Analyze bank reconciliation case studies

CASE #1
No. 1 ANSWER: A
Principal (SQUEEZE) P27,000.00
800.
Interest 00
(200.
Collection Fee 00)
Proceeds credited by bank P27,600.00
No. 2 ANSWER: A
BOOK BANK
Unadjusted Balances P35,000 P60,000
Note collected by bank 27,600
Debit memo for a checkbook
(SQUEEZE) -100
Deposit in Transit 15,200
Transportation error in recording
deposit (54,000-45,000) -9,000
Erroneous bank debit 26,700
Petty Cash fund -10,000
Erroneous bank credit -11,000
Outstanding checks, net of certified
check (39,400-10,000) -29,400
Adjusted Balances P52,500 P52,500
No.3 ANSWER: D
Cost of checkbook (See no.2) P100.00
No. 4 ANSWER: B
Petty Cash fund per Ledger P10,000.00
Petty Cash accounted 9,500.00
Petty Cash shortage P500.00
No. 5 ANSWER: C
Adjusted petty cash balance -
currency & coins P3,000.00
CASE #2
Over
0-30 91-120 120
Year Days 31-60 Days 61-90 Days Days Days
2019 0.30% 1.80% 12% 38% 65%
2018 0.50% 1.60% 11% 41% 70%
2017 0.20% 1.50% 9% 50% 69%
2016 0.40% 1.70% 10% 47% 81%
2015 0.90% 2.00% 10% 33% 95%
TOTAL 2.30% 8.60% 51.90% 209% 380%
AVERAGE 0.46% 1.72% 10.38% 41.80% 76%
No. 1 ANSWER: D
No. 2 ANSWER: D
A/R BAL ESTIMATED
AGE OF ACCOUNTS 12/31/14 RATE UNCOLLECTIBLE
0-30 days P843,200 0.46% P3,878.72
31-60 days 461,000 1.72% 7,929.20
61-90 days 192,400 10.38% 19,971.12
91-120 days 76,650 41.80% 32,039.70
Over 120 days 39,400 76.00% 29,944.00
P1,612,650 P93,762.74
No.3 ANSWER: A
Accounts Receivable P1,612,650
Less: Required Allowance bal per aging 93,763
Net Realizable Value, 12/31/14 P1,518,887
CASE #3
No.1 ANSWER: A
Inventory quantity, June 1 108,500
Add: Units purchased during June 257,500
Units available for sale 366,000
Less: Units sold during June 286,000
No.2 ANSWER: C
FROM QUANTITY UNIT COST AMOUNT
JUNE 24 PURCHASE 70,000 P12.40 868,000
JUNE 11 OURCHASE 10,000 12 120,000
80,000 P988,000
No.3 ANSWER: D
FROM QUANTITY UNIT COST AMOUNT
Beginning Inventory 108,500 P1,450,000
June 4 Purchase 50,000 P13 650,000
June 8 Purchase 62,500 12.5 781,250
June 11 Purchase (SQUEEZE) 65,000 12 780,000
286,000 3,661,250
No.4 ANSWER: A
Gross Profit P2,058,750
Add: Cost of Good Sold (See no. 3) 3,661,250
Sales P5,720,000
Divide by units sold 286,000
Sales price per unit P20
Case #4
No.1 ANSWER: A
No.2 ANSWER: C
No.3 ANSWER: B
No.4 ANSWER: D
No.5 ANSWER: D
Muntinlupa Company
Reconciliation of Receipts, Disbursements, and Bank Balance
For the month ended July 31
Beginning July Ending
June 30 Receipts Disbursements July 31
Balance per bank statement P 107, 082 P 249, 108* P 218, 373 P 137, 817
Deposits in transit: June 30 8, 201 (8, 201)
July 31 12, 880 12, 880
Outstanding Checks:June 30 (27, 718) (27, 718)
July 31 30, 112 ( 30, 112)
NSF check redeposited (8, 250) (8, 250)
Adjusted Bank balance P 87, 565 P 245, 537 P 212, 517 P 120, 585
Beginning July Ending

June 30 Receipts Disbursements July 31
Balance per books P 15, 822 P 236, 452 P 212, 529** P 39, 745
Bank service charge: June (72) (72)
July 60 (60)
Collection of notes receivable:
June 30 71, 815 ( 71, 815)
July 31 80, 900 80, 900
Adjusted Bank balance P 87, 565 P 245, 537 P 212, 517 P 120, 585
*(P137, 817 + P218, 373 – P107,082)
**(P15, 822 + 236, 452 – 39, 745)
Case #5
No.1 ANSWER: C
No.2 ANSWER: A
No.3 ANSWER: B
No.4 ANSWER: D
No.5 ANSWER: C
Inventory Accounts Net Sales Net Purchases Net Income
Payable
Unadjusted
balances P1,100,000 P690,000 P5,050,000 P2,300,000 P510,000
(a) - (100,000) - (100,000) 100,000
(b) (50,000) (50,000) - (50,000) -
(c) 250,000 - (320,000) - (70,000)
(d) 70,000 - (80,000) - (10,000)
(e) (120,000) - - - (120,000)
(f) 100,00 - - - 100,00
(g) - 170,000 - 170,000 (170,000)
(h) 200,000 - - - 200,000
Adjusted
balances P1,550,000 P710,000 P4,650,000 P2,320,000 P540,000
CASE #6
No.1 ANSWER: B
No.2 ANSWER: A
Total cost of production

(6,000 dozens x P360) P2,160,000
Divide by total sales price:
Class A (6,000 x 60% = 3,600 x P500) P1,800,000
Class B (6,000 x 40% = 2,400 x P250) 600,000 2,400,000
Cost ratio 90%
Class A (P1,800,000 x 90%) P 1,620,000

Class B ( P600,000 x 90%) 540,000
No.3 ANSWER: D
Class A (220 x P500 x 90%) P 99,000
Class B (300 x P250 x 90%) 67,500
Inventory, 12/31/19 P166,500
No.4 ANSWER: B
Total cost of production (6,000dozens x P360) P 2,160,000
Less inventory, 12/31/19 166,500
Cost of sales P 1,993,500
No.5 ANSWER: C
Sales of Class A [(3,600 - 220) x P500] P 1,690,000
Sales of Class B [(2,400 – 300) x P250] 525,000
Total sales 2,215,000
Less cost of sales 1,993,500
Gross profit P 221,500
CASE #7
No.1 ANSWER: B
Outstanding Checks P18,625.00
4,000.0
Debit memo for customer's check returned 0
Outstanding Checks on Dec. 31 P22,625.00
No.2 ANSWER: D
No journal entry is necessary. books.
There is no information in the problem that will indicate that
those included in the list of outstanding checks were not taken up properly on
books.
No.3 ANSWER: D
A correct reconciliation (see no.4) shows that there is actually no
"unlocated difference."
No.4 ANSWER: C
BOOK BANK
Unadjusted Balances P34,350 P51,050
Deposit in Transit 5,325
(4,00
Customer's check returned 0.00)
(1,00
Bank service charge 0.00)
(22,625
Outstanding checks .00)
Credit memo for note collected 8,000
(3,60
Understatement of book disbursement 0.00)
Adjusted Balances P33,750 P33,750
No.5 ANSWER: C
ADJUSTING JOURNAL ENTRIES

DECEMBER 31,2014
a
. Accounts Receivable 4,000.00
Cash in Bank 4,000.00

b
. Bank service charges 1,000.00
Cash in Bank 1,000.00

8,00
c. Cash in Bank 0.00
Notes receivable 8,000.00
d 3,60
. Accounts payable 0.00
Cash in bank 3,600.00
Debit to cash in bank 8,000.00

Credit to cash in bank
(P4,000+P1,000+P3,600) (8,600.00)
Net credit to cash in bank (600.00)
CASE #8
No.1 ANSWER: C
Accounts payable, Dec. 31, 2013 P114,720.00
Purchases 3,615,260.00
Total 3,729,980.00
Accounts payable, April 16, 2014 (207,300.00)
Payments for merchandise purchases P3,522,680.00
No.2 ANSWER: A
Accounts receivable, Dec. 31, 2013 P226,230.00
Net sales (P5,876,170 - P18,330) 5,857,840.00
Total 6,084,070.00
Accounts receivable, April 16, 2014 (442,550.00)
Collections from sales P5,641,520.00
No.3 ANSWER: C
Payments for purchases P3,522,680.00
Furniture 3,000.00
Expenses 1,865,830.00
Dividends 40,000.00
Total cash disbursements P5,431,510.00
No.4 ANSWER: A
Cash balance, Dec. 31,2013 P32,670.00
Collections 5,641,520.00
Disbursements (5,431,510.00)
Cash balance, April 16, 2014 (accountability) P242,680.00
No.5 ANSWER: B
Cash accountability P242,680.00
Cash accounted (98,830.00)
Total shortage 143,850.00
Shortage chargeable against bank (100,000.00)
Shortage chargeable against the cashier P43,850.00
CASE #9
No.1 ANSWER: C
Land:
Balance, Jan 1, 2014 P1,750,000.00
Jan. 5 acquisition 5,626,000.00
Balance, Dec. 31, 2014 P7,375,000.00
No.2 ANSWER: D
Land improvements;
Cost of parking lots, streets, and sidewalks P5,760,000.00
No.3 ANSWER: B
Buildings:
Balance, Jan. 1, 2014 P15,000,000.00
Jan. 5 acquisition 16,875,000.00
Balance, Dec. 31, 2014 P31,875,000.00
No.4 ANSWER: B
Machinery and equipment:

Balance, Jan. 1, 2014 P11,250,000.00
July 1 acquisition:
Invoice price P1,250,000.00
45,000.0
Delivery cost 0
98,000.0
Installation cost 0 1,393,000.00
Dec. 20 disposition (425,000.00)
Balance, Dec. 31, 2014 P12,218,000.00
CASE #10
1. Balance, January 1, 2014 3,450,000
Land A
Acquisition cost 12,750,000
Commission to
real estate agent 765,000
Clearing cost less
salvage proceeds
(525,000 - 195,000) 330,000 13,845,000
Land B
Acquisition cost 5,250,000*
Balance, December 31, 2014 22,545,000
Fair value Fraction Allocated cost

*Land B 4,200,000 4.2/6.0 5,250,000
Old building 1,800,000 1.8/6.0 2,250,000
2. Balance, January 1, 2014 13,350,000
Cost of building constructed on land B:
Construction costs 4,950,000
Demolition cost 615,000
Excavation fees 570,000
Architectural design fees 165,000
Building permit fee 37,500 6,337,500

3. Balance, January 1, 2014 9,900,000
Improvements of leased office
space 1,335,000
4. Balance, January 1, 2014 13,125,000

Cost of new machines acquired:
Invoice price 1,305,000
Freight cost 49,500
Installation cost 36,000 1,390,500
5. Non-current asset held for sale.
CASE #11
1. Allowance for bad debts, beginning 143,000

ADD: Bad debts expense for 2016
(15,000,000 x 2%) 300,000
Recoveries of accounts
previously written off 43,000 343,000
TOTAL 486,000
Less: accounts written off (140+120) (260,000)
Allowance for Bad Debts, ending 226,000
2. Nov.-Dec. 2016 2,160,000 x 2% 43,200

July-Oct. 2016 1,300,000 x 10% 130,000
Jan.-June 2016 840,000 x 25% 210,000
Prior to Jan 1
(300-120 write off) 180,000 x 70%. 126,000
Required allowance balance, Dec 31 509,200
Less: allowance before adjustment (226,000)
Increase in allowance 283,200
3. Bad debts expense recorded 300,000
Additional bad debt expense 283,200
TOTAL 583,200
4. Accounts receivable ( 4,600,000 - 120,000) 4,480,000

Less: Required allowance per aging (509,200)
Net realizable value, Dec. 31, 2016 3,970,800
CASE #12
1. Inventory quantity, June 1 108,500

Add: units purchased during june 257,500
Less: Units sold during June (286,000)
2. FIFO COST FROM JUNE 30 INVENTORY

June 24 purchase 70,000 x 12.40 868,000
June 11 purchase 10,000 x 12.00 120,000
988,000
3. COST OF GOODS SOLD
Beginning Inventory 108,500 1,450,000
June 4 purchase 50,000 x 13.00 650,000
June 8 purchase 62,500 x 12.50 781,250
June 11 purchase 65,000 x 12.00 780,000
TOTAL 3,661,250
4. Gross profit 2,058,750

Add: Cost of goods sold 3,661,250
SALES 5,720,000
Divide by units sold 286,000
Sales price per unit P20.00
CASE #13
No.1 ANSWER: D
Dec. 5 deposit P49,000

Dec. 8 deposit 14,000
Dec. 31 deposit in transit 49,000
Total collections/book receipts P112.000
No.2 ANSWER: A
Cash balance, November 30 P423,825

Add: December receipts (see no. 1) 112,000
Total 535,825
Less: Disbursements per check register 260,693
Cash balance, December 31 P275,132
No.3 ANSWER: C
1. Outstanding checks, December 31:

Check no. 4321 P 6,000
4340 1,700
4345 11,880
4347 6,300
4348 14,058
4349 7,000
Total P46.938
No.4 ANSWER: C
Adjusted cash balance, Nov. 30,

P423.825
2014
The balance per books as determined and as shown on the November
30 reconciliation is also the adjusted cash balance on that date.
Notice that there are no book reconciling items in November.
No.5 ANSWER: B
Book Bank
Unadjusted balances P275,132 P273,620
Deposits in transit 49,000
Outstanding checks -46,938
Service charge -1,000
Interest 1,550
Adjusted balances P275,682 P275,682
CASE #14
No.1 ANSWER: A
No.2 ANSWER: C
Balance 0-30 31-60 61-90 91-120 Over120
D
Customer 12-31-14 Days Days Days Days
ays
Aruy, Inc. P 35,180 P14,000 P21,180
Naku Co. 20,920 P12,000 P8,920
Syak Corp. 30,600 20,000 P10,600
Trip Co. 45,140 23,140 22,000
Uy Co. 31,600 31,600
Xak Corp. 17,400 - 17,400
P180,840 P65,600 P44.320 P32,600 P29.400 P8.920
No.3 ANSWER: A
0 - 30 days P65,600 x 1% P 656
31 - 60 days P44,320 x 1.50% 665
61 - 90 days P32,600 x 3% 978
91 - 120 days P29,400 x 10% 2,940
Over 120 days P 8,920 x 50% 4,460

Total P9.699
No.4 ANSWER: A
Bad debt expense 15,199

Allowance for bad debts 15,199
Required allowance (see no. 2) P 9,699
Add: Allowance balance - debit 5,500
Increase in allowance P15,199
No.5 ANSWER: B
Accounts Receivable P180,840

Less: Allowance for bad debts (see no. 2) 9,699
Net Realizable value, Dec.31, 2014 P171,141
CASE #15
No.1 ANSWER: D
P 4,335,000
Non-trading equity securities, at fair value
Unrealized holding gain
225,000
(P4,110,000 [cost] - P4,335,000 [fair value])
No.2 ANSWER: B
Non-trading equity securities, at fair value 3,130,000

Unrealized holding loss
(P4,430,000 [cost] - P3,130,000 [fair value]) 1,300,000
No.3 ANSWER: A.

Non-trading equity securities, at fair value 4,380,000
Unrealized holding gain
[P4,380,000 [fair value] -P2,420,000 [cost]) 1,960,000
No.4 ANSWER: A
Sales price 1,600,000
Less: Carrying value 1,610,000
Realized loss on. sale of Eloy Corp. stock 10,000
No.5 ANSWER: D

Sales price 2,300,000
Less: Carrying value (P500,000 + P1,450,000) 1,950,000
Realized gain on sale of Kelly, Inc. stock 350,000
Realized loss on sale of Kongga Company stock -90,000
Net realized gain in 2016 P260.000
CASE #16
No.1 ANSWER: B
Deposit in transit, Nov. 30 P12,500
Add: Company collections in December 152,500

Total 165,000
Less: Deposits credied by bank in December 145,000
Deposit in transit, December 31 20,000
No.2 ANSWER: B
Bank service charges per December bank

statement P3,250
Less: December bank service charges recorded

on company books in December (P2,500-P1,500) 1,000
Unrecorded December bank service charges P2,250
No.3 ANSWER: A
Actual company collections in December P152,500

Less: Underfooting od December cash receipts
book 2,500
Book receipts in December P150,000
No.4 ANSWER: D
Outstanding checks, December 31 P12,500
Add: Checks paid by the bank in December 130,000

Total 142,500
Less: Outstanding checks, November 30 16,250

Checks issued by December P126,250
No.5 ANSWER: D
Checks issued in December P126,250
Add: Bank service charges recorded in December 2,500
Book disbursements in December P128,750
CASE #17
No.1 ANSWER: D
Sales P6,235,200
Less: Accounts Receivable 165,400
Collections from customers 6,069,800
No.2 ANSWER: C
Cost of sales (P6,235,200 X 70%) P4,364,,640
Add: Merchandise inventory, December 31 69,000
Goods available for sale/Purchase (there is no
beginning ) 4,433,640
Less: Accounts Payable, Dec. 31 389,650
Payments for Purchases 4,043,990
No.3 ANSWER: C
Issue price of ordinary shares (1,500,000 +
P150,000) P1,650,000
Notes payable-Bank 500,000
Collections 6,069,800
Total cash receipts per books P8,219,800
No.4 ANSWER: B
Land P1,000,000
Building 1,400,000
Furniture and fixtures 367,000
Operating expenses paid (P1,005,150-P400,000) 605, 150
Payment for purchases 4,023,990
Total cash disbursements per books 7,416,140
No.5 ANSWER: B
Cash receipts per books P8,219,800

Less:Cash disbursements per book 7,416,140
Cash balance per books, December 31 P803,660
CASE #18
No.1 ANSWER:
Cost of good sold P4,246,000

Divide: Average inventory (720,800 +
744,000=1,464,800/2) 732,400
2017 Inventory Turnover 5.80 times
No.2 ANSWER:

Cost of good sold P4,482,000
Divide: Average Inventory 767,500
(744,000+791,000=1,535,000/2)
2018 Inventory Turnover 5.84 times
No.3 ANSWER:

365 days 365
Divide: Inventory Turnover 5.8
2017 average days to sell inventory 62.9 days
No.4 ANSWER:

365 days 365
Divide: Inventory Turnover 5.84
2018 average days to sell inventory 62.5 days
CASE #19
No.1 ANSWER: C
Average gross profit ratio based on sales

2015 2016 2017
Gross Profit 375,600 366,600 462,400
Divided by sales 1,252,000 1,410,000 1,360,000
Gross profit ratio 30% 26% 34%
Average gross profit ratio: (30%+ 26%+34%)/ 3 =

30%
No.2 ANSWER: A
Estimated sales
Accounts receivable, July 15 P257,780
Add: Collection from customers 1,507,600
Total 1,507,600
Less: Accounts receivable, Jan. 1 261,180
Estimated sales, January 1 - July 15 P1,504,200
No.3 ANSWER:C
Estimated Purchases
Accounts payable, July 15 P245,700
Add: Payments to suppliers 975,000
Total 975,000
Less: accounts payable, jan. 1 176,280
Estimated purchases, jan 1 - July 15 P1,044,420
No.4 ANSWER: D
Estimated Inventory, July 15 (before the fire)
Inventory, jan. 1 P287,700
Add: Estimated purchases 1,044,420
Goods available for sale 1,044,420
Est. Cost of goods sold (P1,504,200 x 70%) 1,052,940
Est. Inventory, July 15 P279,180
No.5 ANSWER: A
Inventory fire loss
Estimated Inventory, July 15 P279,180
Less: Goods out on consignment P97,500
Goods in transit 34,750 132,250
Inventory Fire loss 146,930
CASE #20
No.1 ANSWER: A
Trading securities, at fair value P369,000
No.2 ANSWER: B
Fair value, Dec. 31, 2019 P369,000
Acquisition cost 381,000
Unrealized loss P12,000
No.3 ANSWER: D
sales price of Bobby securities P114,600
Carrying amount, december 31, 2019 126,000
Loss on sale 11,400
No.4 ANSWER: C
trading securities, at FV P 282,000
No.5 ANSWER: D
Investments Quantity Cost FV

Millie, Inc 1,000 P63,000 P60,000
shares
Millie, Inc 2,000 99,000 120,000
shares
Ell Company 1,000 48,000 36,000
shares
Brown Corp. 2,000 180,000 66,000
shares
Totals P390,000 P282,000
Unrealised loss (390,000-282,000) P108,000
CASE #22
No.1 ANSWER: A
Accounts
Aging Receivable Uncollectible
Category Ratio Balances Rate Uncollectible Amount
1 to 10 days 64% P1,920,000 1% P 19,200
11 to 30 days 18% 540,000 2.50% 13,500
Past due 31 to 60 days 8% 240,000 5% 12,000
Past due 61 to 120 days 5% 150,000 20% 30,000
Past due 121 to 180 days 3% 90,000 35% 31,500
Past due over 180 days 2% 60,000 80% 48,000
Total P3,000,000 P154,200
No.2 ANSWER: C
Bad debt expense 44,600

Allowance for bad debt 44,600
Allowance for bad debts, Jan. 1, 2014 P54,600

Add: 2014 bad debt expense 640,000
Total 694,600
Less: Accounts written off 585,000
Allowance balance before adjustment, Dec. 31, 2014 109,600
Required allowance per aging 154,200
Adjustment - increase in allowance 44,600
No.3 ANSWER: B
Account Receivable P3,000,000

Less: Allowance for bad debts 154,200
Net realizable value P2,845,800
No.4 ANSWER: D
Bad debt expense recorded P640,000

Add: Adjustment to bring the allowance balance to the
amount indicated by the aging analysis (see no. 2) 44,600
Correct bad debt expense for 2014 P684,600
No.5 ANSWER: A
Total credit sales for 2014 (P640,000 / 4%) P16,000,000
CASE #23
No.1 ANSWER: D
Cost of goods available for sale P356,400

Less: Purchases:
Units Unit Cost Total Cost
180,00
P0.40 P72,000
0
150,00
0 0.41 61,500
120,00
0 0.42 50,400
150,00
0 0.45 67,500 251,400
Cost of Inventory, July 1 105,000
Divide by unit cost 0.35
Inventory quantity, July 1 300,000
No.2 ANSWER: C
Inventory quantity, July 1 (see no.1) 300,000

Add: Units purchased 600,000
Less: Inventory quantity, July 31 150,000
Units sold during July 750,000
No.3 ANSWER: B
Cost of availabale for sale P356,400

Divide by units available for sale ( see no.2) 900,000
Unit cost of inventory, July 31 P0.396
No.4 ANSWER: A
Inventory value, July 31 (P0.396 x 150,000 units) P59,400
CASE #24
No.1 ANSWER: C
Initial cost P132.00

Add: Discount amortization, Jan. 1 - June 30:
Effective interest (P132 x 5%) P6.60
Nominal interest (P160 x 4%) 6.40 0.20
Carrying value, June 30 132.20
Add: Discount amortization, July 1 - Dec. 31:
Effective interest (P13220 x 5%) P6.61
Nominal interest (P:60 x 496) 6.40 0.21
Carrying value / Amortised cost, Dec. 31 P132.41
No.2 ANSWER: D
No unrealized holding gain/loss shall be recognized on financial assets measured at
amortized cost
No.3 ANSWER: D
Interest income (P6.60+ P6.61) P13.21
CASE #25
No. 1 ANSWER: B
Acquisition cost 10,400,000
Less residual value 800,000
Depletable cost 9,600,000
Total estimated reserves 8,000,000
Depletion rate 1.20
Tons mined 800,000
Depletion for 2005 960,000
No. 2 ANSWER: D
Depreciation - Building [(P800,000/8,000,000 tons) x 800,000 tons x

80%] 64,000
Depreciation - Machinery [(P1,600,000-P320,000/4] 320,000
Total 384,000
No. 3 ANSWER: B
Depletion (see no. 1) 960,000
Direct labor 640,000
Depreciation (see no. 2) 384,000
Miscellaneous mining overhead 128,000
Total available for sale 2,112,000
Divide by tons mined 800,000
Cost per ton 2.64
Unsold tons (800,000 - 640,000) 160,000
Inventory, 12/31/05 422,400
No. 4 ANSWER: A
Cost of sales (640,000 tons x P2.64) 1,689,600
No. 5 ANSWER: C
Sales (640,000 x P4.4) 2,816,000
Less cost of sales (see no. 4) 1,689,600
Gross profit 1,126,400
Operating expenses (576,000)
Depreciation - Building [(P800,000/8,000,000 tons) x 800,000 tons x
20%] (16,000)
Net income 534,400
Realized depletion (640,000 tons x P1.2) 768,000
Maximum amount that may be declared as dividends 1,302,400
CASE #26
Journal entries for 2005:

1/2 Organization expenses 233,000
Cash 233,000
1/15 Advertising expense 15,000
Cash 15,000
4/1 Patents 492,500
Cash 492,500
5/1 Licences (P300,000 x 2/3) 200,000
Trademark 100,000
Common stock (6,000 x P50) 300,000
7/1 Building 1,310,000
Cash 1,310,000
12/31 Research and Development expense 1,750,000
Cash 1,750,000
No. 1 ANSWER: A
See journal entry for April 1.
Note: Cost of internally developed patent includes only the licensing

and other related legal fees in securing the patent rights.
No. 2 ANSWER: B
See journal entry for May 1.
No. 3 ANSWER: C
See journal entry for May 1.
No. 4 ANSWER: C
Cost
Patent 492,500
Licences 200,000
Trademark 100,000 792,500
Less amortization
Patent (P492,500/6 x 9/12) 61,563
Licences (P200,000/6 x 8/12) 22,222
Trademark (P100,000/6 x 8/12) 11,111 94,896
Carrying value, 12/31/04 697,604
No. 5 ANSWER: C
Organization expenses (Jan. 2 transaction) 233,000
Advertising expense (Jan. 15 transaction) 15,000
R and D expense (Dec. 31 transaction) 1,750,000
Total 1,998,000
CASE #27
No. 1 ANSWER: A
Trademark* -
Goodwill* -
Customer list (P220,000/3) 73,333
Total amortization 73,333
*The useful life is indefinite, so no amortization expense is recognized.
No. 2 ANSWER: B
Trademark:
Carrying value 300,000
Recoverable amount (P10,000/0.06) 166,667 133,333
Goodwill*:
Carrying value of Hayo Manufacturing unit
(P2,700,000 + P1,500,000 - P1,800,000) 2,400,000
Recoverable amount (P250,000 x 12.0416) 3,010,400 -
Customer list
Carrying value (P220,000 - P73,333) 146,667
Recoverable amount:
2006: (P120,000 x 0.9434) 113,208
2007: (P80,000 x 0.8900) 71,200 184,408 -
Total impairment loss 133,333
*Since goodwill does not generate cash flows independently from other assets or
group
of assets, the recoverable amount of goodwill as an individual asset cannot
be
determined. Therefore, the recoverable amount is determined for the cash
generating unit to which goodwill belongs.
No. 3 ANSWER: C
Cost 300,000
Less impairment loss 133,333
No. 4 ANSWER: A
Since goodwill is not amortized and is not impaired as of 12/31/05,
the carrying value is P1,500,000.
No. 5 ANSWER: B
Cost 220,000
Less amortization for 2005 73,333
CASE #28
No 1. ANSWER:
Bank receipts in June (arrived at by footing the deposits column of
the bank statement) 88,000.00
No. 2 ANSWER:
Bank disbursements in June (arrived at by footing the Checks
column of the bank statement) 63,200.00
No. 3 ANSWER:
Bank balance, May 31 652,000.00
Add: Bank receipts in June 88,000.00
Total 740,000.00
Less: Bank disbursements in June 63,200.00
Bank balance, June 30 676,800.00
No. 4 ANSWER:
Proof of Cash
June 1-30, 2014
Balance Disbursement Balance June

May 31 Receipts s 30
Bank
balance
s 652,000.00 88,000.00 63,200.00 676,800.00
Deposit in transit: - - - -
31-May 10,000.00 (10,000.00) - -
30-Jun - 70,000.00 - 70,000.00
Outstanding checks - - - -
31-May (20,000.00) - (20,000.00) -
30-Jun - - 17,600.00 (17,600.00)
Bank service charge - - - -
31-May 800.00 - 800.00 -
30-Jun - - (200.00) 200.00
Bank collection in May (70,000.00) 70,000.00 - -

May deposit recorded
by the company in June (2,000.00) 2,000.00 - -
NSF
checks: - - - -
Already redeposited - (1,000.00) (1,000.00) -
Not yet redeposited - - (3,000.00) 3,000.00

Bank error corrected
on the same date - (1,000.00) (1,000.00) -
Book
balance
s 570,800.00 218,000.00 56,400.00 732,400.00
No. 4 ANSWER:
Total book receipts in June 218,000.00
No. 5 ANSWER:
Total book disbursments in June 56,400.00
No. 6 ANSWER:
Book balance on June 30, 2014 732,400.00
CASE #29
No 1. ANSWER:
Cost of goods sold -
2014 1,859,082.00
Add: Inventory, Dec. 31, 2014 488,874.00
Goods available for sale 2,347,956.00
Less: Inventory, Jan. 1,2014 815,386.00
Purchases 1,532,570.00
Accounts payable, Jan.
Add: 1,2014 286,924.00
Total 1,819,494.00
Accounts payable, Dec.
Less: 31, 2014 737,824.00
Amount paid to suppliers in 2014 1,081,670.00
CASE #30
No 1. ANSWER:
Cost of X Company bonds
3000000 x 102.5% 3,075,000.00
No 2. ANSWER:
Sales price 4800000 x 102% 489,600.00
Cost (3075000 x 4800000) /
Less: 3000000 492,000.00
Realized loss on sale of
bonds (2,400.00)
No 3. ANSWER:
Acquisition price 125 x 30000 shares 3,750,000.00
Add: Brokerage fees 28,500.00
Total cost 3,778,500.00
No 4. ANSWER:
Sales price 132 x 4500 shares 594,000.00
Less: Cost 3778500 x (4500/30000) 566,775.00
Realized gain on sale of stock 1,160,775.00
CASE #31
No 1. ANSWER:
Current account at Metro Bank 2,000,000
Payroll Account 500,000
Traveler's Check 50,000
Money Order 30,000
Petty cash fund (P4, 000 in currency) 4,000
Treasury bills, due 3/31/11 (purchased 12/29/10/10 200,000
TOTAL 2784000.00
CASE #32
NO. 1 ANSWER:
PV of Principal (1,200,000 x 0.7513) 901,550
PV of Interest (1,200,000 x 5% x
2.4869) 149,214
Consultaion service fee revenue 1,050,764
NO. 2 ANSWER
DATE PRINCIPA INTERES TOTAL PVF
L T PV
12/31/201 800,000 96,000 896,000 0.8772 785,971
0
12/31/201 800,000 64,000 864,000 1 664,848
1
12/31/201 32,000 832,000 0.675 561,600
2 800,000
2,400,000 2,012,41
9
2,012,41
Present value of note (see above computation) 9
1,600,00
Less cost of land 0
Gain on sale of land 412,419
The following amortization schedules will be helpful in answering questions 3-5:
Note receivable from sale of land
DATE INTEREST CARRYING

INCOME AMOUNT
1/1/2010 727,232
12/31/201 72,723 799,955
0
12/31/201 80,045 880,000
1
*(880,000 x 0.8261)
Interest Income = Previous carrying amount x 10%
Carrying amount = Previous carrying amount + interest income
Notes receivable from consultation
DATE EFFECTIV NOMINAL AMORTIZATIO CARRYIN

E INTEREST N G
INTEREST AMOUNT
1/1/2010 1,050,774
12/31/201 105.077 60,000 45,077 1,095.85
0
12/31/201 109,585 60,000 49,585 1,145,436
1
12/31/201 114,564, 60,000 54,564 1,200,000
2
Effective interest =Previous carrying amount x 14%

Nominal interest = Outstanding principal x 4%
Amortization = Effective interest - nominal interest
Carrying amount = Previous carrying amount - amortization - principal collection
NO.3 ANSWER
Notes receivable from consultation 1,095,851

Notes receivable from sale of equipment 729,900
Noncurrent notes receivable, 12/31/10 1,825,751
NO. 4 ANSWER
Notes receivable from sale of land 799,955
Notes receivable from sale of equipment
(1,398,158 - 729,900) 668,258
Current portion of long-term notes receivable, 12/31/10 1,468,213
NO. 5 ANSWER
Notes receivable from sale of land 72,723

Notes receivable from consultation 105,077
Notes receivable from sale of equipment 281,739
Interest income from 2010 459,539
CASE #33
NO. 1 ANSWER
Total fair value, 12/31/10 3,740,000
Total fair value, 12/31/09 3,920,000
Unrealized loss on trading securities 180,000
CASE #34
NO. 1 ANSWER: B
Currency and coins P1,500
Replenishment check 1,300
Correct balance of PCF P2,800
NO. 2 ANSWER: C
Cash collections P32,400
Check no. 17287 24,900
Check no. 17208 12,600
Correct balance of PCF 2,800
Correct balance of Cash on Hand P72,700
NO. 3 ANSWER: A
BPI, December balance P2,450,000
Bank error -450,000
GOT Incorporated, deposit 400,000
Cash in BPI account P2,400,000
NO. 4 ANSWER: D
Standard Chartered Bank, balance P1,290,000
Check No. 6788-01729 23,500
Check No. 6623-01622 72,000
Check No. 6788-01731 45,900
Cash in Standard Chartered Bank account P1,431,400
NO. 5 ANSWER: B
Correct balance of Cash on Hand P72,700
Cash in BPI account 2,400,000
Cash in Standard Chartered Bank account 1,431,400
Cash in Binaluyo Bank of Asia 2,040,000
Total Cash P5,944,100
CASE #35
NO. 1 ANSWER: D
Inventory at December 31, 2018 P1,281,200
Goods out on consignment (b) 86,000
Materials excluded in the inventory (c) 170,000
Goods in transit to Continuity Incorporated (d) -118,200
Inventory P1,419,000
NO. 2 ANSWER: A
Accounts Payable P1,624,500
Materials purchased not included (c) 170,000
Goods in transit shipped FOB destination (a) -130,450
Accounts Payable P1,664,050
NO. 3 ANSWER: B
Net Sales in 2018 P9,234,600
Items invoiced on December 31 (b) -106,000
Sales invoice dated December 31, 2018 -220,400
Goods on consignment at retail (f) -590,100
Net Sales P8,318,100
NO. 4 ANSWER: C
Difference in Merchandise Inventory P137,800
Less: Difference in Accounts Payable 39,550
Net effect to Cost of Sales P98,250
NO. 5 ANSWER: C
Difference in Merchandise Inventory P137,800
Less: Difference in Cost of Sales 98,250
Net Adjustments to Accounts Payable P39,550
CASE #36
NO. 1 ANSWER: A
Cost allocated to land P17,437500
Title guarantee insurance 250,000
Legal fees for purchase contract allocated to land 300,000
Initial Cost of the land P17,987,500
NO. 2 ANSWER: C
Total contract price and other directly attributable cost P15,450,000
Initial Cost of the new building P15,620,000
NO. 3 ANSWER: D
Purchase price P1,800,000
Legal fees 200,000
Title guarantee insurance 120,000
Carrying amount of land on February 1 P2,120,000
NO. 4 ANSWER: C
New building construction cost P9,200,000
Cost of razing old building 500,000
Architect fee 640,000
Cost of the building P10,340,000
NO. 5 ANSWER: D
Architect fee P620,000
Sale of scrap from old building -30,000
Construction cost of new building 10,780,000
CASE #37
NO. 1 ANSWER: A
Bank receipts (creditd) in December P346,000
Less: Deposit In transit, November 30 P39,458
NSF check redeposit in Dec 11,143 50,601
Book receipts (debits) in December 295,399
NO. 2 ANSWER: B
Bank balance, December 1, 2016 P 145,000
Add: Bank receipts in December 346,000
Total 491,000
Less: Bank balance, Dec 31, 2016 114,500
Bank disbursement In December P 376,500
NO. 3 ANSWER: D
Bank disbursement in December P 376,500
Add: Outstanding checks, Dec 31, 94,162
Total 470,662
Less: Outstanding checks Nov 30 P 67,000
NSF 11,143 78,143
Book disbursement in December 392,519
CASE #38
NO. 1 ANSWER: C
Materials and parts ( 450,000 x 98%) P 411,000
Labor costs 185,000
Overhead costs 100,000
Installation cost 8,600
Total cost 734,600
NO. 2 ANSWER: D
Cash paid for equipment P 175,000
Freight and insurance cost 3,500
cost of moving 1,200
Wage cost for technicians 7,000
Special Plumbing 8,200
Total cost 194,900
CASE #39
NO. 1 ANSWER: B
NO. 2 ANSWER: C
NO. 3 ANSWER: D
Land Land Improv Building

P
Purchase of land 7,892,000
Land survey 104,000
fees for search of lang title 12,000
Building permit P 70,000
Temporary quarters for contruct. 215,000
Cost to demolish old building 940,000
Excavation of basement 200,000
Special assessment for street 40,000
Costs of construction 58,000,000
Cost of parking lot 800,000
Cost of shrubs, trees, and other 660,000
P
Totals 8,048,000 P 1,460,000 P59,425,000
CASE #40
NO. 1 ANSWER: C
Current account with Real Bank P 900 000
Undeposited Collection 350 000
Supplier’s check for goods returned 60 000
Unexpended petty cash 5 000
Current account with Piggy bank
(P410 000- P300 000) 110 000
Total P1 425 000
CASE #41
NO. 1 ANSWER: C
Acquisition cost P 10 400 000
Less: Residual value 800 000
Cost subject to depletion 9 600 000
Divide: total estimated reserves 8 000 000
Depletion rate 1.20
Multiply: tons mined 800 000
Depletion for 2010 P 960 000
CASE #42
NO. 1 ANSWER: B
Cost of patent P480 000
Less: Amortization up to 12/31/06
(P480 000 x 5/10) 240 000
Carrying amount of patent, 12/31/06 P240 000
NO. 2 ANSWER: C
Amortization on original patent (P240 000/10) P24 000
Amortization on related patent (280 000/10) 28 000
Total amortization in 2007 P 52 000
CASE #43
NO. 1 ANSWER: B
Petty cash fund per trial balance P30,000
Various expenses dated (16,
December 2014 250.00)
(3,
Employee cash advance 500.00)
Adjsuted petty cash fund
balance P10,250
NO. 2 ANSWER: A
The petty cash shortage cannot be determined because of
insufficient information.
NO. 3 ANSWER: C
Book Bank
Unadjusted balances P748,320 P638,340
NSF check (22,500.00)
Bank error (P7,520 - P5720) 1,800
Unrecorded cash receipt 3,500
Postdated checks (67,300.00)
Deposit in transit (P136,250 -
P67,300) 68,950
Bank debit memos (230,000.00)
Interest earned 1,950
Bank service charges (1,260.00)
Outstanding checks (276,380.00)
Adjusted balances P432,710 P432,710
NO. 4 ANSWER: A
Accounts receivable (P22,500 +
P67,300) 89,900.00
Accounts payable 230,000.00
Bank service charges 1,260.00
Cash in bank - Tsunami
Bank 315,610.00
Advances to employees 3,500.00
Interest income 1,950.00
NO. 5 ANSWER: D
Cash in bank - Tsunami Bank P432,710
Petty cash fund 10,250
Time deposit 1,000,00
Money market placement 4,000,000.00
Cash and cash equivalent P5,442,960
CASE #44
NO. 1 ANSWER: C
Checks written during
December P405,500
Add: November bank service
charges recorded on company
books in December 2,000
Total book
disbursements in
December P407,500
Balance December Balance

Disbursement
Nov. 30 Receipts s Dec. 31
Balance per books P244,500 P482,750 P407,500 P319,750
Undeposited receipts:
36,00
Nov. 30 (36,000.00) 0.00
(28,75
Dec. 31 0.00) (28,750.00)
Outstanding checks:
63, 63,000.
Nov. 30 000.00 00
(75,500.
Dec. 31 00) (75,500.00)
Bank service charges
(2, (2,000.
Nov. 30 000.00) 00)
(3,000.00
Dec. 31 3,000 )
Balance per bank P269,500 P490,000 P396,000 P363,500
NO. 2 ANSWER: B
Balance, November 30 P269,500
NO. 3 ANSWER: A
Total bank receipts in
December P490,000
NO. 4 ANSWER: D
Total bank disbursement
in December P396,000
NO. 5 ANSWER: B
Bank Balance, December
31 P363,500
CASE #45
NO. 1 ANSWER: C
Fair value. For terms that are not measured at fair value through profit or loss,
transaction cost are also included in the initial measurement.
NO. 2 ANSWER: D
Investment in trading securities 1,000,000
Interest Income (P1,000,000 x 9% x 1/12) 7,500
Cash 1,007,500
NO. 3 ANSWER: B
Investment in equity securities 513,000
Cash 513,000
CASE #46
NO. 1 ANSWER: B
Currency ₱1,650
Petty Cash Vouhers
(420+900+340+800+1500) ₱3,960
Replenishment check ₱7,200
Employee's NSF check ₱1,000
Petty cash accounted ₱13,810
Petty cash fund per ledger ₱16,000
Petty cash shortage -₱2,190
NO. 2 ANSWER: D
Currency ₱1,650
Replenishment check ₱7,200
Adjusted petty csah balance ₱8,850
CASE #47
NO. 1 ANSWER A
Bank receipts (credits) in December ₱346,000
Less: Deposit in transit, November 30 ₱39,458
NSF check redeposited in December ₱11,143 ₱50,601
Book receipts (debits) in December ₱295,399
NO. 2 ANSWER B
Bank balance, December 1, 2014 ₱145,000
Add: Bank receipts in December ₱346,000
Total ₱491,000
Less: Bank balance in December 31, 2014 ₱114,500
Bank disbursements in December ₱376,500
₱376,500
NO. 3 ANSWER D
Bank disbursements in December
Add: Oustanding checks, December 31 ₱94,162
Total ₱470,662
Less: Outstanding checks, Nov. 30 ₱67,000
NSF check ₱11,143 ₱78,143
Book disbursements in December ₱392,519
CASE #48
NO. 1 ANSWER: A
Self- Constructed Asset
Direct Materials, NET
700000 * 95% ₱663,000
Direct Labor ₱312,000
Overhead Cost ₱270,000
Installation ₱46,000
Total Manufacturing Cost - Constructed ₱1,291,000
NO. 2 ANSWER: C
Purchased Asset
Purchase price, NET
605000 * 97% ₱586,850
Freight & Insurance ₱52,000
Cost of Moving ₱39,100
Wages for technician to test ₱124,000
Total Manufacturing Cost - Purchased ₱801,950
NO. 3 ANSWER: B
Expense when incurred
5% discount ₱35,000
3% discount ₱18,150
Insurance premium on asset operation ₱61,500
Repair Cost ₱41,300
Expense ₱155,950
CASE #49
No. 1 ANSWER: A.
Sales P1,615,040
Less AR, 11/15 P 426,900_
Collections from sales P 1,188,140
No. 2 ANSWER: B
Cost of sales (1,615,040/1.4) P1,153,600
Add: Merchandise Inventory, 11/15 P469,600__
Purchases P1,623,200
Less: Accounts Payable, 11/15 P231,420__
Payments for purchases P1,391,780
No. 3 ANSWER: C.
Purchase of real estate P1,000,000
Payment for furn. and fixtures (P145,000-P30,000) 115,000
Expenses paid 303,780
Payments for purchases (see no.2) _1,391,780__
Total cash disbursements P2,810,560
No. 4 ANSWER: D.
Proceeds from issuance of share capital P1,600,000
Proceeds from mortgage note payable 400,000
Proceeds from notes payable- bank P160,000
Collections from sales (see no. 1) _1,188,140_
Total cash receipts P3,348,140
Less: Cash disbursements (see no. 3) _P2,810,560_
Unadjusted cash balance P537,580
No. 5 ANSWER: B
Cash accountability (see no. 4) P537,580
Less: Cash accounted (Adjusted cash balance)
Unadjusted bank balance P131,640
Deposit in transit 25,700
Outstanding checks _ (9,260) 148,080_____
Cash shortage P389,500
CASE #50
No. 1 ANSWER: C.
Total Sales Proceeds P206,500
Less: Accrued Interest (P200,000*9%*3/12) 7,500
Net Proceeds 199,000
Less: Cost of Treasury notes:
Total Amount Paid P198,500
Less: Accrued Interest (200k*9%*5/12) 4,500 194,000
Gain on Sale of Treasury Notes P5,000
No. 2 ANSWER: C.
Sales Proceeds P70,000
Less: Carrying Amount 90,000
Loss on Sale of Bebe, Inc. shares (P20,000)
No. 3 ANSWER: B.
Virgo Co. bonds (P300,000*3/12) P36,000
Add: Phil. Treasury notes (P200,000*9%*8/12) 12,000
Total Interest Income in 2010 P48,000
No. 4 ANSWER: D.
Maca textiles shares (6,000 shares* P44) P264,000
Virgo Co. bonds (P300,000/ P1,000*P950) 285,000
Trading Securities, 12/31/10 P549,000
No. 5 ANSWER: B
Fair Value of trading securities,12/31/10 P549,000
Less: CA, 12/31/10 before fair value adjustment:
Trading securities, 1/1/10 (total fair value) P640,000
Purchase of Phil. treasury notes, 4/1 194,000
Carrying amount of Bebe, Inc.shares sold,7/11 (90,000)
Sale of Phil. treasury notes, 12/1 (194,000_
Total 550,600
Unrealized loss on trading securities (P1,600)
CASE #51
No. 1 ANSWER: B.
Cost of Plant P900,000
Less: Accumulated Depreciation, 1//1/10 160,000
Carrying amount, 1/1/10 P740,000
No. 2 ANSWER: A
Carrying amount, 1/1/10 (see no. 1) P740,000
FV less cost to sell (P720,000- P20,000) 700,000
Impairment loss P40,000
No. 3 ANSWER: D
An entity shall not depreciate a non-current asset while it is classified as held for sale.
(PFRS 5, par. 20)
No. 4 ANSWER: C
Fair Value less cost to sell, 3/31/10 (770,000-20,000) 750,000
Fair Value less cost to sell, /1/10 (720,000-20,000) 700,000
Increase in Fair Value less cost to sell P50,000
Impairment Loss recognized (limit) P40,000
Gain to be recognized (lower) P40,000
No. 5 ANSWER: A
Net sales proceeds (P785,000 – P25,000) P760,000
Carrying amount after recording the reversal
of impairment lost 740,000
Gain on sale P20,000
CASE #52
No. 1 ANSWER: C
Balance per bank, Nov. 30, 2006 P150,000
Add: Total deposits per bank statement 110,000
Total 260,000
Less: Total charges per bank statement 96,000
Balance per bank, Dec. 31, 2006 P164,000
No. 2 ANSWER: A
Total deposits per bank statement P110,000
Less deposits in transit, Nov. 30 24,000
Dec. receipts cleared through the bank 86,000
Add deposits in transit, Dec. 31 38,000
December receipts per books P124,000
No. 3 ANSWER: B
Total charges per bank statement P96,000
Less: Outstanding checks, Nov. 30 P28,000
Correction of erroneous bank credit 10,000
December NSF check 8,000
December bank service charge 400 46,400
Dec. disb. cleared through the bank 49,600
Add outstanding checks, Dec. 31 30,000
December disbursements per books P79,600
No. 4 ANSWER: C
Balance per books, Nov. 30, 2006 P 136,000
Add December receipts per books 124,000
Total 260,000
Less December disbursements per books 79,600
Balance per books, Dec. 31, 2006 P 180,400
No. 5 ANSWER: C
Balance per bank statement, 12/31/06 P164,000
Deposits in transit 38,000
Outstanding checks (30,000)
Adjusted bank balance, 12/31/06 P172,000
Balance per books, 12/31/06 P180,400

NSF check (8,000)
Bank service charges (400)
Adjusted book balance, 12/31/06 P172,000
CASE #53
No. 1 and 2 ANSWER: B, A

Total cost of production
(6,000 dozens x P360) P2,160,000
Divide by total sales price:
Class A (6,000 x 60% = 3,600 x P500) P1,800,000
Class B (6,000 x 40% = 2,400 x P250) 600,000 2,400,000
Cost ratio 90%
Class A (P1,800,000 x 90%) P1,620,000

Class B (P600,000 x 90%) P540,000
Alternative computation:
Class A (P2,160,000 x 18/24) P1,620,000
Class B (P2,160,000 x 6/24) P540,0
No. 3 ANSWER: D
Class A (220 x P500 x 90%) P 99,000
Class B (300 x P250 x 90%) 67,500
Inventory, 12/31/06 P166,500
No. 4 ANSWER: B
Total cost of production (6,000 dozens x P360) P2,160,000
Less inventory, 12/31/06 166,500
Cost of sales P1,993,500
No. 5 ANSWER: C
Sales of Class A [(3,600 - 220) x P500] P1,690,000

Sales of Class B [(2,400 - 300) x P250] 525,000
Total sales 2,215,000
Less cost of sales 1,993,500
Gross profit P 221,500
CASE #54
No. 1 ANSWER: C
Total contract price P5,026,000
Less property taxes for 2006 146,000
Adjusted cost of land and building 4,880,000
Percentage applicable to land 20%
Cost of Land P 976,000
No. 2 ANSWER: A
Cost allocated to building (P4,880,000 x 80%) P3,904,000
Reconditioning costs prior to use 236,800
Salvage proceeds from demolition of garages (36,000)
Construction cost of warehouse 540,800
Cost of Buildings P4,645,600
Notes:
1) The savings on construction of P90,000 should be ignored.
2) The modification costs of P76,800 and the redecorating and repair costs of P60,000
should be expensed.
No. 3 ANSWER: B
Fair value of equipment acquired on Mar. 1 P200,000
Fair value of machine acquired on Apr. 1 360,000
Cost of Machinery and equipment P560,000
No. 4 ANSWER: C
Parking lots P360,000
Waiting sheds 76,800
Cost of Land improvements P436,800
No. 5 ANSWER: D
Land P 976,000
Buildings 4,645,600
Machinery and equipment 560,000
Land improvements 436,800
Total cost of property, plant and equipment P6,618,400

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Analyze bank reconciliation case studies

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CASE #1

Beginning July Ending

Total cost of production

Class A (P1,800,000 x 90%) P 1,620,000

ADJUSTING JOURNAL ENTRIES

Cash in Bank 4,000.00

Cash in Bank 1,000.00

Cash in bank 3,600.00

Debit to cash in bank 8,000.00

Net credit to cash in bank (600.00)

Machinery and equipment:

Dec. 20 disposition (425,000.00)

Balance, Dec. 31, 2014 P12,218,000.00

Fair value Fraction Allocated cost

Balance, December 31, 2014 19,687,500

4. Balance, January 1, 2014 13,125,000

1. Allowance for bad debts, beginning 143,000

2. Nov.-Dec. 2016 2,160,000 x 2% 43,200

4. Accounts receivable ( 4,600,000 - 120,000) 4,480,000

1. Inventory quantity, June 1 108,500

2. FIFO COST FROM JUNE 30 INVENTORY

4. Gross profit 2,058,750

Dec. 5 deposit P49,000

Cash balance, November 30 P423,825

1. Outstanding checks, December 31:

Adjusted cash balance, Nov. 30,

0 - 30 days P65,600 x 1% P 656

31 - 60 days P44,320 x 1.50% 665

61 - 90 days P32,600 x 3% 978

91 - 120 days P29,400 x 10% 2,940

Over 120 days P 8,920 x 50% 4,460

Bad debt expense 15,199

Accounts Receivable P180,840

Non-trading equity securities, at fair value 3,130,000

(P4,430,000 [cost] - P3,130,000 [fair value]) 1,300,000

No.3 ANSWER: A.

[P4,380,000 [fair value] -P2,420,000 [cost]) 1,960,000

No.5 ANSWER: D

Deposit in transit, Nov. 30 P12,500

Add: Company collections in December 152,500

Bank service charges per December bank

Less: December bank service charges recorded

Unrecorded December bank service charges P2,250

Actual company collections in December P152,500

Outstanding checks, December 31 P12,500

Add: Checks paid by the bank in December 130,000

Less: Outstanding checks, November 30 16,250

Cash receipts per books P8,219,800

Cost of good sold P4,246,000

Average gross profit ratio based on sales

Average gross profit ratio: (30%+ 26%+34%)/ 3 =

Investments Quantity Cost FV

Unrealised loss (390,000-282,000) P108,000

Bad debt expense 44,600

Allowance for bad debts, Jan. 1, 2014 P54,600

Account Receivable P3,000,000

Bad debt expense recorded P640,000

Cost of goods available for sale P356,400

Inventory quantity, July 1 (see no.1) 300,000

Cost of availabale for sale P356,400

Initial cost P132.00

Interest income (P6.60+ P6.61) P13.21

Depreciation - Building [(P800,000/8,000,000 tons) x 800,000 tons x