Midterm Dq-Ia1: Jour Nal Entries Based On The Bank Reconciliation Are Required On The Depositor's Books For

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MIDTERM DQ- IA1

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Journal entries based on the bank reconciliation are required on the depositor’s books
for:
1 point

additions to the balance according to the depositor’s records


deductions from the balance according to the depositor’s records
both a and b
both additions to and deductions from the balance according to the bank’s records

What is the cash balance per books at April 30, 20x1?


1 point

a. 42,800
b. 56,800
c. 52,200
d. 48,200
Information on a note receivable: Face amount ₱800,000;Effective interest 14%The
note is due in lump sum in five years’ time. What is the carrying amount of the note at
initial recognition?
1 point

415,495
432,158
567,823
591,834

According to the PFRSs, receivables (with allowed practical expedient for trade
receivables) are initially recognized at fair value. discounted a 90-day, ₱800,000, 12%
note, received from a customer on June 1, 20x1, with a bank at 16% on with recourse
basis
present value.
cost.
fair value
plus transaction costs.
On July 1, 20x1, ABC Co.. The discounting is treated as conditional sale. The bank
uses 365 days per year in computing for discounts. On August 30, 20x1 (maturity
date), the maker of the note defaulted and the bank charged ABC Co. the maturity
value of the note plus a ₱3,000 protest fee. How much is transferred to accounts
receivable due to the dishonor?
1 point

• 826,671
• 823,671
• 827,000
• 862,671

ABC Co. consigned goods costing ₱14,000 to XYZ, Inc. Transportation costs of
delivering the goods to XYZ, Inc. totaled ₱3,000. Repair costs for goods damaged
during transportation totaled ₱1,500. To induce XYZ, Inc. in accepting the consigned
goods, ABC Co. gave XYZ, Inc. ₱2,000 representing an advance commission. How
much is the cost of the consigned goods?
1 point

• 20,500
• 18,500
• 17,000
• 14,000
If the estimate of uncollectibles is made by taking 1% of net sales, the amount of the
adjustment is
1 point

• ₱3,350.
• ₱4,250.
• ₱4,110.
• ₱4,870.

How much is the adjusted balance of cash?


1 point

• 4,300
• 5,200
• 6,600
• 9,800
During the year, Jantz Company made an entry to write off a ₱4,000 uncollectible
account. Before this entry was made, the balance in accounts receivable was ₱80,000
and the balance in the allowance account was ₱4,500. The net realizable value of
accounts receivable after the write-off entry was
1 point

₱80,000.
₱71,500.
₱79,500.
₱75,500.

What is the effective interest rate of a bond or other debt instrument measured at
amortized cost?
1 point

The stated coupon rate of the debt instrument.


The current market rate published by a regulatory body.
The interest rate that exactly discounts the estimated future cash payments or receipts over the expected
life of the debt instrument or, when appropriate, a shorter period, to the net carrying amount of the
instrument.
The basic, risk-free interest rate that is derived from observable government bond prices.

According to PAS 2, inventories are measured at


1 point

cost.
fair value.
net realizable value.
lower of a and c.
lower of a and b.

Scott Company received a one-year non-interest-bearing note receivable. When the


note receivable was recorded, which of the following were debited or credited?
Interest Receivable ;Discount on Note Receivable
1 point

Yes; Yes
Yes; No
No; Yes
No; No
What is the amount of cash disbursements per books in April?
1 point

• 78,900
• 89,200
• 91,900
• 92,200

On Jan. 2, 20x1, an entity sold a machine in which the receipt of the consideration is
deferred to May 1, 20x2. The total collection on May 1, 20x2 will include both principal
and interest. Assuming interest at a 10% rate, the initial measurement of the
receivable would be computed as the total collection multiplied by what time value of
money factor?
1 point

Future value of annuity of 1


Future value of 1
Present value of annuity of 1
Present value of 1

On January 1, 20x1, Hollycow Bank extended a 3-year, ₱1,000,000, 12% loan to


Manna, Inc. at a price that yields an effective interest rate of 10%. Principal is due at
maturity but interest is due annually every December 31. On December 31, 20x1, it
was ascertained that the loan was credit-impaired. The loan was restructured as
follows: Only the principal amount of ₱1,000,000 will be collected on the loan. This is
due on December 31, 20x3.The ₱120,000 interest receivable accrued in 20x1 and
future interests are waived. How much is the impairment loss on December 31, 20x1?
1 point

105,289
129,091
212,561
328,265

On January 1, 20x1, Kakadwa Co. sold transportation equipment with a historical cost
of ₱12,000,000 and accumulated depreciation of ₱7,000,000 in exchange for cash of
₱100,000 and a noninterest-bearing note receivable of ₱4,000,000 due in 4 equal
annual installments starting on January 1, 20x1 and every January 1 thereafter. The
prevailing rate of interest for this type of note is 12%.How much is the interest income
in 20x1?
1 point

• 408,230
• 328,964
• 278,334
• 288,220

Bilag Co. received the following note: Face amount ₱1,200,000: Effective interest
11%The note is due in four equal annual installments. The first installment is due one
period from initial recognition. What is the carrying amount of the note at the end of
the second year?
1 point

930,734
733,114
877,430
513,758

ABC Co., a non-VAT payer, imported goods from a foreign supplier. Costs incurred by
ABC include the following: purchase price, excluding VAT, ₱250; import duties, ₱20;
value added tax, ₱15; transportation and handling costs, ₱5; and commission to
broker, ₱2. How much is the cost of purchase of the imported goods?
1 point

292
277
257
255
How much is the overdraft per ABC’s cashbook on March 31, 20x1?
1 point

37,518
43,201
33,670
46,370

At the close of its first year of operations, December 31, 2004, Linn Company had
accounts receivable of ₱490,000, after deducting the related allowance for doubtful
accounts. During 2004, the company had charges to bad debt expense of ₱90,000
and wrote off, as uncollectible, accounts receivable of ₱40,000. What should the
company report on its balance sheet at December 31, 2004 as accounts receivable
before the allowance for doubtful accounts?
1 point

₱620,000
₱440,000
₱540,000
₱360,000

Bilag Co. received the following note: Face amount ₱1,200,000: Effective interest
11%The note is due in four equal annual installments. The first installment is due one
period from initial recognition. How much is the balance of the unearned interest
income (discount on note receivable) at the end of the second year?
1 point

86,242
87,289
76,632
88,643
How much are the gross sales in December?
1 point

₱118,000
₱130,000
₱120,000
₱144,000

If Stephens Inc. uses the average cost method to account for inventory, the ending
inventory of VTC cameras at July 31 is reported as
1 point

• 153,400
• 156,912
• 158,736
• 159,464
On January 1, 20x1, Kakadwa Co. sold transportation equipment with a historical cost
of ₱12,000,000 and accumulated depreciation of ₱7,000,000 in exchange for cash of
₱100,000 and a noninterest-bearing note receivable of ₱4,000,000 due in 4 equal
annual installments starting on January 1, 20x1 and every January 1 thereafter. The
prevailing rate of interest for this type of note is 12%.How much is the carrying amount
of the receivable on December 31, 20x1?
1 point

1,690,510
2,690,051
892,857
1,594,388

How much is the total inventory on December 31, 20x1?


2 points

25,080,000
20,880,000
20,800,000

The amount of the outstanding checks is included on the bank reconciliation as:
1 point

an addition to the balance per bank statement


a deduction from the balance per bank statement
an addition to the balance per depositor’s records
a deduction from the balance per depositor’s records

On July 1, 20x1, Going Home Co. discounted its own note of ₱200,000 with a bank at
10% for one year. How net proceeds did Going Home Co. receive from the
transaction?
1 point

180,000
190,000
200,000
0

How much is the adjusted balance of cash?


1 point

370,000
330,000
285,000
380,000

How much is the doubtful accounts expense to be recognized in 20x4?


1 point
24,980
34,000
34,890
38,980

ABC Co. factored ₱100,000 accounts receivable to XYZ Financing Corp. on a without
recourse basis on January 1, 20x1. XYZ charged a 4% service fee and retained a 10%
holdback to cover expected sales returns. In addition, XYZ charged 12% interest
computed on a weighted average time to maturity of the receivables of 73 days over
365 days. ABC Co. factored the receivables on a with recourse basis. ABC Co.
determines that the recourse obligation has a fair value of ₱3,000. How much is the
loss on sale of receivables recognized on January 1, 20x1 assuming the factoring was
made on a casual basis?
1 point

3,000
9,400
19,400
6,400

How much is the cash balance per bank statement?


1 point
650
560
930
370

Information on a note receivable: Face amount ₱800,000;Effective interest 14%The


note is due in four equal annual installments. The first installment is due one period
from initial recognition. What is the carrying amount of the note at initial recognition?
1 point

582,742
567,823
591,834
602,158

If Stephens Inc. uses a moving average perpetual inventory system, the ending
inventory of the VTC cameras at July 31 is reported as
1 point

153,400
156,912
158,736
159,464

The due date of a 90-day note receivable dated July 12 is


1 point

September 12.
October 9.
October 10.
October 11.

Under the allowance method of recognizing bad debts on trade accounts receivable,
the effect of writing off an account to an entity's working capital is
1 point

increase
decrease
either a or b depending on the current level of the entity's working capital
no effect

On January 1, 20x1, Extra Co. received a 4-year, noninterest bearing note of


₱1,000,000 in exchange for land with carrying amount of ₱500,000. The note is due
on December 31, 20x4. The effective interest rate is 14%. How much is the carrying
amount of the note on the Dec. 31, 20x2 and what is the net effect of the transaction in
Extra Co.’s 20x1 profit or loss? Carrying amount on Dec. 31, 20x2; Net effect in 20x1
P/L Increase (Decrease)
1 point

674,971; 82,891
769,467; 174,971
674,971; 94,496
769,467; (9,189)

ABC Co. purchased goods with invoice price of ₱3,000 on account on December 27,
20x1. The related shipping costs amounted to ₱50. The seller shipped the goods on
December 31, 20x1. ABC Co. received the goods on January 2, 20x2 and settled the
account on January 5, 20x2. How much is the capitalizable cost of the inventory
purchased if the terms of the shipment are FOB shipping point, freight prepaid?
1 point

3,050
3,000
2,950
0
On March 1, 20x1, Nickelodeon Co. received a 12% note dated January 1, 20x1.
Principal and interest on the note are due on July 1, 20x1. On initial recognition, which
of the following accounts increased?
1 point

Prepaid interest
Unearned interest income
Interest revenue
Interest receivable

Which of the following best describes the concept of time value of money?
1 point

interest is earned or incurred on debt instruments due to passage of time


interest is earned only on interest-bearing receivables
the amount debited to interest receivable is always equal to the interest income recognized during the
period
if no interest receivable is recognized, no interest income is also recognized

What are the effects of direct loan origination costs and origination fees on the
carrying amount of a loan receivable? Direct origination costs; Origination fees
1 point

Increase; increase
Decrease; decrease
Increase; decrease
no effect; no effect

The following are among the transactions of ABC Co. during the year: Purchased
goods costing ₱20,000 from XYZ, Inc. Billing was received although delivery was
delayed per request of ABC Co. The goods purchased were segregated and ready for
delivery on demand. Purchased goods costing ₱35,000 from Alpha Corp. on a lay
away sale agreement. The goods were not yet delivered until after ABC makes the
final payment on the purchase price. ABC Co. made total payments of ₱34,920 during
the year. How much of the goods purchased above will be included in ABC’s year-end
inventory?
1 point

55,000
54,290
34,920
0

Information on a note receivable: Face amount ₱800,000;Effective interest 14%The


note is due in five equal annual installments. The first installment is due at initial
recognition. What is the carrying amount of the note at initial recognition before any
collection?
1 point

582,742
567,823
602,158
626,194

Tremolo Co. transferred loans receivables with carrying amount and fair value of
₱200,000 to XYZ, Inc. for cash amounting to ₱200,000. Under the terms of the
transfer, Tremolo Co. is obligated to repurchase some of the loans transferred not
exceeding ₱20,000. The entry to record the transfer includes all of the following
except
1 point

a debit to cash for ₱200,000.


a credit to loans receivable of ₱200,000.
a credit to liability on repurchase agreement of ₱20,000.
a credit to loans receivable of ₱180,000.

On October 1, 20x1, ABC Co. discounted a one-year, ₱600,000, 12% note, received
from a customer on January 1, 20x1, with a bank at 14% on a without recourse basis.
How much is the loss on discounting?
1 point

4,960
5,250
4,690
5,520

At what total net amount will the notes be initially recognized?


1 point

65,000
53,673
62,357
50,000
Compute for the net realizable value of the accounts receivable of Lucille Company at
December 31, 2002.
1 point

₱804,000
₱763,200
₱799,200
₱727,200

If the estimate of uncollectibles is made by taking 10% of gross account receivables,


the amount of the adjustment is
1 point

₱4,540.
₱5,224.
₱5,300.
₱6,060.

On July 1, 2010, a company obtained a two-year 8% note receivable for services


rendered. At that time, the market rate of interest was 10%. The face amount of the
note and the entire amount of the interest are due on June 30, 2012. Interest
receivable at December 31, 2010, was
1 point

5% of the face value of the note.


4% of the face value of the note.
5% of the July 1, 2010 present value of the amount due on June 30, 2012.
4% of the July 1, 2010 present value of the amount due on June 30, 2012.

Based on the following information, how much is the cost of goods sold?
1 point

108,000
96,000
76,000
84,000

Which of the following is true regarding non-interest bearing note receivables?


1 point

they are always discounted to their present value on initial recognition


they include a specified principal amount but an unspecified interest amount
they include a specified principal and specified interest
they cause no interest income to be recognized over their term
they include an unspecified principal and an unspecified interest

Which of the following is added to the cash balance per bank statement when
preparing a bank reconciliation statement?
1 point

Credit memo
Debit memo
Outstanding check
Deposit in transit

If Miller Inc. uses a FIFO periodic inventory system, the ending inventory of Model III
calculators at August 31 is reported as
1 point
150,080
150,160
152,288
152,960

Which of the following statements is incorrect regarding the initial recognition of


receivables?
1 point

On initial recognition, the fair value of a short-term receivable may be equal to its face amount.
On initial recognition, the fair value of a long-term receivable bearing a reasonable interest rate is deemed
equal to its face amount.
On initial recognition, the fair value of a long-term noninterest bearing receivable is deemed equal to the
present value of future cash flows from the instrument discounted at the effective interest rate on initial
recognition.
On initial recognition, the fair value of all interest-bearing receivables is deemed equal to their face
amount.

If Miller Inc. uses a FIFO cost perpetual inventory system, the ending inventory of
Model III calculators at August 31 is reported as
1 point
150,080
150,160
152,232
152,960

The compound entry to reconcile the accounts includes a


1 point

net debit to cash for ₱2,020.


net credit to cash for ₱700.
credit to notes receivable for ₱2,500.
net debit to accounts receivable for ₱590.
ABC Co. factored ₱100,000 accounts receivable to XYZ Financing Corp. on a without
recourse basis on January 1, 20x1. XYZ charged a 4% service fee and retained a 10%
holdback to cover expected sales returns. In addition, XYZ charged 12% interest
computed on a weighted average time to maturity of the receivables of 73 days over
365 days. How much net proceeds is received from the factoring on January 1, 20x1?
1 point

100,320
85,600
83,600
88,300

At 30 September 2000, Z Ltd. had a provision for doubtful debts of ₱37,000. During
the year ended 30 September 2001 the company wrote off debts totaling ₱18,000, and
at the end of the year, it is decided that the provision for doubtful debts should be
₱20,000. What should be included in the income statement for bad and doubtful
debts?
1 point

₱35,000 debit
₱1,000 debit
₱38,000 debit
₱1,000 credit

On March 1, 20x1, ABC Co. assigned its ₱1,000,000 accounts receivable to Piggy
Bank in exchange for a 2-month, 12% loan equal to 75% of the assigned receivables.
ABC Co. received the loan proceeds after a 2% deduction for service fee based on the
assigned notes. During March, ₱500,000 were collected from the receivables. Sales
returns and discounts amounted to ₱150,000. How much net cash is received from the
assignment transaction on March 1, 20x1?
1 point

735,000
730,000
1,230,000
1,235,000

Bilag Co. received the following note: Face amount ₱1,200,000: Effective interest
11%The note is due in lump sum in five years’ time. What is the carrying amount of
the note at the end of the second year?
1 point

793,360
897,430
877,430
977,430

What amount should Reagan record as "bad debt expense" for the year ended
December 31, 2004?
1 point

₱8,500
₱10,500
₱9,500
₱17,500

On July 1, 2002, Cornell Corp. received a one-year note with a face value of ₱900,000
and a stated interest rate of 15 percent in exchange for a machine with a fair value of
₱1,000,000. What is the effective interest rate on the note?
1 point

16.67 percent
3.5 percent
15.0 percent
11.11 percent

What factor should you use for a ₱2,000 note receivable that is collectible in full after
five years?
1 point

Present value of 1
Present value of an ordinary annuity of 1
Present value of an annuity due of 1
Any of these
On January 2, 20x3, Zyrus Co. sold equipment with a carrying amount of ₱480,000 in
exchange for a ₱600,000 noninterest bearing note due January 2, 20X6. There was
no established exchange price for the equipment. The prevailing rate of interest for a
note of this type at January 2, 20x3 was 10%. In Zyrus' 20x3 income statement, what
amount should be reported as interest income?
1 point

9,000
50,000
45,000
60,000

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