Pre2

Quiz 1
CASELET 1
On July 10, 2024, Mikha Lim Corp. received its bank statement for the month ending June 30.
The statement showed a P209,000 balance while the cash account balance on June 30 was
P35,000. In reconciling the balances, the auditor discovered the following:
The June 30 collections amounting to P176,000 were recorded on the books but were not
deposited until July.
The banks charged the company for a NSF check of a customer.
A paid check for P24,300 was entered incorrectly in the cash disbursements journal as P42,300.
Outstanding checks as of June 30 was totaled P354,00.
Prepare the Bank Reconciliation.
SOLUTION.

Book Bank
P35,00 P209,50
Unadjusted Balances 0 0
(21,900
NSF Check )
Overstatement of Book
Disbursement
(P42,300 - P24,300) 18,000
(354,000
Outstanding Checks )
Undeposited Collections
(SQUEEZE) 176,000
P31,30
Adjusted Balances 0 P31,300

CASELET 2
Data concerning the cash records of Captain Aiah Company for the months of September
and October 2024 follow:
a. Undeposited book balance on September 30 amounted to 2,258,000.
b. Total receipts per book in October, 1,400,000.
c. Total disbursements per book in October, 2,400,000.
d. Unadjusted bank balance on September 30 amounted to 2,100,000.
e. Total credits per bank in October amounted to 1,200,000.
f. Total debits per bank in October amounted to 2,500,000.
g. NSF checks on September 30 amounted to 60,000 while on October 31 amounted to
40,000.
 h. Collection of accounts receivable not recorded by the company on September 30,
30,000 and 50,000 on October 31.
i. Erroneous bank charge on September 30, 10,000 and 18,000 on October 31.
j. Erroneous bank credit on September 30, 7,000 and 9,000 on October 31.
k. Understatement of check in payment of rent payable on September 30, 90,000 and
120,000 on October 31.
l. Deposit in Transit on September 30, 130,000.
m. Outstanding checks on October 31, 30,000.
Required: Prepare Proof of Cash

SOLUTION.

Sep. 30 Receipts Disbursement Oct. 31

Bank Balance 2,100,000 1,200,000 2,500,000 800,000
Deposit in Transit
Sep. 30 130,000 (130,000)
Oct. 31 369,000 369,000
Outstanding Checks
Sept. 30 (95,000) (95,000)
Oct. 31 30,000 (30,000)
Erroneous Bank Debit
Sept. 30 10,000 (10,000)
Oct. 31 (18,000) 18,000
Erroneous Bank Credit
Sept. 30 (7,000) (7,000)
Oct. 31 (9,000) (9,000)
Adjusted Balance 2,138,000 1,420,000 2, 410,000 1, 148,000
 Sep. 30 Receipts Disbursement Oct. 31

Book Balance 2, 258,000 1,400,000 2,400,000 1,258,000

NSF Checks
Sep. 30 (60,000) (60,000)
Oct. 31 40,000 (40,000)
Credit Memo
Sept. 30 30,000 (30,000)
Oct. 31 50,000 50,000
Understatement of checked
payment of rent
Sept. 30 (90,000) (90,000)
Oct. 31 120,000 (120,000)
Adjusted Balance 2138000 1420000 2, 410,000 1, 148,000

CASELET 3
The cash amount of Moal Company shows the following activities:
Date Debit Credit Balances
Nov. 30 Balance 690,000
Dec. 2 November Bank Charges P 300 689,000
4 November bank credit for notes P 60,000 749,700
receivable collected
15 NSF Check 7,800 741,900
20 Loan proceeds 291,000 1,032,900
21 December bank charges 360 1,032,540
31 Cash receipts book 4,243,800 5,276,340
31 Cash disbursement book 2,448,000 2,828,340
CASH BOOKS
 Receipts Payments
Date OR NO. Amount Check No. Amount
Dec. 110-120 P 66,000 801 P 12,000
1
2 121-136 127,800 802 18,000
3 137-150 120,000 803 6,000
4 151-165 336,000 804 18,000
5 166-190 234,000 805 72,000
8 191-210 396,000 806 114,000
9 211-232 528,000 807 156,000
10 233-250 462,000 808 180,000
11 251-275 126,000 809 366,000
12 276-300 180,000 810 42,000
15 301-309 330,000 811 48,000
16 310-350 48,000 812 96,000
17 351-390 114,000 813 120,000
18 391-420 54,000 814 132,000
19 421-480 102,000 816 216,000
22 481-500 126,000 817 66,000
23 501-525 192,000 818 300,000
23 819 42,000
23 820 24,000
26 526-555 444,000 821 18,000
28 556-611 30,000 822 72,000
28 823 78,000
29 612-630 228,000 824 174,000
29 825 12,000
29 826 66,000
Totals

BANK STATEMENT
 Date Check Charges Credit
Dec. 792 P 15,000 P 51,000
1
2 802 18,000 66,000
3 127,800
4 804 18,000 120,000
5 EC 486,000 486,000
8 805 72,000 570,000
9 CM 16 72,000
10 799 42,300 924,000
11 DM 57 7,800 462,000
12 808 180,000 126,000
15 803 6,000
16 809 366,000 510,000
17 DM 61 360 48,000
18 813 120,000 114,000
19 CM 20 291,000
22 815 36,000
23 816 216,000 282,000
23 811 48,000
23 801 12,000
26 814 132,000 192,000
28 818 300,000 444,000
28 DM 112 720
29 821 18,000 30,000
29 CM 36 72,000
29 820 24,000

Additional Information:
1. DMs 61 and 112 are for service charges.
2. EC is error corrected.
3. DM 57 is for an NSF check.
4. CM 20 is for loan proceeds, net of P900 interest charges for 90 days.
5. CM 16 is for the correction of an erroneous November bank charge.
6. CM 36 is for customers’ notes collected by bank in December.
7. Bank Balance on December 31 is P3,553,620
Required: Prepare the Proof of Cash

Solution.
BOOK
Nov. 30 Receipts Disbursement Dec. 31
Unadjusted Balance 690,000 4,594,800 2,456,460 2,828,349
Notes Collected
Nov. 30 60,000 (60,000)
Dec. 31 72,000 72,000
Bank Service Charge
Nov. 30 (300) (300)
Dec. 31 720 (720)
Unrecorded Disbursement
(error 815) 36,000 (36,000)
Adjusted Balance 749,700 4,606,800 2,492,880 2,863,620

BANK
Nov. 30 Receipts Disbursement Dec. 31
Unadjusted Balance 684,000 4,987,800 2,118,180 3,553,620
Deposit in Transit
Nov. 30 51,000 (51,000)
Dec. 31 228,000 228,000
Outstanding Check
Nov. 30 (57,300) (57,300)
Dec. 31 918,000 (918,000)
Error Corrected (486,000) (486,000)
Error 72,000 (72,000)
Adjusted Balance 749,700 4,606,800 2,492,880 2,863,620

PRE 2
QUIZ 2
PROBLEM 1
Your audit disclosed that on December 31, 2010, the accounts receivable control account of
Abueva Company had a balance of P2,865,000. An analysis of the accounts receivable
account showed the following:

Accounts known to be worthless 37,500

Advance payments to creditors on purchase orders 150,000
Advances to affiliated companies 375,000
Customers’ accounts reporting credit balances arising from sales
return (225,000)
Interest receivable on bonds 150,000
Other trade accounts receivable – unassigned 750,000
Subscriptions receivable due in 30 days 825,000
Trade accounts receivable - assigned (Abueva company’s equity in
assigned accounts is P150,000) 375,000
Trade installment receivable due 1 – 18 months, including unearned
finance charges of P30,000 330,000
Trade receivables from officers due currently 22,500
Trade accounts on which post-dated checks are held (no entries
were made on receipts of checks) 75,000
P 2,865,000

Based on the above and the result of your audit, determine the adjusted balance of the
following:

a. The Trade accounts receivables as of December 31, 2010

Other trade accounts receivable – unassigned 750000

Trade accounts receivable - assigned (Abueva company’s equity in
assigned accounts is P150,000) 375,000
Trade installment receivable due 1 – 18 months, including unearned
finance charges of P30,000 330,000
Trade receivables from officers due currently 22,500
Trade accounts on which post-dated checks are held (no entries were
made on receipts of checks) 75,000
Trade Accounts Receivable 1,552,500

b. The Net current trade and other receivables as of December 31, 2010 is

Trades Accounts Receivable 1,522,500

Advance payments to creditors on purchase orders 150,000
Interest receivable on bonds 150,000
Subscriptions receivable due in 30 days 825,000
Current trade and other receivables 2,647,500
 c. How much of the foregoing will be presented under non-current assets as of December
31

Advances to affiliated companies 375,000

PROBLEM 2

Your audit of The Beast Corporation for the year ended December 31, 2016 revealed that
the Accounts Receivable account consists of the following:

Trade accounts receivable (current) P3,440,000

Past due trade accounts 640,000
Uncollectible accounts 128,000
Credit balances in customers’ accounts (80,000)
Notes receivable dishonored 240,000
Consignment shipments – at cost
The consignee sold goods costing P96,000 for P160,000. A 10%
commission was charged by the consignee and remitted the balance
to The Beast. The cash was received in January, 2017.
320,000
Total P4,688,000

The balance of the allowance for doubtful accounts before audit adjustment is a credit of
P80,000. It is estimated that an allowance should be maintained to equal 5% of trade
receivables, net of amount due from the consignee who is bonded. The company has not
provided yet for the 2016 bad debt expense.

a. Trades Account Receivables

Trade accounts receivable (current) P3,440,000

Past due trade accounts 640,000
Notes receivable dishonored 240,000
Consignment goods already sold (P160,000 x 90%) 144,000
Adjusted trade receivables P4,464,000

b. Allowance for Doubtful Accounts

Adjusted trade receivables P 4,464,000

Less due from consignee 144,000
Basis of allowance for doubtful account 4,320,000
Bad debt rate 5%
Required allowance for doubtful accounts P 216,000

c. Doubtful account expense

 Required allowance for doubtful accounts P 216,000
Add: Write-off of uncollectible accounts 128,000
Total 344,000
Less: Allowance account before adjustment (80,000)
Doubtful account expense P 264,000

PROBLEM 3

Domogma CO. sells to a different customer but under the same terms of 3/15, n/30. An analysis
of the balance of the account receivable on Dec. 31 of the current year showed the following:

Balance
Age in Days s
0-30 P 450,000
31-60 300,000
61-90 220,000
91-120 150,000
121-150 60,000

Domogma Co. uses aging of receivables method. Based on the past experience, the following
estimated percentages are to be used:

Overdue accounts %Collectible

for less than 31 days 95%
31-60 94%
61-90 92%
91-120 85%
121 over 80%

The beginning balance of the allowance for doubtful account is P20,000. There were no
recoveries or accounts written off during the year.

a. How much is the balance of the allowance for doubtful accounts at the end of the current
year?
0-30 P 450,000
31-60 300,000 X 5% 15,000
61-90 220,000 X 6% 13,200
91-120 150,000 X 8% 12,000
121-150 60,000 X 15% 9,000
Allowance for doubtful account 49,200
b. How much is the Doubtful accounts expense during the current year?
Allowance for Doubtful account - Beg. 20,000
(SQUEEZ
Doubtful account expense 29,200 E)
Allowance for Doubtful account - end. 49,200

PROBLEM 4

The substantiate the existence of

the accounts receivable balances
as at December 31,2019, of
Tempo Company,
you have decided to send
confirmation requests to
customers. Below is a summary of
confirmation replies together
with the exception and audit
findings. Gross profit on sales is
20%. The company is under
Perpetual inventory
method
The substantiate the existence of
the accounts receivable balances
as at December 31,2019, of
Tempo Company,
you have decided to send
confirmation requests to
customers. Below is a summary of
confirmation replies together
with the exception and audit
findings. Gross profit on sales is
20%. The company is under
Perpetual inventory
method
The substantiate the existence of the accounts receivable balances as at December 31,2024, of
MY EX Company, you have decided to send confirmation requests to customers. Below is a
summary of confirmation replies together with the exception and audit findings. Gross profit on
sales is 20%. The company is under Perpetual inventory method.

Name of Balance per Comments from Customers Audit Findings

Customer books
Abygail P150,000 P90,000 was returned on
December 30,2024.
balance is P60,000.
Correct Returned
goods
were
received
December
 31,2019.
Returned
goods
were
received
December
31,2019.
Returned
goods
were
received
December
31,2019.
Returned goods were
received December 31,2024.
Clarice P30,000 Your CM presenting price The CM was taken up by
adjustment dated December Tempo Company in 2025.
28,2024, cancels this.
Lyka P144,000 You have overpriced us by P150. The complaint is valid.
Correct price should P300.
Janice P112,000 We received the goods only on Term is shipping point.
January 6,2025. Shipped in 2024.
Althea P135,000 Balance was offset by our Tempo Company credited
December shipment of the raw accounts payable for
materials. P135,000 to recorded
purchases. Althea is a
supplier.
 1. If the necessary adjusting journal entry is made regarding the case of Abygail, the net
income will

Sales Return and allowance 90,000

Accounts Receivables 90,000

Inventory 72,000
Cost of Sale (P90,000X80%) 72,000

Net decrease in income (P90,000-P72,000) P18,000

2. The effect of 2024 net income of MY EX Company of its failure to record the CM
involving transaction with Clarice

Sales 30,000
Accounts receivable 30,000

Income overstated by 30,000

3. The overstatement of receivable from Lyka is

P48,00
Overstatement of receivable Lyka (P150X320 units) 0

4. The accounts receivable from Bernabe is

Correctly stated because the goods are considered sold in 2024

5. The adjusting entry to correct the receivable from Althea

Accounts Payable 135,000

Accounts Receivable 135,000
 PRE 2
Midterm Examination

CASELET 1

Milk Corp’s general ledger showed the following information:

Account receivable P550,000

Allowance for doubtful accounts (debit) 16,500

Milk Corp’s account receivable subsidiary ledger on the other hand shows the following
composition:

Customer Invoice date Invoice amount Balance

Zulu Inc. 12/6/2014 P 42,000
11/29/2014 63,540 P 105, 540

Yankee. Co 9/27/2014 36,000

26,760 62,760

Xylon Inc. 12/30/2014 20,000

12/8/2014 40,000
10/25/2014 31,800 91,800

Whiskey Co. 11/17/2014 69,420

10/9/2014 66,000 135,420

Victory Corp. 12/12/2014 57,600

8/20/2014 37,200 94,800

Uniform Inc. 9/12/2014 52,200 52,200

Audit notes:

Customer Balance per Remarks

reply
Yankee P36,000 Invoice dated 08/20/14 was already settled. Investigation
revealed that Yankee's payment was erroneously posted
against Victory Corp.'s account for an invoice dated
12/20/14 for the same amount.

Xylon Inc. 71,800 The difference was due to the invoice dated12/30/14
Goods have not been received by Xylon Inc. yet as of
12/31/14. Term of sale is FOB Destination.

Victory Corp. 121,560 "Amount per our records appear to be higher,

please check.”

Uniform Inc. No reply Uniform Inc is under liquidation and the amount
receivable from the company is deemed definitely
uncollectible.
b. The company’s policy with regard uncollectible accounts summarized below:

Age % Uncollectible
0-30 days 1%
31-60 days 2%
61-90 days 5%
91-120 days 10%
over 120 days 50%

SOLUTION.
Accounts Receivable Allow. For Bad Debts
Beg. 550,000 16,500
20,000 52,200
52,200
AR end. 470,320 31,413 ADA, end.

Subsidiary Ledger
Zulu Inc. 105,540 =105,540
Yankee Co. 62,760 -26,760 = 36,000
Xylon Inc. 91,800 -20,000 = 71,800
Whiskey Co. 135,420 =135,420
Victory Corp. 94,800 26,700 =121,500
Uniform Inc. 52,200 -52,200 0
542,520 470,320

Required:

1. What is the correct allowance for bad debts as of Dec. 31, 2014?
 Zulu Inc. 42,300 30 days
63,540 31-60 days
Yankee Co. 36,000 91-120 days
Xylon Inc. 40,000 30 days
31,800 61-90 days
Whiskey Co. 69,420 31-60 days
66,000 61-90 days
Victory Corp. 57,600 30 days
25,760 30 days
37,200 over 120 days

30 days 166,000x1% 1,663.60

31-60 days 132,960x2% 2,659.20
61-90 days 97,800x5% 4,890
91-120 days 36,000x10% 3,600
over 120 days 37,200x50% 18,600
Allowance for Bad debts, end 31,412.80

2. What is the correct amortized cost (net realizable value) of the accounts receivable as of
December 31, 2014?

Accounts receivable, end 470,320

Allowance for Bad debts (31, 412.8)
Net realizable value 438,907.20

3. What is the correct bad debt expense for the year?

Allow. For Doubtful Account

16,500
52,200
Bad debt expense
(SQUEEZE)
110, 112.80
31, 413 ADA, end.

4. What is the entry to record the unallocated difference between the general ledger and the
subsidiary ledger?

Accounts Receivable
Beg. 550,000
20,000
52,200
 AR end. 470,320
x = 7, 480

Sales 7,480
Accounts Receivables 7,480

CASELET 2

From inception of operation to December 31, 2016, PIXIE CORP. provided for uncollectible
accounts receivable under the allowance method: provisions were made monthly at 2% of credit
sales; bad debts written off were charged to the allowance account: and debts previously written
off but were recovered are credited to a revenue account; and no year-end adjustments to the
allowance account were made; Pixies usual credit terms are net 30 days.

The balance in the Allowance for Doubtful accounts was 143,000 at January 1, 2016. During
2016 credit sales total 15,000,000; interim provisions for doubtful accounts were made at 2% of
credit sales, 140,00 were written off, and recoveries of accounts previously written off amounted
to 43,000. Pixie installed a computer facility in November 2023 and an aging of accounts
receivable was prepared for the first time as of December 31, 2023 A summary of the aging is
as follows:

Estimated %
Classification by month of sale Balance
collectible

2,160,00
Nov-Dec 2016 98%
0

1,300,00
July -Oct 2016 90%
0

Jan-June 2016 840,000 75%

Prior to January 1, 2016 300,000 30%

Based on the review of collectability of the account balances in the Prior to January 1,2016,
aging category, additional receivables totaling 120,00 were written off as of Dec. 31, 2016. The
70% uncollectible estimate applies the remaining 180,000 in the category. Effective with the
year ended Dec. 31, 2016. Pixie adopted a new accounting method for estimating the allowance
for doubtful account at the amount indicated by the year end aging analysis of accounts
receivable.

1. What is the balance of the allowance for doubtful accounts on Dec. 31, 2016 (before
year-end adjustments)?

Allowance for doubtful account

write off 140,000 143,000 beg.
120,000 300,000 doubtful account
43,000 recoveries
226,000
2. For the year end Dec. 31, 2016, Pixies bad debt expense would be?
583, 200
3. The net realizable value of Pixie’s account receivable at Dec. 31,2016 should be

Accounts receivable, end 4,554,000

Allow. for doubtful account, end 583,200
Net realizable value 3,970,800

CASELET 3

The balance sheet of Integrity Products Co, shows the accounts receivable balance at
December 31, 2020 as follows:

Accounts receivable –trade P45,000

Less allowance for doubtful accounts 900
P44,000

During 2021, transactions relating to the accounts were as follows:

 Sales on account, P480,000.

 Cash received from collections of current receivables totaled P392,000, after discounts
of P8,000 were allowed for prompt payment.

 Customer's accounts of P2,000 were ascertained to be worthless and were written off.

 Bad accounts previously written off prior to 2020 amounting to P500 were recovered.

 The company provided P2,300 for doubtful accounts by a journal entry at the end of the
year.

 Accounts receivable of P70,000 have been pledged to a local bank on a loan of

P40,000. Collections of P15,000 were made on these receivables (not included in the
collections previously given) and applied as partial payment to the loan.

The amortized cost or net realizable value of accounts receivable at December 31, 2021 is

Solution.

Accounts receivable, 12/31/20 45,000

Add: Sales on account 480,000
Bad debt recoveries 500
Total 525,500
 Less: Current receivables collected, before cash discounts
(392,000+8,000) 400,000
Accounts written off 2,000
Bad debt recoveries 500
Collections made on AR pledged as collateral 15,000 417,500
Accounts receivable, 12/31/21 108,000

Allowance for doubtful accounts, 12/31/20 900

Add: Bad debt recoveries 500
Provision for doubtful accounts 2,300
Total 3,700
Less: Accounts written off -2,000
Allowance for doubtful accounts, 12/31/21 1,700

Accounts receivable, 12/31/21 108,000

Allowance for doubtful accounts, 12/31/21 1,700
Net realizable value, 12/31/21 106,300

CASELET 4

Your audit senior instructed

you to prepare a four
column proof of cash
receipts and
disbursements for the month
of August, 2005.
The bank reconciliation
prepared by Franc Company
at July 31 is reproduced
below: (All
book adjustments were
recorded in August)
Your audit senior instructed
you to prepare a four
column proof of cash
receipts and
disbursements for the month
of August, 2005.
The bank reconciliation
prepared by Franc Company
at July 31 is reproduced
below: (All
book adjustments were
recorded in August)
Your audit senior instructed
you to prepare a four
column proof of cash
receipts and
disbursements for the month
of August, 2005.
The bank reconciliation
prepared by Franc Company
at July 31 is reproduced
below: (All
book adjustments were
recorded in August)
Your audit senior instructed
you to prepare a four
column proof of cash
receipts and
disbursements for the month
of August, 2005.
The bank reconciliation
prepared by Franc Company
at July 31 is reproduced
below: (All
book adjustments were
recorded in August)
Your audit senior instructed you to prepare a four column proof of cash receipts and
disbursements for the month of December, 2015.

The bank reconciliation prepared by Character Company at November 30 is reproduced

below:
Unadj. Bank
balance P69,000 Unadj. Book balance P66,000
Add: Add:
Deposit in transit 11,000 CM for note collected 8,000
Total P80,000 Total P74,800
Less Less:
Outstanding Checks Bank service charge 1,800
No. 143 P1,000
144 1,500
145 2,000
146 2,500 7,000 -
P73,000 P73,000

The bank statement, which has a beginning balance of 69,000, is reproduced below:

May Bank
Account Name: CHARACTER COMPANY
Date Debits Credits
1-Dec P1,000 P11,000
4-Dec 25,000 10,000
5-Dec 3,000
6-Dec 2,000 20,000
8-Dec 10,000 DM 1 5,000
9-Dec 2,500 40,000
17-Dec 30,000 7,000
19-Dec 40,000 DM 2
20-Dec 500 EC 500 EC
26-Dec 40,000
31-Dec 200 DM 3 35,000 CM 2
P113,000 P 171,500

DM 1 Customer’s DAIF check

DM 2 Customer’s DAIF check
DM 3 Service Charges
CM 1 Accounts collected by the bank
CM 2 Note collected by the bank
EC Error Correction

The debit memo on December 8 and December 19 were customer NSF check returned by
the bank. The check on December 19 was immediately redeposited without entry. The
company made a journal entry when the check returned on December 8 was received. This
check was redeposited by the client in the bank on January 3 without entry.

The company’s cash receipt and cash disbursement journal for the month of December
2015 are provided below:
 Cash receipts Journal Cash Disbursements Journal
Date OR No. Amount Date OR No. Amount
Dec. 03 555 P10,000 Dec. 03 147 P25,000
5 556 20,000 15 148 30,000
7 557 5,000 30 149 8,000
8 558 40,000 31 150 12,000
18 559 7,000
30 560 18,000
31 561 2,000
P102,000 P75,000

The company’s Cash in Bank Ledger appears below

Cash in Bank
Balance P66,000
12/1/2015 GJ (CM) 8,800 12/31/2015 GJ (DM 1) 10,000
12/8/2015 GJ (CM 1) 3,000 12/31/2015 CDJ 75,000
12/31/2015 CRJ 102,000

Solution.
Nov. 30 Receipts Disbursement Dec. 31
Unadjusted bank balance 69,000 171,500 113,000 127,500
Deposit in transit
Nov. 30 11,000 (11,000)
Dec. 31 18,200 18,200
Outstanding checks
Nov. 30 (7,000) (7,000)
Dec. 31 14,300 (14,300)
Error correction (500) (500)
NSF check, no entry on the books (40,000) (40,000)
on the return and redeposit
Adjusted Balance 73,000 138,200 79,800 79,800

Nov. 30 Receipts Disbursement Dec. 31

Unadjusted book balance 66,000 113,800 85,000 94,800
Over footing of cash receipts (1,800) (1,800)
(2,000-200)
Over footing of cash disbursement (7,200) 7,200
(8,000-800)
Credit memo for note collected
Nov. 30 8,800 (8,800)
Dec. 31 35,000 35,000
Bank service charge
Nov. 30 (1,800) (1,800)
Dec. 31 2,000 (2,000)
Adjusted Balance 73,000 138,200 79,800 79,800