FINANCIAL ACCOUNTING AND REPORTING

1. On December 1, Ken Company established an imprest petty cash fund of P10,000 by writing a check drawn

against its general checking account. On December 31, the fund contained the following:

Currency and coins P 3,500

Receipts for miscellaneous expenses 2,200

Receipts for office supplies 2,300

Envelope containing contributions of employees 1,200

Receipts for transportation 500

On December 31, Ken Company wrote a check to replenish the fund. The amount of the replenishment check is

2. On January 1, 2017, Martian Manhunter Company sold land costing P600,000 and received in exchange a four-

year, with a face amount of P1,000,000 bearing an interest rate of 6%. The stated rate on the note was

determined to be substantially low compared to the prevailing rate for a similar transaction being at 12%. Martian

Manhunter Company uses the calendar year for reporting purposes. What is the discounted value of the note?

3. On August 1, 2017, Marvel company sold land costing P2,200,000 and received in exchange a note with a face

amount of P3,000,000 maturing on August 1, 2020. It bears an interest rate of 12% which approximates the

current interest rates in the market. Marvel Company uses the calendar year for reporting purposes

Gain reported arising from the sale

Interest income for 2017

Note receivable amount reported in December 31, 2017 statement of financial position

4. On April 1, 2017, Incredible Hulk Company sold a machine to Banner Enterprises in exchange for a P450,000

non-interest bearing note due on April 1, 2021. There was no established exchange price for the equipment and

the note has no ready market. The prevailing rate of the interest for a note of this type at April 1, 2017 was 12%.

The equipment had a carrying value of P275,000 at the time of sale. The collection of the note from Banner

Enterprises is reasonably assured. Incredible Hulk Company uses the calendar year for reporting purposes

Initial measurement of the notes receivable

Interest income for 2017

Unearned interest as of December 31, 2018

5. On January 1, 2017 Hawkeye Company sold a parcel of land which it has acquired previously for P215,000 and

received in exchange a non-interest bearing note whose face value amounted to P450,000. The note shall be

collected every December 31 as follows: P100,000 in 2017; P150,000 in 2018 and P200,000 in 2019. The

effective interest rate for a similar note was 8%. Hawkeye Company uses the calendar year for reporting

purposes

Gain (loss) on the sale of the land

Interest income for 2017

Note receivable reported in the non-current asset section in the December 31, 2018 statement of financial

position

6. Steve Company factors P3,000,000 of accounts receivable with Marium Finance on a without recourse (without

guarantee) basis on July 1, 2017. The receivable records are transferred to Marium Finance, which will receive

the collections. Marium Finance assesses a service charge of 2% of the factored accounts and retains an amount

equal to 6% of accounts receivable factored to cover sales discounts, returns, and allowances.

Prepare the entries in relation to the receivalbles

The net cash proceeds arising from the factoring of the receivable is

The gain (loss) arising from the factoring of the receivable is

7. Determine the cash proceeds from the following discounted notes.

10-month, 12% note for P6,400,00 dated May 1, 2018, discounted on August 1,2018 at the bank at 15%

1-year, 9% note for P1,800,000 discounted at the bank at 12% after holding the note for 5 months

120-day, non-interest bearing note for P800,000 dated May 16, 2018 was discounted at the bank on June

30,2018 at 12%. (Use 360)

P700,000 note bearing interest at 9% dated January 1, 2017. The note is payable in two equal

installments of P350,000 plus accrued interest on December 31, 2017 and December 31, 2018. The note

was discounted on July 1, 2018

8. Goose Company has gathered the following information in relation to its checking account in BDO for the month

of April

Balance per books April 30, P750,000; per bank statement April 30, P815,000

Deposits still in transit at April 30 was P80,000

NSF checks returned by the bank in April was P90,000 and April charges amounted to P20,000

Checks issued but have not yet cleared by April 30 was P50,000

Proceeds from loan directly credited to Goose Company's account amounted to P200,000, while interest

on deposits amounted to P5,000

a. The adjusted balance per book is

b. The adjusted balance per bank is

9. The cash account of Iguana Company disclosed a balance of P1,128,240 on October 31, while the bank

statement showed a balance of P1,470,300. Comparing the statement with the cash records, the following facts

were developed

Customer's note discounted on October 12; dishonored October 26 and the bank charge Iguana

Company, P305,000 which included a service charge of P5,000

Customer's check for P90,000 erroneously credited by the bank in another account. Iguana Company

correctly recorded this payment by customer

Check drawn against Iguana Company dated October 1 for P79,500 was erroneously debited by the bank

as P97,500

Receipts from October 31 for P685,000 were deposited in the night depository box of the bank. It was not

recorded by the bank until November 1

Check drawn against Iguana Company dated October 12 for P27,000 was erroneously debited by the

bank as P2,700

A bank memo stated that a customer's note for P250,000 and interest of P6,250 had been collected on

October 29, and the bank charged P1,250 as service fee. No entry was made on the books when the note

was sent to the bank for collection

Check number 5566 for P124,250 was entered in the cash disbursements journal at P122,450

Bank charges of P3,000 in October, not yet recorded on the books

Iguana's account was charged on October 26 for a customer's uncollectible check amounting to P114,300

Check number 5599 for P3,290 was entered as P32,900

Customer's check for P12,500 was entered as P1,250 by both the depositor and the bank. The bank has

corrected the error by the end of October

Outstanding checks during October amounted to P1,239,000

a. The adjusted balance per book is

b. The adjusted balance per bank is

10. The following format was to be used in preparing of the two-date bank reconciliation for Monkey Company

Balance

November 30

December

receipts

December

disbursements

Balance

December

31

Balance per bank statement xx Xx xx xx

Items to be added: (1) (2) (3) (4)

Items to be deducted: (5) (6) (7) (8)

Adjusted bank balance xx Xx xx Xx

Balance per books xx Xx xx xx

Items to be added: (9) (10) (11) (12)

Items to be deducted: (13) (14) (15) (16)

Adjusted book balance xx Xx xx xx

Indicate in which the reconciling items would appear

___ a. Erroneous bank debit of P5,000 in November was corrected by the bank in

December

___ b. In December, checks amounting to P6,000 of another company was

erroneously debited against Monkey Company's bank balance

___ c. Erroneous bank credit of P7,000 in November was corrected by the bank in

December

___ d. The bank credited Monkey Company's account for P8,000 in December for a

deposit of another company

___ e. Monkey Company's checks of P9,000 issued and cleared in November was

erroneously debited to another company. Corrections were made by the

bank in December

___ f. Check drawn in November in payment of accounts payable cleared in

December amounting to P1,400 was recorded by the bookkeeper as

P14,000

___ g. Check drawn in December in payment of accounts payable for P1,500 was

recorded in the disbursement journal as P15,000

___ h. Costumer's checks for P16,000 deposited and cleared in November was

erroneously recorded by the bookkeeper as P1,600. Corrections were made

in December

___ i. Direct payments made costumers in December P17,000 not yet recorded by

the book

___ j. Erroneous bank debit of P18,000 in December was corrected by the bank in

December