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Profel1 AC Activity Assets Part1

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0% found this document useful (0 votes)
48 views9 pages

Profel1 AC Activity Assets Part1

Uploaded by

Elijah Caisip
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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PROFEL1-AC Activity – Assets Part 1

Name: ______________________________________________ Score: ____________


Course & Section: _____________________________________ Date: _____________

Provide the properly labeled solutions in each given problem.

1. Armenia Company reported the following information on December 31, 2022:

Cash on hand 1,000,000


Petty cash fund 50,000
Cash in bank 4,000,000
Saving deposit 2,000,000
7,050,000
 Cash on hand included the following:
a. Customer check of P100,000 returned by bank December 26,2022 due to insufficient fund
but subsequently redeposited and cleared by bank January 5,2023.
b. Customer check for P150,000 dated January 15,2023 received December 22,2022.
c. Postal money orders received from customers, P200,000.
 The petty cash fund consisted of the following items:
Currency and coins 2,000
Employees’ IOUs 10,000
Currency in envelope marked collections for
Christmas party 5,000
Check drawn by Armenia payable to petty cashier 33,000
50,000

 Check written and dated December 22,2022 and delivered to payee on January 5,202, P200,000.
 Check written December 26,2022 and dated January 31, 2023 delivered to payee on December
26,2022, P300,000.

Required:
1. Prepare adjusting entries on December 31,2022.
2. Compute the total cash on December 31,2022.

2. On December 1, 2022, Wacky Company established an imprest petty cash fund.


2022
Dec 01 Established an imprest petty cash fund of P10,000 by writing a check on National Bank.
20 Replenished the petty cash fund by writing a check on National Bank. The fund
contained:
Currency and coins 1,000
Vouchers for selling expenses 5,000
Vouchers for miscellaneous expenses 2,000
Vouchers for equipment 2,000
31 The petty cash fund was not replenished. The fund contained:
Currency and coins 6,000
Postdated employee’s check 2,000
Vouchers for selling expenses 1,500
Vouchers for transportation 500
2023
Jan 15 Encashed the employee’s check. The proceeds were retained in the fund.
31 Replenished the petty cash fund by writing a check on National Bank. The petty cash
vouchers for January expenditures are:
Distribution costs 500
Administrative expenses 2,000
Transportation 1,000
Payment for supplier’s invoice 1,200

Required:
1. Prepare journal entries to record the transactions.
2. How much is the petty cash on January 31,2023 before the replenishment?

3. Radiant Company provided the following data for the month of January:
Balance per bank statement, January 31 3,500,000
Collections on January 31 but undeposited 550,000
NSF Check received from a customer returned by the bank
on February 5 with the January bank statement 50,000
Checks outstanding on January 31 650,000
Bank debit memo for safety deposit box rental not recorded by depositor 5,000
A creditor’s check for P30,000 was incorrectly recorded in the
depositor’s book as 300,000
A customer’s check for P200,000 was recorded by the depositor as 20,000
The depositor neglected to make an entry in its book for a check
drawn in payment of an account payable 125,000

Required:
Compute the balance in the cash account before corrections and prepare adjusting entries.

4. Beehive Company provided the following information:


Balance per book October 31 600,000
Receipts per book for November (collection from customer,
P100,000 recorded as P10,000) 2,200,000
Disbursement per book for November (check for P300,000
in payment of account recorded as P30,000) 1,800,000
Balance per bank statement November 30 930,000
Deposit in transit October 31 300,000
Outstanding checks November 30 400,000
Bank receipts for November including an erroneous credit of
P100,000 which should have been credited to Beeline Comp 2,500,000
Bank disbursements for November including check of Beeline Comp
P200,000 1.970,000

Required:
Prepare bank reconciliation on October 31 and November 30, and adjusting entries on
November 30.
5. Credible Company provided the following T-account summarizing the transactions affecting the
accounts receivable for the current year:

Account Receivable
Jan 1 balance 600,000 Collections from customers 5,300,000
Charge sales 6,000,000 Write off 35,000
Shareholder’s subscriptions 200,000 Merchandise returns 40,000
Deposit in contract 120,000 Allowance to customer for
Claims against common shipping damages 25,000
Carriers for damages 100,000 Collections on carrier claims 40,000
IOUs from employees 10,000 Collection on subscriptions 50,000
Cash advance to affiliates 100,000
Advances to a supplier 50,000

Required:
a. Compute the correct amount of accounts receivable.
b. Prepare on compound entry to adjust the accounts receivable.
c. Compute the amount to be presented as “trade and other receivables” under current assets.
d. Indicate the classification and presentation of the other items.

6. Affectionate Company sold merchandise on account for P500,000. The terms are 3/10, n/30.
The related freight charge amount to P10,000. The account was collected within the discount
preiod.

Required:
a. FOB destination and freight collect
b. FOB destination and freight prepaid
c. FOB shipping point and freight collect
d. FOB shipping point and freight prepaid

7. At the beginning of current year, Template Company showed the following account balances:
Accounts receivable 1,000,000
Allowance for doubtful accounts 40,000

The following summary transactions occurred during the current year:


1. Sales on account, 2/30, n/30 7,000,000
2. Collections from customers within the discount period 2,450,000
3. Collections from customers beyond the discount period 3,900,000
4. Accounts receivable written off as worthless 30,000
5. Recovery of accounts previously written off not included
in the above collections 10,000
6. Credit memo for sales return 70,000

Required:
a. Prepare journal entries pertaining to accounts receivable.
b. Prepare the adjustment for doubtful accounts at year-end if the entity uses the percentage of
accounts receivable method consistently.
c. What is the net realizable value of accounts receivable at year-end?
8. Scion Company began operations on January 1, 2019. On December 31, 2019 and 2020, the entity
provided for uncollectible accounts expense based on 1% of annual credit sales.
On January 1, 2020, the entity changed the method of determining the allowance for uncollectible
accounts by applying certain percentages to the aging of accounts receivable.

Days past invoice date Percentage uncollectible


0 – 30 1
31 – 90 5
91 – 180 20
Over 180 80

In addition, the entity wrote off all accounts receivable that were over 1 year old.
The following additional information related to the years ended December 31, 2020 and 2019:
2020 2019
Credit sales 3,000,000 2,800,000
Collections, including recovery 2,915,000 2,400,000
Accounts written off 27,000 none
Recovery of accounts previously written off 7,000 none

Days past invoice date


0 – 30 300,000 250,000
31 – 90 80,000 90,000
91 – 180 60,000 45,000
Over 180 25,000 15,000

Required:
1. Determine the allowance for doubtful accounts on January 1,2020.
2. Determine the allowance for doubtful accounts on December 31,2020 before adjustment.
3. Determine the required allowance on December 31,2020.
4. Prepare the adjustment to record the doubtful accounts expense for the current year.

9.Gullible Company is a dealer in equipment. On December 31,2020, the entity sold an equipment in
exchange for a noninterest bearing note requiring five annual payments of P500,000. The first payment
was made on December 31,2021.
The market interest for similar notes was 8%. The relevant present value factors are:
PV of 1 at 8% for 5 periods 0.68
PV of an ordinary annuity of 1 at 8% for 5 periods 3.99

Required:
1. Prepare journal entries for 2020 and 2021.
2. Determine the carrying amount of the note receivable on December 31,2021.
3. Determine the interest income for 2022.

10. Solvent Bank loaned P10,000,000 to a borrower on January 1,2018. The terms of the loan require
principal payments of P2,000,000 each year for 5 years plus interest at 8%.

The first principal and interest payment is due on December 31,2018. The borrower made the required
payments on December 31,2018 and December 31,2019.
However, during 2020 the borrower began to experience financial difficulties, requiring the bank to
reassess the collectibility of the loan.

On December 31,2020, the bank has determined that the remaining principal payments will be collected
but the collection of the interest is unlikely. The bank has accrued the interest for 2020.

Expected principal payments


December 31, 2021 1,000,000
December 31, 2022 2,000,000
December 31, 2023 3,000,000

Present value of 1 at 8%
For one period .93
For two period .86
For three periods .79

Required:
1. Compute the impairment loss on the loan receivable.
2. Prepare journal entries for 2020, 2021 and 2022.

11. Idealist Company secured a one-year bank loan of P4,000,000 on October 1,2020. The loan was
discounted at 10%.

The entity signed a note for the loan and pledged P5,000,000 of its accounts receivable as collateral for
the same. The accounting period of the entity ends on December 31.

Required:
1.Prepare journal entries, including adjustment from the date of loan up to date of maturity.
2. Statement presentation of the bank loan with adequate disclosure on December 31,2020.

12. Docile Company assigned certain accounts receivable to a bank for a loan on the following basis:
75% cash advance, 4% service charge on gross accounts assigned, 2% interest per month is to be
charged, and the bank makes the collections. The entity signed a promissory note for the loan.
July 01 Received remittance upon the specific assignment of P1,500,000 in accounts to the bank
August 01 Received notice from bank that P800,000 of the assigned accounts were collected. A
check was sent to the bank for one month interest charge.
Sept 01 Received notice from bank that assigned accounts of P500,000 were collected in full and
the remaining accounts of P200,000 were being returned. Accordingly, a check was
received from the bank in settlement of the assignment contract. In making the
settlement, the bank deducted the interest charge for the corresponding period.
Required:
Prepare journal entries on the books of the assignor.

13. Natal Company provided the following information:


Materials 1,400,000
Advance for materials ordered 200,000
Goods in process 650,000
Unexpired insurance on inventories 60,000
Advertising catalogs and shipping cartons 150,000
Finished goods in factory 2,000,000
Finished goods in company-owned retail store.
including 50% profit on cost 750,000
Finished goods in hands of consignees including
40% profit on sales 400,000
Finished goods in transit to customers, shipped FOB
destination at cost 250,000
Finished goods out on approval, at cost 100,000
Unsalable finished goods, at cost 50,000
Office supplies 40,000
Materials in transit shipped FOB shipping point,
excluding freight of P30,000 330,000
Goods held on consignment, at sales price, cost P150,000 200,000

Required:
Compute the correct amount of inventory.

14. Summer Company is a wholesaler of car seatcovers. At the beginning of the current year, the entity’s
inventory consisted of 90 car seatcovers priced atP1,000 each. During the current year, the following
events occurred:
1. Purchased 800 car seatcovers on account at P1,000 each.
2. Returned 50 defective car seatcovers to supplier and received credit.
3. Paid 600 of the car seatcovers purchased.
4. Sold 790 car seatcovers at P2,000 each.
5. Received 20 car seatcovers returned by a customer and gave credit. The goods were in excellent
condition.
6. Received cash for 680 of the car seatcovers sold.
7. Physical count at year-end revealed 60 units on hand.

Required:
1. Prepare journal entries, including adjustments to record the above transactions assuming the company
uses periodic system and perpetual system.
2. Determine the cost of sales under each inventory system.

15. Autumn Company provided the following transactions for the current year, the first year of operations.
1. Purchase of merchandise at an invoice price of P4,750,000 excluding freight. Terms are 2/10, n/30.
2. Freight paid, P250,000. The freight is allocated to each purchase.
3. Cash payment on purchases, P3,717,000, of which P1,617,000 was paid within the discount period.
4. It is expected that all discounts on unpaid accounts payable will be lost.
5. On December 31, one fifth of the merchandise remains on hand.

Required:
1. Prepare journal entries to record the transactions using gross method and net method.
2. Compute inventory and cost of sales under each method.
16. Extreme Company showed the following information:

Units Unit cost Total Cost


January 01 Beginning 10,000 40 400,000
31 Sale 5,000
April 01 Purchase 15,000 50 750,000
July 31 Sale 18,000
October 01 Purchase 25,000 60 1,500,000
December 31 Sale 12,000

Required:
Compute the cost of the ending inventory and cost of goods sold using:
a. FIFO – periodic
b. Weighted average
c. Moving average

17. Winter Company provided the following inventory data at the end of first year of operations:

Cost NRV
Skis 2,200,000 2,500,000
Boots 1,700,000 1,500,000
Ski equipment 700,000 800,000
Ski apparel 400,000 500,000
Required:
Prepare journal entries to adjust the ending inventory under:
a. Direct method
b. Allowance method

18. Erica Company had the following property acquisitions during the current year:
1. Acquired a tract of land in exchange for 50,000 ordinary shares with 100 par value and market price of
120 per share on the date of acquisition.
The last property tax bill indicated assessed value of P4,500,000 for the land.
2. Received land from a major shareholder as an inducement to locate a plant in the city.
No payment was required but the entity paid P50,000 for legal expenses for land transfer. The land is fairly
valued at P1,000,000.
3. Purchased for P5,500,000 including appraiser fee of P100,000 a warehouse building and the land on
which it is located.
The land had an appraised value of P2,000,000 and original cost of P1,400,000. The building had an
appraised value of P3,000,000 and original cost of P2,500,000.
4. Purchased an office building and the land on which it is located for P7,500,000 cash and assumed an
existing P2,500,000 mortgage.
For realty tax purposes, the property is assessed at P9,600,000, 6% of which is allocated to building.

Required:
Prepare journal entries to record the transactions for the current year.
19. At the beginning of current year, Melancholy Company reported the following property, plant and
equipment:
Land 3,500,000
Land improvements 900,000
Building 6,000,000
Equipment 1,500,000

The following transactions occurred during the current year:


 A tract of land was acquired for P1,250,000 and intended definitely for use as future building site.
 A plant facility consisting of land and building was acquired from another entity in exchange for
100,000 Melancholy Company shares.
On acquisition date, the share had a closing market price of P45 on a stock exchange.
The plant facility was carried at P1,000,000 for land and P3,000,000 for the building at the
exchange date.
Current appraised values for the land and building, respectively are P1,200,000 and P2,400,000.
 Expenditures totaling P750,000 were made in early part of the year for new parking lot, street and
sidewalk at the entity’s various plant locations. These expenditures had an estimated useful life
of fifteen years.
 Equipment was purchased at a cost of P3,000,000. Freight and unloading charge of P50,000 and
installation cost of P350,000 were incurred.
 At the middle of the current year, an equipment was sold for P175,000. The original cost of the
equipment acquired two years ago was P500,000. The equipment was depreciated on the straight
line basis over an estimated useful life of five years and no residual value.

Required:
Compute for the total cost of the following at year-end:
a. Land
b. Building
c. Equipment
d. Land improvement

20. Amicable Company purchased a machine at a cost of P635,000 on January 1, 2020. It was estimated
that the machine would have a residual value of P35,000.
The estimated useful life is 5 years, 60,000 service hours and 150,000 production units.

Actual operations Service hours Unit produced


2020 14,000 34,000
2021 13,000 32,000
2022 10,000 25,000
2023 11,000 29,000
2024 12,000 30,000

Required:
Prepare a depreciation table for the following methods:
a. Straight line
b. Service hours
c. Production method
21. At the beginning of the current year, Definite Company acquired the following assets:

Cost Residual value Useful life in years


Machinery 310,000 10,000 5
Office equipment 110,000 10,000 10
Building 1,600,000 100,000 15
Delivery equipment 430,000 30,000 4

Required:
a. Compute the composite depreciation rate
b. Compute the composite life
c. Prepare journal entry to record the depreciation for the current year.

22. Hilarious Company provided the following data pertaining to a machinery on the date of revaluation:

Cost Replacement cost


Machinery 4,500,000 7,200,000
Accumulated depreciation 900,000
Age of asset 3 years

Required:
1.What is the original useful life of the asset?
2. Prepare journal entry to record the revaluation.
3. Prepare journal entry to record the annual depreciation subsequent to revaluation.
4. Prepare journal entry to record the piecemeal realization of the revaluation surplus.

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