Uploaded by Anna Paula Gallemit

PREFINALS MERGED

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1. Inge uncollectible accounts expense - $11,000
2. Roxy Co.’s unadjusted trial balance - $ 30,000
3. On August 15, 2005, Benet Co. sold goods - Interest receivable
4. A company uses the allowance method to account for uncollectible accounts receivable.
After recording the estimate of credit loss expense for the current year, the company
decided to write off in the current year the $10,000 account of a customer who had filed
for bankruptcy. What effect does this write-off have on the company’s current net income
and total current assets, respectively? No effect. No Effect
5. Frame Co. has an 8% note receivable dated June 30, year 1, in the original amount of
$150,000. Payments of $50,000 in principal plus accrued interest are due annually on
July 1, year 2, year 3, and year 4. In its June 30, year 2 balance sheet, what amount
should Frame report as a current asset for interest on the note receivable? - $ 8,000
6. ABC Company sold goods to its customers on credit. The entity had no cash sales. The
entity used the gross method of recording sales. An analysis of accounts receivable at
December 31, 2015 revealed the following: … What amount should be reported as net
realizable value of accounts receivable? 7,500,000
7. Which of the following is a method to generate cash from accounts receivables? 1
8. The following information applies to a manufacturing company, which has a 6-month:
$160,000
9. The following information relates to Jay Co. - $ 1,085,000
10. The following information pertains to Tara Co.'s accounts receivable at December 31,
Year 2: what amount of allowance for credit losses should Tara report at December 31,
Year 2? $9,000
11. A method of estimating uncollectible accounts that emphasizes asset valuation rather
than income measurement is the allowance method based on: Aging Receivables
12. On Merf's April 30, 1993, balance sheet a note receivable was reported as a noncurrent
asset and its accrued interest for eight months was reported as a current asset. Which of
the following terms would fit Merf's note receivable? Principal is due August 31, 1994,
and interest is due August 31, 1993, and August 31, 1994.
13. on december 31, 2019, ABC Company loaned one of its officers for non-interest bearing
note that required five annual payments of 500,000. The first payment was made on
december 31, 2019. The market rate of similar note was 8%. What is the current portion
of the notes receivable on december 31, 2019? 1,995,000
14. On the December 31 balance sheet of Mann Co., the current receivables consisted of
the following: At December 31, the correct total of Mann's current net receivables was
$94,000
15. ABC company purchased from DEF company a 20,000, 8% five-year note that required
five annual year-end payments of 5,009 (interest and principal). The prevailing effective
interest rate for a note of this type on such date is 9%. At the date of purchase, ABC
Company recorded the note at its present value of 19,485. What is the total interest
revenue earned by ABC over the life of this note? 5,560
16. An analysis of an entity’s 150,000 accounts receivable at year end resulted in a 5,000
ending balance for its allowance for uncollectible accounts and a bad debt expense of
2,000. During the past year, recoveries on bad debts previously written off were correctly
recorded at 500. If the beginning balance in the allowance for uncollectible accounts was
$4,700, what was the amount of accounts receivable written off as uncollectible during
the year? - $2,200
17. At January 1, year 2, Jamin Co. had a credit balance of $260,000 in its allowance for
uncollectible accounts. Based on past experience, 2% of Jamin’s credit sales have been
uncollectible. During year 2 Jamin wrote off $325,000 of uncollectible accounts. Credit
sales for year 2 were $9,000,000… - $ 115,000
18. Open trade receivables balance to be shown on the statement of financial position for
the period is - $ 250,000
19. Which method of recording uncollectible accounts expense is consistent with accrual
accounting? 2
20. ABC Company provided the following information for the current year: Allowance for
doubtful accounts- Jan 1 200,000= 550,000
21. Based on the industry average, The entry to record bad debt expense at the end of Year
3 would include a credit to the allowance for uncollectible accounts of $300,000
22. When the allowance method of recognizing uncollectible accounts is used, the entry to
record the write-off of a specific account - Decreases both accounts receivable and
the allowance for uncollectible accounts.
23. On January 1, 2021, ABC Company sold equipment with a carrying amount of 4,800,000
in exchange for a 6,000,000 noninterest-bearing note due January 1,2024. There was no
established price for the equipment. - (300,000)
24. Evaluate the following statements concerning Doubtful Accounts.
I.
An entity has the choice of using direct-write off method or allowance method in
presenting its financial statements in accordance with PFRS True??
II.
Writing off an accounts receivable will reduce the entity’s working capital False??
III.
Allowance method is in line with the matching principle TRUE
25. Based on the industry average, a corporation estimates that its bad debts should
average 3% of credit sales. - $ 300,000
26. Which of the following will cause a decrease to the net realizable value of accounts
receivable? - Only two (not sure)
27. Which method of recording uncollectible accounts expense is consistent with accrual
accounting? - Yes, No
28. On December 1, Year 1, Tigg Mortgage Co. gave Pod Corp. a $200,000, 12% loan. Pod
received proceeds of $194,000 after the deduction of a $6,000 nonrefundable loan
origination fee. Principal and interest are due in 60 monthly installments of $4,450,
beginning January 1, Year 2. The repayments yield an effective interest rate of 12% at a
present value of $200,000 and 13.4% at a present value of $194,000. What amount of
accrued interest receivable should Tigg include in its December 31, Year 1, balance
sheet? $2000
29. The following information has been compile by a manufacturing company… 250,000
30. Evaluate the following statements regarding loans receivable.
I.
If the resulting carrying amount is less than the face value of loans receivable,
the effective interest rate is lower than the stated interest rate in the loan.
II.
Where effective interest rate is unequal to stated interest rate, interest income is
recorded by multiplying the effective interest rate with the carrying value of the
loan at the beginning of the year.
III.
Origination fees received from borrower are recognized as unearned interest.
True?
33. Evaluate the following statements regarding measurement of loans receivable
I.
Loans receivable is recorded at fair value less transaction cost.
II.
Direct origination costs are added while indirect origination costs are deducted to get the
carrying among of loans receivable.
III.
Subsequent to initial measurement, the entity may choose amortized cost or straight
line-method in measuring the carrying amount of loans receivable.
Global Bank granted a loan to a borrower on January 01, 2019. The interest on the loan is 12%
payable annually starting December 31, 2021. The effective interest rate on the loan is 14%.
Round off answers to the nearest ones place.
Principal Amount- 5,000,000
Origination fees received from borrower- 331,800
Direct Origination costs incurred- 100,000
Compute for the following:
Initial carrying amount P4,768,200
Interest Income for the year 2021 P687,247
Carrying amount at the end of 2020 P4,912,753
An analysis of an entity’s $150,000 accounts receivable at year end resulted in a $5,000
ending balance for its allowance for uncollectible accounts and a bad debt expense of
$2,000. During the past year, recoveries on bad debts previously written off were correctly
ANS: 2200
ABC company provided the following information for the current year
ANS: 550000
Evaluate the following statements regarding measurements of loans receivable
1. Loans receivable is recorded at fair value less trans
ANS: All statements are false
Evaluate the following statements regarding measurements of loans receivable
1. If the resulting carrying amount
ANS: Only one statement is false
Which of the following is a method to generate cash from accounts receivable?
ANS: YES YES
Which method of recording uncollectible accounts expense is consistent with acc
ANS: Yes No
A company uses the allowance method to recognize
ANS: Increase No effect
A method of estimating uncollectible accounts that emphasizes asset valuation rather
than income
ANS: Aging
Based on the industry average, Davis Corporation estimates that its bad debts should
average 3% of credit sales. The balance in the allowance for uncollectible accounts at the
beginning of Year 3 was $140,000. During Year 3, credit sales totaled $10,000,000,
accounts of $100,000 were deemed to be uncollectible, and payment was received on a
ANS: 300,000
Evaluate the following statements concerning Doubtful Accounts
1. An entity has the choice of using
ANS: Only one of the statements is true
At January 1, year 2, Jamin Co
ANS: 115,000
The following information relates to Jay Co.’s
ANS: 1085000
The following accounts were abstracted from
ANS: 30000
A company uses the allowance method to account for uncollectible accounts receivable after
recording the estimate
ANS: No effect No effect
Which of the following will cause a decrease to the net realizable of accounts receivable
ANS: Only one
On December 31, 2019, ABC company loaned one of its officers for a non-interest
ANS: 1,655,000
On December 31, year 2 balance sheet of Mann Co.
ANS: 94,000
The following information pertains to Tara Co.
ANS: 9000
ABC Company sold goods to its customers on credit. The entity had no cash sales.
ANS:7,500,000
On December 1, year 2, Tigg Mortgage Co. gave Pod Corp
ANS: 2,000
ABC company purchased from DEF
ANS: 5560
The following information applies to a manufacturing company, which has a 6-month operating
cycle
ANS: 160,000
On January 1, 2021, ABC company sold equipment with a carrying amount of P4,800,000
ANS: (300,000)
On Merf;s April 30, year 2 balance sheet a note receivable
ANS: Principal is due August 31, year 3 and interest is due August 31, year 2 and August 31
Frane Co. has an 8% note receivable dated June 30
ANS: 8000
On August 15, year 2, Benet Co.
Interest receivable
Inge Co. determined that the net value of its accounts receivable at December 31, year 2
11,000
Global bank granted a loan to a borrower
Initial carrying amount 4,768,000
Interest income for the year 2021 667,548
Carrying amount at the end of 2020 667,005
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