Finals - FS to RECEIVABLE

Problem

1. On May 1, 2020, Cristine Company established an imprest petty cash fund for P 20,000 by
writing a check drawn against the checking account. On May 31, 2020, the fund consisted
the following:

Currency and coins 2,000

Receipts for supplies 4,000
Receipts for transportation 3,000
Due from employees 1,200
Traveler’s check 3,000

At the end of the month, the entity wrote a check to replenish the fund. What is the
replenishment under the imprest fund system?
a) 6,800
b)18,000
c) 11,800
d) 20,000
2. Houghton Company has the following items: share capital–ordinary, $720,000; treasury shares,
$85,000; deferred taxes, $100,000 and retained earnings, $313,000. What total amount should
Houghton Company report as shareholders’ equity?
a. $848,000.
b. $948,000.
c. $1,048,000.
d. $1,118,000.
3. On December 31, 2020, the accounts receivable of Harem Company had a balance of P8,200,000. An analysis
of the accounts receivable showed the following:

Accounts known to be worthless 100,000

Advance payments to creditors on purchase orders 400,000
Advances to affiliated entities 1,000,000
Customer’s accounts reporting credit balances arising
from sales returns (600,000)
interest receivable on bonds 400,000
Trade accounts receivable 3,500,000
Subscription receivable due in 30 days 2,200,000
Trade installments receivable die 1-18 months,
Including unearned finance charge of P50,000 850,000
Trade accounts receivable from officers, due recently 150,000
Trade accounts on which post dated checks are held
(no entries were made on receipt of checks) 200,000

What is the correct balance of trade accounts receivable?

a. 4,650,000
b. 4,700,000
 c. 4,150,000
d. 4,050,000
4. Korte Company reported the following information for 2020:
Sales revenue $500,000
Cost of goods sold 350,000
Operating expenses 55,000
Unrealized holding gain on available-for-sale securities 20,000
Cash dividends received on the securities 2,000
For 2020, Korte would report comprehensive income of
a. $117,000.
b. $115,000.
c. $97,000.
d. $20,000.
5. Net cash flow from operating activities for 2021 for Spencer Corporation was $300,000. The following
items are reported on the financial statements for 2021:
Cash dividends paid on ordinary shares 20,000
Depreciation and amortization 12,000
Increase in accounts receivables 24,000
Based on the information above, Spencer’s net income for 2021 was
a. $312,000.
b. $296,000.
c. $264,000.
d. $256,000.
6. During 2021, Orton Company earned net income of $384,000 which included depreciation expense
of $78,000. In addition, the company experienced the following changes in the account balances
listed below:
Increases Decreases
Accounts payable $45,000 Accounts receivable $12,000
Inventory 36,000 Accrued liabilities 24,000
Prepaid insurance 33,000
Based upon this information what amount will be shown for net cash provided by operating activities
for 2021?
a. $492,000
b. $465,000
c. $285,000
d. $267,000
7. Melissa Company provided the following information for the current year:

Beginning inventory 400,000

Freight in 300,000
Purchase returns 900,000
Ending inventory 500,000
Distribution costs 1,250,000
Sales discount 250,000

The cost of goods sold is six times the distribution costs.

 What is the amount of gross purchases?
a. 6,500,000
b. 6,700,000
c. 8,000,000
d. 8,200,000
8. Caticlan Company provided the following data on December 31, 2020:

Cash, including sinking fund of P500,000 for bond

Payable due on June 30, 2021 2,000,000
Notes receivable 1,200,000
Note receivable discounted 700,000
Accounts receivable – unassigned 3,000,000
Accounts receivable – assigned 800,000
Equity of assignee in accounts receivable assigned 500,000
Inventory, including P600,000 cost of goods in transit
Purchased FOB destination. The goods were
Receive on January 3, 2021 2,800,000
Allowance for doubtful accounts 100,000

What total amount of current assets should be reported on December 31, 2020?
a. 7,900,000
b. 8,400,000
c. 7,400,000
d. 7,700,000

9. Jerome Company sold P 5, 750, 000 in accounts receivable for cash payment of P 4,
950,000.An allowance for bad debts of P500, 000 had previously been established by the
entity in relation to these accounts. To allow adjustments and possible customer returns the
factor withheld 10% of the cash proceeds.
What is the loss on factoring that should be recognise?
a.300, 000
b.498, 875
c. 500, 000
d.800, 000
10. Selected information from Dinkel Company's 2021 accounting records is as follows:
Proceeds from issuance of ordinary shares $ 400,000
Proceeds from issuance of bonds 1,200,000
Cash dividends on ordinary shares paid 160,000
Cash dividends on preference shares paid 60,000
Purchase of treasury shares 120,000
Sale of ordinary shares to officers and employees not included above 100,000
Dinkel's statement of cash flows for the year ended December 31, 2021, would show net cash
provided (used) by financing activities of
a. $60,000.
b. $(220,000).
 c. $160,000.
d. $1,360,000.
11. Trans Co. had the following balances at December 31, year 2:
Cash in checking account $ 35,000 Cash in money market account 75,000 US Treasury bill, purchased
11/1/year 2, maturing 1/31/year 3 350,000 US Treasury bill, purchased 12/1/year 2, maturing 3/31/year 3
400,000 Trans’s policy is to treat as cash equivalents all highly liquid investments with a maturity of three
months or less when purchased. What amount should Trans report as cash and cash equivalents in its
December 31, year 2 balance sheet?
a. $110,000
b. $385,000
c. $460,000
d. $860,000
12. The net income for Akira Industries for 2022 was ¥302,000. During 2022, depreciation on plant assets
was ¥114,000, amortization of patent was ¥50,000, and the company incurred a loss on sale of plant
assets of ¥27,000. What is the net cash flow from operating activities?
a. ¥111,000
b. ¥439,000
c. ¥339,000
d. ¥493,000
13. On April, 31, 2020, Alex Company’s bank reconciliation was received but the closing balance
of the account was illegible. Amongst the attempt of communicating with the bank none has
been successful in securing the desired information.

March 31, 2020 book balance 2,560,000

Note collected by Bank 250,000
NSF check of customer 150,000
Interest earned on note 15,000
Bank Service Charge on NSF check 5,000
Other bank Service Charges 3,000
Outstanding checks 250,000
Deposits made but kept in night depository 380,000

Below are the data obtainable in preparing bank reconciliation:

What is the cash balance per bank statement?

a.2,560,000
b.2, 667,000
c.2,825,000
d.2,983,000
14. Beldad Company reported its December 31, 2020 checkbook balance at
P5,000,000.Data about certain cash items follows:

• A customer check amounting to P150, 000 dated January 3, 2021 was included in
the December 31, 2020 checkbook balance.
 • Check drawn to Beldad’s account worth P 300,000, payable to a vendor, dated and
recorded in Beldad’s books on December 31, 204 but not delivered until January 11,
2021.
• Another customer check for P500,000 deposited on November 30, 2020 was
included in the checkbook balance but returned for insufficiency of fund. The check
was redeposited on December 20, 2020 and cleared two days later.
• A check worth P150, 000 payable to supplier dated and recorded on December 29,
2020 was mailed on January 13,2021.
• A petty cash fund of P55, 000 with the following summary on December 31,2020:

Coins and currencies P5, 000

Petty cash vouchers 43,000
Employee’s vales 2,000
Check drawn by Beldad
Company marked “collections for Thanksgiving party” 5,000

• A check of P43, 000 was drawn on December 31, 2020 payable to Petty Cash.

What total amount should be reported as “cash” on December 31,2020?

a. 5,000,000
b. 5,048,000
c. 5, 348,000
d. 5,355,000
15. Gar Company reported the following account balances on December 31, 2020:

Accounts payable 1,900,000

Bonds payable 3,400,000
Premium on bonds payable 200,000
Deferred tax liability 400,000
Dividend payable 500,000
Income tax payable 900,000
Note payable, due January 31, 2021 600,000

On December 31, 2020, What total amount should be reported as current liabilities?
a. 7,100,000
b. 4,300,000
c. 3,900,000
d. 4,100,000
16. For Randolph Company, the following information is available:
Capitalized leases R280,000
Trademarks 90,000
Long-term receivables 105,000
In Randolph’s statement of financial position, intangible assets should be reported at
a. R 90,000.
b. R105,000.
c. R370,000.
 d. R385,000.
17. LB Company reported petty cash fund which comprised the following:
Coins and Currency P 5,300
Paid vouchers
Transportation P 600
Gasoline 400
Office supplies 1,500
Postage Stamps 150
IOU’ signed by employees 750 3,400
Check drawn by LB Company to the order of the petty
cash custodian 3,000

What is the correct amount of petty cash fund for statement presentation purposes?
a.5, 300
b.8, 300
c.8, 700
d.11, 700
18. During 2021, equipment was sold for $156,000. The equipment cost $252,000 and had a book value
of $144,000. Accumulated Depreciation—Equipment was $687,000 at 12/31/2020 and $735,000 at
12/31/2021. Depreciation expense for 2021 was
a. $60,000.
b. $96,000.
c. $156,000.
d. $192,000.
19. Kimberly Company provided the following data for the purpose of reconciling the cash
balance per book with the balance per bank statement on December 31,2020:

Balance per bank statement 1,300,000

Oustanding checks (including certified check of 70,000) 400,000
Deposit in Transit. 150,000
December NSF checks (of which 35,000 had been
redeposited and cleared by December 26) 100,000
Erroneous credit to Kimberly's account, representing proceeds
ofloan granted to another company 280,000
Proceeds of note collected by bank for Kimberly
net of service charge of 18,000 650,000

What amount should be reported as cash in bank on December 31,2020?

a) 1,780,000
b) 856,000
c) 780,000
d) 1,500,000
20. For the year ended December 31, 2020, Transformers Inc. reported the following:
 Net income $ 60,000
Preference dividends declared 10,000
Ordinary share dividends declared 2,000
Unrealized holding loss, net of tax 1,000
Retained earnings, beginning balance 80,000
Share capital – Ordinary 40,000
Accumulated Other Comprehensive Income,
Beginning Balance 5,000
What would Transformers report as total stockholders' equity?
a. $172,000
b. $168,000
c. $128,000
d. $120,000
21. Gumamela Company provided the following data at year-end:

Accounts payable, including cost of goods

Received on consignment of P150,000 1,350,000
Accrued taxes payable 125,000
Customers’s deposit 100,000
Manila Company as guarantor 200,000
Bank overdraft 55,000
Accrued electric and power bills 60,000
Reserve for contingencies 150,000

What total amount should be reported as current liabilities?

a. 1,840,000
b. 1,740,000
c. 1,650,000
d. 1,540,000
22. The following items were among those that were reported on Dye Co.'s income statement for the year ended
December 31, 2020:
Legal and audit fees $130,000
Rent for office space 180,000
Interest on inventory floor plan 210,000
Loss on abandoned equipment used in operations 35,000
The office space is used equally by Dye's sales and accounting departments. What amount of the above-listed
items should be classified as general and administrative expenses in Dye's income statement?
a. $220,000
b. $255,000
c. $310,000
d. $430,000
23. The following information on selected cash transactions for 2021 has been provided by Mancuso
Company:
Proceeds from sale of land $160,000
Proceeds from long-term borrowings 400,000
Purchases of plant assets 144,000
Purchases of inventories 680,000
 Proceeds from sale of Mancuso ordinary shares 240,000
What is the cash provided (used) by investing activities for the year ended December 31, 2021, as a
result of the above information?
a. $16,000
b. $256,000.
c. $160,000.
d. $800,000.
24. At year-end, the current assets of Hazel Company revealed cash and cash equivalents of P700,000, accounts
receivable of P1,200,000 and inventories of P600,000. The examination of accounts receivable disclosed the
following:

Trade accounts 930,000

Allowance for doubtful accounts ( 20,000)
Claim against shipper for goods lost in transit 30,000
Selling price of unsold goods sent by Hazel
On consignment at 130% of cost and not
Included in ending inventory 260,000
Total accounts receivable 1,200,000

What total amount should be reported as current assets at year-end?

a. 2,412,000
b. 2,440,000
c. 2,240,000
d. 2,500,000
25. At Ruth Company, events and transactions during 2020 included the following. The tax rate for all items is
30%.
(1) Depreciation for 2018 was found to be understated by $30,000.
(2) A litigation settlement resulted in a loss of $25,000.
(3) The inventory at December 31, 2018 was overstated by $40,000.
(4) The company disposed of its recreational division at a loss of $500,000.

The effect of these events and transactions on 2020 income from continuing operations net of tax would be
a. $17,500.
b. $38,500.
c. $66,500.
d. $416,500.
26. On April 1,2021, CPA company began operating a service proprietorship with an initial cash investment of 500,000.
The proprietorship provided 320,000 of services in April and received full payment in May. It incurred expenses of
150,000 in April, which were all paid in June. During May, CPA Company withdrew 50,000 against her capital account.

Determine the profit for two months ended May 31,2021 under cash basis and accrual basis accounting.
a. 320,000 and 170,000
b. 170,000 and 320,000
c. 320,000 and 320,000
d. 170,000 and 170,000
27. Pullman Corporation had retained earnings of $700,000 at January 1, 2020. During the year the company
experienced a net loss of $300,000 and declared cash dividends of $80,000. It was discovered in 2020 that
$50,000 of repair expense was debited to the land account in 2019. The income tax rate is 20%. Determine the
retained earnings balance at December 31, 2020.
 a. $270,000
b. $360,000
c. $350,000
d. $280,000
28. Mill Company reported the following account balances on December 31, 2020:

Accounts payable 1,500,000

Bonds payable, due 2021 2,500,000
Discount on bonds payable 300,000
Dividend payable 800,000
Note payable, due 2022 2,000,000

What total amount should be reported as current liabilities?

a. 4,500,000
b. 5,100,000
c. 6,500,000
d. 7,800,000
29. On December 1, 2019, Nonchalant Bank gave a borrower a P250,000, 11% loan. The bank
paid proceeds of P200,000 after deduction of a 50,000 nonrefundable loan origination fee.
Principal and interest are due in sixth monthly installments of P4,540 beginning January 1,
2020. The repayment yield an effective interest rate of 11% at a present value of P250,000
at 12.4% at a present value of P200,000. What amount of interest income should be
reported in the 2019 income statement?
a. 2, 067
b. 1, 833
c. 2, 076
d. 0
30. Joshtin Company used the allowance method of accounting for uncollectible accounts.
During 2019, the entity had charged 750,000 to bad debt expense and wrote off accounts
receivable of 780,000 as uncollectible. What was the decrease in working capital?
a) 750,000.
b) 780,000
c) 650,000.
d) 0
31. Compass Company sold machinery on January 1, 2019 for which the cash selling price
was P758, 200. The buyer entered into an installments sale contract at an implicit interest
rate of 10%. The contract required payment of P200,000 a year over 5 years with the first
payment due on December 31, 2019. What amount of interest income should be reported
in 2020?
a. 63, 402
b. 0
c. 100, 000
d. 75, 820
32. Delta, Inc. sells to wholesalers on terms of 2/15, net 30. Delta has no cash sales but 50% of Delta’s customers
take advantage of the discount. Delta uses the gross method of recording sales and trade receivables. An
analysis of Delta’s trade receivables balances at December 31, year 2, revealed the following:
 Age Amount Collectible 0 - 15 days $100,000 100% 16 - 30 days 60,000 95% 31 - 60 days 5,000 90% Over
60 days 2,500 $500 $167,500 In its December 31, year 2 balance sheet, what amount should Delta report for
allowance for discounts?
a. $1,000
b. $1,620
c. $1,675
d. $2,000
33. Diane Company provided the following information in relation to cost of goods sold for the current year:

Inventory, January 1 4,500,000

Purchases 6,000,000
Loss on inventory writedown 1,500,000
Inventory, December 31 at net realizable value 1,000,000

The inventory writedown is due to an unexpected and unusual technological advance by a computer.

In the income statement, what amount should be reported as cost of goods sold after inventory writedown?
a. 9,500,000
b. 9,000,000
c. 8,000,000
d. 9,250,000
34. Kaila World assigned 2,500,000 of accounts receivable as collateral for a 1,700,000 loan with
a bank. The bank assessed a 4% finance fee and charged 6% interest on the note at maturity.
What would be the journal entry to record the transaction?

a) Debit cash 2,432,000, debit finance charge 68,000 and credit note payable
2,500,000
b) Debit cash 2,342,000, debit finance charge 68,000 and credit note payable
2,050,000
c) Debit cash 2,500,000, debit finance charge 68,000 and credit note payable
2,500,000
d) Debit cash 2,656,000, debit finance charge 86,000 and credit note payable
2,500,000
35. On July 1, 2018, Mavis Company sold equipment to Dundas Company for 1,500,000. Mavis
accepted a 10% note receivable for the entire sales price.

This note is payable in two equal installments of 400,000 plus accrued interest on December
31, 2018 and December 31, 2019.

On July 1, 2019, the entity discounted the note at a bank at an interest rate of 12%. What is
the amount received from the discounting of note receivable?
a) 416,500
b) 413,600
c) 431,600
d) 421,300
36. The following information is from Sampaguita Corp’s first year of operations:
 1. Merchandise purchased p550, 000
2. Ending Merchandise Inv. 150, 000
3. Collections from customers 185, 000
4. All sales are on account and goods sell at 20% above cost.

What is the accounts receivable balance at the end of the company’s first year of operation?
a.P295, 000
b.P345, 900
c.P322, 988
d.P564, 876
37. Ivan Company prepared the following bank reconciliation in December 31, 2020:
Balance per Bank Statement 2, 800,000
Add: Deposit in Transit 185, 000
Checkbook Printing Charge 8, 000
Error made by Ivan in recording check No.13 45, 000
NSF Check 120, 000 358, 000

3, 158,000
Less: Outstanding Check 95, 000
Note Collected by Bank(includes 15, 000 355,000 450, 000
interest)
Balance per Book 2, 700, 000

The entity had P 230,000 cash on hand on December 31, 2020. What amount should be
reported as cash in the statement of financial position on December 31, 2020

a. 3, 120, 000
b. 3, 140, 500
c. 3, 150, 600
d. 3, 950 ,000
38. Violago Company provided the following account balances at year-end:

Accounts receivable 1,600,000

Financial assets at fair value through profit or loss 500,000
Financial assets at amortized cost 1,300,000
Cash 1,100,000
Inventory 3,000,000
Equipment and furniture 2,500,000
Accumulated Depreciation 1,500,000
Patent 400,000
Prepaid Expenses 100,000
Equipment held for sale 1,800,000

What total amount should be reported as current assets at year-end?

a. 8,100,000
b. 6,300,000
 c. 8,000,000
d. 7,600,000
39. On January 1, 2020, Zhang Inc. had cash and share capital of ¥5,000,000. At that date, the company had no
other asset, liability, or equity balances. On January 5, 2020, it purchased for cash ¥3,000,000 of equity
securities that it classified as available-for-sale. It received cash dividends of ¥400,000 during the year on these
securities. In addition, it has an unrealized loss on these securities of ¥300,000. The tax rate is 20%.

Compute the amount of accumulated other comprehensive income/(loss).

a. ¥(300,000)
b. ¥100,000
c. ¥80,000
d. ¥240,000
40. Snickers Company prepared an aging of its accounts receivable on December 31, 2022,
and determined that the net realizable value of the accounts receivable was P2, 000,000.
Additional information is available as follows:

Allowance for uncollectible accounts on January 1 230,000

Accounts written off as uncollectible 200,000
Accounts receivable at December 31 2,200,000
Uncollectible accounts recovery 50,000

For the year ended December 31, 2022, what is the uncollectible expense?
a. 100,000
b. 80,000
c. 160,000
d. 40,000
41. Ivan Company kept all cash in checking account. An examination of the accounting records
and bank statement for the month ended June 30, 2020 revealed the following information:

• The cash balance per book on June 30, 2020 is P9, 550, 000.
• The bank statement shows a P35, 000 service charge for June
• A deposit of P 450, 000 which was placed in the bank’s night depository on June 28
but did it appear on the bank statement.
• Checks outstanding on June 30 amount to P250, 000.
• Notes collected by the bank that shows an amount of P850, 000 and was credited to
Ivan’s account.
• Ivan discovered that a check written in June 23, 2020 for P350, 000 in payment of
an account payable had been recorded in the book’s record for only P35, 000.
• Included in the bank’s statement was NSF check for P150, 000 that Ivan had
received from a customer on June 13.

What amount should be reported as cash in bank on June 31, 2020?

a. 10, 400, 000

b. 10, 085, 000
c. 9, 950, 000
 d. 9, 900,000
42. On December 1, 2022, Death Company signed a specific accounts receivable totaling 5,000,000 as
collateral on a 3,000,000, 10% notes from a certain finance entity. Death Company will continue to
collect the assigned account receivable. In addition to the interest on the note, the entity also charged
a 5% finance fee deducted in advance on the 3,000,000 value of the note. The December collections
of assigned accounts receivable amounted to1, 500,000 less cash discount of 100,000. On December
31, 2022, Death Company remitted the collection to the finance entity in payment of the interest
accrued on December 31, 2022 and the note payable.
What amount should be disclosed as the equity of Death Company in assigned accounts on
December 31, 2022?
a. 25
b. 125,000
c. (125,000)
d. (25.000)
43. In the December 31, 2020 statement of financial position of CUTE Company, the current
receivables consisted of the following:
Trade accounts receivable 3. 000, 000
Allowance for doubtful accounts (300,000)
Claims against shipper for goods lost
in transit in November 2020 500, 000
Selling price of unsold goods sent
by Cute Company on consignment 800,000
Security deposit on lease of warehouse 300,000
Total 4,300,000

What total amount should be reported as current trade and other receivables?
a. 3,400,000
b. 3,300,000
c. 3,200,000
d. 3,000,000
44. Burr Company had the following account balances at December 31, year 2:
Cash in banks $2,250,000 Cash on hand 125,000 Cash legally restricted for additions to plant (expected to be
disbursed in year 3) 1,600,000 Cash in banks includes $600,000 of compensating balances against short-term
borrowing arrangements. The compensating balances are not legally restricted as to withdrawal by Burr. In
the current assets section of Burr’s December 31, year 2 balance sheet, total cash should be reported at
a. $1,775,000
b. $2,250,000
c. $2,375,000
d. $3,975,000
45. Alberta Company sold an office equipment with a carrying amount of 739,000, receiving a
noninterest-bearing note due in three years with a face amount of 1,300,000. There is no
established market value for the equipment. The interest rate on similar obligations is
estimated at 12%. The present value of 1 at 12% for three periods is .712. What amount
should be reported as gain or loss on the sale and interest income for the first year?
 Gain (loss) Interest Income
a) 200,000. 288,00
b) 168,600. 110,072
c) 186,600. 110,072
d) 110,072. 186,600
46. On December 31, 2019, Capperine Company sold a building, receiving a consideration a
P6, 000, 000 noninterest bearing note due in three years. The building had a cost of P2,
500,000 and the accumulated depreciation was P1, 000,000 at the date of sale. The
prevailing rate of interest for a note of this type was 12%. The present value of 1 for three
periods at 12% is 0.71. What amount should be reported as gain on sale in 2019?
. a. 2, 500,000
b. 6,000,000
c. 1, 000, 000
d. 2, 760, 000
47. Under the accrual basis, Lucena Company reported rental income for the current year at
600,000. The entity provided the following additional information regarding rental income.

Unearned rental income - January 1 50,000

Unearned rental income - December 31 75,000
Accrued rental income - January 1 30,000
Accrued rental income - December 31 40,000

What total amount of cash was received from rental in the current year?
A. 585,000
B. 615,000
C. 625,000
D. 655,000
48. The board of directors of Akiko Corp. declared cash dividends of ¥265,000 during the current year. If
dividends payable was ¥83,000 at the beginning of the year and ¥77,000 at the end of the year, how
much cash was paid in dividends during the year?
a. ¥425,000
b. ¥271,000
c. ¥259,000
d. ¥265,000
49. During the current year, Samar Company reported total operating expenses of 3,200,000 consisting
of 1,000,000 depreciation, 700,000 insurance and 1,500,000 salaries. The prepaid insurance is
150,000 on January 1 and 200,000 on December 31. The accrued salaries payable totaled of 120,000
on January 1 and 100,000 on December 31.

What total amount was paid for operating expenses?

A.? 3,270,000
B.? 2,270,000
 C.? 2,130,000
D.? 2,230,000
50. Lindsay Corporation had net income for 2021 of $3,000,000. Additional information is as follows:
Depreciation of plant assets $1,200,000
Amortization of intangibles 240,000
Increase in accounts receivable 420,000
Increase in accounts payable 540,000
Lindsay's net cash provided by operating activities for 2021 was
a. $4,560,000.
b. $4,440,000.
c. $4,320,000.
d. $1,680,000.
51. Kensington Industries reported net income of £50,000 in 2022. Depreciation expense was £19,000.
The following working capital accounts changed:
Accounting receivable £11,000 increase
Non-trading equity investment 16,000 increase
Inventory 7,300 increase
Non-trade note payable 15,000 increase
Accounts payable 12,200 increase
If Kensington uses IFRS reporting and the indirect method, what amount is their adjustments to
reconcile net income to net cash provided by or (used in) operating activities?
a. £3,100
b. £49.500
c. £12,900
d. £10,500
52. During 2021, Stout Inc. had the following activities related to its financial operations:
Carrying value of convertible preference shares in Stout,
converted into ordinary shares of Stout $ 360,000
Payment in 2021 of cash dividend declared in 2020 to
preference shareholders 186,000
Payment for the early retirement of long-term bonds payable
(carrying amount $2,220,000) 2,250,000
Proceeds from the sale of treasury shares (on books at cost of $258,000) 300,000
The amount of net cash used in financing activities to appear in Stout's statement of cash flows for
2021 should be
a. $1,590,000.
b. $1,776,000.
c. $2,136,000.
d. $2,148,000.
53. Burma Company disclosed the following liabilities:

Accounts payable, after deducting debit balances

In suppliers’ accounts amounting to P100,000 4,000,000
Accrued expenses 1,500,000
Credit balances of customers’ accounts 500,000
Stock dividend payable 1,000,000
 Claims for increase in wages and allowance by
Employees, covered in a pending lawsuit 400,000
Estimated expenses in redeeming prize coupons 600,000

What total amount should be reported as current liabilities?

a. 6,700,000
b. 6,600,000
c. 7,100,000
d. 7,700,000
54. Use the following information:
Gross profit £7,800,000
Loss on sale of investments 20,000
Interest expense 15,000
Gain on sale of discontinued operations 60,000
Income tax rate 20%

Compute the amount of income tax applicable to continuing operations.

a. £1,553,000
b. £1,640,000
c. £1,569,000
d. £1,568,000
55. Joshtin Company reported the following balances after adjustment at year-end:
2019. 2020
Accounts Receivable. 6,360,000. 4,780,000
Net Realizable Value. 6,050,000. 4,520,000

During 2020, the entity wrote off accounts totaling 148,500 and collected 52,000 on accounts
written off in previous year. What amount should be recognized as doubtful accounts
expense for the year ended December 31,2020?
a) 169,500
b) 196,500
c) 198,500
d) 169,050
56. The following information was taken from the 2021 financial statements of Dunlop Corporation:
Bonds payable, January 1, 2021 $ 500,000
Bonds payable, December 31, 2021 2,000,000
During 2021
• A $450,000 payment was made to retire bonds payable with a face amount of
$500,000.
• Bonds payable with a face amount of $200,000 were issued in exchange for equipment.
In its statement of cash flows for the year ended December 31, 2021, what amount should Dunlop
report as proceeds from issuance of bonds payable?
a. $1,500,000
b. $1,750,000
c. $1,800,000
d. $2,200,000
57. Gracia Company reported the following current assets at year-end:

Cash including sinking fund of P500,000 with trustees 1,500,000

Accounts receivable 2,500,000
Inventory, including P200,000 cost of goods in transit
Purchased FOB point of destination 2,000,000
Advances to officers collectible currently 400,000
Dividend receivable 100,000
Total current assets 6,500,000

What total amount should be reported as current assets?

a. 5,400,000
b. 5,300,000
c. 5,800,000
d. 5,900,000

58. Moorman Corporation reports the following information:

Correction of understatement of depreciation expense
in prior years, net of tax $ 430,000
Dividends declared 320,000
Net income 1,000,000
Retained earnings, 1/1/2020, as reported 2,000,000
Moorman should report retained earnings, December 31, 2020, of
a. $1,570,000.
b. $2,250,000.
c. $2,680,000.
d. $3,110,000.
59. Bin Corporation had the following information relating to its accounts receivable:

Accounts receivable, 12/31/2021 2,000,000

Credit sales for 2022 7,100,000
Collections from customers for 2022 6,500,000
Accounts written off, August 30, 2022 250,000
Estimated uncollectible receivables per
aging of receivables, 12/31/2022 355,000

In the December 31, 2022 statement of financial position, what is the amortized cost of the
receivable?
a. 2,000,000
b. 7,100,000
c. 1,995,000
d. 2,350,000
60. Loeb Company assigned P 4, 000, 000 of accounts receivables as collateral for a P1, 500,
000 5% loan with a bank. The entity was also assessed by the bank for a finance charge of
6% on the transaction and is paid up front. What amount should be recorded as a gain or
loss on the transfer of accounts receivables?
 a.150, 000 gain
b.100, 000 gain
c.240, 000 loss
d. 0
61. On December 31, 2019, Lakeshore Company sold for P3,000,000 an old equipment having an
original cost of P5,400,000 and carrying amount of P2,400,000. The terms of the sale were P600,
000 down payment and P1,200,000 payable each year on December 31 of the next two years. The
sale agreement made no mention of interest. However, 9% would be a fair rate for this type of
transaction. The present value of an ordinary annuity of 1 at 9% for two years is 1.76.

What is the carrying amount of the note receivable on December 31, 2020?
a. 1,009,920
b. 1,102,080
c. 1,200,000
d. 2,302,080
62. Use the following information (in thousands):
Sales revenue ¥150,000
Gain on sale of equipment 45,000
Cost of goods sold 82,000
Interest expense 8,000
Selling & administrative expenses 15,000
Income tax rate 30%

Determine the amount of net income.

a. ¥63,000
b. ¥10,500
c. ¥21,000
d. ¥31,500
63. Winterton Company discounted with recourse a note at the bank, On July 31 of the current year, at
discount rate of 13%. The note was received from the customer on August 1, 2019, is for 60 days,
has a face value of P5, 500,000 and carries an interest rate of 10%. The customer paid the note to
the bank on October 30, 2019, the date of maturity. Given that the discounting is accounted for a
secured borrowing.

1. What amount of interest expense should be recognized on July 31, 2019?

a. 300, 175
b. 235, 895
c. 135, 895
d. 532, 598

2. What should be the amount to be recognized as the net proceeds?

a. 5,500,000
b. 5,545, 833.33
c. 5,409, 937.50
d. 5, 000, 000
64. On January 1, 2019, Mavis Company sold land with carrying amount of 1,600,000 in
exchange for a 9-month, 10% note with face value of 3,000,000. The 10% rate properly
reflects the time value of money for this type of note.

On April 1, 2019, the entity discounted the note with recourse. The bank discount rate is 12%.
The discounting transaction is accounted for as a secured borrowing.

On October 1, 2019, the maker dishonored the note receivable. The entity paid the bank the
maturity value of the note plus protest fee of 23,000.

On December 31, 2019, the entity collected the dishonored note in full plus 12% annual
interest on the total amount due.

1. What is the amount received from discounting of note receivable?

a) 3,301,050
b) 3,301,500
c ) 3,031,500
d) 3,103,500

2. What is the interest expense to be recognized on April 1, 2019?

a) 50,000
b) 43,500
c) 21,500
d) 34,500

3. What is the amount collected from the customer on December 31, 2019?
a) 3,450,600
b) 3,345,440
c) 3,345,044
d) 3,432,440
65. On the beginning of the accounting period, January 1, 2019, Mississauga Company
reported the following balances:

• Note receivable from an officer 1,950,000

• Note receivable from a sale of building 7,125,000

The P7, 125,000 note receivable is dated April 1, 2018, bears interest at 10%.
Principal payments of P2, 000, 000 plus interest are due annually beginning April 1, 2019.

The P1, 950,000 note receivable is dated December 31, 2016, bears interest at 8%
and is due on December 31, 2020. Interest is payable annually on December 31, and all
interest payments were made through December 31, 2019.
 On July 1, 2019, Mississauga Company sold a parcel of land to Binay Company for
P4, 000,000 under an instalment sale contract. Binay Company made a P1, 200,000
cash down payment on July 1, 2019, and signed a 4-year 10% note for the P2,900,000
balance. The equal annual payments of principal and interest on the note totaled
P878,000, payable on July 1 of each year from 2022 through 2023.

1 . What is the total amount of notes receivable including accrued interest that should
be classified as current assets on December 31, 2019?
a. 3, 117, 375
b. 2,200,000
c. 2,384,375
d. 3,384,000

2 . What is the total amount of notes receivable that should be classified as noncurrent
assets on December 31, 2019?
a. 7,300,000
b. 7, 150,000
c. 6,250,000
d. 4,300,000
66. Kings Company accepted from a customer P 2,000,000 face amount, 6- month, 10% note
dated January 15, 2015. On the same date, the entity discounted the note without recourse
at a 12% discount rate.
What amount of cash was received from discounting?
a. 2,000,000
b. 1,974,000
c. 126,000
d. 100,000
2) What is the loss on note receivable discounting?
a. 32,000
b. 52,000
c. 16,000
d. 26,000
67. Miguel Bank granted a loan to a borrower on January 1, 2019. The interest rate on the loan
is 10% payable annually starting December 31, 2019. The loan mature in five years on
December 31, 2023. The date related to the loan are:
Principal amount P4,000,000
Direct origination cost 61, 500
Origination fee received from borrower 350,000

The effective rate on the loan after consideration the direct origination cost and origination
fee received is 12%.
Q1. What is the carrying amount of the loan receivable on January 1, 2019?
A. 4,000,000
 B. 4,650,000
C. 3, 711, 500
D. 4, 411, 500
Q2. What is the interest income for 2019?
A. 445, 380
B. 400,000
C. 529, 000
D. 588, 000
68. Sunny Company sells a variety of imported goods. By selling on credit, Sunny cannot expect to
collect 100% of its accounts receivable. At December 31, 2020, Sunny reported the ff. in its statement
of financial position:
Accounts receivable 2,197,500
Less: Allowance for bad debts (183,500)
Accounts receivable, net p2, 014, 000

During the year ended December 31, 2021, Sunny earned sales revenue of P542, 312, 500 and
collected cash of P432, 765, 200 from customers. Assume bad debt expense for the year was 1% of
sales revenue and that Sunny wrote off uncollectible accounts receivable totalling p5, 567,500

Q1. What is the accounts receivable balance at December 31, 2021?

a.P106, 177, 300
b.P105, 900, 788
c.P178, 000, 787
d.P108, 900, 300

Q2. What is the December 31, 2021, balance of the Allowance for Bad Debts accounts?
a.P39, 125
b.P43, 000
c.P34, 000
d.P39, 124
Finals - FS to RECEIVABLE
Answer Section

PROBLEM

1. B
Petty cash fund 20,000
Currency and coins (2,000)
Expense 18,000
2. B
3. A
Trade accounts receivable 3,500,000
Trade installments receivable die 1-18 months,
Including unearned finance charge of P50,000 (850,000-50,000) 800,000
Trade accounts receivable from officers, due recently 150,000
Trade accounts on which post dated checks are held
(no entries were made on receipt of checks) 200,000
4,650,000
4. a $500,000 – $350,000 – $55,000 + $20,000 + $2,000 = $117,000.
5. a X + $12,000 – $24,000 = $300,000; X = $312,000.

6. a $384,000 + $78,000 + $45,000 – $36,000 + $12,000 – $24,000 + $33,000 = $492,000.

7. D
Beginning inventory 400,000
Gross purchase 8,200,000
Freight In 300,000
Purchase returns ( 900,000)
Goods available for sale 8,000,000
Ending inventory ( 500,000)
Cost of goods sold (1,250,000 x 6) 7,500,000
8. B
Cash 2,000,000
Notes receivable 1,200,000
Notes receivable discounted ( 700,000)
Accounts receivable – unassigned 3,000,000
Accounts receivable – assigned 800,000
Allowance for doubtful accounts ( 100,000)
Inventory (2,800,000 – 600,000) 2,200,000
Total current assets 8,400,000
9. Solution: Answer A

Sale price P4, 950, 000

Carrying amount of accounts receivable 5, 250, 000
(5, 750, 000 – 500, 000)
Loss on Factoring (P 300, 000)
10. D $400,000 + $1,200,000 – $160,000 – $60,000 – $120,000 + $100,000 =
$1,360,000.
11. (c) The definition of cash includes both cash (cash on hand and demand deposits) and cash equivalents (short-
term, highly liquid investments). Cash equivalents have to be readily convertible into cash and so near
maturity that they carry little risk of changing in value due to interest rate changes. This will include only
those investments with original maturities of three months or less from the date of purchase by the enterprise.
Common examples of cash equivalents include treasury bills, commercial paper, and money market funds.
Trans should report a total of $460,000 ($35,000 + $75,000 + $350,000) on its December 31, year 2 balance
sheet. The US treasury bill purchased on 12/1/Y2 is not included in the calculation because its original
maturity is not within three months or less from the date of purchase.
12. D ¥302,000 + (¥114,000 + ¥50,000 + ¥27,000) = ¥493,000.
13. B
Solution:

March 31 book balance 2,560,000

Note collected by bank 250,000
Interest earned on note 15,000
NSF check of customer (150,000)
Bank Service Charge (5,000+ 3,000) (8,000)
2, 667, 000
Adjusted Book Balance

Balance per bank Statement(SQUEEZE) 2, 537, 000

Deposit in Transit 380, 000
Outstanding checks (250,000)
2, 667, 000

14. C

Solution:
Checkbook balance P 5,000,000
Postdated customer check (150,000)
Undelivered check payable to supplier 150,000
Undelivered Company check 300,000
Adjusted cash in bank 5,300,000
Petty cah:
Coins and currencies P5, 000
Replenishment check 43,000 48,000
Total P5, 348,000

15. C
Accounts payable 1,900,000
Dividends payable 500,000
 Income tax payable 900,000
Note payable 600,000
Total current liabilities 3,900,000
16. A
17. B
Solution:
Coins and Currency P 5,300
Check drawn by Hugo Company to the order of the petty
cash custodian 3,000
Total P 8,300
18. C $735,000 – $687,000 + ($252,000 – $144,000) = $156,000.
19. C
Balance per bank. 1,300,000
Deposit in Transit. 150,000
Total. 1,450,000
Oustanding checks (400,000-70,000) ( 390,000)
Erroneous bank credit. ( 280,000)
Adjusted bank balance. 780,000
20. A ($80,000 + $60,000 – $10,000 – $2,000) + $40,000 + ($5,000 – $1,000) = $172,000.
21. D
Accounts payable (1,350,000 – 150,000) 1,200,000
Accrued taxes payable 125,000
Customers’ deposit 100,000
Bank overdraft 55,000
Accrued electric and power bills 60,000
Total current liabilities 1,540,000
22. A $130,000 + $90,000 = $220,000.
23. A $160,000 – $144,000 = $16,000.
24. B

Cash and cash equivalent 700,000

Trade and other receivables (1,200,000 minus 260,000) 940,000
Inventories (600,000 + 200,000) 800,000
Total current assets 2,440,000

Adjustments

1. Sales 260,000
Accounts Receivable 260,000

2. Inventory (260,000 / 130%) 200,000

Cost of goods sold 200,000
25. A $25,000 – $7,500 = $17,500.
26. A
Cash basis. Accrual Basis
Revenues. 320,000. 320,000
Expenses. ---- 150,000
Profit. 320,000. 170,000
27. D $700,000 – $300,000 – $80,000 – ($50,000  0.80) = $280,000.
28. A
Accounts payable 1,500,000
Bonds Payable 2,500,000
Discount on bonds payable ( 300,000)
Dividends payable 800,000
Total current liabilities 4,500,000
29. A
Solution:
Principal P250,000
Origination fee, 50,000
Carrying amount P200,000
Effective rate x 12.4%
P24, 800
Months Dec1 to Dec31 x 1/12
2, 067
30. A
Only bad debts expense decreases working capital. The write off does not affect anymore
the working capital because the effect is offsetting.
31. D

Solution :
Date Annual Payment Interest income Principal Present Value
12/31/11 758,200
12/31/12 200,000 75, 820 124, 180 637, 020
32. A
If material, an allowance for discounts must be reported at year-end in order to match the discounts with the
related sales and to report receivables at their collectible amount. At 12/31/Y2, $100,000 of the accounts
receivable have the potential to be discounted by 2% because they are less than fifteen days old (terms 2/15,
net 30). Since 50% of the customers are expected to take advantage of the 2% discount, the allowance for
discounts should be $1,000 [($100,000 × 50%) × 2%]. None of the other categories require a discount
allowance because they are older than the maximum age of fifteen days to receive the 2% discount.
33. A
Inventory – January 1 4,500,000
Purchases 6,000,000
Goods available for sale 10,000,000
Less: Inventory – December 31 2,500,000
Cost of goods sold before writedown 8,000,000
Loss on inventory writedown 1,500,000
Cost of good sold after writedown 9,500,000
34. A
Face amount of loan. 2,500,000
Finance Fee (4% x 1,700,000) 68,000
Cash Received. 2,432,000
35. B
Principal. 400,000
Add: Interest (400,000 x 10%) 40,000
Maturity Value. 440,000
 Less: Discount
( 440,000 x 12% x 6/12 ) ( 264,000)
Net Proceeds.413,600
36. Solution: A
Purchases P550, 000
Less: Merchandise inventory, ending 150, 000
Cost of goods sold 400, 000
Multiply by sales ratio x 120%
Sales 480, 000
Less: 185, 000
Accounts receivable, ending P295, 000
37. A

Balance per Bank P 2, 800, 000

Deposit in Transit 185, 000
Outstanding Check (95, 000)

Adjusted Cash in Bank 2, 890, 000

Cash in Hand 230, 000
Total Cash P 3, 120, 000
38. A
Accounts receivable 1,600,000
Financial assets at fair value through profit or loss 500,000
Cash 1,100,000
Inventory 3,000,000
Prepaid expenses 100,000
Equipment held for sale 1,800,000
8,100,000
39. D ¥300,000 – (¥300,000  0.20) = ¥240,000
40. B
Allowance for uncollectible accounts on January 1 230,000
Uncollectible accounts recovery 50,000
Uncollectible Account expense 80,000
360,000 cr
Accounts written off as uncollectible 200,000 dr
160,000
41. D

Balance per Book P 9, 550, 000

Note Collected by Bank 850, 000
Total 10, 400, 000
Book Error(350, 000 – 35, 000) (315, 000)
NSF check (150, 000)
 Service Charge (35, 000)
Adjusted Book Balance P 9, 900,000

42. C

1,500,000 – 1,625,000 = (125,000)

43. C
Trade accounts receivable 3. 000, 000
Allowance for doubtful accounts (300,000)
Claims against shipper for goods lost
in transit in November 2020 500, 000
Total 3,200,000
44. C
Cash on hand ($125,000) and cash in banks ($2,250,000) are both reported as cash in the current asset section
of the balance sheet because they are both unrestricted and readily available for use. Cash legally restricted
for additions to plant ($1,600,000) is not available to meet current operating needs, and therefore should be
excluded from current assets. Instead, it should be shown in the long-term asset section of the balance sheet as
an investment.
45. C
Present value of note receivable (1,300,000 x .712) 925,600
Carrying Amount of equipment. 439,000
Loss on Sale. 186,600

Interest Income for first year (12% x 925,600) 110,072

46. D
Solution:
6,000,000 x 0.71 = 4, 260, 000
2, 500, 000 – 1, 000, 000 = 1, 500, 000
Gain on sale 2, 760, 000
47. B
Rental income - accrual basis 600,000
Unearned rental income - January 1 (50,000)
Unearned rental income - December 31 75,000
Accrued rental income - January 1 30,000
Accrued rental income - December 31 (40,000)
Rental received - cash basis 615,000
48. B ¥265,000 + ¥83,000 – ¥77,000 = ¥271,000.
49. B
Operating expenses per book 3,200,000
Depreciation (1,000,000)
Prepaid insurance - December 31 200,000
Prepaid insurance - January 1 (150,000)
Accrued salaries payable - December 31 (100,000) Accrued salaries
payable - January 1 120,000
 Cash paid for operating expenses 2,270,000
50. A $3,000,000 + $1,200,000 + $240,000 - $420,000 + $540,000 = $4,560,000.
51. C £50,000 + (£19,000 + £12,200 – £11,000 – £7,300) = £62,900.
52. C $300,000 – $186,000 – $2,250,000 = $2,136,000.
53. A
Accounts payable (4,000,000 + 100,000) 4,100,000
Accrued expenses 1,500,000
Credit balances in customers’ accounts 500,000
Estimated liability for coupons 600,000
Total current liabilities 6,700,000
54. A (£7,800,000 – £20,000 - £15,000) × 0.20 = £1,553,000.
55. B
Allowance - 12/31/2019 (4,780,000 - 4,725,000) 260,000
Recovery of accounts written off in previous year. 52,000
Doubtful Accounts expense for 2020 (SQUEEZE) 196,500
Total.508,500
Accounts written off in 2020.( 198,500)
Allowance- 12/31/2019 (6,360,000 - 6,050,000) 310,000
56. C $2,000,000 – $500,000 + $500,000 – $200,000 = $1,800,000.
57. C

Cash (1,500,000-500,000) 1,000,000

Trade and other receivables 3,000,000
Inventory (2,000,000-200,000) 1,800,000
Total current assets 5,800,000
58. B $2,000,000 – $430,000 + $1,000,000 – $320,000 = $2,250,000.
59. C
Accounts receivable, 12/31/2021 2,000,000
Add: Credit sales 7,100,000
Total 9,100,000
Less: Collection from customers 6,500,000
Accounts written off 250,000 6,750,000
Accounts receivable, 12/31/2022 2.350.000
Less: Estimated uncollectible accounts 355,000
Amortized cost (expected net cash inflow) 1,995,000
60. D

No gain or loss is recognized because assignment of accounts receivable is a secures

borrowing and not a sale
61. B

Note receivable – December 31, 2019 2,400,000

Present value (1,200,000 x 1.76) (2,112,000)
Unearned interest income 288,000
Interest income for 2020 (9% x 2,112,000) 190,080
 Note Receivable – December 31, 2020 1,200,000
Unearned interest income – 12/31/2020 (288,000 – 190,080) ( 97,920)
Carrying amount – December 31, 2020 1,102,080
62. A ¥150,000 – ¥82,000 – ¥15,000 + ¥45,000 – ¥8,000 = ¥90,000;
¥90,000 – ¥27,000 = ¥63,000
63. C,C

Question 1 and 2: Answer C

Principal P 5,500,000
Interest (5,500,000 x 10% x 60/360) 91,666.67
Maturity value 5,591,666.67
Discount (5, 591, 666.67x 13% x 90/360) 181, 729
Net proceeds P5,409, 937.50

Principal P 5,500,000
Accrued interest receivable (5,500,000 x 10% x 30/360) 45, 833.33
Carrying amount of note receivable P 5,545, 833.33

Net proceeds P 5,409, 937.50

Carrying amount of note receivable 5,545, 833.33
Interest expense P ( 135, 895.7)

64. C,B,B

• Question No. 1. c

Principal. 3,000,000
Interest (3,000,000 x 10% x 9/12) 225,000
Maturity Value. 3,225,000
Discount (3,225,000 x 12% x 6/12) ( 193,500)
Net Proceeds. 3,031,500

• Question No. 2 b
Principal. 3,000,000
Accrued Interest Receivable.
(3,000,000 x 10% x 3/12) 75,000
Carrying Amount of Note Receivable. 3,075,000

Net Proceeds. 3,031,500

Carrying Amount of Note Receivable. 3,075,000
Interest Expense. ( 43,500)

• Question No. 3. b
Maturity Value. 3,225,000
Protest Fee. 23,000
 Total Amount Due. 3,248,000
Interest (3,248,000 x 12% x 3/12) 97,440
Amount collected from customer. 3,345,440
65. A,C
Note receivable from sale of building due 4/1/2018 P2, 000,000
Accrued interest on note receivable from sale of building
from 4/1/2019 to 12/31/2019 (5, 125,000 x 10% x 9/12) 384, 375
Principal payment of note receivable from sale of land due
on 7/1/2019:
Annual Interest 878,000
Interest from 7/1/2018 to 7/1/2019 (290,000)
588,000
Accrued interest on NR from sale of land from
7/1/2019 to 12/31/2019 (6/12 x 290,000)
145,000
Total current receivable – December 31, 2019 P3, 117, 375

NR from sale of building due April 1, 2019 P2,000,000

NR from officer due December 31, 2019 1,950,000
NR from sale of land – noncurrent portion:
Principal 2,900,000
Due July 1, 2019 – current portion (600,000) 2,300,000
Total noncurrent notes receivable (12/31/2019) P6,250,000
66. B,D
Principal 2,000,000
Interest (2,000,000x .10x 6/12) 100,000
Maturity Value 2,100,000
Discount (2,100,000x .12x 6/12) (126,000)
Net proceeds 1,974,000

Net proceeds 1,974,000

Carrying amount of note receivable (equal to principal)
(2,000,000)
Loss on receivable discounting (26,000)
67. C,A

Principal amout P4,000,000

Direct origination cost 61, 500
Origination fee received from borrower ( 350,000 )
P3,711, 500
3,711,500 x 12% = 445, 380
68. A,A
Solution: A
Accounts receivable, Jan 1, 2021 2, 197, 500
Sales P542, 312, 500
Collections (P432, 765, 200)
Accounts written off (p5, 567, 500)
Accounts receivable, Dec. 31, 2021 P106, 177, 300

Q2. Solution: A
Allowance for bad debts, Jan. 1, 2021 p183, 500
Bad debts exp. (P542, 312, 500x 1%) 5, 423, 125
Accounts written off (p5, 567, 500)
Allowance for bad debts, Dec. 31, 2021 P39, 125