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QUIZZER 01:

1. An entity provided the following data on December 31, 2018:

Checkbook balance 5,000,000
Bank statement balance 4,000,000
Check drawn on entity’s account, payable to supplier, dated and
recorded on December 31, 2018 but not mailed until January 31, 1,000,000
2019 1,500,000
Cash in sinking fund 2,500,000
Treasury bills, purchased November 1,, 2018 and maturing January 2,000,000
31, 2019
Time deposit, purchased October 1, 2018 and maturing January 31,
2019

What amount should be reported as cash and cash equivalents on December 31, 2018?
a. 8,000,000 b. 8,500,000 c. 7,500,000 d. 6,000,000

2. An entity had the following cash balances on December 31, 2018:

Cash in bank 5,000,000
Petty cash fund (all funds were reimbursed on December 31, 2018) 50,000
Money market placement or commercial papers 1,500,000
Saving deposit 800,000

Cash included P 500,000 of compensating balance against short-term borrowing

arrangement on December 31, 2018. The compensating balance is legally restricted as to
withdrawal. A check of P 1,000,000 dated January 31, 2019 in payment of accounts
payable was recorded and mailed on December 31, 2018. What amount should be
reported as cash and cash equivalents on December 31, 2018?
a. 6,350,000 b. 7,850,000 c. 6,850,000 d. 5,550,000

3. An entity provided the following information for 2018:

Accounts receivable – January 1 2,000,000
Credit sales 10,000,000
Collection from customers, excluding recovery of accounts written 8,000,000
off 100,000
Accounts written off as worthless 500,000
Sales returns 50,000
Recovery of accounts written off 150,000
Estimated future sales returns on December 31 300,000
Estimated uncollectible accounts on December 31 per aging
What is the amortized cost of accounts receivable on December 31, 2018?
a. 3,400,000 b. 3,100,000 c. 2,950,000 d. 2,900,000
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4. On December 31, 2018, an entity reported accounts receivable of P 6,000,000 and

allowance for doubtful accounts of P 1,000,000 on January 1, 2018.
Net sales Write-offs Recoveries
2015 9,000,000 400,000 30,000
2016 13,000,000 600,000 70,000
2017 15,000,000 700,000 120,000
2018 20,000,000 650,000 150,000
Doubtful accounts are provided for as percentage of net credit sales. The percentage is
computed annually by using the data of the three years prior to the current year.
4.1. What amount should be reported as doubtful accounts expense for 2018?
a. 800,000 b. 650,000 c. 500,000 d. 600,000

4.2. What is the allowance for doubtful accounts on December 31, 2018?
a. 1,300,000 b. 1,950,000 c. 1,150,000 d. 1,800,000

5. From inception of operations, an entity provided for doubtful accounts 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 P 1,000,000 on January 1, 2018. During 2018, credit
sales totaled P 20,000,000, interim provisions for doubtful accounts were made at 2% of
credit sales, P 200,000 of bad debts were written off, and recoveries of accounts
previously written off amounted to P 50,000. An aging was made on December 31, 2018.
Classification Balance Collectible
November – December 6,000,000 90%
July – October 2,000,000 80%
January – June 1,500,000 70%
Prior to January 1, 2018 500,000 50%
Based on the review of collectability of the accounts balances in the “prior to January 1,
2018” aging category, additional accounts totaling P 100,000 is to be written off on
December 31, 2018. Effective December 31, 2018, the entity adopted aging method for
estimating the allowance for doubtful accounts.

5.1. What is the required allowance for doubtful accounts on December 31, 2018?
a. 1,650,000 b. 1,950,000 c. 1,700,000 d. 1,450,000

5.2. What amount should be reported as doubtful accounts expense for current year?
a. 1,200,000 b. 1,650,000 c. 900,000 d. 950,000

5.3. What is the adjustment to the allowance for doubtful accounts on December 31,
2018?
a. 900,000 Dr. b. 900,000 Cr. c. 500,000 Dr. d. 500,000 Cr.
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5.4. What is the net realizable value of accounts receivable on December 31, 2018?
a. 9,900,000 b. 8,250,000 c. 8,350,000 d. 8,200,000

6. On December 1, 2018, an entity assigned on a non-notification basis accounts receivable

of P 5,000,000 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, 2018, the entity collected assigned accounts of P 2,000,000 less
discount of P 200,000. 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 P 100,000 on the assigned accounts and wrote-off assigned accounts of
P 300,000.
6.1. What is balance of accounts receivable assigned on December 31, 2018?
a. 3,000,000 b. 2,600,000 c. 2,400,000 d. 2,900,000

6.2. What is the carrying amount of the note payable on December 31, 2018?
a. 2,240,000 b. 2,000,000 c. 4,000,000 d. 2,200,000

6.3. What is the equity of the assignor in assigned accounts on December 31, 2018?
a. 2,600,000 b. 2,240,000 c. 360,000 d. 0

7. An entity factored P 5,000,000 of accounts receivable. Control was surrender by the

entity. The finance company assessed a fee of 5% and retained 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?

7.1. What is the amount initially received from the factoring of accounts receivable?
a. 4,250,000 b. 4,200,000 c. 4,700,685 d. 4,200,685

7.2. What total amount should be recognized as loss on factoring?

a. 299,315 b. 799,315 c. 250,000 d. 0

8. On April 1, 2018, an entity discounted with recourse a 9-month, 10% note dated January
1, 2018 with face of P 6,000,000. The bank discount rate is 12%. The discounting
transaction is accounted for as a conditional sale with recognition of contingent liability.

On October 1, 2018, the maker dishonors the note receivable. The entity paid the bank
the maturity value of the note plus protest fee of P 50,000. On December 31, 2018, the
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entity collected the dishonored note in full plus 12% annual interest on the total amount
due.

8.1. What amount was received from the note receivable discounting?
a. 6,063,000 b. 6,450,000 c. 6,150,000 d. 5,963,000

8.2. What amount should be recognized as loss on note receivable discounting?

a. 450,000 b. 387,000 c. 87,000 d. 63,000

8.3. What is the total amount collected from the customer on December 31, 2018?
a. 6,450,000 b. 6,500,000 c. 6,695,000 d. 6,662,500

8.4. If the discounting is secured borrowing, what is included in the journal entry to
record the transaction?
a. Debit interest expense 87,000
b. Credit interest income 150,000
c. Credit liability for note discounted, P 6,000,000
d. All of these are included in the journal entry

9. On December 31, 2018, an entity sold equipment with carrying amount of P 2,000,000 in
exchange for a noninterest bearing note of P 5,000,000 requiring ten annual payments of
P 500,000. The first payment was made on December 31, 2019. 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.

9.1. What is the carrying amount of the note receivable on December 31, 2018?
a. 5,000,000 b. 2,825,000 c. 2,665,000 d. 4,500,000

9.2. What is the gain on sale of equipment to be recognized in 2018?

a. 3,000,000 b. 2,175,000 c. 825,000 d. 0

9.3. What amount should be recognized as interest income for 2019?

a. 600,000 b. 339,000 c. 319,800 d. 261,000

9.4. What is the carrying amount of the note receivable on December 31, 2019?
a. 2,664,000 b. 4,500,000 c. 3,164,000 d. 2,644,800

10. Solid Bank loaned P 7,500,000 to a borrower on January 1, 2017. The terms of the loan
were payment in full on January 1, 2022 plus annual interest payment at 12%. The
interest payment was made as scheduled on January 1, 2018. However, due to financial
setbacks, the borrower was unable to make the 2019 interest payment. The bank
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considered the loan impaired and projected the cash flows from the loan on December 31,
2019. The bank had accrued the interest on December 31, 2018 but did not continue to
accrue interest for 2019 due to impairment of the loan.
Date of cash flow Amount projected December 31, 2019
December 31, 2020 500,000
December 31, 2021 1,000,000
December 31, 2022 2,000,000
December 31, 2023 4,000,000

10.1. What amount should be recognized as impairment loss for 2019?

a. 2,275,000 b. 3,175,000 c. 5,225,000 d. 2,175,000

10.2. What amount should be reported by the bank as interest income for 2020?
a. 627,000 b. 900,000 c. 567,000 d. 0

10.2. What is the carrying amount of the loan receivable on December 31, 2020?
a. 5,352,000 b. 4,725,000 c. 5,225,000 d. 7,000,000

11. At June 30, Almond Co.'s cash balance was $10,012 before adjustments, while its ending
bank statement balance was $10,772. Check number 101 was issued June 2 in the
amount of $95, but was erroneously recorded in Almond's general ledger balance as $59.
The check was correctly listed in the bank statement at $95. The bank statement also
included a credit memo for interest earned in the amount of $35, and a debit memo for
monthly service charges in the amount of $50. What was Almond's adjusted cash balance
at June 30?
a. 9,598 b. 9,961 c. 10,048 d. 10,462

12. The cash in bank account of S-mart, Inc. for April 2010 showed an ending balance of P
129,298. Deposits in transit on April 30 were P 18,200. Outstanding checks as of April 30,
were P 59,435, including a P 5,000 check which the bank had certified on April 27. During
the month of April, the bank charged back NSF checks in the amount of P 3,435 of which
P 1,835 had been re-deposited by April 20. On April 23, the bank charged SMart’s
account for a P 2,200 items which should have been charged against K-mart, Inc., the
error was not detected by the bank. During April, the proceeds from notes collected by the
bank for SMart, Inc. was P 7,548 and bank charges for this services was P18. How much
is the unadjusted balance per bank on April 30?
a. P 95,263 b. P 88,333 c. P 173,663 d. P 169,263