor to Hero were received and recorded on January 4, 2017. The invoice cost was P 300,000. What amount should be reported as inventory on December 31, 2016? a. 5,875,000 b. 6,000,000 c. 6,175,000 d. 6,300,000

9. Delicate Company is a wholesale distributor of automotive replacement parts. Initial amounts taken from accounting records on December 31, 2016 are as follows: A. Parts held on consignment from another entity to Delicate, the consignee, amounting to P 165,000, were included in the physical count on December 31, 2016, and in accounts payable on December 31, 2016. B. P 20,000 of parts which were purchased and paid for in December 2016, were sold in the last week of 2016 and appropriately recorded as sales of P 28,000. The parts were included in the physical count on December 31, 2016 because the parts were on the loading dock waiting to be picked up by the customer. C. Parts in transit on December 31, 2016 to customers, shipped FOB shipping point on December 28, 2016, amounted to P 34,000. The customers received the parts on January 6, 2017. Sales of the p 40,000 to the customers for the parts were recorded by Delicate on January 2, 2017. D. Retailers were holding P 210,000 at cost and P 250,000 at retail, of goods on consignment from Delicate, at their stores on December 31, 2016. E. Goods were in transit from a vendor to Delicate on December 31,2016. The cost of goods was P 25,000. The goods were shipped FOB shipping point on December 29, 2016. 1. What is the correct amount of inventory? a. 1,300,000 b. 1,320,000 c. 1,334,000 d. 1,090,000

2. What is the correct amount of accounts payable? a. 835,000 b. 960,000 c. 975,000 d. 860,000 3. What is the correct amount of sales? a. 9,250,000 b. 9,290,000 c. 9,040,000 d. 9,000,000

10. Chicago Company has the two products in the inventory. Product X

Product Y

Selling price

2,000,000

3,000,000

Materials and conversion costs

1,500,000

1,800,000

General administration costs

300,000

800,000

Estimated selling cost

600,000

700,000

At the year – end, the manufacture of items of inventory has been completed but no selling costs have yet been incurred. 1. What amount should be reported as inventory using the LCNRV individual approach? a. 3,700,000 b. 3,200,000 c. 3,800,000 d. 3,300,000 2. What amount should be reported as inventory using the LCNRV total approach? a. 3,300,000 b. 3,200,000 c. 3,700,000 d. 2,450,000 In the absence of any statement to the contrary, the LCNRV should be applied using the individual approach. 11. On November 15, 2016, Diamond Company entered into a commitment to purchase 10,000 ounces of gold on February 15, 2017 at a price of P 310 per ounce. On December 31, 2016, the market price of gold is P 270 per ounce. On February 15, 2017, the price of gold is P 300 per ounce

1. What is the loss on purchase commitment to be recognized on December 31, 2016? a. 400,000 b. 100,000 c. 300,000 d. 0 2. What is the gain on purchase commitment to be recognized on February 15, 2016? a. 400,000 b. 300,000 c. 100,000 d. 0 3. What amount should be debited to purchases on February 15, 2017? a. 3,000,000 b. 3,100,000 c. 2,700,000 d. 3,500,000 4. What amount should be recognized as accounts payable on February 15, 2017? a. 2,700,000 b. 3,100,000 c. 3,500,000 d. 3,000,000 12. On January 1, 2016, Card Company signed a three – year, noncancelable purchase contract, which allows Card to purchase up to 5,000 units of a computer part annually from Hart Company at P 100 per unit and guarantees a minimum annual purchase of 1,000 units. During 2016, the part unexpectedly became obsolete. Card had 2,500 units of this inventory on December 31, 2016, and believed these parts can be sold as scrap for P 20 per unit. 1. What amount of loss from the purchase commitment should be reported in the 2016 income statement? a. 240,000 b. 200,000 c. 160,000 d. 360,000 2. What amount should be recognized as loss on inventory writedown in 2016? a. 360,000 b. 560,000 c. 200,000 d. 0

13. Lin Company sells merchandise at a gross profit of 30%. On June 30, 2016, all of the inventory was destroyed by fire. The following figures pertain to the operations for six months ended June 30, 2016: Net sales Beginning inventory Net purchases

a. b. c. d.

8,000,000 2,000,000 5,200,000

What is the estimated cost of the destroyed inventory? 4,800,000 2,800,000 1,600,000 800,000

14. Karen Company reported the following information for the current year: Beginning inventory Purchases Freight in Purchase returns and allowances Purchase discounts Sales Sales returns Sales allowances Sales discounts

5,000,000 26,000,000 2,000,000 3,500,000 1,500,000 40,000,000 3,000,000 500,000 1,000,000

A physical inventory taken at year – end resulted in an ending inventory of P 4,000,000. At year- end, unsold goods out on consignment with selling price of P 1,000,000 are in the hands of a consignee. The gross profit was 40% on sales. 1. What is the cost of goods available for sale? a. 28,000,000 b. 31,000,000 c. 33,000,000 d. 29,500,000 2. What is the cost of goods sold? a. 21,900,000 b. 22,200,000 c. 21,300,000 d. 24,000,000

3. What is the estimated cost of inventory shortage? a. 1,800,000 b. 2,700,000 c. 1,200,000 d. 2,100,000 15. On October 31, 2016, Pamela Company reported that a flood caused severe damage to the entire inventory. Based on recent history, the entity has a gross profit of 25% of sales. The following information is available from the records for ten months ended October 31, 2016: Inventory, January 1 Purchases Purchase returns Sales Sales returns Sales allowances

520,000 4,120,000 60,000 5,600,000 400,000 100,000

A physical inventory disclosed usable damaged goods which can be sold for P 70,000. What is the estimated cost of goods sold for the ten months ended October 31, 2016? a. 3,360,000 b. 3,830,000 c. 3,900,000 d. 3,825,000 16. On September 30, 2016, Brock Company reported that a fire caused severe damage to the entire inventory. The entity has a gross profit of 30% on cost. The following data are available for nine months ended September 30, 2016: Inventory at January 1 Net purchases Net sales

1,100,000 6,000,000 7,280,000

A physical inventory disclosed usable damaged goods which can be sold for P 100,000. 1. What is the estimated cost of goods sold for the nine months ended September 30, 2016? a. 5,500,000 b. 4,970,000 c. 5,096,000 d. 5,600,000

2. What is the estimated amount of fire loss? a. 1,500,000 b. 1,400,000 c. 2,004,000 d. 1,964,000 17. On December 31, 2016, Empress Company had a fire which completely destroyed the goods in process inventory. After the fire a physical inventory was taken. The raw materials were valued at P 600,000, the finished goods at P 1,000,000 and factory supplies at P 100,000 on December 31, 2016. The inventories on January 1, 2016 consisted of the following: Finished goods Goods in process Raw materials Factory supplies

1,400,000 1,000,000 300,000 400,000

Data for the current year Sales Purchases Freight in Direct labor Manufacturing overhead – 50% of direct labor Average gross profit rate on sales

3,000,000 1,000,000 100,000 800,000 ? 30%

1. What is the cost of goods sold? a. 2,100,000 b. 1,700,000 c. 1,900,000 d. 2,300,000 2. What is the cost of goods manufactured? a. 2,500,000 b. 1,700,000 c. 3,100,000 d. 2,300,000 3. What is the estimated cost of the goods in process on December 31, 2016 what were completely destroyed by fire? a. 1,300,000

b. 2,100,000 c. 2,000,000 d. 1,700,000