Government Accounting

Quiz 5

Write the letter pertaining to best answer.

1. Land Bank of the Philippines granted a loan amounting to

P2,500,000 with annual interest of 3% to City of Malabon on
January 1, 2020 for their rehabilitation efforts due to Typhoon
Bitoy who hits the National Capital Region last year. What is the
journal entry of the Land Bank of the Philippines to record the
loan granted to City of Malabon?

a. Loan Receivable - City of Malabon 2,500,000

Cash-Treasury/Agency Deposit /Trust 2,500,000
b. Loan Receivable - City of Malabon 2,500,000
Cash in Bank-Local Currency, Current
Account 2,500,000
c. Loan Receivable - City of Malabon 2,500,000
Cash-Modified Disbursement System, Regular 2,500,000
d. Loan Receivable - City of Malabon 2,500,000
Subsidy from National Government 2,500,000

2. The Department of Health obtained a loan from Asian

Development Bank – a foreign bank to finance the government
response in the ongoing pandemic amounting to $20 Billion.
What is the journal entry of the Bureau of Treasury to record the
receipt of loan proceeds based on the credit advised from
Bangko Sentral ng Pilipians?

a. Cash in Bank-Foreign Currency, BSP $5,000,000,000

Loan Payable-Foreign $5,000,000,000
b. Cash in Bank-Foreign Currency $5,000,000,000
Credit Cash-Treasury/Agency deposit, Foreign $5,000,000,000
c. Cash in Bank-Local Currency, BSP $5,000,000,000
 Loan Payable-Foreign $5,000,000,000
d. Cash in Bank-Local Currency, BSP $5,000,000,000
Credit Cash-Treasury/Agency deposit, Foreign $5,000,000,000

3. After months of deliberation, the transfer of cash to the agency’s

account from a loan to a foreign bank amounting to P10,000,000
is about to proceed. What is the entry to recognize the receipt of
loan proceeds based on credit advice from Bangko Sentral ng
Pilipinas?

a. Subsidy to National Government 10,000,000

Cash in Bank-Foreign Currency, Savings Account 10,000,000
b. Subsidy to National Government 10,000,000
Cash in Bank-Foreign Currency, Bangko Sentral ng
Pilipinas 10,000,000
c. Cash in Bank-Foreign Currency, Savings Account 10,000,000
Subsidy to National Government 10,000,000
d. Cash in Bank-Foreign Currency, Bangko Sentral ng Pilipinas 10,000,000
Subsidy to National Government 10,000,000

4. Land Management Bureau remitted P2,000,000 cash to the

Bureau of Treasury from its various collections. What is the
journal entry of Land Management Bureau to record the
remittance of collections to the Bureau of the Treasury?

a. Cash-Treasury/Agency Deposit/Trust 2,000,000

Cash-Collecting Officers 2,000,000
b. Cash-Collecting Officers 2,000,000
Due from Land Management Bureau 2,000,000
c. Cash-Treasury/Agency Deposit/Trust 2,000,000
Cash-Modified Disbursement System, Regular 2,000,000
d. Due from Land Management Bureau 2,000,000
Cash-Modified Disbursement System, Regular 2,000,000
 5. The construction of the floodway in Marikina City was delayed
by 6 weeks. According to the contract, any delay will be
penalized by 5% of 1% of the contract price per week. Assuming
that the contract price for the construction of floodway is
P36,000,000, what is the entry to recognize collection of
liquidated damages?

108,00
a. Cash-Collecting Officers 0
108,00
Miscellaneous income 0
108,00
b. Cash-Collecting Officers 0
108,00
Buildings 0
108,00
c. Cash-Modified Disbursement System, Regular 0
108,00
Miscellaneous income 0
d. No entry, Posting to appropriate Registry of Allotments,
Obligations and Disbursement Capital Outlays (RAODCO)

6. The retention fee amounting to P500,000 is to be released as the

end of defects notification period for the bridge constructed by
MMD Contractors already lapsed. What is the entry to record the
release of retention fee?

a. Guaranty/Security Deposits Payable 500,000

Cash-Modified Disbursement System, Trust 500,000
b. Guaranty/Security Deposits Payable 500,000
Cash-Modified Disbursement System, Special 500,000
c. Guaranty/Security Deposits Payable 500,000
Cash-Modified Disbursement System, Regular 500,000
d. No entry, Posting to appropriate Registry of Allotments, Obligations
 and Disbursements

7. On March 1, 2020, the construction materials for the renovation

of the office of the Secretary of National Defense arrived with
pertinent documents such as delivery receipt and sales invoice
amounting to P40,000. What is the entry to recognize the
delivery and acceptance of construction materials with charge
invoice?

a. Accounts Payable 40,000

Cash-Modified Disbursement System, Regular 40,000
b. Construction materials inventory 40,000
Cash-Modified Disbursement System, Regular 40,000
c. Construction materials inventory 40,000
Accounts payable 40,000
d. No entry, Posting to appropriate Registry of Allotments, Obligations
and Disbursements

8. A parcel of land with fair value of P10,000,000 was donated by

a group of retired soldiers to the Armed Forces of the Philippines
(AFP) under a condition that a hospital for soldiers will be
constructed on it. What is the entry to recognize the land
received as donation?

a. Land 10,000,000
Income from Grants and Donations in Kind 10,000,000
b. Land 10,000,000
Other Deferred Credits 10,000,000
c. Other Deferred Credits 10,000,000
Income from Grants and Donations in Kind 10,000,000
d. No entry, posting in the appropriate registry only
 9. On June 1, the Light Rail Transit purchases new set of train on
account at P5,500,000 with credit terms of 3/10, n/30. The
agency made payment on July 15 for the full amount. What is
the journal entry to recognize the payment of machinery? Ignore
tax implication.

a. Motor Vehicle 5,335,000

Accounts payable 5,335,000
b. Accounts payable 5,500,000
Cash-Modified Disbursement System, Regular 5,500,000
c. Accounts payable 5,335,000
Cash-Modified Disbursement System, Regular 5,335,000
d. Accounts payable 5,335,000
Other losses 165,000
Cash-Modified Disbursement System, Regular 5,500,000

10. On April 1, 2020, the Philippine Council for Agriculture and

Fisheries purchased P500,000 worth of rice from Ifugao farmers
for sale to customers. On May 15, the rice were sold for P650,
000 with a 15% discount to rice dealers. What is the entry of
agency to record the sale of rice?

a. Cash-Collecting Officers 650,000

Sales Revenue 650,000
b. Cash-Modified Disbursement System, Regular 552,500
Sales Discounts 97,500
Sales Revenue 650,000
c. Cash-Modified Disbursement System, Regular 650,000
Sales Revenue 650,000
d. Cash-Collecting Officers 552,500
Sales Discounts 97,500
Sales Revenue 650,000