1.

Horvath Company has the following items at year-end:

Cash in bank P20,000
Petty cash 300
Short-term paper with maturity of 2 months 5,500
Postdated checks 1,400
Horvath should report cash and cash equivalents of
a. P20,000.
b. P20,300.
c. P25,800.
d. P27,200.

2.Marshell Company has cash in bank of P15,000, restricted cash in a separate account of P4,000, and a
bank overdraft in an account at another bank of P2,000. Marshell should report cash of
a. P13,000.
b. P15,000.
c. P18,000.
d. P19,000.

3.Peterson Company has the following items at year-end:

Cash in bank P30,000
Petty cash 500
Short-term paper with maturity of 2 months 8,200
Postdated checks 2,100
Peterson should report cash and cash equivalents of
a. P30,000.
b. P30,500.
c. P38,700.
d. P40,800.

4.At the close of its first year of operations, December 31, 2018, Linn Company had accounts receivable of
P540,000, after deducting the related allowance for doubtful accounts. During 2018, the company had
charges to bad debt expense of P90,000 and wrote off, as uncollectible, accounts receivable of P40,000.
What should the company report on its balance sheet at December 31, 2018, as accounts receivable
before the allowance for doubtful accounts?
a. P670,000
b. P590,000
c. P490,000
d. P440,000

5.Before year-end adjusting entries, Bass Company's account balances at December 31, 2018, for accounts
receivable and the related allowance for uncollectible accounts were P600,000 and P45,000, respectively.
An aging of accounts receivable indicated that P62,500 of the December 31 receivables are expected to
be uncollectible. The net realizable value of accounts receivable after adjustment is
a. P582,500.
b. P537,500.
c. P492,500.
d. P555,000.

A trial balance before adjustments included the following:

Debit Credit
Sales P425,000
Sales returns and allowance P14,000
Accounts receivable 43,000
Allowance for doubtful accounts 760

6.If the estimate of uncollectibles is made by taking 2% of net sales, the amount of the adjustment is
a. P6,700.
b. P8,220.
c. P8,500.
d. P9,740.

7.If the estimate of uncollectibles is made by taking 10% of gross account receivables, the amount of the
adjustment is
a. P3,540.
b. P4,300.
c. P4,224.
 d. P5,060.

8.On December 31, 2018, Eller Corporation sold for P75,000 an old machine having an original cost of
P135,000 and a book value of P60,000. The terms of the sale were as follows:
P15,000 down payment
P30,000 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. What should be the amount of the notes receivable net of the unamortized discount on
December 31, 2018 rounded to the nearest peso? (The present value of an ordinary annuity of 1 at 9%
for 2 years is 1.75911.)
a. P52,773.
b. P67,773.
c. P60,000.
d. P105,546.

9.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
a. Petty Cash, P75.
b. Petty Cash, P100.
c. Cash, P95; Cash Over and Short, P5.
d. Cash, P100.

10. If the month-end bank statement shows a balance of P36,000, outstanding checks are P12,000, a deposit
of P4,000 was in transit at month end, and a check for P500 was erroneously charged by the bank against
the account, the correct balance in the bank account at month end is
a. P27,500.
b. P28,500.
c. P20,500.
d. P43,500.

11. In preparing its bank reconciliation for the month of April 2018, Gregg, Inc. has available the following
information.
Balance per bank statement, 4/30/18 P39,140
NSF check returned with 4/30/18 bank statement 450
Deposits in transit, 4/30/18 5,000
Outstanding checks, 4/30/18 5,200
Bank service charges for April 20
What should be the correct balance of cash at April 30, 2018?
a. P39,370
b. P38,940
c. P38,490
d. P38,470

12. Tanner, Inc.’s checkbook balance on December 31, 2018 was P21,200. In addition, Tanner held the
following items in its safe on December 31.
(1) A check for P450 from Peters, Inc. received December 30, 2018, which was not included in the
checkbook balance.
(2) An NSF check from Garner Company in the amount of P900 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, 2019. The original deposit has been included in the December 31
checkbook balance.
(3) Coin and currency on hand amounted to P1,450.
The proper amount to be reported on Tanner's balance sheet for cash at December 31, 2018 is
a. P21,300.
b. P20,400.
c. P22,200.
d. P21,750.

13. The cash account shows a balance of P45,000 before reconciliation. The bank statement does not include
a deposit of P2,300 made on the last day of the month. The bank statement shows a collection by the
bank of P940 and a customer's check for P320 was returned because it was NSF. A customer's check for
P450 was recorded on the books as P540, and a check written for P79 was recorded as P97. The correct
balance in the cash account was
a. P45,512.
b. P45,548.
 c. P45,728.
d. P47,848.

14. In preparing its May 31, 2018 bank reconciliation, Dogg Co. has the following information available:
Balance per bank statement, 5/31/18 P30,000
Deposit in transit, 5/31/18 5,400
Outstanding checks, 5/31/18 4,900
Note collected by bank in May 1,250
The correct balance of cash at May 31, 2018 is
a. P35,400.
b. P29,250.
c. P30,500.
d. P31,750.

15. On the December 31, 2018 balance sheet of Yount Co., the current receivables consisted of the following:
Trade accounts receivable P 75,000
Allowance for uncollectible accounts (2,000)
Claim against shipper for goods lost in transit (November 2018) 3,000
Selling price of unsold goods sent by Yount on consignment
at 130% of cost (not included in Yount 's ending inventory) 26,000
Security deposit on lease of warehouse used for storing
some inventories 30,000
Total P132,000
At December 31, 2018, the correct total of Yount 's current net receivables was
a. P76,000.
b. P102,000.
c. P106,000.
d. P132,000.

16. On January 1, 2006, Marr Co. exchanged equipment for a P400,000 zero-interest-bearing note due on
January 1, 2020. The prevailing rate of interest for a note of this type at January 1, 2006 was 10%. The
present value of P1 at 10% for three periods is 0.75. What amount of interest revenue should be included
in Marr's 2018 income statement?
a. P0
b. P30,000
c. P33,000
d. P40,000

17. On June 1, 2018, Watt Corp. loaned Hall P300,000 on a 12% note, payable in five annual installments of
P60,000 beginning January 2, 2019. In connection with this loan, Hall was required to deposit P3,000 in a
zero-interest-bearing escrow account. The amount held in escrow is to be returned to Hall after all
principal and interest payments have been made. Interest on the note is payable on the first day of each
month beginning July 1, 2018. Hall made timely payments through November 1, 2018. On January 2,
2019, Watt received payment of the first principal installment plus all interest due. At December 31, 2018,
Watt's interest receivable on the loan to Hall should be
a. P0.
b. P3,000.
c. P6,000.
d. P9,000.

18. In preparing its August 31, 2018 bank reconciliation, Adel Corp. has available the follow-ing information:
Balance per bank statement, 8/31/18 P21,650
Deposit in transit, 8/31/18 3,900
Return of customer's check for insufficient funds, 8/30/18 600
Outstanding checks, 8/31/18 2,750
Bank service charges for August 100
At August 31, 2018, Adel's correct cash balance is
a. P22,800.
b. P22,200.
c. P22,100.
d. P20,500.

19. Sandy, Inc. had the following bank reconciliation at March 31, 2018:
Balance per bank statement, 3/31/18 P37,200
Add: Deposit in transit 10,300
 47,500
Less: Outstanding checks 12,600
Balance per books, 3/31/18 P34,900
Data per bank for the month of April 2018 follow:
Deposits P46,700
Disbursements 49,700
All reconciling items at March 31, 2018 cleared the bank in April. Outstanding checks at April 30, 2018
totaled P6,000. There were no deposits in transit at April 30, 2018. What is the cash balance per books
at April 30, 2018?
a. P28,200
b. P31,900
c. P34,200
d. P38,500

20. The following selected transactions occurred during the year ended December 31, 2015 of XYZ
COMPANY:
Gross sales (cash and credit) P 900,736.80
Collections from credit customers, net of 2% cash discount 294,000.00
Cash sales 180,000.00
Uncollectible accounts written off 19,200.00
Credit memos issued to credit customers for sales returns and allowances 10,080.00
Cash refunds given to cash customers for sales returns and allowances 15,168.00
Recoveries on accounts receivable written off in prior years (not included in cash
received stated above) 6,505.20
At year-end, the company provides for estimated bad debts losses by crediting the Allowance for Bad Debts
account for 2% of its net credit sales for the year. The allowance for bad debts at the beginning of the year
is P19,327.20. The Accounts Receivable of XYZ COMPANY at December31, 2015 is:

21. On December 31, 2015, the “Receivables” account of AA. Company show a debit balance of P5,950,000
Subsidiary details show the following:
Accounts receivable, P725,000; Loans receivable, P100,000; Instalments receivable, normally due 1 year
to two years, P300,000; Customers’ accounts reporting credit balances arising from sales returns,
P30,000; Advance payments for purchase of merchandise, P150,000; Customers’ accounts reporting
credit balances arising from advance payments, P20,000; Cash advances to subsidiary, P400,000; Claim
from insurance company, P15,000; Subscription receivable due in 60 days, P300,000; Accrued interest
receivable, P10,000, Deposit on contract bids, P3,000,000 and Advances to shareholders (collectible in
2014), P1,000,000. How much is the amount to be presented as “loans and receivables” under current
assets section of the balance sheet?

Answer: 1.6 M

22. ABC Company provided some information on their financial records on December 31, 2015:
Accounts receivable, December 2015 1,680,000
Collections of account receivable 6,240,000
Bad debts 200,000
Inventory, January 1 2,880,000
Inventory, December 31 2,640,000
Accounts payable, January 1 1,000,000
Accounts payable, December 31 1,500,000
Cash sales 1,200,000
Purchases 4,800,000
Gross Profit on sales 2, 160,000
Determine the balance of accounts receivable beginning of 2015? Answer: 1.920 T

FOR THE NEXT 4 REQUIREMENTS: From inception of operations to June 30, 2015, Pascal Ltd provided for
uncollectible accounts receivable under the allowance method – provisions were made monthly at 2% of credit
sales; bad debts 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.
Pascal’s usual credit terms are net 30 days.

The balance in the allowance for doubtful debts account was P154,000 at July 1, 2014. During 2014-15, credit
sales totalled P9,000,000, interim provisions for doubtful debts were made at 2% of credit sales, P95,000 of
bad debts were written off, and recoveries of accounts previously written off amounted to P15,000. Pascal
installed a computer in May 2015, and an aging of accounts receivable was prepared for the first time as of
June 30, 2015. The summary of aging is as follows:
Classification Balance/ category Estimated doubtful
May – June 15 1,080,000 2%
 Jan – April 15 650,000 10%
July – Dec 15 420,000 25%
Before July 2014 150,000 70%
Based on the review of collectability of the account balances in the “before July 2014” aging category,
additional receivables totalling P60,000 were written off as of June 30, 2015. The 70% uncollectable estimate
applies to the remaining P90,000 in the category. Effective with the year ended June 30, 2015, Pascal
adopted a new accounting method for estimating the allowance for doubtful debts at the amount indicated by
the year – end aging analysis of account receivable.

REQUIRED
23. How much is the bad debts expense for 2015?
24. Determine the balance of the allowance account as of June, 2015. Answer: 254,600
25. Prepare the necessary entry to reflect the required allowance.
26. Determine the net realizable value of accounts receivable as of June, 2015.

FOR THE NEXT 3 REQUIREMENTS: On January 1, 2015, ABC Co. sells its equipment with a carrying value
of P160,000. The company receives a non-interest-bearing note due in 3 yrs. with a face amount of P200,000.
There is no established market value for the equipment. The prevailing interest rate for a note of this type is
12%.

27. How much is the interest income of ABC for the year 2015?
28. Determine the carrying value of the current notes receivable account as at December 31, 2015?
29. Determine the carrying value of the current notes receivable account as at December 31, 2016?

FOR THE NEXT 4 REQUIREMENTS: On January 2, 2015, a tract of land that originally cost P800,000 was
sold by ABC Company. The company received a P1,200,000 note as payment. It bears interest rate of 14%
and is payable in 3 annual installments of P400,000 plus interest on the outstanding balance. The prevailing
rate of interest for a note of this type is 12%.

REQUIRED:
30. Compute the initial amount of the notes receivable.
31. How much is the gain/ loss on disposal of asset?
32. Determine the interest income over the term of the note.
33. If the entity has recorded the transaction as Dr. Notes receivable 1,200,000, Cr. Land 800,000 Cr. Gain on
sale 400,000, on the year of sale, what are the adjusting entries to be made?

FOR THE NEXT 7 REQUIREMENTS: ABC Bank loaned P8,800,000 to XYZ Company on January 1, 2012.
The initial loan repayment terms include a 10% interest rate plus annual principal payments of P1,100,000 on
December 31 each year, starting 2012. XYZ made the required principal and interest payment in 2012 and
2013 but did not make the P1,100,000 principal payment for 2014. ABC is preparing its annual financial
statements on December 31, 2015. XYZ is having financial difficulty, and ABC has concluded that the loan is
impaired in 2014.

Analysis of XYZ’s financial condition on December 31, 2014, indicates the principal payments will be collected,
but the collection of interest is unlikely. ABC did not accrue the interest on December 31, 2014.
The projected cash flows are:
December 31, 2014 P600,000
December 31, 2015 2,000,000
December 31, 2016 1,500,000
December 31, 2017 1,500,000
December 31, 2018 1,000,000

REQUIRED:
34. How much is the carrying value of the loan receivable?
35. Determine the impairment loss on December 31, 2014.
36. Compute the carrying amount of the loan receivable account as of December 31, 2014.
37. How much is the interest income for 2015?
38. How much is the balance of allowance for loan impairment account as of December 31, 2016?
39. As of 2016, how much will be presented as current loan receivable? Noncurrent portion?
40. Determine the carrying amount of the loan receivable as of December 31, 2017.