Reference no: EM132796923

The cash account for Honda Co. on March 1, 2020, indicated a balance of P 13,823.90. During March, the total cash deposited was P 141,000.80, and checks are written totaled P 135,136.94. The bank statement indicated a balance of P27,760.90 on March 31, 2020.

Comparing the bank statement, the canceled checks, and the accompanying memorandums with the records revealed the following reconciling items:

• Checks outstanding totaled P 12,360.54
• A deposit of P 8,963.40, representing receipts of March 31, had been made too late to appear on the bank statement.
• A check for P620 had been incorrectly charged by the bank as P 260.
• A check for P 514.50 returned with the statement had been recorded by Honda Co. as P1,054.50. The check was for payment of an obligation to Maramba & Sons on the account.
• The bank had collected for Honda Co. for P3,816 on a note left for collection. The face of the note was P 3,600.
• Bank service charges for March amounted to P40.

In addition to the above information, Honda Co. owns the following assets on March 31, 2020:

1) Money market placements totaling P 450,000,

2) P18,000 of high grade, 60 days, commercial paper, and

(3) highly liquid stock investment valued at P696,000 on March 31, 2020. The original cost of these stock investments P516,000.

• On February 1, Honda sold an unused piece of Land to Dagupena Restaurant for P1,800,000. Honda accepted a nine months P1,800,000 8 % note receivable from Mr. Morales. The note plus accrued interest is due in full on October 31, 2020. Honda adjusts for accrued interest revenue monthly.
• Honda Co. uses the income statement approach to compute its provision for doubtful accounts expense. The general ledger had reported Account Receivable P 6,450,000 at April 1, 2019. At that time the allowance for doubtful accounts has a credit balance of P120,000. Throughout the fiscal year ending March 31, 2020, the company wrote off the actual accounts receivable of P 420,000 and collected P 63,640,800 on account from credit customers. Credit sales for the year ended March 31, 2020, totaled P60,000,000. Of these credit sales, 1 % were estimated to eventually become uncollectible.

Instructions:

Problem 1: Prepare Honda Co' bank reconciliation dated March 31, 2020, and prepare journal entry necessary to update the company's general ledger balances.

Problem 2: Prepare the adjusting entry necessary to account for the notes receivable from Dagupena Restaurant on March 31, 2020

Problem 3: Determine the net realizable value of Honda Co's account receivable on March 31, 2020.

Problem 4: Illustrate the presentation of financial assets in the March 31, 2020 Statement of Financial Position

Problem 5: What are the account receivable turnover rate and average days outstanding?