Cash To Accrual Assignment

PROBLEM 1: You were able to gather the following in connection with your audit
of the Bukidnon Company for the year ended December 31, 2010:
1/1/2010 12/31/2010
Accounts receivable 6,400,000 4,000,000
Unpaid merchandise invoices ? 2,621,000
Accrued wages 85,000 125,000
Advertising supplies inventory 35,000 75,000
Accrued advertising 14,250 40,000
Prepaid insurance 25,000
Unexpired insurance 41,000
During the year:

Amount collected from customers 10,000,000
Total payments to suppliers of merchandise 13,618,000
Total payments to suppliers of merchandise of prior years 4,632,000
Wages paid 3,050,000
Advertising paid which includes P40,000 applicable in 2011 300,000
Insurance premium paid 125,000
PROVIDE:
 Net Sales for 2010
 Net purchases for 2010
 Wages expense for 2010
 Advertising expense for 2010
 Insurance expense for 2010
PROBLEM 2: The income statement of Cagayan Corporation for 2010 included the
following items:
Interest income 2,101,000
Salaries expense 1,650,000
Insurance expense 277,200
The following balances have been excerpted from Cagayan Corporation's
statements of financial position:
12/31/2009 12/31/2010
Accrued interest receivable 165,000 200,200
Accrued salaries payable 92,400 195,800
Prepaid insurance 33,000 24,200
PROVIDE:
 The cash received for interest during 2010
 The cash paid for salaries during 2010
 The cash paid for insurance premium during 2010
PROBLEM 3: Gingoog Company paid or collected during 2010 the following items:
Insurance premiums paid 462,000
Interest collected 927,000
Salaries paid 4,056,000
The following balances have been excerpted from Gingoog's statements of
financial position:
12/31/2009 12/31/2010
Interest receivable 87,000 111,000
Salaries payable 318,000 369,000
PROVIDE:
 The insurance expense on the income statement for 2010
 The interest income on the income statement for 2010
 The interest income on the income statement for 2010
PROBLEM 4: ligan & Associates maintains its records on the cash basis. You
have been engaged to convert its cash basis income statement to the accrual
basis. The cash basis income statement, along with additional information,
follows:
Iligan & Associates
Income Statement (Cash Basis)
For the Year Ended December 31, 2010
In PHP
Cash receipts from customers 2,800,000
Cash payments:
Wages 1,200,000
Taxes 520,000
Insurance 320,000
Interest 200,000 2,240,000
Net profit 560,000
Additional information:
12/31/2009 12/31/2010
Accounts receivable 240,000 400,000
Wages payable 160,000 120,000
Taxes payable 152,000 112,000
Accumulated depreciation 600,000 760,000
Interest payable 72,000 24,000
No plant assets were sold during 2010.
 How much is the profit before income tax under the accrual basis of
accounting?
PROBLEM 5:
Presented below is information pertaining to Malay Specialty Foods, a calendar-
year sole proprietorship, maintaining its books on the cash basis during the year.
At year-end, however, Ms. Balay Malay's accountant adjusts the books to the
accrual basis only for sales, purchases, and cost of sales, and records
depreciation to more clearly reflect the business income for income tax purposes.
Malay Specialty Foods
Trial Balance
December 31, 2010
In PHP
Debit Credit
Cash 185,000
Accounts receivable, 12/31/09 45,000
Inventory, 12/31/09 200,000
Equipment 350,000
Accumulated depreciation, 12/31/09 90,000
Accounts payable, 12/31/09 48,000
Withholding tax payable 8,500
Balay Malay, drawing 240,000
Balay Malay, capital, 12/31/09 336,500
Sales 1,870,000
Purchases 827,000
Salaries 295,000
Taxes and licenses 29,000
Rent 84,000
Miscellaneous 39,000
Insurance 24,000
Utilities 35,000. ___________
2,353,000 2,353,000
During 2010, Malay signed a new-eight-year lease for the store premises and is in
the prodess of negotiating a loan for remodeling purposes. The bank requires
Malay to present financial statements for 2010 prepared on the accrual basis.
During the course of the
engagement, Malay's accountant obtained the following additional information:
1. Amounts due from customers totaled P79,000 at December 31, 2010.
2. A review of the receivables at December 31, 2010 disclosed that an
allowance for doubtful accounts of P11,000 should be provided.Malay had no
bad debt losses from inception of the business through December 31, 2010.
3. The inventory amounted to P230,000 at December 31, 2010, based on a
physical count of goods priced at cost. No reduction to net realizable value
was required.
4. On signing the new lease on October 1, 2010, Malay paid P84,000
representing one year's rent in advance for the lease year ending October 1,
2011. The P75.000 annual rental under the old lease was paid on October 1,
2009, for the lease year ended October 1, 2010.
5. On April 1, 2010, Malay paid P24,000 to renew the comprehensive insurance
coverage for one year. The premium was P21,600 on the old policy which
expired on April 1, 2010.
6. Depreciation on equipment was computed at P58,000 for 2010.
7. Unpaid vendor's invoices for food purchases totaled P88,000 at December
31, 2010.
8. Accrued expenses at December 31, 2009 and December 31, 2010 were as
follows:
12/31/09 12/31/10
Salaries 3,750 5,100
Taxes and licenses 2,500 4,000
Utilities 2,750 4,500
PROVIDE:
 Balay Malay, capital, 12/31/09
 Profit for the year ended December 31, 2010
 Balay Malay, capital, 12/31/10
 Total assets at December 31, 2010
 Total liabilities at December 31, 2010
END

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PROBLEM 1: You were able to gather the following in connection with your audit

During the year:

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