Professional Documents
Culture Documents
1. An entity reported sales revenue of P4,600,000 in the income statement for the current year.
Additional information for the current year is as follows:
January 1 December 31
Accounts receivable 1,000,000 1,300,000
Allowances for doubtful accounts 60,000 110,000
Advances from customers 200,000 300,000
The entity wrote off uncollectible amounts totalling P50,000 during the current year. Under cash
basis, what amount should be reported as sales revenue for the current year?
2. During 2017, an entity reported gross cash sales of P3,000,000 with related returns and allowances of
P100,000 and gross credit sales of P5,000,000 with related discounts of P400,000. On January 1,
2017, customers owed the entity P1,000,000. On December 31, 2017, customers owed the entity
P1,500,000. The entity used the direct write off method for bad debt. No bad debts were recorded in
2017. Under cash basis, what amount of sales revenue should be reported for the current year?
3. An entity began operations on January 1, 2017. The entity has elected to use cash basis of accounting
for tax purposes and accrual basis for financial reporting. The entity reported sales of P8,750,000 and
P4,000,000 in the tax returns for 2018 and 2017, respectively. The entity reported accounts
receivable of P1,500,000 and P2,500,000 on December 31, 2018 and December 31, 2017,
respectively.
During 2018, the entity paid suppliers P4,900,000 and reported the following balances:
December 31 January 1
Inventory 2,600,000 2,900,000
Accounts payable 750,000 500,000
1. What amount should be reported as sales in the income statement for 2018?
2. What amount should be reported as cost of goods sold in the income statement for 2018?
6. An entity borrowed money under various loan agreement involving notes discounted and notes
requiring interest payments at maturity. During the current year, the entity paid interest totalling
P6,000,000. The statement of financial position included the following:
January 1 December 31
Prepaid interest 500,000 1,500,000
interest payable 2,000,000 2,500,000
What amount of interest expense should be reported for the current year?
7. An entity assigned some of its patents to other entities under a variety of licensing agreements. The
following data are gathered for the current year:
January 1 December 31
Unearned royalties 600,000 400,000
Royalties receivable 900,000 850,000
During the current year, the entity received royalty remittance of P2,000,000. What amount should
be reported as royalty income for the current year?