1.

)
Unadjusted Checkbook Balance
Check payable to the entity deposited
December 15 and included in checkbook balance
Check drawn on the entity's account
Coins and currencies
Three - month money market instruments due 2020
Sinking fund restricted for bonds payable due 12/31/2020
Traveler's check
Manager's check
Total Cash and Cash Equivalent

2.) Amount
30 days or less 3,000,000.00
Between 31 and 60 days 1,500,000.00
Between 61 and 180 days 1,200,000.00
Between 181 and One year 1,200,000.00
Over one year - to be written off 100,000.00

3.)
Allowance for Doubtful Accounts
Total Accounts written off 2019 300,000.00

Computation of Beg. Allowance for DA

Total Credit Sales 2016 to 2018 23,500,000.00
DA rate based on credit sales 5%
Cumulative DA expense 2016 - 2018 1,175,000.00
Accounts Written off 2016 to 2018 (200,000.00)
Recoveries 75,000.00
Allowance for DA, beg 1,050,000.00

4.)
Total Credit Sales 38,500,000.00
Total Collections excluding Recovery 31,100,000.00
Unadjusted gross AR 7,400,000.00
Accounts Written - off (500,000.00)
Gross A/R 6,900,000.00
Allowance for DA, end (1,350,000.00)
Accounts Receivable - net 5,550,000.00
5.)
CA of first note receivable P2,000,000

note:since the first note receivable is due in nine months, in practice, it is not amortize due to the immateriality of th

6.)
Face value of second note 2,000,000.00
Interest at 3% annually for 5 years 300,000.00
Maturity value 2,300,000.00
PV factor of 1 at 8% for 5 periods 0.68
CA on December 31, 2019 1,564,000.00

7.)

FV on January 1, 2019 5,000,000.00

payment on January 1, 2020 (1,000,000.00)
payment on January 1, 2021 (1,000,000.00)
Remaining FV on January 1, 2021 3,000,000.00

To compute for the projected present value of cash flows

Face Value
Payment due on January 1, 2022 1,000,000.00
Payment due on January 1, 2023 1,000,000.00
Payment due on January 1, 2024 1,000,000.00
3,000,000.00

Remaining FV on January 1, 2021 3,000,000.00

Present value of remaining cash flows 2,790,000.00
Impairment loss 210,000.00

8.)
Present Value at December 31, 2021 2,790,000.00
Payment made on January 1, 2022 (1,000,000.00)
1,790,000.00
Interest Receivable @8% for 2022 143,200.00
Carrying amount of loan receivable, 12/31/2022 1,933,200.00

9.)
D. Highly marketable Equity Investment

because generally speaking, equity instruments have no maturity date. To be considered as part of cash equivalents
the remaining term of investments such as treasury bills, money market instruments, and certificate of time deposit
as of the acquisition date should be 3 months or less.
because generally speaking, equity instruments have no maturity date. To be considered as part of cash equivalents
the remaining term of investments such as treasury bills, money market instruments, and certificate of time deposit
as of the acquisition date should be 3 months or less.

10.)
0-15 days receivables 10,000,000.00
Discount rate 2%
Total possible discount as of year - end 200,000.00
Expected rate of customers who will avail of the discount 50%
Allowance for sales discount at year - end 100,000.00

11.)
Age Amount
0-15 days 10,000,000.00
16-30 days 7,000,000.00
31-60 days 2,000,000.00
Over 60 days 1,000,000.00
20,000,000.00

Total A/R 20,000,000.00

Allowance for D/A (1,600,000.00)
Allowance for Sales Discount (100,000.00)
A/R end - net 18,300,000.00

12.)
Units
January 1 Beg Bal 8,000.00
January 6 Purchase 3,000.00
February 5 Sale (10,000.00)
March 5 Purchase 11,000.00
March 8 Purchase Return (800.00)
April 10 Sale (7,000.00)
April 30 Sale Return 300.00
Ending Inventory in Units 4,500.00

13.)
Units
January 1 Beg Bal 8,000.00
January 6 Purchase 3,000.00
March 5 Purchase 11,000.00
March 8 Purchase Return (800.00)
Ending Inventory in Units 21,200.00
Average unit cost 75.52
Ending Inventory in units 4,500.00
Ending Inventory @cost using weighted average 339,834.91

difference from the letter B choice of 339,840 is due to the rounding off of the average unit cost

14.)
Product 1
Historical Cost 4,000,000.00
Replacement Cost 4,500,000.00
Sales Price 600,000.00
Net Realizable Value 2,750,000.00
Normal Profit 1,250,000.00

@Cost 4,000,000.00
@NRV 2,750,000.00
LCNRV 2,750,000.00

Total at cost 15,000,000.00

Total LCNRV 13,000,000.00
Ending Allowance for Inventory Writedown 2,000,000.00
Less: Beginning Balance (800,000.00)
Loss on Inventory Writedown 1,200,000.00

15.)
LCNRV 13,000,000.00

*note: The measurement basis of inventory is at LOWER OF COST AND NET REALIZABLE VALUE (LCNRV). Th
the LCNRV is recognized as a loss and is included as part of the cost of goods sold. Since there is a beginning allow
will be deducting it to arrive at the loss on inventory writedown for the period.

16.)
D. The net realizable value for ending inventory is substituted for cost and the loss is buried in cost of good
Note: Cost of goods sold method is the same as the direct method wherein there is no allowance for inventory write

17.)
Inventory Beginning 1,500,000.00
Purchases during the year 5,500,000.00
Cost of Goods Sold (4,500,000.00)
Ending Inventory lost from storm surge 2,500,000.00

Accounts Receivable, beg. 2,000,000.00

Credit Sales 6,500,000.00
Collection of Accounts Receivable (8,000,000.00)
Accounts Receivable, ending 500,000.00

Credit Sales 6,500,000.00

Cash Sales 1,000,000.00
Total Sales 7,500,000.00
Cost Ratio (1 - GP rate of 40%) 60%
Cost of Goods Sold 4,500,000.00

18.)
D. The amount of purchases and the amount of sales remain relatively unchanged from the comparable pre

*the assumption of the gross profit method is that the rate of gross profit remains approximately the same from
period to period. It assumes that what is relatively unchanged is the ratio of cost of goods sold to the net sales and
not the amount of purchases and the amount of sales.

19.)
Market Price on December 31, 2017 270.00
Commitment price 310.00
difference (40.00)
total ounces to be purchased 10,000.00
Total loss on purchase commitment as of 12/31/2017 (400,000.00)

20.)
Market Price on February 15, 2018 300.00
Commitment Price 310.00
difference (10.00)
total ounces to be purchased 10,000.00
loss on purchase commitment (100,000.00)
beginning allowance for loss on purchase commitment (400,000.00)
Gain on Purchase commitment 300,000.00

21.)
Market Price on February 15, 2018 300.00
total ounces to be purchased 10,000.00
Total purchase price 3,000,000.00

*note: even though Diamond entered into a commitment to purchase at 310 per ounce, the purchase will be recorde

22.) Cost
Beginning Inventory 1,650,000.00
Net Purchases 3,725,000.00
Departmental transfer - credit (200,000.00)
Net Markup
Markdown
Total goods available for sale 5,175,000.00
Inventory Shortage
Sales
Employee Discounts
Total sales (deduction from TGAFS)

Ending Inventory at Retail

average cost ratio
Estimated cost of ending inventory

*note: Departmental transfer - credit are deducted both from cost and retail because these represents outflow of
inventory from the department. Since there is no indication that the inventory shortage is abnormal, it will only be
deducted from the TGAFS at retail. Be also mindful of the net markdown mentioned amounting to 100,000 (500,000
400,000)

23.)

Cost of land 1,000,000.00

Total cost on December 31, 2016 500,000.00

Depreciation for 2017 (useful life of 5 years) (100,000.00)
Carrying amount of bearer plants 400,000.00

Total Carrying amount of PPE 1,400,000.00

24.)
Fair value less cost of disposal of the fruits December 31, 2017 50,000.00

25.)
Fair value less cost of disposal of the fruits upon harvest 75,000.00
Fair value less cost of disposal of the fruits December 31, 2017 50,000.00
Gain from change in fair value 25,000.00

26.)
B. fair value less cost of disposal at the point of harvest

27.)
C. An active market for the asset exists

28.)
A. Deposits credited by bank but not yet recorded by the entity

29.)
A. Excess of the carrying amount of the loan receivable over the present value of the cash flows related to
*Note: if there is accrued interest receivable, include it in the carrying amount of the loan receivable
30.)
B.Maturity value less the discount at 15%
 8,000,000.00

(3,000,000.00)
2,500,000.00
800,000.00
1,500,000.00
1,000,000.00
200,000.00
100,000.00
11,100,000.00 B.

Probability of CollectionAllowance % Allowance for Doubtfull Accounts

95% 5% 150,000.00
80% 20% 300,000.00
75% 25% 300,000.00
50% 50% 600,000.00
0% 100% -To be written off-
Allowance for DA, end 1,350,000.00 A.

owance for Doubtful Accounts

1,050,000.00 Beg bal
100,000.00 Recoveries 2019
500,000.00 Doubtful Accounts Expense A.

1,350,000.00 Allowance for DA, end

C.
 A.

ortize due to the immateriality of the discount

D.

*reminder: since the

problem did not
mentioned that the
payment dates will be
PV factor Present Value changed, and that the
1.00 1,000,000.00 bank determined that
0.93 930,000.00 the remaining
0.86 860,000.00 principal payments
(1M at the beg of
2,790,000.00 every year), the
payment due on
January 1, 2022 is
not discounted
B. anymore because the
assessment of
collectability was
made by the bank on
December 31, 2021.

B.

nsidered as part of cash equivalents,

nts, and certificate of time deposit
nsidered as part of cash equivalents,
nts, and certificate of time deposit

A.

Collectibility Allowance Rate Allowance for DA

100% 0% -
90% 10% 700,000.00
80% 20% 400,000.00
50% 50% 500,000.00
1,600,000.00

C.

@80 per unit 360,000.00 A.

*When using FIFO, the ending inventory will come from the most recent purchases becau

Total Cost
560,000.00
225,000.00
880,000.00
(64,000.00)
1,601,000.00
 *B.

erage unit cost

Product 2 Product 3 Product 4

5,000,000.00 3,500,000.00 2,500,000.00
6,000,000.00 5,000,000.00 3,000,000.00
6,500,000.00 6,250,000.00 5,000,000.00
5,500,000.00 4,750,000.00 1,750,000.00
750,000.00 1,500,000.00 1,500,000.00

5,000,000.00 3,500,000.00 2,500,000.00 15,000,000.00

5,500,000.00 4,750,000.00 1,750,000.00
5,000,000.00 3,500,000.00 1,750,000.00 13,000,000.00

C.

B.

EALIZABLE VALUE (LCNRV). The difference between the cost and

old. Since there is a beginning allowance for inventory writedown, we

the loss is buried in cost of goods sold

e is no allowance for inventory writedown. The difference between the cost and the LCNRV is buried in the cost of goods sold.

A.

SQUEEZE
hanged from the comparable previous period.

approximately the same from

of goods sold to the net sales and

A.

B.

A.

ounce, the purchase will be recorded using the market price on the date of purchase since it is the price per ounce when it bou

Retail
2,200,000.00
4,950,000.00
(300,000.00)
150,000.00
(100,000.00)
6,900,000.00 75%
 cost ratio - average method
100,000.00
4,000,000.00
200,000.00
4,300,000.00

2,600,000.00
75%
1,950,000.00 A.

use these represents outflow of

rtage is abnormal, it will only be
ed amounting to 100,000 (500,000-

*Note: Land is NOT depreciable. As discussed, bearer plants are now

considered part of property, plant, and equipment due to the ammendment made
by IASB.

B.

C.

C.

alue of the cash flows related to the loan

the loan receivable
st recent purchases because the older purchases/stock will be the first to be sold
n the cost of goods sold.
ice per ounce when it bought the gold.