Review Material for Accounting 17NC CASH & ACCRUAL BASIS, SINGLE-ENTRY SYSTEM 1. In its accrual accrual basis of of income statement statement for for the year year ended December December 31, 31, 2014, 2014, Daria Company Company reported revenue of P3,000,000.dditional information !as as follo!s" ccounts receivable# receivable# $anuary 1 P 400,000 400,000 %ncollectible %ncollecti ble accounts !ritten off 20,000 ccounts receivable# receivable# December 31 31 &00,000 &00,000 %nder the cash basis, ho! much should Daria report as revenue for 2014' . P 2,((0,000 2,((0,000 ). P 2,*00,000 2,*00,000 C. P 3,000,000 3,000,000 D. P 3,120,000 3,120,000 2. dam Company Company reported reported cash basis sales revenue of P2,300,000 P2,300,000 for for the year year ended December December 31, 2014. dditional information !as as follo!s" $anuary 1 December 31 ccounts receivable P &00,000 &00,000 P +&0,000 +&0,000 otes receivable 1&0,000 200,000 DurinDurin- 2014, 2014, uncol uncollec lectib tible le accou account nts s of P 10,00 10,000 0 !ere !ere !ritt !ritten en off off and and notes notes receiv receivab able le of P100,000 !as !as discounted for net proceeds proceeds of P*0,000 and credited directly to notes receivable. receivable. %nder accrual basis, dam Company !ould report sales at . P 2,1+0,000 2,1+0,000 ). P 2,&00,000 2,&00,000 C. P 2,&10,000 2,&10,000 D. P 2,+00,000 2,+00,000 3. eid eid Compa Company ny,, !hich !hich be-an be-an opera operatio tions ns on $anua $anuary ry 1, 2013, 2013, has has electe elected d to use cash cash basis basis accountin- for ta/ purposes and accrual basis accountin- for financial statements. eid reported sales of P 1,&0,000 and P (00,000 in its ta/ returns for the year s ended December 31, 2014 and 2013, respectively. eid reported accounts receivable of P 300,000 and P&00,000 in its balance sheets as of December December 31,2014 and 2013 respectively. respectively. hat amount should eid report as sales in its income statement for the year ended December 31, 2014' . P 1,4&0,000 1,4&0,000 ). P 1,&&0,000 1,&&0,000 C. P 1,*&0,000 1,*&0,000 D. P 2,0&0,000 2,0&0,000 4. ard ard a consulta consultant, nt, eeps eeps his accounti accountinn- records records on cash basis. basis. DurinDurin- 2014, ard ard collected collected P2,000,0 P2,000,000 00 in fees fees from clients. clients. t December December 31, 2013, 2013, ard ard had accounts accounts receivable receivable of P400,000. P400,000. t December 31, 2014, !ard had accounts receivable of P+00,000 and unearned fees of P&0,000. n accrual basis, !hat !as ards service revenue for 2014' . P 1,&0,000 1,&0,000 ). P 1,(00,000 1,(00,000 C. P 2,1&0,000 2,1&0,000 D. P 2,2&0,000 2,2&0,000 &. 5eta Company Company reported reported sales revenue revenue of of P4,+00,000 P4,+00,000 in its income statement statement for for the year ended December 31, 2014. dditional information as follo!s" 1263162013 1263162014 ccounts receivable P 1,000,000 1,000,000 P 1,300,000 1,300,000 llo!ance for uncollectible uncollectible accounts accounts +0,000 110,000 110,000 5eta !rote off uncollectible accounts totalin- P20,000 durin- 2014. %nder the cash basis of accountin-, 5eta !ould have reported sales of . P 4,*00,000 4,*00,000 ). P 4,3&0,000 4,3&0,000 C. P 4,300,000 4,300,000 D. P 4,2(0,000 4,2(0,000 +. Durin- 2014 7e! 7e! Company, Company, a service or-ani8ation, or-ani8ation, had P200,000 P200,000 in cash cash sales and P3,000,00 P3,000,000 0 in credit sales. 9he accounts receivable balances !ere P400,000 and P4(&,000 at at December 31, 2013 and 2014 respectively. If 7e! desires to prepare a cash basis income statement, ho! much should be reported as sales for 2014' . P 2,*1&,000 2,*1&,000 ). P 3,11 3,11&,000C. &,000C. P 3,200,000 3,200,000 ). P 3,2(&,000 3,2(&,000 1C : 00*
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. 9he follo!in- information pertains to ;pee Companys 2014 sales. Cash sales note for a ban loan of P200,000. 9otal payments to suppliers in 2014 amounted to P2,200,000, after purchase discounts of P&0,000. Durin- 2014, the company returned merchandise costin- P100,000. hat is the amount of -ross purchases for 2014 under accrual basis' . P 3,0&0,000 ). P 2,(&0,000 C. P 2,00,000 D. P *00,000 *. ?ard Company maintains its accountin- records on the cash basis but restates it financial statements to the accrual method of accountin-. ?ard has P+,000,000 in cash basis income for 2014. 9he follo!in- information pertains to the operations for the years ended December 31, 2014 and 2013. 2014 2013 ccounts receivable P 4,000,000 P 2,000,000 ccounts payable 1,&00,000 3,000,000 %nder the accrual method, !hat amount should ?ard report in its 2014 income statements' . P 2.&00,000 ). P &,&00,000 C. P +,&00,000 D. P *,&00,000 10. Clay Company borro!s money under various loan a-reements involvin- notes discounted and notes re@uirin- interest payments at maturity. Durin- the year ended December 31, 2014, Clay paid interest totalin- P100,000. Clays December 31 balance sheets included the follo!ininformation" 2013 2014 Prepaid interest P 23,&00 P 1(,000 Interest payable 4&,000 &3,&00 (?o! much interest should Clay report for 2014' . P (+,000 ). P *,000 C. P 103,000 D. P 114,000 11. %nder =aster Companys accountin- system, all insurance premiums paid are debited to prepaid insurance. Information for the year ended December 31, 2014, is as follo!s" Prepaid insurance at $anuary 1 P 100,000 Char-e to insurance e/pense 440,000 Prepaid insurance at December 31 120,000 hat !as the amount of insurance premium paid in 2014' . P 340,000 ). P 420,000 C. P 440,000 1C : 00*
D. P 4+0,000 Pa-e 2 of 4
Aor items 12 to 13" -usan Company is en-a-ed in small e/port business. 9he company maintains limited record. 9he follo!in- balances are abstracted from the companys records for the year 2014" January 1 December 31 ccount eceivable P 1&0,000 P 100,000 ccount Payable 200,000 100,000 ccount eceivable ritten ff &,000 Cash eceived from costumers 2,100,000 Cash paid to trade creditors 1,400,000 ;ales Discounts 1&,000 ;ales returns and allo!ances 10,000 ote receivable : 9rade &0,000 100,000 Purchase discounts 20,000 Purchase returns &,000 12. hat is the amount of -ross sale' . P 2,0&&,000 ). P 2,0(0,000 13. hat is the amount of -ross purchase' . P 1,&2&,000 ). P 1,&00,000
C. P 2,10&,000
D. P 2,130,000
C. P 1,32&,000
D. P 1,300,000
14. Camadillo Company reported the follo!in- chan-es in all the year, e/cept for retained earnin-s" Increase Cash ccounts receivable, net Inventory Investments ccounts payable )onds payable ;hare capital ;hare premium
account balances for the current BDecrease P *0,000 240,000 1,20,000 B40,000 B3(0,000 (20,000 1,2&0,000 130,000
9here !ere no other entries in the retained earnin-s account e/cept for net and dividend declaration of P 1*0,000 !hich !as paid in the current year. hat is the net income for the current year' . P 1,200,000 ). P 1,1*0,000 C. P 200,000 D. P 10,000 1&. )art Company provided the follo!in- information for the current year" Disbursements for purchases P &,(00,000 Increase in trade accounts payable &00,000 Decrease in merchandise inventory 200,000 hat is the cost of -oods sold for the current year' . P +,&00,000 ). P +,100,000 C. P &,&00,000 D. P &,100,000 1+. Durin- the first year, =/el Company issued 1&,000 shares !ith P 100 par value at P 1&0 per share. t year#end, the entity issued 2,000 shares in payment of current obli-ations of P 2&0,000. Dividends of P &00,000 !ere paid durin- the year. 9otal liabilities at the end of the year amounted to P 200,000 and total assets at the end of the year e@ualled P 3,000,000. hat is the net income for the first year of operations' . P 1,&00,000 ). P (00,000 C. P &00,000 D. P 300,000 1. ;unshine Company had total assets of P 4,000,000 and shareholders e@uity of P 2,0(0,000 at the be-innin- of the year. Durin- the year, assets increased by P &20,000 and liabilities decreased by P (20,000. hat is the shareholders e@uity at the end of the year' . P 3,00,000 ). P 3,420,000 C. P 3,3(0,000 D. P 1,340,000 1C : 00*
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1(. =asy Companys be-innin- and endin- total liabilities !ere P (40,000 and P 1,000,000, respectively. t year#end, o!ners e@uity !as P 2,+00,000 and total assets !ere P 200,000 lar-er than at the be-innin- of the year. Durin- the year, the ne! share capital issued e/ceeded dividends by P 240,000. hat !as the net income or loss for the year' . P 2(0,000 income ). P 2(0,000 loss C. P 200,000 loss D. P 40,000 income 1*. ?a8e Company provided the follo!in- information for 2012" $anuary 1 Cash P +20,000 ccounts receivable +0,000 erchandise inventory (+0,000 ccounts payable &30,000
December 31 P' *00,000 (0,000 4(0,000
9he sales and cost of -oods sold !ere P ,*(0,000 and P &,(30,000, respectively. ll sales and purchases !ere on credit. Earious e/penses of P 1,00,000 !ere paid in cash. 9here !ere no other pertinent transactions. hat is the cash balance on December 31, 2012' . P 1,0*0,000 ). P 1,&00,000 C. P 2,&0,000 D. P 3,0&0,000 20. Durin- 2012, oller Co. sold e@uipment that had cost P2*4,000 for P1+,400. 9his resulted in a -ain of P12,*00. 9he balance in ccumulated DepreciationF=@uipment !as P*&,000 on $anuary 1, 2012, and P*30,000 on December 31. o other e@uipment !as disposed of durin2012. Depreciation e/pense for 2012 !as . P4&,000. ). P&,*00. C. P(&,&00. D. P1&,&00. 21. ellin-ton Corp. has outstandin- accounts receivable totalin- P& million as of December 31 and sales on credit durin- the year of P2& million. 9here is also a debit balance of P20,000 in the allo!ance for doubtful accounts. If the company estimates that (> of its outstandin- receivables !ill be uncollectible, !hat !ill be the balance in the allo!ance for doubtful accounts after the year# end adGustment to record bad debt e/pense' . P2,000,000. ). P 420,000 C. P 400,000 D. P 3(0,000 22. 9he follo!in- information for the Hilac Company for the year 2013"
D. P34(,(00
23. Certain information relative to the 2014 operations of no Co. follo!s" ccounts receivable, $anuary 1, 2014 P34,000 ccounts receivable collected durin- 2014 4+,000 Cash sales durin- 2014 12,000 Inventory, $anuary 1, 2014 1(,000 Inventory, December 31, 2014 1+,&00 Purchases of inventory durin- 2014 40,000
1C : 00*
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