Practice exercises………… | Exercises Financial Accounting

ST. THOMAS MORE COLLEGE

FUNDAMENTALS OF ACCOUNTING

1. Noise Co. had the following balances on December 31, 20x1:

Cash in checking account ₱35,000

Cash in money market account 75,000

Treasury bill, purchased 11/1/20x1, maturing 1/31/20x2 350,000

Treasury bill, purchased 12/1/20x1, maturing 3/31/20x2 400,000

What amount should Noise Co. report as cash and cash equivalents in its December 31, 20x1 statement of

financial position?

a. 110,000 c. 460,000

b. 385,000 d. 860,000

2. The records of Kapiz Co. show the following balances on December 31, 20x1:

Cash on hand ₱ 400,000

Cash in Bank – current account 1,200,000

Cash in Bank – peso savings deposit 5,000,000

Cash in Bank – dollar deposit (unrestricted) $ 100,000

Cash in Bank – dollar deposit (restricted) 250,000

Cash in 3-month money-market account ₱ 500,000

3-month unrestricted time deposit $ 20,000

Treasury bill, purchased 11/1/20x1, maturing 2/14/20x2 ₱1,600,000

Treasury bond, purchased 3/1/20x1, maturing 2/28/20x2 1,000,000

Treasury note, purchased 12/1/20x1, maturing 2/28/20x2 400,000

Unused Credit Line 4,000,000

Redeemable preference shares, purchased 12/1/20x1, due on 3/1/20x2 740,000

Treasury shares, purchased 12/1/20x1, to be reissued on 1/5/20x2 200,000

Sinking fund 400,000

Additional information:

Cash on hand includes a ₱40,000 check payable to Kapiz Co. dated December 29, 20x1.

During December 20x0, check amounting to ₱30,000 was drawn against the Cash in bank - current account

in payment of accounts payable. The check remains outstanding as of December 31, 20x1.

The Cash in Bank – peso savings deposit includes ₱800,000 security bond on a pending labor case, in favor

of a previous employee. The establishment of the bond is mandated by a court of law.

The Cash in Bank – peso savings deposit also includes a compensating balance amounting to ₱500,000

which is not legally restricted.

The Cash in Bank – dollar deposit (unrestricted) account includes interest of $4,000, net of tax, directly

credited to Kapiz Co.’s account. The exchange rate at year-end is $1 is to ₱45.

How much is the cash and cash equivalents to be reported in the 20x1 financial statements?

a. 14,720,000 c. 12,430,000

b. 19,520,000 d. 12,870,000

3. The information below was taken from the bank transfer schedule prepared during the audit of Fox

Co.’s financial statements for the year ended December 31, 2001. Assume all checks are dated and

issued on December 30, 2001.

Bank Accounts Disbursement date Receipt date

Check # From To Per books Per bank Per books Per bank

101 National Federal Dec. 30 Jan. 4 Dec. 30 Jan. 3

202 County State Jan. 3 Jan. 2 Dec. 30 Dec. 31

303 Federal American Dec. 31 Jan. 3 Jan. 2 Jan. 2

404 State Republic Jan. 2 Jan. 2 Jan. 2 Dec. 31

Which of the following checks might indicate kiting?

a. #101 and #303.

b. #202 and #404

c. #101 and #404

d. #202 and #303

4. The following were the transactions involving an entity’s petty cash fund during the period.

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ST. THOMAS MORE COLLEGE

FUNDAMENTALS OF ACCOUNTING

Noise Co. had the following balances on December 31, 20x1: Cash in checking account ₱35, Cash in money market account 75, Treasury bill, purchased 11/1/20x1, maturing 1/31/20x2 350, Treasury bill, purchased 12/1/20x1, maturing 3/31/20x2 400, What amount should Noise Co. report as cash and cash equivalents in its December 31, 20x1 statement of financial position? a. 110,000 c. 460, b. 385,000 d. 860,
The records of Kapiz Co. show the following balances on December 31, 20x1: Cash on hand ₱ 400, Cash in Bank – current account 1,200, Cash in Bank – peso savings deposit 5,000, Cash in Bank – dollar deposit (unrestricted) $ 100, Cash in Bank – dollar deposit (restricted) 250, Cash in 3-month money-market account ₱ 500, 3-month unrestricted time deposit $ 20, Treasury bill, purchased 11/1/20x1, maturing 2/14/20x2 ₱1,600, Treasury bond, purchased 3/1/20x1, maturing 2/28/20x2 1,000, Treasury note, purchased 12/1/20x1, maturing 2/28/20x2 400, Unused Credit Line 4,000, Redeemable preference shares, purchased 12/1/20x1, due on 3/1/20x2 740, Treasury shares, purchased 12/1/20x1, to be reissued on 1/5/20x2 200, Sinking fund 400, Additional information:  Cash on hand includes a ₱40,000 check payable to Kapiz Co. dated December 29, 20x1.  During December 20x0, check amounting to ₱30,000 was drawn against the Cash in bank - current account in payment of accounts payable. The check remains outstanding as of December 31, 20x1.  The Cash in Bank – peso savings deposit includes ₱800,000 security bond on a pending labor case, in favor of a previous employee. The establishment of the bond is mandated by a court of law.  The Cash in Bank – peso savings deposit also includes a compensating balance amounting to ₱500, which is not legally restricted.  The Cash in Bank – dollar deposit (unrestricted) account includes interest of $4,000, net of tax, directly credited to Kapiz Co.’s account. The exchange rate at year-end is $1 is to ₱45. How much is the cash and cash equivalents to be reported in the 20x1 financial statements? a. 14,720,000 c. 12,430, b. 19,520,000 d. 12,870,
The information below was taken from the bank transfer schedule prepared during the audit of Fox Co.’s financial statements for the year ended December 31, 2001. Assume all checks are dated and issued on December 30, 2001. Bank Accounts Disbursement date Receipt date Check # From To Per books Per bank Per books Per bank 101 National Federal Dec. 30 Jan. 4 Dec. 30 Jan. 3 202 County State Jan. 3 Jan. 2 Dec. 30 Dec. 31 303 Federal American Dec. 31 Jan. 3 Jan. 2 Jan. 2 404 State Republic Jan. 2 Jan. 2 Jan. 2 Dec. 31 Which of the following checks might indicate kiting?

a. #101 and #303.

b. #202 and

c. #101 and

d. #202 and

The following were the transactions involving an entity’s petty cash fund during the period.

July. 1, 20x1 Established ₱30,000 petty cash fund. July 1 through 21, 20x Disbursements:

Office supplies expense ₱4,
Transportation expenses 10,
Repairs and maintenance 3,
Miscellaneous expense 9, Total ₱26, July 22, 20x1 Total coins and currencies in the petty cash box is ₱1,500. Replenishment is made. The petty cash fund is not replenished and financial statements are prepared on July 31, 20x1. The month- end adjustment to the petty cash fund would not include a a. debit to receivable from custodian for ₱1,800. b. credit to petty cash fund for ₱28,500. c. total debits to various expense accounts for ₱26,700. d. credit to cash in bank for ₱28,500.

On December 31, 20x1, the petty cash fund of Kristelle Co. with a general leger balance of ₱15, comprises the following: Coins and currencies 2, Petty cash vouchers: Gasoline for delivery equipment 3, Medical supplies for employees 2,040 5, IOU’s: Advances to employees 2, A sheet of paper with names of several employees together with contribution to bereaved employee, attached is a currency of 2, Checks: Check drawn to the order of the petty cash custodian 3, Personal check drawn by the petty cash custodian 2, The entry to replenish the fund on December 31, 20x1 includes a a. credit to cash shortage or overage for ₱2,910. b. debit to cash shortage or overage for ₱2,910. c. credit to cash in bank for ₱9,450. d. credit to petty cash fund for ₱9,450. TRADE AND OTHER RECEIVABLES
On December 27, 20x1, ABC Co. received a sale order for a credit sale of goods with selling price of ₱3,000. The goods were shipped by ABC on December 31, 20x1 and were received by the buyer on January 2, 20x2. The related shipping costs amounted to ₱20. ABC Co. collected the receivable on January 5, 20x2. If the term of the sale is FOB destination, freight collect , how much net cash is collected on January 5, 20x2? a. 3, b. 3, c. 2, d. 0
Soap Co. has the following information on December 31, 20x1 before any year-end adjustments. Allowance for doubtful accounts, Jan. 1 30,

Accounts receivable, December 976, Allowance for doubtful accounts, Dec. 31 (before any necessary year-end adjustments)

Percentage of credit sales 2% The aging of receivables is shown below: Days outstanding Receivable balances % uncollectible 0 – 60 378,000 1% 61 – 120 283,500 2% Over 120 315,000 6% Total accounts receivables 976, Additional information:  ABC Co. uses the percentage of credit sales in determining bad debts in monthly financial reports and the aging of receivables for its annual financial statements.  Accounts written-off during the year amounted to ₱119,700 and accounts recovered amounted to ₱28,350.  As of December 31, ABC Co. determined that ₱63,000 accounts receivable from a certain customer included in the “61-120 days outstanding” group is 95% collectible and a ₱31,500 account included in the “Over 120 days outstanding” group is worthless and needs to be written-off.

How much is the balance of the allowance for doubtful accounts on January 1, 20x1? a. 12, b. 18, c. 19, d. 23,
How much is the adjusted bad debt expense to be reported in the year-end financial statements? a. 123, b. 128, c. 143, d. 132,
ABC Co. has the following information before any year-end adjustment. Accounts receivable, Dec. 31 600, Allowance for doubtful accounts, Jan. 1 18,000 (Dr.) Percentage of receivables 2% Write-offs and recoveries during the year amounted to ₱22,800 and ₱3,000, respectively. How much is the bad debts expense for the year? a. 13, b. 26, c. 49, d. 52, INVENTORIES
ABC Co. uses the periodic inventory system. In the current year, ABC’s ending inventory is understated by ₱20,000. Which of the following statements is correct? a. ABC’s cost of goods sold is understated by ₱20,000. b. ABC’s gross income is understated by ₱20,000. c. ABC’s net purchases are understated by ₱20,000. d. ABC’s profit is overstated by ₱20,000.
On January 1, 20x1 Plaka Co. acquired goods for sale in the ordinary course of business for ₱250,000, excluding ₱5,000 refundable purchase taxes. The supplier usually sells goods on 30 days’ interest-free credit. However, as a special promotion, the purchase agreement for these goods provided for payment to be made in full on December 31, 20x1. Transport charges of ₱2, were paid on January 1, 20x1. An appropriate discount rate is 10 per cent per year. How much is

the initial cost of the inventories? a. 229,273 b. 224,727 c. 250,000 d. 257,

Ciano Co. acquired a tract of land for ₱2,000,000. The land was developed and subdivided into residential lots at an additional cost of ₱200,000. Although the subdivided lots are relatively equal in sizes, they were offered at different sales prices due to differences in terrain. Information on the subdivided lots is shown below: Lot group No. of lots Price per lot A 4 480, B 10 240, C 15 192, During the year, 2 lots from the A group, 3 lots from the B group and 12 lots from the C group were sold. How much gross income is recognized during the year? a. 2,766,666 b. 2,783,333 c. 2,860,000 d. 2,877, Use the following information for the next four questions: Kryslanz Co. is a wholesaler of guitar picks. The activity for product “Pick X” during August is shown below:
How much are the ending inventory and cost of goods sold under the FIFO – periodic cost flow formula? Ending inventory Cost of goods sold a. 219,840 122, b. 112,341 229, c. 122,368 219, d. 122,386 219,
How much are the ending inventory and cost of goods sold under the FIFO – perpetual cost flow formula? Ending inventory Cost of goods sold a. 219,840 122, b. 112,341 229, c. 122,368 219,

Practice exercises…………, Exercises of Financial Accounting

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ST. THOMAS MORE COLLEGE

FUNDAMENTALS OF ACCOUNTING

a. #101 and #303.

b. #202 and

c. #101 and

d. #202 and