DySAS Center for CPA Review2F & 3F Mitra Building, San Pedro Street, Davao City Tel. No. (082) 224-43-20: E-mail Address –
[email protected] Practical Accounting 1 John C. Frivaldo, CPA, MBA FIRST PRE-BOARD EXAMINATIONS December 20, 2008 @ 8:00 – 10:00 am =========================================================== INSTRUCTIONS: Mark the letter of your choice with a VERTICAL LINE on the answer sheet provided. ERASURES NOT ALLOWED. 1. Mega Company purchased from Ora Company a P2,000,000, 8% 5-year note that required five equal annual year-end payments of P500,900. The note was discounted to yield a 9% rate to Mega. At the date of purchase, Mega recorded the note at its present value of P1,948,500. What should be the total revenue earned by Mega over the life of this note? (a) P504,500 (b) P556,000 (c) P800,000 (d) P900,000 B Total payments (500,900 x 5) Present value of note Total interest revenue P2,504,500 1,948,500 P 556,000 National Bank grants a 10-year loan to Abbo Company in the amount of P1,500,000 with a stated interest rate of 6%. Payments are due monthly and are computed to be P16,650. National Bank incurs P40,000 of direct loan origination cost and P20,000 of indirect loan origination cost. In addition, National Bank charges Abbo a 4-point nonrefundable loan origination fee. 2. National Bank, the lender, has a carrying amount of: (a) P1,440,000 (b) P1,480,000 (c) P1,500,000 (d) P1,520,000 B Note receivable P1,500,000 Direct origination cost 40,000 Total P1,540,000 Nonrefundable origination fee (1,500,000 x 4%) 60,000 Carrying value P1,480,000 The direct origination cost incurred by the bank is a deferred charge to be amortized over the term of the loan. The indirect origination cost incurred by the bank is an outright expense. The nonrefundable origination fee charged by the bank against the borrower is unearned income on the part of the bank and deferred financing charge on the part of the borrower to be amortized over the term of the loan. 3. Abbo, the borrower, has a carrying amount of: (a) P1,440,000 (b) P1,480,000 (c) P1,500,000 Note payable Nonrefundable origination fee Carrying value (d) P1,520,000 A P1,500,000 ( 60,000) P1,440,000 4. Impeccable Corporation manufactures and sells electrical generators. On January 1, 2000, it sold an electrical generator costing P700,000 for P1,000,000. The buyer paid P100,000 down and signed a P900,000 non-interest bearing note payable in three equal installments every December 31. Assume the prevailing interest rate for a note of this type is 12%. What is the interest income that should be recognized for the year 2000? (a) P86,465 (b) P108,000 (c) P179,460 (d) P59,820 A Face value Present value (300,000 x 2.4018) Unearned interest income Interest income – 2000 (720,540 x 12%) P900,000 (720,540) P179,460 P86,465 6-month. 10% note receivable dated April 30. X Corporation will receive and record cash of: (a) P5.520) Net proceeds P60. What amount of cash did Roth received from the bank? (a) P540.000 Collections (including recovery) 2. 2005 and 2004: 2005 2004 Credit sales P3.000 P2.000 31 – 90 80. A Corporation charged 15% interest computed on a weighted-average time to maturity of the receivables of 54 days.000) ( 133.480 (d) P61.000 45.000 x 10% x 6/12)]P63.000 ( 300.850 B P6.000 + (60.5.000) ( 180. The bank discounted the note at 12%.238 C Maturity value [500. 2004.000 x 12% x 4/12) ( 2.150 9.150 P313. Sigma provided for uncollectible accounts based on 1% of annual credit sales.000 133.000 6.000 x 5%) Factoring fee (6. Roth discounted the note at a nearby bank at an effective interest rate of 10%. On January 1. 2003.800.000. 2003.000 Accounts written off 27.150) P5.000 note bearing annual interest of 8%.150 (d) P613.000) P513.000.000 none Recovery of accounts previously written off 7.296.000.000 (c) P433.740 C Maturity value [60. Sigma changed its method of determining its allowance for uncollectible accounts by applying certain percentages to the accounts receivable aging as follows: Days past invoice date Percent uncollectible 0 – 30 1 31 – 90 5 91 – 180 20 Over 180 80 In addition.850 8. 7.850 (b) P5. 2005. A Corporation accepted the receivables subject to recourse for nonpayment.850 Accounts receivable Factor’s holdback (6.000 250. A Corporation assessed a fee of 3% and retains a holdback equal to 5% of the accounts receivable.000 ( 27.000 15. 2004. On December 31.386. Ray’s proceeds from this discounted note amounted to: (a) P56.000.000 x 15% x 54/365) Cash received from factoring (d) P5. Ray Company discounted at the bank a customer’s P60. On June 30.000 2. Roth Company received from a customer a 1 – year.915. Assuming all receivables are collected. In addition.000 + (500. Sigma wrote off all accounts receivables that were over 1 year old.810 (c) P513.476.000 none Days past invoice date at 12/31: 0 – 30 300. Sigma Company began operations on January 1.386.000 x 10% x 6/12) Net proceeds P540.000 91 – 180 60.000 of accounts receivable to A Corporation on October 1.000. 2004.000.150 A Factoring fee Interest Total cost of factoring P180. The following additional information relates to the years ended December 31.850 (c) P5.000 Discount (63. X Corporation’s cost of factoring the receivables would be: (a) P313.000.000 x 8%)] Discount (540.000 x 3%) Interest (6.150 (b) P180. After holding the note for 6 months.556.400 (b) P57. P500.000 Over 180 25.480 X Corporation factored P6.400.000 (b) P523.000 .000 90.000 (d) P495. Control was surrendered by X Corporation.000.600 (c) P60. The fair value of the recourse obligation is P90. From inception of operations to December 31.000 x 5%) 91 – 180 (60.000 .000 – 60. A summary of the aging is as follows: Classification by Balance in Estimated % month of sale each category uncollectible November – December 2004 P2.000 31.000. 2004.000 P305.000 Allowance – 1/1/2004 Recoveries Doubtful accounts expense Total Writeoffs (90. Murr installed a computer facility in November 2004 and prepared an aging of accounts receivable for the first time as of December 31.000 10.000) Required allowance – 12/31/2004 P120. Effective with the year ended December 31.000 B 0 – 30 (300.000.800. interim provisions for doubtful accounts were made at 2% of credit sales.000 P66.000 P39. Murr adopted a new accounting method for estimating the allowance the allowance for doubtful accounts at the amount indicated by the year-end aging analysis of accounts receivable.000 2% July – October 600. and no year-end adjustments to the allowance account were made.000 105. additional receivables totaling P60.000 x 1%) Recovery in 2005 Uncollectible accounts expense Total Writeoff in 2005 Required allowance – 12/31/2005 P28.000 (b) P180.000.000 of bad debts were written off.000 x 1%) 31 – 90 (80.000 Correct doubtful accounts expense Recorded amount (2% x 9.000 Based on the review of collectibility of the account balances in the “prior to 1/1/2004” aging category.000 15.000 (d) P140.000 P305. provisions were made monthly at 2% of credit sales.000 (b) P31. 2004. What is the year-end adjustment to the allowance for doubtful accounts as of December 31.000 (c) P38.000 D November – December (2.000 x 75%) Required allowance – 12/31/2004 P 40.000 (c) P320.000 P39.000 Doubtful accounts Allowance for doubtful accounts P140.000 Allowance – 12/31/2004 (2.000 were written off as of December 31. The balance in the allowance for doubtful accounts was P120.000 at January 1.000 (d) P11.000 320.000.000 180.000 27.000 7.000 10% January – June 400. 2004.000 P455.000 x 25%) Prior to 1/1/2004 (200.200.000 60. credit sales totaled P9. 2003. bad debt written off were charged to the allowance account.000 P140. recoveries of bad debts previously written off were credited to the allowance account.000 100.000 x 10%) January – June (400. Murr Corporation provided for uncollectible accounts receivable under the allowance method. and recoveries of accounts previously written off amounted to P15.000 150.000 x 2%) July – October (600.000 4.000 25% Prior to 1/1/2004 200.What is the provision for uncollectible accounts for the year ended December 31. 2004? (a) P305.000 x 20%) Over 180 (25. P90.000. During 2004.000 75% P3. Murr’s usual credit terms are net 30 days.000 x 80%) Required allowance – 12/31/2005 P 3.000 P140. 2005? (a) P39.000 12.000 20.000.000) Increase in doubtful accounts P320.000 + 60. 2004. n/30 terms (included in P2.000 3% 3% 27.500.000 Debit balances – creditors 300.000 Cash received from credit customers. you determined that the allowance for doubtful accounts should be P200.000 Expense (squeeze) 27.11.000 (c) P45.000 Cash received from cash customers 400.000 (b) P8.850.000 The following transactions affecting accounts receivable occurred during the year ended December 31. When examining the accounts of Brute Company.100 1.800.100.000) 500.000/ 1. you ascertain that balances relating to both receivables and payables are included in a single controlling account called receivables control that has a debit balance of P4. 2003: Sales – cash and credit P3.470.000 2003 3% x 900.000 P8. What is the correct total of current net receivables? (a) P8.800.950.850.000 12.000 B Accounts receivable – customers (7.475.000 (c) P8.000 30. excluding recovery 2.000 B 2001 Allowance – 1/1 22.000 (d) P8. 2003: Accounts receivables P 600.000 Writeoff 2.000 + 400.000) 1.000 2002 30.800.000 Credit balances in customers’ accounts 200.000 Allowance for doubtful accounts 30.000 56.000 80.000 Cash received from credit customers who took advantage of the 2/10.000 ( 200.000 Accounts receivable – officers 500.000 Subscriptions receivable 800. An analysis of the make-up of this account revealed the following: Debit Credit Accounts receivable – customers P7.000 Total 49.000 After further analysis of the aged accounts receivable. what was the balance in the allowance for doubtful accounts at the beginning of 2001? (a) P 0 (b) P22. Rip Corporation showed the following balances on January 1.000 = = = 2003 30.000 2002 47.000.000 Cash received in advance from customers for goods not yet shipped 100.000 33.475.200.000.000 50.000 Expected bad debts 150.000 300.000/ 1.280.000 4.000 Percentage of charge sales: 2001 33.800.000 .000.700 Accounts receivable (end of year) 170 230 220 Allowance for doubtful accounts (end of year) 47 30 56 Accounts written off as uncollectible (during the year) 2 50 4 Assuming there was no change in the method used for estimating doubtful accounts.600.500 1.000 Accounts payable for merchandise P4.000 Postdated checks from customers 400.000) Allowance for doubtful accounts Accounts receivable – officers Debit balances – creditors Total current net receivables P8.000 60.000 (d) P49. The following information is available for the Hook company: Amount in Thousands 2001 2002 2003 Charge sales 900 1.000 Cash sales 600 800 700 Total 1.000 Expense 13.900 1.000 30.000 Allowance – 12/31 47. 000 Credit memoranda for returned credit sales 55.900 (c) P86.000/98%)P1.100 The correct amount of inventory is: (a) P83.500 (c) P82.000) P 30. 2003? (a) P855.15) + 120] Inventory as adjusted.120 P82. 31 2003 P70. 2003 is: (a) P85. Excel reported P70.000 Recoveries of accounts written off 5.470.000 – (6.000) P88.475.000 of inventory on December 31. at cost plus 50% markup on cot plus P100 delivery charge 6.800 Goods held as consignee 5.000 Cash received from credit customers. 2003.000 and goods were shipped FOB shipping point on December 31.000) Sales discounts ( 30. Dec.000 (b) P900. excluding recovery (2. shipping costs.000 ( 5.000 Cash received 1. December 31 Goods held as consignee Markup on goods out on consignment [6. on December 31. December 31 P95.500 C Inventory per count. c.620 15.000 Allowance for doubtful accounts (5% x 900. Work in process costing P500 was sent to an outside processor for finishing on December 30. P120 (markup is 15% on cost). b.000. 2003. d.000 (c) P850.000 500 4.000) Credit memoranda for returned credit sales ( 55.000) 2.000) ( 45. The book value of Good’s inventory at the end of 2003 is P95. What is the net realizable value of accounts receivable on December 31. Included in the amount are the following items: Merchandise in transit.Accounts receivable written off as worthless 20.000 Cash refunds to cash customers 10. 2003 Goods in transit.000 . Goods were in transit from a vendor.000) ( 2.620 (b) P85. The correct amount of inventory on December 31. FOB shipping point.000/ 1.600/ 1. The shipment is ready for pick-up by the delivery contractor.000 Sales – credit (3. 2003. Goods out on consignment amounted to P4.000 D Inventory per books. Additional information was given as follows: a.000) Accounts receivable – 12/31 P 900.000 The company uses the percentage of accounts receivable method in determining the allowance for doubtful accounts.100 (b) P87. 2003.50)] Inventory as adjusted. purchased FOB shipping point P6.000 14.280.500.470. 1.000 Sales discounts (2% x 1.000) Accounts receivable written off as worthless ( 20. based on physical count. Included in the physical count were machines billed to a customer.000) Net realizable value P 855.000 Goods out on consignment.000. shipped FOB shipping point Work in process job out for finishing Goods out on consignment [(4. The machines had a cost of P3.000 Accounts receivable – 12/31 P 900.000 a had been billed at P5.000 8. Jan. The invoice cost was P8.200 (d) P88.000 Accounts collected with discount (1.600 (sales price).620 (d) P82.000 (d) P895.880.500.000 A Accounts receivable – 1/1 P 600.000 – 400. 760 (b) P56. December 31.000 (c) P150.800 (c) P193. 2004 to Jan.000) P150. 2004 30.600) P574.000 – 8.600 Purchases of inventory during November 163. December 31.200) ( 5. month-end inventories must be estimated. 2003 2004 purchases 2004 write-off of obsolete inventory Inventory.000) (30. 2005 583.000 The inventory written off became obsolete due to an unexpected and unusual technological advance by a competitor.000) P142.000 (b) P184.940 (c) P62.660 (d) P56.800 .800 Freight in 3.000 Accounts receivable.940 17.400 B Inventory.000 and goods having a selling price of P4. July 1.000 Collection of accounts receivable during November 255. The rate of markup on cost is 50%.000 18.800 Accounts receivable. In its 2004 income statement. The average gross profit rate on net sales is 40%. November 1 P102. 2005 368. July 1.800 P406. A physical inventory is taken only at year-end. July 1.000 Divided by 150% (50% markup on cost) 50% Estimated cost of goods sold P204. what amount should Dely report as cost of goods sold? (a) P218. November 30 153. FOB shipping point.000 (d) P124. The following information relates to the month of November: Accounts receivable. (a) P59.000 Sales.000 ( 11.000 Accounts receivable.200 The estimated cost of the November 30 inventory is: (a) P122. 30 inventory (346.400 (344. All sales are made on account.900.820) P 56. 2005 Purchase returns Purchase discounts taken Freight in Available for sale Cost of goods sold: Net sales (583.800) 3.400 (b) P142. 2003 P90.600 A fire destroyed the entire inventory except for purchases in transit. 2004 Purchases. July 1.800 – 204.200 Purchase discounts taken 5.600 Purchases of inventory during November 163.000 Estimated cost of the Nov. November 30 P153.000 Collection of accounts receivable during November 255.860 B Inventory. hence. December 31.000 Inventory. 2004 P51. December 31.200 Cost of goods available for sale P346.000 2004 write-off of obsolete inventory 34.000 Inventory.000) ( 2. July 1.000 C Inventory. 2004 to Jan. November 1 (102.600 Purchases. 19. 19.800 (d) P224. Pine Company prepares monthly income statements.16. 19. The salvaged goods had an estimated value of P2. of P2. The following information pertains to Dely Corporation’s 2004 cost of goods sold: Inventory.000 2004 purchases 124.600 368.800 Sales returns 8.640) P 61.760 ( 2.000) Sales P306.000 Purchase returns 11.400 Multiply by cost percentage 60% Estimated ending inventory Goods in transit Salvage value of damaged goods Estimated inventory lost in fire P 51.700 that were salvaged from the fire. November 1 183.000 (34. Compute for the cost of inventory lost in fire using the data below: Inventory. 2004 Cost of goods sold P90. November 1 P183.000 124. 2004 to Jan. 000 P29.Goods were in transit from a vendor to Reed on December 31.250.345. 2000 from a vendor were lost in transit. October 31 P255.000) Total inventory reduction P11. 2001. The invoice cost was P60. 2000 was P1.000 60. 2004 be reduced? (a) P29.000) 10.225.000 ( 35.000 before the following information was considered: .000 50.Goods shipped FOB destination on December 21.On December 27. The invoice price was P50. 2000 balance sheet? (a) P1.300.000 A Accounts payable per book A B C D Adjusted accounts payable P1. October 1 P255.000 – 8.200 16.400 Sales 856. FOB shipping point 24.000 on December 20.750 20.800 – 30.000) Goods held on consignment Markup on goods out on approval (10.800 (d) P318.000 claim against the common carrier. 2001.550 (b) P214. The following items were included in Opal Company’s inventory account at December 31. . The invoice cost of P45. The returned goods were shipped by Reed on December 27. at sales price.235. On December 28. goods shipped and billed at P35. A store uses the gross profit method to estimate inventory and cost of goods sold for interim reporting purposes.000 credit memo was received and recorded by Reed on January 6. cost .200 21.000 Goods purchased in transit.000 A Markup on merchandise out on consignment (40% x 28. The balance in Reed Company’s accounts payable account at December 31. What amount should Reed report as accounts payable in its December 31. 2000.000 By what amount should the inventory at December 31. 2000.000 was not recorded by Reed.Goods shipped to Reed.200 (b) P50. 2000. what is the estimated ending inventory at October 31? (a) P206. Past experience indicates that the average gross profit rate is 25% of sales.750 D Inventory cost.225. October 1 Purchases during the month at cost Cost of goods sold [(856.000. 2004: Merchandise out on consignment. Reed received the goods on January 6. 2000.000 (c) P54. The following data relate to the month of October: Inventory cost.200 (c) P295. 2000.000 (b) P1.800 Sales returns 30.000 Purchases during the month at cost 683. P10.600) x 75%] Estimated inventory. . On January 5.000.000) P1. including 40% markup on selling price P28. FOB shipping point on December 20. 2001.000 Goods held on consignment by Opal Company 16.000 (d) P78.400 (619.000 2.650) P318.000 Goods out on approval (sales price.000 683.000 (d) P1.600 Using the data above. a vendor authorized Reed to return.19.000 . Reed filed a P50. P8. for full credit.000 and the goods were shipped FOB shipping point on December 28. .000 (c) P1. Reed notified the vendor of the lost shipment. 2000. A P35. 20009 from a vendor to Reed were lost in transit.300. 2000? (a) P833. and record accounts payable. The cost of the goods was P25.000 of parts which were purchased from Full and paid for in December 2000 were sold in last week of 2000 and appropriately recorded as sales of P28. 2000. Maricar’s policy is to pay invoices in time to take advantage of all cash discounts. shipped FOB shipping point. and they were shipped FOB shipping point on December 29. 2000. all of which was still in the inventory at December 31.000.000 _________ P9.000.000 at retail).000 Per book 1 2 3 4 5 6 7 Adjusted Inventory P1.000 (b) P9. 2001. 22. The parts were included in the physical count of goods on December 31. on December 28.000 ( P 25.000 ( 8.000 2.039.000 Charlie net 30 210. Parts held on consignment from Charlie to Maricar. Art Company has determined its cash flows from 2004 operating activities as P5. The cash balance on January 1. Parts in transit on December 31.250.Maricar Company.200.000 (d) P1.000 24.000.000 (c) P1.600.000 freight cost. the company had the following investing and financing activities.000 were declared and paid. .000) ( 20. What is the adjusted balance of net sales for 2000? (a) P9. 2000.239.000 39. at their stores on December 31.000 specifically relating to merchandise purchases in December 2000.000 at cost (P250. the consignee. These items have been recorded in accounts payable and accounted for in the physical inventory at cost before discount. and in accounts payable at December 31.000 (d) P8.300. Retailers were holding P210.000 23.000 was sold for that amount. was received on January 3. 2004 was P6. 2000. E.000. A quarterly freight bill in the amount of P2. B.880.000 Additional information is as follows: A. What is the adjusted balance of accounts payable on December 31. 2001.250. of goods on consignment from Maricar the consignor.000 ( 159.000) B C B Net sales P9. 2000. amounting to P159.000 Accounts payable P1. net of cash discounts.400. Machinery with a book value of P1. 2000.000 (c) P860. adjust inventory accordingly.500.000 Full net 30 Greg net 30 _________ P1. D.300.000 8. Goods were in transit from Greg to Maricar on December 31. 2000.000 (b) P858.250. a wholesaler distributor of automotive replacement parts.000 2. F.000 (c) P9. P20. net 30 P 400.000.000. An additional P1.000) 210. 2000.356. 2001.000 (b) P1.000 was acquired for cash to replace the one sold.750.000 Accounts payable at December 31.000 ( 159.000 Eagle net 30 90. Additional machinery of P2. amounted to P34. What is the adjusted balance of inventory on December 31.000 (d) P1. Initial amounts taken from accounting records are as follows: Inventory at December 31. 2000? (a) P1.500. During 2004. G. were recorded by Maricar on January 2.000 Dolly net 30 300. Cash dividends of P3.000 including P1. 2000 to customers. All of the purchases from Baker occurred during the last seven days of the year. 2000.000) P1.000 of cash dividends were declared but remained unpaid at the end of the year. Sales of P40. C.000.000 were included in the physical count of goods on December 31. 2000: Vendor Terms Amount Baker 2% 10 days.000. 2000 (based on physical count) P1. The freight bill was not included in either the inventory or in accounts payable at December 31.000 25.000) 860. because the parts were on the loading dock waiting to be picked up by the customers.300.039.350.000 Sales in 2000 P9.000 25.000.000. The customers received the parts on January 6. 200.000 Accounts receivable 2. The present value of the annual rental payments is P8.300. Mart made the first rental payment of P1. P1. On December 31.000 Income tax payable 100.000 which equals the fair value of the building.000.000 (b) P5.700.000 6.000) Issuance of note 4.200.000 Property.000.000 Common stock 10.200.000 1. No dividend was paid on Max’s common stock during the year.500. e.000) Net cash used in financing activities (P 500.000.000 Decrease in accounts receivable 100.000 Inventories 4.000 3.000.700.000 Dividend payable 2.000 (d) P6.000 3.700.000 + 500. plant and equipment 12. 2005.000) P6.000) (100.000 (b) P7.000. 2005.700.000.000.000 750.000 Inventory 775. Mart sold equipment costing P1.000 Investment loss (2.700.000 Unamortized bond discount 112.000) 800.700.000 was converted into common stock having par value of P2.000 (c) P5.000.000 a.200. an unrelated company.500. Mart entered into a capital lease for an office building.000 3. Mart loaned P3. Trial balances of Ron Company at December 31 are as follows: Debits: 2005 Cash P 875.000.000 125.000 plus interest of 10% on October 1.000 Loan receivable 2.000.800.000 Retained earnings 6. b.000) Increase in accounts payable 200.000 Partial payment of note ( 1. plant and equipment 2. 2005.000 D Payment of dividends (P3.300.000.000.000.000) Depreciation (2.000 Gain on sale (800.000 2. On December 31.800. Mart declared cash dividends in one year and paid the dividends in the subsequent year.400.000. Max report net loss of P2. Chase made the first semi-annual principal repayment of P300.000 2.175. Net cash provided by operating activities was: (a) P6. c. How much should be reported as net cash used in financing activities in the 2002 cash flow statement? (a) P4.500.000 500.000 for the year ended December 31.600. 2005.000 Increase in inventories (400.000 10.700.000 . By the end of the year.000.000 x 20%) 500.000 Accumulated depreciation (2.000 of this amount including interest of P300.200.000 2.000) 26.000 A Net income (6.000) Net cash provided by operating activities P6.500. Bonds payable with a book value of P2.000 – 2.000 – 2.000 – 700.800.900.000. Mart acquired 20% of Max Company’s common stock for P6. The following is Mart Company’s comparative balance sheet accounts: 2005 2004 Cash 4.000 27.500 P 2004 800.000 Accounts receivable 825.000 to Chase Company.000 when due on January 2.000 (d) P500.000 (c) P1.000 had been repaid.000 Property.000 Accounts payable 2. 2005. 2006.700.000 + 2. During 2005.000 6.000 Decrease in income tax payable (400. On January 2.000.Note payable of P4.000.200.000.000 Capital lease liability 8.700.000 cash.000 1.500.000.500.000.000. d.000 Additional paid in capital 1.700.300.000. for P800.000) Investment in Max Company 5.000 with a carrying amount of P700.375.500.000 was taken out of the local bank early in the year.000.000) (2.000 1. 000 29.000.500 (c) P95.000 15.000) 5.500) 95.000 (c) P4.000 1.000 Dividend declared (of which P1.500 4.300.500 A Other operating expenses Increase in operating expenses payable Insurance expense Increase in prepaid insurance Depreciation Amortization Cash paid for operating expenses 95.500 187.500 Retained earnings 1.000 Interest revenue 6.467.000.200.399.000 1. Ron uses the direct method to prepare its cash flow statement.000 (1.500 Accumulated depreciation 412.000 Issuance of common stock for cash 5.125.000 The 2005 cash flow statement should report net cash provided by financing activities at: (a) P4.500 65.500.500.000 Insurance expense 48.500 637.000 Other operating expenses payable 18.000 Trade accounts payable 625.000 Increase in customer’s deposits 300.470.000 (2.000.000 Payment of bank loan including interest of P200.500 C Interest expense Amortization of bond discount Interest paid 107.800.000 3.000 405.000 A Borrowed from bank Dividends paid Issuance of common stock Payment of bank loan Net cash provided by financing activities 3.000 Sale of securities for cash 1.000 2.000 Ron purchased P125.117.500 Deferred income taxes 132.000 Selling expenses 3.900 ( 3.500 115.000) 4.000 19.500 Sales 13.000 28.000 (b) P1.500 Interest expense 107.000 Other operating expenses 95.500.000 (d) P4. Data below came from the comparative trial balance of Excel Corporation. What amount should Ron report in its cash flow statement for the year ended December 31.000 equipment during 2005. The books are kept on the accrual basis.000 was paid during the year) 2.000 245.400 (b) P87.500 3% callable bonds payable 1.000 General and administrative expenses 3.000.100 and amortization of P1.500.000) 48.782.100) ( 1.200.Cost of goods sold 6.000 437.000 (d) P42.000 Credits: Allowance for uncollectibles P 32.400 .000.000.000 (b) P107.000 ( 3.900 Accounts payable 364.500.400.700 Inventories 420.000 9.500.600 (d) P102.800 1. 2005 for cash paid for interest? (a) P120. December 2005 2004 Accounts receivable 220.300.250.000 Net sales 1.500 Income taxes payable 67.500 P 27.500 (c) P139.500 375.000 345.400) 137.000 Common stock 1.500 1.250.000 Income tax expense 52.425.000 Additional paid in capital 227. The transactions of Art Company for the year 2005 included the following: Purchase of land for cash (cash was borrowed from bank) 3. Ron allocated one-half of its depreciation expense to selling expenses and the remainder to general expenses.000 500.000 Prepaid insurance 3.000.000 Cash paid for operating expenses during the year is: (a) P137.000 Interest receivable 800 1.500 (12.500 Cost of goods sold 800. Included in the operating expenses are depreciation of P3.000.537. Dione uses the conventional accrual basis of accounting. The company’s experience shows that postdated checks are eventually realized. The balance sheet at December 31 of Love Company showed a cash balance of P200. per book Cash sales for January 1 to 7 NSF checks Undelivered check Customer’s postdated checks Cash for purchase of a computer Adjusted cash balance P200. Some of the companies require payments in advance for performing services while others bill Dione after services are rendered.000 from January 1 to 7.500 in payment of liabilities were prepared before December 31. 2003 balance sheet was recorded at P6.400.000 The value of the land to be disclosed in the balance sheet as of December 31. Checks of P6.000 Loss on sale of land 200.000. the 2004 cash flow statement should report cash received from leasing office space at: (a) P8.000 200.200.000) Balance of land.200 .8M D Balance of land. Land on January 1. 31. 2002 Rent receivable.000 ( 400.200 (b) P166. and recorded in the books.000 32.000.000) 800. Some law firms are required to pay rent in advance for using their offices while others are allowed to their offices before paying rent. b.000 deposited with and returned by the bank.200 (d) P200.500 (c) P192.000 2.000.000) P152.000. 1. were predated as of December 28 to 31. 2002 Unearned rent revenue.000 being reserved for the purchase of a mini-computer which will be delivered soon. Dione Company employs several consulting companies. An examination of the books disclosed the following: a.300 are being held by the cashier as part of cash.000 Under the direct method. Cash sales of P15. The cash account includes P30.500 ( 4.000 ( 600.000 Unearned rent revenue 1. How much cash balance is to be shown on the December 31 balance sheet? (a) P152. Selected information in the year 2003 from the statement of cash flows follows: Net income P20.400.000 (c) P8. 2003 is: (a) P6M (b) P7M (c) P8.000 31. 2001 Unearned rent revenue. Customer’s checks totaling P5.000 A Cash balance. e. on December 27. Selected information obtained from the company’s comparative balance sheet is shown below: 2004 2003 Prepaid consulting fees 200.000 ( 15.600.800.400. The amount of cash paid to consulting companies during 2004 was P6.400.000 Depreciation expense 3. 2001 Cash received from leasing P7.800. c.000 (d) P7.000 Proceeds from sale of land 1.000 Investing and financing activities not affecting cash: Issued preferred stock for land 2. but withheld by the treasurer.000 500.000 A Rent revenue earned Rent receivable.600.000 (b) P7.00 + 200.300) ( 30.800.800.000.000 (1.000) 6.000. Customer’s postdated checks totaling P4.000. 2003 P6. and charged to the cash account.30.000 800. Dione also leases office space to several law firms. Jan.000) ( 5.000 Accrued consulting fees 700.400.000 1.000) P8.000 and the amount of rent revenue earned from leasing office space was P7. were not recorded in the books.000 Rent receivable 600. 2003 Preferred stock issued for land Cost of land sold (1.4M (d) P6. NSF.000. d.000 400.000.000.600.000) P6. Dec. on December 27. but returned to cashier on January 2. An examination of the books disclosed the following: a.750 (b) P69. Customer’s postdated checks totaling P7. 2004 and recorded in the books.000 3.500 Deposits 7.000) ( 1. 2004.200 1.750 Items 30 to 34: On October 7.500) 9.700.300 ( 7.000 earmarked for the purchase of an office equipment which will be delivered soon.300 in payment of liabilities were prepared before December 31. The cash account includes P40.750 Cash sales for January ( 12. The balance sheet at December 31.000 4 Friday 6. b.400 3 Thursday 800 1. The sales book was left open up to January 5. outstanding checks – October 31.500 (c) P58.350 C Cash balance. e.. Cash sales of P12. An examination of the books disclosed the following: a. 2004 were not recorded in the books.644.600 ( 15.000 2. d. 2005 were predated as of December 28 to 31.000 October 1 Tuesday 1. NSF. Checks of P9.400 5 Saturday 4.500) Undelivered check 5. but not mailed or delivered to payees.800 deposited with but returned by bank. 2004.600 D Cash balance. 2004 balance sheet? (a) P105. recorded in the books.000) NSF checks ( 4.600 in payment of liabilities were prepared before December 31. NSF. erroneously charged to Davao account 5. P10. How much cash balance is to be shown on the December 31 balance sheet? (a) P91. Return was not recorded in the books. on December 27.400 (d) P50. How much cash balance is to be shown on the December 31. September 30 – overdraft P6.000.800) ( 40. P1. per book P 91. .000 were considered as sales in December 2004.600 2 Wednesday 3.000 being reserved for the purchase of an office machine which will be delivered soon. were “redeemed” on December 31.000) Adjusted cash balance P 54. 2004 and charged to the cash account.000 2.500.500 Cash receipts are deposited at the beginning of every Monday.700) Cash for purchase of a computer ( 20. the cash book of Davao Company showed the following entries: Receipts Checks September 30 (overdraft) P 0 P5.750. The bank statement at the close of October 5 showed: Balance. c.600 (b) P60.800 A check for P256 issued on October 5 had been canceled by the company but the bookkeeper has not made any entry for this. Personal checks of officers.500 deposited with and returned by the bank. 2005. d. Wednesday and Friday and in each case includes the receipts of the preceding two working days.150 (c) P54.000 from January 1 to 5. 2004. 2005 and cash sales totaling P15. Additional information: undeposited collections – October 31.400) Personal checks of officers ( 2. b.000 Checks (includes all checks issued prior to October 4 and also a check for P300 belonging to Cebu Co. Checks of P5. P2. P5. The cash account includes P20. c.600. per book Cash sales for January NSF checks Undelivered check Customer’s postdated checks Cash for purchase of office equipment Adjusted cash balance P105. 2004.600 34.000) P 50.33. but withheld by the treasurer. The balance sheet at December 31 of Live Company showed a cash balance of P91. Customer’s checks totaling P4.750 (d) P90.600 Customer’s postdated checks ( 3.2004 of Lore Company showed a cash balance of P105. 144 (d) P344 B Balance per book. The bank balance as at October 5.35.500) 7.000) 15.300) 37. 2004 should be: (a) P200 (b) P300 (c) P400 Outstanding checks – October 31 P 5.300) Undeposited collections 10.500 Book disbursements (10. 2004 should be: (a) P5.675 Notes receivable in the possession of a collecting agency 2.000 38.900) (P 900) 36.050) Total P 360 33. Oct.075 16. The book balance as at October 5. The adjusted book and bank balances as at October 5. September 30 Receipts (October 1 to 5) Checks (October 1 to 5) Balance per book.644 (b) P644 (c) P1.100 (d) P1. 2004 should be: (a) (P3.000 17. 2004 should be: (a) P4.644) Outstanding checks – September 30 P 500 Unadjusted balance per bank. which was determined to consist of the following: Petty cash fund P 360 Cash in Metro.900) (c) P1.200 A (d) P1. with a check for P600 still outstanding 33.5(P5.000 Outstanding checks ( 5.800) (P5.644) Bank error ( 300) Adjusted balance per bank. The outstanding checks as at September 30.000 ( 5.100 B (d) P1.200 Balance per bank.225 A Petty cash fund Cash in Metro (33.750 P50.800 – 1.000 Undeposited collections – October 31 Bank receipts Book receipts Undeposited collections – September 30 P10. Oct.050 and a traveler’s check for P1.185 * end of the examination – practical accounting 1* . September 30 Deposits Checks Balance per bank. The undeposited collections as at September 30.675 – 600) Undeposited receipts (17.000 7.475 (c) P62. 2004 should be: (a) (P900) (b) (P3.000) P 2.000 C (d) P500 D 39.000 (c) P2. 2004 showed a cash balance of P68.644 Bank disbursements (5.500 Undeposited receipts.935 (d) P66.750 IOUs signed by employees 495 Paid vouchers.800 – 300) 5. not yet recorded 645 Total P68.225.900) (b) (P5. per bank statement. The balance sheet of Happy Company as of December 31.800 Bond sinking fund – cash 12.000 (15.000 (b) P3. October 5 (P5. including a postdated check for P1.000 (10. 5 (P 644) 40.225 At what amount should cash on bank and in bank be reported on Happy’s balance sheet? (a) P50.900 – 256) (10. October 5 (P6.185 (b) P53.300) (c) P1.