MANUEL L.

QUEZON UNIVERSITY School of Accountancy and Business Arts

Integrated Review in Theory of Accounts and Practical Accounting 1 Day 3
CASH & CASH EQUIVALENTS

Question 1 and 2: Lipton Company shows the following account balances in their financial
records as of December 31, 2014;
Checking account at Morgan Bank P (20,000)
Checking account at Land Bank 500,000
Payroll account- National Bank 100,000
Foreign bank account-restricted 750,000
Postage stamps 22,000
Employees postdated checks 30,000
I.O.U. from presidents brother 75,000
Travelers check 50,000
No-sufficient funds check 18,000
Petty cash funds (P 16,000 in currency & expenses
receipts for P 84,000) 100,000
Cashiers checks 36,000
1. What is the correct cash balance to be reported in the statement of financial position of Lipton
Company on December 31, 2014?
a. P 582,000
b. P 686,000
c. P 702,000
d. P 704,000
2. What is the correct cash balance to be reported in the statement of financial position of Lipton
Company on December 31, 2014 assuming the bank overdraft is repayable on demand and its integral
to the entitys cash management?
a. P 682,000
b. P 686,000
c. P 702,000
d. P 704,000
3. Delta Corporation has supplied you with the following list of its bank accounts and cash at December
31, 2014
Checking account (compensating balance of P 15,000
with no restriction) P 48,000
Savings account, 2% 30,000
Certificate of deposit, 6 months, 10%, due April 20, 2015 60,000
Money market (30-day certificate), current rate, 9.75% 40,000
Payroll account 20,000
Certificate of deposit, 3 months, 10%, due
February 15, 2015 75,000
Petty cash 1,500
Total P 274,500
What should be the balance to be reported as Cash and Cash Equivalents in the December 31, 2014
statement of financial position of Delta Corporation?
a. P 139,500
b. P 199,500
c. P 214,500
d. P 274,500
4. The following information is shown in the accounting records of Container Company:
January 1 December 31
Cash P 186,000
Accounts receivable P 201,000 P 273,000
Merchandise inventory P 258,000 P 234,000
Accounts payable P 159,000 P 144,000
Total sales and cost of goods sold for 2014 were P 2,394,000 and P 1,749,000, respectively. All
sales and purchases were made on credit. Various operating expenses of P 321,000 were paid in
cash. Assume that there were other pertinent transactions.
What is the cash balance on December 31, 2014 of Container Company?
a. P 324,000
b. P 447,000
c. P 758,000
d. P 915,000
5. While checking the cash accounts of Ruler Company on December 31, 2014, you find the following
information:
Balance per books P 67,760
Balance in checking accounts (outstanding checks
per books of P 9,876) 65,323
Deposit in bank closed by BSP 16,000
Deposit in transit 12,345

1
MANUEL L. QUEZON UNIVERSITY School of Accountancy and Business Arts
Integrated Review in Theory of Accounts and Practical Accounting 1 Day 3
Currency and coins counted 9,500
Petty cash fund (of which P450 is in the form of paid vouchers) 1,000
Bank charges not yet taken up in the books 58
Bond sinking fund-cash 10,000
Receivables from employees 700
Book error in recording a check, the correct amount as paid by
the bank is P 890 instead of P 980 as recorded in the books,
or a difference of 90
What is the correct cash on hand and in bank balance for Ruler Company on December 31, 2014?
a. P 64,915
b. P 77,842
c. P 83,124
d. P 103,292

6. Shown below is the bank reconciliation for LENT Company for May 2014:
Balance per bank, May 2014 P 75,000
Add: Deposit in transit 12,000
Total 87,000
Less: Outstanding checks P 14,000
Bank credit recorded in error 5,000 19,000
Cash balance per book, May 2014 P 68,000
The bank statement for June 2014 contains the following data:
Total deposits P 55,000
Total charges, including an NSF check of
P 4,000 and a service charge of P 200 48,000
All outstanding checks on May 2014, including the bank credit, were cleared in bank in June
2014. There were outstanding checks of P 15,000 and deposits in transit of P 19,000 on June 30,
2014.
What is the cash balance per books on June 30, 2014?
a. P 73,800
b. P 82,200
c. P 90,200
d. P 94,400
7. Rich Company had the following bank reconciliation at March 31, 2014:
Balance per bank statement, March 31, 2014 P 46,500
Add: Deposit in transit 10,300
P 56,800
Less: Outstanding checks 12,600
Balance per book, March 31, 2014 P 44,200
Data per bank statement for the month of April, 2014 follow:
Deposits P 58,400
Disbursement 49,700
All reconciliation items at March 31, 2014 cleared through the bank in April. Outstanding checks
at April 30, 2014 totaled P 7,500.
What is the amount of cash disbursements per book in April?
a. P 44,600
b. P 49,700
c. P 54,800
d. P 57,200
8. What is the cash balance per books at April 30,2014?
a. P 47,700
b. P 52,900
c. P 55,200
d. P 58,500
Question 9 and 10: In reconciling the Cash in bank of Inner Company with the bank statement
balance for the month of November 2014, the following data are summarized:
Book debits for November, including October CM for note
collected, P 60,000 P 800,000
Book credits for November, including NSF of P 20,000 and service
charge of P 800 for October 620,000
Bank credits for November including CM for November for bank loan of
P 100,000 and October deposit in transit for P 80,000 700,000
Bank debits for November including October outstanding checks of
P 170,800 and November service charge of P 200 600,000
9. What is the amount of outstanding checks for November?
a. P 20,000
b. P 170,200
c. P 171,000

2
MANUEL L. QUEZON UNIVERSITY School of Accountancy and Business Arts
Integrated Review in Theory of Accounts and Practical Accounting 1 Day 3
d. P 191,000
10. How much is the deposit in transit for the month of November?
a. P 40,000
b. P 100,000
c. P 140,000
d. P 220,000

ACCOUNTS RECEIVABLE

11. Maiden Company provided some information on their financial records on December 31,2014
Accounts receivable, January 1 P 1,920,000
Collections of account receivable 6,240,000
Bad debts 200,000
Inventory, January 1 2,880,000
Inventory, December 31 2,640,000
Accounts payable, January 1 1,000,000
Accounts payable, December 31 1,500,000
Cash sales 1,200,000
Purchases 4,800,000
Gross profit on Sales 2,160,000
What is the ending of accounts receivable on December 31, 2014?
a. P 1,680,000
b. P 2,880,000
c. P 3,120,000
d. P 4,080,000
12. On December 31, 2014, the Receivables account of Con Company shows an amortized cost of P
1,950,000. Subsidiary details show the following:
Trade accounts receivable, P 775,000; trade notes receivable, P 100,000; installments receivable,
normally due one (1) year to two (2) years, P 300,000; customers accounts reporting credit balances
arising from sales returns, P 30,000; advance payments for purchase of merchandise, P150,000;
customers accounts reporting credit balances arising from advance payments, P20,000; Cash
advances to subsidiary, P 400,000, Claims from insurance company, P 15,000;
Subscription receivables due in 60 days, P 300,000; Accrued interest receivable, P 10,000.
How much should be presented as trade and other receivables under current assets?
a. P 725,000
b. P 1,125,000
c. P 1,290,000
d. P 1,650,000
13. Diane company had the following information for 2015
Accounts receivable-January 1 2,000,000
Credit sales 10,000,000
Collection from customers, excluding the recovery of accounts written off 8,000,000
Accounts written off as worthless 100,000
Sales returns 500,000
Recovery of accounts written off 50,000
Estimated future sales returns on December 31 150,000
Estimated uncollectible accounts on December 31, per aging 300,000
What is the net realizable value of accounts receivable on December 31, 2015?
a. 3,400,000
b. 3,100,000
c. 2,950,000
d. 2,900,000
14. Rotary Corporation is located in Quezon but does business throughout Metro Manila. The company
builds and sells equipment used in manufacturing pharmaceuticals. On December 31, 2014, Rotarys
accounts receivable are as follows:
Individually significant receivables
A Company P 320,000
B Company 800,000
C Company 480,000
D Company 400,000
All other receivables 2,000,000
Rotary Corporation determines that A Companys receivable is impaired by P 160,000 and D
Companys receivable is totally impaired. The other receivables from B and C are not considered
impaired. Rotary determines that a composite rate 2% is appropriate to measure impairment on all
other receivables.
What is the total impairment of receivables for Rotary Corporation for 2014?
a. P 494,600
b. P 560,000

3
MANUEL L. QUEZON UNIVERSITY School of Accountancy and Business Arts
Integrated Review in Theory of Accounts and Practical Accounting 1 Day 3
c. P 600,000
d. P 625,600
15. Mayette Company operates in an industry that has a high rate of bad debts. On December 31, 2015,
the accounts receivable balance was P 8,000,000 and the allowance for doubtful accounts on January
1, 2015 was P 1,000,000. The year-end balance reported for the allowance for doubtful accounts is
based on the following schedule:
Time outstanding Accounts receivable Percent uncollectible
Under 30 days 5,000,000 10%
31-180 days 1,500,000 20%
181-360 days 1,000,000 50%
More than one year 500,000 100%
During the year, accounts of P 400,000 were written off and recoveries of previously written off
accounts totaled P 100,000. What amount should be reported as doubtful accounts expense for 2015?
a. 1,800,000
b. 1,100,000
c. 1,000,000
d. 1,400,000
16. On May 9, 2015, Paul Corp. sold merchandise with a list price of P 150,000 to Camry on account.
Paul allowed trade discounts of 30% and 20%. Credit terms were 2/15, n/40 and the sale was made
F.O.B. shipping point. Paul prepared P 6,000 of delivery costs for Camry as an accommodation.
What amount should be Camry remit to Paul as full payment on May 2015?
a. P 82,320
b. P 88,200
c. P 88,320
d. P 94,200

RECEIVABLE FINANCING

Question 17 and 18: On December 1, 2015, Hero Company assigned P 400,000 of accounts
receivable to Halo Company as a security for a loan of P 335,000. Hero Company charged a 2%
commission on the amount of the loan; the interest rate on the note was 10%. During December, Hero
collected P110,000 on assigned accounts after deducting P 380 of discounts. Hero accepted returns
worth P1,350 and wrote off assigned accounts totaling P 2,980.
17. How much cash did Hero receive from Halo at the time of the transfer?
a. P 301,500
b. P 327,000
c. P 328,300
d. P 335,000
18. What is the carrying value of the account receivable assigned as of December 31, 2015?
a. None
b. P 285,290
c. P 289,620
d. P 290, 000
19. On October 31, 2015, Bundle Company engaged in the following transactions:
Obtained a P 500,000, six-month loan from City Bank, discounted at 12%. The company pledged P
500,000 of accounts receivable as security for the loan
Factored P 1,000,000 of accounts receivable without recourse on a non notification basis with Help
Company. Help charged a factoring fee of 2% of the amount of receivables factored and withheld
10% of the amount factored.
What is the total cash received from the financing of receivables?
a. P 1,320,000
b. P 1,350,000
c. P 1,380,000
d. P 1,470,000
20. Freelance Factors provides financing to other companies by purchasing their accounts receivable on a
non-recourse basis. Freelance charges a commission to its clients of 15% of all receivables factored.
In addition, Freelance withholds 10% of receivables factored as protection against sales return or
other adjustments. Freelance credits the 10% withheld to Client Retainer and makes payments to
clients at the end of the month so that the balance in the retainer is equal to 10% of unpaid receivables
at the end of the month. Freelance recognizes its 15% commissions as revenue at the time the
receivables are factored. Also, experience has led Freelance to establish an Allowance for Bad Debts
of 4% of all receivables purchased.
On January 2, 2015, Freelance purchased receivables from Committed Company totaling P1,500,000.
Committed had previously established an Allowance for Bad Debts for these receivables of P 35,000.
By January 31, Freelance had collected P 1,200,000 on these receivables.
What amount of loss from factoring should Committed Company recognize on the sale of its
receivable?
a. None

4
MANUEL L. QUEZON UNIVERSITY School of Accountancy and Business Arts
Integrated Review in Theory of Accounts and Practical Accounting 1 Day 3
b. P 150,000
c. P 190,000
d. P 225,000
Question 21 - 23: Bruno received from a customer a one-year, P 375,000 note bearing annual interest
of 8%. After holding the note for six months, Bruno discounted the note at Super Bank at an effective
interest rate of 10%.
21. How much did Bruno receive from the bank?
a. P 371,428.50
b. P 384,750.00
c. P 392,857.50
d. P 405,000.00
22. If the discounting is treated as a sale, what amount of loss from discounting should Bruno recognize?
a. None
b. P 5,250
c. P 9,750
d. P 20,250
23. If the discounting is treated as borrowing, what amount of loss from discounting should Bruno
recognize?
a. None
b. P 5,250
c. P 9,750
d. P 20,250
Question 24 and 25: Sad Company accepted a P 200,000, 90-day, 12% interest bearing note dated
November 15, 2015 from a customer. On December 15, 2015, Sad discounted the note at Finance
Company at 15% discount rate. Sad Company informed the maker of the note regarding the
discounting arrangement. On maturity date, the maker of the note did not pay the note and as a result
Finance Company charged Sad Company for the total amount due plus P 2,000 protest fee.
24. How much should Sad Company pay to Finance Company, when the maker fails to pay the note upon
its maturity?
a. None
b. P 202,000
c. P 206,000
d. P 208,000
25. What amount of interest income should Sad Company recognize related to the notes receivable in its
December 31, 2015 statement of financial position?
a. None
b. P 1,000
c. P 2,000
d. P 3,000

NOTES RECEIVABLE

Question 26-28: On January 2, 2015, Play Company sold equipment with a carrying amount of
P480,000 in exchange for a P 600,000 non-interest-bearing note due January 2, 2018. There was no
established exchange price for the equipment. The prevailing rate of interest for a note of this type at
January 2, 2015 was 10%. The present value of 1 at 10% for three periods 0.7513
26. How much should Play Company report as interest income in its 2015 profit or loss?
a. P 45,078
b. P 49,586
c. P 54,544
d. P 60,000
27. How much should Play Company report as gain or loss on sale of equipment in its 2015 profit or
loss?
a. P 29,220 loss
b. P 29,220 gain
c. P 120,000 gain
d. P 270,000 gain
28. What is the carrying value of the note receivable as of December 31, 2015 statement of financial
position?
a. P 450,780
b. P 495,858
c. P 545,444
d. P 600,000
29. On December 31, 2015, Party Co. received two P 50,000 notes receivable from customers in
exchange for service rendered. On both notes, interest is computed on the outstanding principal
balance at the annual rate of 3% and payable at maturity. The note from Pretty Corp. made under
customary trade terms, is due in nine months and the note from Charm, Inc. is due in five years. The
market interest rate for similar notes on December 31, 2015 was 8%.

5
MANUEL L. QUEZON UNIVERSITY School of Accountancy and Business Arts
Integrated Review in Theory of Accounts and Practical Accounting 1 Day 3
The compound interest factors to convert future values into present values at 8% follow:
Present value of P1 due in nine months .944
Present value of P1 due in five years .680
At what amounts should these two notes receivable be reported in Partys December 31, 2015
statement of financial position?
Pretty Charm
a. P 47,200 P 34,000
b. P 48,260 P 39,100
c. P 50,000 P 34,000
d. P 50,000 P 39,100
30. On March 1, 2015, Cursor Company sold goods to Matrix Company. Matrix signed a non-interest
bearing note requiring payment of P 60,000 annually for seven years. The first payment was made on
March 31, 2015. The prevailing rate of interest for this type of note at the date of issuance was 10%.
Information on present value factors is as follows:
Present value of 1 at PV of Ordinary Annuity of 1 at
Periods 10% 10%
6 0.56 4.36
7 0.51 4.87
How much should Cursor Company report as sales revenue in March 2015?
a. P 214,200
b. P 261,600
c. P 292,200
d. P 321,600
31. On December 31, 2015, Dwarf Corporation sold for P 50,000 an old machine having an original cost
of P 70,000 and a book value of P 20,000, t he term of the sale were as follows:
P 10,000 down payment
P 20,000 payable on December 31 each of the next two years
The agreement of sale made no mention of interest; however, 9% would be a fair rate for this type of
transaction.
What should be the amount of the notes receivable, net of the unamortized discount and gain on sale,
respectively, on December 31, 2015?
a. P 35,182 & 25,182
b. P 40,000 & 20,000
c. P 45,182 & 25,182
d. P 70,364 & 30,000

LOANS RECEIVABLE

Question 32 and 33: Megabank granted an 8%, 3-year P 6,000,000 loan to Global Company on
January 1, 2014. The interest on the loan is payable every December 31. Megabank incurred
P520,600 of direct origination cost but an origination fee of P 200,000 was charged against Global
Company.
32. What is the carrying value of the loan on January 1, 2014 in Megabanks accounting books?
a. P 5,800,000
b. P 6,000,000
c. P 6,320,600
d. P 6,520,600
33. What is the carrying value of the loan on December 31, 2015 in Megabanks accounting books?
a. P 6,000,000
b. P 6,113,026
c. P 6,219,836
d. P 6,320,600
34. Omega Finance granted a 10%, 2-year P 5,000,000 loan to Duchess Company on January 1, 2014.
The interest is payable every December 31 for each year during the term of the contract. Omega
Finance incurred an origination cost of P 328,326 but charge Duchess Company P 150,000 as
origination fee. The effective rate is now 8% after considering the origination costs and origination
fee. Due to financial difficulty, Duchess was unable to pay the interest on December 31, 2014. Omega
Finance has now considered that the loan to Duchess Company is now impaired. Reliable estimate
shows that the projected cash flows from the loan are as follows:
P 2,000,000 on December 31, 2015 and P 3,000,000 on December 31, 2016.
What amount of impairment loss on the loan should Omega Finance recognize on December 31,
2014?
a. None
b. P 373,371
c. P 668,723
d. P 1,168,723