Quiz No.

Part I Part II
Multiple Choice Problem Solving

1 C 1 P 5,165,000
2 D 2 P 41,160
3 D 3 P 86,660
4 B 4 P 280,000
5 C 5 P 811,460
6 D 6 P 19,316.80
7 B 7 P 15,848.80
8 B 8 P 3,060,000
9 A 9 P 57,114
10 B 10 P 68,640
11 A 11 P 187,526
12 C 12 P 567,800
13 D 13 P 35,650
14 D 14 P 257,750
15 A 15 P 152,988
16 B 16 P 341,098.76
17 D 17 P 778,316.33
18 B 18 P 412,280.46
19 B
20 C
Part II
Problem 1

Solution:

Trade accounts receivable – unassigned 2,000,000

Trade accounts receivable – assigned (Finance
Company’s equity in assigned accounts is
P500,000) 1,700,000

Trade installments receivable due 1–18 months,

including unearned finance charge of P50,000 830,000
Trade accounts receivable from officers, due
currently 170,000

Trade accounts on which postdated checks are

held (no entries were made on receipt of checks) 240,000
Consignment goods already sold
(P250,000 x 90%) 225,000
Adjusted trade receivables 5,165,000 Reqt. No. 1

Problem 2
Accounts
Payable Inventories
Invoice - October 2010:
October 25 (4,700)

Invoice - November 2010:

October 30 5,320 5,320
October 27 6,220
November 2 6,980
October 23 12,920 12,920
October 23 14,420 14,420

Additional information:
Hold for shipping instructions 28,000
Fabricated to order -
Unshipped goods 26,000
Net adjustments 41,160 86,660
Reqt. No. 2 Reqt. No. 3

Problem 3

Accounts receivable 4,000,000

Commission (4,000,000 x 12%) (480,000)
Net sales price 3,520,000
Carrying value of accounts receivable
(4,000,000 - 200,000) 3,800,000
Loss on factoring (280,000) Reqt. No. 4

Problem 4

GL SL 0 to 1 1 to 3 3 to 6 Over 6

Unadjusted balances 815,000 806,960 376,460 310,780 92,220 27,500

Add (deduct):
Understatement of accounts written off
(P8,832 - 8,332) (500)
Definitely uncollectible accounts (7,500) (7,500) (7,500)
Advances from customers 7,000 7,000 7,000
Accounts with credit balances 5,000 5,000 5,000
Unlocated difference (7,540)
Adjusted balances 811,460 811,460 383,460 315,780 92,220 20,000
Reqt. No. 5

Account classification Adjusted balance Rate Required Allowance

0 to 1 month 383,460 1% 3,834.60

1 to 3 months 315,780 2% 6,315.60
3 to 6 months 92,220 3% 2,766.60
Over 6 months 20,000 P8,000 - 50% 4,000.00
P12,000 - 20% 2,400.00
19,316.80 Reqt. No. 6
Allowance for doubtful accounts, beg. 19,800.00
Write-off (8,832.00)
Write-off (7,500.00)
Subtotal 3,468.00
Allowance for doubtful accounts, end. 19,316.80
Doubtful Accounts Expense 15,848.80 Reqt. No. 7

Problem 5

Goods out on consignment at another company’s 875,000

store
Goods purchased FOB shipping point that are in 225,000
transit at December 31
Goods sold to another company, for which our 400,000
company has signed an agreement to repurchase
at a set price that covers all costs related to
inventory
Freight charges on goods purchased 75,000
Factory labor costs incurred on goods still unsold 60,000

Materials on hand not yet placed into production 380,000

Raw materials on which the company has started

production, but which are not completely
processed 340,000
Factory supplies 50,000
Cost identified with units completed but not yet
sold 270,000
Goods sold FOB destination that are in transit at
December 31 55,000
Goods used as collateral for a loan 330,000
Inventory, end 3,060,000 Reqt. No. 8

Problem 6
Write-off Recovery Credit Sales

2005 32,000 1,160 2,100,000

2006 40,000 - 3,200,000
2007 86,000 5,800 4,900,000
2008 114,000 6,000 6,200,000
2009 139,000 9,765 6,850,000
2010 176,000 16,875 8,200,000

Total write-off (2005 to 2009) 411,000

Total recoveries (2005 to 2009) 22,725
Net write-off (2005 to 2009) 388,275

Divide by: Total credit sales (2005 to 2009) 23,250,000

% of uncollectible accounts 1.67%

Multiply by: Accounts receivable for 2009 3,420,000
Allowance for doubtful accounts-1/1/2010 57,114.00 Reqt. No. 9

Total write-off (2006 to 2010) 555,000

Total recoveries (2006 to 2010) 38,440
Net write-off (2006 to 2010) 516,560

Divide by: Total credit sales (2006 to 2010) 29,350,000

% of uncollectible accounts 1.76%

Multiply by: Accounts receivable for 2010 3,900,000
Allowance for doubtful accounts-12/31/2010 68,640.00 Reqt. No. 10

Allowance for doubtful accounts-1/1/2010 57,114.00

Write-off for 2010 (176,000)
Allowance for doubtful accounts-12/31/2010 (68,640.00)
Doubtful accounts expense for 2010 187,526.00 Reqt. No. 11

Problem 7

Sales (1/1 to 3/31) 505,000

Sales (4/1 to 4/15) - see below (A) 62,800
Total Sales (1/1 to 4/15) 567,800 Reqt. No. 12
A/R, 4/15
(143,000 + 36,000) 179,000
Collections
(53,450 - 4,650) 48,800
A/R, 3/31 (165,000)
Sales (4/1 to 4/15) - (A) 62,800

Salvaged inventory 29,000

Goods in transit 6,650
Cost of inventory not destroyed by fire 35,650 Reqt. No. 13

Purchases (1/1 to 3/31) 211,000

April merchadise shipments paid 10,200
Unrecorded purchases 41,200
Purchase returns (4,650)
Net purchases 257,750 Reqt. No. 14

Inventory, 1/1 225,000

Purchases 257,750
Cost of Goods Available for Sale 482,750
Less: Estimated Cost of Sales
Sales (1/1 to 4/15) 567,800
Multiply by: COS ratio - see below (B) 54.00% 306,612
Estimated Inventory, 4/15 176,138
Proceeds from sale of inventory 16,500
Goods in transit 6,650 23,150
Inventory fire loss 152,988 Reqt. No. 15

Net sales
2008 1,170,000
2009 1,590,000 2,760,000

Cost of sales
Inventory, 1/1/08 219,400
Add: Net purchases
(P705,600 + 790,400) 1,496,000
1,715,400
Less: Inventory, 12/31/09 (225,000) 1,490,400
Gross Profit 1,269,600

Gross profit rate 46.00%

COS ratio - (B) 54.00%

Problem 8
4% 12%
Date Principal Interest Total PVF PV

12/31/2010 900,000 108,000 1,008,000 0.8929 900,000.00

12/31/2011 900,000 72,000 972,000 0.7972 774,872.45
12/31/2012 900,000 36,000 936,000 0.7118 666,226.31
2,341,098.76 (A)

Present value of note (see above - A) 2,341,098.76

Less: Cost of euipment 2,000,000.00
Gain on sale of equipment 341,098.76 Reqt. No. 16

Notes receivable from consultation

PV of principal (P1,500,000 x 0.7513) 1,126,972.20

PV of interest (P1,500,000 x 5% x 2.4869) 186,513.90
1,313,486.10

10% 5% Carrying
Date Effective Interest Nominal Interest Amortization Amount

1/1/2010 1,313,486.10
12/31/2010 131,348.61 60,000.00 71,348.61 1,384,834.71
Notes receivable from sale of equipment

12% 4% Carrying
Date Effective Interest Nominal Interest Amortization Amount

1/1/2010 2,341,098.76
12/31/2010 280,931.85 108,000 172,931.85 1,614,030.61
12/31/2011 193,683.67 72,000 121,683.67 835,714.29

Notes receivable from sale of equipment 1,614,030.61 835,714.29

Current portion of long-term notes receivable, 12/31/10 778,316.33 Reqt. No. 17

Notes receivable from consultation 131,348.61

Notes receivable from sale of equipment 280,931.85
Interest income in 2010 412,280.46 Reqt. No. 18
Part III

Truffles Company
Inventory Schedule
December 31, 2010

Final Accounts Accounts Net Net Net

Inventory Receivable Payable Sales Purchases Income

Uncorrected balances 86,000 93,000 31,000 530,000 230,000 21,000

a. - - - - - -
b. 24,000 - - - - 24,000
c. (18,500) - - - - (18,500)
d. (14,000) - - - - (14,000)
- - (14,000) - (14,000) 14,000
e. 8,000 - - - - 8,000
f. 16,000 - - - - 16,000
- - 16,000 - 16,000 (16,000)
g. 38,000 - - - - 38,000
- (42,000) - (42,000) - (42,000)
h. (22,000) - - - - (22,000)
Corrected balances 117,500 51,000 33,000 488,000 232,000 8,500