CVCITC

Cagayan Valley Computer & Information Technology College, Inc.

No. 28 Carreon Street, Centro East, Santiago City, Philippines | Telefax: (078) 305-0139
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COLLEGE OF BUSINESS AND ACCOUNTANCY
DEPARTMENT OF ACCOUNTANCY
Quiz 1

1. The books of Kapiz Co. show the following balances at December 31, 20x1:
Cash on hand ₱ 400,000
Cash in Bank – current account 1,200,000
Cash in Bank – peso savings deposit 5,000,000
Cash in Bank – dollar deposit (unrestricted) $ 100,000
Cash in Bank – dollar deposit (restricted) 250,000
Cash in 3-month money-market account ₱ 500,000
3-month unrestricted time deposit $ 20,000
Treasury bill, purchased 11/1/20x1, maturing 2/14/20x2 ₱1,600,000
Treasury bond, purchased 3/1/20x1, maturing 2/28/20x2 1,000,000
Treasury note, purchased 12/1/20x1, maturing 2/28/20x2 400,000
Unused Credit Line 4,000,000
Redeemable preference shares, purchased 12/1/20x1, 740,000
due on 3/1/20x2
Treasury shares, purchased 12/1/20x1, to be reissued on 200,000
1/5/20x2
Sinking fund 400,000

Additional information:
 Cash on hand includes a ₱40,000 check payable to Kapiz Co. dated December 29, 20x1.
 During December 20x0, check amounting to ₱30,000 was drawn against the Cash in bank -
current account in payment of accounts payable. The check remains outstanding as of
December 31, 20x1.
 The Cash in Bank – peso savings deposit includes ₱800,000 security bond on a pending labor
litigation, in favor of a previous employee. The establishment of the bond is mandated by a
court of law.
 The Cash in Bank – peso savings deposit also includes a compensating balance amounting to
₱500,000 which is not legally restricted.
 The Cash in Bank – dollar deposit (unrestricted) account includes interest of $4,000, net of
tax, directly credited to Kapiz Co.’s account. The exchange rate at year-end is $1 is to ₱45.

How much is the cash and cash equivalents to be reported in the 20x1 financial statements?
a. 14,720,000 b. 19,520,000 c. 12,430,000 d. 12,870,000

2. The cash balance of Ronnie Co. comprises the following:

Cash on hand 300,000
Cash in bank – savings – Alpha Bank 600,000
Cash in bank – current – Alpha Bank (160,000)
Cash in bank – current – Beta Bank (140,000)
Cash in bank – deposit in escrow – Beta Bank 240,000
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Cagayan Valley Computer & Information Technology College, Inc.
No. 28 Carreon Street, Centro East, Santiago City, Philippines | Telefax: (078) 305-0139
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Cash in bank – savings – Charlie Bank 90,000

Additional information:
 Cash on hand excludes undeposited collections of ₱60,000.
 The cash in bank – savings maintained at Alpha Bank includes a ₱100,000 compensating
balance which is restricted.

How much is the amount of cash to be reported in the financial statements?

a. 700,000 b. 640,000 c. 730,000 d. 790,000

3. The following were the transactions involving an entity’s petty cash fund during the period.
July. 1, Established ₱30,000 petty cash fund.
20x1
July 1 Disbursements are made for the following:
through 21, - Groceries for use of employees in the pantry ₱4,200
20x1 - Transportation of Mang Benny, the messenger boy 1,500
- Snacks during meetings and conferences 3,000
- Gasoline for company vehicles 9,000
- Pedicure of Ms. Ana (secretary of the
boss) – authorized 9,000
Total ₱ 26,700

July 22, Total coins and currencies in the petty cash box is ₱1,500. Replenishment is
20x1 made.

Assuming that the petty cash fund is not replenished and financial statements are prepared on
July 31, 20x1, the month-end adjustment to the petty cash fund most likely does not include a:
a. debit to receivable from custodian for ₱1,800
b. credit to petty cash fund for ₱28,500
c. total debit to various expense accounts for ₱26,700
d. credit to cash in bank for ₱28,500

4. As of December 31, 20x1, the petty cash fund of Kristelle Co. with a general leger balance of
₱15,000 comprises the following:
Coins and currencies 2,550
Petty cash vouchers:
Gasoline for delivery equipment 3,000
Medical supplies for employees 2,040 5,040
IOU’s:
Advances to employees 2,220
A sheet of paper with names of several employees
together with contribution to bereaved employee,
attached is a currency of 2,400
Checks:
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Cagayan Valley Computer & Information Technology College, Inc.
No. 28 Carreon Street, Centro East, Santiago City, Philippines | Telefax: (078) 305-0139
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Check drawn to the order of the petty cash custodian 3,000
Personal check drawn by the petty cash custodian 2,400

The entry to replenish the fund on December 31, 20x1 includes a

a. credit to cash shortage or overage for ₱2,190
b. debit to cash shortage or overage for ₱2,910
c. credit to cash in bank for ₱9,450
d. credit to petty cash fund for ₱9,450

5. Jane Co. is preparing its September 30, 20x1 bank reconciliation. Relevant information is
shown below:
Balance per books 1,480
Balance per bank statement 2,800
Collection on note by bank (including ₱250 interest) 2,500
NSF check returned by bank 500
Bank service charges for December 70
Deposits in transit 2,200
Outstanding checks (including certified checks of ₱100) 1,000

 A ₱600 loan amortization of Jane Co. was erroneously debited by the bank to Tarzan Co.’s
account.
 A ₱650 collection of accounts receivable was erroneously recorded in the books as ₱560.
The actual amount deposited to the bank is ₱650.

The compound entry to reconcile the accounts includes a

a. net debit to cash for ₱2,020
b. net credit to cash for ₱700
c. credit to notes receivable for ₱2,500
d. net debit to accounts receivable for ₱590

6. Ching Co. has the following information:

Balance per books 380
Credit memos 670
Debit memos 400
Deposits in transit 560
Outstanding checks 280

How much is the cash balance per bank statement?

a. 650 b. 560 c. 930 d. 370

The next three items are based on the following information:

Taken from the records of Girly Co. are the following:

Balance per books, October 31 4,440

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Cagayan Valley Computer & Information Technology College, Inc.
No. 28 Carreon Street, Centro East, Santiago City, Philippines | Telefax: (078) 305-0139
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Total Credits per books, November 8,320
Balance per books, November 30 2,400
Balance per bank statement, October 31 5,520
Balance per bank statement, November 30 4,560
Total Debits per bank statement, November 2,800
Loan proceeds directly credited to Girly’s account in October 1,200
Collection of receivable directly credited to Girly’s
account in November – not yet recorded in the books 600
NSF checks returned in October 900
NSF checks returned in November - not yet recorded in the 300
books
Check received from a customer amounting to ₱1,800
was recorded in the books in October as 180
Overstatement in book debit in October 800
Overstatement in book credit in November 300
Understatement in bank debit in October 290
Overstatement in bank credit in October 370
Deposit amounting to ₱1,050 was recorded by
the bank in November as 150

Deposits in transit – October 31 4,500

Outstanding checks – October 31 3,800

7. How much is the deposits in transit at November 30?

a. 5,820 b. 6,190 c. 5,340 d. 6,920

8. How much is the outstanding checks at November 30?

a. 7,620 b. 8,680 c. 9,120 d. 8,280

9. How much is the adjusted balance of cash at November 30?

a. 3,000 b. 3,300 c. 2,400 d. 3,580

10. Radeline Co.’s bank statement shows an overdraft of ₱18,500 as of August 31, 20x1.
Additional information is as follows:
 A cash deposit of ₱1,380 appears on the bank statement as ₱1,830. The bank admits it has
committed an error.
 The bank collected ₱700 from a customer on behalf of Radeline.
 Cash deposited in an overnight depository on August 30 but not shown on the August bank
statement – ₱1,800
 Interest on overdraft not yet recorded – ₱1,728
 Check issued but not presented – ₱2,200
 The bank returned a customer check for ₱2,000 to Radeline.

How much is the overdraft in Radeline’s cashbook on August 31, 20x1?

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Cagayan Valley Computer & Information Technology College, Inc.
No. 28 Carreon Street, Centro East, Santiago City, Philippines | Telefax: (078) 305-0139
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a. 16,322 b. 17,650 c. (19,350) d. (16,322)

Use the following information for the next three questions:

Kriselda Co. has the following information for the months of June and July.
June 30 July 31
Book balance ? 9,300
Book debits 30,700
Book credits 27,000
Bank balance 10,200 16,800
Bank debits 21,300
Bank credits ?
Notes collected by bank 2,250 3,000
Bank service charge 20 100
NSF checks 880 1,400
Understatement of recorded cash
collections 1,900 1,200
Deposit in transit 6,000 11,250
Outstanding checks 9,750 17,850
Loan amortization of Kristeta
Corp. erroneously debited to
Kriselda Co.’s account 2,400 1,800

11. How much is the adjusted cash receipts in July?

a. 24,150 b. 27,900 c. 30,750 d. 24,350

12. How much is the adjusted cash disbursements in July?

a. 27,600 b. 27,900 c. 21,000 d. 21,600

13. How much is the adjusted cash balance as of July 31?

a. 12,000 b. 8,850 c. 15,930 d. 14,600

14. ABC Co. cannot reliably estimate future returns. much is the net accounts receivable
recognized on the date of sale?
a. 20,000 b. 16,000 c. 15,000 d. 0

15. ABC Co. has the following information on December 31, 20x1 before any year-end
adjustments.
Allowance for doubtful accounts, Jan. 1 30,400
Write-offs 19,000
Recoveries 3,800
Sales (including cash sales of ₱380,000) 2,280,000
Sales returns and discounts (including ₱3,800 sales returns
22,800
on cash sales)
Accounts receivable, Dec. 31 570,000
Percentage of credit sales 3%
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Cagayan Valley Computer & Information Technology College, Inc.
No. 28 Carreon Street, Centro East, Santiago City, Philippines | Telefax: (078) 305-0139
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How much is the recoverable historical cost of accounts receivable?

a. 498,370 b. 502,630 c. 486,780 d. 478,970

Use the following information for the next two questions:

ABC Co. has the following information on December 31, 20x1 before any year-end adjustments.
Accounts receivable, Jan. 1 80,000
Net credit sales 270,000
Collections from customers (including recoveries) 140,000
Allowance for doubtful accounts, Jan. 1 10,000
Write-offs 5,000
Recoveries 1,000
Percentage of receivables 5%

16. How much is the bad debt expense?

a. 4,250 b. 4,300 c. 4,550 d. 10,300

17. How much is the recoverable historical cost of accounts receivable?

a. 194,750 b. 200,450 c. 196,250 d. 195,700

18. ABC Co. has been recognizing bad debt expenses based on the direct write-off method. In
20x4, ABC Co. decided to change to the allowance method and that doubtful accounts shall
be estimated using the percentage of receivables method. The percentage is to be computed
based on all available historical data up to a maximum of four years. Information for five
years is shown below:
Year Write-offs Recoveries Net credit sales
20x0 10,000 600 80,000
20x1 7,000 1,000 100,000
20x2 10,000 3,000 160,000
20x3 15,000 5,000 200,000
20x4 28,000 2,000 240,000
  70,000 11,600 780,000

The balances of accounts receivables on January 1, 20x4 and December 31, 20x4 are ₱100,000
and ₱200,000, respectively.

How much is the doubtful accounts expense to be recognized in 20x4?

a. 19,900 b. 34,000 c. 35,000 d. 24,600

19. ABC Co. has the following information:

Days outstanding Receivable balances % uncollectible
0 – 60 180,000 1%
61 – 120 135,000 2%
Over 120 150,000 6%
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Cagayan Valley Computer & Information Technology College, Inc.
No. 28 Carreon Street, Centro East, Santiago City, Philippines | Telefax: (078) 305-0139
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Total accounts receivables 465,000  

During the year, ABC Co. wrote off ₱10,500 receivables and recovered ₱6,000 that had been
written-off in prior years. The allowance for doubtful accounts has a beginning balance of
₱3,000.

How much is the doubtful accounts expense for the year?

a. 20,000 b. 25,000 c. 15,000 d. 30,000

20. ABC Co. sells to wholesalers on terms of 2/15, net 30. An analysis of ABC Co.’s trade
receivable balances at December 31, 20x1, revealed the following:
Receivable
Age in days balances
0 – 15 180,000
16 – 30 108,000
31 – 60 90,000
61 – 90 72,000
91 – 120 54,000
121 – 150 36,000
Total accounts
540,000
receivables

ABC Co. uses the aging of receivables method. The estimated percentages of collectibility based
on past experience are shown below.
Accounts which are overdue for less than 31 days 97%
Accounts which are overdue 31 – 60 days 90%
Accounts which are overdue 61 – 90 days 85%
Accounts which are overdue 91 – 120 days 65%
Accounts which are overdue for over 120 days 40%

The allowance for doubtful accounts has a balance of ₱18,000 as of January 1, 20x1. Write-offs
and recoveries during the year amounted to ₱6,000 and ₱3,000, respectively.

How much is the doubtful accounts expense for the year?

a. 15,600 b. 9,000 c. 22,600 d. 28,200

Use the following information for the next two questions:

ABC Co. has the following information on December 31, 20x1 before any year-end adjustments.
Net credit sales 6,300,000
Accounts receivable, December 976,500
Allowance for doubtful accounts, Dec. 31 (before any
53,550
necessary year-end adjustments)
Percentage of credit sales 2%
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Cagayan Valley Computer & Information Technology College, Inc.
No. 28 Carreon Street, Centro East, Santiago City, Philippines | Telefax: (078) 305-0139
____________________________________________________________________________________________________________________
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The aging of receivables is shown below:
Days outstanding Receivable balances % uncollectible
0 – 60 378,000 1%
61 – 120 283,500 2%
Over 120 315,000 6%
Total accounts receivables 976,500  

Additional information:
 ABC Co. uses the percentage of credit sales in determining bad debts in monthly financial
reports and the aging of receivables for its annual financial statements.
 Accounts written-off during the year amounted to ₱119,700 and accounts recovered amounted
to ₱28,350.
 As of December 31, ABC Co. determined that ₱63,000 accounts receivable from a certain
customer included in the “61-120 days outstanding” group is 95% collectible and a ₱31,500
account included in the “Over 120 days outstanding” group is worthless and needs to be
written-off.

21. How much is the balance of the allowance for doubtful accounts on January 1, 20x1?
a. 12,600 b. 18,900 c. 19,200 d. 23,400

22. How much is the adjusted bad debt expense to be reported in the year-end financial
statements?
a. 123,300 b. 128,700 c. 143,300 d. 132,300

23. ABC Co. has the following information before any year-end adjustment.
Accounts receivable, Dec. 31 200,000
Allowance for doubtful accounts, Jan. 1 6,000 (Dr.)
Percentage of receivables 2%

Recoveries and write-offs during the year amounted to ₱1,000 and ₱7,600, respectively.

How much is the bad debts expense for the year?

a. 3,400 b. 4,600 c. 16,600 d. 10,600

Use the following information for the next two questions:

On January 1, 20x1, ABC Co. sold a transportation equipment with a historical cost of
₱1,000,000 and accumulated depreciation of ₱300,000 in exchange for cash of ₱100,000 and a
noninterest-bearing note receivable of ₱800,000 due on January 1, 20x4. The prevailing rate of
interest for this type of note is 12%.

24. How much is the interest income in 20x1?

a. 68,331 b. 76,532 c. 85,714 d. 96,000

25. How much is the carrying amount of the receivable on December 31, 20x2?
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Cagayan Valley Computer & Information Technology College, Inc.
No. 28 Carreon Street, Centro East, Santiago City, Philippines | Telefax: (078) 305-0139
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a. 800,000 b. 569,424 c. 637,755 d. 714,286

Use the following information for the next three questions:

On January 1, 20x1, ABC Co. sold transportation equipment with a historical cost of
₱20,000,000 and accumulated depreciation of ₱7,000,000 in exchange for cash of ₱500,000 and
a noninterest-bearing note receivable of ₱8,000,000 due in 4 equal annual installments starting
on December 31, 20x1 and every December 31 thereafter. The prevailing rate of interest for this
type of note is 12%.

26. How much is the interest income in 20x1?

a. 728,946 b. 678,334 c. 728,964 d. 704,236

27. How much is the current portion of the receivable on December 31, 20x1?
a. 1,271,036 b. 1,423,560 c. 3,380,102 d. 1,594,388

28. How much is the carrying amount of the receivable on December 31, 20x2?
a. 4,803,663 b. 3,380,102 c. 6,074,699 d. 6,000,000

Use the following information for the next three questions:

On January 1, 20x1, ABC Co. sold transportation equipment with a historical cost of
₱12,000,000 and accumulated depreciation of ₱7,000,000 in exchange for cash of ₱100,000 and
a noninterest-bearing note receivable of ₱4,000,000 due in 4 equal annual installments starting
on January 1, 20x1 and every January 1 thereafter. The prevailing rate of interest for this type of
note is 12%.

29. How much is the interest income in 20x1?

a. 408,230 b. 278,334 c. 328,964 d. 288,220

30. How much is the carrying amount of the receivable on December 31, 20x1?
a. 1,690,510 b. 892,857 c. 2,690,051 d. 1,594,388

31. How much is the carrying amount of the receivable on January 1, 20x3?
a. 892,857 b. 3,380,102 c. 6,074,699 d. 6,000,000

32. On March 1, 20x1, ABC Co. assigned its ₱1,000,000 accounts receivable to Piggy Bank in
exchange for a 2-month, 12%, loan equal to 75% of the assigned receivables. ABC Co.
received the loan proceeds after a 2% deduction for service fee based on the assigned notes.
During March, ₱500,000 were collected from the receivables. Sales returns and discounts
amounted to ₱150,000. How much net cash is received from the assignment transaction on
March 1, 20x1?
a. 735,000 b. 730,000 c. 1,230,000 d. 1,235,000

The next three questions are based on the following information:

Fact pattern
 CVCITC
Cagayan Valley Computer & Information Technology College, Inc.
No. 28 Carreon Street, Centro East, Santiago City, Philippines | Telefax: (078) 305-0139
____________________________________________________________________________________________________________________
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ABC Co. factored ₱100,000 accounts receivable to XYZ Financing Corp. on a without recourse
basis on January 1, 20x1. XYZ charged a 4% service fee and retained a 10% holdback to cover
expected sales returns. In addition, XYZ charged a 12% interest computed on a weighted average
time to maturity of the receivables of 73 days based on 365 days.

33. How much proceeds is received from the factoring on January 1, 20x1?
a. 100,320 b. 85,600 c. 83,600 d. 88,300

34. How much is the cost of factoring assuming all of the receivables have been collected?
a. 6,400 b. 2,400 c. 16,400 d. 12,400

35. Use the same information in the preceding illustration except that ABC Co. factored the
receivables on a with recourse basis. ABC Co. determines that the recourse obligation has a
fair value of ₱3,000. How much is the loss on sale of receivables recognized on January 1,
20x1 assuming the factoring was made on a casual basis?
a. 3,000 b. 9,400 c. 19,400 d. 6,400