Final Exam Intermediate Accounting 1 CAE223 2 nd Sem AY2020-21

1. (1-152)
AAA Company had the following account balances on December 31, 2020:

Petty cash fund P 50,000

Cash in bank – current account 4,000,000
Cash in bank – payroll account 1,200,000
Cash in bank – sinking fund 2,000,000
Cash on hand 500,000
Cash in bank – restricted account for plant expansion 1,500,000
Treasury bill 1,000,000

The petty cash fund included un-replenished Dec. 2020 petty cash expense vouchers P5,000 and employee IOU
P5,000. The cash on hand included a P100,000 customer check payable to AAA dated January 15, 2021. In
exchange for a guaranteed line of credit, the entity has agreed to maintain a minimum balance of P200,000 in
the unrestricted current bank account. The treasury bill placement is less than 3 months while the sinking fund
is set up to settle a bond payable that is due on December 31, 2020.

What total amount should be reported as cash and cash equivalents on December 31 2020?
a. 8,640,000
b. 7,440,000
c. 7,640,000
d. 5,640,000

2. (2-154)
BBB Company provided the following information on December 31, 2020:
Petty cash fund P 50,000
Current account – First Bank 4,000,000
Current account – Second Bank ( 250,000) overdraft
Money market placement for 90 days – Third Bank 1,000,000
Time Deposit – Fourth Bank 2,000,000

A check for P100,000 was drawn against First Bank current account dated and recorded December 29, 2019 but
delivered to payee on January 15, 2020. The Fourth Bank time deposit is set aside for land acquisition in early
January 2022.

What total amount should be reported as cash and cash equivalents on December 31, 2020?
a. 5,050,000
b. 5,150,000
c. 4,900,000
d. 4,150,000

3. (3-155)
On December 31, 2020, CCC Company reported cash account balance per ledger of P9,500,000 which included
the following:

Cash in bank – current account P 3,000,000

Time deposit – 30 days 500,000
NSF check of customer 200,000
Money market placement due on June 30, 2021 2,000,000
Savings deposit 1,000,000
IOU from an employee 300,000
Pension fund 1,500,000
Customer check dated January 31, 2021 600,000
Customer check outstanding for 18 months 400,000
P 9,500,000

Check of P100,000 in payment of accounts payable was dated and recorded on December 31, 2020 but mailed
to creditors on January 15, 2021. Check of P300,000 dated January 31, 2021 in payment of account payable
was recorded and mailed December 31, 2020. The cash receipts journal was held open until January 15, 2021,
during which time P200,000 was collected and recorded on December 31, 2020.
What total amount should be reported as cash and cash equivalents on December 31, 2020?
a. 4,700,000
b. 6,700,000
c. 4,900,000
d. 5,100,000

4. (4-157)
On December 31, 2020, DDD Company reported cash of P9,950,000 which comprised the following:

Undeposited collections P 600,000

Cash in bank – PNB checking account 4,000,000
Undeposited NSF check received from customer, dated Dec. 1, 2020 150,000
Undeposited check from customer, dated January 15, 2021 250,000
Cash in Bank – PNB fund for payroll 1,000,000
Cash in Bank – PNB money market instrument, 90 days 2,000,000
Cash in Bank – PNB foreign currency deposit, restricted 1,500,000
Cash in Bank – PNB value added tax account 450,000
P 9,950,000

On December 31, 2020, what total amount should be reported as cash and cash equivalents?
a. 7,600,000
b. 8,200,000
c. 6,050,000
d. 8,050,000

5 & 6 (5-158)
EEE Company reported the following information in relation to cash on December 31, 2020:

Cash in bank account balance, P4,000,000.

Un-deposited collections, P400,000.
A customer check amounting to P200,000 dated January 2, 2020 was included in the Dec. 31, 2020 cash in bank
balance.
Another customer check for P500,000 deposited on December 22, 2020 was included in the cash in bank
balance but returned by the bank for insufficiency of fund. However, this check was re-deposited on December
26, 2020 and cleared 2 days later.
A P400,000 check payable to supplier dated and recorded on December 30, 2020 was mailed on January 16,
2021.
A petty cash fund of P50,000 comprised the following on December 31, 2020:
Coins and currencies P 5,000
Petty cash vouchers 40,000
Refundable deposit for returnable containers 5,000
P 50,000
A check of P45,000 was drawn on December 31, 2020 payable to Petty Cash.

5. What is the adjusted cash in bank on December 31, 2020?

a. 4,600,000
b. 4,200,000
c. 4,400,000
d. 3,700,000

6. What total amount should be reported as cash on December 31, 2020?

a. 4,645,000
b. 4,845,000
c. 4,600,000
d. 4,650,000
7. (5-146)
FFF Company reported the following information at year-end:

Share investments of P1,000,000 that are very actively traded in the stock market.
Government treasury bills of P2,000,000 with a 10-year term but purchased on December 31 at which time
they had 2 months to go until maturity.
Cash of P3,400,000 in the form of coin, currency, saving account and checking account.
Commercial papers of P1,500,000 with term of 9 months but purchased on December 31 at which time they
had 3 months to go until maturity.

What total amount should be reported as cash?

a. 3,400,000
b. 4,900,000
c. 4,400,000
d. 5,400,000

8. (8-149)
GGG Company reported the cash in bank balance on December 31, 2020 at P5,000,000 and held the following
items on same date:

P2,000,000 check payable to GGG dated January 2, 2021 in payment of a sale made in December 2020 not
included in December 31 balance.
P500,000 check payable to GGG deposited December 15 and included in December 31 balance, but returned by
bank on December 30 stamped “NSF”. The check was re-deposited on January 2, 2021 and cleared January 5,
2021.
P300,000 check drawn on GGG’s account, payable to a vendor dated and recorded in GGG’s books on
December 31, 2020 but not mailed until January 10, 2021.
P1,000,000 certificate of time deposit

What amount should be reported as cash balance on December 31, 2020?

a. 4,800,000
b. 5,300,000
c. 6,500,000
d. 5,800,000

9. (150-13-9
HHH Company reported petty cash fund which comprised the following:
Coins and currency P 3,300.
Paid vouchers:
Transportation P 600
Gasoline 400
Office supplies 500
Postage stamps 300
IOUs from employees 1,200 3,000
Customer’s check returned by bank marked NSF 1,000
Check drawn by HHH to the order of petty cash custodian 2,700

What is the correct amount of petty cash fund for statement presentation purposes?
a. 10,000
b. 7,000
c. 6,000
d. 9,000
10. (10-151)
III Company reported an imprest petty cash fund of P50,000 with the following details:

Currencies P 22,000
Petty cash vouchers:
Gasoline 3,000
Medical supplies benefit 1,000
Repairs office equipment 1,500
Loans to employees 3,500
A check drawn by III payable to the order of
petty cash custodian representing her salary 15,000
An employee check returned by the bank
for insufficiency of fund 3,000
A sheet of paper with names of several employees
together with cash contribution for a
birthday gift of a co-employee 5,000

What amount of cash from petty cash fund should be reported in the statement of financial position?
a. 42,000
b. 27,000
c. 37,000
d. 22,000

11 to 13 (5-191)
JJJ Company provided the following bank reconciliation on May 31:

Balance per bank statement P 2,100,000

Deposits in transit 300,000
Checks outstanding ( 50,000)
Correct cash bank balance P 2,350,000

Balance per book P 2,360,000

Bank service charge ( 10,000)
Correct cash book balance P2,350,000. P 2,350,000

Data for the month of June: Bank Book

Checks recorded P 2,300,000 P 2,400,000
Deposits recorded 1,700,000 1,800,000
Collection by bank, P500,000 note
Plus interest 550,000
NSF check returned with June 30 statement 100,000
Balances 1,950,000 1,750,000

11. What is the amount of checks outstanding on June 30?

a. 200,000
b. 150,000
c. 100,000
d. 0

12. What is the amount of deposit in transit on June 30?

a. 400,000
b. 100,000
c. 200,000
d. 0

13. What amount should be reported as adjusted cash in bank on June 30?
a. 1,760,000
b. 2,200,000
c. 1,950,000
d. 2,250,000
14 & 15 (2-161)
In preparing the bank reconciliation for the month of December, KKK Company provided the following data:

Balance per bank statement P 3,800,000

Deposit in transit 520,000
Amount erroneously credited by bank to KKK’s account 40,000
Bank service charge for December 5,000
NSF check 50,000
Outstanding checks 675,000

14. What is the adjusted cash in bank?

a. 3,685,000
b. 3,645,000
c. 3,600,000
d. 3,605,000

15. What is the unadjusted cash in bank balance per book?

a. 3,550,000
b. 3,660,000
c. 3,610,000
d. 3,655,000

16 & 17 (8-213)
At the beginning of current year, LLL Company had a credit balance of P260,000 in the allowance for
uncollectible accounts. Based on past experience, 2% of credit sales would be uncollectible. During the current
year, the entity wrote off P325,000 of uncollectible accounts. Credit sales for the year totalled P9,000,000.

16. What amount should be reported as bad debt expense for the year?
a. 325,000
b. 180,000
c. 440,000
d. 65,000

17. What amount should be reported as allowance for bad debts accounts at year-end?
a. 115,000
b. 180,000
c. 245,000
d. 440,000

18. (1-230)
MMM Company assigned P3,000,000 of accounts receivable as collateral for a P2,000,000 loan with a bank.
The bank assessed a 4% finance fee and charged 6% interest on the note at maturity.

What would be the journal entry to record the transaction?

a. Debits: Cash P1,920,000, Finance Charge P80,000; and Credit: Note Payable P2,000,000
b. Debits: Cash P1,920,000, Finance Charge P80,000; and Credit: Accounts Receivable P2,000,000
c. Debits: Cash P1,920,000, Finance Charge P80,000; Due from Bank P1,000,000; and Credit: Accounts
Receivable P3,000,000
d. Debits: Cash P1,880,000, Finance Charge P120,000; and Credit: Note Payable P2,000,000

19 to 21 (2-251-21)
On December 1, 2020, NNN Company assigned specific accounts receivable totalling P4,000,000 as collateral on
a P3,000,000, 12% note from a certain Bank. The NNN will continue to collect the assigned accounts receivable
(non-notification basis).

In addition to the interest on the note, the Bank also charged a 5% finance fee deducted in advance on the
P3,000,000 value of the note.

The December collections of assigned accounts receivable amounted to P2,000,000 less cash discounts of
P100,000. On December 31, 2020, NNN remitted the collections to the Bank in payment for the interest
accrued on December 31, 2020 and the note payable. NNN accepted sales return of P150,000 on the assigned
accounts and wrote off assigned accounts of P200,000.
19. What amount of cash was received from the assignment of accounts receivable on December 1, 2020?
a. 4,000,000
b. 3,000,000
c. 3,800,000
d. 2,850,000

20. What is the carrying amount of note payable on December 31, 2020?
a. 1,000,000
b. 1,100,000
c. 1,130,000
d. 1,460,000

21. What is the balance of accounts receivable assigned on December 31, 2020?
a. 2,100,000
b. 2,000,000
c. 1,650,000
d. 1,850,000

22 & 23 (2-255)
OOO Company has an 8% note receivable dated June 30, 2020, in the original amount of P1,500,000. Payments
of P500,000 in principal plus accrued interest are due annually on July 1, 2021, 2022 and 2023. (Present value is
not to be computed because it is interest-bearing note, hence P1,500,000 is the present value, be aware also
that payment date does not coincide with Dec. 31 year end.)

22. What is the balance of note receivable on July 1, 2021?

a. 1,500,000
b. 1,000,000
c. 500,000
d. 0

23. On June 30, 2022, what amount should be reported as accrued interest on the note receivable?
a. 120,000
b. 40,000
c. 80,000
d. 0

24. (1-402)
At the beginning of current year, PPP Company purchased marketable equity securities to be held as “trading”
for P5,000,000. The entity also paid transaction cost amounting to P200,000. The securities had a market value
of P5,500,000 at year-end and the transaction cost that would be incurred on sale is estimated at P100,000. No
securities were sold during the current year.

What amount of unrealized gain or loss on these securities should be reported in the income statement for the
current year?
a. 500,000 gain
b. 500,000 loss
c. 300,000 gain
d. 400,000 gain

25. (4-405)
At the beginning of current year, QQQ Company acquired non-trading equity instrument for P4,000,000. The
equity instruments irrevocably designated as financial asset at fair value through other comprehensive income.
The transaction cost incurred amounted to P700,000. The fair value of the instrument was P5,500,000 at year
end and the transaction cost that would be incurred on the sale of the investments is estimated at P600,000.

What amount of unrealized gain should be recognized in other comprehensive income for the current year?
a. 200,000
b. 900,000
c. 800,000
d. 0
26. (2-135v2)
At the beginning of current year, RRR Company issued P5,000,000 face amount, 5-year bond at 109.

Each P1,000 bond was issued with 50 detachable share warrants, each of which entitled the bondholder to
purchase one ordinary share of P5 par value at P25. Immediately after issuance, the market value of each
warrant was P5.

The stated interest rate on the bonds is 11% payable annually every December 31. However, the prevailing
market rate of interest for similar bonds without warrant is 12%.
@ 11% @12%
PV of a single payment of 1 for 5 periods 0.59 0.57
PV of an ordinary annuity of 1 for 5 periods 3.70 3.60

What is the initial carrying amount of the bonds payable?

a. 4,985,000 b. 4,830,000 c. 5,000,000 d. 5,450,000

27. Refer to no. 26. What amount should be recorded initially as discount or premium on bonds payable?
a. 170,000 discount b. 15,000 discountc. 450,000 premium d. 0

28. Refer to no. 26. What amount should be reported as equity component arising from the issuance of
bonds payable?
a. 465,000 b. 450,000 c. 620,000 d. 0

29 Refer to no. 26. What amount should be recorded as share premium if all of the warrants are
exercised?
a. 1,250,000 b. 2,500,000 c. 5,000,000 d. 5,620,000

30. (4-138v2)
Neptune Company issued P5,000,000 face amount 12% convertible bonds at 110 at the beginning of current
year. The bonds pay interest semi-annually on January 1 and July 1. It is estimated that the bonds would sell
only at 103 without the conversion feature. Each P1,000 bond is convertible into 10 ordinary shares with P100
par value.

What is the increase in shareholders’ equity arising from the original issuance of the convertible bonds
payable?
a. 350,000 b. 500,000 c. 150,000 d. 0