A Company had the following account balances at December 31, year 2: Cash in banks 2,250,000

Cash on hand 125,000 Cash legally restricted for additions to plant (expected to be disbursed in
year 3) 1,600,000 Cash in banks includes 600,000 of compensating balances against short-term
borrowing arrangements. The compensating balances are not legally restricted as to withdrawal by
A. In the current assets section of A’s December 31, year 2 balance sheet, total cash should be
reported at

 2,250,000 + 125,000 = 237,5000

Suzy Co. had the following balances on December 31, year 2: Cash in checking account - 35,000
Cash in money market account -75,000 Treasury bill, purchased 11/1/year 2, maturing 1/31/year 3 -
350,000 Treasury bill, purchased 12/1/year 2, maturing 3/31/year 3 - 400,000 Suzy's policy is to treat
as cash equivalents all highly liquid investments with a maturity of three months or less when
purchased. What amount should Trans report as cash and cash equivalents in its December 31,
year 2 balance sheet?

 December 31, year 2. (Ito lang ang kukunin kasi year 2 lang naman.)
 350,000 + 75,000 + 35,000 = 460,000.00

In preparing its August 31, year 2 bank reconciliation, Knor Corp. has available the following
information: Balance per bank statement, 8/31/Y2 - 18,050 Deposit in transit, 8/31/Y2 - 3,250 Return
of customer’s check for insufficient funds, 8/31/Y2 - 600 Outstanding checks, 8/31/Y2 - 2,750 Bank
service charges for August - 100 On August 31, year 2, Knor’s correct cash balance is

Balance per bank statement 18,050

DIT 3,250

Outstanding checks (2,750)

18,550

Fer, Inc. had the following bank reconciliation on March 31, year 2: Balance per bank statement,
3/31/Y2 - 46,500 Add deposit in transit - 10,300 Less outstanding checks- 12,600 Balance per book
- 44,200 Data per bank for the month of April year 2 follow: Deposits - 58,400 Disbursements- 49,700
All reconciling items on March 31, year 2, cleared the bank in April. Outstanding checks on April 30,
year 2, totaled 7,000. There were no deposits in transit on April 30, year 2. What is the cash balance
per books on April 30, year 2?

Balance per book 44,200 Checks 49,700

Deposits 58,400 Outstanding Checks (12,600)

 DIT (10,300) Outstanding checks 7,000

92,300 44,100

92,300 – 44,100 = 48,200

The following information relates to Neki Co.’s accounts receivable for year 2: Accounts receivable,
1/1/Y2 -650,000 Credit sales for year 2 - 2,700,000 Sales returns for year 2- 75,000 Accounts written
off during year 2- 40,000 Collections from customers during year 2 - 2,150,000 Estimated future
sales returns at 12/31/Y2 - 50,000 Estimated uncollectible accounts at 12/31/Y2 - 110,000 What
amount should Neki report for accounts receivable, before allowances for sales returns and
uncollectible accounts, at December 31, year 2?

Beg 650,000

Credit sales 2,700,000

Sales return (75,000)

Write-offs (40,000)

Cash collections (2,150,000)

1,085,000

Jose Co. has an 8% note receivable dated June 30, year 1, in the original amount of 150,000.
Payments of 50,000 in principle plus accrued interest are due annually on July 1, year 2, year 3, and
year 4. In its June 30, year 2 balance sheet, what amount should Jose report as a current asset for
interest on the note receivable?

 1 year = 150,0000. Then, nagbayad ka ng 50,000. So, 150,000-50,000 = 100,000.

 So, mangyayari, 100,000 x 8% = 8,000.00

On December 1, year 2, Xantia Mortgage Co. gave Jerome Corp. a 200,000, 12% loan. Jerome
received proceeds of 194,000 after the deduction of a 6,000 nonrefundable loan origination fee.
Principal and interest are due in sixty monthly installments of 4,450, beginning January 1, year 3.
The repayments yield an effective interest rate of 12% at a present value of 200,000 and 13.4% at a
present value of 194,000. Xantia does not elect the fair value option for recording the note to Jerome.
What amount of accrued interest receivable should Xantia include in its December 31, year 2
balance sheet?

 1/12 lang kasi 1-month nalang naman ang hinihingi, December lang.
  1/12 x .12 x 200,000 = 2,000.00

Pining, Inc. sells to wholesalers on terms of 2/15, net 30. Pining has no cash sales but 50% of
Pining’s customers take advantage of the discount. Pining uses the gross method of recording
sales and trade receivables. An analysis of Pining’s trade receivables balances on December 31,
year 2, revealed the following: Age- Amount - Collectible 0 – 15 days; 100,000; 100% 16 – 30 days;
60,000; 95% 31 – 60 days; 5,000; 90% Over 60 days; 2,500; 500 In its December 31, year 2 balance
sheet, what amount should Pining report for allowance for discounts?

 Allowance = Amount x Percent taking discount x Discount rate for discounts.

 100,000 x 50% x 2% = $1,000
 0-15 days lang kukunin mo kasi nakalagay naman sa problem ang terms, 2/15. Bale, 2% for 15
days lang ang pasok.

Phines Stores, Inc. had sales of 1,000,000 during December, year 2. Experience has shown that
merchandise equaling 7% of sales will be returned within thirty days and an additional 3% will be
returned within ninety days. Returned merchandise is readily resalable. In addition, merchandise
equaling 15% of sales will be exchanged for merchandise of equal or greater value. What amount
should Phines report for net sales in its income statement for the month of December year 2?

 Kukunin mo ang 7% at 3% since pasok yung condition sa one month.

 7% + 3% = 10%
 1,000,000 x 10% = 100,000
 1,000,000 – 100,000 = 900,000

The following accounts were abstracted from Foxy Co.’s unadjusted trial balance at December 31,
year 2: Accounts receivable - 1,000,000 Dr. Allowance for uncollectible accounts - 8,000 Dr. Net
credit sales - 3,000,000 Cr. Foxy estimates that 3% of the gross accounts receivable will become
uncollectible. After adjustment on December 31, year 2, the allowance for uncollectible accounts
should have a credit balance of

 3,000,000 x 3% = 30,000.00

Jacob Co. determined that the net value of its accounts receivable on December 31, year 2, based
on an aging of the receivables, was 325,000. Additional information is as follows: Allowance for
uncollectible accounts—1/1/Y2 - 30,000 Uncollectible accounts written off during year 2 - 18,000
Uncollectible accounts recovered during year 2 - 2,000 Accounts receivable at 12/31/Y2 - 350,000
For year 2, what would be Jacob’s uncollectible accounts expense?

 Dahil sa aging ang mangyayari, 350,000 – 325,000 = 25,000.00. So, dapat makakuha ka ng total
na 25,000.
 Allowance for uncollectible 30,000

Write-off (18,000)

Accounts recovered 2,000

14,000

25,000 – 14,000 = 11,000.00

The following information pertains to Mara Co.’s accounts receivable at December 31, year 2: Days
outstanding -- Amount -- Estimated % uncollectible 0 – 60; 120,000; 1% 61 – 120; 90,000; 2% Over
120; 100,000 ; 6% During year 2, Mara wrote off 7,000 in receivables and recovered 4,000 that had
been written off in prior years. Mara’s December 31, year 1 allowance for uncollectible accounts
was 22,000. Under the aging method, what amount of allowance for uncollectible accounts should
Mara report on December 31, year 2?

 $120,000 × 1% = 1,200
 $90,000 × 2% = 1,800
 $100,000 × 6% = 6,000
 Add lamang lahat. = 9,000.00

Fedz Co.’s beginning inventory on January 1, year 1, was understated by 26,000, and its ending
inventory was overstated by 52,000. As a result, Fedz’s cost of goods sold for year 1 was

 52,000 – 26,000 = 78,000.00

Barron Corp. reports operating expenses in two categories: (1) selling, and (2) general and
administrative. The adjusted trial balance on 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. Barron’s total selling expenses for year 1 are

 Ito lang ang kukunin kasi nga selling expenses lang.

Advertising 150,000

Freight-out 80,000

Rent (1/2 lang) 220,000/2 = 110,000

 Sales and salaries 140,000

480,000

The following costs were incurred by Rift 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?

 Ito lang kasi general and administrative lang.

A and L 25,000

Office salaries 150,000

Insurance 85,000

260,000

On January 1, 2021, entity sold equipment with a carrying amount of 4,800,000 in exchange for
6,000,000 noninterest bearing note due January 1, 2024. There was no established exchange price
for the equipment. The prevailing interest rate for this note was 10%. the present value of 1 at 10%
for three periods is 0.75. What should be reported as gain or loss on sale of equipment in 2021?

 Carrying amount= 4,800,000

 Less proceeds on sale: 6,00,000(.75) = 4,500,000
 4,800,000 – 4,500,000 = 300,000 loss

On January 1, 2021, entity sold equipment with a carrying amount of 4,800,000 in exchange for
6,000,000 noninterest bearing note due January 1, 2024. There was no established exchange price
for the equipment. The prevailing interest rate for this note was 10%. the present value of 1 at 10%
for three periods is 0.75. What amount should be reported as interest income in 2021?

Date Interest Income Unearned II Present V

(6,000,000 – PV)
January 2021 1,500,000 4,500,000
January 2021 450,000 1,050,000 4,950,000
January 2022 495,000 555,000 5,445,000
January 2023 555,000 - 6,000,000
On January 1, 2021, entity sold equipment with a carrying amount of 4,800,000 in exchange for
6,000,000 noninterest bearing note due January 1, 2024. There was no established exchange price
for the equipment. The prevailing interest rate for this note was 10%. the present value of 1 at 10%
for three periods is 0.75. What amount should be reported as interest income in 2022?

Date Interest Income Unearned II Present V

(6,000,000 – PV)

January 2021 1,500,000 4,500,000

January 2021 450,000 1,050,000 4,950,000

January 2022 495,000 555,000 5,445,000

January 2023 555,000 - 6,000,000

On December 31, 2021, an entity sold equipment with carrying amount of 2,000,000 in exchange for
a noninterest bearing note of 5,000,000 requiring ten annual payments of 500,000. The first
payments were made on December 31, 2022. The market interest for similar note was 12%. What is
the carrying amount of the note receivable on December 31, 2021? (Please roundoff in 4 decimal
number)

 Paki gamit po ito.

Solution for PV of ordinary annuity = 1 – (1 + .12)-10 / .12 = 5.650

 Bale, ang PV ay 5.650

 5,000,000 x 5.650 ay 2,825,000

On December 31, 2021, an entity sold equipment with carrying amount of 2,000,000 in exchange for
a noninterest bearing note of 5,000,000 requiring ten annual payments of 500,000. The first
payments was made on Decemeber 31, 2022. The market interest for similar note was 12%. What
amount should be recognized as gain on sale of equipment in 2021? (Please roundoff in 4 decimal
number)

 2,825,000 - 2,000,000 = 825,000,00

On December 31, 2021, an entity sold equipment with carrying amount of 2,000,000 in exchange for
a noninterest bearing note of 5,000,000 requiring ten annual payments of 500,000. The first
payments were made on Decemeber 31, 2022. The market interest for similar note was 12%. What
amount should be as interest income for 2022? (Please roundoff in 4 decimal number)
  Kukunin mo yung PV

Solution for PV = 1/ (1 + .12)10 = 0.322

 500,000 x 0.322 = 161,000

 500,000 – 161,000 = 399,000.00

On December 31, 2021, an entity sold equipment with carrying amount of 2,000,000 in exchange for
a noninterest bearing note of 5,000,000 requiring ten annual payments of 500,000. The first
payments was made on Decemeber 31, 2022. The market interest for similar note was 12%. What is
the carrying amount of the notes receivable on December 31, 2022? (Please roundoff in 4 decimal
number)

 5.650 - .322 = 5.328

 5,000,000 x 5.328 = 2,664,000

During the current year, an entity reported beginning allowance for doubtful accounts 200,000, sales
9,500,000, sales returns and allowances 1,000,000, sales discounts 500,000, accounts written-off
300,000 and recovery of account written off 50,000. It is estimated that 5% net sales may prove
uncollectible. What amount should be reported as doubtful accounts expense?

Credit sales 9,500,000

Sales discount (1,000,000)

Sales return (500,000)

800,000 x 5% = 400,000

A cash flow of 200,000 may be received by ABC, Inc. in one year, two years, or three years, with
probabilities of 20%, 50%, and 30%, respectively. The rate of interest on default risk-free
investments is 5%. The present value factors are PV of 1, at 5%, for 1 year is .95238; PV of 1, at 5%,
for 2 years is .90703; PV of 1, at 5%, for 3 years is .86384; What is the expected present value of
ABS’c cash flow

yr. Amount PV Amount % Amount

(20,000 x PV) (% x column 4)
1 200,000 .95238 190,476 .20 38,095

2 200,000 .90703 181,406 .30 90,703

3 200,000 .86384 172,768 .50 51,830

ADD THE COLUMN 6 180,628