UNIVERSITY OF SAN JOSE RECOLETOS

ACCOUNTANCY and FINANCE DEPARTMENT

ACCTG 3 Financial Accounting
F I N A L O U T P U T

GENERAL INSTRUCTIONS:
1. Each group will have at most 8 members.
2. Please use MSWord for the excerpt notes and MSExcel in preparing the schedules.
3. All final output should be emailed to your professor on or before 12noon on October 15, 2015. Email all
outputs to the designated email ads of your professors.
COMPREHENSIVE PROBLEM
Humanajudmi Company reported the following information as of December 31, 2015.
1. The details of cash on hand are as follows:
Collections place on vault awaiting deposit in January
Customer check dated January 15, 2016 received on
December 22, 2015
Postal money orders
Traveller check

150,000
50,000
75,000
125,000
400,000

2. The established amount of the petty cash fund is P15,000. At December 31, 2015, the fund was not
replenished. The composition of the fund was as follows:
Coins and currency
Memoranda for paid expenditures
Postage
Supplies
Transportation

7,680
2,587
3,669
1,064

3. The current account of BPI amounted to P250,000 as of December 31, 2015. Records show that as of
December 31, 2015, Deposit in transit amounted to P100,000 while outstanding checks amounted to
P690,000. This account is an auto debit with the another saving account of the Company which has a balance
of P1,540,000 as of December 31, 2015. No bank reconciliation was prepared on December.
4. The Metrobank current accounts provided the following bank reconciliation as of November 30 for the current
year
Bank balance
Add: Deposit in transit
Total
Less: Outstanding checks
No.

150,000
300,000
450,000
121
126
127

120,000
80,000
30,000

Adjusted bank balance

230,000
220,000

Receipts are deposited to the bank intact. Bank statement as of December is as follows
BPI Current
account
Date
Balance forwarded
Dec 1

Code
CD

Debits

Credits
300,000

Balance
150,000
450,000

Dec 2
Dec 3
Dec 4
Dec 6
Dec 8
Dec 9
Dec 10
Dec 12
Dec 15
Dec 20
Dec 21
Dec 22
Dec 23
Dec 26
Dec 27
Dec 28
Dec 29

CW
CD
CW
CW
CW
CD
CW
CD
CW
CD
CW
CW
CD
CD
SC
CM
Int

Cash Withdrawal
Cash Deposit
Service Charge
Credit Memo
Interest

CW
CD
SC
CM
Int

120,000
1,000,000
100,000
450,000
80,000
200,000
250,000
500,000
275,000
600,000
400,000
500,000
650,000
275,000
2,500
133,500
1,500

330,000
1,330,000
1,230,000
780,000
700,000
900,000
650,000
1,150,000
875,000
1,475,000
1,075,000
575,000
1,225,000
1,500,000
1,497,500
1,631,000
1,632,500

A detail of the Credit Memo is as follows:

Loan proceeds
Less: Bank charge

140,000
6,500

Proceeds

133,500

The Companys cash receipts journal and cash disbursement are as follows:
Cash Receipts Journal
OR No.
252
253
254
255
256
257
258
259

Collection
1,000,000
200,000
400,000
100,000
600,000
650,000
275,000
225,000
3,450,000

Cash Disbursement Journal

Check No.
128
129
130
131
132

Disbursed
100,000
450,000
400,000
250,000
275,000

133
134
135
136

90,000
500,000
60,000
125,000
2,250,000

No bank reconciliation was prepared on December 31.

5. Details of the BDO account is as follows:
Cash in bank, December 31
Book receipts for December
Book disbursements for December

255,000
2,550,000
2,480,000

Bank statement balance, November 30

Bank credits for December
Bank debits for December

270,000
2,645,000
2,451,000

December collection of P10,000

recorded as
December check in payment of account
payable for P120,000 recorded as
Deposit of another company erroneously
credited by bank to own bank account
Check of Company erroneously charged by
bank to another bank company account
Note collected by bank
November
December
NSF check
November
December

100,000
12,000
150,000
76,000

87,000
236,000

49,000
88,000

Deposit in transit
November
December

111,000
?

Outstanding checks
November
December

158,000
?

No bank reconciliation was prepared on December 31, 2015.

6. Details of the time deposit account are as follows:
BPI 1
Metro bank
BDO
China Bank

Treasury bill, purchased 11/1/14 maturing 1/30/16

Treasury bill, purchased 5/1/14 maturing 2/2/16
Time deposit renewable every month
Money market placement, legally restricted

7. The aging of its trade receivables and its probability of uncollectability are as follows:

Not yet due, with P40,000 credit balance AR

1-30 days past due
31-60 days past due
61-90 days past due
Over 90 days past due

3,750,000
1,280,000
630,000
470,000
370,000

% uncollectible
Nil
5
10
30
80

6,500,000
The Companys policy on setting up allowance for doubtful accounts is based on the aging of accounts
receivables.
On January 1, 2015, allowance for doubtful accounts has a credit balance of P275,000. Bad debts recoveries
and bad debts written off in the current year amounted to P40,000 and P360,000, respectively.
Based on the review of collectability of account balances, additional receivables of P80,000 under the
classification Over 90 days past due are to be written off. NSF checks are to be classified under 1-30 days
past due while post dated checks are not yet due.
Due to an urgent demand for cash, on December 31, 2015 the Company assigned P1,000,000 accounts
receivable to a bank on a nonnotification basis in consideration for a loan. On this date, the bank advanced
80% of total receivables assigned less service charged of 5% of the loan granted to the Company. The
assigned AR were taken from the not yet due receivables.
8. Advances to officers and employees are all current and management believes that all these are collectible.
9. Included in the advances to suppliers are payments of refundable deposit for the lease contract entered on
May 1, 2015 amounting to 200,000.
10. The breakdown of notes receivable are as follows:
Amount Note
Note
A
B
C
D
E

800,000
5,000,000
1,200,000
6,500,000
2,500,000
16,000,000

All notes were obtained on January 1, 2015. It has been the policy of the Company to record the notes at the
gross amount of the note. The details of the notes above are as follows:
a. Sold a printing machine, with no sales price, to another entity where the buyer signed a noninterestbearing note requiring payment of P800,000 annually for 7 years. The first payment is on January 1,
2016.
The prevailing rate of interest for this type of note at date of issuance was 10%. Information on present
value factors is as follows:
Periods
6
7

Present value
of 1 at 10%
.56
.51

Present value of
ordinary annuity
of 1 at 10%
4.36
4.87

b. Received a note from a buyer of a printing machine with a cost of P2,500,000 and a sales price of
P3,500,000. The buyer signed a note for P5,000,000 payable in four equal instalments every
December 31.

c.

Accepted a customers P1,200,000 non-interest bearing nine-month note for the sale of its
transportation equipment. The transportation equipment had a cost of P1,500,000 and a carrying
amount of P900,000.

d. Sold an piece of land with a carrying amount of P4,800,000 in exchange for a P6,500,000 noninterestbearing note due on January 1, 2018. There was no established price for the land. The prevailing rate
of interest for a note of this type is 12%. The present value of 12% for three periods is .71.
e. Sold a heavy equipment with a cost of P3,500,000 and an accumulated depreciation of P1,750,000
for P2,500,000. The buyer signed a 3 year not for P2,500,000 plus interest compounded semiannually. The interest is 12% per annum
11. The following are the details of the loan granted by the Company to different borrowers
A
Principal
Direct origination cost
Direct origination fee from borrower
Date granted
Maturity
Interest rate on the loan per promissory note
Effective interest rate

6,000,000
92,250
525,000
January 1, 2014
after 5 years
10% per annum
12% per annum

B
Principal
Direct origination cost
Direct origination fee from borrower
Date granted
Maturity
Interest rate on the loan per promissory note
Effective interest rate

2,400,000
208,240
80,000
January 1, 2015
after 3 years
8% per annum
6% per annum

C
At December 31, 2015, the Company has a 5-year loan receivable with face amount of P7,000,000
dated January 1, 2014 that will be due on December 31, 2018. Interest is payable at 9% every
December 31. The borrower was able to pay interest due on December 31, 2014 but informed the
Company that interest accrued in 2015 will be paid at maturity date. There is also a high probability
that the remaining interest payments will not be paid because of such cash difficulty. The prevailing
market rate on December 31, 2015 is 10. (use at to 3 decimal places.
12. Inventory as of January 1, 2015 are as follows:
Finished goods A
Finished goods B
Finished goods C

2,700,000
3,600,000
4,500,000

Detailed information on these inventories are follows:

a. Finished goods A
The Company uses moving average in computing for the cost of Finished good A.
Date
1/1/2015
1/6/2015
2/5/2015
3/5/2015
4/10/2015
5/7/2015
6/28/2015
7/5/2015
7/6/2015
10/15/2015
10/30/2015

Description
Beginning balance
Purchase
Sale
Purchase
Sale
Purchase
Sale
Purchase
Purchase return
Sale
Sale return

Units
10,000
15,000
13,000
20,000
12,000
18,000
25,000
20,000
2,000
14,000
1,000

Unit cost
270
275
260
280
285
285

Total Cost
2,700,000
4,125,000
5,200,000
5,040,000
5,700,000
570,000
-

11/15/2015
11/28/2015
12/10/2015

Purchase
Sale
Purchase

17,000
21,000
11,000

290

4,930,000
3,300,000

300

b. Finished goods B
An inventory count was conducted on December 31, 2015 of the year and reported at P4,200,000. None of
the following items were included when the total amount of the ending inventory was computed

c.

P250,000 in goods located in the warehouse that are on consignment from another entity. These
were included in the count.
P400,000 in goods that were sold by the Company and shipped on December 30, 2015 and were
in transit on December 31, 2015. The goods were received on January 2, 2016 and the terms of
the sale is FOB destination.
P150,000 in goods that were purchased by the Company and shipped on December 30, 2015 and
were in transit as of December 31, 2015. The goods were received by the Company on January 2,
2016. Terms of the purchase is FOB shipping point.
Goods costing at P100,000 are on consignment with a customer. These goods are not included in
the year-end count.
P400,000 cost of goods were purchased and paid for in December 2015, were sold on the last
week of 2015 and appropriately recorded as sales at P500,000. The goods were included in the
inventory count on December 31, 2015, because the parts were on the loading dock waiting to be
picked up by the customer.

Finished goods C
Due to the volume of units of this inventory, the Company only uses an estimate on valuing its ending
inventory. The recent gross profit history is 40% of net sales. Relevant information on this inventory are as
follows:
Purchases
Sales
Sales return and allowances
Sales discounts
Purchases return
Freight in
Freight out
Purchase discounts

32,300,000
48,500,000
2,500,000
1,000,000
750,000
500,000
900,000
300,000

Determine the ending inventory.

13. Investments in equity securitie information are as follows:

ABC Company
DEF Company
GHI Company
JKL Company

No. of
shares
1,800
25,000
12,000
5,000

Purchase
Price
2,700,000
3,125,000
9,000,000
1,050,000

Transaction
cost
50,000
125,000
240,000
-

Purpose
for trading
not for trading
not for trading
not for trading

Date of
purchase
1/1/2014
7/1/2014
3/28/2015
10/10/2015

ABC shares have quoted price listed in the stock exchange, while DEF is elected irrevocably to present
changes in fair value in other comprehensive income. GHI and JKL are accounted at cost since fair value
cannot be obtained reliably.
Pertinent fair values are as follows:

ABC Company
DEF Company

Decemeber 31, 2014

1,650
150

Decemeber 31, 2015

1,480
140

When the Company purchased GHI shares on March 28, 2015, a P5/share cash dividend had been
declared on March 20, 2015 on stockholders on record as of March 30, 2015.
It was also noted that on December 16, 2015, JKL Company declared an issuance of stock rights to
purchase new shares at P240 plus 5 rights. The rights expires January 16, 2016. At the time of the
declaration, the shares excluding the rights have market value of P220 per share while rights have market
value of P12 per right.

14. Investments in debt securities are as follows:

MNO bonds
PQR bonds
STU bonds
VWX bonds

Face Amount
2,500,000
3,000,000
4,000,000
6,000,000

Detailed information on these investments are as follows:

a. Purchased 12% P2,5000 face amount MNO bonds at 110 plus accrued interest on March 1, 2015. Interest
is payable semiannually on May 1 and November 1. Bonds are dated May 1, 2014 and mature on May 1,
2019.
b. PQR bonds were purchased on January 1, 2015 and has the following data:
Face amount of bonds
Semiannual interest
Date of bonds
Date of maturity
Nominal rate
Effective rate

3,000,000
June 30 and December 31
January 1, 2015
January 1, 2017
12%
10%

These bonds are carried at amortized cost.

c.

STU bonds were purchased on March 31, 2015 and has the following data:
Face amount of bonds
Semiannual interest
Date of bonds
Date of maturity
Nominal rate
Effective rate

4,000,000
January 1 and July 1
January 1, 2015
January 1, 2020
8%
10%

The Company has irrevocable designated these bonds at fair value through other comprehensive income.
d. VWX bonds were purchased on January 1, 2015 and has the following data:
Face amount of bonds
Annual principal installment every December 31
Interest payment every
Date of bonds
Nominal rate
Effective rate

6,000,000
1,500,000
42,369
January 1, 2015
10%
12%

Instructions:
1. Using MSExcel, prepare schedules and journal entries to properly account the above information. The
schedules and well as its assigned sheet are as follows will be grouped as follows:
Cash on hand and petty cash fund

Sheet 1

Bank reconciliation

Sheet 2

Trade receivables and allowance for doubtful accounts

Sheet 3

Notes and loans receivables

Sheet 4

Inventories

Sheet 5

Investment in Equity Securities

Sheet 6

Investment in Debt Securities

Sheet 7

2. Using MSWord, have a excerpt of a notes to the financial statements to disclose the following:
a. Accounting Policy on the major accounts (Cash, Receivables, Inventory, Investments)
b. Supporting schedules and disclosures of the major accounts

c.

Other corroborative disclosures to support the above accounts.