Reference no: EM132496077
The adjusted trial balance of Austronesian Corporation on December 31, 2013, includes the following cash and receivables balances.
Cash-Allied Bank P450,000
Currency on hand 160,000
Petty cash fund 10,000
Cash in bond sinking fund 150,000
Notes receivable (including notes
discounted with recourse, P155,000) 365,000
Accounts receivable P856,000
Allowance for doubtful accounts ( 41,500) 814,500
Interest receivable 5,250
Current liabilities reported in the December 31, 2013, statement of financial position included:
Obligation on discounted notes receivable P155,000
Transactions during 2014 included the following:
(a) Sales on account were P7,670,000.
(b) Cash collected on accounts totaled P5,765,000, including accounts of P930,000 with cash discounts of 2%.
(c) Notes received in settlement of accounts totaled P825,000.
(d) Notes receivable discounted as of December 31, 2013, were paid at maturity with the exception of one P30,000 note on which the company had to pay the bank P30,900, which include interest and protest fees. It is expected that recovery will be made on this note early in 2015.
(e) Customer notes of P585,000 were discounted with recourse during the year, proceeds from their transfer being P585,000. (All discounting transactions were recorded as loans.) Of this total, P480,000 matured during the year without notice of protest.
(f) Customer accounts of P87,200 were written off during the year as worthless.
(g) Recoveries of bad debts written off in prior years were P20,200.
(h) Notes receivable collected during the year totaled P270,000 and interest collected was P24,500.
(i) On December 31, accrued interest on notes receivable was P6,300.
(j) Cash of P350,000 was borrowed from Allied Bank with accounts receivable of P400,000 being pledged on the loan. Collections of P195,000 had been made on these receivables [included in the total given in transaction (b)], and this amount was applied on December 31, 2014, to payment of accrued interest on the loan of P6,000, and the balance to the partial payment of the loan.
(k) The petty cash fund was reimbursed (meaning that cash was removed from the bank account and placed in the petty cash fund) based following analysis of expenditure vouchers:
Travel expense P1,120
Entertainment expense 780
Postage expense 930
Office supplies expense 1,730
Cash short and over (an income account) 60
(l) Cash of P30,000 was added to bond retirement fund.
(m) Currency on hand at December 31, 2014, was P120,000.
(n) Total cash payments for all expenses during the year were P6,800,000. Charge to general expenses.
(o) Uncollectible accounts are estimated to be 5% of the December 31, 2014, Accounts Receivable balance.
QUESTIONS:
Based on the above and the result of your audit, answer the following:
Question 1. The total cash to be reported in the company's December 31, 2014 statement of financial position is
a. P555,700
b. P574,300
c. P574,180
d. P569,800