Академический Документы
Профессиональный Документы
Культура Документы
Adapted questions:
1. Burr Company had the following account balances at December31, year 2: Cash in banks P2,250,000 Cash on hand
125,000; Cash legally restricted for additions to plant (expected to be disbursed in year 3) 1,600,000; Cash in banks
includes P600,000 of compensating balances against short-term borrowing arrangements. The compensating balances
are not legally restricted as to withdrawal by Burr. In the current assets section of Burr’s December 31, year2 balance
sheet, total cash should be reported at? 2,375,000
2. Ral Corp.’s checkbook balance on December 31, year 2, was P5,000. In addition, Ral held the following items in its safe on
that date: Check payable to Ral Corp., dated January 2, year 3, in payment of a sale made in December year 2, not included
in December 31 checkbook balance P2,000; Check payable to Ral Corp., deposited December 15 and included in December
31 checkbook balance, but returned by bank on December 30 stamped “NSF.” The check was redeposited on January 2,
year 3, and cleared on January 9 ₱500; Check drawn on Ral Corp.’s account, payable to a vendor, dated and recorded in
Ral’s books on December 31 but not mailed until January 10, year 3 ₱300. The proper amount to be shown as Cash on Ral’s
balance sheet at December 31, year 2, is? 4,800
3. Trans Co. had the following balances at December 31, year 2: Cash in checking account P 35,000; Cash in money market
account 75,000; Treasury bill, purchased 11/1/year 2, maturing 1/31/year 3 350,000; Treasury bill, purchased 12/1/year 2,
maturing 3/31/year 3 ₱400,000. Trans’s policy is to treat as cash equivalents all highly liquid investments with a maturity
of three months or less when purchased. What amount should Trans report as cash and cash equivalents in its December
31, year 2 balance sheet?460,000
4. On October 31, year 2, Dingo, Inc. had cash accounts at three different banks. One account balance is segregated solely for
a November 15, year 2 payment into a bond sinking fund. A second account, used for branch operations, is overdrawn. The
third account, used for regular corporate operations, has a positive balance. How should these accounts be reported in
Dingo’s October 31, year 2 classified balance sheet?
a. The segregated account should be reported as a noncurrent asset, the regular account should be reported as a
current asset, and the overdraft should be reported as a current liability.
b. The segregated and regular accounts should be reported as current assets, and the overdraft should be reported as a
current liability.
c. The segregated account should be reported as a noncurrent asset, and the regular account should be reported as a
current asset net of the overdraft.
d. The segregated and regular accounts should be reported as current assets net of the overdraft.
5. In preparing its August 31, year 2 bank reconciliation, Apex Corp. has available the following information: Balance per bank
statement, 8/31/Y2 P18,050; Deposit in transit, 8/31/Y2 ₱3,250; Return of customer’s check for insufficient funds, 8/31/Y2
₱600; Outstanding checks, 8/31/Y2 ₱2,750; Bank service charges for August ₱100. At August 31, year 2, Apex’s correct
cash balance is? 18,550
6. Poe, Inc. had the following bank reconciliation at March 31, year 2:
Data per bank for the month of April year 2 follow: Deposits P58,400; Disbursements 49,700.
All reconciling items at March 31, year 2, cleared the bank in April. Outstanding checks at April 30, year 2, totaled P7,000.
There were no deposits in transit at April 30, year 2. What is the cash balance per books at April 30, year 2? 48,200
7. On the December 31, year 2 balance sheet of Mann Co., the current receivables consisted of the following: Trade accounts
receivable P93,000; Allowance for uncollectible accounts (2,000); Claim against shipper for goods lost in transit (November
year 2) 3,000; Selling price of unsold goods sent by Mann on consignment at 130% of cost (not included in Mann’s ending
inventory) 26,000; Security deposit on lease of warehouse used for storing some inventories 30,000. At December 31, year
2, the correct total of Mann’s current net receivables was? 94,000
8. The following information relates to Jay Co.’s accounts receivable for year 2: Accounts receivable, 1/1/Y2 650,000; Credit
sales for year 2 2,700,000; Sales returns for year 2 75,000; Accounts written off during year 2 40,000; Collections from
customers during year 2 2,150,000; Estimated future sales returns at 12/31/Y2 50,000; Estimated uncollectible accounts at
12/31/Y2 110,000. What amount should Jay report for accounts receivable, before allowances for sales returns and
uncollectible accounts, at December 31, year 2? 1,085,000
9. Frame Co. has an 8% note receivable dated June 30, year 1 in the original amount of P150,000. Payments of P50,000 in
principal plus accrued interest are due annually on July 1, year 2, year 3, and year 4. In its June 30, year 2 balance sheet,
what amount should Frame report as a current asset for interest on the note receivable? 8,000
10. On December 1, year 2, Tigg Mortgage Co. gave Pod Corp. a P200,000, 12% loan. Pod received proceeds of P194,000 after
the deduction of a P6,000 nonrefundable loan origination fee. Principal and interest are due in sixty monthly installments
of P4,450, beginning January 1, year 3. The repayments yield an effective interest rate of 12% at a present value of
P200,000 and 13.4% at a present value of P194,000. Tigg does not elect the fair value option for recording the note to Pod.
What amount of accrued interest receivable should Tigg include in its December 31, year 2 balance sheet? 2,000
11. On Merf’s April 30, year 2 balance sheet a note receivable was reported as a noncurrent asset and its accrued interest for
eight months was reported as a current asset. Which of the following terms would fit Merf’s note receivable?
a. Both principal and interest amounts are payable on August 31, year 2, and August 31, year 3.
b. Principal and interest are due December 31, year 2.
c. Both principal and interest amounts are payable on December 31, year 2, and December 31, year 3.
d. Principal is due August 31, year 3, and interest is due August 31, year 2, and August 31, year 3.
12. On August 15, year 2, Benet Co. sold goods for which it received a note bearing the market rate of interest on that date.
The four-month note was dated July 15, year 2. Note principal, together with all interest, is due November 15, year 2.
Assume Benet did not elect the fair value option for reporting the note. When the note was recorded on August 15, which
of the following accounts increased?
a. Unearned discount.
b. Interest receivable.
c. Prepaid interest.
d. Interest revenue.
13. Delta, Inc. sells to wholesalers on terms of 2/15, net 30. Delta has no cash sales but 50% of Delta’s customers take
advantage of the discount. Delta uses the gross method of recording sales and trade receivables. An analysis of Delta’s
trade receivables balances at December 31, year 2, revealed the following:
In its December 31, year 2 balance sheet, what amount should Delta report for allowance for discounts? 1,000
14. Fenn Stores, Inc. had sales of P1,000,000 during December, year 2. Experience has shown that merchandise equaling 7% of
sales will be returned within thirty days and an additional 3% will be returned within ninety days. Returned merchandise is
readily resalable. In addition, merchandise equaling 15% of sales will be exchanged for merchandise of equal or greater
value. What amount should Fenn report for net sales in its income statement for the monthof December year 2? 900,000
15. At January 1, year 2, Jamin Co. had a credit balance of P260,000 in its allowance for uncollectible accounts. Based on past
experience, 2% of Jamin’s credit sales have been uncollectible. During year 2 Jamin wrote off P325,000 of uncollectible
accounts. Credit sales for year 2 were P9,000,000. In its December 31, year 2 balance sheet, what amount should Jamin
report as allowance for uncollectible accounts? 115,000
16. The following accounts were abstracted from Roxy Co.’ unadjusted trial balance at December 31, year 2:
Debit Credit
Accounts receivable P1,000,000
Allowance for uncollectible accounts 8,000
Net credit sales P3,000,000
Roxy estimates that 3% of the gross accounts receivable will become uncollectible. After adjustment at December 31, year 2,
the allowance for uncollectible accounts should have a credit balance of? 30,000
17. In its December 31 balance sheet, Butler Co. reported trade accounts receivable of P250,000 and related allowance for
uncollectible accounts of P20,000. What is the total amount of risk of accounting loss related to Butler’s trade accounts
receivable, and what amount of that risk is offbalance- sheet risk?
18. Inge Co. determined that the net value of its accounts receivable at December 31, year 2, based on an aging of the
receivables, was P325,000. Additional information is as follows: Allowance for uncollectible accounts—1/1/Y2 P30,000;
Uncollectible accounts written off during year 2 18,000; Uncollectible accounts recovered during year 2 2,000; Accounts
receivable at 12/31/Y2 350,000. For year 2, what would be Inge’s uncollectible accounts expense? 11,000
19. The following information pertains to Tara Co.’s accounts receivable at December 31, year 2:
During year 2, Tara wrote off P7,000 in receivables and recovered P4,000 that had been written off in prior years. Tara’s
December 31, year 1 allowance for uncollectible accounts was P22,000. Under the aging method, what amount o
allowance for uncollectible accounts should Tara report at December 31, year 2? 9,000
20. A method of estimating uncollectible accounts that emphasizes asset valuation rather than income measurement is the
allowance method based on
a. Aging the receivables.
b. Direct write-off.
c. Gross sales.
d. Credit sales less returns and allowances.
21. Which method of recording uncollectible accounts expense is consistent with accrual accounting?
Allowance Direct write-off
a. Yes Yes
b. Yes No
c. No Yes
d. No No
22. A company uses the allowance method to recognize uncollectible accounts expense. What is the effect at the time of the
collection of an account previously written off on each of the following accounts?
Allowance for uncollectible accounts Uncollectible accounts expense
a. No effect Decrease
b. Increase Decrease
c. Increase No effect
d. No effect No effect
23. The amount reported as "Cash" on a company's statement of financial position normally should exclude
a. postdated checks that are payable to the company.
b. cash in a payroll account.
c. undelivered checks written and signed by the company.
d. petty cash.
26. Which of the following is not a basic characteristic of a system of cash control?
a. Use of a voucher system
b. Combined responsibility for handling and recording cash
c. Daily deposit of all cash received
d. Internal audits at irregular intervals
28. On January 1, 2002, Kyle Corporation established a petty cash fund of ₱400. On December 31, 2002, the petty cash fund
was examined and found to have receipts and documents for miscellaneous expenses amounting to ₱364. In addition,
there was cash amounting to ₱44. What entry would be required to record replenishment of the petty cash fund on
December 31, 2002?
29. On December 31, 2009, West Company had the following cash balances:
Cash in banks includes P600,000 of compensating balances against short-term borrowing arrangements at December 31, 2009.
The compensating balances are not legally restricted as to withdrawal by West. In the current assets section of West's
December 31, 2009, balance sheet (statement of financial position), what total amount should be reported as cash? 1,850,000
Additional information:
Cash on hand includes undeposited collections of P60,000.
The cash in bank – savings maintained at BPI includes a P150,000 compensating balance which is not restricted.
31. As of December 31, 20x1, the petty cash fund of Tum Co. with a general leger balance of P15,000 comprises the following:
The entry to record the replenishment of the petty cash fund includes
a. A debit to cash short/overage account of P2,190 and a credit to cash on hand of P9,450.
b. A credit to cash short/overage account of P810 and a credit to cash of P12,450.
c. A debit to cash short/overage account of P810 and a credit to petty cash fund of P12,450.
d. A debit to cash short/overage account of P2,190 and a credit to cash in bank of P9,450.
32. It is a report that is prepared for the purpose of bringing the balances of cash per records and per bank statement into
agreement.
a. Bank statement
b. Check Disbursement Voucher
c. Bank reconciliation
d. Bank deposit slip
33. These are deposits made but not yet credited by the bank to the depositor’s bank account.
a. Credit memos (CM)
b. Debit memos (DM)
c. Outstanding checks (OC)
d. Deposits in transit (DIT)
34. These are deductions made by the bank to the depositor’s bank account but not yet recorded by the depositor.
a. Credit memos (CM)
b. Debit memos (DM)
c. Outstanding checks (OC)
d. Deposits in transit (DIT)
35. These are additions made by the bank to the depositor’s bank account but not yet recorded by the depositor.
a. Credit memos (CM)
b. Debit memos (DM)
c. Outstanding checks (OC)
d. Deposits in transit (DIT)
36. These are checks drawn and released to payees but are not yet encashed with the bank.
a. Credit memos (CM)
b. Debit memos (DM)
c. Outstanding checks (OC)
d. Deposits in transit (DIT)
37. Which of the following is added to the cash balance per books when preparing a bank reconciliation statement?
a. Credit memo
b. Debit memo
c. Outstanding check
d. Deposit in transit
38. Which of the following is added to the cash balance per bank statement when preparing a bank reconciliation statement?
a. Credit memo
b. Debit memo
c. Outstanding check
d. Deposit in transit
“Nobody who ever gave his best regretted it.” – George Halas
When you are in competition, you have to leave everything on the field. You can’t hold back and hope that you have enough for
tomorrow. The best competitors leave the arena with no regrets and with nothing left in their tank. That’s the type of effort
you have to give to every match.