Quiz 1- Cash and Bank Reconciliation

On December 31, 2020, Masikap Company had the following cash balances:
 
Cash in bank                                                                                             1,800,000
Petty cash fund (all funds reimbursed in 12/31/2020)                         60,000
Time deposit (due February 1, 2021)                                                      350,000
 
Cash in bank includes P600,000 of compensating balance against short-term borrowing arrangement
on December 31, 2020. The compensating balance is legally restricted as to withdrawal by Masikap.
 
In the December 31, 2020 statement of financial position, what total amount should be reported as
cash and cash equivalents?
The correct answer is:

P1,610,000

Mapagkumbaba Company’s bank statement for the month of December included the following
information:
 
            Ending balance, December 31                                                                                     
2,800,000
            Bank service charge for December                                                                                  12,000
            Interest paid by bank to Mapagkumbaba Company for December                       10,000
           
In comparing the bank statement to its own cash records, Mapagkumbaba Company found the
following:
            Deposits made but not yet recorded by the bank                                                       350,000
            Checks written and mailed but not yet recorded by the bank                                650,000
 
In addition, Mapagkumbaba Company discovered that it had drawn and erroneously recorded a
check for P46,000 that should have been recorded for P64,000.
 
What is the cash balance per ledger on December 31?

The correct answer is:

P2,520,000
Mahabagin Company have the following balances: Cash in Bank – checking account of P18,500,
Cash on hand of P500, Post-dated checks received totaling P3,500, and Certificates of deposit
totaling P124,000. How much should be reported as cash in the balance sheet?

The correct answer is:

P19,000

Matiyaga Inc.’s checkbook balance on December 31, 2020  was P42,400. In addition, Matiyaga held
the following items in its safe on December 31.
(1)   A check for P900 from Mahinahon, Inc. received December 30, 2020, which was not included in
the checkbook balance.
(2)   An NSF check from Masipag Company in the amount of P1,800 that had been deposited at the
bank, but was returned for lack of sufficient funds on December 29. The check was to be redeposited
on January 3, 2021. The original deposit has been included in the December 31 checkbook balance.
(3)   Coin and currency on hand amounted to P2,900.
The proper amount to be reported on Matiyaga's balance sheet for cash at December 31, 2020 is
The correct answer is:
P44,400

The cash account in Mapayapa Company’s ledger showed a balance at December 31, 2020 of
P4,415,000 which consisted of the following:
 
            Petty cashfund                                                                                             26,000
            Undeposited receipts, including a postdated 
customer check for 75,000                                                                                  1,220,000
            Cash in PNB, per bank statement, with a
            a check for P55,000 still outstanding                                                     2,245,000
            Bond sinking fund                                                                                         850,000
            Vouchers paid out of collections,
            not yet recorded                                                                                             43,000
            IOUs signed by employees, taken from collections                                33,000
 
What amount should be reported as cash in the December 31, 2020 statement of financial position?
The correct answer is:

P3,361,000
Cash in bank                                                                         P35,000
Petty cash                                                                                    500
Short-term paper with maturity of 2 months                   8,200
Postdated checks                                                                     2,100
Matalino should report cash and cash equivalents of

The correct answer is:

P43,700
If a petty cash fund is established in the amount of P250, and contains P150 in cash and P95 in
receipts for disbursements when it is replenished, the journal entry to record replenishment should
include credits to the following accounts
The correct answer is:

Cash, P100.
The following information was included in the bank reconciliation for Matapat Company  for October
and November 2020:
            Checks and charges recorded by bank in November, including
            a November service charge of P4,000 and NSF check of P20,000                 550,000
            Service charge made by bank in October and recorded
            by depositor in November                                                                                            2,000
            Total credits to cash in all journals during November                                       620,000
            Customer’s NSF check returned in October and redeposited
            in November (no entry made by depositor in either
            October or November)                                                                                                40,000
           Outstanding checks on October 31, 2020 that cleared in November                230,000
 
What amount of outstanding checks on November 30, 2020?
The correct answer is:

P322,000

In preparing its bank reconciliation for the month of April 2020 Maubaya, Inc. has available the
following information.
Balance per bank statement, 4/30/20                                       P34,140
NSF check returned with 4/30/20 bank statement                       450
Deposits in transit, 4/30/20                                                              5,000
Outstanding checks, 4/30/20                                                          5,200
Bank service charges for April                                                              20
What should be the correct balance of cash at April 30, 2020?
The correct answer is:

P33,940
Mapagmahal Company keeps all its cash in a checking account. An examination of the entity’s
accounting records and bank statement for the month ended December 31, 2020 revealed a bank
statement balance of P8,469,000 and a book balance of P8,524,000.
 
A deposit of P950,000 placed in the bank’s night depository on December 29 does not appear on the
bank statement. Checks outstanding on December 31 amount to P270,000.
 
The bank statement shows that on December 25, the bank collected a note for Mapagmahal
Company and credited the proceeds of P935,000 to the entity’s account. The proceeds included
P35,000 interest, all of which Mapagmahal Company earned during the current period. Mapagmahal
Company has not yet recorded the said collection.
 
Mapagmahal Company discovered that check number 1000759 written in December for P183,000 in
payment of an accountant had been recorded in the entity’s records as P138,000.
 
Included with the December 31, bank statement was an NSF check for P250,000 that Mapagmahal
Company had received from Matampuhin Company in December 20. Mapagmahal Company has not
yet recorded the returned check. The bank statement shows a P15,000 service charge for December.
 
What is the journal entry to adjust the cash in bank on December 31, 2020?
The correct answer is:

 Net debit to cash in bank of P625,000.

Question 11
Question text
The account of Masigla Company prepared the following bank reconciliation dated June 30 of the
current year.
            Balance per bank                                            9,800,000
            Deposit in transit                                              400,000
            Outstanding checks                                        (1,400,000)
            Balance per book                                            8,800,000
There were total deposits of P6,500,000 and charges for disbursements of P9,000,000 for July per
bank statement.
All reconciliation items on June 30 cleared the bank on July 31. Checks outstanding amounted to
P1,000,000 on July 31.
What is the amount of cash disbursement per book in July?
The correct answer is:

P8,600,000
The cash account shows a balance of P90,000 before reconciliation. The bank statement does not
include a deposit of P4,600 made on the last day of the month. The bank statement shows a
collection by the bank of P1,880 and a customer's check for P640 was returned because it was NSF.
A customer's check for P900 was recorded on the books as P1,080, and a check written for P158
was recorded as P194. The correct balance in the cash account was

The correct answer is:

P91,096.
Question text
Account of the petty cash fund of Masigasig Company showed its composition as follows:
 
            Coins and currency                                                                  5,600
            Paid vouchers:
                        Transportation                                                600
                        Gasoline                                                           400
                        Office Supplies                                                500
                        Postage stamps                                             300
                        Due from employees                                      1,200          3,000
            Manager’s check returned by bank marked as NSF               1,500
            Check drawn by the entity to the order of
              petty cash custodian                                                                   2,800
What is the correct amount of petty cash fund for statement presentation purposes?
The correct answer is:

P8,400
Question 14
Maunawain Company had the following bank reconciliation on November 30, 2020:
            Balance per bank statement, Novembermber 31                              3,000,000
            Deposit in transit                                                                                          400,000
            Total                                                                                                             3,400,000
            Outstanding checks                                                                                (  900,000)
            Balance per book, November 31                                                             2,500,000
 
The bank statement for the month of December showed the following:
Deposits (including P250,000 collected for Maunawain)                              9,000,000
Disbursements (including P160,000 NSF check and
P12,000 service charge)                                                                                          7,000,000
 
All reconciling items on November 30 cleared through the bank in December. The outstanding checks
totaled P700,000 and deposit in transit amounted to P1,200,000 on December 31.
 
What is the cash balance per book on December 31?
The correct answer is:

P5,422,000
Question 15
In preparing its May 31, 2020 bank reconciliation, Maginhawa Inc. has the following information
available:
Balance per bank statement, 5/31/20                                  P35,000
Deposit in transit, 5/31/20                                                            5,400
Outstanding checks, 5/31/20                                                      4,900
Note collected by bank in May                                                   1,250
The correct balance of cash at May 31, 2020 is

The correct answer is:

P35,500
Question 16
The checkbook balance of Masipag Company on December 31, 2020 was P4,000,000. Data about
certain cash items follow:
§  A customer check amounting P200,000 dated January 2, 2021 was included in the December 31,
2020 checkbook balance.
§  Another customer check for P500,000 deposited on December 22, 2020 was included in its
checkbook balance but returned by the bank for insufficiency  of fund. This check was redeposited on
December 26, 2020 and cleared two 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 with the following summary on December 31, 2020:
Coins and currencies                                                         5,000
Petty cash vouchers                                                          43,000
Return value of 20 cases of soft drinks                           2,000
                                                                                                50,000
§  A check of P43,000 was drawn on December 31, 2020 payable to petty cash.
 
What is the amount to be reported as “cash” on December 31, 2020?
The correct answer is:

P4,248,000
Question 17
Mabuti Company has the following items at year-end:
Cash in bank                                                                              P30,000
Petty cash                                                                                            300
Short-term paper with maturity of 2 months                            5,500
Postdated checks                                                                              1,400
Mabuti should report cash and cash equivalents of
The correct answer is:
P35,800.
Question 18
Masiyahin Company keeps all its cash in a checking account. An examination of the entity’s
accounting records and bank statement for the month ended June 30, 2020 revealed the following
information:
§  The cash balance per book on June 30 is P8,500,000.
§  A deposit of P1,500,000 that was placed in the bank’s night depository on June 30 does not appear
on the bank statement.
§  The bank statement shows on June 30, the bank collected note for Masiyahin and credited
proceeds of P850,000 to the entity’s account.
§  Checks outstanding on June 30 amount to P250,000.
§  Masiyahin discovered that a check written in June for P200,000 in payment of an accounts
payable, had been recorded in the entity’s records as P20,000.
§  Included with the June bank statement was NSF check for P275,000 that Masiyahin had received
from a customer on June 26.
§  The bank statement shows a P15,000 service charge for June.
 
What is the cash in bank to be reported in the statement of financial position on June 30, 2020?

The correct answer is:

P8,880,000
Question 19
The December 31, 2020 trial balance of Masunarin Company included the following accounts:
            Cash on hand                                                                  200,000
            Petty cash fund                                                                 20,000
            BPI current account                                                     5,000,000
            BDO current account                                                    4,000,000
            City Bank current account                                            (100,000)
            Asia Bank saving account                                              250,000
            Asia bank time deposit, 90 days                                2,000,000
 
§  Cash on hand included the following items:
Customer’s check for P35,000 returned by bank December 26, 2020 due to insufficient fund but
subsequently redeposited and cleared by the bank on January 10, 2021.
 
Customer’s check for P15,000 dated January 10, 2021, received December 23, 2020.
 
§  The petty cash fund comprised the following items on December 31, 2020:
Currency and coins                                           5,000
IOUs from an officer                                           2,000
Unreplenished petty cash vouchers              12,000
                                                                                19,000
 
§  Included among the checks drawn by Masunurin against BPI current account and recorded in
December 2020 are the following:
Check written and dated December 23, 2020 and delivered to payee on January 3, 2021, P25,000.
 
Check written December 26, 2020, dated January 30, 2021, delivered to payee on December 28,
2020, P45,000.
 
§  The credit balance in City bank current account represents checks drawn in excess of the deposit
balance which are still outstanding on December 31, 2020.
 
§  The saving account in Asia bank has been set aside by the Board of Directors for acquisition of
new equipment. This amount is expected to be distributed in the next 3 months from the end of
reporting period.
 
What total amount should be reported as cash and cash equivalents on December 31, 2020?
The correct answer is:

P11,225,000

On December 31, 2020, the cash account on Matatag Company showed the following details:
Undeposited collections                                                                           60,000
Cash in bank – BDO checking account                                              500,000
Cash in bank – PNB (overdraft)                                                            (50,000)
Undeposited NSF check received from customer,
Dated December 1, 2020                                                                            15,000
Undeposited check from a customer, dated
January 15, 2021                                                                                          25,000
Cash in bank – BDO (payroll fund)                                                       150,000
Cash in bank – BDO (saving deposit)                                                  100,000
Cash in bank – BDO (90 days money market instrument)          2,000,000
Cash in foreign bank (restricted)                                                           100,000
IOUs from officers                                                                                       30,000
Sinking fund cash                                                                                     450,000
Listed shares held as trading investment                                            120,000
 
On December 31, 2020, what total amount should be reported as “cash and cash equivalents”?

The correct answer is:

P2,810,000

Quiz 2- Cash, Cash Equivalents, Bank Reconciliation & Proof of Cash

The 3 questions are based on the following information:
DEF Trading ledger showed a balance on its cash account on December 31, 2020 of P909,500 which
was determined to consist of the following:

How much is the correct petty cash fund balance?

The correct answer is: 5,000

How much is the correct cash balance in Security Bank?

The correct answer is: 35,000

How much is the correct Cash and Cash equivalents to be reported in the statement of financial
position?
The correct answer is: 663,900

Question 4
The petty cash fund of ABC Trading at the end of the fiscal year ended September 30, 2019 is
composed of the following:
a.      Currencies and coins
-          10 pcs. of P100
-          8 pcs. of P50
-          5 pcs. of P20
b.     Replenishment check dated September 15, 2019                              P3,500
c.      Paid vouchers for expenses and loans dated September 16-30, 2019, unreplenished:
            Supplies                                                                                                  1,200
            Postage stamps                                                                                     300
            Loans to employees                                                                            1,500
d.     Unused supplies                                                                                          120
e.      Check drawn by office manager marked NSF                                 2,500
f.      Check drawn by employee dated October 5, 2019                             500
g.     Enveloped containing cash donations for the departed parent of one employee 
(currencies attached)                                                                               1,500
 
The general ledger balance of the imprest petty cash fund on September 30, 2019 is ₱17,500.
 
How much is the correct petty cash fund balance on September 30, 2019?
The correct answer is: 5,000

BBB Company provided the following data for the purpose of reconciling the cash balance per book:
How much is the cash in bank balance as shown in the bank statement?
The correct answer is: 402,000

Question 6
Complete
Question text
Use the following information for the 3 questions below
Benson Plastics Company deposits all receipts and makes all payments by check. The following
information is available from the cash records:

What is the April 30 deposit in transit?

The correct answer is: 4,205
What is the April 30 outstanding checks?
The correct answer is: 2,780
What is the April 30 adjusted cash balance? 
The correct answer is: 29,420
Question text
Tresh, Inc. had the following bank reconciliation at March 31, 2020:

All reconciling items at March 31, 2020 cleared the bank in April. Outstanding checks at April 30,
2020 totaled P6,000. There were no deposits in transit at April 30, 2020. What is the cash balance
per books at April 30, 2020?
The correct answer is: 25,200
In preparing its August 31, 2020 bank reconciliation, Bing Corp. has available the
following information:

The correct answer is: 19,800

If the month-end bank statement shows a balance of P72,000, outstanding checks are P24,000, a
deposit of P8,000 was in transit at month end, and a check for P1,000 was erroneously charged by
the bank against the account, the correct balance in the bank account at month end is
The correct answer is: 57,000
Question 12
Question text
The cash account in Durian Company’s ledger showed a balance at December 31, 2020 of
P4,415,000 which consisted of the following:

What amount should be reported as cash in the December 31, 2020 balance sheet?
The correct answer is: 3,379,000
Question 13
Question text
The Cash in bank account of SOM Co. showed a balance of P1,000,000. Included among the checks
drawn against the bank 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.
 
What is the adjusted Cash in bank account of SOM Co. on December 31, 2020?

The correct answer is: 1,120,000

Question 14
Question text
The cash account shows a balance of P90,000 before reconciliation. The bank statement does not
include a deposit of P4,600 made on the last day of the month. The bank statement shows a
collection by the bank of P1,880 and a customer's check for P640 was returned because it was NSF.
A customer's check for P900 was recorded on the books as P1,080, and a check written for P158
was recorded as P194. The correct balance in the cash account was
The correct answer is: 91,096
Question 15
Question text
In preparing its May 31, 2020 bank reconciliation, Catt Co. has the following information available:

The correct balance of cash at May 31, 2020 is

The correct answer is: 35,500

Quiz 3- Accounts Receivable

ABC Company had the following information for the current year relating to accounts receivable:
What is the balance of accounts receivable, before allowance for doubtful accounts, on December
31?
The correct answer is:
1,825,000

ABC Company sold goods to wholesalers on terms 2/15, net 30. The entity had no cash sales but
50% of the customers took advantage of the discount. The entity used the gross method of recording
sales and accounts receivable. An analysis of the trade accounts receivable at year-end revealed the
following:

What amount should be reported as allowance for sales discount at year-end?

The correct answer is:
20,000
ABC Company sold goods to wholesalers on terms 2/15, net 30. The entity had no cash sales but
50% of the customers took advantage of the discount. The entity used the gross method of recording
sales and accounts receivable. An analysis of the trade accounts receivable at year-end revealed the
following:
What amount should be reported as allowance for doubtful accounts at year-end?
The correct answer is:
210,000

ABC Company sold goods to wholesalers on terms 2/15, net 30. The entity had no cash sales but
50% of the customers took advantage of the discount. The entity used the gross method of recording
sales and accounts receivable. An analysis of the trade accounts receivable at year-end revealed the
following:

What is the net realizable value of accounts receivable at year-end?

The correct answer is:
3,770,000

The following information were obtained during the examination of the financial statements of ABC
Company for the year ended December 31, 2020:

A. The December 31, 2020, balance in the Accounts Receivable control account is P558,600

B. An aging schedule of the account receivable as of December 31, 2020, is presented below:

C. The only entries made in the Bad Debts Expense account were:
1. A debit on December 31 for the amount of the credit to the Allowance for Bad debts
2. A credit for P4,110 on November 31, 2020, and a debit to Allowance for Bad debts because of a
bankruptcy. The related sale took place on October 1, 2020
 
D. The Allowance for Bad Debts schedule is presented below:

E. There is a credit balance in one account receivable (61 to 90 days) of P7,260; it represents an
advance on a sales contract.
How much is the adjusted balance of Accounts Receivable as of December 31, 2020?
The correct answer is:
555,450
How much is the adjusted balance of the Allowance for Bad Debts as of December 31, 2020?
The correct answer is:
19,583
How much is the Bad Debts expense for the year 2020?
The correct answer is:
16,868
How much is the net adjustment to the Bad Debts expense account?
The correct answer is:
6,952 credit

From the inception of operations, ABC Company provided for uncollectible accounts expense under
the allowance method and provisions were made monthly at 2% of credit sales. No year-end
adjustments to the allowance account were made. The balance in the allowance for doubtful accounts
was P1,000,000 on January 1, 2020. During 2020, credit sales totaled P20,000,000, interim
provisions for doubtful accounts were made at 2% of credit sales, P200,000 of bad debts were written
off, and recoveries of accounts previously written off amounted to P50,000. An aging of accounts
receivable was made for the first time on December 31, 2020. 

Based on the review of the collectibility of the account balances in the "prior to January 1, 2020"aging
category, additional accounts totaling P100,000 are to be written off on December 31, 2020. Effective
December 31, 2020, the entity adopted the aging method for the allowance for doubtful accounts.

What is the required allowance for doubtful accounts on December 31, 2020?
The correct answer is:
1,650,000
What amount should be reported as doubtful accounts expense?
The correct answer is:
900,000
What is the year-end adjustment to the allowance for doubtful accounts on December 31, 2020?
The correct answer is:
500,000 credit
What is the net realizable value of accounts receivable on December 31, 2020?
The correct answer is:
8,250,000

ABC Company provided the following data for the current year in relation to accounts receivable:

What amount should be reported as accounts receivable on December 31?

The correct answer is:
595,000
What total amount of trade and other receivables should be reported under current assets?
The correct answer is:
1,245,000
What total amount of other receivables should be reported under noncurrent assets?
The correct answer is:
1,300,000
On January 1, 2021, ABC Company reported accounts receivable P2,070,000 and allowance for
doubtful accounts P80,000.
The collections from customers during 2021 totaled P14,000,000, excluding recoveries.

Doubtful accounts are provided as a percentage of credit sales.

 
The entity calculated the percentage annually by using the experience of the three years prior to the
current year.
 
What amount should be reported as doubtful accounts expense for 2021?
The correct answer is:
300,000
What amount should be reported as an allowance for doubtful accounts on December 31, 2021?
The correct answer is:
110,000
What amount should be reported as net realizable value of accounts receivable on December 31,
2021?
The correct answer is:
2,650,000

ABC Company started business at the beginning of current year. The entity established an allowance
for doubtful accounts estimated at 5% of credit sales.
 
During the year, the entity wrote off P50,000 of uncollectible accounts.
 
Further analysis showed that merchandise purchased amounted to P9,000,000 and ending
merchandise inventory was P1,500,000. Goods were sold at 40% above cost.
 
The total sales comprised 80% sales on account and 20% cash sales. Total Collections from
customers, excluding cash sales, amounted to P6,000,000.
 
What amount should be reported as cost of goods sold?
The correct answer is:
7,500,000
What amount should be reported as net realizable value of accounts receivable at year-end?
The correct answer is:
1,980,000

QUIZ 4- RECEIVABLES
On December 1, 2020, ABC Company assigned on a non-notification basis accounts receivable of
P5,000,000 to a bank in consideration for a loan of 80% of the accounts less a 5% service fee on the
accounts assigned. The entity signed a note for the bank loan. On December 31, 2020, the entity
collected assigned accounts of P2,000,000 less discount of P200,000. The entity remitted the
collections to the bank in partial payment for the loan. The bank applied first the collection to the
interest and the balance to the principal. The agreed interest is 1% per month on the loan balance.
The entity accepted sales returns of P100,000 on the assigned accounts and wrote off assigned
accounts totaling P300,000.

What is the balance of accounts receivable assigned on December 31, 2020?

The correct answer is: 2,240,000
What is the equity of the assignor in assigned accounts on December 31, 2020?
The correct answer is: 360,000

ABC Company factored P5,000,000 of accounts receivable. Control was surrendered by the entity.
The finance company assessed a fee of 5% and retains a holdback equal to 10% of the accounts
receivable. In addition, the finance company charged 12% interest computed on a weighted average
time to maturity of the accounts receivable for 30 days.

What is the amount initially received from the factoring of accounts receivable?
The correct answer is: 4,200,685
What total amount should be recognized as loss on factoring?
The correct answer is: 299,315

ABC pledged P4,000,000 of accounts receivable as collateral for a P3,000,000 loan with a bank. The
bank assessed a 10% finance fee on the amount of the loan and charged 8% annual interest on the
note at maturity. What is the journal entry to record the transaction?
The correct answer is: Debit cash P2,700,000, debit finance charge P300,000 and credit note
payable P3,000,000

On January 1, 2020, ABC Company sold equipment with a carrying amount of P4,800,000 in
exchange for P6,000,000 noninterest bearing note due January 1, 2023. 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 3 periods is 0.75 and at 12% for 3 periods is 0.71.

What amount should be reported as gain or loss on sale of equipment?

The correct answer is: 300,000 loss
What amount should be reported as interest income for 2020?
The correct answer is: 450,000

On December 31, 2020, Janice Company sold used equipment with carrying amount of P2,000,000 in
exchange for a noninterest bearing note of P5,000,000 requiring ten annual payments of P500,000.
The first payment was made on December 31, 2021. The market interest for similar note was 12%.
The present value of an ordinary annuity of 1 is 5.65 for ten periods and 5.33 for nine periods. The
present value of 1 for 10 periods is 0.32.

What is the carrying amount of the note receivable on December 31, 2020?
The correct answer is: 2,825,000
What is the gain on sale of equipment to be recognized in 2020?
The correct answer is: 825,000
What amount should be recognized as interest income for 2021?
The correct answer is: 339,000
What is the carrying amount of the note receivable on December 31, 2021?
The correct answer is: 2,664,000

ABC Bank loaned P7,500,000 to a borrower on January 1, 2018. The terms of the loan were payment
in full on January 1, 2023 plus annual interest payment at 12%. The interest payment was made as
scheduled on January 1, 2019. However, due to financial setbacks, the borrower was unable to make
the 2020 interest payment. The bank considered the loan impaired and projected the cash flows from
the loan on December 31, 2020. The bank had accrued the interest on December 31, 2019 but did
not , continue to accrue interest for 2020 due to the impairment of the loan.

The projected cash flows are:

The PV of 1 at 12% is .89 for one period, .80 for two periods, .71 for three periods and .64 for four
periods. The PV of annuity of 1 at 12% is .89 for one period, 1.69 for two periods, 2.40 for three
periods and 3.04 for four periods.

What is the present value of the cash flows from the loan receivable on December 31, 2020?
The correct answer is: 5,225,000
What is the loan impairment loss to be recognized on December 31, 2020?
The correct answer is: 3,175,000
What is the interest income to be reported by the bank in 2021?
The correct answer is: 627,000

On December 31, 2020, ANGELS CORPORATION sold for P50,000 an old machine having an
original cost of P70,000 and a book value of P20,000, the term of the sale were as follows:

 10,000 down payment

 P20,000 payable on December 31 each of the next two years

The agreement of sale made no mention of interest; however, 9% would be a fair rate for this type of
transaction. The present value of 1 at 9% for 2 periods is 0.8417 and the present value of 1 for
ordinary annuity at 9% for 2 periods is 1.7591.

How much is the carrying value of notes receivable on December 31, 2020?

The correct answer is: P35,182

How much is the gain on sale?

The correct answer is: P25,182

On March 1, 2020, HERA Company sold goods to TITANS Company. TITANS signed a noninterest
bearing note requiring payment of P60,000 annually for seven years. The first payment was made on
March 1, 2020. The prevailing rate of interest for this type of note at the date of issuance was 10%.

 How much should be reported as sales revenue on March 1, 2020?

The correct answer is: P321,600

What is the amount on interest income for the year 2020?

The correct answer is: P21,800

On December 31, 2018, VENUS Company finished consultation services and accepted in exchange
a promissory note with a face value of P200,000, a due date of December 31,2021, and a stated rate
of 5%, with interest receivable at the end of each year. The fair value of the services is not readily
determinable and the note is not readily marketable. Under the circumstances, the note is considered
to have an appropriate imputed rate interest of 10%

What is the present value of the note in December 31, 2018?

The correct answer is: P175,133

What is the amount of interest income for the year 2019?

The correct answer is: P17,513

What is the carrying value of notes as of December 31, 2020?

The correct answer is: P190,909

The balance sheet of EROS Corp. reported the following long-term receivables as of December 31,
2018:

 Notes Receivable from sale of plant                   P4,500,000

 Notes Receivable from Officer                           P1,200,000

The following are transactions during 2019 and other information pertaining to the company’s long-
term receivables:

a. The note receivable from sale of plant bears interest at 12% per annum. The note is payable in 3
annual installments of P1,500,000 plus interest on the unpaid balance every April 1. The initial
principal and interest payment was made on April 1, 2019
b. The note receivable from officer is dated December 31, 2018, earns interest at 10% per annum,
and is due on December 31, 2019. The 2019 interest was received on December 31, 2019
What is the accrued interest receivable as of December 31, 2019?

The correct answer is: P270,000

On January 1, 2019, ABC Company sold an equipment with a carrying amount of P800,000, receiving
a noninterest bearing note due in three years with a face amount of P1,000,000. There is no
established market value for the equipment. The interest rate on similar obligations is 12%. The
present value of 1 at 12% for three periods is 0.712.

What amount should be reported as gain or loss on the sale of equipment in 2019?

The correct answer is: 88,000 loss

What amount should be reported as interest income for 2019?

The correct answer is: 85,440

What is the carrying amount of note receivable on December 31, 2019?

The correct answer is: 797,440

What amount should be reported as interest income for 2020?

The correct answer is: 95,693

From inception of operations, ABC Co. provided for uncollectible accounts expense under the
allowance method and provisions were made monthly at 2% of credit sales. No year-end adjustments
to the allowance account were made. The balance in the allowance for doubtful accounts was
P1,000,000 on January 1, 2021. During 2021, credit sales totaled P20,000,000, interim provisions for
doubtful accounts were made at 2% of credit sales, P200,000 of bad debts were written off, and
recoveries of accounts previously written off amounted to P50,000. An aging of accounts receivable
was made for the first time on December 31, 2021.
Based on the review of collectability of the account balances in the “prior to January 1, 2021” aging
category, additional accounts totaling P100,000 are to be written off on December 31, 2021. Effective
December 31, 2021, the entity adopted the aging method for estimating the allowance for doubtful
accounts.

What is the required allowance for doubtful accounts on December 31, 2021?

The correct answer is: 1,650,000

What amount should be reported as doubtful accounts expense?

The correct answer is: 900,000

What is the year-end adjustment to the allowance for doubtful accounts on December 31, 2021?

The correct answer is: 500,000 credit