Multiple Choice.

Write the letter of the best answer.

1. Banaag Company had the following account balances on December 31, 2019: Cash
in bank 2,250,000 Cash on hand 125,000 Cash restricted for addition to plant in 2020
1,600,000 Cash in bank included P600,000 of compensating balance against short-term
borrowing arrangement. It is not legally restricted as to withdrawal. What total amount
should be reported as cash on December 31, 2019?

a. 1,775,000 b. 2,250,000 c. 2,375,000 d. 3,975,000

For items 2-4. Lorenzo Company provided the following information at month-end:
Cash in bank per bank statement 8,000,000 Deposit in transit 1,200,000 Outstanding
checks, including certified checks of P200,000 1,500,000 Amount erroneously credited
by bank to Lorenzo ‘s account 150,000 Note collected by bank for Lorenzo Company,
including interest of P 100,000 1,100,000 Service charge for the current month 20,000
NSF checks of customers returned by bank 500,000 Error in recording a check in the
book. The correct amount amount as paid by The bank is P100,000 instead of
P200,000 as recorded in the book 100,000 Saving deposit on another bank closed by
BSP 1,000,000 Currency and coins on hand 900,000 Petty cash fund 50,000

2. What is the adjusted cash in bank at month-end?

a. 7,550,000 b. 7,750,000 c. 7,900,000 d. 8,050,000

3. What is the unadjusted cash in bank per ledger at month-end?

a. 7,070,000 b. 7,220,000 c. 7,270,000 d. 7,750,000

4. What total amount of cash should be reported as current assets?

a. 8,020,000 b. 8,700,000 c. 8,850,000 d. 9,700,000

For items 5-6. Mercurio Company provided the following data relating to the cash
transactions and bank account for the month of July: Cash balance per ledger ? Cash
balance per bank statement ? Debit memo for July service charge 5,000 Deposit of July
31 not recorded by bank until August 1 450,000 Outstanding checks, including certified
check of P50,000 750,000 Proceeds of bank loan not recorded in the ledger 500,000
Proceeds from customer note, face P400,000 collected by bank, collection Fee of
P15,000 435,000 A creditor check had been entered in the book as P20,000 and was
Erroneously deducted by the bank at 200,000 A customer check was returned by bank
marked DAIF 50,000 Correct cash balance 3,000,000

5. What is the cash balance per ledger?

a. 2,065,000 b. 2,120,000 c. 2,555,000 d. 3,055,000

6. What is the cash balance per bank statement?

a. 2,370,000 b. 3,050,000 c. 3,070,000 d. 3,700,000

For items 7-8. Alcoreza Co. kept all cash in a checking account. An examination of the
accounting records and bank statement for the month of June revealed the following
information: - The cash balance per book on June 30 is P8,500,000 - A deposit of
P1,000,000 that was placed in the bank’s night depository on June 30 does not appear
on the bank statement - The bank statement shows on June 30, the bank collected note
for Alcoreza Co. and credited the proceeds of P950,000 to the entity’s account. -
Checks outstanding on June 30 amount to P300,000 - Alcoreza Co. discovered that a
check written in June for P200,000 in payment of an accounts payable had been
recorded in the entity’s records as P20,000 - Included with the June bank statement
was NSF check for P250,000 that Alcoreza Co. had received from a customer on June
26. - The bank statement shows a P20,000 service charge for June

7. What amount should be reported as cash in bank on June 30?

a. 3,300,000 b. 9,000,000 c. 9,180,000 d. 9,360,000

8. What is the net adjustment to cash in bank on June 30?

a. Net credit 450,000 b. Net debit 500,000

c. Net debit 860,000 d. Net debit 950,000

9. Juvilyn Co. provided for the following information for the month of December: Balance
per bank statement, December 31 2,800,000 Bank service charge for December 12,000
Interest paid by bank to Student 8 Co. for December 10,000 Deposits made but not yet
recorded by the bank 350,000 Checks written but not yet recorded by the bank 650,000
The entity discovered that it had drawn and erroneously recorded a check for P46,000
that should have been recorded for P64,000. What is the cash balance per ledger on
December 31?

a. 2,500,000 b. 2,520,000 c. 2,540,000 d. 2,800,00

10. Charlene Co. received the bank statement for the month of April which included the
following information: Bank service charge for April 15,000 Check deposited by Maessie
May during April was not collectible and has been Marked “NSF” by the bank and
returned 40,000 Deposits made but not yet recorded by the bank 130,000 Checks
written and mailed but not yet recorded by a bank 100,000 The entity found a customer
check for P35,000 check payable to the entity that had not yet deposited and had not
been recorded. The general ledger showed a bank account balance of P920,000. What
amount should be reported as adjusted cash in bank on April 30?

a. 865,000 b. 900,000 c. 935,000 d. 965,000

11. Jester Co. received the bank statement for the month of March. However, the
closing balance of the account was unreadable. Attempts to contact the bank after office
hours dis not secure the desired information. February 28 book balance 1,460,000 Note
collected by bank 100,000 Interest earned on note 10,000 NSF check of customer
130,000 Bank service charge on NSF check 2,000 Other bank service charge 3,000
Outstanding checks 200,000 Deposit on February 28 placed in night depository 85,000
Checks issued by Jexter Company charged to Jester account 20,000 What is the cash
balance per bank statement?

a. 1,340,000 b. 1,435,000 c. 1,530,000 d. 1,550,000

12. In preparing the bank reconciliation for the month of December, Jessa provided the
following data: Balance per bank statement, 3,800,000 Deposit in transit 520,000
Amount erroneously credited by bank to Jessa’s account 40,000 Bank service charge
for December 5,000 NSF check 50,000 Outstanding checks 675,000 What is the
unadjusted cash in bank balance per book?

a. 3,550,000 b. 3,610,000 c. 3,655,000 d. 3,660,000

13. Aloha Bea Co. provided the following data for the purpose of reconciling the cash
balance per book with the cash balance per bank statement on December 31: Balance
per book 850,000 Balance per bank statement 2,000,000 Outstanding checks, including
certified check of P100,000 500,000 Deposit in transit 200,000 December NSF checks,
of which P50,000 had been redeposited and cleared on December 27 150,000
Erroneous credit to Aloha Bea’s account, representing the proceeds of loans Granted to
another company 300,000 Proceeds of note collected by bank for Aloha Bea, net of
service charge of P20,000 750,000 What amount should be reported as cash in bank at
year-end?

a. 1,400,000 b. 1,450,000 c. 1,500,000 d. 1,800,000

14. In preparing the bank reconciliation for the month of August, Shane Ann Co.
provided the following information: Balance per bank statement 1,805,000 Deposit in
transit 325,000 Return of customer check for insufficient fund 60,000 Outstanding
checks 275,000 Bank service charge for August 10,000 What is the adjusted cash in
bank? a. 1,755,000 b. 1,785,000 c. 1,795,000 d. 1,855,000 For items 15-19. From
inception of operations, Balderama Co. provided for uncollectible accounts expense
under the allowance method using the percentage of sales method. No year-end
adjustments to the allowance accounts were made. The balance in the allowance for
doubtful accounts was P1,000,000 on January 1, 2019. During 2019, credit sales
totalled P20,000,000 interim provisions for doubtful accounts were made at 2% of credit
sales, bad debts of P200,000 were written off, and recoveries of accounts previously
written off amounted to P50,000. An aging of accounts receivable was made for the first
time on December 31, 2020. Aging Balance Uncollectible 0 – 60 days 6,000,000 10%
61 – 180 2,000,000 20% 181 – 360 1,500,000 30% Over 360 500,000 50% Based on
the review of collectability of the account balances in the “over 360 days” aging
category, additional accounts totalling P100,000 are to be written off on December 31,
2020. Effective with the year ended December 31, 2019, the entity adopted a new
accounting method for estimating the allowance for doubtful accounts at the amount
indicated by the year-end aging of accounts receivable. 15. What is the balance of the
allowance for doubtful accounts on December 31, 2019 before adjustments? a.
1,100,000 b. 1,150,000 c. 1,200,000 d. 1,250,000 16. What is the required allowance for
doubtful accounts on December 31, 2019? a. 1,450,000 b. 1,650,000 c. 1,700,000 d.
1,950,000 17. What amount should be reported as doubtful accounts expense for the
current year? a. 900,000 b. 950,000 c. 1,200,000 d. 1,650,000 18. What is the year-end
adjustment to the allowance for doubtful accounts on December 31, 2019? a. 500,000
credit b. 500,000 debit c. 900,000 credit d. 900,000 debit 19. What is the net realizable
value of accounts receivable on December 31, 2019? a. 8,200,000 b. 8,250,000 c.
8,350,000 d. 9,900,000 20. Jen Co. reported the following accounts at year-end before
adjustments: Allowance for doubtful accounts 5,000 debit Sales 7,200,000 credit Sales
return 200,000 debit The entity estimated uncollectible accounts receivable at 2% of net
sales. What amount of doubtful accounts expense should be reported for the current
year? a. 140,000 b. 141,000 c. 144,000 d. 145,000 21. Jessica Co. provided the
following information in relations to accounts receivable at year-end: Days outstanding
Estimated amount % uncollectible 0 – 60 1,200,000 1% 61 – 120 900,000 2% 0ver 120
1,000,000 6% During the current year, the entity wrote off P70,000 in accounts
receivable and recovered P20,000 that had been written off in prior years. At the
beginning of current year, the allowance for uncollectible accounts was P600,000.
Under the aging method, what amount of uncollectible accounts expense should be
reported for the current year? a. 60,000 b. 70,000 c. 80,000 d. 90,000

Problem Solving. Show your answers and solutions in good form. A. Japson Co.
provided the following transactions: Nov 2, 2019 The entity established an imprest petty
cash fund of P10,000 Nov 30, 2019 Spend 2,000 in postage and 5,000 in supplies A
check was drawn to replenish the fund and to increase its amount to P20,000 Dec 31,
2019 Spent postage, P3,000; supplies, P 4,000; deposits for 20 cases of softdrinks,
P2,000 Prepare journal entries (12 points)

B. From the inception of operations, Bagro Co. provided for uncollectible accounts
receivable under allowance method using the percentage of sales method. The balance
in the allowance for doubtful accounts was P500,000 on January1 , 2019 During 2019,
credit sales totalled P20,000,000 interim provisions for doubtful accounts were made at
2% of credit sales,P300,000 bad debts are written off and recoveries of accounts
previously written off amounted to P50,000. Compute for the allowance for doubtful
accounts. ( 5 points)

C. Garcia Co. provided the following information in connection with a bank loan. March
1 The company borrowed P2,000,000 from bank on a six-month note carrying an
interest of 12% per annum. Accounts of P3,000,000 are pledged to secure the loan.
April 1 Pledged accounts of P1,000,000 are collected minus 2% discount June 1 The
remaining pledged accounts are collected. September 1 the bank loan is repaid plus
interest. Prepare journal entries (12 points)