ReSA The Review School of Accountancy ‘"@ Tel. Nos, 734-3989 / 735-9807 PRACTICAL ACCOUNTING 1 records as of December 31, 2014 YY, etn Cres nes ine fog coon baal Coking acount Margutsnk, 20,00; Chcking ann Lan ak, 750,00; Parl acct = Nit bankP 10.00 Focien bank acon P7500: Postape stamp, 2.00; Employes penned check, P3000, 10°. ram pesca wo, P7500: Traveler check 0.00; Nest Tans hcl, P10: uty cash nd (T6000 ea expenses oss or PRA.00), P1008 ad What is the correct ggsbs balince to be reported in the balance sheet of Lipton Company on Dis. 31, 20142 1582.00 P702,000) : bh P6k.00. A. Pros. 000 " The eash account ih the current asset section of the by Sat for Heater Company showed a balance of 555,000. It was fowl togjuabide the following itenit Petty cash find (P1,000. is ia the form of gaid aauchers), 5,000: Checking account balance, fr bal Slalsiicnt (A P2S.000 check is still outstinding), P255,000; Undeposited receipts (including a pestdate check for PS,000).P120,000; Currencies and eoins awaiting deposit, P$5,000; Bond sinking fund — cash, i 100,000; Check dave by mi ured by hank marked NSE, P20,000 HK che ching excastt, Whale the cot san hale for Heater Company's lance she for wads tenet 2 PAOLO ©, PA30,000 be PA29.000 529.000 yea) tion has supplied you with the following list of its bank accounts and eash at December 31, 2014 Checking account (compensating bake of P1S,000 with po rextriion), PAK.O00; Savings account, 2%, 130,000, Certificate of deposit, (gusadhs, 10%, due April 20. 2015, P80,000; Money market (20-day certificate), current rate, 9.75%, PA0,000: Payroll aecount, P20.000: Cerificate of deposit. Lgoaths, 10Po, due February 15, 2015, 775,000 and Petty cash, P1,300. What should be the balance to by reported as “Cash e A Delta Compo anh is" in the December 31,201 statement of financial position of Delta Corporation & PIS9.S00 fc. P214,500) bP199.500 4 P274,500 see 4. On December 31, 2014, First Company ha te following cash balances: Cash in banks, 1,800,000 ew Petty cash funds (all finds wereaignhuesed on 1231/14) - 50,000 ‘Cast in banks igeluled 600,000 in a Seprnate bank whert-in the company is required t Pate average of P8O0000-of 10 workings on a gallina In the current assets section of First's December 31, 2014 statement oF Financial position, what total amount a. P1200000 . P1.8O0.000 X ations b. P1250.000 4. PL8S0.000 = sa basis - means vorertased its cash and eash equivalents: ~\ (On December 31, 2014, Everlasting Company has the following gomposiia p 20,000; Money market smanul deposit, 1,500,000; Certifieate of deposit-Sadase, PS00.000; NSE check of customer June 30, 2015), 11,000,000; Savings deposit in os “6h ‘Bagk, 50,000; 1OU from an employee. 130,000; Penty cash fund, P10.000; Customer's check ated ih January 31. 2015, P60,000; Customer's check outstanding for 18 months, 30,000, Check of P100,000 in paytnent al accounts payable was rgenrded on December 31, 2014 but ‘mailed to creditors om January 15, 3018 _ 1B Cheek of PS0,000 dated January’ 31.2015 in payment of accounts payable was wot recorded and mailed Deeeniber 31, 2014 eu The company uses the calendar year, The eash receipts, 2015, during whieh time, P200.000 warns was held open until January 1. How much “ash and cash ents” showkt be shown iw the December 31; 2014 htance sive a. 1,910,000 2,160,000, ft San 3104F AeSA / Practictl Accounting: GASH —___Page20f2 & Z% *imber Company provided the following data For the purpose of reconecifing the cash balance per book prelate Fo, Dulane per bok Te Pigm00 e 3/4 sain ‘Outstanding cheeks (including cetitied cheek of P20,000) woo 100,000 Zr Deposit ia transi 40,000 \ paste December NSF checks (of which P10,000 bad heen re-deposited and eared «on December 27) 6.60 30,000 Erroncons sme to Timber's account, represemting proceeds of loan granted ie to another company 60,000 Proceeds of note collected by bank for Timber, net of service charge of P4,000 150,000 gee roo hank ch 73,000 : ‘A check of P5000 i pavinent of account way recoiled y the company as 500 econ sh lancet be shown iy the company’s December 31,2014 satenent of finan position x a Sse sod e335,300 wb. 295:500 1 MS.s00 * A Va your tut of Glenisus Company ws ci Dedersber 31; 2014 you gathered the following: Balance per book, Pot,000, Bank charges P1500; olan per bank, P6000 Deposit in ians PLRU 000, Coss calleted hy hank, P225 000: Inert eumpmer mae, P00; Gon Deposio's note gs acc, F150,000. What she ttl avant of ousanding eke? a. 140.000 © 160.00) i. 150,000 a. tes.000 ic 8. The following information was i ‘vin the bank reconciliation for Fox Company. Assume all other © * Chicks & changes retored by gk in Ae incluling 4 Fane servic change oF PS,000, 900,000: Check ssl ty campy (or P9,000 was reborded at, PAH: Lroncous hank debit, P40: Service charge mak by bank in May and recorded on book in June, P10,000; Toil credits to cash in “all journals during June PR00,000; Customer's NST heck returned asa bank charge in luge (ni cntry wis madam book), B1O.000; Customer’ NSE check retuned in May’ and ce-deprsites in June (no entcy made on book i ether May oF June), PSO,O Customer's NSE check gsuurned ini May. and recorded in June, P20,000: Outstanding checks at Muy. 31.) 200,000. What's the adjusted amount oF cash dishirsemens. foe June? ‘a, 833,100 ae BO1200 Aways cae of MEP Rear R100 & $94,100 & eveor is Opposite ‘9 The following information was inctuded in the bank reesmeiliation of on Comipany on December 31, 2014 receipts for December P850,000 Seceipfy -e00 ber recorded in Devember 60,000 a for December not yet recorded 80,000 chee Frroneous receipt by December, no comection was ‘made until the following 50,000 “) erroneous bunk disbursement in December congetvd by. bank in December 18,000 BesaN Als Deposit of Siliman Co. gssdited o Silicon ¢ December 20,000 Total receipts per bank in December 990,000 ; F Deposit in transt-December 31,2014 100,000 DT cn e Book receipt for P50,000 in Dec. recorded by the company as 5,000 eta What isthe contectadiusted feceipt for December? 4 845,000 & 865,001 b. 850,000 895,000 10. Rock Conhpany hud the followins bank reconciliation at Marci 31. 2014 Arisuitec! th dnt WR Balance per bank statement, 03/31 468,000 Deposit in transit 100,000 Debit mento 10,000 110,000 Total ‘ 575,000 : ess: Outstanding cheeks 2135.00 Credit memo 50000 145,000 Balance per book. 03/31 ‘All reconcitiation items t March 31, 2014 eléared throueh the bank in April. Ouistandi 2014 totaled P75,000; deposits in transit amounted to ¥ {for Apri P15,000, Ertencous book rexeipt on- April 119.000 bat com for April-P’600,000 and a apk disbursement for April 500,000, hocks st April 30, "80,000 debit meio revels What is the amount of gash receipts popbook in April? a 590,000 &. 619.000 bh, 630,000. 1d, 650,000 Fea thoagh 104, 00 he sume wre! ShY Error Bk JPR, ReSA The Review School of Accountancy ‘MTel. No. 735-9807 & 734-3989 CTICAL ACCOUNTING | . Uberitw©. Espenilla Nature of receivables - Receivable represents financial asset arising from a:contractual right to receive cash or another financial asset from another company. It falls under one of four categories of financial instruments, namely Loans and Receivables. Loans and Receivables are non-derivative financial assets with fixed maturity (including loan assets, trade receivables, investments in debt securities and deposits held by banks) that are not quoted in an active market other than those classified as “financial assets at fair value”. The reference to fixed matyrity in the definition means a contractual arrangement that defines the amounts and dates of payments to the holder such as interest and: principal payments. For most entities, they comprise trade receivables, foan assets, investments in debt instruments. For banks and similar institutions, they constitute a significant proportion of their non-trading assets, in particular loans and advances to customers. . Classes of receivables Trade receivables ~ are claims. arising from sale of merchandise or service in the ordinary course of business operations; such as the following (a) accounts receivable and (b) notes receivable, Non-trade receivable ~ are claims arising from sources other than from sale of goods and services.in the normal course of business; such, as the following (a) advances to Officers and employees (b) advances to subsidiaries (c) dividends and interest receivable (4) deposits as 2.guarantee of performance or payment (e) deposits to cover potential damages or losses (f) claims for; insurance, tax refunds, lawsuits, merchandise damaged or lost in transit, returnable items, etc Presentation of receivabies on the face of the balance sheet or in the notes Receivables are disaggregated into amounts receivable from trade custon receivables from related parties prepayments and other amounts (PAS 1 paragraph 5b) Trade receivables should be presented on the face of the balance sheet as one line item, and classified as current assets but the detail of which will be disclosed in the nates. Non-trade receivables that are currently collectible should be presented as one line item under the current asset section but the detail of which will be disclosed in the notes. Valuation of Loans and Receivabies: a. At initial recognition loans and recetvables are measured at fair value (transaction price). The fair value is based on the total expected future cash inflows that an enterprise will realized. b. Subsequent to initial recognition foans and receivables are measured at amortized Cost. The amortized cost of a financial asset |s the amount at which the financial asset. is measured at initial recognition minus principal repayments, plus or minus principal amortization using the effective interest method of any difference between that initial amount and maturity amount and minus any reduction (directly through the use of allowance account) for impairment or uncollectibility, Accounts receivable are measured at original exchange price between the firm and the outside party, less adjustment for cash discount, sales return and allowances, yielding and approximation to fair value which is the amount expected to be collected, The issue of bad and doubtful debts will inevita receivables. There are currently no approved accounting standards that deal specifically with the measurement of bad and doubtful debts, the dnly guide. which accountants rely on in practice is the prudence consideration of PAS 1, which generally requires that known bad and doubtful debts shall be provided fo However, the application of this prudence consideration on accounting for trade receivables is subjective as it is left méstly to the discretion of the reporting e: y arise in accounting for trade