Problem 1.

(Operating Segment) 10 points

Reported in the income statement of COS Company for the year 2020 are the following:
Revenue ₱30,000,000.00
(including intersegment sales ₱5,000,000.00)
Expenses ₱22,000,000.00
Net Income ₱ 3,000,000.00

1. What is the minimum amount of sales to a major customer?

(30,000,000.00-5,000,000.00) x 10% = 2,500,000.00

2. What is the minimum amount of external revenue to be disclosed by reportable

segments?
(25,000,000.00 x 75%) = 18,750,000.00

Problem 2. (Interim Financial Reporting) 20 points

UDM Corporation prepares quarterly interim financial reports side from the mandatory
annual financial statements. The following are the information available for the current
year:
(a) The sales and collections of UDM Company during the year are as follow:

1st 2nd 3rd 4th

Sales, shipped 2,100.000.00 2,240,000.00 3,360,000.00 2,940,000.00
Collections 2,030,000.00 2,165,500.00 3,181,200.00 2,873,000.00

Sales of 10,000.00 and 15,000.00 were in transit at the end of 2nd and 3rd quarter,
respectively. The entity’s shipping term for sales transactions is FOB destination. All sales
are on account.
In prior years, the entity has an estimated bad debts of 3% of outstanding accounts
receivable. On December 31 of the year, the entity revised its estimate to 4%. The accounts
receivable balance at the start of the year is Php 23, 000.00.
What amount of bad debts expense should be recognized for the 1st, 2nd, 3rd and 4th
quarter?

Problem 3. (Cash and Cash Equivalents) 10 points

DMU Company has cash of P600, 000.00 on hand as at December31, 2020. The entity also
currently holds a 60-day BSP Treasury bill worth P2, 400,000.00. Items related to the entity’s
bank account are as follows:
 Secure na Secure Bank P1,200,000.00
 Bank of the UDM 1 300,000.00
 Bank of the UDM 2 (overdraft) 50,000.00

A check for P300, 000.00 for a payment of an accounts payable was drawn against the
Secure na Secure Bank account. The check was dated January 20, 2021 which the entity
had it delivered to the payee and had the same not recorded at year-end. Other items
include P60, 000.00 postal money order and P150, 000.00 customer postdated check,
both of which are duly recorded by the company as part of cash on hand.

How much shall be recorded as cash and cash equivalents in the Statement of Financial
Position as at December 31, 2020?

Problem 4. (Bank Reconciliation) 10 points

MUD Company maintains cash in Secure na Secure Bank. The following information
was available for the month of January 2021.
1. The bank statement at the end of the month showsP10,000.
2. Deposit not yet reflected in the bank statement, P84,000.
3. Checks issued but not yet encashed but already recorded as a credit to the cash in
bank, P65,000.
4. The bank made an error of debiting the account of MUD Company which was actually
a debit for JON Company, P4,000.
5. The ledger shows a cash in bank balance of P12,000
6. Notes receivable collected by the bank for MUD Company amounted toP16,000
7. Interest earned by UDM Company from keeping their cash at Secure na Secure Bank
is P5,000
8. Secure na Secure Bank charged MUD P1,000 service charge directly debited to their
account as seen in the bank statement.
9. MUD received a check from ERIC Company amounting to P7,000 but it was drawn
against insufficient funds.
10. There was a bank-related transactions that erroneously credited the ledger balance of
cash in bank account amounting to P8,000.
Requirement: Compute for the adjusted cash balance.