Reference no: EM132850091

Questions -

Q1. Assume Royal Palm Corp., an equipment distributor, sells a piece of machinery with a list price of P800,000 to Arch Inc. Arch Inc. will pay P850,000 in one year. Royal Palm Corp. normally sells this type of equipment for 90% of list price. How much should be recorded as revenue?

Q2. Smithson Corporation had a 1/1/10 balance in the Allowance for Doubtful Accounts of P10,000. During 2010, it wrote off P7,200 of accounts and collected P2,100 on accounts previously written off. The balance in Accounts Receivable was P200,000 at 1/1 and P240,000 at 12/31. At 12/31/10, Smithson estimates that 5% of accounts receivable will prove to be uncollectible. What is Bad Debt Expense for 2010?

Q3. Assume Royal Palm Corp., an equipment distributor, sells a piece of machinery with a list price of P800,000 to Arch Inc. Arch Inc. will pay P850,000 in one year. Royal Palm Corp. normally sells this type of equipment for 90% of list price. How much should be recorded as revenue?

Q4. Equestrain Roads sold P50,000 of goods and accepted the customer's P50,000 10% 1-year note in exchange. Assuming 10% approximates the market rate of return, how much interest would be recorded for the year ending December 31 if the sale was made on June 30?

Q5. Sun Inc. factors P2,000,000 of its accounts receivables without guarantee (recourse) for a finance charge of 5%. The finance company retains an amount equal to 10% of the accounts receivable for possible adjustments. What would be recorded as a gain (loss) on the transfer of receivables?

Q6. Geary Co. assigned P400,000 of accounts receivable to Kwik Finance Co. as security for a loan of P335,000. Kwik charged a 2% commission on the amount of the loan; the interest rate on the note was 10%. During the first month, Geary collected P110,000 on assigned accounts after deducting P380 of discounts. Geary accepted returns worth P1,350 and wrote off assigned accounts totaling P2,980.

Q7. On February 1, 2010, Henson Company factored receivables with a carrying amount of P300,000 to Agee Company. Agee Company assesses a finance charge of 3% of the receivables and retains 5% of the receivables. Relative to this transaction, you are to determine the amount of loss on sale to be reported in the income statement of Henson Company for February.

Assume that Henson factors the receivables on a without guarantee (recourse) basis. The loss to be reported is?

Assume that Henson factors the receivables on a with guarantee (recourse) basis. The amount of cash received is?

Q8. Maxwell Corporation factored, with guarantee (recourse), P100,000 of accounts receivable with Huskie Financing. The finance charge is 3%, and 5% was retained to cover sales discounts, sales returns, and sales allowances. What amount of cash would Maxwell receive on the sale of receivables?

Q9. Wilkinson Corporation factored, with guarantee (recourse), P400,000 of accounts receivable with Huskie Financing. The finance charge is 3%, and 5% was retained to cover sales discounts, sales returns, and sales allowances. What amount of cash would Wilkinson receive on the sale of receivables?

Q10. If the month-end bank statement shows a balance of P36,000, outstanding checks are P12,000, a deposit of P4,000 was in transit at month end, and a check for P500 was erroneously charged by the bank against the account, the correct balance in the bank account at month end is

Q11. Finley, Inc.'s checkbook balance on December 31, 2020 was P21,200. In addition, Finley held the following items in its safe on December 31.

(1) A check for P450 from Peters, Inc. received December 30, 2020, which was not included in the checkbook balance.

(2) 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, 2021. The original deposit has been included in the December 31 checkbook balance.

(3) 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, 2020 is?

Q12. 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?

Q13. In preparing its May 31, 2010 bank reconciliation, Catt Co. has the following information available:

Balance per bank statement, 5/31/10 P30,000

Deposit in transit, 5/31/10 5,400

Outstanding checks, 5/31/10 4,900

Note collected by bank in May 1,250

The correct balance of cash at May 31, 2010 is?

Q14. On the December 31, 2010 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 2010) 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

Total P132,000

At December 31, 2010, the correct total of Vanoy's current net receivables was?

Q15. Ace Co. prepared an aging of its accounts receivable at December 31, 2010 and determined that the net realizable value of the receivables was P300,000. Additional information is available as follows:

Allowance for uncollectible accounts at 1/1/10-credit balance P 34,000

Accounts written off as uncollectible during 2010 23,000

Accounts receivable at 12/31/10 325,000

Uncollectible accounts recovered during 2010 5,000

For the year ended December 31, 2010, Ace's uncollectible accounts expense would be?

Q16. For the year ended December 31, 2010, Dent Co. estimated its allowance for uncollectible accounts using the year-end aging of accounts receivable. The following data are available:

Allowance for uncollectible accounts, 1/1/10 P56,000

Provision for uncollectible accounts during 2010

(2% on credit sales of P2,000,000) 40,000

Uncollectible accounts written off, 11/30/10 46,000

Estimated uncollectible accounts per aging, 12/31/10 69,000

After year-end adjustment, the uncollectible accounts expense for 2010 should be?

Q17. Nenn Co.'s allowance for uncollectible accounts was P95,000 at the end of 2020 and P90,000 at the end of 2019. For the year ended December 31, 2020, Nenn reported bad debt expense of P13,000 in its income statement. What amount did Nenn debit to the appropriate account in 2010 to write off actual bad debts?

Q18. The following accounts were abstracted from Starr Co.'s unadjusted trial balance at December 31, 2010:

Debit Credit

Accounts receivable P750,000

Allowance for uncollectible accounts 8,000

Net credit sales P3,000,000

Starr estimates that 2% of the gross accounts receivable will become uncollectible. After adjustment at December 31, 2010, the allowance for uncollectible accounts should have a credit balance of?

Q19. On June 1, 2020, Yang Corp. loaned Gant P300,000 on a 12% note, payable in five annual installments of P60,000 beginning January 2, 2011. In connection with this loan, Gant was required to deposit P3,000 in a zero-interest-bearing escrow account. The amount held in escrow is to be returned to Gant 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, 2020. Gant made timely payments through November 1, 2020. On January 2, 2021, Yang received payment of the first principal installment plus all interest due. At December 31, 2020, Yang's interest receivable on the loan to Gant should be?

Q20. Tresh, Inc. had the following bank reconciliation at March 31, 2020:

Balance per bank statement, 3/31/10 P37,200

Add: Deposit in transit 10,300

47,500

Less: Outstanding checks 12,600

Balance per books, 3/31/10 P34,900

Data per bank for the month of April 2010 follow:

Deposits 46,700

Disbursements 49,700

All reconciling items at March 31, 2020 cleared the bank in April. Outstanding checks at April 30, 2020 totaled P6,000. There were no deposits in transit at April 30, 2020. What is the cash balance per books at April 30, 2020?