Quiz 1 7.

The following are classified as cash, except*

1. All of the following are considered cash for financial
reporting purposes, except? a. Bank draft
a. Petty cash funds and change funds b. money orders
b. Money orders, certified checks, and c. postage stamps
personal checks d. tax fund
c. Coin, currency, and available funds
8. Unreleased checks, which are checks drawn before
d. customers' postdated checks and the end of reporting period but held for later delivery to
employees' I.O.U.' creditors

2. To be reported as part of cash and cash equivalents, a. Shall be restored to the cash balance.
the cash and cash equivalent must be: b. Shall be treated as outstanding
checks.
a. Available for the purchase of property, c. Shall be treated as outstanding
plant and equipment checks if they are ultimately
b. Unrestricted in use for current encashed.
operations d. Shall be treated as outstanding
c. Set aside for liquidation of long-term checks if the date is shortly after the
debt end of reporting period.
d. Deposited in the bank.
9. Investment in ordinary securities may be classified
3. Which item should be excluded from cash and cash as cash equivalent True False
equivalents in the current year-end statement of
financial position 12/31/23? 10. The petty cash fund account under the imprest fund
system is debited
a. The minimum cash balance in the
entity’s current account which is a. When the fund is created and every
maintained to avoid service charges. time it is replenished.
b. A check issued by the entity on b. When the fund is created and when
December 27, 2023 but dated the size of the fund is decreased.
January 15, 2024. c. Only when the fund is created
c. Time deposit which matures in one d. When the fund is created and when
year the size of the fund is increased.
d. A customer’s check denominated in a
11. When a petty cash fund is used, which of the
foreign currency.
following is true?
4. Bank overdrafts, if material, should be
a. The balance of the petty cash fund
a. reported as a deduction from the should be reporting in the statement
current asset section. of financial position as a long-term
b. reported as a deduction from cash. investment.
c. netted against cash and a net cash b. Entries that include a credit to the
amount reported. cash account should be recorded at
d. reported as a current liability. the time the payments from the petty
cash fund are made.
5. Deposits held as compensating balances c. The petty cashier’s summary of petty
cash payments serves as a journal
a. if not legally restricted as to entry that is posted to the appropriate
withdrawal are included as cash. general ledger account.
b. if legally restricted and held against d. The reimbursement of the petty cash
long-term credit may be included fund should be credited to the cash in
among current assets. bank account.
c. usually do not earn interest.
d. if legally restricted and held against 12. A cash short or over account
short-term credit may be included as
cash. a. is an income statement account
b. Is debited when the petty cash fund
6. The following are classified as cash, except* proves out over
c. is a balance sheet account
a. Personal check d. Is debited when the petty cash fund
b. Managers check proves out short.
c. traveller check
d. Postdated check
13. Cash equivalents are Quiz 2

a. all of these 1. Diligent Company had the following balances on Dec.

b. high credit quality 31, 2023
c. highly liquid
d. short-term investment Cash in checking account - Metrobank 350,00
Cash in checking account- BPI. 20,000 overdraft
14. Cash is measured at* Cash in savings account- BDO 500,000
Cash in money market account 750,000
a. fair value 90-day Treasury-bills, purchased Nov. 1, 2023, 500,000
b. face value Time deposit purchased Dec. 1, 2023.
c. future value maturing March 31,2024 4,000,000
d. Cost

15. Cash and cash equivalents are presented in the What amount should be reported as cash and cash
__________ of statement of financial position equivalents on Dec. 31, 2023?

a. current asset 2. On Dec. 31, 2022, Gratitude INC. had the following
b. non current asset information concerning its Cash and cash equivalents
c. either current or non current asset and some other items:
d. current liability
Coins and currencies 50,000
16. The following are bank reconciling items, except* Check received from customers 600,000
Certificate of deposit, term: 12 months 800,000
a. outstanding checks Petty Cash Fund 5,000
b. credit memo Postage stamps 600
c. deposit in transit Bank A account 1, checking account balance 2,100,000
d. bank errors Post-dated check, customer 10,000
Money order from customer 15,000
17. Deposit that has been made by the company, but
Cash in savings account 100,000
does not appear on bank statement yet
Bank draft from customer 40,000
a. understatement of bank deposits Utility deposit to gas company, refundable 5,000
b. deposit in transit Cash advance received from customer 8,000
c. overstatement of book receipts NSF Check, C. Company 20,000
d. outstanding checks Cash advance to company executive, collectible upon
demand 200,000
18. The following are book reconciling items, except* Bank A account 2, checking account overdraft 20,000
IOUs from employees 12,000
a. credit memo
b. debit memo What amount of cash and cash equivalents should
c. book error Gratitude INC. report in its Dec. 31, 2022 statement of
d. deposit in transit financial position?

19. Subtractions from the cash balance on the bank 3. Responsible Co. provided the following information
statement for items such as service charges and NSF about the composition of its cash on Dec. 31, 2022
Commercial savings account of 600,000 and a
a. debit memo
commercial checking account balance of 900,000 are
b. credit memo
held at BPI
c. bank error
Money market fund account held by Citibank that
d. book error
permits Responsible to write checks in this balance,
5,000,000
Travel advances of 180,000 for executive travel for the
20. It is an expanded bank reconciliation first quarter of next year (employee to pay through
salary deduction
a. Bank reconciliation A separate cash fund in the amount of 1,500,000 is
b. bank confirmation restricted for the retirement of long term assets
c. Proof of cash Petty cash fund 50,000 (20,000 vouchers not yet
d. Bank draft replenished)

What is the correct amount of cash and cash

equivalents of Responsible [Link] report in its
December 31, 2022 statement of financial position?
4. Grateful Co. provided the following information on Determine the answers to the questions below:
Dec. 31, 2022
● Unadjusted book balance: _____________
Current account at PRIME Bank (30,000) ● Adjusted book or bank balance:____________
Current account at PRUDENT Bank 135,000 ● Adjusting journal entry to recognize the debit
Treasury Bills (acquired 3 months memo*
before maturity) 300,000 a. DR Accounts Receivable 225,000; CR
Treasury Bills (maturity date is Cash in Bank 225,000
Dec. 31, 2023) 1,500,000 b. DR Accounts Receivable 225,000; CR
Payroll account 390,000 Cash on hand 225,000
Tax fund c. DR Accounts Payable 225,000; CR
100,000Foreign bank account - restricted (translated Cash in Bank 225,000
using the Dec. 31, 2022 exchange rate) 2,000,000 d. DR Cash in Bank 225,000; CR
Postage stamps 1,250 Accounts Receivable 225,000
Employee’s postdated check 4,500 ● Adjusting journal entry to recognize the credit
IOUs from the vice president 8,000 memo*
Credit memo from a supplier for purchase return 8,100 a. DR Cash in Bank 250,000; CR Notes
Traveler’s check 21,000 Receivable 250,00
Money order 12,900 b. DR Cash in Bank 300,000; CR Notes
Petty cash fund (3,000 in currency and expense receipts Receivable 300,000
for 12,000) 15,000 c. DR Cash in Bank 300,000; DR Bank
service Charge 10,000; CR Notes
Receivable 250,000; CR Interest
What would be reported as “cash and cash equivalents”
Income 60,000
in the statement of financial position on Dec. 31, 2022?
d. DR Cash in Bank 300,000; DR Bank
service Charge 10,000; CR Notes
5. The controller of Perseverance CO. is trying to Receivable 250,000; CR Interest
determine the amount of cash and cash equivalents to Receivable60,000
be reported on its Dec. 31, 2023, statement of financial ● Adjusting journal entry to correct the book
position. The following information is provided: error*
a. DR Accounts Payable 675,000; CR
1. Balances in the company’s accounts at the BPI Cash in bank 675,000
Bank: Checking account - 540,000 b. DR Cash in Bank 600,000; CR
Savings account - 884,000 Accounts Payable 600,000
30-day Time deposit 1,000,000 c. DR Cash in Bank 675,000; CR
2. Undeposited customer checks of 208,000 Accounts Receivable 675,000
3. Currency and coins on hand of 23,200 d. DR Cash in Bank 675,000; CR
4. Savings account at the BDO Bank with a balance of Accounts Payable 675,000
350,000. This account is being used to accumulate cash
for future plant expansion (in 2024) 2. The following information pertained to Grateful
5. 800,000 balance in checking account at the BDO Corporation for the month of August 2024:
Bank
6. Treasury Bills; 30-day maturity bills totaling 600,000 a. Collection in July of 140,000 recorded in the cash
and 180-day bills totaling 800,000 receipts journal for 410,000.
On December 31, 2023, what amount should be
reported as cash and cash equivalents? b. Creditor's check for August amounting to 210,000
recorded in the cash disbursement journal for 120,000.
Quiz 3
c. Deposit in July amounting to 1,000,000 was
erroneously recorded by the bank for 100,000
1. Courage Company is preparing the July 31 bank
reconciliation. The following information was
summarized:
Bank statement balance. 4,800,000.
Credit memo on note collected (face value 250,000,
interest 60,000, service charge 10,000) - 300,000.
Debit memo on customer's NSF - 225,000.
Deposit in transit - 1,125,000
Outstanding checks - 375,000
Creditor's check was overstated in the disbursement
journal - 675,000
Deposit amounting to 600,000 of Courageous Company
credited to Courage's account.
 a. FOB shipping point, freight prepaid
b. FOB shipping point, freight collect
c. FOB destination, freight prepaid
d. FOB destination, freight collect
● Book balance on August 31:_____________
● bank balance on July 31:______________ 7. Accounts receivable and Sales are recognized when
● Adjusted book/bank receipts for the month of the goods are received by the buyer. Accounts
Aug:___________ Receivable is debited at gross invoice amount less
● Adjusted book/bank disbursements for the freight charge*
month of Aug:_________
● Adjusted book/bank balance as of July a. FOB destination, freight prepaid
31:__________ b. FOB destination, freight collect
● Adjusted book/bank balance as of Aug c. FOB shipping point, freight prepaid
31:___________ d. FOB shipping point, freight collect

8. Non trade receivables are classified as current assets

only when they are expected to be realized in cash
Quiz 4. within one year.*
1. Which is an example of Trade Receivables* True
a. Advances to employees False
b. Advances to affiliates
c. Claims receivable 9. A credit balance in accounts receivable resulting
d. Notes Receivable - customers from overpayments, advanced payments and sales
returns should be classified as (customers’ credit
2. Trade receivables are claims arising from the sale of balance)
goods or services in the ordinary course of business.
These are classified as current assets when these are a. non current asset
expected to be realized in cash within the normal b. contra asset account
operating cycle or one-year whichever is longer. c. Netted against accounts receivable
with debit balance
True d. current liability
False 10. Uncollectible accounts expense
3. The normal operating cycle * a. Is the amount an entity must pay to a
collection agent to recover amounts
a. Should be used to classify asset and on overdue account
liabilities as current if the cycle is less b. Represents the loss in accounts
than one year receivable that eventually turn out to
b. Measures the time elapsed between be uncollectible
cash disbursements for inventory and c. Is the amount an entity must pay
cash collection of the sales price whenever a customer fails to pay his
c. cannot exceed the period of one year or her account
d. refers to the seasonal variations d. Should not occur if a company
experienced by the entity properly investigates customers
based on credit history
4. Trade receivables are initially measured at*
11. A method of estimating uncollectible accounts that
a. discounted value emphasize asset valuation rather than
b. transaction price incomemeasurement is the allowance method based on
c. net realizable value
d. net invoice amount a. direct write-off method
b. percent of net sales
5. Trade receivables are subsequently measured at* c. aging of receivables method
d. percent of credit sales
a. transaction price
b. net realizable value 12. Under the allowance method, the entry to recognize
c. discounted value bad debt expense
d. net invoice amount
a. no effect on net income
6. Accounts receivable and Sales are recognized at the b. decreases the current assets
time of shipment. Accounts Receivable is debited at c. no effect on current assets
gross invoice amount plus freight charge d. increases the net income
13. Under the allowance method, the allowance for c. Fair Value less Transaction costs
doubtful accounts would decrease when directly attributable to the acquisition
of the financial assets
a. Provision for doubtful accounts is d. amortized cost
recorded
b. Specific account receivable is 20. The entity shall recognize a loss allowance for
collected expected credit losses on financial asset measured
c. Account previously written off is @amorized cost
collected
d. Specific uncollectible account is True
written off
False
14. Under the allowance method, entries at the time of
21. The amount of receivables that are hypothecated or
collection of an account previously written off would
pledged against borrowings should be
a. have no effect on net income a. Excluded in total receivables with
b. have no effect on the allowance disclosure
account b. Excluded in total receivables without
c. increase net income disclosure
d. decrease the allowance account c. Included in total receivables without
disclosure
15. Short-term notes receivable are initially and d. Included in total receivables with
subsequently measured at* disclosure
a. amortized cost 22. Assignment of Accounts Receivable are recorded
b. net realizable value as*
c. face value
d. discounted value a. DR Accounts Receivable-assigned;
CR Notes Payable
16. Long-term interest-bearing notes receivable are b. No journal entry is required
initially and subsequently measured at* c. DR Accounts Receivable-assigned;
CR Accounts Receivable
a. discounted value d. DR Accounts Receivable-assigned;
b. face value CR Notes Payable; CR Equity in
c. amortized cost Assigned Accounts
d. net realizable value
23. Endorsement of note with recourse means that the
17. Long-term non-interest-bearing notes receivable endorser shall pay the endorsee if the maker dishonors
are initially and subsequently measured at* the note. Hence a contingent liability is recognized
a. face value and discounted value True
b. face value and amortized cost
c. present value and amortized cost False
d. net realizable value
24. The difference between maturity value of the note
18. Loans receivable are classified as financial assets and the discount is called*
and are initially measured at*
a. amortized cost
a. amortized cost b. loss on discounting or interest
b. Fair Value less Transaction costs expense
directly attributable to the acquisition c. Net proceeds
of the financial assets d. carrying value of the note
c. Fair Value plus Transaction costs
directly attributable to the acquisition 25. The difference between net proceeds from
of the financial assets discounting and the carrying amount of the note is
d. Principal amount called
19. Loans receivable are classified as financial assets a. Net proceeds
and are subsequently measured at* b. loss on discounting or interest
expense
a. Fair Value plus Transaction costs c. carrying value of the note
directly attributable to the acquisition d. amortized cost
of the financial assets
b. Principal amount
Prelims d. DR Accounts Receivable 100,000; CR
Cash in Bank 100,000
1. Perseverance Corporation had the following bank ● Adjusting journal entry to correct the
reconciliation on July 31, 2024 unrecorded disbursements on August 31*
a. DR Cash in Bank 200,000; CR
Balance per bank, 7/31. 4,500,000 Accounts Receivable 200,000
b. DR Cash in Bank 200,000; CR
Deposit in transit 600,000 Accounts Payable 200,000
c. DR Accounts Payable 200,000; CR
Total 5,100,000
Cash in Bank 200,000
Outstanding checks. (1,350,000) d. DR Accounts Payable 300,000; CR
Cash in Bank 300,000
Balance per book, 7/31 3,750,000 ● Adjusting journal entry to recognize the DM -
Bank service charge and NSF check on August
The bank statement for the month of August 2024 31*
showed the following: a. DR Cash in Bank 225,000; CR
Accounts Receivable 225,000
Deposits (including P300,000 note collected for b. DR Cash in Bank 210,000; CR
Perseverance) 13,500,000 Accounts Receivable 210,000
c. DR Accounts Receivable 210,000; CR
Withdrawals(including 210,000 NSF check and 15,000 Cash in Bank 210,000
service charge) d. DR Accounts Receivable 210,000; DR
10,500,000 Bank Service Charge 15,000; CR
Cash in Bank 225,000
All reconciling items on July 31 cleared through the
bank in August. The outstanding checks totaled 900,000 2. Reconciliation of Faith Company's demand deposit
and deposit in transit totaled to 1,500,000 on August 31. account at BPI on August 31, 2024
In August, It was also discovered that there was Bank statement balance 4,200,000
unrecorded book receipts of 100,000 from customers,
and unrecorded book disbursements of 200,000 for Deposit in transit 600,000
payment to suppliers
Outstanding checks (60,000)
Based on the above information, answer the questions
below: Adjusted bank balance 4,740,000

● Perseverance Corporation had cash receipts Book balance. 4,744,000

per book for the month of August:_____
● Perseverance Corporation had cash Bank service charge ( 4,000)
disbursements per book for the month of
August:_______ Adjusted bank balance 4,740,000
● Perseverance Corporation had cash in bank
September data are presented below:
balance per book as of August 31:______
● Perseverance Corporation would report Bank Book
adjusted cash in bank balance as of August
31:_________ Deposits recorded 3,240,000. 3,600,000
● Perseverance Corporation would report
adjusted cash in bank balance as of Checks recorded 4,600,000 4,720,000
July31:_______
● Perseverance Corporation would report CM Note collected by bank. (Principal 800,000 and
adjusted cash receipts for the month of interest, Bank service charge 10,000). 840,000.
August:_____ NSF check 20,000
● Perseverance Corporation would report
adjusted cash disbursements for the month of Balances 3,660,000 3,620,000
August:______
● Adjusting journal entry to correct the Based on the above information, answer the following
unrecorded receipts on August 31* questions:
a. DR Cash in Bank 100,000; CR
Accounts Receivable 100,000 ● Determine the deposit in transit on Sept
b. DR Cash in Bank 200,000; CR 30:_______
Accounts Receivable 200,000 ● Determine the outstanding checks on Sept
c. DR Cash in Bank 100,000; CR 30:_______
Accounts Payable 100,000 ● Determine the adjusted cash in bank balance
on Sept 30:______
 ● Adjusting journal entry to recognize the CM on Customers paying within 15 day discount period
note on September 30 990,000.
a. DR Cash in bank 840,000; Recovery of accounts written off 6,000
DR Bank Service Charge Customers paying beyond the discount period (?)
10,000; CR Note Receivable Accounts receivable written off as worthless 22,000
800,000; CR Interest Income Credit memo for sales returns 12,000
50,000
b. DR Cash in bank 840,000; It is the company’s policy to provide for uncollectible
CR Note Receivable 840,000 accounts equal to 1% of sales.
c. DR Cash in bank 840,000;
CR Note Receivable ● How much is the gross accounts receivable as
800,000; CR Interest Income of December 31, 2023:_______
40,000 ● How much is the carrying value of the accounts
d. DR Cash in bank 840,000; receivable as of December 31, 2023:________
DR Bank service charge
10,000; CR Note Receivable
800,000; CR Interest
● What is the journal entry to recognize the
Receivable 50,000
provision for doubtful accounts on December
31, 2023?
3. The following data were taken from the records of a. DR Doubtful accounts expense 30,000; CR
Honesty CORPORATION for the year ended December Allowance for doubtful accounts 30,000
31, 2023 b. DR Doubtful accounts expense 32,000; CR
Allowance for doubtful accounts 32,000
Sales on account 7,200,000 c. DR Doubtful accounts expense 38,000; CR
Accounts receivable written off 50,000 Allowance for doubtful accounts 38,000
Notes receivable to settle accounts 800,000 d. DR Doubtful accounts expense 24,000; CR
Purchases on account 7,800,000 Allowance for doubtful accounts 24,000
Payments to creditors 6,400,000
Purchase discounts 520,000 Quiz 5
Sales return 30,000
Collections received to settle account 4,900,000
1. Perseverance Company has an 10% notes receivable
Notes given to settle accounts 500,000
dated June 30, 2023 in the original face amount of
Purchase returns 140,000
3,000,000. Payments of 1,000,000 principal plus interest
Payments of notes 200,000
are due annually starting July 1, 2024.
Discounts taken by Customers 80,000
Collection on notes receivable 360,000
Estimated sales returns 40,000 ● How much interest income should be reported
Estimated doubtful accounts 60,000 by Perseverance Company in its Statement of
Profit or Loss for the year ended December 31,
2024:_____________
● What is the amount of gross Accounts
● How much interest receivable should be
Receivable as of December 31, 2023:_______
reported by Perseverance Company in its
● What is the carrying value of accounts
Statement of Financial Position as of
receivable on December 31, 2023:_________
December 31, 2024:__________
● In the current asset, how much Notes
4. The balances of selected accounts taken from the Receivable should be reported by
December 31, 2022 of Courage COMPANY are shown Perseverance Company in its Statement of
below: Financial Position as of December 31,
2024:_________
Accounts receivable 674,000 ● What is the adjusting journal entry to accrue
Allowance for doubtful accounts 24,000 the interest on December 31, 2024
The following transactions (in summary) affecting a. DR Interest Receivable 150,000; CR
accounts receivables occurred during the year ended Interest Income 150,000
December 31, 2023: b. DR Interest Receivable 300,000; CR
Interest Income 300,000
Sales (all on account, terms, 2/10, 1/15, n/60)3,000,000 c. DR Interest Receivable 100,000; CR
Cash received from customers 3,200,000 Interest Income 100,000
d. DR Interest Receivable 200,000; CR
Interest Income 200,000

2. On January 1, 2024, Persistence Company sold

The cash received includes the following:
goods for Ace Corporation. Ace issued a non-interest
Customer Paying within 10 day discount period
bearing note requiring payment of 300,000 annually for
1,764,000.
seven years, starting January 1, 2024. The prevailing
interest rate for this type of note at date of issuance was round-off PVF up to 3 decimal
10%.round - off PVF to 2 decimal places. place:__________
● Determine the amount of interest income that
● What amount should be recorded as sales should be recognized on December 31, 2025.
revenue:________ round-off PVF up to 3 decimal
● What is the journal entry on January 1, 2024? places:__________
a. DR Notes Receivable 1,800,000; CR ● What is the journal entry to recognize the
Sales 1,308,000; CR Unearned impairment on December 31, 2024?
Interest Income 492,000 a. DR Impairment loss 677,000; CR
b. DR Cash 300,000; DR Notes Allowance for loan impairment
Receivable 1,800,000; CR Sales 677,000
1,608,000; CR Unearned Interest b. no journal entry
Income 492,000 c. DR Impairment loss 200,000; CR
c. DR Cash 300,000; DR Notes Allowance for loan impairment
Receivable 1,800,000; CR Sales 200,000
2,100,00 d. DR Impairment loss 1,177,000; CR
d. DR Notes Receivable 2,100,000; CR Allowance for loan impairment
Sales 2,100,000 1,177,000
● What amount should be recorded as unearned
interest income on January 1, 2024:___ Quiz 6
● What amount should be reported as interest
income for the year ended December 31, 1. On November 1, 2024, Determined Company
2024:_________ assigned specific accounts receivable amounting to
● What amount should be reported as carrying 4,000,000 as collateral on a 6-month, 12% note with
amount of notes receivable as of December face value of 3,000,000 from ABC Bank. In addition to
31, 2024:________ the interest on the note, the bank charge 5% on the face
value of the note as service charge.
3. BPI granted a loan to a borrower on January 1, 2024.
The interest rate on the loan is 10% payable annually
starting December 31, 2024. The loan matures in 5
years. The data related to the loan are: By the end of November, collections of assigned
accounts amounted to 1,000,000 less 40,000 cash
Principal amount 2,000,000 discount. Collections were applied to accrued interest
and then to principal on December1
Direct origination cost 30,750
● Determine the proceeds from assignment of
Origination fees received from borrower 175,000 accounts receivable:_________
● Determine the Note Payable to be reported on
The effective interest rate on the loan is 12% after December 31, 2024 Statement of Financial
considering the direct origination cost and origination Position:________
fees received. ● Determine the Equity in assigned accounts to
be disclosed in the notes to financial
● What is the carrying amount of the loan on statements on December 31, 2024:_______
January 1, 2024________ ● Prepare the journal entry to recognize the
● What is the carrying amount of the loan on proceeds of note payable on November 1
December 31, 2024:________ a. DR Cash 2,850,000; DR Service
● What is the amount of interest income for the Charge 150,000 CR Notes Payable
year ended December 31, 2024:______ 3,000,000
b. DR Cash 3,000,000; CR Notes
4. On January 1, 2024, ABC Bank granted a 2,000,000, Payable 3,000,000
8% loan. The interest is payable annually starting c. DR Cash 3,800,000; DR Service
December 31, 2024 while the principal is payable at the Charge 200,000; CR Notes Payable
end of the 5-year term. 3,800,000
d. DR Cash 4,000,000; CR Notes
On December 31, 2024, the borrower missed the first
Payable 4,000,000
interest payment because of financial difficulties. The
● Assuming notification basis, prepare the
borrower negotiated a restructuring of the loan, where
journal entry to recognize partial settlement of
all the interest payments are to be made at the end of
the note and accrued interest on December 1*
the 5-year term of the loan. In the addition, the principal
a. DR Notes Payable 960,000; DR Sales
is reduced by 50%.
Discount 40,000; CR Accounts
No interest was accrued at the end of 2024. Receivable-Assigned 1,000,000
b. DR Notes Payable 930,000; DR
● Determine the amount of impairment loss that Interest Expense 30,000 DR Sales
should be recognized on December 31, 2024.
 Discount 40,000; CR Accounts ● Determine the carrying value of the note at the
Receivable-Assigned 1,000,000 time of discounting:_________
c. DR Notes Payable 930,000; DR ● Assuming that the note was discounted on
Interest Expense 30,000 DR Sales without recourse basis, what is the journal
Discount 40,000; CR Cash1,000,000 entry to recognize the proceeds from
d. DR Notes Payable 930,000; DR discounting?*
Interest Expense 30,000 DR Sales a. DR Cash 512,500; CR Notes
Discount 40,000; CR Accounts Receivable 500,000 CR Interest
Receivable 1,000,000 Income 12,500
● Assuming non-notification basis, prepare the b. DR Cash 500,500; DR Loss on NR
journal entry to recognize partial settlement of Discounting 12,000; CR Notes
the note and accrued interest on December 1* Receivable 500,000 CR Interest
a. DR Notes Payable 930,000; DR Income 12,500
Interest Expense 30,000 CR Cash c. DR Cash 500,500; DR Loss on NR
960,000 Discounting 12,000; CR Notes
b. DR Notes Payable 960,000; DR Receivable- discounted 500,000 CR
Interest Expense 30,000 CR Cash Interest Income 12,500
990,000 d. DR Cash 550,000; CR Notes
c. DR Notes Payable 930,000; DR Receivable 500,000 CR Interest
Interest Expense 30,000 DR Sales Income 50,000
Discount 40,000; CR Accounts ● Assuming that the note was discounted on with
Receivable-Assigned 1,000,000 recourse conditional sale basis, what is the
d. DR Notes Payable 960,000; CR Cash journal entry to recognize the proceeds from
960,000 discounting?
a. DR Cash 500,500; CR Notes
Receivable- discounted 500,000 CR
Interest Income 500
2. Courage Company sold accounts receivable without b. DR Cash 512,500; CR Notes
recourse with face value of 3,000,000. The factor Receivable 500,000 CR Interest
charged 15% commission and withheld 10% of the Income 12,500
accounts factored as protection against customer c. DR Cash 500,500; DR Loss on NR
returns. Courage had previously established an Discounting 12,000; CR Notes
allowance equivalent to 5% outstanding accounts Receivable- discounted 500,000 CR
receivable. Interest Income 12,500
d. DR Cash 550,000; CR Notes
● How cash was initially received from Receivable 500,000 CR Interest
factoring:_________ Income 50,000
● What is the journal entry to recognize the ● Assuming that the note was discounted on with
factoring transaction? recourse conditional sale basis. The note was
a. DR Cash 2.100,000 DR Allowance for dishonored on maturity date. Consequently,
Doubtful accounts 150,000; DR Patience paid the bank for the amount due plus
Commission Expense 450,000; DR protest fee of 10,000. What is the journal entry
Receivable from Factor 300,000; CR when the note was dishonored on maturity
Accounts Receivable 3,000,000 date?
b. DR Cash 2.250,000 DR Commission a. DR Notes Receivable Discounted
Expense 450,000; DR Receivable 500,000 DR Accounted Receivable
from Factor 300,000; CR Accounts 550,000 CR Cash 550,000 CR Notes
Receivable 3,000,000 Receivable 500,000
c. DR Cash 2.850,000 DR Allowance for b. DR Accounted Receivable 560,000
Doubtful accounts 150,000; CR CR Cash 560,000
Accounts Receivable 3,000,000 c. DR Notes Receivable Discounted
d. DR Cash 3,000,000; CR Accounts 500,000; CR Notes Receivable
Receivable 3,000,000 500,000
d. DR Notes Receivable Discounted
500,000 DR Accounted Receivable
3. Patience Company received from a customer a 560,000 CR Cash 560,000 CR Notes
one-year, P500,000 note bearing annual interest of Receivable 500,000
10%. After holding the note for 3 months, Patience ● Assuming that the note was discounted on with
discounted the note at XYZ bank at 12%. recourse conditional sale basis. The note was
dishonored on maturity date. Consequently,
● Determine the maturity value of the Patience paid the bank for the amount due plus
note:__________ protest fee of 10,000. After several months, the
maker of the note settled the total amount due
 at interest charge of 5,000. What is the journal 3. Which of the following are included as part of the cost
entry to recognize the final settlement? of an inventory, except?
a. DR Cash 565,000; CR Accounts
Receivable 560,000; CR Interest a. transportation out
Income 5,000 b. Purchase price, net of trade discounts
b. DR Cash 560,000; CR Accounts c. transportation In
Receivable 560,000 d. direct labor cost
c. DR Cash 565,000; CR Notes
Receivable 560,000; CR Interest 4. The use of purchase discount account means that the
Income 5,000 Purchases account and Accounts Payable are recorded
d. DR Cash 550,000; CR Accounts at
Receivable 500,000; CR Interest
Income 50,000 a. Invoice amount less cash discount whether
● Assuming that the note was discounted on with taken or not
recourse secured borrowing basis, what is the b. invoice amount
journal entry to recognize the proceeds from c. List Price
discounting? d. Invoice amount less cash discount taken
a. DR Cash 550,000; CR Notes Receivable
500,000 CR Interest Income 50,000 5. When Purchase Discount Lost account is recognized,
b. DR Cash 512,500; CR Notes Receivable it means that the Purchases account and Accounts
500,000 CR Interest Income 12,500 Payable are recorded at*
c. DR Cash 500,500; DR Loss on NR Discounting
12,000; CR Notes Receivable- discounted a. Invoice amount less cash discount whether
500,000 CR Interest Income 12,500 taken or not
d. DR Cash 500,500; CR Notes Receivable- b. List Price
discounted 500,000 CR Interest Income 500 c. Invoice amount less cash discount taken
d. invoice amount
Quiz 7.
6. Sales discount forfeited is presented as*
1. The following items would be reported as inventory,
except? a. other income
b. other expense
a. Land acquired for resale by a real estate firm. c. addition to sales account to compute the net
b. Agricultural produce held by a farm. sales
c. Partially completed goods held by a d. deduction from sales account to compute the
manufacturing company. net sales
d. Machinery acquired by a manufacturing
company for use in production process 7. A merchandising company uses an automated
accounting system in which the serial number if each
2. Unsold goods under the consignment agreement item of inventory in the system is entered. This allows
should be reported as inventory of the company to keep track of each item’s movement.
Which inventory system is most likely to be adopted by
a. Consignee the aforementioned company?
b. whoever holds the goods
c. either consignee or consignor a. inventory system
d. Consignor b. perpetual inventory system
c. computerized inventory system
3. At year end, goods still in transit to customer under d. periodic inventory system
FOB destination should be reported as inventory of the*
8. The periodic inventory system calls for physical
a. Seller inventory counting of goods on hand at the end of the
b. Carrier accounting period
c. Buyer
d. either buyer or seller True

4. At year end, goods still in transit to customer under False

FOB shipping point should be reported as inventory of
the* 9. Any entry debiting merchandise inventory and
crediting cost of sales should be made when
a. buyer
b. either buyer or seller a. Goods are returned and the periodic inventory
c. carrier system is used.
d. Seller b. Goods are sold and the periodic inventory
system is used.
 c. Goods are returned and the perpetual c. Gross sales minus sales returns
inventory system is used. d. Gross sales less sales discounts
d. Goods are sold and the perpetual inventory
system is used. 18. In average retail inventory method, the net mark up
and net markdown are included in the calculation of*
10. Balance sheet measurement of inventories is
a. Both in cost ratio and Goods available for sale
a. higher of cost or net realizable value b. Goods available for sale at retail
b. Cost c. Either in cost ratio or goods available for sale
c. lower of cost or net realizable value d. cost ratio
d. Net realizable value

11. Net realizable value is defined as

Quiz 8.
a. Estimated selling prices minus estimated cost
to complete and estimated cost to sell 1. The physical count conducted in the warehouse of
b. Fair value less cost of disposal Accountable Company on December 31, 2023 disclosed
c. Expected selling price minus expected cost to merchandise inventory amounting to 5,000,000.
complete and expected cost to sell However, further investigation revealed that the
d. Current replacement cost following items were not included in the inventory
taken:
12. Write-downs of inventories to their net realizable
value are recognized in the a. Goods out on consignment, still unsold costing
200,000 with sales price of 300,000.
a. other expenses
b. general and administrative expenses b. Goods in transit to customer, sold FOB destination at
c. cost of goods sold sales price of 400,000 with cost of 280,000
d. distribution costs
c. Goods in transit to customer, sold FOB Shipping point
13. Reversals of inventory write-downs may exceed the at sales price of 70,000 with cost of 50,000
amount of the original write-down previously recognized
-False -True d. Goods in transit from a vendor, purchased FOB
destination with an invoice amount of 120,000.
14. How the gross profit method is used in relation to
e. Goods in transit from a vendor, purchased FOB
inventory?*
shipping point with an invoice amount of 90,000.
a. To verify the accuracy of the physical count ● Determine the correct amount of inventory on
b. To verify the accuracy of the perpetual December 31, 2023:__________
inventory records
c. To estimate the cost of goods sold 2. Grateful Company provided the following transactions
d. To provide the FIFO inventory value for the month of December, 2024

15. If the gross profit is based on sales, the cost of 7 Purchased merchandise on credit from AC
goods sold is computed as Company at an invoice amount of 150,000, terms 3/10,
n/30, FOB shipping point. Paid freight of 4,000
a. Net sales x cost ratio
b. Net sales / cost ratio
c. Net sales x gross profit ratio 9 Returned merchandise amounting to 20,000 from
d. Net sales / sales ratio December 7 purchases

16. If the gross profit is based on cost, the cost of goods 11 Purchased merchandise on credit from AE
sold is computed as* Company at an invoice amount of 250,000, terms 3/10,
n/30, FOB Destination. Paid freight of 10,000
a. Net sales x gross profit ratio
b. Net sales / cost ratio 17 Paid total amount due to AC Company
c. Net sales x cost ratio
d. Net sales / sales ratio 30 Paid total amount due to AE Company
17. In inventory estimation using gross profit method,
net sales in computed as* ● Using periodic inventory system and gross
method, what is the journal entry on Dec 17*
a. DR Accounts Payable 150,000; CR Cash
a. Gross sales minus sales returns and sales
145,500; CR Purchase Discount 4,500
discounts
b. DR Accounts Payable 130,000; CR Cash
b. Gross sales minus sales returns, sales
126,100; CR Purchase Discount 3,900
allowances and sales discounts
c. DR Accounts Payable 150,000; CR Cash b. DR Accounts Payable 240,000; CR Cash
150,000 232,500; CR Merchandise Inventory 7,500
d. DR Accounts Payable 130,000; CR Cash c. DR Accounts Payable 232,500; DR Purchase
130,000 Discount Lost 7,500; CR Cash 240,000
d. DR Accounts Payable 240,000; CR Cash
240,000
● Using perpetual inventory system and net
method, what is the journal entry on Dec 30*
a. DR Accounts Payable 240,000; CR Cash
● Using periodic inventory system and gross 232,500; CR Merchandise Inventory 7,500
method, what is the journal entry on Dec 30 b. DR Accounts Payable 250,000; CR Cash
a. DR Accounts Payable 232,500; CR Cash 250,000
232,500 c. DR Accounts Payable 240,000; CR Cash
b. DR Accounts Payable 240,000; CR Cash 240,000
240,000 d. DR Accounts Payable 232,500; DR Purchase
c. DR Accounts Payable 250,000; CR Cash Discount Lost 7,500; CR Cash 240,000
250,000
d. DR Accounts Payable 242,500; DR Purchase 3. Agreeable Company provided the following data for
Discount lost 7,500; CR Cash 250,000 the year 2023:
● Using periodic inventory system and net
Inventory, Jan 1 3,000 units @ P50 per unit
method, what is the journal entry on Dec 17*
a. DR Accounts Payable 130,000; CR Cash Purchases: Units Unit Cost
126,100; CR Purchase Discount 3,900
b. DR Accounts Payable 130,000; CR Cash Quarter 1 5,000 P60
130,000
c. DR Accounts Payable 145,500; CR Cash Quarter 2 10,000 55
145,500
d. DR Accounts Payable 126,100; CR Cash Quarter 3 6,000 65
126,100
● Using periodic inventory system and net Quarter 4 20,000 70
method, what is the journal entry on Dec 30*
a. DR Accounts Payable 232,500; DR Purchase Sales Units Sales Price per unit
Discount lost 7,500; CR Cash 240,000
b. DR Accounts Payable 232,500; CR Cash Quarter 1 6,000 P100
232,500
Quarter 2 8,000 100
c. DR Accounts Payable 242,500; DR Purchase
Discount lost 7,500; CR Cash 250,000 Quarter 3 7,000 120
d. DR Accounts Payable 240,000; CR Cash
240,000 Quarter 4 18,000 120
● Using perpetual inventory system and gross
method, what is the journal entry on Dec 17*
a. DR Accounts Payable 126,100; CR Cash
126,100 At the end of the year, the estimated selling price of
b. DR Accounts Payable 130,000; CR Cash remaining inventories amounted to 360,000 and
126,100; CR Purchase Discount 3,900 estimated cost to sell amounted to 25,000
c. DR Accounts Payable 130,000; CR Cash
126,100; CR Merchandise Inventory 3,900 ● Using FIFO, determine the cost of ending
d. DR Accounts Payable 150,000; CR Cash inventory on December 31, 2023_________
150,000 ● Using FIFO, determine the cost of goods sold
● Using perpetual inventory system and net for the year ended December 31,
method, what is the journal entry on Dec 17 2023_________
a. DR Accounts Payable 130,000; CR Cash ● Using weighted average, determine the cost of
126,100; CR Merchandise Inventory 3,900 ending inventory on December 31, 2023
b. DR Accounts Payable 150,000; CR Cash round-off the unit cost to nearest
150,000 peso________
c. DR Accounts Payable 130,000; CR Cash ● Using weighted average, determine the cost of
126,100; CR Purchase Discount 3,900 goods sold for the year ended December 31,
d. DR Accounts Payable 126,100; CR Cash 2023________
126,100 ● Using moving average, determine the cost of
● Using perpetual inventory system and gross ending inventory on December 31, 2023
method, what is the journal entry on Dec 30* round-off the unit cost to nearest peso in
a. DR Accounts Payable 250,000; CR Cash determining cost of sales every
250,000 quarter_______
 ● Using moving average, determine the cost of Net Markdowns 1,200,000
goods sold for the year December 31,
2023________ Sales 5,000,000
● Assuming FIFO cost, periodic inventory system
and direct method, prepare the journal entry to Sales returns 500,000
apply the LCNRV principle on December 31,
2023* Sales discounts 200,000
a. DR Merchandise Inventory 335,000; CR
round-off cost ratio up to 3 decimal places
Income Summary 335,000
b. DR Cost of Goods Sold15,000; CR ● Determine the conservative inventory
Merchandise Inventory 15,000 cost_____
c. DR loss on inventory write down 15,000; CR ● Determine the amount of cost of sales -
Merchandise Inventory 15,000 conservative approach______
d. DR loss on inventory write down 15,000; CR ● Determine the average inventory cost_______
Allowance for inventory writedown 15,000 ● Determine the amount of cost of sales -
average retail inventory approach_____
Quiz 9
● Determine the FIFO inventory cost______
1. Ethical Company reported the following information ● Determine the amount of cost of sales using
for the current year: FIFO retail inventory approach________

Beginning inventory 500,000

Purchases 2,600,000

Freight in 200,000

Purchase returns 350,000

Purchase discounts 150,000

Sales 4,000,000

Sales returns 300,000

Sales discounts 50,000

Physical inventory at year-end amounted to 400,000.

● Assuming that the gross profit rate is 40% of

sales, determine the estimated cost of ending
inventory_________
● Assuming that the gross profit rate is 40% of
sales, determine the estimated cost of missing
inventory________
● Assuming that the gross profit rate is 60% of
cost, determine the estimated cost of ending
inventory______
● Assuming that the gross profit rate is 60% of
cost, determine the estimated missing
inventory______

2. Competence Company provided the following

information for the current year:

Cost Retail

Beginning Inventory. 600,000 1,500,000

Net Purchases 3,000,000 5,500,000

Net Markups 500,000