--> PRACTICAL ACCOUNTING ONE REVIEWERS/ TESTBANKS

1. In an audit of Selena Company on December 31, 2009, the following information is gathered: Balance per book 6,700,000 Customers check 200,000 Depositors note charged to account 650,000 Customers note collected by bank 120,000 Outstanding checks 800,000 Checkbook printing charge 2,000 Certified checks included in the outstanding checks 100,000 Deposit in transit 1,200,000 Interest earned on deposits net of 20% final tax 32,000 The adjusted cash in bank of Selena Company on December 31, 2009 is a. 6,050,000 b. 6,700,000 c. 6,000,000 d. 5,300,000 Balance per book Customers NSF check Depositors note charged to account Customers note collected by bank Checkbook printing charge Interest earned on deposits Balance per books 2. 6,700,000 ( 200,000) ( 650,000) 120,000 ( 2,000) 32,000 6,000,000

On January 1, 2009, Everlasting Company purchased serial bonds with a face value of P4,000,000 and a stated interest rate of 10% to be held to maturity. The stated interest is payable annually on December 31. The bonds are acquired to have an effective yield at 12%. The bonds mature at annual installments of P1,000,000 every January 1, beginning in January 1, 2010 and every January 1 thereafter. What is the market price of the bond investment on January 1, 2009? (Round off present value factors to 2 decimal places) a. 4,000,000 b. 3,776,000 c. 3,842,000 d. 3,876,000 PV of PV of PV of PV of Total 1/1/10 1/1/11 1/1/12 1/1/13 cash cash cash cash flow flow flow flow (1.4M (1.3M (1.2M (1.1M x x x x .89) .80) .71) .64) 1,246,000 1,040,000 852,000 704,000 3,842,000

3.

On December 31, 2009, the balance of accounts receivable of Jalena Company was P6,000,000 and the January 1, 2009 balance of allowance for doubtful accounts was P800,000. The following data were gathered: Credit Sales Write offs Recoveries 2006 9,000,000 400,000 30,000 2007 13,000,000 600,000 70,000 2008 15,000,000 700,000 120,000 2009 20,000,000 650,000 150,000 Doubtful accounts are provided for a percentage of credit sales. The accountant calculates the percentage annually by using the experience of the three years prior to the current year. Hpw much should be reported as allowance for doubtful accounts on December 31, 2009? a. 1,100,000 b. 800,000 c. 1,300,000 d. 1,250,000 Total writeoff (400 + 600 + 700) Less: Total recovery (30 + 70 + 120) 1,700,000 220,000

Net writeoff Divided by total credit sales Doubtful accounts expense rate Beg. ADA Writeoff Recovery DAE (20M x 4%) ADA, end

1,480,000 37,000,000 4% 800,000 ( 650,000) 150,000 800,000 1,100,000