Professional Documents
Culture Documents
PART I. TRUE OR FALSE: Identify if the statements are true or false. Choose the
letter that represents the correct combination of answers.
a. Both statements are true. c. Only statement II is true.
b. Only statement I is true. d. Both statements are false.
1. Statement 1: Accrued interest and dividends are generally current asset. TRUE
Statement 2: Trade receivables that do not have a significant financing
component are measured at the transaction price in accordance
with PFRS 15. TRUE
2. Statement 1: Is silent, notes receivable are assumed to be trade receivables.
TRUE
Statement 2: Interest bearing note with stated rate of 10% and prevailing rate
of 15% is considered discount on notes receivable. As such, the
amortization shall be deducted to the present value. FALSE.
3. Statement 1: Trade discounts are reductions from invoice price as an
inducement for prompt payment of an account within the discount
period. FALSE
Statement 2: Interest bearing note with stated rate of 10% and prevailing rate
of 8% is considered discount on notes receivable. As such, the
amortization shall be deducted to the present value. FALSE.
4. Statement 1: Under allowance method in recording cash discount, the discount
is recorded at net amount. FALSE.
Statement 2: Under the percentage of AR, This method is based on the idea
that a percentage of accounts receivable will be uncollectible, and
management uses past experiences and current economic
situations as a guide to the percentage used. TRUE.
5. Statement 1: If paid beyond the discount period, sales discount forfeited is
recorded. It shall be deducted to the computation of Net Income.
FALSE.
PART II. MULTIPLE CHOICE PROBLEM: Choose the letter that correspond your
answer.
PROBLEM 1
Sampaguita Company is a dealer in equipment. On December 31,2013, the entity sold
an equipment in exchange for a noninterest bearing note requiring five annual payments
of P500,000. The first payment was made on December 31,2014. The market interest
for similar notes was 12%. The PV of 1 at 12% for 5 periods is .57, and the PV of an
ordinary annuity of 1 at 12% for 5 periods is 3.60.
11.) What is the carrying amount of the note receivable on December 31,2013?
A. 1,200,000
B. 1,700,000
C. 1,350,000
D. 1,800,000
12.) What interest income should be reported for 2014?
A. 216,000
B. 215,000
C. 210,000
D. 110,000
PROBLEM 2
On January 1,2020, Toshiba Corp sells a machinery costing P400,000 and with
accumulated depreciation of P350,000 as of January 1,2020. The company receives 4-
year, P120,000, 10% note. The note requires interest to be paid annually on December
31. The market rate of interest for a note of this type is 16% and the principal amount of
the note is to be paid in four equal annual installments of P30,000 every December 31.
PV of ordinary annuity of 16% at 4 periods 2.7982
PV of ordinary annuity of 10% at 4 periods 3.1699
13.) How much is the gain or loss on sale of equipment?
A. 56,481.10
B. 67,524.40
C. 71,985.00
D. 57,994.00
14.) How much is the present value of the note as of December 31, 2020?
A. 94,328.30
B. 77,159.84
C. 99,502.60
D. 81,518.08
14.) How much is the present value of the note as of December 31, 2021?
A. 57,596.73
B. 55,560.97
C. 70,420.83
D. 50,505.41
PART III: SUPPLY THE ANSWER. Type in your answer in the appropriate format.
If the answer is amount, add peso sign and appropriate comma, and then round off your
final answer to two decimal places.
PROBLEM 3
Obvious Ba Company had the following account balances on December 31, 2016:
3.) Determine the Current asset to be reported on the entity’s December, 31 2016
statement of Financial Position
PROBLEM 4
Wala na Finish na Company had the following account balances on January 01, 2016:
Additional Information:
• The company estimates that 10% of accounts receivable ending is doubtful.
• The sales includes sold inventory, in transit, under FOB Destination amounting to
20,000; and cash sales amounting to 60,000.
5.) Determine the balance for Allowance for Doubtful Accounts for December 31,
2016.
ANSWER KEY:
PART I. TRUE OR FALSE
1.) A
2.) B
3.) D
4.) C
5.) D
6.) A
7.) C
8.) C
9.) D
10.) A
PART II. MULTIPLE CHOICE PROBLEM:
11.) D
12.) A
13.) A
14.) D
15.) B
PART III: SUPPLY THE ANSWER.
16.) 131,300.00
17.) 213,820.00
18.) 208,300.00
19.) 248,000.00
20.) 24,800.00
SOLUTION:
PROBLEM 1
Annual Installment 500,000.00
PV of an ordinary annuity of 1 at 12% for 5 periods 3.60
PV of Note 1,800,000.00
PROBLEM 2
Present value of principal (30,000 x 2.7982) 83,946.00
Add: Present value of interest 22,535.10 106,481.10
Cost 400,000.00
Less: Accum. Depn 350,000.00 50,000.00
Gain on sale 56,481.10
PROBLEM 3
Trade receivables Non-trade receivables Current asset
Accounts receivables- normally collectible after 2yrs 25,000.00 25,000.00
Advances to employees 15,000.00 15,000.00
Advances to officer – collectible after 2yrs 13,000.00
Notes receivables 25,000.00 25,000.00
Notes receivables- Long term 48,620.00
Notes receivables- payable after 4yrs 40,000.00 40,000.00
Bonds receivable 50,200.00
Customer stale checks 20,000.00 20,000.00
Stale Check from loan 25,000.00
Bounced customer ‘s checks –
re-deposited by the customer on January 1,
2017 21,300.00 21,300.00
Interest receivables 12,000.00 12,000.00
Dividend receivables 50,000.00 50,000.00
TOTAL 131,300.00 213,820.00 208,300.00
16.) 17.) 18.)
PROBLEM 4
ACCOUNTS RECEIVABLE ALLOWANCE FOR BAD DEBTSS
Beg 150,000 Collection 20,000 Write off 12,000 Beg 15,000
Sales (200,000 - 60,000120,000
- 20,000)
Write off 12,000 Recovery 10,000
Recovery 10,000 BDE 11,800.00