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PRACTICAL ACCOUNTING 1 – REVIEW
CASH & CASH EQUIVALENTS
PROF. U.C. VALLADOLID
Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
1. In connection with your audit of John Paul Corporation for the year ended December 31, 2020, you gathered the following:
Current account at Metrobank P2,000,000

Current account at BPI (100,000)
Payroll account 500,000
Foreign bank account – restricted (in equivalent pesos) 1,000,000
Postage stamps 1,000
Employee’s post dated check 4,000
IOU from controller’s sister 10,000
Credit memo from a vendor for a purchase return 20,000
Traveler’s check 50,000
Not-sufficient-funds check 15,000
Money order 30,000
Petty cash fund (P4,000 in currency and expense receipts for
P6,000) 10,000
Treasury bills, due 3/30/2021 (purchased 12/29/2020) 200,000
Treasury bills, due 1/31/2021 (purchased 2/1/2020) 300,000
Based on the above information and the result of your audit, compute for the cash and cash equivalents that will be reported on the
December 31, 2020 statement of financial position.
a. P2,784,000 c. P2,790,000
b. P3,084,000 d. P2,704,000
2. The controller Cooper Corporation, is attempting to determine the amount of cash to be reported on its December 31, 2020 statement
of financial position. The following information is provided:
1. Commercial savings account of P1,200,000 and a commercial checking account balance of P1,800,000 are held at PS Bank.
2. Travel advances of P360,000 for executive travel for the first quarter of the next year (employee to reimburse through salary
deduction).
3. A separate cash fund in the amount of P3,000,000 is restricted for the retirement of a long term debt.
4. Petty cash fund of P10,000.
5. An I.O.U. from a company officer in the amount of P40,000.
6. A bank overdraft of P250,000 has occurred at one of the banks the company uses to deposit its cash receipts. At the present time,
the company has no deposits at this bank.
7. The company has two certificates of deposit, each totaling P1,000,000. These certificates of deposit have maturity of 120 days.
8. Cooper has received a check dated January 2, 2021 in the amount of P150,000.
9. Cooper has agreed to maintain a cash balance of P200,000 at all times at PS Bank to ensure future credit availability.
10. Currency and coin on hand amounted to P15,000.
Based on the above data, how much will be reported as cash and cash equivalents at December 31, 2020?
a. P3,025,000 c. P2,575,000
b. P2,825,000 d. P5,025,000
3. In your cash count of the petty cash fund of Kaila Company as of July 4, 2020, you found the following composition of its petty cash
fund:
Bills and coins counted 2,450.00

Approved and signed petty cash vouchers
Dated June 2020 3,300.00
Dated July 1-4, 2020 800.00
IOU from Joe Santos (Employee) 1,400.00
A check drawn by Juvy Victoria, an employee,
dated July 15, 2020 2,000.00
The petty cash fund has an imprest balance of 10,000. The company’s reporting period ends on June 30.
1. What is the correct balance of the petty cash fund?
a. 3,000.00 c. 3,250.00
b. 3200.00 d. 3,100.00
2. How much is the cash shortage or overage?
a. 100 shortage c. 100 overage
b. 50 shortage d. 50 overage
4. Jeff Incorporated established a petty cash fund of 5,000 for incidental expenses on June 1, 2020. At the end of the month, the count of
cash on hand indicated that 670.40 remained in the fund. A review of the petty cash vouchers disclosed the following expenses had
been incurred during the month:
Office supplies 341.60 Miscellaneous 837.60
Transportation 1,321.40 Representation 1,000.00
Postage 780.00
Question 1: What is the amount of cash shortage?
a. P 55.50 c. P 48.00
b. 45.00 d. P 49.00
5. On January 1, 2020, Kyle Corporation established a petty cash fund of P400. On December 31, 2020, the petty cash fund was
examined and found to have receipts and documents for miscellaneous expenses amounting to P364. In addition, there was cash
amounting to P44. What entry would be required to record replenishment of the petty cash fund on December 31, 2020?
a. Petty Cash.................... 364
Cash Short and Over......... 8
Cash........................ 356
b. Miscellaneous Expense......... 364
Petty Cash.................. 356
c. Miscellaneous Expense......... 364
Cash........................ 356
d. Miscellaneous Expense......... 356
Cash........................ 364
6. The following data pertaining to the cash transactions and bank account of Angel Company for May 2020 are available to you:
Cash balance, per accounting records, May 31, 2020 P 51,582
Cash balance, per bank statement, May 31, 2020 95,874
Bank service charge for May 327
Debit memo for the cost of printed checks delivered by the bank;
the charge has not been recorded in the accounting records 375
Outstanding checks, May 31, 2020 20,184
Deposit of May 30 not recorded by bank until June 1 14,610
Proceeds of bank loan on May 30, not recorded in the accounting
records, net of interest of P900 17,100
Proceeds from a customer’s promissory note; principal amount P24,000,
with interest collected by the bank 24,300
Check No. 1086 issued to a supplier entered in the accounting records
as P6,300 but deducted in the bank statement at an erroneous amount of 3,600
Stolen check lacking an authorized signature, deducted from Angel’s
account by the bank in error 2,400
Customer’s checks returned by the bank marked NSF, indicating that the
customer’s balance was not adequate to cover the checks; no entry has
been made in the accounting records to record the returned check 2,280
1. The adjusted cash in bank balance at May 31, 2020 is:

a. P 87,570 b. P 90,000 c. P 90,570 d. P 90,900
2. The cash in bank balance of Angel COMPANY at May 31, 2020 is:
a. Understated by P39,318 c. Understated by P38,418
b. Understated by P38,988 d. Understated by P35,988
7. The books of JP's Service, Inc. disclosed a cash balance of P687,570 on December 31, 2020. The bank statement as of
December 31 showed a balance of P547,800. Additional information that might be useful in reconciling the two balances
follows:
(a) Check number 748 for P30,000 was originally recorded on the books as P45,000.
(b) A customer's note dated September 25 was discounted on October 12. The note was dishonored on December 29 (maturity date).
The bank charged JP's account for P142,650, including a protest fee of P2,650.
(c) The deposit of December 24 was recorded on the books as P28,950, but it was actually a deposit of P27,000.
(d) Outstanding checks totaled P98,850 as of December 31.
(e) There were bank service charges for December of P2,100 not yet recorded on the books.
(f) JP's account had been charged on December 26 for a customer's NSF check for P12,960.
(g) JP properly deposited P6,000 on December 3 that was not recorded by the bank.
(h) Receipts of December 31 for P134,250 were recorded by the bank on January 2.
(i) A bank memo stated that a customer's note for P45,000 and interest of P1,650 had been collected on December 27, and the bank
charged a P360 collection fee.
Based on the above and the result of your audit, determine the following:
1. Adjusted cash in bank balance

a. P583,200 c. P589,200
b. P577,200 d. P512,400
2. Net adjustment to cash as of December 31, 2020

a. P104,370 c. P 98,370
b. P110,370 d. P175,170
8. On March 3, 2020, Jerome Company received its bank statement. However, the closing balance of the account was unreadable.
Attempts to contact the bank after hours did not secure the desired information. Thus, you had to prepare a bank reconciliation from the
available information summarized below:
February 28 book balance 1,460,000
Note collected by bank 100,000
Interest earned on note 10,000
NSF check of customer 130,000
Bank service charge on NSF check 2,000
Other bank service charges 3,000
Outstanding checks 202,000
Deposit of February 28 placed in night depository 85,000
Check issued by Axle Company charged to Jerome’s account 20,000
What was the cash balance per bank statement?

a. 1,435,000
b. 1,532,000
c. 1,338,000
d. 1,557,000
9. Information pertaining to Ana Company appears below.

Balance per bank statement July 31 1,240,000
Balance per ledger, July 31 750,000
Deposit of July 30 not recorded by bank 280,000
Debit memo – service charge 10,000
Credit memo – collection of note by bank for Ana 300,000
Outstanding checks ?
An analysis of the canceled checks returned with the bank statement reveals the following:
? Check for purchases of supplies was drawn for P60,000 but was recorded as P90,000.
? The manager wrote a check for traveling expenses of P100,000 while out of town. The checks was not recorded.
What is the amount of outstanding checks on July 31?

a. 970,000 c. 270,000
b. 550,000 d. 610,000
10. Norman Company had the following bank reconciliation on June 30, 2020:
Balance per bank statement, June 30 3,000,000
Add: Deposit in transit 400,000
Total 3,400,000
Less: Outstanding checks 900,000
Balance per book, June 30 2,500,000
The bank statement for the month of July showed the following:
Deposits (including P200,000 note collected for Norman) 9,000,000
Disbursement (including P140,000 NSF check and
P10,000 service charge) 7,000,000
All reconciling items on June 30 cleared through the bank in July. The outstanding checks totaled P600,000 and the deposit in transit
amounted to P1,000,000 on July 31.
Q1. What is the cash balance per book on July 31, 2020?
a. 5,400,000
b. 5,350,000
c. 5,550,000
d. 4,500,000
Q2. What is the amount of cash receipts per book in July 2020?
a. 9,400,000
b. 9,600,000
c. 8,600,000
d. 9,800,000
Q3. What is the amount of cash disbursements per book in July 2020?
a. 6,550,000
b. 6,700,000
c. 7,300,000
d. 6,850,000
11.The following information is shown in the accounting records of a company:

Balances as of January 1, 2020
Cash P93,000
Merchandise inventory 129,000
Accounts Receivable 100,500
Accounts payable 79,500
Balances as of December 31, 2020
Merchandise Inventory P117,000
Accounts receivable 136,500
Total sales and cost of goods sold for 2020 were P1,197,000 and P874,500, respectively. All sales and all merchandise purchases
were made on credit. Various operating expenses of P160,500 were paid in cash. Assume that there were no other pertinent
transactions. The cash balance on December 31, 2020 would be
a. 162,500
b. 223,500
c. 384,000
d. 457,500
12. On October 31, year 2, Dingo, Inc. had cash accounts at three different banks. One account balance is segregated solely for a
November 15, year 2 payment into a bond sinking fund. A second account, used for branch operations, is overdrawn. The third
account, used for regular corporate operations, has a positive balance. How should these accounts be reported in Dingo’s October 31,
year 2 classified balance sheet?
a. The segregated account should be reported as a noncurrent asset, the regular account should be reported as a current asset, and
the overdraft should be reported as a current liability.
b. The segregated and regular accounts should be reported as current assets, and the overdraft should be reported as a current
liability.
c. The segregated account should be reported as a noncurrent asset, and the regular account should be reported as a current asset net
of the overdraft.
d. The segregated and regular accounts should be reported as current assets net of the overdraft.
13. During the year, Jerome issued the following checks pertaining to its petty cash fund:
*P5,000 check issued to established the petty cash fund
*P2,000 checks issued to replenish the petty cash fund
*P2,000 check to increase the pety cash fund
All the above checks were correctly recorded.
At balance sheet date, the petty cash fund is consisting of the following:
*P2,200 paper currencies and coins
*P4,300 paid, but unreplenished vouchers
To record the adjustment of petty cash fund balance as of balance sheet date, the adjusting entry would have a
a. debit to petty cash shortage of P500 c. credit to overage of P1,500
b. debit to petty cash of P500 d. credit to petty cash of P4, 300
14. Jerome Co. was organized on January 2, 2020. The following items are from the company’s trial balance on December 31, 2020.
Common stock P1,200,000
Additional paid-in-capital 50,000
Land 1,000,000
Building 1,400,000
Furniture and fixtures 367,000
Notes payable-bank 500,000
Sales 6,235,200
Operating expenses (including depreciation of P400,000) 1,005,150
Additional information is as follows:

1. Deposits in transit, December 31 P45,167
2. Service charge for December 2,000
3. Outstanding checks, December 31 163,666
4. Bank balance, December 31 520,159
5. Jerome Co.’s mark up on sales is 30%.
1. What is the total collection from sales?

a. P6,114,967 c. P6,235,200
b. P4,119,240 d. P6,069,800
2. What is the total payment for merchandise purchases?
a. P3,905,990 c. P4,043,990
b. P4,649,140 d. P5,914,550
3. What is the total cash receipts per books?

a. P7,819,800 c. P7,985,200
b. P7,769,800 d. P5,869,240
4. What is the total cash disbursements per books?

a. P7,816,140 c. P8,021,290
b. P7,416,140 d. P7,278,140
5. What is the cash balance per books on December 31?

a. P403,660 c. P569,060
b. P541,660 d. P707,060
6. What is the adjusted cash balance on December 31?

a. P638,568 c. P401,660
b. P705,060 d. P539,660
15. The bookkeeper of Jostin Company recently prepared the following bank reconciliation on December 31, 2020:
Balance per bank statement 20,000,000

Add: Deposit in transit 1,500,000
Checkbook and other bank charge 50,000
Error made by Jostin in recording check No.
1005 (issued in December) 150,000
Customer check marked DAIF 500,000 2,200,000
Total 22,200,000
Deduct: Outstanding checks 1,900,000
Note collected by bank (includes P200,000 interest) 2,300,000 4,200,000
Balance per book 18,000,000
Jostin has P1,000,000 cash on hand on December 31, 2020. The amount to be reported as cash on the balance sheet as of December
31, 2020 should be
a. P19,600,000 c. P20,600,000
b. P18,600,000 d. P19,750,000
16. You were able to gather the following from the December 31, 2020 trial balance of JP Corporation in connection with your audit of the
company:
Cash on hand P 500,000

Petty cash fund 10,000
BPI current account 1,000,000
Security Bank current account No. 01 1,080,000
Security Bank current account No. 02 (80,000)
PNB savings account 1,200,000
PNB time deposit 500,000
Cash on hand includes the following items:
a. Customer’s check for P40,000 returned by bank on December 26, 2020 due to insufficient fund but subsequently redeposited
and cleared by the bank on January 8, 2021.
b. Customer’s check for P20,000 dated January 2, 2021, received on December 29, 2020.
c. Postal money orders received from customers, P30,000.
The petty cash fund consisted of the following items as of December 31, 2020.
Currency and coins P 2,000

Employees’ vales 1,600
Currency in an envelope marked “collections for charity” with names
attached 1,200
Unreplenished petty cash vouchers 1,300
Check drawn by JP Corporation, payable to the petty cashier
4,000
P10,100
Included among the checks drawn by JP Corporation against the BPI current account and recorded in December 2020 are the following:
a. Check written and dated December 29, 2020 and delivered to payee on January 2, 2021, P80,000.
b. Check written on December 27, 2020, dated January 2, 2021, delivered to payee on December 29, 2020, P40,000.
The credit balance in the Security Bank current account No. 2 represents checks drawn in excess of the deposit balance. These checks
were still outstanding at December 31, 2020.
The savings account deposit in PNB has been set aside by the board of directors for acquisition of new equipment. This account is
expected to be disbursed in the next 3 months after the end of the reporting period.
Based on the above and the result of your audit, determine the adjusted balances of following:
1. Cash on hand
a. P410,000 c. P470,000
b. P530,000 d. P440,000
2. Petty cash fund

a. P6,000 c. P2,000
b. P7,200 d. P4,900
3. BPI current account

a. P1,000,000 c. P1,080,000
b. P1,120,000 d. P1,040,000
4. Cash and cash equivalents

a. P2,917,200 c. P3,052,000
b. P3,074,900 d. P3,066,000
17. You are attempting to determine an apparent cash shortage that you believe resulted from an employee’s theft. You have assembled
the following information for the month of March:
Cash balance per books, March 1 115,963.70
Cash receipts for March, per books 246,475.00
Cash disbursements for March, per books 334,709.10
Cash balance, per bank statement, March 31 15,341.40
Deposit in transit, March 31 9,000.00
Outstanding checks, March 31 2,703.80
Bank service charge for March 92.00
What is the amount of the suspected ash shortage?

a. 5,800
b. 6,350
c. 6,000
d. 5,500
18. You are auditing the cash in bank account of Pamela Manufacturing Company as of December 31, 2020.
Your examination revealed the following:
From the bank statement:

Balance, December 1, 2020 P 876,750
Deposits (20) 9,153,760
Check (64) plus debit memos (8,524,300)
Service charges for new checks ( 2,250)
Balance, December 31, 2020 P 1,503,960
From the company’s records:

CASH
Nov. 1 652,070 Nov. 30 CD 6,654,410
Nov. 30 CR 6,824,290 Dec. 1 – Bank reconciliation 38,400
Dec. 31 CR 9,198,720 Dec. 31 CD 8,574,610
CD – Cash disbursements
CR – Cash receipts
Your review of last month’s bank reconciliation and the current bank statement reveals the following.
1. Outstanding checks: November 30, 2020 P254,720
December 31, 2020 335,610
2. Deposit in transit: November 30, 2020 164,220
December 31, 2020 209,180
3. Check no 359 for Office Repairs was written for P6,950 but recorded in the cash disbursements journal as P9,650. The
bank deducted the check as P6,950. The error happened in November and is not yet recorded as of December 31.
4. A check written on the account of the Pamplona Company for P5,830 was deducted by the bank from the Pamela’s
account.
5. Included with the bank statement was debit memorandum dated December 31 for P24,750 for interest on a note taken
out by the Pamela Manufacturing Company on November 30.
6. The service charge for the new checks has not been recorded.
7. The November 30 bank reconciliation showed as reconciling items a service charge of P3,500 and a customer’s DAIF
check for P34,900.
1. How much is the audit adjusted balance of Receipts as of December 31?

a) 9,198,720 b) 9,918,270 c) 9,891,720 d) 9,189,270 e) none of the above
2. How much is the audit adjusted balance of Disbursements as of December 31?
a) 8,601,610 b) 8,610,601 c) 8,601,601 d) 8,610,610 e) none of the above
3. Which is to be included in the audit adjusting entries?
a) Dr: Cash in Bank 27,000 b) Cr: Cash in bank 2,200 c) Dr: Interest expense 24,750 d) None of the
above
BALANCE SHEET
Multiple Choice
1. The following data pertains to Jerome Company on December 31, 2020:

Cash, including sinking fund of P500,000 with trustee 2,000,000
Notes receivable (P200,000 pledged) 1,200,000
Accounts receivable – unassigned 3,000,000
Accounts receivable – assigned 800,000
Notes receivable discounted 700,000
Equity of assignee in accounts receivable assigned 500,000
Inventory, including P600,000 cost of goods in transit purchased FOB destination. The
goods were received on January 3, 2021
2,800,000
Allowance for doubtful accounts 100,000
How much current assets should be shown in the balance sheet on December 31, 2020?
a. 7,900,000 b. 8,000,000 c. 7,400,000 d. 7,700,000
2. The following is Kaila Company’s June 30, 2020, trial balance:

Cash overdraft 100,000
Accounts receivable, net 350,000
Inventory 580,000
Prepaid expenses 120,000
Land classified as “held for sale” 1,000,000
Property, plant and equipment, net 950,000
Accounts payable and accrued expenses 320,000
Common stock 250,000
Additional paid-in capital 1,500,000
Retained earnings 830,000
3,000,000 3,000,000
Checks amounting to P300,000 were written to vendors and recorded on June 29,2020, resulting in cash overdraft of P100,000. The
checks were mailed on July 9, 2020. Land classified as held for sale was sold for cash on July 15, 2020.
Kaila issued its financial statements on July 31, 2020.
In its June 30, 2020 balance sheet, what amount should Kaila report as current assets?
a. 2,250,000 b. 2,050,000 c. 1,950,000 d. 1,250,000
3. Presented below are account balances and related information on December 31, 2020 for Jerome Company:
Cash and cash equivalents 3,700,000
Accounts receivable 1,500,000
Allowance for doubtful accounts ( 200,000)
Inventory 2,000,000
Prepaid insurance 300,000
7,300,000
The cash and cash equivalents include the following:
Cash in bank, net of bank overdraft of P300,000
Maintained in a separate bank 1,000,000
Cash set aside by the Board of Directors for the
Purchase of a plant site 2,000,000
Petty cash 10,000
Cash withheld from wages for income tax of employees 190,000
General cash 500,000
3,700,000
========
The accounts receivable balance includes past due account in the amount of P100,000 on which a loss of 50% is anticipated.
The account should be written off.
The merchandise inventory includes goods held on consignment amounting to P150,000 and goods of P200,000 purchased and
received on December 31, 2020. Neither of these items have been recorded as a purchase.
The prepaid-insurance includes cash surrender value of life insurance of P50,000.
The adjusted balance of current assets should be
a. 5,400,000 b. 5,100,000 c. 5,300,000 d. 5,200,000
4. An analysis of Joshtine Company’s liabilities disclosed the following
Accounts payable, after deducting debit balances

In suppliers’ accounts amounting to P100,000 4,000,000
Accrued expenses 1,500,000
Credit balances of customers’ accounts 500,000
Stock dividend payable 1,000,000
Claims for increase in wages and allowance by
Employees of the company, covered in a
pending lawsuit 400,000
Estimated expenses in redeeming prize coupons
Presented by customers 600,000
How much should be presented as total current liabilities on the balance sheet?
a. 6,700,000 b. 6,600,000 c. 7,100,000 d. 7,700,000
5. The following information pertains to Kaila Company on December 31 of the current year:
Property, plant and equipment 35,000,000
Prepaid insurance 2,500,000
Short-term note payable 3,000,000
Cash 5,000,000
Bonds payable 40,000,000
Total assets 101,500,000
Land 20,000,000
Accounts payable 8,000,000
Allowance for doubtful accounts 1,000,000
Merchandise inventory 13,000,000
Available for sale securities – to be held indefinitely 7,000,000
Wages payable 2,000,000
Total liabilities 56,000,000
Premium on bonds payable 3,000,000
The December 31 working capital is

a. 46,500,000 b. 33,500,000 c. 26,500,000 d. 35,500,000
6. Kaila Company trial balance reflected the following account balances at December 31, 2020:
Trading securities 500,000
Accumulated depreciation on equipment and furniture 1,500,000
Cash 1,100,000
Inventory of merchandise 3,000,000
Equipment and furniture 2,500,000
Patent 400,000
Prepaid expenses 100,000
Land held for future business site 1,800,000
In Kaila Company’s December 31, 2020 balance sheet, the current assets total is
a. 8,100,000 b. 7,300,000 c. 6,700,000 d. 6,300,000
7. The trial balance of Joshtine Company reflected the following liability account balances at December 31, 2020:
Bonds payable 3,400,000
Deferred tax liability 400,000
Dividends payable 500,000
Income payable 900,000
Note payable, due January 31, 2021 600,000
Discount on bands payable 200,000
The deferred tax liability is based on temporary differences that will reverse equally in 2021 and 2022.
In Joshtine’s December 31, 2020 balance sheet, the current liabilities total was
a. 7,100,000 b. 4,300,000 c. 3,900,000 d. 4,100,000
8. The trial balance of Angel Company reflected the following liability account balances on December 31, 2020:
Bonds payable, due December 30, 2021 10,000,000
Premium on bonds payable 500,000
Deferred tax liability 2,500,000
Dividends payable 4,500,000
Income tax payable 1,500,000
Note payable – bank 4,000,000
The bank note payable matures on June 30, 2021. On March 1, 2021, the entire balance of the bank payable was refinanced on a long-
term basis. Angel’s financial statements were issued on March 31, 2021.
In its December 31, 2020, Angel Company should report current liabilities at
a. 21,500,000 b. 24,000,000 c. 25,500,000 d.28,000,000
9. Jerome Company’s December 31, 2020 balance sheet reported the following current assets:
Cash 4,000,000
Inventory 4,000,000
Deferred tax asset 1,200,000
Equipment used and held for resale 300,00
17,000,000
An analysis of the accounts receivable disclosed the accounts receivable comprised the following
Trade accounts receivable 5,000,000
Allowance for doubtful accounts (500,000)
Selling price of Jerome Company’s unsold goods sent to Tar Company on
consignment at 150% of cost and excluded from Jerome’s ending inventory
3,000,000
7,500,000
At December 31, 2020, the total current assets should be
a. 16,000,000 b. 15,700,000 c. 14,500,000 d. 14,800,000
10. The following information about Angel Company is available at December 31, 2020:
Employee income taxes withheld 900,000
Cash balance at first state Bank 2,500,000
Cash overdraft at Harbor Bank 1,300,000
Accounts receivable with credit balance 750,000
Estimated expenses of meeting warranties on merchandise previously sold
500,000
Estimated damages as a result of unsatisfactory performance on a contact
1,500,000
Deferred serial bonds, issued at par and bearing interest at 12%, payable in
semiannual installments of P500,000 due April 1 and October 1 of each year, the
last bond to be paid on October 1, 2026. Interest is also paid semiannually. 5,000,000
Stock dividend payable 2,000,000
The December 31, 2020 balance sheet should report current liabilities at
a. 8,100,000 b. 7,950,000 c. 9,100,000 d. 7,350,000
11. Joshtine Company had the following liabilities at December 31, 2020:
Account payable 550,000
Unsecured note, 8%, due July 1, 2021 4,000,000
Accrued expenses 350,000
Contingent liability 450,000
Deferred tax liability 250,000
Senior bonds, 7%, due March 31, 2021 5,000,000
The contingent liability is an accrual for possible loss on a P1,000,000 lawsuit filed against Joshtine. Joshtine’s legal councel expects
the suit to be settled in 2021 and has estimated that Joshtine will be liable for damages in the amount of 450,000
The deferred tax liability is not related to an asset for financial reporting and is expected to reverse in 2021
What amount should Joshtine report in its December 31, 2020 balance sheet for current liabilities?
a. 10,350,000 b. 10,150,000 c. 9,900,000 d. 4,900,000
12. The trial balance of Jerome Company included the following account balances at December 31, 2020:
Bonds payable, due 2021 2,500,000
Discounts on bonds payable 2021 300,000
Dividends payable 800,000
Note payable, due 2022 2,000,000
What amount should be included in the current liability section of Jerome’s December 31, 2020 balance sheet?
a. 4,500,000 b. 5,100,000 c. 6,500,000 d. 7,800,000
13. The summarized general ledger trial balance of Guildwood Corporation, an investment company, includes the following accounts at
December 31 2020:
Debit Credit
Cash P 7,000
Deposits, at call 112,869
Dividends receivable 15,693
Interest receivable 478
Outstanding settlements receivable 4,900
Listed securities (available for sale) 1,880,472
Deferred tax 655
Outstanding settlements payable P 10,253
Interest payable 280
Other payables 83
Current tax payable 242
Provision for employee benefits 752
Deferred tax 56,414
Share capital 1,368,024
Revaluation reserve - Investments 376,090
Retained earnings ___________ 278,384
P2,090,522 P2,090,522
Note: Provision for employee benefits includes P525 payable within one year
Based on the above information, calculate the amount that should appear on Guildwood’s statement of financial position at December
31, 2020 for the following:
1. Current assets
a. P 96,526 c. P 209,395
b. P204,495 d. P2,089,867
2. Noncurrent assets
a. P 655 c. P1,886,027
b. P1,881,127 d. P1,993,996
3. Current liabilities
a. P11,383 c. P10,858
b. P 1,130 d. P 605
4. Noncurrent liabilities
a. P56,641 c. P57,166
b. P67,419 d. P66,894
14. The following unadjusted sections of the Statement of Financial Position of the Loeb Inc. as at December 31, 2020 were presented to
you.
Cash P 85,000
Deferred charges 8,600
Current assets P468,000
Trade accounts payable, net of P5,000 debit balance P125,000

Interest payable 3,000
Income tax payable 12,000
Money claims of Union pending final decision 45,000
Mortgage payable due in four annual installments 100,000
Current liabilities P285,000
A review of the above indicate that the Cash account of P85,000 included a customer’s check returned by the bank marked NSF
amounting to P1,250; and employee’s IOU of P2,000; and P10,000 deposited with the courts for a case under litigation.
Accounts receivable totaling P282,400 is composed of: Customers, debit balances – P181,400; Advances to subsidiaries – P20,000;
Advances to suppliers – P15,000; Receivables from Loeb officers – P18,000; Allowance for Bad Debts – (P8,000); and selling price of
merchandise invoiced at 140% of cost but not yet delivered – P56,000 (The goods were not included in Merchandise Inventory).
Based on the above information, answer the following:

1. The correct total of Current Assets on December 31, 2020 is
a. P410,150 c. P413,400
b. P415,150 d. P418,400
2. The correct total of Current Liabilities on December 31, 2020 is

a. P170,000 c. P145,000
b. P160,000 d. P215,000
15. In connection with your audit of the Steven Co. for the year 2020, you were able to gather the following accounts are from the unadjusted
trial balance of the company on December 31, 2020:
Cash P170,000
Allowance for bad debts 4,000
Notes receivable 180,000
Prepaid rent expense 10,000
Note payable 100,000
Accrued expenses 22,000
Bonds payable (due semi-annually in June and December
at P30,000) 300,000
Income tax payable 30,000
SSS and HDMF premiums payable 12,000
Withholding tax payable 9,000
Mortgage payable, due July 31, 2025 200,000
Contingent liability 80,000
Additional information:
Cash consists of:
Cash in bank per bank statement

(outstanding checks, P12,000) P167,000
Petty cash, including unreplenished petty cash expense vouchers
of P150) 500
Customer’s advance deposit in check dated January 15, 2021
2,500
P170,000
Accounts receivable includes P125,000 selling price of goods sent on consignment at 125% of cost and not included in the inventory.
Notes receivable include notes discounted of P80,000.
Accounts payable includes P40,000 cost of purchases in transit FOB destination but not included in the inventory. It also includes
customer’s advance deposit in check dated January 15, 2021 of P2,500.
The Note Payable is a promissory note dated October 1, 2020, due March 31, 2021 with 18% interest p.a. This is in connection with
a loan from a Chubby Bank. Accrued expenses exclude the interest payable on the note.
Based on the above data, determine the amounts to be presented in Steven’s statement of financial position as of December 31, 2020
for the following:
1. Cash
a. P167,500 c. P155,500
b. P155,350 d. P157,850
2. Trade and other receivables

a. P496,000 c. P576,000
b. P500,000 d. P498,500
3. Total current assets

a. P1,363,850 c. P1,361,350
b. P1,321,250 d. P1,261,350
4. Trade and other payables

a. P243,000 c. P277,500
b. P247,500 d. P250,000
5. Total current liabilities

a. P437,500 c. P433,000
b. P440,000 d. P377,500
COMPREHENSIVE INCOME & NCAHS
Multiple Choice
1. Presented below is information related to Watt Company in its first year of operation. The following information is provided at December
31, 2020, the end of its first year.
Sales revenue 450,000
Cost of goods sold 210,000
Selling and administrative expenses 75,000
Gain on sale of plant assets 45,000
Unrealized gain on available-for-sale financial assets 15,000
Financial costs 10,000
Loss on discontinued operations 20,000
Allocation to non-controlling interest 60,000
Dividends declared and paid 8,000
Compute the following (a) income from operations, (b) net income, (c) net income attributable to Watt Company shareholders, (d)
comprehensive income, and (e) retained earnings balance at December 31, 2020.
2. Ortiz Co. had the following account balances:

Sales 120,000
Salary expense 10,000
Depreciation expense 20,000
Dividend revenue 4,000
Utilities expense 8,000
Rental revenue 20,000
Interest expense 12,000
Sales returns 11,000
Advertising expense 13,000
What amount would Ortiz report as other income and expense in its income statement?
a. 24,000 b. 12,000 c. 49,000 d. 10,000
3. Chase Corp. had the following infrequent transactions during 2020:

A 150,000 gain from selling its automotive division.
A 210,000 gain on the sale of investments.
A 70,000 loss on the write-down of inventories.
In its 2020 income statement, what amount should Chase report as other income and expense?
a. 80,000 b. 140,000 c. 290,000 d. 360,000
4. James, Inc. incurred the following infrequent losses during 2020:

A 70,000 impairment loss on intangible assets.
A 40,000 litigation settlement.
A 60,000 write-off of obsolete inventory.
In its 2020 income statement, what amount should James report as other income and expense?
a. 170,000 b. 130,000 c. 110,000 d. 100,000
5. The following costs were incurred by Griff Co., a manufacturer, during year 1:
Accounting and legal fees 25,000 Freight-in 175,000 Freight-out 160,000 Officers salaries 150,000 Insurance 85,000 Sales
representatives salaries 215,000 What amount of these costs should be reported as general and administrative expenses for year 1?
a. 260,000 b. 550,000 c. 635,000 d. 810,000
6. Brock Corp. reports operating expenses in two categories: (1) selling, and (2) general and administrative. The adjusted trial balance at
December 31, year 1, included the following expense and loss accounts:
Accounting and legal fees 120,000 Advertising 150,000 Freight-out 80,000 Interest 70,000 Loss on sale of long-term investment 30,000
Officers’ salaries 225,000 Rent for office space 220,000 Sales salaries and commissions 140,000 One-half of the rented premises is
occupied by the sales department.
Brock’s total selling expenses for year 1 are
a. 480,000 b. 400,000 c. 370,000 d. 360,000
7. Ortiz Co. had the following account balances:

Sales 120,000
Salary expense 10,000
Depreciation expense 20,000
Dividend revenue 4,000
Utilities expense 8,000
Rental revenue 20,000
Sales returns 11,000
Advertising expense 13,000
What amount would Ortiz report as income from operations in its income statement?
a. 49,000 b. 30,000 c. 22,000 d. 10,000
8. Use the following information (in thousands):

Revenues 1,200,000
Income from continuing operations 150,000
Net Income 135,000
Income from operations 330,000
Selling & administrative expenses 750,000
Income before income tax 300,000
Determine the amount of discontinued operations.

a. (30,000) b. 120,000 c. 150,000 d. (15,000)
9. Use the following information:

Gross profit 7,800,000
Loss on sale of investments 20,000
Gain on sale of discontinued operations 60,000
Income tax rate 20%
Compute the amount of discontinued operations to be combined with income from continuing operations on the income statement.
a. 60,000 b. 48,000 c. 12,000 d. None of the above.
10. During 2020, Lopez Corporation disposed of Pine Division, a major component of its business. Lopez realized a gain of 1,200,000, net
of taxes, on the sale of Pine's assets. Pine's operating losses, net of taxes, were 1,400,000 in 2020. How should these facts be reported
in Lopez's income statement for 2020?
Total Amount to be Included in
Income from Results of
Continuing Operations Discontinued Operations
a. 1,400,000 loss 1,200,000 gain
b. 200,000 loss 0
c. 0 200,000 loss
d. 1,200,000 gain 1,400,000 loss
11. On November 1, year 2, management of Herron Corporation committed to a plan to dispose of Timms Company, a major subsidiary.
The disposal meets the requirements for classification as discontinued operations. The carrying value of Timms Company was
8,000,000 and management estimated the fair value less costs to sell to be 6,500,000. For year 2, Timms Company had a loss of
2,000,000. How much should Herron Corporation present as loss from discontinued operations before the effect of taxes in its income
statement for year 2?
a. 0 b. 1,500,000 c. 2,000,000 d. 3,500,000
12. Cuticle Company decided on May 1, 2020 to dispose a component of its business. The component was sold on August 28, 2020.
Cuticle’s income for 2020 included income of 8,000,000 from operating the discontinued segment from January to the sale date. Cuticle
incurred a loss on August 28 sale of 2,500,000.
Ignoring income taxes, what amount should be reported in the 2020 income statement as income or loss under “ discontinued
operation”?
a.4,500,000 loss b.5,000,000 income c.5,500,000 income d.10,500,000 income
13. Pink Company has correctly classified its packaging operation as a disposal group held for sale and as discontinued operation. For the
year ended December 31, 2020, this disposal group incurred trading loss after tax of P4,000,000 and the loss on remeasuring to fair
value less cost to sell was P2,000,000.
What total amount of the disposal group’s losses should be included in profit or loss for the year ended December 31, 2020?
a. 2,000,000 b.4,000,000 c.6,000,000 d.0
14. On September 30, 2020, when the carrying amount of the net assets of segment C was 7,000,000, X Company signed a binding
contract to sell segment C for P12,000,000. The sale is expected to be completed by January 31, 2021, the sale contract obliges X
Company to terminate certain employees of segment C incurring termination costs of P2,000,000 to be paid on June 30, 2021. The
company continued to operate segment C throughout 2020. Revenue of segment C throughout 2020 was P 8,000,000, operating costs
was P4,000,000.
How much income should be reported as income from discontinued segment for 2020, before taxes ?
a. 0 b.2,000,000 c.7,000,000 d.8,000,000
15. On September 30, 2019, when the carrying amount of the net assets of a business segment was P70,000,000, XYZ Company signed a
legally binding contract to sell the business segment. The sale is expected to be completed by January 31, 2020 at a selling price of
expected to be completed by January 31, 2020 at a selling price of P60,000,000. In addition, prior to January 31, 2020, the sale contract
obliges XYZ Company to terminate the employment of certain employees of the business segment incurring an expected termination cost
of P2,000,000 to be paid on June 30, 2020. The segment’s revenue and expenses for 2019 were P40,000,000 and P45,000,000
respectively.
Before income tax, how much will be reported as loss from the discontinued segment for 2019?
a. 17,000,000 b. 12,000,000 c. 15,000,000 d. 7,000,000
16. On January 1, 2020, Zhang Inc. had cash and share capital of 5,000,000. At that date, the company had no other asset, liability, or equity
balances. On January 5, 2020, it purchased for cash 3,000,000 of equity securities that it classified as available-for-sale. It received cash
dividends of 400,000 during the year on these securities. In addition, it has an unrealized loss on these securities of 300,000. The tax
rate is 20%.
Compute the amount of comprehensive income.

a. 100,000 b. 80,000 c. 320,000 d. 300,000
17. On January 1, 2020, Zhang Inc. had cash and share capital of 5,000,000. At that date, the company had no other asset, liability, or equity
balances. On January 5, 2020, it purchased for cash 3,000,000 of equity securities that it classified as available-for-sale. It received cash
dividends of 400,000 during the year on these securities. In addition, it has an unrealized loss on these securities of 300,000. The tax
rate is 20%.
Compute the amount of other comprehensive income/(loss).

a. 240,000 b. (300,000) c. 100,000 d. 80,000
18. Korte Company reported the following information for 2020:

Sales revenue 500,000
Operating expenses 55,000
Unrealized holding gain on available-for-sale securities 20,000
Cash dividends received on the securities 2,000
For 2020, Korte would report comprehensive income of
a. 117,000. b. 115,000. c. 97,000. d. 20,000.
19. On January 2, 2019, X co. is committed to a plan to sell a manufacturing facility and has initiated action to locate a buyer. Any uncompleted
customers orders will be transferred to the buyer. The fair value of the facility is P6,000,000 and its carrying value as of January 2, 2019
is P5,600,000.
On January 2, 2019, X co. sold classify the building as

a. PPE valued at P6,000,000
b. PPE valued at P5,600,000
c. Non current asset held for sale valued at P6,000,000
d. Non current asset held for sale valued at P5,600,000
20. On July 2019, Vince Carter is committed to a plan to sell a disposal group that represents a significant portion of its regulated operations.
The sale requires regulatory approval, which could extend the period required to complete the sale beyond one year. Actions necessary
to obtain that approval cannot be initiated until after a buyer is known and a firm purchase commitment is obtained. However, a firm
purchase commitment is highly probable within one year. The non--current assets of disposal group have a carrying value of P5,000,000
and liabilities of P1,000,000. The assets total fair value as of December 31, 2019 of the disposal group is P4,800,000. If the sale is
completed within one year, the estimated cost to sell is P200,000, but if the sale will exited beyond one year, the present value of the
estimated cost to sell is P180,000.
If the sale will extend beyond one year, what amount of non-current asset should Vince Carter report its held for sale property at December
31, 2019?
a. 3,600,000 b. 3,620,000 c. 4,000,000 d. 4,620,000
21. On July 1, 2019, Blazers co. has a building with a cost of P4,000,000 and accumulated deprecation of P1,600,000. On the same date,
Blazers co. commits to a plan to sell the building by February 1, 2018. The building has a fair value of P2,000,000 and it is estimated that
the selling cost of the building will be P150,000. As of July 1, 2019, the building has a remaining life of 15 years.
What is the amount to be reported as the carrying value of the building held for sale as of December 31, 2019?
a. 1,788,333 b.1,850,000 c. 1,933,333 d. 2,000,000
What is the amount of loss to be recognized by Blazers co. in its income statement as a result of reclassification?
a. 0 b. 150,000 c. 400,000 d. 550,000
22. On October 1, 2019, Jerome co. has a building with a cost of P4,000,000 and accumulated depreciation of P3,100,000. The co. commits
a plan to sell the building by February 1, 2018. On October 1, 2019, the building has an estimated selling price of P800,000 and it is
estimated that selling cost associated with the disposal of the building will be P120,000. On December 31, 2019, the estimated selling
price of the building has increased to P1,200,000 with estimated selling cost remaining at P120,000.
1. At the time of reclassification as held for sale, what amount should the non current asset held for sale be recognized?
a. 680,000 b.780,000 c.800,000 d. 900,000
2. What amount of loss should Jerome recognize at the time the building was reclassified as held for sale?
a. 0 b. 100,000 c. 120,000 d. 220,000
3. As of December 31, 2019, what amount of gain on recovery should Jerome recognize to the asset held for sale?
a. 0 b. 180,000 c. 220,000 d. 400,000
23. The bookkeeper for the Kristine Company prepared the following income statement and retained earnings statement for the year ended
December 31, 2020:
Kristine Company
December 31, 2020
Expense and Profits
Sales (net ) P1,568,000

Less: Selling expenses ( 156,800)
Net sales 1,411,200
Add: Interest revenue 18,400
Add: Gain on sale of equipment 25,600
Gross sales revenue 1,455,200
Less: Costs of operations
Cost of goods sold P960,800
Correction of overstatement in last year's
income due to error (net of P13,200
income tax credit) 30,800
Dividend costs (P4 per share for 8,000
ordinary shares) 32,000
Loss due to earthquake 33,600 (1,057,200)
Taxable revenues 398,000
Less: Income tax on income from continuing
operations ( 99,840)
Net income 298,160
Miscellaneous deductions
Loss from operations of discontinued
Segment X44 (net of P7,200 income tax
credit) 16,800
Administrative expenses 134,400 ( 151,200)
Net revenues P 146,960
Kristine Company
Retained Revenue Statement
For the Year Ended December 31, 2020
Beginning retained earnings P474,400

Add: Gain on sale of Segment X44 (net of P10,800 income taxes)
25,200
Recalculated retained earnings 499,600
Add: Net revenues 146,960
646,560
Less: Interest expense ( 27,200)
Ending: retained earnings P619,360
The preceding account balances are correct but have been incorrectly classified in certain instances.
Based on the above and the result of the audit, answer the following:
1. The income from continuing operations for the year ended December 31, 2020 is
a. P207,760 c. P299,200
b. P199,360 d. P226,560
2 The income (loss) from discontinued operations for the year ended December 31, 2020 is
a. P 8,400 c. P25,200
b. (P16,800) d. P 0
3. The profit for the year ended December 31, 2020 is
a. P234,960 c. P209,760
b. P307,600 d. P207,760
4. The balance of retained earnings as of December 31, 2020 should be
a. P619,360 c. P650,160
b. P646,560 d. P709,360

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PRACTICAL ACCOUNTING 1 – REVIEW

CASH & CASH EQUIVALENTS

PROF. U.C. VALLADOLID

Current account at Metrobank P2,000,000

4. Petty cash fund of P10,000.

5. An I.O.U. from a company officer in the amount of P40,000.

10. Currency and coin on hand amounted to P15,000.

Bills and coins counted 2,450.00

1. The adjusted cash in bank balance at May 31, 2020 is:

(d) Outstanding checks totaled P98,850 as of December 31.

1. Adjusted cash in bank balance

2. Net adjustment to cash as of December 31, 2020

What was the cash balance per bank statement?

9. Information pertaining to Ana Company appears below.

What is the amount of outstanding checks on July 31?

11.The following information is shown in the accounting records of a company:

Additional information is as follows:

1. What is the total collection from sales?

3. What is the total cash receipts per books?

4. What is the total cash disbursements per books?

5. What is the cash balance per books on December 31?

6. What is the adjusted cash balance on December 31?

Balance per bank statement 20,000,000

Cash on hand P 500,000

Cash on hand includes the following items:

Currency and coins P 2,000

2. Petty cash fund

3. BPI current account

4. Cash and cash equivalents

What is the amount of the suspected ash shortage?

Your examination revealed the following:

From the bank statement:

From the company’s records:

1. How much is the audit adjusted balance of Receipts as of December 31?

PROF. U.C. VALLADOLID

1. The following data pertains to Jerome Company on December 31, 2020:

2. The following is Kaila Company’s June 30, 2020, trial balance:

4. An analysis of Joshtine Company’s liabilities disclosed the following

Accounts payable, after deducting debit balances

The December 31 working capital is

Trade accounts payable, net of P5,000 debit balance P125,000

Based on the above information, answer the following:

2. The correct total of Current Liabilities on December 31, 2020 is

Cash consists of:

Cash in bank per bank statement

Notes receivable include notes discounted of P80,000.

2. Trade and other receivables

3. Total current assets

4. Trade and other payables

5. Total current liabilities

PROF. U.C. VALLADOLID

2. Ortiz Co. had the following account balances:

3. Chase Corp. had the following infrequent transactions during 2020:

4. James, Inc. incurred the following infrequent losses during 2020:

7. Ortiz Co. had the following account balances:

8. Use the following information (in thousands):

Determine the amount of discontinued operations.

9. Use the following information:

Compute the amount of comprehensive income.

Compute the amount of other comprehensive income/(loss).

18. Korte Company reported the following information for 2020:

On January 2, 2019, X co. sold classify the building as

Sales (net ) P1,568,000