Problem 1. The following receivables are presented in the Trial Balance of Honda Inc.

for the year ended

December 31,2011:

Trade accounts receivable unassigned

P1,200,000

Interest receivable on bonds

200,000

Trade installment receivable due 1-15 months including unearned finance charge of P50,000
150,000

Subscription receivable due within 12 months

300,000

Advances to affiliated companies

400,000

Advance payments to creditors on purchase orders

200,000

Trade receivables from officers collectible within 15 months

500,000

Subscription receivable due beyond 12 months

300,000

Trade accounts receivable assigned (Hondas equity in assigned accounts is P200,000)

500,000

Trade accounts receivable factored

200,000

Trade Notes Receivable dishonored (including interest of P50,000)

750,000

Trade accounts receivable known to be worthless

150,000

Trade accounts on which post-dated checks are held (no entries were made on receipts of
checks) 200,000

Advances to employees
100,000

Customers accounts reporting credit balances arising from sales returns

(50,000)
 Deposit in leased premises
200,000

Dividends receivable
100,000

Claims receivable from insurance company

500,000

P5,900,000

Note: It is Hondas policy to provide allowance for bad debts of 10% of ending Trade Receivables.

Required: Based on the results of your audit, determine the following as of December 31,2011:

____________1. Trade Accounts Receivable

____________2. Allowance for Bad Debts

____________3. Net Realizable Value of Trade Accounts Receivable

____________4. Net Current Trade and Other Receivables

____________5. Total Non-current Receivables

Problem 2. LLB bank granted a loan to borrower in the amount of P5,000,000 on January 1,200 7. The
interest rate on the loan is 10% payable annually starting December 31,2007. The loan matures in five
years on December 31,2011. LLB bank incurs P39,400 of direct loan origination cost and P10,000 of
indirect loan origination cost. In addition, LLB bank charges the borrower 8% nonrefundable loan
origination fee.

Required: Based on the above information, answer the following: (Round off the present value to four
decimal places)

____________1. The carrying amount of the loan as of January 1, 2007 is

____________2. The effective interest rate of the loan is

____________3. The interest income to be recognized in 2007 is

____________4. The carrying amount of the loan as of December 31,2007 is

Problem 3. On January 1,2011, the following data was presented by Toyota Inc. concerning its Accounts
Receivables:

Accounts Receivable P20,000,000

Allowance for Bad Debts (2,000,000)

Net Realizable Value of AR P18,000,000

Additional data for 2011 are as follows:

The total sales for 2011 is P100,000,000.

Toyota received P20,000,000 from cash customers during the year.

On July 1,2011, a credit memo was issued to James Bond for P10,000,000.

On July 2,2011, a cash customer returned a truck with a selling price of P5,000,000.

On September 1,2011, the company received P27,000,000 cash from collection of current receivables.
The customers availed of the cash discount which is 10%.

On October 1,2011, the company factored its account receivable from SM Inc. for P1,000,000. The gross
amount of that receivable is P1,500,000 with net realizable value of P1,200,000.

On November 1,2011, the note receivable of P2,000,000 from Avatar Inc. was dishonored by non-
payment. The accrued interest up to this date is P200,000.

On November 10,2011, P10,000,000 accounts receivable were assigned to BDO Inc. No collection was
made during 2011 according to the assignee.

On December 1,2011, P5,000,000 accounts receivable written off in 2010 were recovered.

On December 15,2011, P1,000,000 accounts receivable was written off.

Required: Based on the result of your audit, determine the following as of December 31,2011:

____________1. Ending Accounts Receivable

____________2. Bad Debts Expense assuming the company provides 10% bad debts based on Net
Credit Sales
____________3. Ending Allowance for Bad Debts using the assumption in number 2

____________4. Net Realizable Value of Accounts Receivable using the assumption in number 2

____________5. Bad Debts Expense assuming the company provides 10% bad debts based on Ending
Accounts Receivable

____________6. Ending Allowance for Bad Debts using the assumption in number 5

____________7. Net Realizable Value of Accounts Receivable using the assumption in number 5