ACCT 1

1. In preparing a monthly bank reconciliation, which of the following items would be added
to the balanceper bank statement to arrive at the correct cash balance?

a. Outstanding Checks
b. Deposit in Transit
c. A customer’s note collected by the bank on behalf of the depositor
d. Deducted from the bank statement balance

2. A department store received cash and issued a gift certificate that is redeemable in
merchandise, whenthe gift certificate was issued
a. Deferred revenue account should be decreased
b. Deferred revenue account should be increased
c. Revenue account should be decreased
d. Revenue account should be increased
3. Niel just spent P20,000 on a new commercial mixer for his bakery. Where would this be
reported?
a. Under operating expenses on a statement of cash flow
b. Under financing activities on a statement of owner's equity
c. Under operating expenses on a balance sheet
d. Under investing activities on a statement of cash flow
4. The direct and indirect methods are the two methods used by businesses to create _____.
a. balance sheets
b. cash flow statements
c. inventory safeguards
d. accounting controls
5. How are the direct and indirect ways of preparing a cash flow statement similar?
a. Both place a strong emphasis on non-cash assets.
b. Both are prefered by small businesses.
c. Both of them have an operative section.
d. Both of them have the same financing section.
6. Financial accounting information can be considered relevant if it pertains to decision-
makers and _____.
a. is produced on a timely basis
b. contains fewer than three typographical errors
c. is produced by a company CEO
d. is as detailed and comprehensive as possible
7. ABC borrowed 50,000 from XYZ to start her own business. The two entered into a
formal writtenagreement that specified the interest rate and amount to be repaid. What is
this referred to as?
a. note
b. Promissory Negotiable bond
c. Stock
d. Annuity
8. In which of the following scenarios is an accounts receivable created?
a. A company sells a product to a buyer on an extension of credit, so that payment is due in 30 days.
b. A company announces to shareholders that dividends will be paid next quarter.
c. A company issues bonds to investors to raise money for a new product.
d. A buyer renders a cash payment for a product at the time of the sale.
 9. John's IT company can build a computer for 15,000, and they have recently sold one for
20,000 in cash.How should John book this entry using the perpetual inventory system?
a. Debit: Cash 15,000 Credit: Revenue 20,000 Debit: COG 20,000 Credit: Inventory 15,000
b. Debit: Cash 15,000 Credit: Revenue 15,000 Debit: COG 15,000 Credit: Inventory 15,000
c. Debit: Cash 20,000 Credit: Revenue 35,000 Debit: COG 20,000 Credit: Inventory 15,000
d. Debit: Cash 20,000 Credit: Revenue 20,000 Debit: COG 15,000 Credit: Inventory 15,000
10. To be reported as "cash and cash equivalent" the cash item must be
a. Deposited in bank
b. Available for the purchase of property,plant and equipment
c. Unrestricted in use for current operations
d. Set aside for the liquidation of long-term debt
11. Which of the following should not be included in cash?
a. postdated checks received from customers
b. cash collections not deposited at year-end
c. undelivered checks drawn
d. postdated checks drawn and delivered to payees
12. Postdated checks received from customers should
a. neither a nor b
b. be reverted back to receivables.
c. a and b
d. be included in cash.
13. Which of the following may qualify as cash equivalent?
a. Investments in debt instruments acquired 3 months before maturity
b. Investments in equity instruments acquired 3 months before maturity
c. Checks that are not postdated and are certified by the drawee bank
d. Shares of stocks to be sold in the near term
14. Bank overdrafts should be
a. reported as current liabilities
b. reported as current liabilities except when offsetting is permitted.
c. offset from the balance of cash
d. disclosed only
15. Compensating balances that are not legally restricted
a. should not be disclosed in the notes.
b. are included in cash.
c. B and c
d. are excluded from cash.
16. An entity provided the following information on December 31, 2024:
Cash in bank 2,000,000
Accounts receivable 4,000,000
Allowance for doubtful accounts 250,000
Notes receivable 1,250,000
Note receivable discounted 250,000
Inventory 2,250,000
Prepaid expenses (including cash surrender value of P300,000) 1,000,000
Deferred tax asset 1,500,000
Equipment classified as “held for sale” 1,800,000

The accounts receivable included sale price of P1,500,000 of unsold goods out on consignment
at 125%of cost and excluded from ending inventory. Which of the following statements is false?
 a. Total noncurrent assets amount to P1,800,000
b. Total current assets amount to P11,200,000.
c. The operating cycle of an entity is always a period of 12 months.
d. Current and noncurrent presentation of assets and liabilities provide useful information when
an entity supplies goodsor services within a clearly identifiable operating cycle.
17. An entity reported changes in certain accounts included accounts payable P150,000
decrease,inventory P50,000 increase and accounts receivable P100,000 decrease. All
purchases of inventorywere on account. Depreciation during the year was P900,000 and
equipment was sold at gain ofP300,000. The entity reported net income of P3,500,000 for
the current year and the cash flows forthe current year were as follows: collection from
customers, P9,500,000; payment for inventorypurchase P4,100,000; payment for other
expenses, P1,400,000.
Statement I: The indirect method of preparing the cash flow statement is known as the
reconciliationmethod.

Statement II: The net cash flow provided by operating activities is P4,000,000.
a. Only statement I is true.
b. Statements I and II are true.
c. Only statement II is true.
d. Statements I and II are false.

18. Significant accounting policies may not be

a. Selected from existing acceptable alternatives
b. Selected on the basis of judgement
c. Unusual or innovative in application
d. Omitted from financial statement disclosures
19. The following may be classified as cash equivalents, except
a. Equity investments held for trading
b. Money market placements
c. Certificate of time deposit
d. Redeemable preference shares
20. An entity had outstanding 1,000,000 written put options on the ordinary shares with an
exercise price ofP25. The average market price of ordinary share of the period is P20.
How many potential ordinaryshares should be included in the computation of diluted
earnings per share?
a. 250,000
b. 1,250,000
c. 800,000
d. 200,000

21. An entity received the following information to prepare a bank reconciliation on May 31
2024:

Cash balance per bank statement – May 31, 2024 80,890

Note collected by bank credited to entity’s account, including interest of P400 10,400
Bank service charges 200
Cash balance per ledger – May 31, 2024 96,470
Deposit in transit on May 31, 2024 38,000
Outstanding checks on May 31, 2024 15,500
Cash on hand – May 31, 2024 3,100
The bookkeeper improperly recorded a payment for supplies at P1,465.

The correct amount should beP1,645. What amount of cash should be reported in the statement
of financial position on May 31, 2024?
a. 83,990
b. 106,850
c. 103,390
d. 106,490

22. An investor uses the equity method to account for its equity investment. Which of the
following willincrease the investment account?
a. Amortization of goodwill
b. Cash dividend received from the investee
c. Amortization of excess cost relating to the investee’s depreciable asset
d. Share in the net income of the investee
23. An entity incurred an inventory loss from market decline of P420,000 on June 30, 2024.
What amount ofinventory loss should be recognized in the quarterly income statement for
the three months ending June30, 2024?
a. 105,000
b. 210,000
c. 140,000
d. 420,000

24. .Aloha had the following account balances on December 31, 2021.

Petty cash fund 50,000

Cash in bank – current account 4,000,000
Cash in bank – set a side for bond payable due December 31, 2022 2,000,000
Cash on hand 500,000
Treasury bills 1,000,000

The petty cash find included un replenished December 2021 petty cash expense vouchersP5,000
and employee IOU P5,000. The cash on hand included a P100,000 customer check dated
January 15, 2022. In exchange for a guaranteed line of credit, Aloha Company has agreed to
maintain a minimum balance of P200,000 in the unrestricted current bank account.

What total amount should be reported as cash and cash equivalents by Aloha on December
31,2021?
a. 7,440,000
b. 5,440,000
c. 6,440,000
d. 7,540,000
25. Allura Company adopted the imprest system and established a petty cash fund balance of
P50,000. Atthe end of the current year, it was discovered that receipts evidencing
expenses amounted to P35,000,employee IOU P5,000 and currency P12,000. The fund
was replenished at year-end.
Which is included in Allura’s entry to record the replenishment of the petty cash fund?
a. Credit cash short or over P5,000
b. Credit cash in bank P38,000
c. Debit cash short or over P2,000
d. Credit petty cash fund P38,000

26. Faye Company had the following bank reconciliation on June 30:

Balance per bank statement – June 30 3,000,000

Deposit in transit 400,000
Debit memo for service charge 50,000
Total 3,450,000
Outstanding checks (900,000)
Credit memo for note collected (750,000)
Balance per book – June 30 1,800,000

The records of the bank and Faye Company for the month of July showed the following:

Bank credits, including credit memo for note collected P500,000 9,000,000
Bank debits, including P150,000 debit memo for NSF check 7,000,000
Cash receipts per ledger 9,200,000
Cash disbursements per ledger 6,550,000

What amount was reported by Faye as deposit in transit on July 31?

a. 250,000
b. 550,000
c. 450,000
d. 900,000

27. On March 25,2020, Koran Company sold merchandise with a list price of P2,000,000.
Koran gavethe customer a 20% and 10% trade discount. Credit terms of 5/10, n/30 were
given to the customer.The goods were shipped FOB destination, Freight collect. Freight
of P100,000 was paid by thecustomer and goods were returned to Koran at the invoice
mount of P200,000 on March 27, 2020.Koran assesses that most likely its customers take
advantage of the discount period based on pastexperience and therefore recognizes
allowance for sale discount. What is the net realizable value ofKoran’s accounts
receivable on March 31, 2021?
a. 1,140,000
b. 1,068,000
c. 1,078,000
d. 1,240,000

28. Mae Company reported the following information at year-end:

Trade accounts receivable 930,000
Allowance for uncollectible accounts ( 20,000)
Claim against shipper for goods lost in transit in November 30,000
Selling price of unsold goods sent out by Mae on consignment at 130% of cost
and not included in Mae’s ending inventory 260,000
Security deposit on lease of warehouse used for storing some inventories 300,000
What total amount should be reported by Mae as trade and other receivables under current assets
atyear-end?
a. 940,000
b. 1,240,000
c. 1,500,000
d. 1,200,000
29. On January 1, 2021, Ott Company sold goods to Fox Company. Fox signed a
noninterestbearing noterequiring payment of P600,000 annually for seven years. The first
payment was made on January 1,2021. The prevailing rate of interest for this type of note
at date of issuance was 10%.
PV of an ordinary annuity of 1 at 10% for 6 periods 4.36
PV of an ordinary annuity of 1 at 10% for 7 periods 4.87

What amount should be recorded by Ott as sales revenue in January 2021?

a. 3,216,000
b. 2,616,000
c. 2,922,000
d. 2,142,000
30. On December 1, 2021, Nicole Company gave Dawn Company a P2,000,000, 12% loan.
NicoleCompany paid proceeds of P1,940,000 after the deduction of a P60,000
nonrefundable loan origination fee.

Principal and interest are due in sixty monthly installments of P44,500, beginning
January 1, 2022.The repayments yield an effective interest rate of 12% at a present value
of P2,000,000 and 13.4% at apresent value of P1,940,000. What amount should Nicole
report as accrued interest receivable onDecember 31, 2021?
a. 22,333
b. 21,663
c. 20,000
d. 19,400

31. Joy Company conducted a physical count on December 31, 2021 which revealed
inventory with a cost of P4,410,000. The following items were excluded from the
physical count:

Merchandise held by Joy on consignment 610,000

Merchandise shipped by Joy FOB destination to a customer on
December 31, 2021 and was received by the customer on January 5, 2022 380,000
Merchandise shipped by Joy FOB shipping point to a customer on
December 31, 2021 and was received by the customer on January 5, 2022 460,000
Merchandise shipped by a vendor FOB destination on December 31, 2021
was received by Joy on January 5, 2022 830,000
Merchandise purchased FOB shipping point was shipped by the supplier
on December 31, 2021 and received by Joy on January 5, 2022 510,000

What amount should be reported by Joy inventory on December 31, 2021?

 a. 4,920,000
b. 5,300,000
c. 3,800,000
d. 4,690,000
32. Steven Company provided the following information during the first year of operations:
Total merchandise purchases for the year 7,000,000
Merchandise inventory on December 31 1,400,000
Collections from customers 4,000,000
Steven marked all merchandise to sell at 40% above cost. All sales are on a credit basis and all
accounts receivable are collectible.

What amount should Steven report as accounts receivable on December 31?

a. 3,840,000
b. 5,800,000
c. 5,000,000
d. 1,000,000

33. Wine Company recorded purchases at net amount. On December 10, the entity purchased
merchandiseon account, P4,000,000, terms 2/10, n/30. The entity returned P300,000 of
the December 10 purchaseand received credit on account. The account had not been paid
on December 31. What adjusting entryshould Wine prepare on December 31?
a. Debit accounts payable and credit purchase discount P74,000
b. Debit purchase discount lost and credit accounts payable P80,000
c. No adjusting entry
d. Debit purchase discount lost and credit accounts payable P74,000

34. Chicago Company reported for an inventory historical cost P2,000,000, current
replacement costP1,400,000, net realizable value P1,800,000, net realizable value less
normal profit margin P1,700,000and fair value P1,900,000. What amount should Chicago
report the inventory under LCNRV?

a. 1,900,000
b. 2,000,000
c. 1,400,000
d.1,800,000

35. Victoria Company reported the following items on December 31, 2023:

Bank A – demand deposit 135,000

Undeposited customer check 52,000
Currency and coins on hand 5,800
Savings deposit – for plant expansion 4,000,000
Bank B – demand deposit 200,000
Treasury bills – 7 months maturity 300,000
Treasury bills – 2 months maturity 150,000

The demand deposit in Bank B represents a 20% compensating balance for a P1,000,000 loan
with thebank. Victoria may not withdraw the balance until the loan is repaid in 2026. What
amount of cash and cash equivalents should Victoria report on December 31, 2023?
 a. 542,800
b. 342,800
c. 842,800
d. 642,800

36. The statement of financial position of Vuitton Company shows cash of P237,390. The
following itemswere found to comprise this amount:

Cash in Metrobank, per bank statement (outstanding checks as of year-end

totaled P5,200) 99,320
Savings account at Far East Bank 30,800
Petty cash fund (including expense receipts of P250) 1,500
Cash on hand (undeposited sales receipts) 4,200
Sinking fund cash 20,000
Cash in foreign bank (in equivalent pesos) 62,000

Customer’s checks on hand:

Traveler’s check 4,450
Certified check 3,120
90-day, BSP treasury bills 12,000

What is the correct amount of cash and cash equivalents in Vuitton Company’s statement of
financialposition?
a. 231,940
b. 196,820
c. 199,820
d. 211,940
37. A surprise count of the petty cash fund of Jing Trading on July 4, 2021 showed the
following:

Currencies 5,600
Coins 450
Paid vouchers for:
Office supplies (dated July 2, 2021) 1,750
Newspaper subscription for two weeks (dated June 29, 2021) 300
Loans to employees 3,000
Company check representing replenishment of petty cash fund 3,850

The company’s fiscal year ends of June 30. The petty cash fund was established for an amount
ofP15,000. What is the correct amount of petty cash fund at June 30, 2021?
a. 6,050
b. 11,650
c. 15,000
d. 9,900

38. Noreen Company provided the following information for 2020:

Accounts receivable – January 1 2,000,000
Credit sales 10,000,000
Collection from customers, excluding the recovery of accounts written off 8,000,000
Accounts written off 100,000
Sales returns 500,000
Recovery of accounts written off 50,000
Estimated future sales returns on December 31 150,000
Estimated uncollectible accounts on December 31 per aging 300,000

What is the “amortized cost” of accounts receivable on December 31, 2020?

a. 2,900,000
b. 2,950,000
c. 3,100,000
d. 3,400,000
39. Divine Company prepared the following bank reconciliation on December 31:

Balance per bank statement: 2,800,000

Add: Deposit in Transit 195,000
Checkbook printing charge 5,000
error made by divine in recording
check issued in December 35,000
NSF Check 110,000 345,000
Total 3,145,000
Less: Outstanding check 100,000
note collected by bank including P15,000 interest 215,000 315,000
balance per book 2,830,000
The entity had cash on hand P500,000 and petty cash fund P50,000 on December 31. What
amountshould be reported as cash in bank at year end?
a. 2,900,000
b. 2,985,000
c. 2,895,000
d. 2,800,000

40. Divine Company prepared the following bank reconciliation on December 31:

Balance per bank statement: 2,800,000

Add: Deposit in Transit 195,000
Checkbook printing charge 5,000
error made by divine in recording
check issued in December 35,000
NSF Check 110,000 345,000
Total 3,145,000
Less: Outstanding check 100,000
note collected by bank including
P15,000 interest 215,000 315,000
balance per book 2,830,000
The entity had cash on hand P500,000 and petty cash fund P50,000 on December 31. What
totalamount of cash should be reported as year end?
a. 3,455,000
b. 3,445,000
c. 3,400,000
d. 3,545,000
41. Roxy Company provided the following information for the current year:

Accounts receivable on January 1,300,000

credit sales 5,400,000
collection from customers, excluding recovery 4,750,000
accounts written off 125,000
collections of account written off in prior year
(customer credit was not reestablished) 25,000
Estimate uncollectible receivables per aging
of receivables at December 31 165000

What is the balance of accounts receivable, before allowance for doubtful accounts on December
31?
a. 6,725,000
b. 4,750,000
c. 1,825,000
d. 3,125,000

42. Jay Company provided the following data for the current year:

Accounts receivable, January 1 650,000

credit sales 2,700,000
sales return 75,000
accounts written off 40,000
collections from customers 2,150,000
Estimated future sales return at Decemebr 31 50,000
Estimated uncolletible accounts at 12/31 per aging 110,000

What is the amount of Gross Accounts Receivable on December 31?

a. 925,000
b. 1,085,000
c. 900,000
d. 890,000

43. Burma Company kept all cash in a checking account. An examination of the accounting
records andbank statement for the month of June revealed the following information:

 The cash balance per book on June 30 is P8,500,000.

 A deposit of P1,000,000 that was placed in the bank’s night depository on June 30 does
not appearon the bank statement.
  The bank statement showed on June 30 that the bank collected note for the entity and
credited theproceeds of P950,000 to the entity’s account, net of collection charge
P50,000.
 Checks outstanding on June 30 amounted to P300,000 including certified check
P100,000.
 The entity discovered that a check written in June for P200,000 in payment of accounts
payable hadbeen recorded in the entity’s record as P20,000.I
 Included with the Junk bank statement was NSF check for P250,000 that the entity had
receivedfrom a customer on June 26.
 The bank statement revealed P20,000 service charge for June.

On December 31, 2021, Roma Company reported cash of P3,350,000, with the following details:

Undeposited collections 60,000

Cash in bank – BDO checking account 500,000
Cash in bank – PNB (overdraft) (50,000)
Undeposited NSF check received from customer, dated December 1, 2021 15,000
Undeposited check from a customer, dated January 15, 2022 25,000
Cash in bank – BDO fund for payroll 150,000
Cash in bank – BDO saving deposit 100,000
Cash in bank – money market instrument, 90 days 2,000,000
Cash in foreign bank restricted 100,000
Cash in bank – BDO value added tax account 450,000
Total 3,350,000

Germany Company started business at the beginning of current year. The entity established
anallowance for doubtful accounts estimated at 5% of credit sales. During the year, the entity
wrote offP50,000 of uncollectible accounts. Further analysis showed that merchandise purchased
amounted toP9,000,000 and ending merchandise inventory was P1,500,000. Goods were sold at
40% above cost.The total sales comprised 80% sales on account and 20% cash sales. Total
collections from customers,excluding cash sales, amounted to P6,000,000.

What amount should Burma report as cash in bank on June 30?

a. 9,180,000
b. 8,300,000
c. 9,360,000
d. 9,000,000

44. Burma Company kept all cash in a checking account. An examination of the accounting
records andbank statement for the month of June revealed the following information:

 The cash balance per book on June 30 is P8,500,000.

 A deposit of P1,000,000 that was placed in the bank’s night depository on June 30 does
not appearon the bank statement.
 The bank statement showed on June 30 that the bank collected note for the entity and
credited theproceeds of P950,000 to the entity’s account, net of collection charge
P50,000.
  Checks outstanding on June 30 amounted to P300,000 including certified check
P100,000.
 The entity discovered that a check written in June for P200,000 in payment of accounts
payable hadbeen recorded in the entity’s record as P20,000.
 Included with the Junk bank statement was NSF check for P250,000 that the entity had
receivedfrom a customer on June 26.
 The bank statement revealed P20,000 service charge for June.

On December 31, 2021, Roma Company reported cash of P3,350,000, with the following
details:

Undeposited collections 60,000

Cash in bank – BDO checking account 500,000
Cash in bank – PNB (overdraft) ( 50,000)
Undeposited NSF check received from customer, dated December 1, 2021 15,000
Undeposited check from a customer, dated January 15, 2022 25,000
Cash in bank – BDO fund for payroll 150,000
Cash in bank – BDO saving deposit 100,000
Cash in bank – money market instrument, 90 days 2,000,000
Cash in foreign bank restricted 100,000
Cash in bank – BDO value added tax account 450,000
Total 3,350,000
Germany Company started business at the beginning of current year. The entity established
anallowance for doubtful accounts estimated at 5% of credit sales. During the year, the entity
wrote offP50,000 of uncollectible accounts. Further analysis showed that merchandise purchased
amounted toP9,000,000 and ending merchandise inventory was P1,500,000. Goods were sold at
40% above cost.The total sales comprised 80% sales on account and 20% cash sales. Total
collections from customers,excluding cash sales, amounted to P6,000,000.

What amount was reported as balance per bank statement on June 30?
a. 8,250,000
b. 8,300,000
c. 8,200,000
d. 8,560,000

45. Burma Company kept all cash in a checking account. An examination of the accounting
records andbank statement for the month of June revealed the following information:

 The cash balance per book on June 30 is P8,500,000.

 A deposit of P1,000,000 that was placed in the bank’s night depository on June 30 does
not appearon the bank statement.
 The bank statement showed on June 30 that the bank collected note for the entity and
credited theproceeds of P950,000 to the entity’s account, net of collection charge
P50,000.
 Checks outstanding on June 30 amounted to P300,000 including certified check
P100,000.
  The entity discovered that a check written in June for P200,000 in payment of accounts
payable hadbeen recorded in the entity’s record as P20,000.
 Included with the Junk bank statement was NSF check for P250,000 that the entity had
receivedfrom a customer on June 26.
 The bank statement revealed P20,000 service charge for June.

On December 31, 2021, Roma Company reported cash of P3,350,000, with the following details:

Undeposited collections 60,000

Cash in bank – BDO checking account 500,000
Cash in bank – PNB (overdraft) ( 50,000)
Undeposited NSF check received from customer, dated December 1, 2021 15,000
Undeposited check from a customer, dated January 15, 2022 25,000
Cash in bank – BDO fund for payroll 150,000
Cash in bank – BDO saving deposit 100,000
Cash in bank – money market instrument, 90 days 2,000,000
Cash in foreign bank restricted 100,000
Cash in bank – BDO value added tax account 450,000
Total 3,350,000

Germany Company started business at the beginning of current year. The entity established
anallowance for doubtful accounts estimated at 5% of credit sales. During the year, the entity
wrote offP50,000 of uncollectible accounts. Further analysis showed that merchandise purchased
amounted toP9,000,000 and ending merchandise inventory was P1,500,000. Goods were sold at
40% above cost.The total sales comprised 80% sales on account and 20% cash sales. Total
collections from customers,excluding cash sales, amounted to P6,000,000.

On December 31, 2021, what total amount should Roma report as cash and cash equivalents?
a. 2,760,000
b. 2,910,000
c. 3,260,000
d. 2,810,000

46. Connected to the question above What should Germany report as the net realizable value
of accounts receivable at year-end?
a. 1,930,000
b. 2,350,000
c. 2,400,000
d. 1,980,000

47. Certain information relative to the 2021 operation of Dilinger Company follows:

Accounts receivable, January 1 300,000

Total accounts receivable collected 1, 100,000
Cash sales 150,000
Inventory, January 1 100,000
Inventory, December 31 230,000
Purchases 780,000
Accounts written off 80,000
Accounts recovered 20,000
Gross profit on sales 550,000

What is the accounts receivable balance at December 31, 2021?

a. 320,000
b. 340,000
c. 170,000
d. 190,000

48. The following transactions affecting the accounts receivable of Wonder Company took
place during theyear ended December 31, 2021:

Sales (cash and credit) 5,900,000

Cash received from credit customers, all of whom took advantage of
the discount feature of the company’s credit terms 4/10, n/30 3,024,000
Cash received from cash customers 2,100,000
Accounts receivable written off as worthless 50,000
Credit memorandum issued to credit customers for
sales returns and allowances 250,000
Cash refunds given to cash customers for sales returns and allowance 20,000
Recoveries on accounts receivable written off as uncollectible in
prior periods (not included in cash amount stated above) 80,000
The following two balances were taken from the December 31, 2020 balance sheet:
Accounts receivable 950,000
Allowance for doubtful accounts 90,000

The company provides for its net uncollectible account losses by crediting allowance for bad
debts for 2% of net credit sales for the fiscal period.

What is the balance of accounts receivable on December 31, 2021?

a. 1,426,000
b. 1,300,000
c. 1,220,000
d. 1,280,000

49. Connected to the question above What is the balance of allowance for doubtful accounts
after adjustment on December 31, 2021?
a. 188,080
b. 108,480
c. 188,480
d. 120,000

50. Faith Company provided the following information relating to current operations:

Accounts Receivable, January 1 4,000,000

Accounts receivable collected 8,400,000
cash sales 2,000,000
Inventory, January 1 4,800,000
Inventory, December 31 4,400,000
Purchases 8,000,000
Gross Margin on sales 4,200,000

What amount should be reported as accounts receivable on December 31?

a. 6.400,000
b. 6,200,000
c. 8,400,000
d. 4,200,000