Sample/practice exam 1 February 2014, questions and answers PDF

Preview

Summary

NATIONAL UNIVERSITYMANILAFINANCIAL ACCOUNTING AND REPORTING 2ND TERM A. 2019- 2020QUIZZERS RROcampoCash and Cash Equivalents Which statement is true? a. Certificates of deposit are usually classified as cash on the statement of financial position. b. Companies include postdated checks and petty cash...

Description

NATIONAL UNIVERSITY MANILA FINANCIAL ACCOUNTING AND REPORTING

2ND TERM A.Y. 2019-2020 RROcampo

QUIZZERS

Cash and Cash Equivalents

1.

Which statement is true?

a. b. c. d. 2.

Certificates of deposit are usually classified as cash on the statement of financial position. Companies include postdated checks and petty cash funds as cash. Cash equivalents are investments with original maturities of six months or less. Savings accounts are usually classified as cash on the statement of financial position.

On December 31, 2019, the cash account of Jen Company has a debit balance of P3,500,000.

An analysis of the cash

account shows the following details:

Undeposited collections

P

60,000

Cash in bank-PCIB checking account

500,000

Cash in bank-PNB (overdraft)

(50,000)

Undeposited NSF check received from a customer, dated December 1, 2019

15,000

Undeposited check from a customer, dated January 15, 2020

25,000

Cash in bank-PCIB (fund for payroll)

150,000

Cash in bank-PCIB (savings deposit)

100,000

Cash in bank-PCIB (money market instrument, 90 days)

2,000,000

Cash in foreign bank (restricted)

100,000

IOUs from officers

30,000

Sinking fund cash

450,000

Listed stock held as temporary investment

120,000 P3,500,000

Cash and cash equivalents on Jen’s December 31, 201 9 statement a.

3.

b.

P2,760,000

P2,810,000

c.

of financial position should be

P2,885,000

d.

P2,935,000

Diversity Corporation's checkbook balance on December 31, 2019, was P800,000.

In addit ion, Dive rsity held the

following items in its safe on December 31:

Check payable to Divers ity Corporation, dated January 2, 2020, not included in

P200,000

December 31 checkbook balance Check payable to Diversity Corporation, deposited December 20, and included in December stamped

31

checkbook

"DAIF."

The

balance,

check

was

but

returned

redeposited

by

bank

January

2,

on

December

2020,

and

30,

cleared

January 7

40,000

Check drawn on Diversity Cor poration's account, payable to a vendor, dated and recorded December 31, but not mailed until January 15, 2020

100,000

The proper amount to be shown as cash on Diversity's statement of financial position at December 31, 2019, is a.

4.

P760,000

b.

P800,000

c.

P860,000

d.

The Ingersoll Co.’s ledger showed a balance in its cash account at Decembe r

P975,000

31, 2019

of

P341,125

determined to consist of the following:

Petty cash fund

P

Cash per bank statement with a check for P3,000 still outstanding Notes receivable in the possession of a collecting agency Undeposited re

1,800

168,375 12,500

ceipts, including postdated check for P5,250 and traveler’s

check for P5,000 Bond sinking fund

89,000

– cash

63,750

IOUs signed by employees

2,475

Paid vouchers not yet recorded

3,225

Total

P341,125

At what amount should ‚Cash on hand and in bank‛ be reported on Ingersoll’s balance sheet? a.

5.

P267,375

b.

P250,925

c.

P331,125

d.

The following items were included as cash in the books of Gotch Co.:

Checking account at Security Bank

(P1,200)

Checking account at BPI

5,335

Checking account at Citytrust used for payment of salaries

5,500

Postage stamps

Employee’s post-dated check

107 2,300

P314,675

which

was

I O U from an employee A check marked ‚DAIF‛

200 1 250

Postal money order

500

Petty cash fund (P324 in expense receipts)

500

Certificate of time deposit with BPI

5,000

A gold ring surrendered as security by a customer who lost his wallet (at market value)

1,500

The correct amount that should be reported as cash is a.

6.

P11,835

b.

P11,011

c.

P16,511

d.

P11,511

d.

P140,000

Aguinaldo Corporation had the following transactions in its first year of operations:

Sales (90% collected in the first year)

P750,000

Disbursements for costs and expenses

600,000

Purchases of equipment for cash

200,000

Proceeds from issuance of ordinary shares

250,000

Payments on short-term borrowings

25,000

Proceeds from short-term borrowings

50,000

Depreciation on equipment

40,000

Disbursements for income taxes

45,000

Bad debt write-offs

30,000

What is the cash balance at December 31 of the first year? a.

7.

P

75,000

b.

P105,000

c.

Pops Co. established a P3,000 petty cash fund.

Cash and currency

P

85,000

You found the following items in the fund:

P1,683.80

Expense vouchers

829.80

Advance to salesman

200.00

IOU from employee

300.00

In the entry to replenish the fund, what amount should be debited to Cash Short and Over? a.

P500.00

b.

P300.00

c.

d.

P13.60

P

0

Bank Reconciliation

1.

The bookkeeper of Santa Clara Co. recently prepared the following bank reconciliation:

Santa Clara Co. Bank Reconciliation December 31

Balance per bank statement

P126,420

Add: Deposit in transit

P8,700

Checkbook printing charge

210

Error made in recording check No. 25 (issued in December)

1,600

NSF check

5,000

15,510 P141,930

Deduct: Outstanding checks

P4,480

Note collected by bank (includes P50 interest

9,500

Balance per books

13,980 P127,950

Santa Clara has P9,100 cash on hand on December 31.

The amount Santa Clara should report as cash on the balance sheet as of December 31 should be a.

2.

P120,260

b.

P139,740

c.

P130,640

d.

As of June 30, the bank statement of Ang Po Trading had an ending balance of P373,612.

P132,240

The follow ing data were

assembled in the course of reconciling the bank balance:

 

The bank erroneously credited Ang Po Trading for P2,150 on June 22. During the month, the bank charged back NSF checks amounting to P2,340 of which P800 had been redeposited by the 25th of June.

  

Collection for June 30 totalling P10,330 was deposited the following month. Checks outstanding as of June 30 were P30,205. Notes collected by the bank for Ang Po Trading were P8,150 and the corresponding bank charges were P50.

The adjusted bank balance on June 30 is a.

3.

P351,587

b.

P358,147

c.

P353,927

d.

P359,687

Woody Company's accountant is preparing its October bank reconciliation and has collected the following data:

Per Books Oct. 1 balance

P11,600

Per Bank P10,000

Oct deposits

24 600

21 200

Per Books Oct. checks

Per Bank

27,800

29,000

Note collected (includes 10% interest)

-

4,400

Oct. service charge

-

20

8,400

6,580

Oct. 31 balance

Additionally, deposits in transit and outstanding checks from September's recon ciliation were, P4,400 and P2,800 respectively.

The correct balance for cash at October 31 should be: a.

4.

P13,980

b.

P12,780

c.

P11,180

d.

P10,960

Part of Tsibog Co.’s unadjusted trial balance at December 31 showed a Cash balance of P17,400. bank

statement was

P12,000 on

December

31.

Outstanding

checks

amounted to

P6,900.

The balance per

Interest

of P40 was

credited to the enterprise's account by the bank during December, but has not yet been entered on the company’s books.

Assuming no errors exist in the a.

5.

P

5,400

b.

company’s

cash balance, deposits in transit at December 31 amount to

P12,260

c.

P12,300

d.

P12,340

d.

P

Reconciliation of Heaven Company’s bank account at May 31 is: Balance per bank statement

2,100,000

Deposits in transit

300,000

Checks outstanding

(

Correct cash balance

2,370,000

Balance per book

30,000)

2,372,000

Bank service charge

(

Correct cash balance

2,000)

2,370,000

June data are as follows: Bank Total credits

P1,620,000

Total debits

2,300,000

Collection by bank (P400,000 Note plus interest)

420,000

NSF check

10,000

Balance

1,420,000

Books Deposits recorded

1,800,000

Checks recorded

2,360,000

Balance

1,810,000

The deposits in transit on June 30 amount to a.

6.

P120,000

b.

c.

P480,000

P900,000

0

Sandy, Inc. had the following bank reconciliation at March 31:

Balance per bank statement, 3/31

P37,200

Add: Deposit in transit

10,300

Less: Outstanding checks

12,600

47,500

Balance per books, 3/31

P34,900

Data per bank for the month of April follow: Deposits

P42,700

Disbursements

49,700

All reconciling items at March 31 clear ed the bank in April. were no deposits in transit at April 30. a.

P25,200

b.

Outstanding checks at April 30 t otaled P5,000.

There

What is the cash balance per books at April 30?

P30,200

c.

P27,900

d.

P35,500

Trade and Other Receivables

1.

On the December 31, 2019 statement of financial position of Mann Company, the receivables consisted o f the following:

Trade accounts receivable Allowance for uncollectible accounts Claim against shipper for goods lost in transit last November 2019

P

93,000 ( 2,000) 3,000

Selling price of unsold goods sent by Mann on consignment at 30% of cost (not included in Mann's ending inventory) Security deposit on the lease of a warehouse

26,000 30,000

Total

P150 000

How much s hould be reported as trade and other receivables in Mann's December 31, 2019 statement of financial position? a.

2.

P94,000

b.

P68,000

c.

P120,000

d.

P150,000

When examining the accounts of Medved Company, you ascertain that balances relating t o both receivables and payables

are

P4,850,000.

included

in

a

single

controlling

account

called

receivables

control

that

has

a

debit

balance

of

An analysis of the composition of this account revealed the following:

Debit

– customers Accounts receivable – officers Debit balances – creditors Account receivable

Credit

P7,800,000 500,000 300,000

Postdated checks from customers

400,000

Subscriptions receivable

800,000

Accounts payable for merchandise

P4,500,000

Credit balances in customers’ accounts

200,000

Cash received in advance from customers for goods not yet shipped

100,000

Expected bad debts

150,000

After further analysis of the aged accounts receivable, you determined t hat the allowance for doubtful accounts should be P200,000. a.

3.

4.

What is the correct total of current net receivables?

P8,950,000

b.

c.

P8,800,000

d.

P8,850,000

Credit balances in accounts receivable should be classified as a.

Current liability

b.

Part of accounts payable

c.

Noncurrent liabilit y

d.

Deduction from accounts receivable

A company, which has an adequate amount in its Allowance for Doubtful Accounts, writes off as uncollectible an accounts receivable from a bankrupt customer.

a. b. c. d. 5.

P8,600,000

This action will

Reduce net income for the period. Reduce the amount of equity. Reduce total current assets. Have no effect on total current assets.

Tyson, Inc. reported the following balances (after adjustment) at the end of 2019 and 2018.

Total accounts receivable Net accounts receivable

12/31/19

12/31/18

P105,000

P96,000

102,000

94,500

During 2019, Tyson w rote off customer accounts totaling P3,200 and collected P800 o n accounts writt en off in previous years. a.

6.

Tyson's doubtful accounts expense for the year ending December 31, 2019 is

P1,500

b.

P2,400

c.

Cabugao Company began operations on January 1, 2018. accounts based on 5% of annual credit sales.

P3,000

d.

On December 31, 2018, Cabugao provided for uncollectible

On January 1, 2019, Cabugao changed it s method of determining its

allowance for uncollectible accounts to the percentage of accounts receivable. was determined to be 15% of the ending accounts receivable balance. receivable t hat w ere over 1 year old.

P3,900

The rate of uncollectible accounts

In addition, Cabugao wr ote off all accounts

The following additional information relates to the years ended December 31,

2018 and 2019.

Credit sales

2019

2018

P8,000,000

P6,000,000

6,950,000

4,500,000

Collections (including collections on recovery) Accounts written off

70,000

Recovery in accounts previously written off

20,000

None None

How much is the provision for uncollectible accounts for the year ended December 31, 2019? a.

7.

P125,000

b.

P122,000

c.

P400,000

d.

P

72,000

Don’t Let Me Down, Inc. estimates its doubtful accounts by aging its accounts receivable. The aging schedule of accounts receivable at December 31, 2019 is presented below:

Age of accounts

– 30 days 31 – 60 days 61 – 90 days 91 – 120 days 0

over 120 days

Amount P1,264,800 691,500 288,600 114,975 59,100 P2,418,975

Don’t Let Me Down, Inc.’s uncollectible accounts experience for the past 5 years are summarized in the

following

schedule:

A/R Balance Year

0

Dec. 31

–30

31 -60

61

–90

91

–120

Over 120

Days

Days

Days

Days

Days

2018

P1,968,750

0.3%

1.8%

12%

38%

65%

2017

1,500,000

0.5%

1.6%

11%

41%

70%

2016

697,500

0.2%

1.5%

9%

50%

69%

2015

1,224,000

0.4%

1.7%

10.2%

47%

81%

2014

1,865,500

0.9%

2.0%

9.7%

33%

95%

The balance of the allowance for doubtful accounts at December 31, 2019 (before adjust ment) is P126,751.

The necessary adjusting jour nal entry to adjust the allowance for doubtful accounts as of December 31, 2019 would include: a.

No adjusting journal entry is necessary.

b.

A debit to retained earnings of P13,894.

c.

A debit to doubtful accounts expense P140,644.

d.

A credit to allow. for doubtful accounts of P13,894.

Loans and Receivables

1.

On January 1, 2019, Boy Company sold a machine to Bawang Company. requiring payment of P30,000 annually for seven years.

Bawang signed a non-interest-bearing note

The first payment was made on January 1, 2019.

prevailing rat e of interest for this t ype of note at date of issuance was 10%.

The

Information on present value factors is

as follows:

Periods

Present value of 1 at 10%

Present value of ordinary annuity of 1 at 10%

6

.56

4.36

7

.51

4.87

Boy should record...