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Batch 17 1st Preboard (P1) No Answer

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DySAS Center for CPA Review

2F & 3F Mitra Building, San Pedro Street, Davao City


Tel. No. (082) 224-43-20: E-mail Address dysasrev@yahoo.com
Practical Accounting 1
John C. Frivaldo, CPA, MBA
FIRST PRE-BOARD EXAMINATIONS
December 21, 2008 @ 10:0012:00 am
===========================================================
INSTRUCTIONS: Mark the letter of your choice with a VERTICAL LINE on the answer sheet
provided. ERASURES NOT ALLOWED.
1. Mega Company purchased from Ora Company a P2, 000,000, 8% 5-year note that required
five equal annual year-end payments of P500, 900. The note was discounted to yield a 9%
rate to Mega. At the date of purchase, Mega recorded the note at its present value of P1,
948,500. What should be the total revenue earned by Mega over the life of this note?
(a) P504, 500
(b) P556, 000
(c) P800, 000
(d) P900, 000
Items 2 and 3:
National Bank grants a 10-year loan to Abbo Company in the amount of P1, 500,000 with a
stated interest rate of 6%. Payments are due monthly and are computed to be P16, 650.
National Bank incurs P40, 000 of direct loan origination cost and P20, 000 of indirect loan
origination cost. In addition, National Bank charges Abbo a 4-point nonrefundable loan
origination fee.
2. National Bank, the lender, has a carrying amount of:
(a) P1, 440,000
(b) P1, 480,000
(c) P1,500,000

(d) P1,520,000

3. Abbo, the borrower, has a carrying amount of:


(a) P1, 440,000
(b) P1, 480,000
(c) P1,500,000

(d) P1,520,000

4. Impeccable Corporation manufactures and sells electrical generators. On January 1, 2008,


it sold an electrical generator costing P700, 000 for P1, 000,000. The buyer paid P100, 000
down and signed a P900, 000 non-interest bearing note payable in three equal installments
every December 31. Assume the prevailing interest rate for a note of this type is 12%.
What is the interest income that should be recognized for the year 2008?
(a) P86, 465
(b) P108, 000
(c) P179, 460
(d) P59, 820
5. Roth Company received from a customer a 1year, P500, 000 note bearing annual interest
of 8%. After holding the note for 6 months, Roth discounted the note at a nearby bank at
an effective interest rate of 10%. What amount of cash did Roth received from the bank?
(a) P540, 000
(b) P523, 810
(c) P513, 000
(d) P495, 238
6. On June 30, 2008, Ray Company discounted at the bank a customers P60, 000, 6-month,
10% note receivable dated April 30, 2008. The bank discounted the note at 12%. Rays
proceeds from this discounted note amounted to:
(a) P56, 400
(b) P57, 600
(c) P60, 480
(d) P61, 740
Items 7 and 8:
X Corporation factored P6, 000,000 of accounts receivable to A Corporation on October 1,
2008. Control was surrendered by X Corporation. A Corporation accepted the receivables
subject to recourse for nonpayment. A Corporation assessed a fee of 3% and retains a
holdback equal to 5% of the accounts receivable. In addition, A Corporation charged 15%
interest computed on a weighted-average time to maturity of the receivables of 54 days.
The fair value of the recourse obligation is P90, 000.
7. X Corporation will receive and record cash of:
(a) P5, 296,850
(b) P5, 386,850
(c) P5,476,850

(d) P5,556,850

8. Assuming all receivables are collected, X Corporations cost of factoring the receivables
would be:
(a) P313, 150
(b) P180, 000
(c) P433, 150
(d) P613, 150

9. Sigma Company began operations on January 1, 2008. On December 31, 2008, Sigma
provided for uncollectible accounts based on 1% of annual credit sales. On January 1,
2009, Sigma changed its method of determining its allowance for uncollectible accounts by
applying certain percentages to the accounts receivable aging as follows:
Days past invoice date
Percent uncollectible
0 30
1
31 90
5
91 180
20
Over 180
80
In addition, Sigma wrote off all accounts receivables that were over 1 year old. The
following additional information relates to the years ended December 31, 2009 and 2008:
2009
2008
Credit sales
P3, 000,000
P2, 800,000
Collections (including recovery)
2,915,000
2,400,000
Accounts written off
27,000
none
Recovery of accounts previously
written off
7,000
none
Days past invoice date at 12/31:
0 30
300,000
250,000
31 90
80,000
90,000
91 180
60,000
45,000
Over 180
25,000
15,000
What is the provision for uncollectible accounts for the year ended December 31, 2009?
(a) P39, 000
(b) P31, 000
(c) P38, 000
(d) P11, 000
10. From inception of operations to December 31, 2007, Murr Corporation provided for
uncollectible accounts receivable under the allowance method, provisions were made
monthly at 2% of credit sales, bad debt written off were charged to the allowance account,
recoveries of bad debts previously written off were credited to the allowance account, and
no year-end adjustments to the allowance account were made. Murrs usual credit terms
are net 30 days.
The balance in the allowance for doubtful accounts was P120, 000 at January 1, 2008.
During 2008, credit sales totaled P9, 000,000, interim provisions for doubtful accounts were
made at 2% of credit sales, P90, 000 of bad debts were written off, and recoveries of
accounts previously written off amounted to P15,000. Murr installed a computer facility in
November 2008 and prepared an aging of accounts receivable for the first time as of
December 31, 2008. A summary of the aging is as follows:
Classification by
Balance in
Estimated %
month of sale
each category
uncollectible
November December 2008
P2, 000,000
2%
July October
600,000
10%
January June
400,000
25%
Prior to 1/1/2008
200,000
75%
P3, 200,000
Based on the review of collectibility of the account balances in the prior to 1/1/2008 aging
category, additional receivables totaling P60, 000 were written off as of December 31, 2008.
Effective with the year ended December 31, 2008, Murr adopted a new accounting method
for estimating the allowance the allowance for doubtful accounts at the amount indicated by
the year-end aging analysis of accounts receivable.
What is the year-end adjustment to the allowance for doubtful accounts as of December
31, 2008?
(a) P305, 000
(b) P180, 000
(c) P320, 000
(d) P140, 000
11. When examining the accounts of Brute Company, you ascertain that balances relating to
both receivables and payables are included in a single controlling account called receivables
control that has a debit balance of P4, 850,000. An analysis of the make-up of this account
revealed the following:
Debit
Credit
Accounts receivable customers
P7, 800,000
Accounts receivable officers
500,000
Debit balances creditors
300,000
Postdated checks from customers
400,000
Subscriptions receivable
800,000

Debit
Credit
Accounts payable for merchandise
P4, 500,000
Credit balances in customers accounts
200,000
Cash received in advance from customers
for goods not yet shipped
100,000
Expected bad debts
150,000
After further analysis of the aged accounts receivable, you determined that the allowance
for doubtful accounts should be P200, 000. What is the correct total of current net
receivables?
(a) P8, 950,000
(b) P8, 800,000
(c) P8,600,000
(d) P8,850,000
12. The following information is available for the Hook company:
Amount in Thousands
2006
2007
2008
Charge sales
900
1,100
1,000
Cash sales
600
800
700
Total
1,500
1,900
1,700
Accounts receivable
(end of year)
170
230
220
Allowance for doubtful
accounts (end of year)
47
30
56
Accounts written off as
uncollectible (during
the year)
2
50
4
Assuming there was no change in the method used for estimating doubtful accounts, what
was the balance in the allowance for doubtful accounts at the beginning of 2006?
(a) P 0
(b) P22, 000
(c) P45, 000
(d) P49, 000
13. Rip Corporation showed the following balances on January 1, 2008:
Accounts receivables
P 600,000
Allowance for doubtful accounts
30,000
The following transactions affecting accounts receivable occurred during the year ended
December 31, 2008:
Sales cash and credit
P3, 280,000
Cash received from cash customers
400,000
Cash received from credit customers,
excluding recovery
2,475,000
Cash received from credit customers who took
advantage of the 2/10, n/30 terms
(included in P2, 475,000)
1,470,000
Accounts receivable written off as worthless
20,000
Recoveries of accounts written off
5,000
Credit memoranda for returned credit sales
55,000
Cash refunds to cash customers
10,000
The company uses the percentage of accounts receivable method in determining the
allowance for doubtful accounts. What is the net realizable value of accounts receivable on
December 31, 2008?
(a) P855, 000
(b) P900, 000
(c) P850, 000
(d) P895, 000
14. Excel reported P70, 000 of inventory on December 31, 2008, based on physical count.
Additional information was given as follows:
a. Included in the physical count were machines billed to a customer, FOB shipping
point, on December 31, 2008. The machines had a cost of P3, 000 as had been
billed at P5, 000. The shipment is ready for pick-up by the delivery contractor.
b. Goods were in transit from a vendor. The invoice cost was P8, 000 and goods were
shipped FOB shipping point on December 31, 2008.
c. Work in process costing P500 was sent to an outside processor for finishing on
December 30, 2008.
d. Goods out on consignment amounted to P4, 600 (sales price); shipping costs, P120
(markup is 15% on cost).
The correct amount of inventory on December 31, 2008 is:
(a) P85, 620
(b) P85, 500
(c) P82, 620
(d) P82, 500

15. The book value of Goods inventory at the end of 2008 is P95, 000. Included in the amount
are the following items:
Merchandise in transit, purchased FOB shipping point
P6, 800
Goods held as consignee
5,000
Goods out on consignment, at cost plus 50% markup
on cost plus P100 delivery charge
6,100
The correct amount of inventory is:
(a) P83, 100
(b) P87, 900
(c) P86, 200
(d) P88, 000
16. Compute for the cost of inventory lost in fire using the data below:
Inventory, July 1, 2008
P51, 600
Purchases, July 1, 2008 to Jan. 19, 2009
368,000
Sales, July 1, 2008 to Jan. 19, 2009
583,000
Purchase returns
11,200
Purchase discounts taken
5,800
Freight in
3,800
Sales returns
8,600
A fire destroyed the entire inventory except for purchases in transit, FOB shipping point, of
P2, 000 and goods having a selling price of P4, 700 that were salvaged from the fire. The
salvaged goods had an estimated value of P2, 900. The average gross profit rate on net
sales is 40%.
(a) P59, 760
(b) P56, 940
(c) P62, 660
(d) P56, 860
17. The following information pertains to Dely Corporations 2008 cost of goods sold:
Inventory, December 31, 2007
P90, 000
2008 purchases
124,000
2008 write-off of obsolete inventory
34,000
Inventory, December 31, 2008
30,000
The inventory written off became obsolete due to an unexpected and unusual technological
advance by a competitor. In its 2008 income statement, what amount should Dely report as
cost of goods sold?
(a) P218, 000
(b) P184, 000
(c) P150, 000
(d) P124, 000
18. Pine Company prepares monthly income statements. A physical inventory is taken only at
year-end; hence, month-end inventories must be estimated. All sales are made on account.
The rate of markup on cost is 50%. The following information relates to the month of
November:
Accounts receivable, November 1
P102, 000
Accounts receivable, November 30
153,000
Collection of accounts receivable during November 255,000
Inventory, November 1
183,600
Purchases of inventory during November
163,200
The estimated cost of the November 30 inventory is:
(a) P122, 400
(b) P142, 800
(c) P193, 800
(d) P224, 400
19. A store uses the gross profit method to estimate inventory and cost of goods sold for
interim reporting purposes. Past experience indicates that the average gross profit rate is
25% of sales. The following data relate to the month of October:
Inventory cost, October 1
P255, 000
Purchases during the month at cost
683,400
Sales
856,800
Sales returns
30,600
Using the data above, what is the estimated ending inventory at October 31?
(a) P206, 550
(b) P214, 200
(c) P295, 800
(d) P318, 750
20. The following items were included in Opal Companys inventory account at December 31,
2008:
Merchandise out on consignment, at sales price,
including 40% markup on selling price
P28, 000
Goods purchased in transit, FOB shipping point
24,000
Goods held on consignment by Opal Company
16,000
Goods out on approval (sales price, P10, 000;
cost, P8, 000)
10,000
By what amount should the inventory at December 31, 2008 be reduced?
(a) P29, 200
(b) P50, 000
(c) P54, 000
(d) P78, 000

21. The balance in Reed Companys accounts payable account at December 31, 2008 was
P1,225,000 before the following information was considered:
- Goods shipped FOB destination on December 21, 2008 from a vendor to Reed were lost
in transit. The invoice cost of P45, 000 was not recorded by Reed. On December 28,
2008, Reed notified the vendor of the lost shipment.
- Goods were in transit from a vendor to Reed on December 31, 2008. The invoice cost
was P60, 000 and the goods were shipped FOB shipping point on December 28, 2008.
Reed received the goods on January 6, 2009.
- Goods shipped to Reed, FOB shipping point on December 20, 2008 from a vendor were
lost in transit. The invoice price was P50, 000. On January 5, 2009, Reed filed a P50,
000 claim against the common carrier.
- On December 27, 2008, a vendor authorized Reed to return, for full credit, goods
shipped and billed at P35, 000 on December 20, 2008. The returned goods were
shipped by Reed on December 27, 2008. A P35, 000 credit memo was received and
recorded by Reed on January 6, 2009.
What amount should Reed report as accounts payable in its December 31, 2008 balance
sheet?
(a) P1, 300,000
(b) P1, 345,000
(c) P1,235,000
(d) P1,250,000
Items 22 to 24:
Maricar Company, a wholesaler distributor of automotive replacement parts. Initial amounts
taken from accounting records are as follows:
Inventory at December 31, 2008 (based on physical count)
P1, 250,000
Accounts payable at December 31, 2008:
Vendor
Terms
Amount
Baker
2% 10 days, net 30
P 400,000
Charlie
net 30
210,000
Dolly
net 30
300,000
Eagle
net 30
90,000
Full
net 30
Greg
net 30
_________
P1, 000,000
Sales in 2008
P9, 000,000
Additional information is as follows:
A. Parts held on consignment from Charlie to Maricar, the consignee, amounting to P159,
000 were included in the physical count of goods on December 31, 2008, and in
accounts payable at December 31, 2008.
B. P20, 000 of parts which were purchased from Full and paid for in December 2008 were
sold in last week of 2008 and appropriately recorded as sales of P28, 000. The parts
were included in the physical count of goods on December 31, 2008, because the parts
were on the loading dock waiting to be picked up by the customers.
C. Parts in transit on December 31, 2008 to customers, shipped FOB shipping point, on
December 28, 2008, amounted to P34, 000. The customers received the parts on
January 6, 2009. Sales of P40, 000 including P1, 000 freight cost, were recorded by
Maricar on January 2, 2009.
D. Retailers were holding P210, 000 at cost (P250, 000 at retail), of goods on consignment
from Maricar the consignor, at their stores on December 31, 2008.
E. Goods were in transit from Greg to Maricar on December 31, 2008. The cost of the
goods was P25, 000, and they were shipped FOB shipping point on December 29, 2008.
F. A quarterly freight bill in the amount of P2, 000 specifically relating to merchandise
purchases in December 2008, all of which was still in the inventory at December 31,
2008, was received on January 3, 2009. The freight bill was not included in either the
inventory or in accounts payable at December 31, 2008.
G. All of the purchases from Baker occurred during the last seven days of the year. These
items have been recorded in accounts payable and accounted for in the physical
inventory at cost before discount. Maricars policy is to pay invoices in time to take
advantage of all cash discounts, adjust inventory accordingly, and record accounts
payable, net of cash discounts.
22. What is the adjusted balance of inventory on December 31, 2008?
(a) P1, 250,000
(b) P1, 300,000
(c) P1,356,000
(d) P1,200,000
23. What is the adjusted balance of accounts payable on December 31, 2008?
(a) P833, 000
(b) P858, 000
(c) P860, 000
(d) P1, 000,000
24. What is the adjusted balance of net sales for 2008?
(a) P9, 300,000
(b) P9, 039,000
(c) P9,239,000

(d) P8,880,000

25. Art Company has determined its cash flows from 2008 operating activities as P5, 350,000.
The cash balance on January 1, 2008 was P6, 500,000. During 2008, the company had the
following investing and financing activities. Cash dividends of P3, 500,000 were declared
and paid. An additional P1, 400,000 of cash dividends were declared but remained unpaid
at the end of the year.
Machinery with a book value of P1, 750,000 was sold for that amount. Additional
machinery of P2, 600,000 was acquired for cash to replace the one sold.
Note payable of P4, 200,000 was taken out of the local bank early in the year. By the
end of the year, P1, 500,000 of this amount including interest of P300, 000 had been repaid.
Bonds payable with a book value of P2, 500,000 was converted into common stock
having par value of P2, 000,000.
How much should be reported as net cash used in financing activities in the 2008 cash
flow statement?
(a) P4, 700,000
(b) P5, 000,000
(c) P1, 900,000
(d) P500, 000
26. The following is Mart Companys comparative balance sheet accounts:
2008
2007
Cash
4,800,000
3,000,000
Accounts receivable
2,300,000
2,400,000
Inventories
4,000,000
3,600,000
Property, plant and equipment
12,800,000
6,000,000
Accumulated depreciation
(2,300,000)
(2,000,000)
Investment in Max Company
5,500,000
6,000,000
Loan receivable
2,700,000
Accounts payable
2,000,000
1,800,000
Income tax payable
100,000
500,000
Dividend payable
2,000,000
3,000,000
Capital lease liability
8,000,000
Common stock
10,000,000
10,000,000
Additional paid in capital
1,000,000
1,000,000
Retained earnings
6,700,000
2,700,000
a. On December 31, 2008, Mart acquired 20% of Max Companys common stock for P6,
000,000. Max report net loss of P2, 500,000 for the year ended December 31, 2008.
No dividend was paid on Maxs common stock during the year.
b. During 2008, Mart loaned P3, 000,000 to Chase Company, an unrelated company.
Chase made the first semi-annual principal repayment of P300, 000 plus interest of
10% on October 1, 2008.
c. On January 2, 2008, Mart sold equipment costing P1, 200,000 with a carrying amount
of P700, 000, for P800, 000 cash.
d. On December 31, 2008, Mart entered into a capital lease for an office building. The
present value of the annual rental payments is P8, 000,000 which equals the fair value
of the building. Mart made the first rental payment of P1, 200,000 when due on
January 2, 2009.
e. Mart declared cash dividends in one year and paid the dividends in the subsequent
year.
Net cash provided by operating activities was:
(a) P6, 700,000
(b) P7, 700,000
(c) P5,700,000
(d) P6,200,000
27. Trial balances of Ron Company at December 31 are as follows:
Debits:
2008
Cash
P 875,000
Accounts receivable
825,000
Inventory
775,000
Property, plant and equipment
2,500,000
Unamortized bond discount
112,500
Cost of goods sold
6,250,000
Selling expenses
3,537,500
General and administrative expenses
3,425,000
Interest expense
107,500
Income tax expense
52,500
Credits:
Allowance for uncollectibles
P
32,500
Accumulated depreciation
412,500
Trade accounts payable
625,000
Income taxes payable
67,500
Deferred income taxes
132,500
3% callable bonds payable
1,125,000

2007
800,000
750,000
1,175,000
2,375,000
125,000
9,500,000
4,300,000
3,782,500
65,000
637,000
27,500
375,000
437,500
115,500
500,000

Common stock
1,250,000
1,000,000
Additional paid in capital
227,500
187,500
Retained earnings
1,117,500
1,399,500
Sales
13,470,000
19,467,000
Ron purchased P125, 000 equipment during 2008. Ron allocated one-half of its depreciation
expense to selling expenses and the remainder to general expenses. Ron uses the direct
method to prepare its cash flow statement. What amount should Ron report in its cash flow
statement for the year ended December 31, 2008 for cash paid for interest?
(a) P120, 000
(b) P107, 500
(c) P95, 000
(d) P42, 500
28. The transactions of Art Company for the year 2008 included the following:
Purchase of land for cash (cash was borrowed from bank)
3,000,000
Sale of securities for cash
1,000,000
Dividend declared (of which P1, 500,000 was paid during
the year)
2,000,000
Issuance of common stock for cash
5,000,000
Payment of bank loan including interest of P200, 000
2,200,000
Increase in customers deposits
300,000
The 2005 cash flow statement should report net cash provided by financing activities at:
(a) P4, 500,000
(b) P1, 500,000
(c) P4,300,000
(d) P4,800,000
29. Data below came from the comparative trial balance of Excel Corporation. The books are
kept on the accrual basis. Included in the operating expenses are depreciation of P3, 100
and amortization of P1, 400.
December
2008
2007
Accounts receivable
220,000
245,000
Interest receivable
800
1,700
Inventories
420,000
405,000
Prepaid insurance
3,800
1,900
Accounts payable
364,000
345,000
Other operating expenses payable
18,000
15,000
Net sales
1,200,000
Interest revenue
6,500
Cost of goods sold
800,000
Insurance expense
48,000
Other operating expenses
95,000
Cash paid for operating expenses during the year is:
(a) P137, 400
(b) P87, 500
(c) P139, 600
(d) P102, 500
30. Land on January 1, 2008 balance sheet was recorded at P6, 000,000. Selected information
in the year 2003 from the statement of cash flows follows:
Net income
P20, 000,000
Depreciation expense
3,000,000
Loss on sale of land
200,000
Proceeds from sale of land
1,400,000
Investing and financing activities not affecting cash:
Issued preferred stock for land
2,400,000
The value of the land to be disclosed in the balance sheet as of December 31, 2008 is:
(a) P6M
(b) P7M
(c) P8.4M
(d) P6.8M
31. Dione Company employs several consulting companies. Some of the companies require
payments in advance for performing services while others bill Dione after services are
rendered. Dione also leases office space to several law firms. Some law firms are required
to pay rent in advance for using their offices while others are allowed to their offices before
paying rent. Dione uses the conventional accrual basis of accounting. The amount of cash
paid to consulting companies during 2008 was P6, 400,000 and the amount of rent revenue
earned from leasing office space was P7, 800,000. Selected information obtained from the
companys comparative balance sheet is shown below:
2008
2007
Prepaid consulting fees
200,000
500,000
Accrued consulting fees
700,000
200,000
Rent receivable
600,000
800,000
Unearned rent revenue
1,000,000
400,000
Under the direct method, the 2008 cash flow statement should report cash received from
leasing office space at:
(a) P8, 600,000
(b) P7, 800,000
(c) P8,200,000
(d) P7,000,000

32. The balance sheet at December 31 of Love Company showed a cash balance of P200, 000.
An examination of the books disclosed the following:
a. Cash sales of P15, 000 from January 1 to 7, were predated as of December 28 to 31,
and charged to the cash account.
b. Customers checks totaling P5, 000 deposited with and returned by the bank, NSF, on
December 27, were not recorded in the books.
c. Checks of P6, 500 in payment of liabilities were prepared before December 31, and
recorded in the books, but withheld by the treasurer.
d. Customers postdated checks totaling P4, 300 are being held by the cashier as part of
cash. The companys experience shows that postdated checks are eventually realized.
e. The cash account includes P30, 000 being reserved for the purchase of a mini-computer
which will be delivered soon.
How much cash balance is to be shown on the December 31 balance sheet?
(a) P152, 200
(b) P166, 500
(c) P192, 200
(d) P200, 000
33. The balance sheet at December 31, 2008 of Lore Company showed a cash balance of P105,
600. An examination of the books disclosed the following:
a. The sales book was left open up to January 5, 2009 and cash sales totaling P15, 000
were considered as sales in December 2008.
b. Checks of P9, 300 in payment of liabilities were prepared before December 31, 2008,
recorded in the books, but not mailed or delivered to payees.
c. Customers postdated checks totaling P7, 800 deposited with but returned by bank, NSF,
on December 27, 2008. Return was not recorded in the books, P1, 500.
d. The cash account includes P40, 000 earmarked for the purchase of an office equipment
which will be delivered soon.
How much cash balance is to be shown on the December 31, 2008 balance sheet?
(a) P105, 600
(b) P60, 500
(c) P58, 400
(d) P50, 600
34. The balance sheet at December 31 of Live Company showed a cash balance of P91, 750. An
examination of the books disclosed the following:
a. Cash sales of P12, 000 from January 1 to 5, 2009 were predated as of December 28 to
31, 2008 and charged to the cash account.
b. Customers checks totaling P4, 500 deposited with and returned by the bank, NSF, on
December 27, 2008 were not recorded in the books.
c. Checks of P5, 600 in payment of liabilities were prepared before December 31, 2008 and
recorded in the books, but withheld by the treasurer.
d. Personal checks of officers, P2, 700, were redeemed on December 31, 2008, but
returned to cashier on January 2, 2009.
e. The cash account includes P20, 000 being reserved for the purchase of an office machine
which will be delivered soon.
How much cash balance is to be shown on the December 31 balance sheet?
(a) P91, 750
(b) P69, 150
(c) P54, 750
(d) P90, 350
Items 35 to 39:
On October 7, 2008, the cash book of Davao Company showed the following entries:
Receipts
Checks
September 30 (overdraft)
P 0
P5, 000
October 1
Tuesday
1,200
1,600
2
Wednesday
3,000
2,400
3
Thursday
800
1,000
4
Friday
6,000
3,400
5
Saturday
4,000
2,500
Cash receipts are deposited at the beginning of every Monday, Wednesday and Friday and in
each case includes the receipts of the preceding two working days. The bank statement at
the close of October 5 showed:
Balance, September 30 overdraft
P6, 500
Deposits
7,000
Checks (includes all checks issued prior to October 4
and also a check for P300 belonging to Cebu
Co., erroneously charged to Davao account
5,800
A check for P256 issued on October 5 had been canceled
by the company but the bookkeeper has not made
any entry for this.
Additional information: undeposited collections October 31, P10, 000; outstanding checks
October 31, P5, 644.

35. The book balance as at October 5, 2008 should be:


(a) (P900)
(b) (P3, 900)
(c) P1, 100

(d) P1, 200

36. The bank balance as at October 5, 2008 should be:


(a) (P3, 900)
(b) (P5, 300)
(c) P1, 200

(d) P1, 100

37. The undeposited collections as at September 30, 2008 should be:


(a) P4, 000
(b) P3, 000
(c) P2, 000

(d) P1, 000

38. The outstanding checks as at September 30, 2008 should be:


(a) P200
(b) P300
(c) P400

(d) P500

39. The adjusted book and bank balances as at October 5, 2008 should be:
(a) P5, 644
(b) P644
(c) P1, 144
(d) P344
40. The balance sheet of Happy Company as of December 31, 2008 showed a cash balance of
P68,225, which was determined to consist of the following:
Petty cash fund
P
360
Cash in Metro, per bank statement, with a
check for P600 still outstanding
33,675
Notes receivable in the possession of a
collecting agency
2,500
Undeposited receipts, including a postdated
check for P1,050 and a travelers
check for P1,000
17,800
Bond sinking fund cash
12,750
IOUs signed by employees
495
Paid vouchers, not yet recorded
645
Total
P68, 225
At what amount should cash on bank and in bank be reported on Happys balance sheet?
(a) P50, 185
(b) P53, 475
(c) P62, 935
(d) P66, 225

* end of the examination practical accounting 1*

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