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ACC 211 REVIEWER

1. An entity reported the checkbook balance on December 31, 2015 at P8,000,000. In


addition, the entity held the following items in the safe on that date:

Check payable to the entity, dated January 2, 2016 in payment of a sale,


not included in December 31 check book balance
1,000,000

Check payable to the entity, deposited December 15 and included inDecember


31 checkbook balance, but returned by bank on December 30 stamped “NSF”.
The check was redeposited on January 2, 2016 and cleared on January 5, 2016 3,000,000

Check drawn on the entity’s account, dated and recorded on December 31, 2,500,000
2015 but not mailed until January 15, 2016

Coins and currencies on hand 800,000

Three-month money market instruments 1,500,000

What is the correct amount of “cash” on December 31, 2015? : 8,300,000

2. On April 12, 2006, upon the receipt of the March 2006 bank statement, the accountant of
Rosalyn Company prepared the following bank reconciliation dated March 31, 2006 and
immediately recorded the appropriate adjusting entry.

Balance per bank statement, March 31, 2006 P 980,000

Add: Deposit in transit P 34,500

Error in recording check No.125412 (P45,000 instead of 9,000


P54,000)

Service charges for March 1,500 45,000

Less: Outstanding checks P 15,000

Erroneous bank credit 2,000

Loan proceeds including interest for March 15,500 32,500

Balance per books, March 31, 2006 P 992,500

The bank statement reported total receipts of P265,000 and total disbursements of P215,000
for April 2006. All reconciling items as of March 31, 2006 cleared the bank on April 2006.
However, the bank, in April 2006 erroneously debited Rosalyn Company P20,000 for a check
that was supposed to be against the account of Rosaline Company. Service charges for April
2006 was P1,200. Deposits in transit amounted to P42,000 while checks still outstanding
amounted to P33,000 as of April 2006.

The total cash debits (receipts) to the cash in bank account is: 288,000
ACC 211 REVIEWER

3. Rosalyn Supplies, Inc. lost most of its inventory in a fire in December just before the
year-end physical inventory was taken. Corporate records disclosed the following:
beginning inventory, P1,207,000; purchases, P3,600,000; purchase returns, P225,000;
sales, P5,250,000; sales returns, P120,000. Rosalyn Company’s markup on cost has
averaged 25% during the past few years. Merchandise with a selling price of P100,000
remained undamaged after the fire, and the damaged merchandise has a salvage value of
P56,200. Rosalyn Company does not carry fire insurance on its inventory. It is estimated
that the year-end inventory would have been subject to a normal 5% write-down for
obsolescence.

The estimated fire loss incurred by Rosalyn Supplies is: 321,900

4. The information that follows is available from the general ledger, cash in bank – BPI and
the bank statement of Rosalyn Company for the month of August 2006:

· Bank statement balance, August 31, P1,430,000

· Note collected by the bank in August including interest of P2,500, P62,500

· NSF checks in August, P25,000

· Outstanding checks at the beginning of August, P47,650, at the end of August, P68,450

· Bank service charges for July, P1,200; for August, P1,400

· Deposit in transit at the beginning of August P27,000; at the end of August P32,900

· Error committed by Rosalyn Company’s accountant in recording check No 12345 for


P16,000 was recorded as P1,600 and check No. 12348 for P1,250 was recorded as P12,500

· Error committed by Rosalyn Company’s accountant in recording deposits for its BPI
checking account of P12,000 was recorded under its BDO checking account, and deposits for
its BDO checking account of P16,000 was recorded as deposits to its BPI checking account

· Bank error in recording a disbursement by Roslyn Company for P28,000 was recorded
against Rosalyn Company’s account

The adjusted cash in bank – BPI balance is: 1,422,450

5. While preparing the 2006 trial balance, Rosalyn Company’s accountant committed the
following errors: omission of the prepaid rent account amounting to P4,000;
understatement of the inventory account by P72,000; overstatement of the sales account
by P1,500; accounts receivables totaling to P123,000 was included in the trial balance as
P213,000; accounts payable totaling to P153,000 was included as P135,000; discount on
bonds payable was included as a credit rather than as a debit, P1,500; Revenue
expenditures of P35,000 was erroneously capitalized to furniture and fixtures.

The difference between the debit and credit amounts in Rosalyn Company’s trial balance is:
27, 500
ACC 211 REVIEWER

6. An entity provided the following information about assets in forest plantation:

Freestanding trees 5,000,000

Land under trees 900,000

Roads in forest 500,000

Animals related to recreational activities 2,000,000

Rubber trees 1,500,000

What total amount should be reported as biological assets? 5,000,000

7. On April 12, 2006, upon the receipt of the March 2006 bank statement, the accountant of
Rosalyn Company prepared the following bank reconciliation dated March 31, 2006 and
immediately recorded the appropriate adjusting entry.

Balance per bank statement, March 31, 2006 P 980,000

Add: Deposit in transit P 34,500

Error in recording check No.125412 (P45,000 instead of 9,000


P54,000)

Service charges for March 1,500 45,000

Less: Outstanding checks P 15,000

Erroneous bank credit 2,000

Loan proceeds including interest for March 15,500 32,500

Balance per books, March 31, 2006 P 992,500

The bank statement reported total receipts of P265,000 and total disbursements of P215,000
for April 2006. All reconciling items as of March 31, 2006 cleared the bank on April 2006.
However, the bank, in April 2006 erroneously debited Rosalyn Company P20,000 for a check
that was supposed to be against the account of Rosaline Company. Service charges for April
2006 was P1,200. Deposits in transit amounted to P42,000 while checks still outstanding
amounted to P33,000 as of April 2006.

The cash credits (disbursements) to the cash in bank account is : 220,300

8. An entity reported the following accounts receivable on December 31, 2015:

Customer A 1,000,000

Customer B 1,500,000

Customer C 2,000,000
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Customer D 2,500,000

All other accounts receivable not individually significant 3,500,000

The entity determined that Customer A receivable is totally impaired and Customer B
receivable is impaired by P700,000. The other receivables from Customers C and D are not
considered impaired. The entity determined that a composite rate of 10% is appropriate to
measure impairment on the remaining accounts receivable.
What is the total impairment loss of accounts receivable for 2015? 2,500,000

9. An entity reported current receivables on December 31, 2015 which consisted of the
following:

Trade accounts receivable 930,000

Allowance for uncollectible accounts 20,000

Claim against shipper for goods lost in transit in November 2015 30,000

Selling price of unsold goods sent by the entity on consignment at 130% of


cost and not included in the ending inventory
260,000

Security deposit on lease of warehouse used for storing inventories 300,000

What is the correct total of current net receivables on December 31, 2015? 940,000

10. Rosalyn Company reported the following items as part of cash and cash equivalents

SEC registered commercial papers P 300,000

Central Bank Certificates of Indebtedness 350,000

3-month Central Bank Treasury bills, maturing on January 31, 2006 450,000

3-year Treasury note, acquired three months from its maturity date of 600,000
January 31, 2006

3-year Treasury note, acquired 2 years ago, maturing on January 31, 2006 800,000

The amount to be included from cash and cash equivalents is : 1,700,000

11. Rosalyn Company on December 31, 2006 reported an inventory balance of P2,575,000
which was based on a physical count conducted as of December 29, 2006. An analysis of
the purchase records of Rosalyn Company revealed the following information:

· Goods costing P120,000 purchased fob shipping point were sent by the seller on
December 30, 2006 and was received by Rosalyn Company on January 5, 2007.

· Goods costing P150,000 purchased fob destination were sent by the seller on
December 27, 2006 and was received by Rosalyn Company on January 2, 2007.
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· Goods costing P175,000 shipped to Rosalyn Company fob destination on December


28, 2007 and was received on December 31, 2006.

· Goods costing P125,000 received on December 30, 2006 from Milady Company on
consignment. Rosalyn was to sell the goods at a mark-up of 25% of cost. 80% of the goods
remained unsold at December 31, 2006.

· Goods costing P130,000 and P125,000 were sent out on consignment to Mac Company
on December 28, 2006 and Myles Company on December 31, 2006 respectively. The goods
remained unsold at December 31, 2006.

The correct amount of inventory to be reported as of December 31, 2006 by Rosalyn


Company is: 3,000,000

12. On January 1, 2005, Rosalyn Company sold goods to Miko Company costing P300,000
and receive in exchange a P750,000 non-interest bearing note with a maturity date of
January 1, 2009. The note has no ready market but an effective interest of 11% is
considered appropriate for a note of this type which will approximate the inventory’s fair
value at the time of sale.

On July 1, 2007, Rosalyn Company which was in need of immediate cash discounted the note
issued by Miko Company to Clark Finance at 14%.

The loss arising from the discounting of the note on July 1, 2007 is: 49,696

13. A bank granted a 10-year loan to a borrower in the amount of P1,500,000 with stated
interest rate of 6%. Payments are due monthly and are computed to be P16,650. The bank
incurred P40,000 of direct loan origination cost and P20,000 of indirect loan origination
cost. In addition, the bank charged the borrower a 4-point nonrefundable loan origination
fee.

What is the carrying amount of the loan receivable to be reported initially by the bank?
1,480,000

14. On January 1, 2007, Rosalyn Company sold its goods costing P400,000 to Milton
Company. Rosalyn Company maintains a mark-up of 30% on cost. Milton Company
made an initial payment of P20,000 and issued a promissory note for the balance. The
note provides for equal annual installments that will yield 12%. The first installment
would be made at the end of the current year and the last on December 31, 2011.

The carrying amount of the notes receivable at December 31, 2009 is: 233,797

15. An entity reported inventory on December 31, 2015 at P6,000,000 based on a physical
count at cost and before any necessary year-end adjustments relating to the following:
ACC 211 REVIEWER

· Included in the physical count were goods billed to a customer FOB shipping point on
December 30, 2015. These goods had a cost of P125,000 and were picked up by the carrier
on January 7, 2016.

· Goods shipped FOB shipping point on December 28, 2015 from a vendor to the entity
were received on January 4, 2016. The invoice cost was P300,000.

What amount should be reported as inventory on December 31, 2015? : 6,300,000

16. Rosalyn Company’s cash in bank balance as of May 31, 2006 included the following
information:

Ending balance, May 31 P 38,280

Deposits made but not yet recorded by the bank 5,100

Checks written and mailed but not yet recorded by the bank 3,460

In comparing the cash records to the bank statement Rosalyn Company found the following:

Bank service charge for May P 100

Interest paid by bank to Rosalyn for May 1,500

In addition, Rosalyn Company discovered that it had erroneously recorded a check for P1,450
that should have been recorded for P1,540. The correct cash balance at May 31 is: 39,590

17. An entity reported accounts payable on December 31, 2015 at P4,500,000 before any
necessary year-end adjustments relating to the following transactions:

· On December 27, 2015, the entity wrote and recorded checks to creditors totaling
P2,000,000 causing an overdraft of P500,000 in the entity’s bank account on December 31,
2015. The checks were mailed on January 10, 2016.

· On December 28, 2015, the entity purchased and received goods for P750,000, terms
2/10, n/30. The entity recorded purchases and accounts payable at net amount. The invoice
was recorded and paid January 3, 2016.

· Goods shipped FOB destination on December 20, 2015 from a vendor to the entity
were received January 2, 2016, The invoice cost was P325,000.

On December 31, 2015, what amount should be reported as accounts payable? : 7,235,000

18. On December 31, 2015, an entity provided the following information:

Cost Retail

Inventory, January 1 735,000 1,015,000

Purchases 4,165,000 5,775,000


ACC 211 REVIEWER

Additional markup 210,000

Sales for the year totaled P5,500,000. Markdown amounted to P100,000.

Under the approximate lower of average cost or NRV retail method, what is the inventory on
December 31, 2015? 980,000

19. An entity budgeted the following sales.

June July August

Sales on account 1,800,000 1,840,000 1,900,000

Cash sales 180,000 200,000 260,000

All merchandise is marked up to sell at invoice cost plus 20%. Merchandise inventory at the
beginning of each month is 30% of that month's projected cost of goods sold.

What is the amount of anticipated purchases for July? 1,700,000

20. On December 31, 2015, an entity received two P2,000,000 notes receivable from
customers. On both notes, interest is calculated on the outstanding principal balance at the
annual rate of 3% and payable at maturity. The first note, made under customary trade
terms, is due in nine months and the second note is due in five years. The market interest
rate for similar notes on December 31, 2015 was 8%. The PV of 1 at 8% due in nine
months is .944, and the PV of 1 at 8% due in 5 years is .68.

On December 31, 2015, what total carrying amount should be reported for the two notes
receivable? 3,564,000