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PROBLEMS:
1. You are given the following information relating to Majoy Trading, a general merchandising company:
Assuming all sales were on account, what was the company’s Accounts Receivable balance on December 31, 2019?
a. P120,000 b. P100,000 c. P90,000 d. P50,000
2. Anong Pizza Na Company sold merchandise on credit with a invoice price of P94,500 and a trade discount of 10%. Terms were
2/10, n/30. Which of the following entries is correct, given the indicated method of accounting for cash discounts.
3. Papasa Ako Company sold on credit merchandise having a list price of P200,000 with the following terms: trade discount of 10%
and 5%, cash discountof 3% if the account is paid within 10 days from the invoie date, full amount is due in 30days. Which of the
following entries is correct, to record the collection of the account, given the indicated method of accounting for cash discounts?
5. The following accounts were abstracted from Romina Company’s unadjusted trial balance at December 31, 2019:
Debit Credit
Accounts Receivable 1,000,000
Allowance for Bad Debts 8,000
Net Credit Sales 3,000,000
Romina estimates that 3% of the gross accounts receivable oustanding will become uncollectible. After adjustment at December
31,2019, what is the balance of the allowance for bad debts?
a. P90,000 b. P82,000 c. P38,000 d. P30,000
6. Use the same information given in no. 5. How much uncollectible accounts expense is reported in Romina’s Statement of
Comprehensive Income for year ended December 31, 2019?
a. P90,000 b. P82,000 c. P38,000 d. P30,000
7. Marga, Inc. prepared an aging of its accounts receivable at December 31, 2019 and determined that the amortized cost of the
receivables was P250,000. Additional information is available as follows:
8. Bumbum Company had the following data relating to its accounts receivable.
How much is Bumbum Company’s net accounts receivable at December 31, 2019?
a. P1,660,000 b. P1,685,000 c. P1,825,000 d. P1,850,000
9. On March 31, 2019, Jisicasuhu Company had an unadjusted credit balance of P10,000 in its allowance for uncollectible accounts.
An analysis of Jisicasuhu’s trade accounts receivable at that date revealed the following:
What amount shoud Jisicasuhu report as allowance for uncollectible accounts in its March 31, 2019 statement of financial position?
a. P48,000 b. P40,000 c. P38,000 d. P30,000
On January 1, 2018, Hernani Corporation sold a piece of equipment that was acquired ten years ago for P350,000. At the time of sale,
the equipment had an accumulated depreciation of P240,000. Bravery received a non-interest bearing note for P300,000 in exchange
of the equipment. The note is due on December 31, 2019. There is no readily available market value for the equipment, but the current
market rate for comparable notes is 12% (PV factor, round of f to 4 decimals.)
Justin Company sells equipment with a book value of 800,000, receiving a non-interest bearing note due in three years with a face
amount of P1,00,000. There is no established market value for the equipment. The interest rate on similar obligation is estimated at
12%. Round off present value factor to three decimal places)
3. Justin should report gain (or loss) on the sale and interest revenue respectively, for the first year at
a. P200,000 and P288,000
b. P200,000 and P96,000
c. P(88,000) and P120,000
d. P(88,000) and P85,440
On January 1, 2018, New Orleans Company sold an equipment to Hornets company which had a carrying value on New Orleans
books of P100,000. Hornets gave New Orleans a P600,000, non-interest bearing note, payable in five equal annual installment of
P120,000 with the first payment due on December 31, 2018. There were no established price for the equipment and the note has no
ready market value.
The prevailing rate of interest for a similar note at January 1, 2018 was 12%.
Present Value (PV) and Future Value (FV) factors for 5 periods at 12% are:
5. How much is the amortized cost of the notes receivable at December 31, 2016?
a. P483,840 b. P432,000 c. P363,840 d. P236,540
On January 1, 2016, Japeth Company sold land that originally cost P400,000 to the Greg Company. As payment, Egi gave Japeth a
P600,000 note. The note bears an interest of 8% and is to be repaid in three annual installments of 200,000 plus interest on the
outstanding balance. The first payment is due on December 31, 2018. The market price of the land is not reliably determinable. The
prevailing rate for notes of this type is 8%.
8. Assume the same facts given in the problem, but change the prevailing interest rate for notes of this type to 12% (instead of 8%). At
how much should the note be recorded on January 1 , 2018?
a. P600,000 b. P560,138 d. 480,360 d. P427,080