MODFIN2

QUIZ 2 ANSWER KEY

I.TRUEorFALSE(10points) II.MULTIPLECHOICE(10points)

1 0 6 0 1 D 6 A
2 1 7 2 C 7 C
3 0 8 1 3 A 8 D
4 9 0 4 D 9 C
5 10 1 5 A 10 C
(10points)
PROBLEM SOLVING

1 Customer NSF check P 10,000.00

Goods in transit - FOB destination 14,000.00
Dishonored note charged back to AR 8,000.00
AR from customers 420,000.00
Total trade accounts receivable P 452,000.00

2 Accounts receivable P 1,758,000.00

Sales 430,162,000.00
Collections (42,456,400.00)
Write-of (4,351,600.00)
AR, Dec. 31, 2013 P ###

3 AR, Dec. 31, 2013 P 385,112,000.00

Allowance for bad debts
P385,112,000 x 3% 11,553,360.00
Net realizable value P ###

4 Write-of P 180,000.00
Additional write-of 120,000.00
Allowance for DA based on aging 537,600.00
Allowance for DA beg. -260,000.00
Bad debts for 2013 P 577,600.00

5 Nov - Dec (P2,280,000 x 2%) P 45,600.00

July - Oct (P1,200,000 x 15%) 180,000.00
Jan - June (P800,000 x 25%) 200,000.00
Prior to Jan (P140,000 x 80%) 112,000.00
Allowance for DA, Dec. 31, 2013 p 537,600.00

6 Bad debts expense for 2013

P1,425,000 x 2% P 28,500.00

7 Allowance for bad debts, 12/31/12 P 30,800.00

Provision for bad debts in 2013
P1,800,000 x 2% 36,000.00
Allowance for bad debts, 12/31/13 (41,400.00)
Accounts written-of in 2013 P 25,400.00

8 AR P 1,200,000.00
Allowance for doubtful accounts (160,000.00)
Net realizable value 1,040,000.00
Selling price (1,000,000.00)
 Loss on factoring P 40,000.00

9 Loan P 1,600,000.00
Finance charge (P2,000,000 x 2%) -40,000.00
Cash proceeds P 1,560,000.00

10 Loan P 1,600,000.00
Partial payment (P1,450,000 - P7,500) (1,442,500.00)
Loan balance 157,500.00
Interest rate * 1%
Interest paid on Sep. 1 P 1,575.00

11 Assigned AR P 2,000,000.00
Unassigned AR 500,000.00
Total AR 2,500,000.00

12 AR net realizable value (P700,000 x 97%) P 679,000.00

Selling price of AR (560,000.00)
Loss on factoring 119,000.00

13 Down payment P 20,000.00

Present value of note (P30,000 x 1.73554) 52,066.00
Total selling price 72,066.00
Book value of machine (40,000.00)
Gain on sale P 32,066.00

14 Present value of note on 1/1/13

P25,000,000 x 0.71178 P 17,794,500.00
Multiply by 1.12
Carrying value of note, 12/31/13 19,929,840.00

15 Face value of note P

Present value of note, 1/1/12
P1,000,000 x 2.48685 P 2,486,850.00
P120,000 x 0.90909 109,091.00
P80,000 x 0.82645 66,116.00
P40,000 x 0.75132 30,053.00
Discount on notes receivable P

Present value of note, 1/1/12 P 2,692,110.00

Discount amortizarion in 2012
(P2,692,110 x 10%) - P120,000 149,211.00
Annual installment (1,000,000.00)
Present value of note, 12/31/12 1,841,321.00
 Efective rate * 10%
Interest income in 2013 P 184,132.00

16 Discount on notes receivable P 307,890.00

2012 amortization (149,211.00)
2013 amortization (P184,132 - P80,000) (104,132.00)
Unamortized discount, 12/31/2013 P 54,547.00

17 Present value of interest P20,000 2.48685 P

Present value of maturity value P400,000 .75132
Present value of note P

Cash
Date Interest (5%) Interest (10%)
12/31/2012
12/31/2013 20,000
12/31/2014 20,000
12/31/2015 20,000
60,000

Carrying value of note 12/31/13 P 365,292.00

18 Discount amortized in 2014 P 16,529.00

3,000,000.00

2,692,110.00
307,890.00
 49,737
300,528
350,265.00
Present
Efective Discount Unamortized Value
Interest (10%) Amortized Discount of Note
49,735 350,265
35,027 15,027 34,708 365,292
36,529 16,529 18,179 381,821
38,179* 18,179 0 400,000
109,735 49,735