Sherwin Company 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 Sherwin, dated January 2,2016 in payment of a sale,

not included in December 31 check book balance 1,000,000
Check payable to Sherwin, deposited December 15 & included in
December 31 checkbook balance, but retuned 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 Sherwin’s account dated & recorded on
December 31,2015 but not mailed until January 15,2016 2,500,000
Coins and currencies on hand 800,000
Three-month money market instruments 1,500,000

1. What is the correct amount of “cash” on December 31,2015?

a. 7,500,000
b. 9,300,000
c. 8,300,000
d. 9,800,000

Shermaine Company had the following bank reconciliation on June 30,2015:

Balance per bank statement, June 30 3,000,000

Deposit in transit 400,000
Total 3,400,000
Outstanding checks ( 900,000)
Balance per book, June 30 2,500,000

The bank statement for the month of July showed the following:
Deposits (including P200,000 note collected for Shermaine) 9,000,000
Disbursements (including P140,000 NSF check & P10,000
Service charge) 7,000,000

All reconciling items on June 30 cleared through the bank in July. The deposit in transit amounted
to P1,000,000 and the outstanding checks totaled P600,000 on July 31

2. What is the cash in bank to be reported on July 31,2015?

a. 5,000,000
b. 5,400,000
c. 4,600,000
d. 4,900,000
 3. What is the cash in bank balance per ledger on July 31,2015?
a. 5,400,000
b. 5,350,000
c. 5,550,000
d. 4,500,000

4. What is the amount of cash receipts per ledger for July?

a. 9,000,000
b. 9.400,000
c. 9,600,000
d. 8,400,000

5. What is the amount of cash disbursement per ledger for July?

a. 7,000,000
b. 6,550,000
c. 6,850,000
d. 6,700,000

An entity maintains a checking at the West Bank. The bank provides a bank statement along with
canceled checks on the last day of each month. The October bank statement included the
following information:

Balance, October 1 3,200,000

Deposits 8,600,000
Check processed 7,500,000
Service charges 50,000
NSF checks 150,000
Monthly loan payment deducted directly by bank from account
including P50,000 in interest 500,000

Deposit outstanding totaled P400,000 and all checks written by the entity were processed by the
bank except for those totaling P500,000. In addition, a check for P200,000 was incorrectly
recorded by the entity as a P300,000 disbursement. The bank correctly processed the check
during October.

6. What amount should be reported as cash in bank on October 31?

a. 3,500,000
 b. 3,600,000
c. 3,700,000
d. 3,400,000
7. What is the cash in bank balance per ledger October 31?
a. 4,100,000
b. 4,300,000
c. 4,150,000
d. 4,000,000

The bank statement for the checking account of an entity showed a balance of P 4,500,000 on
December 31,2019. The entity provided the following information in preparing a bank
reconciliation

• Outstanding checks were P 150,000

• Deposits in transits were P 500,000
• Check payment was incorrectly recorded by the entity in the amount of P 260,000. The
correct amount recorded by the bank was P 250,000
• The bank withdrew P 100,000 as payment on mortgage payable of the entity. The entity
did not record the payment
• Bank service charges amounted to P20,000
• A deposit of P 800,000 was unappropriately credited by the bank to the entity’s account
• NSF checks amounted to P 200,000
• Per instruction of the entity on December 30, the bank withdrew P 1,000,000 from the
account and purchased treasury bills. The entity recorded the transaction on the same
date

8. What is the cash in bank to reported on December 31,2019?

a. 4,050,000

b. 4,850,000

c. 5,650,000

d. 3,050,000

9. What is the cash in bank balance per ledger on December 31,2019?

a. 5,360,000

b. 4,120,000

c. 4,360,000

d. 4,380,000
Shelter Corporation’s checkbook balance on December 31,2018 was P 160,000. On the same
date, Shelter held the following items in its safe:

• A P 5,000 check payable to Shelter, dated January 2,2018 was included in the
December 31 checkbook balance
• A P 3,500 check payable to Shelter which was deposited December 19 and
included in the December 30 marked NSF. The check was re-deposited on
January 2,2019 and cleared on January 9
• A P 25,000 check payable to a supplier and drawn on Shelter’s account, was date
and recorded on December 31, but was not nailed until January 19,2019

10. In its December 31,2018 statement of financial position, how much should Shelter report as
cash?

a. P 156,600
b. P 161,500
c. P 176,500
d. P 181,500

An entity provided the following information at year-end:

2020 2019

Accounts receivable 880,000 800,000

Allowance for doubtful accounts (10,000) (15,000)

Allowance for products returns (20,000) (25,000)

Net realizable value 850,000 760,000

The entity reported debt expenses in 2020 of P30,000 and had products returned fir credits
totaling P15,000 at sales price. Gross sales for 2020 amounted to P6,150,000

11. What amount of accounts receivable was written during 2020?

a. 35,000
b. 30,000
c. 15,000
d. 10,000
12. What amount was collected from customers during 2020?

a. 6,035,000
b. 6,070,000
c. 6,020,000
d. 6,100,000

13. What amount was reported as net sales for 2020?

a. 6,150,000
b. 6,140,000
c. 6,100,000
d. 6,135,000

On January 1,2019, an entity was indebted to a bank under a P 4,800,000, 10% loan. The
loan was dated January 1,2017 and was due on December 31,2020. The annual interest was
last paid on December 31,2017. The entity was experiencing financial troubles and therefore
the bank considered to the loan impaired. The bank agreed to reduce last year’s interest and
the remaining two year’s interest payments to P 200,000 each and delay all such payments
on December 31,2020. The present value of 1 at 10% for two periods is 0.83

The entity also reported the net realizable value of accounts receivable in the amounts of P
1,000,000 and P 1,200,000 on December 31,2019 and 2018 respectively. It was also
disclosed that the allowance for doubtful accounts on December 31,2019 and 2018 were P
100,000 and P 130,000 respectively. Credit sales amounted to P 4,770,000 and collections
from customers totaled P 4,800,000. Certain accounts were written off during the year

14. What is the impairment on the loan for the year ended December 31,2019?

a. 318,000

b. 918,000

c. 484,000

d. 884,000

15. What amount of accounts receivable was written off during the year?

a. 200,000

b. 100,000

c. 150,000

d. 0

16. What is the doubtful accounts expense for the year ended December 31,2019?
 a. 100,000

b. 130,000

c. 300,000

d. 170,000

Loaded Company recorded the following data at the end of the current year:

Accounts receivable 8,000,000

Credit sales 20,000,000

Doubtful accounts expense (2% of credit sales) 400,000

The allowance for doubtful accounts on January 1 has a balance of P 150,000. Loaded elected
to estimate its doubtful accounts by using percent of accounts receivable method at year-end.
The entity estimated that 10% would be a good estimate

17. What amount of doubtful accounts expense should be reported for the current year?

a. 800,000

b. 650,000

c. 400,000

d. 250,000

During 2019, Coco Company sold accounts receivable with recourse with a face amount of P
4,000,000. The factor charged a service fee of 10% of the accounts factored and withheld 5% of
the accounts factored as protection against customer returns and other adjustments. The fair
value of the recourse obligations as determined to be P 150,000. All of the accounts were fully
collected by the factor

On June 30,2019, the entity also discounted a customer’s note with recourse at a bank at a 10%
discount rate. The note is dated May 1,2019 has a term of 90 days, a face value of P 6,000,000
and an interest rate of 9%. The entity accounted for this transaction as a secured borrowing. The
customer paid the note to the bank on maturity date

18. What amount of loss on factoring should Coco report for 2019?

a. 400,000

b. 550,000

c. 750,000

d. 600,000

19. What is the amount of proceeds from discounting the note on June 30,2019?
 a. 6,083,875

b. 6,135,000

c. 6,000,000

d. 6,103,875

20. What amount should recognized as interest expense related to the note discounting?

a. 51,125

b. 13,875

c. 6,125

d. 0

From inception of operations, Kerwin Company provided the following for uncollectible accounts
expense under the allowance method and provisions were made monthly at 2% of credit sales.
No year-end adjustments to the allowance account were made. The balance in the allowance for
doubtful accounts was P1,000,000 on January 1,2015. During 2015, credit sales totaled
P20,000,000, interim provisions for doubtful accounts were made at 2% of credit sales, P200,000
of bad debts 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 31,2015.

Classification Balance Uncollectible

November – December 6,000,000 10%
July – October 2,000,000 20%
January – June 1,500,000 30%
Prior to January 1,2015 500,000 50%

Based on the review of collectability of the account balances in the “prior to January 1,
2015” aging category, additional accounts totaling P100,000 are to be written off on
December 31,2015. Effective December 31,2015, the entity adopted the aging method for
estimating the allowance for doubtful accounts

21. What is the required allowance for doubtful accounts on December 31,2015?
a. 1,650,000
b. 1,950,000
c. 1,700,000
d. 1,450,000

22. What amount should be reported as doubtful accounts expense?

a. 1,200,000
 b. 1,650,000
c. 900,000
d. 950,000

23. What is the year-end adjustment to the allowance for doubtful accounts on December
31,2015?
a. 900,000 debit
b. 900,000 credit
c. 500,000 debit
d. 500,0000 credit
24. What is the NRV of accounts receivable on December 31, 2015?
a. 9,900,000
b. 8,250,000
c. 8,350,000
d. 8,200,000

During a move to a new location, the inventory records of an entity were misplaced. The
bookkeeper has been able to gather some data for July purchases.

Units Unit cost Total cost

July 5 10,000 65 650,000
10 12,000 70 840,000
15 15,000 60 900,000
25 14,000 55 770,000
On July 31, 17,000 units were on hand. The sales for July amounted to P6,000,000 or 60,000
units at P100 per unit. The entity has always used a perpetual FIFO inventory costing system.
Gross profit on sales for July was P2,400,000.

25. What was cost of the inventory on July 31?

a. 3,600,000
b. 1,670,000
c. 770,000
d. 950,000
26. What was the cost of inventory on July 1?
a. 1,390,000
b. 2,400,000
c. 950,000
d. 760,000
An entity uses the periodic inventory system. Beginning inventory listed 20,000 units at P 6.10
each. Below are the following transactions during the current month in chronological order

• Purchased 100,000 units at P5.50 each

• Sold 80,000 units at P12 each
• Purchased 60,000 units P5 each
• Sold 70,000 units at P11 each

27. What is the cost of ending inventory using FIFO?

a. 166,000

b. 177,000

c. 165,000

d. 150,000

28. What is the cost of ending inventory using weighted average?

a. 166,000

b. 162,000

c. 177,000

d. 159,375

Situation 1 – an entity provided the following inventory information for the current year

COST RETAIL

Beginning inventory 350,000 1,000,000

Net purchases 550,000 1,100,000

Net markups 150,000

Net markdowns 250,000

Net sales (including sales discount of P50,000) 1,450,000

29. What is the cost of goods sold under the conventional retail method?

a. 700,000

b. 680,000

c. 675,000

d. 652,500
An entity provided the following records connected to its inventory transactions:

Date and transaction Units Unit cost

January 1 balance 40,000 P 20

February 10 sale 30,000

April 12 purchase 60,000 P 25

September 20 sale 59,000

November 28 purchase 40,000 P 30

The entity used the moving average method. At December 31, the entity determined that the NRV
per unit is P 23 (Round to two decimal places)

30. What is the cost of the inventory at December 31?

a. 1,173,000

b. 1,275,000

c. 1,475,000

d. 1,466,890

31. What amount of cost of goods sold should be reported at December 31?

a. 2,225,000

b. 2,327,000

c. 2,033,110

d. 2,025,000

On December 16,2018, Fair Company purchased goods costing P 200,000. The terms of
purchase were FOB shipping point. Costs incurred by Fair Company in connection with the
purchase and delivery of the goods were as follows: Normal freight charges, P 6,000; handling
charges, P 4,000; insurance on shipment, P 1,000 and abnormal freight charges for express
shipping P 2,400.

32. The goods were received on December 20,2018, what amount should be added to the cost
of inventory?

a. None
b. P 11,000
c. P 13,4000
d. P 213,400
33. On October 1,2018 Terrain Corp. sold merchandise with a list price of P 400,000 to Radial on
account. Terrain allowed to trade discounts of 30%, 20%, and 10%. Credit terms were 2.15, n/40
and the sale was made FOB destination. Radial paid P4,000 of delivery costs for Radial. On
October 3,2018, Terrain received from Radial returned merchandise with a list price of P 100,000
due to minor defects. On October 14,2018, Radial settled its account in full to Terrain. How much
net cash remittance did Terrain receive?

a. P 95,648

b. P 99,568
c. P 144,176
d. P 144,256

Aljes Company reported inventory on December 31,2015 at P6,000,000 based on a physical

count at cost and before any necessary year-end adjustment relating to the following:

• 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 Aljes
were received on January 4,2016. The invoice cost was P300,000

34. What amount should be reported as inventory on December 31,2015?

a. 5,875,000
b. 6,000,000
c. 6,175,000
d. 6,300,000

During the December 2015, Mark Company shipped inventory on consignment to Ken Company
costing P1,800,000 and paid freight of P100,000. In the same month, the entity received inventory
on consignment from Kam Company costing P1,200,000. Kam Company paid freight of P50,000
for the shipment. No sales of consigned goods were made in December 2015.

35. What amount should be included in inventory on December 31,2015?

A. 1,800,000
B. 1,900,000
C. 1,250,000
D. 3,150,000
Camille Company 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

36. On December 31,2015, what amount should be reported as accounts payable?

e. 7,575,000
f. 7,250,000
g. 7,235,000
h. 7,553,500

On December 31,2015, Mike Company provided the following information:

Cost Retail

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

Purchases 4,165,000 5,775,000

Additional markup 210,000

Markdown 100,000

Sales 5,500,000

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

a. 1,540,000
b. 1,400,000
c. 1,078,000
d. 980,000
An analysis of cash received from customers during the year revealed that P 1,411,200 was
received from customers availing the 10-day discount period, P 792,000 from customers availing
the 15-day discount period P 4,800, represented recovery of accounts written off, and the balance
was received from customers paying beyond the discount period

Galant’s year-end balance of allowance for bad debts was estimated to be 5% of the outstanding
accounts receivable as at December 31,2019, based on the aging of the accounts

38. What is the accounts receivable balance at December 31,2019?

a. P 307,200
b. P 270,400
c. P 289,600
d. P 265,600

39. How much was Galant’s bad debts expense for the year ended December 31,2019?
a. P 7,120
b. P 8,960
c. P 8,080
d. P 11,920

40. What is the allowance of doubtful accounts adjusted balance at December 31,2019?
a. P 15,360
b. P 13,520
c. P 14,480
d. P 13,280