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Junior Philippine Institute of Accountants

College of the Immaculate Conception

Peer Mentoring
Pre- Test

Basic Accounting

1. What is the law regulating the practice of accountancy in the


Philippines?
a. R.A. No. 9289 c. R.A. No. 9928
b. R.A. No. 9198 d. R.A. No. 9298
2. Adjusting entries are made to ensure that
a. balance sheet and income statement accounts have correct
balances at the end of the accounting period
b. revenues and expenses are recognized in the period in which
they are earned and incurred
c. part of the asset that has been used up is recognized as
expense
d. all of the above

3. Entries prepared at the end of every accounting period to clear


the books of temporary accounts.
a. adjusting entries c. reversing entries
b. closing entries d. post-closing entries

4. This is a temporary account used to clear the books of revenues


and expenses, the balance of which represents the net income or net
loss for the period.
a. income summary c. owner’s drawing
b. owner’s capital d. accounting equation

5. These are the accounts that must always be closed every accounting
period
a. revenues
b. expenses
c. owner’s drawing
d. a & b
e. all of the above
Comprehensive Problem

The trial balance of Diana Company provider of interior decoration


services, for December 31, 2018 appears below:

Diana Company
Trial Balance
December 31, 2018

Debit Credit
Cash P 186,000
Accounts Receivable 71,200
Prepaid Rent 19,200
Equipment 177,500
Accumulated Depreciation- Equipment 4,750
Accounts Payable 18,750
Notes Payable 12,000
Margallo, Capital 300,000
Margallo, Drawings 19,000
Professional Fees 276,300
Salaries Expense 82,500
Supplies Expense 17,000
Utilities Expense 37,800
Interest Expense 1,600 _______
Totals 611,800 611,800

Additional data:
1. Prepaid rent is for the period October 1, 2018 to May 31, 2019.
2. Depreciation rate on the equipment is 5% per year. Scrap value of
P35,000.
3. Salaries incurred but unpaid as of December 31, 2018, P12,000.
4. The note was issued on December 11 for 30 days at 12%.
5. Provision for bad debts is 5% of the outstanding accounts of
customers.
6. Supplies found on hand, not expensed, after counting. P5,000.

Required:
Prepare the adjusting entries and the adjusted trial balance in good
form.
Financial Accounting I
1. The cash account of Efren Tabo on December 31, 2018 has a balance
of P151,000 and it consists of the following:

Bills and coins on hand P 52,780


Traveler’s check 22,400
Escrow deposits 6,500
Postage stamps on hand 120
Petty cash including paid cash vouchers of P1,650 2,000
Balance in Savings account with a bank closed by the BSP 36,000
Customer’s check dated January 15,2019 8,000
Postal money order 800
IOU of a Salesperson 400
Checking account balance in the China Bank 22,000
The correct cash and cash equivalents balance on December 31, 2018 is
a. P98,900 c. P97,530
b. P98,730 d. P98,330

2. At year-end, Novilee Company reported cash and cash equivalents


which comprised the following:

Cash on hand 500,000


Demand deposit 4,000,000
Certificate of deposit 2,000,000
Postdated customer check 300,000
Petty cash fund 50,000
Traveler’s check 200,000
Manager’s check 100,000
Money order 150,000

What total amount should be reported as “cash” at year-end?


a. 7,000,000 c. 6,800,000
b. 4,800,000 d. 5,000,000

3. DBE Company had the following balances on December 31, 2018:

Cash in Checking account 350,000


Cash in money market account 750,000
Treasury bill, purchased November 1, 2018 maturing
January 31, 2018 3,500,000
Time deposit purchased December 1, 2018 maturing
March 31, 2018 4,000,000

What amount should be reports as cash and cash equivalents on


December 31, 2018?
a. 1,100,000 c. 4,600,000
b. 3,850,000 d. 8,600,000
4. Rian and Brian Company provided the following information at year-
end:

Cash on hand P500,000


Cash in bank 4,000,000
Petty cash fund including unreplenished expense
vouchers P5,000 and employee IOU P5,000 60,000
Commercial Paper with maturity of 2 months 1,000,000
Cash in foreign currency with a spot rate of P50 $40,000
Customer’s check dated January of the next period 200,000

What total amount should be reported as “cash and cash equivalents”?


a. 7,550,000 c. 5,550,000
b. 5,560,000 d. 7,760,000

5. Valix Corporation had the following account balances at December 31,


2018:
Cash on hand and in bank P2,500,000
Cash restricted for plant expansion on June 30, 2019 1,000,000
Time deposit 3,000,000
Savings deposit set aside for dividends payable
on June 30, 2019 500,000

The total amount to be reported as cash and cash equivalents as of


December 31, 2018 is
a. 7,000,000 c.6,500,000
b. 6,000,000 d.5,500,000

6. On December 31, 2018, Marie Joyce Company had the following cash
balances:

Cash in bank P15,000,000


Petty cash fund 50,000
Time deposit 5,000,000
Savings deposit 2,000,000

Cash in bank includes P500,000 of compensating balance against


short-term borrowing arrangement at December 31, 2018. The
compensating balance is legally restricted as to withdrawal by
Marie Joyce. A check of P300,000 dated January 15, 2019 in payment
of accounts payable was recorded and mailed on December 31, 2018.
In the current assets section of the December 31, 2018 statement of
financial position, what amount should be reported as “cash and
cash equivalents”?
a. P21,850,000 c. P21,800,000
b. P16,850,000 d. P14,850,000

7. Anna Lissa Company provided the following information on December


31, 2018:

Cash on hand 500,000


Petty cash fund 20,000
BDO Current account 1,000,000
BPI Current account No. 1 400,000
BPI Current account No. 2 ( 50,000)
BSP treasury bill – 60 days 3,000,000

 The cash on hand included a customer postdated check of


P100,000 and postal money order of P40,000
 A check for P200,000 was drawn against BDO account, dated
January 15, 2018, delivered to payee and recorded December 31,
2018.
What total amount of cash and cash equivalents should be
reported on December 31, 2018?
a. 4,970,000 c. 4,770,000
b. 6,970,000 d. 1,970,000
8. Armin Glenn Company had the following account balances at December
31, 2018:
Cash in banks P2,250,000
Cash on hand 125,000
Cash not legally restricted for additions
to plant (expected to be disbursed in 2019) 1,600,000
Cash in sinking fund set aside for bond payable
due June 30, 2019 1,600,000

Cash in banks include P1,600,000 of compensating balances against


short-term borrowing agreements. The compensating balances are
legally restricted as to withdrawal by Vice Ganda.
In the current assets section of Vice Ganda’s December 31, 2018
balance sheet, total cash should be reported at –
a. P3,975,000 c. P2,375,000
b. P2,250,000 d. P5,575,000

9. Richard Corporation’s checkbook balance at December 31, 2018 was


P50,000. In addition, Richard held the following items in its safe
on that date.

Check payable to Richard, dated December 31, 2018 in


Payment of a sale made in December 2018 not included
in December 31, check book Balance. P20,000

Check payable to Richard, deposited December 15 but


Returned by bank on December 30 marked “NSF”.
The deposit and the return were both reflected
In the checkbook. 5,000

Check drawn on Richard Company’s account, payable to


A vendor, dated December 30, but not yet mailed to payee
As of December 31, 2018. The check is not yet recorded. 3,000

The amount to be shown as cash on Richard’s statement of financial


position at December 31, 2018 is
a. P48,000 c. P68,000
b. P65,000 d. P70,000

10. The petty cash fund of Estonilo Company at the end of the fiscal
year ended June 30, 2018, is composed of the following:

Currencies P 3,800
Coins 1,200
Paid vouchers:
Office supplies 1,750
Postage stamps 2,000
Loans to employees 6,000
Check drawn by the manager, returned by bank
Marked “NSF”. 2,750
Check drawn by the company, payable to the order of
The petty cash custodian, representing her salary 12,500

The amount of petty cash fund that should be shown on the statement
of financial position at June 30, 2018 of Estonilo Company is
a. P5,000 c. P20,250
b. P17,500 d. P30,000

11. In preparing its august 31, 2018 bank reconciliation, Ronnel


Company has available the following information:

Balance per bank statement, 8/31/18 P180,500


Deposit in transit, 8/31/18 32,500
Return of customer’s NSF checks, 8/31/18 6,000
Outstanding checks, 8/31/18 27,500
Bank service charges for August 1,000
Book error, 8/31/18 2,000

At august 31, 2018, Ronnel Company’s correct cash balance is


a. 194,500 c. 176,500
b. 185,500 d. 178,500

For problems 12&13

In preparing the bank reconciliation for the month of December,


Gladly Company provided the following data:

Balance per bank statement 3,800,000


Deposit in transit 520,000
Amount erroneously credited by bank to Gladly’s account 40,000
Bank service charge for December 5,000
NSF check 50,000
Outstanding checks 675,000

12. What is the adjusted cash in bank?


a. 3,685,000 c. 3,600,000
b. 3,645,000 d. 3,605,000
13. What is the unadjusted cash in bank balance per book?
a. 3,550,000 c. 3,610,000
b. 3,660,000 d. 3,655,000

For problems 14 & 15

Will Byers’ Company provided the following transactions affecting


accounts receivable during the current year:
Sales (cash and credit) 5,900,000

Cash received from credit customers, 3,024,000


all of whom took advantage of the discount
feature of the credit terms 4/10, n/30

Cash received from cash customers 2,100,000

Accounts receivable written off as worthless 50,000

Credit memorandum issued to credit customers 250,000


for sales returns and allowances

Cash refunds given to cash customers for 20,000


sales returns and allowances

Recoveries on accounts receivable written off 80,000


as uncollectible in prior periods not included
in cash received from customers stated above

The balances on January 1 were as follows:

Accounts receivable 950,000

Allowance for doubtful accounts 100,000

The entity provided for uncollectible account losses by crediting


allowance for doubtful accounts in the amount of P70,000 for the
current year.

14. 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

15. What is the balance of allowance for doubtful accounts on


December 31?
a. 120,000
b. 200,000
c. 250,000
d. 170,000
(REMOVE THIS PAGE BEFORE PRINTING)

Answer Keys

Basic Accounting
1. d
2. d
3. b
4. a
5. e
a. Rent expense 7,200
Prepaid expense 7,200
b. Depreciation expense 7,125
Accum. Depreciation 7,125
c. Salaries Expense 12,000
Salaries Payable 12,000
d. Interest Expense 80
Interest Payable 80
e. Bad Debt Expense 3,560
ADA 3,560
f. Supplies 5,000
Supplies Expense 5,000

Financial Accounting
1. D
2. D
3. C
4. A
5. B
6. A
7. A
8. A
9. D
10. B
11. B
12. D
13. B
14. A
15. B