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City (074) 442-1440 / 0922-8499196 (082) 285-8805 / 0925-7272223
3. Romania Company purchased from Sweden Company a P20,000, 8%, 5-year note
that required five equal annual year-end payments of P5,009. The note was
discounted to yield a 9% rate to Romania. At the date of purchase Romania
recorded the note at its present value of P19,485.
Total interest revenue earned by Romania over the
life of this note is
d. P
a. P 5,045 b. P 5,560 c. P 8,000 9,000
6. On March 1, 2016, the Heisman Company recorded two sales of P20,000 and P30,000 under credit terms of 3/10, n/30.
Payment for the P20,000 sale was received March 11 Payment for the P30,000 sales was received on March 15. Under the
gross method and net method, net sales in the March 2016 income statement are
Gross Net Gross Net
method method method method
P P
c 49,40 48,50
a. P48,500 P48,500 . 0 0
P
49,40 P49,4
b. P48,500 P49,500 d. 0 00
9. On December 31, 2016, Boston Company sold used equipment and received a
noninterest-bearing note requiring payment of P500,000 annually for ten years.
The first payment is due December 31, 2016 and the
prevailing rate of interest for this type of note at date of issuance is 12%.
Present value factors are as follows:
Present value of 1 at 12% for 10
periods 0.32
Present value of ordinary annuity of 1 at 12%
for 10 periods 5.65
The unearned interest income at December 31, 2016
is
1,836,
a. 2,336,000 b. 000 c. 1,536,000 d. 1,516,000
13. On July 1, 2015, Capitols Company sold equipment to WSTN Company for
P250,000. Capitols Company accepted a 10% note receivable for the entire sales
price. This note is payable in two equal installments of P125,000 plus accrued
interest on December 31,2015, and December 31,2016. On July 1, 2016, Capitols
Company discounted the note at a bank at an
interest rate of 12%.
The cash received by Capitols Company from the note
discounting is
d.
a. 246,750 b. 233,500 c. 129,250 123,375
14. On January 1, 2016, Broncos Company sold goods to Denver Company. Portland
signed a noninterest-bearing note requiring payment of P600,000 annually for
seven years. The first payment was made on
January 1, 2016. The prevailing rate for this type of note
at issuance date was 10%.
The amount recorded as sales revenue in January
2016 is
3,216, d 2,142,0
a. 000 b. 2,922,000 c. 2,616,000 . 00
15. On June 1, 2016, Apple Company sold merchandise with a list price of P200,000
to Microsoft Company on account. Apple Company allowed trade discounts of
20% and 10%. Credit terms were 2/10, n/30 and sale was made FOB shipping
point. Apple Company prepaid P3,000 of insurance for Microsoft Company as an
accommodation.
On June 11, 2016, Microsoft Company paid Apple
Company
d.
a. 147,000 b. 144,120 c. 144,060 141,120
Page 3
16. 49ers Company factored P6,000,000 of its accounts receivables. The transfer is
recorded as a sale by SF Company. SF Company retained 5% for sales
adjustments and charged a P120,000 finance fee
The loss to be reported as a result of the transfer is
d.
a. 0 b. 120,000 c. 300,000 420,000
19. On July 1, 2016, Target Company obtained a two-year 10% note receivable for
services rendered. At that time, the market rate of interest was 12%. The face
amount of the note and the entire amount of interest are due on June 30, 2018.
Interest receivable on December 31, 2016 is
a. 5% of the face amount of the note
b. 6% of the face amount of the note
c. 5% of the July 1, 2016 present value of the note due on June 30, 2018
d. 6% of the July 1, 2016 present value of the note due on June 30, 2018
20. On July 1 of the current year, Krogers Company received a one-year note
receivable bearing interest at the market rate. The face amount of the note
receivable and the entire amount of the interest are due on June 30 of next year.
On December 31 of the current year, Krogers Company should report in the
statement of financial position
a. A deferred credit for interest applicable to next year
b. No interest receivable
c. Interest receivable for the entire amount of the interest due on June 30 of
next year
d. Interest receivable for the interest accruing in the current year
21. Tresh, Inc. had the following bank reconciliation at March 31, 2015:
P37,2
Balance per bank statement, 3/31/15 00
15,30
Add: Deposit in transit 0
47,50
0
12,60
Less: Outstanding checks 0
P34,9
Balance per books, 3/31/15 00
Data per bank for the month of April 2015
follow:
Deposits P46,700
Disbursements 49,700
Page 4
All reconciling items at March 31, 2015 cleared the bank in April. Outstanding
checks at April 30, 2015 totaled P6,000. There were no deposits in transit at
April 30, 2015. What is the cash balance per books at April 30, 2015?
a. P28,200 b. P31,900 c. P34,200 d. P38,500
22. Wellington Corp. has outstanding accounts receivable totaling P6.5 million as of
December 31 and sales on credit during the year of P24 million. There is also a
credit balance of P12,000 in the allowance for doubtful accounts. If the company
estimates that 8% of its outstanding receivables will be uncollectible,
what will be the amount of bad debt expense
recognized for the year?
d. P
a. P 532,000. b. P 520,000. c. P1,920,000 508,000.
24. Rosalie Co. uses the gross method to record sales made on credit. On June 15,
2016, it made sales of P150,000 with terms 2/15, n/30 to Finley Farms, Inc. On
June 19, 2016, Rosalie received payment for 1/2 the amount due from Finley
Farms. Rosalie's fiscal year end is on June 30, 2016. What amount will be
reported in the statement of financial position for the accounts receivable due
from Finley Farms, Inc.?
a. P49,000 b. P50,000 c. P48,000 d. P51,000
25. Vasguez Corporation had a 1/1/15 balance in the Allowance for Doubtful
Accounts of P20,000. During 2015, it wrote off P14,400 of accounts and collected
P4,200 on accounts previously written off. The balance in Accounts Receivable
was P400,000 at 1/1 and P480,000 at 12/31. At 12/31/15, Vasguez
estimates that 5% of accounts receivable will prove to be uncollectible. What is
Bad Debt Expense for 2015?
a. P4,000 b. P14,200 c. P18,400 d. P24,000
26. If a petty cash fund is established in the amount of P250, and contains P150 in
cash and P95 in receipts for disbursements when it is replenished, the journal
entry to record replenishment should include credits
to the following accounts
c. Cash, P95; Cash Over and
a. Petty Cash, P75. Short, P5.
d. Cash,
b. Petty Cash, P150 P150.
28. Finley, Inc.’s checkbook balance on December 31, 2015 was P21,200. In
addition, Finley held the following items in its safe on December 31.
I. A check for P450 from Peters, Inc. received December 30, 2015, which was
not included in the checkbook balance.
II. An NSF check from Garner Company in the amount of P900 that had been
deposited at the bank, but was returned for lack of sufficient funds on
December 29. The check was to be redeposited on January 3, 2016. The
original deposit has been included in the December 31 checkbook balance.
III. Coin and currency on hand amounted to P1,450.
The proper amount to be reported on Finley's statement of financial position for
cash at December 31, 2015 is
d.
P21,750
a. P21,300 b. P20,400 c. P22,200 .
29. On June 1, 2015, Nott Corp. loaned Horn £400,000 on a 12% note, payable in
five annual installments of P80,000 beginning January 2, 2016. In connection
with this loan, Horn was required to deposit P5,000 in a noninterest-bearing
escrow account. The amount held in escrow is to be returned to Horn after all
principal and interest payments have been made. Interest on the note is payable
on the first day of each month beginning July 1, 2015. Horn made timely
payments through November 1, 2015. On January 2, 2016, Nott received
payment of the first principal installment plus all interest due. At December 31,
2015,
c. d.
P8,00 P12,000
a. P0. b. P4,000 0. .
Page 5
30. In preparing its bank reconciliation for the month of April 2015, Henke, Inc. has
available the following information.
Balance per bank statement,
4/30/15 P39,140
NSF check returned with 4/30/15 bank
statement 450
Deposits in transit, 4/30/15 5,000
Outstanding checks, 4/30/15 5,200
Bank service charges for
April 20
What should be the correct balance of cash at
April 30, 2015?
b.P38,
b. P39,370 940 c. P38,490 d. P38,470
31. The cash account shows a balance of P45,000 before reconciliation. The bank
statement does not include a deposit of P2,300 made on the last day of the
month. The bank statement shows a collection by the bank of P940 and a
customer's check for P320 was returned because it was NSF. A customer's check
for P450 was recorded on the books as P540, and a check written for P79 was
recorded as P97. The correct balance
in the cash account was
c. P45,512 b. P45,548 c. P45,728 d. P47,848.
32. At the end of 2016, Diego Company made four adjusting entries for the following
items:
1. Depreciation expense, RP25,000.
2. Expired insurance, RP2,200 (originally recorded as prepaid insurance.)
3. Interest payable, RP6,000.
4. Rental revenue receivable, RP15,000.
In the normal situation, to facilitate subsequent entries, the adjusting entry or
entries that may be reversed is (are)
c. Entry No. 3 and
a. Entry No. 3. No. 4.
d. Entry No. 2, No. No.
b. Entry No. 4. 3 and 4.
33.Eaton Co. sells major household appliance service contracts for cash. The
service contracts are for a one-year, two-year, or three-year period. Cash
receipts from contracts are credited to Unearned Service Revenues. This
account had a balance of P1,800,000 at December 31, 2015 before year-end
adjustment. Service contract costs are charged as incurred to the Service
Contract Expense account, which had a balance of P450,000 at December 31,
2015. Service contracts still outstanding at December 31, 2015
expire as follows:
During P380,0
2016 00
During 570,00
2012 0
During 350,00
2013 0
What amount should be reported as Unearned Service Revenues in Eaton's
December 31, 2015 statement of financial position?
a. P1,350,000. b. P1,300,000. c. P850,000 d. P500,000.
34. Jim Yount, M.D., keeps his accounting records on the cash basis. During 2016,
Dr. Yount collected Rp 360,000 from his patients. At December 31, 2015, Dr.
Yount had accounts receivable of Rp 50,000. At
December 31, 2016, Dr. Yount had accounts receivable of Rp 70,000 and
unearned revenue of Rp 15,000. On the accrual basis, how much was Dr. Yount's
patient service revenue for 2016?
a. P 315,000. b. P c. P 380,000. d. P
370,000. 390,000.
35. On the December 31, 2015 statement of financial position of Vanoy Co., the
current receivables consisted of the following:
Trade accounts receivable P 75,000
Allowance for uncollectible
accounts (2,000)
Claim against shipper for goods lost in transit
(November 2015) 3,000
Selling price of unsold goods sent by Vanoy on consignment at
130% of cost
(not included in Vanoy 's ending
inventory) 26,000
Security deposit on lease of warehouse used for storing some
inventories 30,000
P132,0
Total 00
At December 31, 2015, the correct total of Vanoy's current net
receivables was
P
76,00 d.
a. 0. b. P152,000 c. P156,000 P132,000.
/mft