SOLUTION MANUAL
Intermediate Accounting
Valix Peralta Valix
VOLUME ONE - 2020 Edition
CHAPTER 1
PROBLEM 1-1 (IAA) - ALBANIA COMPANY
Requirement 1 - Adjusting Entries
a.) Accounts Receivable
Cash in Bank
200 000
200 000
b.) Cash in Bank
Accounts Payable
250 000
250 000
c.) Cash in Bank
Accounts Payable
100 000
100 000
d.) Accounts Receivable
Cash in Bank
450 000
450 000
Requirement 2 - Total Cash and Cash Equivalents
3,000,000
( 200,000)
250,000
100,000
( 450,000)
2,700,000
1,000,000
 20,000
3,720,000
Cash in Bank
Customer Check Outstanding
Undelivered Check Jan. 15
Postdated Check Delivered Jan. 31
Collection on Jan. 15
Adjusted Cash in Bank
Time Deposit - 30 days
Petty Cash Fund
Total Cash and Cash Equivalents
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PROBLEM 1-2 (IAA) - ARGENTINA COMPANY
Requirement 1 - Adjusting Entries
150 000
150 000
a.) Accounts Receivable
Cash on Hand
10 000
5 000
b.) Expenses
Receivable from Employees
Petty Cash Fund
15 000
Requirement 2 - Total Cash and Cash Equivalents
1,000,000
( 150,000)
850,000
Cash on Hand
Postdated Customer Check
Adjusted Cash on Hand
50,000
(10,000)
( 5,000)
35,000
Petty Cash Fund
Unreplenished Petty Cash Expenses
Postdated Employee Check
Adjusted Petty Cash Fund
Cash on Hand
Petty Cash Fund
Security Bank - Current Account
PNB - Current Account
Bond Sinking Fund
Total Cash and Cash Equivalents
850,000
35,000
2,000,000
1,500,000
 2,500,000
6,885,000
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PROBLEM 1-3 (IAA) - ARMENIA COMPANY
Requirement 1 - Adjusting Entries
a.) Accounts Receivable
Cash on Hand
100 000
100 000
b.) Accounts Receivable
Cash on Hand
150 000
150 000
c.) Receivable from Employees
Cash Short or Over
Petty Cash Fund
10 000
5 000
d.) Cash in Bank
Accounts Payable
200 000
200 000
e.) Cash in Bank
Accounts Payable
300 000
300 000
15 000
Requirement 2 - Total Cash
Cash on Hand
NSF Customer Check Jan. 5
Postdated Customer Check
Adjusted Cash on Hand
1,000,000
( 100,000)
( 150,000)
750,000
Petty Cash Fund
Receivable from Employees
Cash Shortage
Adjusted Petty Cash Fund
50,000
(10,000)
( 5,000)
35,000
4,000,000
200,000
 300,000
4,500,000
Cash in Bank
Undelivered Company Check Jan. 5
Postdated Check Delivered Jan. 31
Adjusted Cash in Bank
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Cash on Hand
Petty Cash Fund
Cash in Bank
Savings Deposit
Total Cash
750,000
35,000
4,500,000
2,000,000
7,285,000
PROBLEM 1-4 (PHILCPA) - CALLOUS COMPANY
Requirement 1 - Total Cash and Cash Equivalents
Cash on Hand
NSF Customer Check Jan. 5
Postdated Customer Check
Adjusted Cash on Hand
200,000
( 35,000)
( 15,000)
150,000
Petty Cash Fund
Currency and Coins
 5,000
Cash in Bank - Philippine Bank
Philippine Bank - Current Account
Undelivered Company Check
Postdated Check Delivered
Adjusted Cash in Bank
5,000,000
25,000
 45,000
5,070,000
Cash on Hand
Petty Cash Fund
Philippine Bank - Current Account
City Bank - Current Account #1
City Bank - Current Account #2
Asia Bank Saving Deposit
Asia Bank Time Deposit
Total Cash and Cash Equivalent
150,000
5,000
5,070,000
4,000,000
( 100,000)
250,000
 2,000,000
 11,375,000
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Requirement 2 - Adjusting Entries
a.) Accounts Receivable
Cash on Hand
50 000
b.) Receivable from Officer
Expenses
Cash Short or Over
Petty Cash Fund
2 000
12 000
1 000
c.) Cash in Bank - Philippine Bank
Accounts Payable
70 000
50 000
15 000
70 000
100 000
d.) Cash in Bank - City Bank
Bank Overdraft
100 000
Problem 1-5 (ACP) - ZEALOUS COMPANY
Imprest Fund System
a.) Petty Cash Fund
Cash in Bank
Fluctuating Fund System
10 000
10 000
b.) Postage
Supplies
Transportation
Misc. Expense
Petty Cash Fund
b.) No Entry
c.) Petty Cash Fund
Postage
Supplies
Transportation
Misc. Expense
Cash in Bank
a.) Petty Cash Fund
Cash in Bank
5 000
1 500
5 500
1 200
800
14 000
c.) Petty Cash Fund
Cash in Bank
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10 000
10 000
1 500
5 500
1 200
800
9 000
14 000
14 000
Problem 1-6 (ACP) - ZENITH COMPANY
Imprest Fund System
a.) Petty Cash Fund
Cash in Bank
Fluctuating Fund System
10 000
10 000
b.) No Entry
c.) No Entry
d.) Petty Cash Fund
Postage
Supplies
Transportation
Accounts Payable
Cash in Bank
10 000
1 500
3 000
1 000
3 500
19 000
a.) Petty Cash Fund
Cash in Bank
10 000
10 000
b.) Postage
Supplies
Petty Cash Fund
1 500
3 000
b.) Transportation
Accounts Payable
Petty Cash Fund
1 000
3 500
c.) Petty Cash Fund
Cash in Bank
4 500
4 500
19 000
19 000
Problem 1-7 (IAA) - LABORIOUS COMPANY
Fluctuating Fund System
Imprest Fund System
5/2  Petty Cash Fund
Cash in Bank
5/29 Postage
Supplies
Transportation
Misc. Expense
Cash in Bank
6/30 Supplies
Postage
Transportation
Petty Cash Fund
7/1 Petty Cash Fund
Supplies
Postage
Transportation
5/2  Petty Cash Fund
10 000
10 000
5/29 Postage
1 000
3 000
2 500
1 500
Supplies
Transportation
Misc. Expense
Petty Cash Fund
8 000
Petty Cash Fund
Cash in Bank
2 000
1 000
1 000
4 000
6/30 Supplies
Postage
Transportation
Petty Cash Fund
4 000
2 000
1 000
1 000
7/1 No Entry
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10 000
Cash in Bank
0
10 000
1 000
3 000
2 500
1 500
8 000
8 000
8 000
2 000
1 000
1 000
4 000
7/15 Petty Cash Fund
Supplies
Postage
Transportation
Misc. Expense
Cash in Bank
5 000
3 500
1 500
1 500
500
7/15 Supplies
Postage
Transportation
Misc. Expense
Cash in Bank
PROBLEM 1-8 (IAA) - TACIT COMPANY
11/2 Petty Cash Fund
10 000
Cash in Bank
10 000
11/30 Postage
2 000
5 000
10 000
Supplies
Petty Cash Fund
Cash in Bank
17 000
12/31 Postage
3 000
4 000
2 000
Supplies
Special Deposit
Petty Cash Fund
1/2
3 000
12 000
Petty Cash Fund
Cash in Bank
1/1
1 500
500
500
500
9 000
Petty Cash Fund
Postage
Supplies
Special Deposit
9 000
3 000
4 000
2 000
No Entry (already reversed)
1/31 Postage
5 000
6 000
7 000
1 000
Supplies
Accounts Payable
Cash Short or Over
Cash in Bank
19 000
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12 000
12 000
Problem 1-9 (IAA) - WACKY COMPANY
Fluctuating Fund System
Imprest Fund System
12/1 Petty Cash Fund
Cash in Bank
12/20 Selling Expenses
Misc. Expenses
Equipment
Cash in Bank
12/31 Rec. from Employees
Selling Expenses
Transportation
Petty Cash Fund
1/1
12/1 Petty Cash Fund
10 000
10 000
Cash in Bank
10 000
12/20 Selling Expenses
5 000
2 000
2 000
Misc. Expenses
Equipment
Petty Cash Fund
9 000
Petty Cash Fund
Cash in Bank
2 000
1 000
500
4 000
Petty Cash Fund
4 000
Rec. from Employees
2 000
Selling Expenses
1 000
Transportation
500
12/31 Rec. from Employees
Selling Expenses
Transportation
Petty Cash Fund
1/1
5 000
2 000
2 000
9 000
9 000
9 000
2 000
1 000
500
4 000
No Entry
1/15 Petty Cash Fund
1/15 No Entry
10 000
2 000
Rec. from Employees
1/31 Selling Expenses
Admin. Expenses
Transportation
Purchases
Cash in Bank
2 000
2 000
1 500
1 200
1/31 Selling Expenses
Admin. Expenses
Transportation
Purchases
Cash in Bank
6 700
Petty Cash Fund
Cash in Bank
PROBLEM 1-10 (AICPA) - TRANVIA COMPANY
350,000
750,000
 3,500,000
4,600,000 → C.
Cash in Checking Account
Cash in Money Market Account
Treasury Bill Jan. 31
Total Cash and Cash Equivalents
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2 000
500
2 000
1 000
1 200
4 700
6 700
6 700
PROBLEM 1-11 (IAA) - AFFABLE COMPANY
5,000,000
400,000
50,000
100,000
 1,000,000
6,550,000 → C.
Cash in Bank - Demand Deposit Acc.
Cash on Hand
Money Order
Manager Check
Traveler Check
Total Cash
PROBLEM 1-12 (AICPA) - THOR COMPANY
Checkbook Balance
Undelivered Company Check Jan. 15
Adjusted Cash Balance
4,000,000
500,000
4,500,000 → A.
PROBLEM 1-13 (AICPA) - JOANA COMPANY
Petty Cash Fund (50,000 -10,000)
Cash on Hand (500,000 -100,000)
Cash in Bank - Current Account
Cash in Bank - Payroll Account
Time Deposit
Cash in Sinking Fund for Bonds Payable
Total Cash and Cash Equivalents
40,000
400,000
4,000,000
1,000,000
2,000,000
 1,500,000
8,940,000 → B.
PROBLEM 1-14 (AICPA) - LAMENTABLE COMPANY
Cash in Bank (6,000,000 - 400,000)
Petty Cash Fund
Time Deposit
Savings Deposit
Total Cash and Cash Equivalents
5,600,000
50,000
2,500,000
 1,000,000
9,150,000 → B.
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PROBLEM 1-15 (AICPA) - BALONEY COMPANY
2,250,000
125,000
2,375,000 → C.
Cash in Bank
Cash on Hand
Total Cash
PROBLEM 1-16 (IAA) - YASMIN COMPANY
Petty Cash Fund
Current Acc. - First Bank (4,000,000 + 100,000)
Treasury Bill Jan. 31
Total Cash and Cash Equivalents
50,000
4,100,000
1,000,000
5,150,000 → B.
PROBLEM 1-17 (IAA) - ROMA COMPANY
600,000
4,000,000
1,000,000
2,000,000
 450,000
8,050,000 → D.
Undeposited Collections
Cash in Bank - BDO Checking Account
Cash in Bank - BDO Fund for Payroll
Cash in Bank - BDO Time Deposit
Cash in Bank - BDO VAT Account
Total Cash and Cash Equivalents
PROBLEM 1-18 (AICPA) - ARUBA COMPANY
Question 1
Checkbook Balance
Postdated Customer Check
NSF Check
Undelivered Company Check
Cash on Hand
Change Fund
Adjusted Cash Balance
8,000,000
(2,000,000)
( 500,000)
1,500,000
400,000

40,000
7,440,000 → B.
Question 2
Treasury Bill
Money Market Placement
Total Cash Equivalents
2,500,000
3,000,000
5,500,000 → C.
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PROBLEM 1-19 (IAA) - ECSTASY COMPANY
Question 1
Coin, Currency, Savings and Checking Acc.
Total Cash
 3,400,000
3,400,000 → A.
Question 2
Government Treasury Bills
Commercial Paper
Total Cash Equivalents
2,000,000
1,500,000
3,500,000 → A.
PROBLEM 1-20 (PHILCPA) - MARJORIE COMPANY
22,000
15,000
37,000 → C.
Coins and Currency
Accomodation Check
Adjusted Petty Cash Fund Balance
PROBLEM 1-21 (PHILCPA) - ADMIRABLE COMPANY
2,000
4,000
6,000 → C.
Coins and Currency
Reimbursement Check
Adjusted Petty Cash Fund Balance
PROBLEM 1-22 (ACP) - LOVE COMPANY
Question 1
Checkbook Balance
Erroneous Customer Check
Undelivered Company Check
Adjusted Cash in Bank
4,000,000
( 200,000)
400,000
4,200,000 → B.
Question 2
Cash in Bank
Cash on Hand
Petty Cash Fund (5,000 + 40,000)
Total Cash
4,200,000
400,000
45,000
4,645,000 → A.
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PROBLEM 1-23 (IAA)
1. D.
2. B.
3. A.
4. B.
5. D.
6. C.
7. B.
8. D.
9. A.
10. C.
PROBLEM 1-24 (IAA)
1.
2.
3.
4.
5.
D.
A.
C.
B.
D.
1.
2.
3.
4.
5.
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PROBLEM 1-25 (IAA)
0
D.
D.
C.
C.
B.
SOLUTION MANUAL
Intermediate Accounting
Valix Peralta Valix
VOLUME ONE - 2020 Edition
CHAPTER 2
PROBLEM 2-1 (IAA) - APATHY COMPANY
Requirement 1 - Adjusted Balance Method
Book Balance
Add: Notes Collected by Bank
Total
Less: Bank Service Charge
Adjusted Book Balance
65,000
30,000
95,000
2,000
93,000
Bank Balance
Add: Deposit in Transit
Total
Less: Outstanding Checks
Check No. 102 15,000
Check No. 105 30,000
Check No. 107 50,000
Adjusted Bank Balance
Requirement 2 - Adjusting Entries
a.) Cash in Bank
Notes Receivable
30 000
b.) Bank Service Charge
Cash in Bank
2 000
30 000
2 000
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108,000
80,000
188,000
95,000
93,000
PROBLEM 2-2 (IAA) - SENSIBLE COMPANY
Requirement 1 - Adjusted Balance Method
Book Balance
Add: Notes Collected by Bank
Total
Less: NSF Check
10,000
Service Charge
5,000
Bank Error
27,000
(52,000-25,000)
Adjusted Book Balance
110,000
45,000
155,000
42,000
113,000
Bank Balance
135,000
Add: Deposit in Transit 60,000
Bank Error
8,000 68,000
Total
203,000
Less: Outstanding Checks
Check No. 770
20,000
Check No. 775
30,000
Check No. 777
40,000 90,000
Adjusted Bank Balance
113,000
Requirement 2 - Adjusting Entries
a.) Cash in Bank
Bank Service Charge
Notes Receivable
45 000
5 000
b.) Accounts Receivable
Cash in Bank
10 000
c.) Bank Service Charge
Cash in Bank
5 000
50 000
10 000
5 000
d.) Accounts Payable
Cash in Bank
27 000
27 000
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PROBLEM 2-3 (IAA) - XANTHOUS COMPANY
Requirement 1 - Adjusted Balance Method (Unadjusted & Adjusted)
Book Balance
Add: Notes Collected by Bank
Total
Less: Bank Service Charge
Adjusted Book Balance
2,840,000
270,000
3,110,000
5,000
3,105,000
Book Balance
3,265,000
Add: Notes Collected by Bank
450,000
Total
3,715,000
Less: Outstanding Checks
Check No. 122 180,000
Check No. 124 120,000
Check No. 116
60,000
Check No. 125 250,000
610,000
Adjusted Bank Balance
3,105,000
Requirement 2 - Adjusting Entries
a.) Cash in Bank
Bank Service Charge
Notes Receivable
Interest Revenue
270 000
10 000
b.) Accounts Receivable
Cash in Bank
5 000
250 000
30 000
5 000
PROBLEM 2-4 (IAA) - CHIVALRY COMPANY
Requirement 1 - Adjusted Balance Method
Book Balance
Add: Coll. of Note
2,500,000
Int. on Note
150,000
Book Error CN#175 45,000
Total
Less: NSF Check
220,000
Service Charge
5,000
Payment for
245,000
Light and Water
Adjusted Book Balance
1,405,000
2,695,000
4,100,000
Bank Balance
Add: Deposit in Transit
Total
Less: Bank Error
1,100,000
Outstanding 1,650,000
Checks
Adjusted Bank Balance
470,000
3,630,000
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5,630,000
750,000
6,380,000
2,750,000
3,630,000
Requirement 2 - Adjusting Entries
a.) Cash in Bank
Notes Receivable
Interest Income
Accounts Payable
2 695 000
b.) Accounts Receivable
Cash in Bank
220 000
c.) Bank Service Charge
Cash in Bank
5 000
2 500 000
150 000
45 000
220 000
5 000
d.) Light and Water
Cash in Bank
245 000
245 000
PROBLEM 2-5 (IAA) - ZODIAC COMPANY
Requirement 1 - Book to Bank Method
Balance per Book - April 30
Credit Memo for Note Collected
Outstanding Checks:
Check No. 1331
Check No. 1332
Check No. 1334
Check No. 1335
Total
Less: NSF Check
Bank Service Charge
Undeposited Collections
Balance per Bank - April 30
1,100,000
60,000
40,000
30,000
60,000
10,000
25,000
5,000
270,000

140,000
1,300,000
300,000
1,000,000
Requirement 2 - Adjusting Entries
a.) Cash in Bank
Notes Receivable
60 000
60 000
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b.) Bank Service Charge
Accounts Receivable
Cash in Bank
5 000
25 000
30 000
Requirement 3 - Adjusted Cash in Bank
Balance per Book - April 30
Credit Memo for Note Collected
NSF Check
Bank Service Charge
Adjusted Cash in Bank
1,100,000
60,000
( 25,000)
(
5,000)
1,130,000
PROBLEM 2-6 (IAA) - RADIANT COMPANY
Requirement 1 - Bank to Book Method
Balance per Bank - January 31
Add: Undeposited Collections
NSF Check
Debit Memo for Safety Deposit
Unrecorded Check
Total
Less: Checks Outstanding
Overstatement of Creditor’s Check
Understatement of Cust. Check
Balance per Book - January 31
3,500,000
550,000
50,000
5,000
125,000 
730,000
4,230,000
650,000
270,000
180,000  1,100,000
3,130,000
Requirement 2 - Adjusting Entries
a.) Cash in Bank
Accounts Payable
Accounts Receivable
450 000
b.) Accounts Receivable
Bank Service Charge
Accounts Payable
Cash in Bank
50 000
5 000
125 000
270 000
180 000
180 000
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Requirement 3 - Adjusted Cash in Bank
Balance per Book - January 31
Overstatement of Creditor’s Check
Understatement of Customer’s Check
Total
NSF Check
Debit Memo for Safety Deposit
Unrecorded Check
Adjusted Book Balance
3,130,000
270,000
180,000
3,580,000
( 50,000)
(
5,000)
( 125,000)
3,400,000
PROBLEM 2-7 (IAA) - RANCOR COMPANY
Requirement 1 - Adjusted Balance Method
Balance per Book
Proceeds of Bank Loan
Note Collected by Bank
Service Charge
Book Error
Adjusted Book Balance
2,700,000
940,000
435,000
( 10,000)
( 50,000)
4,015,000
Balance per Bank
Deposit in Transit
Bank Error
Erroneous Bank Charge
Erroneous Debit Memo
Outstanding Checks
Erroneous Bank Credit
Adjusted Bank Balance
Requirement 2 - Adjusting Entries
a.) Cash in Bank
Interest Expense (1,000,000 x 12% x 6/12) x 1/6
Prepaid Interest Expense (60,000-10,000)
Loan Payable (940,000/94%)
940 000
10 000
50 000
b.) Cash in Bank
Bank Service Charge
Notes Receivable
Interest Income
435 000
5 000
c.) Bank Service Charge
Accounts Receivable
Cash in Bank
10 000
50 000
1 000 000
400 000
40 000
60 000
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4,000,000
475,000
90,000
150,000
200,000
( 600,000)
( 300,000)
4,015,000
PROBLEM 2-8 (IAA) - ALPHA COMPANY
Requirement 1 - Adjusted Balance Method
Balance per Book
Proceeds of Bank Loan
Petty Cash Fund
Book Error
Adjusted Book Balance
5,000,000
516,000
( 10,000)
( 180,000)
5,326,000
Balance per Bank
Deposit in Transit
Erroneous Bank Charge
Outstanding Checks
Erroneous Bank Credit
Adjusted Bank Balance
5,500,000
450,000
50,000
( 544,000)
( 130,000)
5,326,000
Requirement 2 - Adjusting Entries
a.) Cash in Bank
Interest Expense (600,000 x 14% x 12/12) x 1/12
Prepaid Interest Expense (84,000-7,000)
Accounts Payable
Petty Cash Fund
Supplies
Transportation
Postage
Loan Payable (516,000/86%)
326 000
7 000
77 000
180 000
4 000
2 000
3 000
1 000
600 000
PROBLEM 2-9 (IAA) - PATHETIC COMPANY
Requirement 1 - Adjusted Balance Method
Balance per Book
Book Error
Check No. 555 Stopped
Service Charge
NSF Check
Adjusted Book Balance
1,300,000 Balance per Bank
1,200,000
20,000 Deposit in Transit
275,000
10,000 Outstanding Checks
(
5,000)
Check No. 761
55,000
( 85,000)
Check No. 762
40,000
1,240,000
Check No. 763
25,000
Check No. 764
65,000
Check No. 765
50,000 ( 235000)
Adjusted Bank Balance
1,240,000
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Requirement 2 - Adjusting Entries
a.) Cash in Bank
Accounts Payable
Miscellaneous Income
30 000
b.) Accounts Receivable
Cash in Bank
85 000
c.) Bank Service Charge
Cash in Bank
5 000
20 000
10 000
85 000
5 000
d.) Receivable from Cashier
Accounts Receivable
Sales Discounts
40 000
30 000
10 000
PROBLEM 2-10 (AICPA) - APEX COMPANY
1,805,000
325,000
2,130,000
( 275,000)
1,855,000 → A.
Balance per Bank
Deposit in Transit
Total
Outstanding Checks
Adjusted Bank Balance
PROBLEM 2-11 (IAA) - CORE COMPANY
Balance per Bank
Deposit in Transit
Erroneous Bank Credit
Outstanding Checks (500,000 - 100,000)
Adjusted Bank Balance
2,000,000
200,000
(  300,000)
( 400,000)
1,500,000 → A.
Balance per Book
NSF Checks (150,000 - 50,00)
Proceeds of Note Collected
Adjusted Book Balance
850,000
( 100,000)
750,000
1,500,000
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SOLUTION MANUAL
Intermediate Accounting
Valix Peralta Valix
VOLUME ONE - 2020 Edition
CHAPTER 2
PROBLEM 2-1 (IAA) - APATHY COMPANY
Requirement 1 - Adjusted Balance Method
Book Balance
Add: Notes Collected by Bank
Total
Less: Bank Service Charge
Adjusted Book Balance
65,000
30,000
95,000
2,000
93,000
0
Requirement 2 - Adjusting Entries
0
Bank Balance
Add: Deposit in Transit
Total
Less: Outstanding Checks
Check No. 102 15,000
Check No. 105 30,000
Check No. 107 50,000
Adjusted Bank Balance
108,000
80,000
188,000
95,000
93,000
a.) Cash in Bank
Notes Receivable
30 000
b.) Bank Service Charge
Cash in Bank
2 000
30 000
2 000
mariapatricia.arana-19@cpu.edu.ph
0
0
PROBLEM 2-2 (IAA) - SENSIBLE COMPANY
Requirement 1 - Adjusted Balance Method
Book Balance
Add: Notes Collected by Bank
Total
Less: NSF Check
10,000
Service Charge
5,000
Bank Error
27,000
(52,000-25,000)
Adjusted Book Balance
110,000
45,000
155,000
42,000
113,000
Bank Balance
135,000
Add: Deposit in Transit 60,000
Bank Error
8,000 68,000
Total
203,000
Less: Outstanding Checks
Check No. 770
20,000
Check No. 775
30,000
Check No. 777
40,000 90,000
Adjusted Bank Balance
113,000
Requirement 2 - Adjusting Entries
a.) Cash in Bank
Bank Service Charge
Notes Receivable
45 000
5 000
b.) Accounts Receivable
Cash in Bank
10 000
c.) Bank Service Charge
Cash in Bank
5 000
50 000
10 000
5 000
d.) Accounts Payable
Cash in Bank
27 000
27 000
0
0
mariapatricia.arana-19@cpu.edu.ph
0
0
PROBLEM 2-3 (IAA) - XANTHOUS COMPANY
Requirement 1 - Adjusted Balance Method (Unadjusted & Adjusted)
Book Balance
Add: Notes Collected by Bank
Total
Less: Bank Service Charge
Adjusted Book Balance
2,840,000
270,000
3,110,000
5,000
3,105,000
Book Balance
3,265,000
Add: Notes Collected by Bank
450,000
Total
3,715,000
Less: Outstanding Checks
Check No. 122 180,000
Check No. 124 120,000
Check No. 116
60,000
Check No. 125 250,000
610,000
Adjusted Bank Balance
3,105,000
Requirement 2 - Adjusting Entries
a.) Cash in Bank
Bank Service Charge
Notes Receivable
Interest Revenue
270 000
10 000
b.) Accounts Receivable
Cash in Bank
5 000
250 000
30 000
5 000
PROBLEM 2-4 (IAA) - CHIVALRY COMPANY
Requirement 1 - Adjusted Balance Method
Book Balance
Add: Coll. of Note
2,500,000
Int. on Note
150,000
Book Error CN#175 45,000
Total
Less: NSF Check
220,000
Service Charge
5,000
Payment for
245,000
Light and Water
Adjusted Book Balance
1,405,000
2,695,000
4,100,000
470,000
3,630,000
mariapatricia.arana-19@cpu.edu.ph
0
0
Bank Balance
Add: Deposit in Transit
Total
Less: Bank Error
1,100,000
Outstanding 1,650,000
Checks
Adjusted Bank Balance
5,630,000
750,000
6,380,000
2,750,000
3,630,000
Requirement 2 - Adjusting Entries
a.) Cash in Bank
Notes Receivable
Interest Income
Accounts Payable
2 695 000
b.) Accounts Receivable
Cash in Bank
220 000
c.) Bank Service Charge
Cash in Bank
5 000
d.) Light and Water
Cash in Bank
2 500 000
150 000
45 000
220 000
5 000
0
0
245 000
245 000
PROBLEM 2-5 (IAA) - ZODIAC COMPANY
Requirement 1 - Book to Bank Method
1,100,000
60,000
Balance per Book - April 30
Credit Memo for Note Collected
Outstanding Checks:
Check No. 1331
Check No. 1332
Check No. 1334
Check No. 1335
Total
Less: NSF Check
Bank Service Charge
Undeposited Collections
Balance per Bank - April 30
40,000
30,000
60,000
10,000
25,000
5,000
270,000
140,000
1,300,000
300,000
1,000,000
Requirement 2 - Adjusting Entries
60 000
a.) Cash in Bank
Notes Receivable
60 000
mariapatricia.arana-19@cpu.edu.ph
0
0
b.) Bank Service Charge
Accounts Receivable
Cash in Bank
5 000
25 000
30 000
Requirement 3 - Adjusted Cash in Bank
Balance per Book - April 30
Credit Memo for Note Collected
NSF Check
Bank Service Charge
Adjusted Cash in Bank
1,100,000
60,000
( 25,000)
(
5,000)
1,130,000
PROBLEM 2-6 (IAA) - RADIANT COMPANY
Requirement 1 - Bank to Book Method
Balance per Bank - January 31
Add: Undeposited Collections
NSF Check
Debit Memo for Safety Deposit
Unrecorded Check
Total
Less: Checks Outstanding
Overstatement of Creditor’s Check
Understatement of Cust. Check
Balance per Book - January 31
0
Requirement 2 - Adjusting Entries
3,500,000
550,000
50,000
5,000
125,000 
730,000
4,230,000
650,000
270,000
180,000  1,100,000
3,130,000
0
a.) Cash in Bank
Accounts Payable
Accounts Receivable
450 000
b.) Accounts Receivable
Bank Service Charge
Accounts Payable
Cash in Bank
50 000
5 000
125 000
270 000
180 000
180 000
mariapatricia.arana-19@cpu.edu.ph
0
0
Requirement 3 - Adjusted Cash in Bank
3,130,000
270,000
180,000
3,580,000
( 50,000)
(
5,000)
( 125,000)
3,400,000
Balance per Book - January 31
Overstatement of Creditor’s Check
Understatement of Customer’s Check
Total
NSF Check
Debit Memo for Safety Deposit
Unrecorded Check
Adjusted Book Balance
PROBLEM 2-7 (IAA) - RANCOR COMPANY
Requirement 1 - Adjusted Balance Method
Balance per Book
Proceeds of Bank Loan
Note Collected by Bank
Service Charge
Book Error
Adjusted Book Balance
2,700,000
940,000
435,000
( 10,000)
( 50,000)
4,015,000
Balance per Bank
Deposit in Transit
Bank Error
Erroneous Bank Charge
Erroneous Debit Memo
Outstanding Checks
Erroneous Bank Credit
Adjusted Bank Balance
Requirement 2 - Adjusting Entries
a.) Cash in Bank
Interest Expense (1,000,000 x 12% x 6/12) x 1/6
Prepaid Interest Expense (60,000-10,000)
Loan Payable (940,000/94%)
940 000
10 000
50 000
b.) Cash in Bank
Bank Service Charge
Notes Receivable
Interest Income
435 000
5 000
c.) Bank Service Charge
Accounts Receivable
Cash in Bank
10 000
50 000
1 000 000
400 000
40 000
60 000
mariapatricia.arana-19@cpu.edu.ph
0
0
4,000,000
475,000
90,000
150,000
200,000
( 600,000)
( 300,000)
4,015,000
PROBLEM 2-8 (IAA) - ALPHA COMPANY
Requirement 1 - Adjusted Balance Method
Balance per Book
Proceeds of Bank Loan
Petty Cash Fund
Book Error
Adjusted Book Balance
5,000,000
516,000
( 10,000)
( 180,000)
0
0
5,326,000
Balance per Bank
Deposit in Transit
Erroneous Bank Charge
Outstanding Checks
Erroneous Bank Credit
Adjusted Bank Balance
5,500,000
450,000
50,000
( 544,000)
( 130,000)
5,326,000
Requirement 2 - Adjusting Entries
a.) Cash in Bank
Interest Expense (600,000 x 14% x 12/12) x 1/12
Prepaid Interest Expense (84,000-7,000)
Accounts Payable
Petty Cash Fund
Supplies
Transportation
Postage
Loan Payable (516,000/86%)
326 000
7 000
77 000
180 000
4 000
2 000
3 000
1 000
600 000
PROBLEM 2-9 (IAA) - PATHETIC COMPANY
Requirement 1 - Adjusted Balance Method
Balance per Book
Book Error
Check No. 555 Stopped
Service Charge
NSF Check
Adjusted Book Balance
1,300,000 Balance per Bank
1,200,000
20,000 Deposit in Transit
275,000
10,000 Outstanding Checks
(
5,000)
Check No. 761
55,000
( 85,000)
Check No. 762
40,000
1,240,000
Check No. 763
25,000
Check No. 764
65,000
Check No. 765
50,000 ( 235000)
Adjusted Bank Balance
1,240,000
mariapatricia.arana-19@cpu.edu.ph
0
0
Requirement 2 - Adjusting Entries
a.) Cash in Bank
Accounts Payable
Miscellaneous Income
30 000
b.) Accounts Receivable
Cash in Bank
85 000
c.) Bank Service Charge
Cash in Bank
5 000
20 000
10 000
85 000
5 000
40 000
d.) Receivable from Cashier
Accounts Receivable
Sales Discounts
30 000
10 000
PROBLEM 2-10 (AICPA) - APEX COMPANY
Balance per Bank
Deposit in Transit
Total
Outstanding Checks
Adjusted Bank Balance
0
0
1,805,000
325,000
2,130,000
( 275,000)
1,855,000 → A.
PROBLEM 2-11 (IAA) - CORE COMPANY
Balance per Bank
Deposit in Transit
Erroneous Bank Credit
Outstanding Checks (500,000 - 100,000)
Adjusted Bank Balance
2,000,000
200,000
(  300,000)
( 400,000)
1,500,000 → A.
Balance per Book
NSF Checks (150,000 - 50,00)
Proceeds of Note Collected
Adjusted Book Balance
850,000
( 100,000)
750,000
1,500,000
mariapatricia.arana-19@cpu.edu.ph
0
0
PROBLEM 2-12 (AICPA) - CASE COMPANY
Balance per Bank
Deposit in Transit
Erroneous Bank Credit
Outstanding Checks
Adjusted Bank Balance
3,800,000
520,000
(  40,000)
( 675,000)
3,605,000
Unadjusted Book Balance (SQUEEZE)
Bank Service Charge
NSF Check
Adjusted Cash in Bank Balance
3,660,000 → B.
(
5,000)
(
50,000)
3,605,000
PROBLEM 2-13 (AICPA) - ABLE COMPANY
February 28 Book Balance
Note Collected by Bank
Interest Earned on Note
NSF Check
Bank Service Charges (2,000 + 3,000)
Adjusted Book Balance
1,460,000
100,000
10,000
(  130,000)
(
5,000)
1,435,000
Balance per Bank (SQUEEZE)
Deposit in Transit
Bank Error - Erroneous Charge
Outstanding Checks
Adjusted Cash in Bank Balance
1,530,000 → B.
85,000
20,000
( 200,000)
1,435,000
PROBLEM 2-14 (IAA) - LACONIC COMPANY
Balance per Ledger
Unrecorded Customer Check
Bank Service Charge
NSF Check
Adjusted Book Balance
0
0
920,000
35,000
(  15,000)
( 40,000)
900,000 → A.
mariapatricia.arana-19@cpu.edu.ph
PROBLEM 2-15 (IAA) - SAPPHIRE COMPANY
Balance per Bank
Deposit in Transit
Outstanding Checks
0
0
2,800,000
350,000
(  650,000)
Adjusted Bank Balance
2,500,000
Balance per Ledger (SQUEEZE)
Interest Income
Service Charge
Book Error (64,000 - 46,000)
Adjusted Book Balance
2,520,000 → B.
10,000
(
12,000)
(
18,000)
2,500,000
PROBLEM 2-16 (IAA) - ADVERSARY COMPANY
Balance per Book
Note Collected by Bank
Book Error (200,000 - 20,000)
NSF Check
Service Charges
Adjusted Book Balance
8,500,000
950,000
(  180,000)
(  250,000)
(
20,000)
9,000,000
Balance per Bank (SQUEEZE)
Deposit in Transit
Outstanding Checks
Adjusted Cash in Bank Balance
8,300,000
1,000,000
( 300,000)
9,000,000 → C.
Cash in Bank
Note Receivable
950 000
Accounts Payable
Accounts Receivable
Service Charge
Cash in Bank
180 000
250 000
20 000
950 000
450 000
Net Debit P500,000 → C.
mariapatricia.arana-19@cpu.edu.ph
0
0
PROBLEM 2-17 (IAA) - TIMEX COMPANY
Balance per Ledger (SQUEEZE)
Proceeds of Bank Loan
Proceeds of Customer Note
DM Service Charge
Collection Fee by Bank
NSF Check
Adjusted Book Balance
2,120,000 → A.
500,000
450,000
(
5,000)
(
15,000)
(
50,000)
3,000,000
Balance per Bank (SQUEEZE)
Deposit in Transit
Bank Error
Outstanding Checks (750,000 - 50,000)
Adjusted Bank Balance
3,070,000 → B.
450,000
180,000
(  700,000)
3,000,000
0
0
PROBLEM 2-18 (AICPA) - JANE COMPANY
Balance per Ledger (SQUEEZE)
Note Collected by Bank
Interest on Note
Book Error
Service Charge
NSF Check
Adjusted Book Balance
7,070,000 → A.
1,000,000
100,000
100,000
(
20,000)
( 500,000)
7,750,000
Balance per Bank
Deposit in Transit
Bank Error - Erroneous Credit
Outstanding Checks (1,500,000 - 200,000)
Adjusted Bank Balance
8,000,000
1,200,000
( 150,000)
( 1,300,000)
7,750,000 → A.
Currency and Coins on hand
Petty Cash Fund
Adjusted Cash in Bank
Total Cash (Current Assets)
900,000
50,000
7,750,000
8,700,000 → A.
mariapatricia.arana-19@cpu.edu.ph
0
0
PROBLEM 2-19 (AICPA) - PEARL COMPANY
Balance per Bank, July 1
Deposits
Checks Processed
Service Charge
NSF Check
Monthly Loan Payment
Balance per Bank, July 31
550,000
1,800,000
( 1,400,000)
(
30,000)
( 120,000)
( 100,000)
700,000 → A.
Balance per Bank, July 31
Deposit in Transit
Bank Error (300,000 - 30,000)
Outstanding Check
Adjusted Bank Balance
700,000
100,000
270,000
( 150,000)
920,000 → B.
Balance per Ledger (SQUEEZE)
Book Error (200,000 - 20,000)
Service Charge
NSF Check
Monthly Loan Payment
Adjusted Book Balance
990,000 → C.
180,000
( 30,000)
( 120,000)
( 100,000)
920,000
PROBLEM 2-20 (IAA)
1.
2.
3.
4.
5.
6.
7.
D.
A.
C.
B.
C.
A.
B.
0
0
PROBLEM 4-6 (IAA) - PRIME COMPANY
Requirement 1 - Sale of Merchandise on Account, 2/10, n/30
2 450 000
Accounts Receivable
2 450 000
Sales Revenue
Requirement 2 - Collection within the Discount Period
Cash
2 450 000
Accounts Receivable
2 450 000
Requirement 3 - Collection beyond the Discount Period
2 500 000
Cash
2 450 000
Accounts Receivable
50 000
Sales Discount - Forfeited
PROBLEM 4-7 (IAA) - RAVEN COMPANY
Requirement 1 - Sale of Merchandise on Account, 2/10, n/30
Accounts Receivable
4 000 000
Sales Revenue
4 000 000
Requirement 2 - Sales Returns
Sales Return
Accounts Receivable
300 000
300 000
Requirement 3 - Year-end Adjusting Entry for Estimated Sales Returns
Sales Return
100 000
Accounts Receivable
100 000
Estimated Sales Returns (10% x 4,000,000)
Actual Returns
Balance
400,000
300,000
100,000
mariapatricia.arana-19@cpu.edu.ph
0
0
PROBLEM 4-8 (AICPA) - VALIANT COMPANY
Trade Accounts Receivable
Allowance for Doubtful Accounts
Claims Receivable
Total Trade and other Receivables
2,000,000
( 100,000)
 300,000
2,200,000 → A.
PROBLEM 4-9 (AICPA) - JINX COMPANY
1,300,000
5,500,000
( 5,000,000)
( 150,000)
( 100,000)
 1,550,000
( 250,000)
( 50,000)
1,250,000 → B.
Accounts Receivable, January 1
Credit Sales
Collections from Customers
Sales Returns
Accounts Written-off
Accounts Receivable, December 31
Allowance for Doubtful Accounts
Allowance for Sales Returns
Net Realizable Value
PROBLEM 4-10 (AICPA) - RAPTURE COMPANY
Accounts Receivable, January 1
Credit Sales
Collections from Customers
Accounts Written-off
Accounts Receivable, December 31
1,300,000
5,400,000
( 4,750,000)
( 125,000)
 1,825,000 → A.
PROBLEM 4-11 (PHILCPA) - HAREM COMPANY
3,500,000
800,000
150,000
 200,000
4,650,000 → A.
Trade Accounts Receivable
Trade Installments Receivable (850,000 - 50,000)
Trade Accounts Receivable from Officers
Accounts on which PDC are held
Total Trade Accounts Receivable
mariapatricia.arana-19@cpu.edu.ph
0
0
PROBLEM 4-12 (IAA) - VON COMPANY
Accounts Receivable, January 1
Charge Sales
Accounts written-off but recovered
Total
Collections from Customers
Accounts Written-off
Merchandise Returns
Allow. to customers for shipping damages
Accounts Receivable, December 31
560,000
5,250,000
10,000
5,820,000
( 5,150,000)
(
35,000)
(
25,000)
(
15,000)
 595,000 → B.
Accounts Receivable, January 1
Credit balance of Customer
Adjusted Accounts Receivable
530,000
30,000
560,000
Collections from Customers
Overpayment
Adjusted Collections
5,200,000
(
50,000)
 5,150,000
Accounts Receivable
Claim Receivable (400,000 - 50,000)
Advances to Supplier
Total Trade and other Receivables
595,000
350,000
 300,000
1,245,000 → C.
Subscriptions Receivable (1,000,000 - 200,000)
Deposit on Contract
Total long-term other Receivables
800,000
 500,000
1,300,000 → C.
PROBLEM 4-13 (IAA) - WONDER COMPANY
950,000
3,800,000
4,750,000
( 3,024,000)
( 126,000)
(
50,000)
( 250,000)
 1,300,000 → A.
Accounts Receivable, January 1
Credit Sales
Total
Cash received from Credit Customers
Sales Discounts
Accounts Receivable Written-off
Sales Returns and Allowances
Accounts Receivable, December 31
mariapatricia.arana-19@cpu.edu.ph
0
0
Total Sales
Cash from Cash Customers - Cash Sales
Credit Sales
5,900,000
( 2,100,000)
3,800,000
Gross A/R Collected (3,024,000/96%)
Sales Discounts (4% x 3,150,000)
Cash Received from Credit Customers
3,150,000
( 126,000)
 3,024,000
Gross Amount
Cash Discounts
Net Amount
100%
( 4%)
96%
Allow. for Doubtful Accounts, January 1
Recovery of Accounts Written-off
Doubtful Accounts Expense for Cur. Year
Total
Accounts Written-off
100,000
80,000
 70,000
250,000
( 50,000)
200,000 → B.
Allow. for Doubtful Accounts, December 31
PROBLEM 4-14 (IAA)
PROBLEM 4-15 (AICPA)
1. D.
2. D.
3. A.
4. C.
5. D.
6. C.
7. D.
8. B.
9. A.
10. C.
1.
2.
3.
4.
5.
mariapatricia.arana-19@cpu.edu.ph
0
0
C.
A.
A.
D.
B.
SOLUTION MANUAL
Intermediate Accounting
Valix Peralta Valix
VOLUME ONE - 2020 Edition
CHAPTER 5
PROBLEM 5-1 (IAA) - MARVELOUS COMPANY
Requirement 1
Credit Sales (5,000,000 x 75%) = 3,750,000
Doubtful Accounts (3,750,000 x 2%) = 75,000
75 000
Doubtful Accounts
Allowance for Doubtful Accounts
75 000
Requirement 2
Doubtful Accounts (5,000,000 x 1%)
Allowance for Doubtful Accounts
Requirement 3
Required Allowance
Credit Balance of Allowance
Doubtful Accounts Expense
50 000
50 000
80,000
(20,000)
60,000
60 000
Doubtful Accounts
Allowance for Doubtful Accounts
Requirement 4
Required Allowance (500,000 x 10%)
Credit Balance of Allowance
Doubtful Accounts Expense
60 000
50,000
20,000
30,000
30 000
Doubtful Accounts
Allowance for Doubtful Accounts
30 000
mariapatricia.arana-19@cpu.edu.ph
0
0
PROBLEM 5-2 (IAA) - TEMPLATE COMPANY
Requirement 1 - Journal Entries pertaining to Accounts Receivable
7 000 000
1. Accounts Receivable
7 000 000
Sales
2. Cash
Sales Discount
Accounts Receivable
2 450 000
50 000
3. Cash
Accounts Receivable
3 900 000
2 500 000
3 900 000
4. Allowance for Doubtful Accounts
Accounts Receivable
30 000
5. Allowance for Doubtful Accounts
Accounts Receivable
10 000
30 000
10 000
Cash
Accounts Receivable
10 000
6. Sales Return
Accounts Receivable
70 000
10 000
70 000
Requirement 2
Allow. for Doubtful Accounts - 12/31
60,000
(20,000)
40,000
(1,500,000 x 4%)
Allowance before Adjustment
Doubtful Accounts Expense
(40,000/1,000,000 = 4%)
(7,000,000 + 1,000,000 - 2,500,000 - 3,900,000 - 30,000 - 70,000 = 1,500,000)
(40,000 + 10,000 - 30,000 = 20,000)
Doubtful Accounts
Allowance for Doubtful Accounts
Requirement 3
Accounts Receivable - 12/31
Allowance for Doubtful Accounts
Net Realizable Value
40 000
40 000
1,500,000
( 60,000)
1,440,000
mariapatricia.arana-19@cpu.edu.ph
0
0
PROBLEM 5-3 (IAA) - JOCOSE COMPANY
Requirement 1 - Journal Entries pertaining to Transactions
800 000
1. Cash
7 200 000
Accounts Receivable
8 000 000
Sales ( 800,000/10%)
2. Cash
Sales Discount (720,000 x 5%)
Accounts Receivable (7,200,000 x 10%)
3. Cash
Accounts Receivable
684 000
38 000
720 000
5 940 000
5 940 000
4. Sales Discount
Allowance for Sales Discount
10 000
5. Sales Return
Accounts Receivable
80 000
6. Allowance for Doubtful Accounts
Accounts Receivable
60 000
10 000
80 000
60 000
Accounts Receivable
Allowance for Doubtful Accounts
10 000
Cash
Accounts Receivable
10 000
10 000
10 000
7. Doubtful Accounts
Allowance for Doubtful Accounts
70 000
70 000
Required Allowance - 12/31
120,000
(50,000)
70,000
(2,400,000 x 5%)
Allowance before Adjustment
Doubtful Accounts Expense
(100,000/2,000,000 = 5%)
(7,200,000 + 2,000,000 - 720,000 - 5,940,000 - 80,000 - 60,000 = 2,400,000)
(100,000 + 10,000 - 60,000 = 50,000)
mariapatricia.arana-19@cpu.edu.ph
0
0
Requirement 2
Accounts Receivable - 12/31
Allowance for Doubtful Accounts
Allowance for Sales Discount
Net Realizable Value
2,400,000
( 120,000)
( 10,000)
2,270,000
PROBLEM 5-4 (IAA) - RELENTLESS COMPANY
Requirement 1 - Journal Entries pertaining to Transactions
1. Accounts Receivable
2 600 000
Sales ( 3,070,000 - 470,000)
2 600 000
2. Cash (2,455,000 - 1,455,000)
Accounts Receivable
1 000 000
3. Cash
Sales Discount (1,455,000 x 3%)
Accounts Receivable (1,455,000/97%)
1 455 000
45 000
1 000 000
1 500 000
4. Allowance for Doubtful Accounts
Accounts Receivable
20 000
20 000
5. Cash
Sales
470 000
470 000
6. Sales Return and Allowances
Accounts Receivable
55 000
7. Sales Returns and Allowances
Cash
10 000
55 000
10 000
8. Accounts Receivable
Allowance for Doubtful Accounts
5 000
5 000
Cash
Accounts Receivable
5 000
5 000
mariapatricia.arana-19@cpu.edu.ph
0
0
Requirement 2 - Adjustment
Doubtful Accounts
Allowance for Doubtful Accounts
Credit Sales
Sales Discount
Sales Return and Allowances
Net Credit Sales
50 000
50 000
2,600,000
( 45,000)
( 55,000)
2,500,000
Doubtful Accounts (2,500,000 x 2%) = 50,000

Requirement 3
Accounts Receivable
Allowance for Doubtful Accounts
Net Realizable Value
625,000
( 60,000)
565,000
(2,600,000 + 600,000 - 1,000,000 - 1,500,000 - 20,000 - 55,000 = 625,000)
(50,000 + 25,000 + 5,000 - 20,000 = 60,000)
PROBLEM 5-5 (IAA) - NOSTALGIA COMPANY
Requirement 1 - Journal Entries pertaining to Transactions
7 935 000
1. Accounts Receivable
7 935 000
Sales
2. Cash
Sales Discount (4,500,000 x 2%)
Accounts Receivable (4,410,000/98%)
4 410 000
90 000
3. Cash
Sales Discount (2,500,000 x 1%)
Accounts Receivable (2,475,000/99%)
2 475 000
25 000
4 500 000
2 500 000
4. Accounts Receivable
Allowance for Doubtful Accounts
15 000
15 000
Cash
Accounts Receivable
15 000
5. Cash
Accounts Receivable
1 100 000
15 000
1 100 000
(8,000,000 - 4,410,000 - 2,475,000 - 15,000)
mariapatricia.arana-19@cpu.edu.ph
0
0
6. Allowances for Doubtful Accounts
Accounts Receivable
55 000
7. Sales Return
Accounts Receivable
30 000
55 000
30 000
Requirement 2 - Adjustment
Doubtful Accounts
Allowance for Doubtful Accounts
30 000
30 000
Required Allowance (1,250,000 x 4%)
Allowance before Adjustment
Doubtful Accounts Expense
50,000
(20,000)
30,000
(60,000/1,500,000 = 4%)
(7,935,000 + 1,500,000 - 4,500,000 - 2,500,000 + 15,000 - 15,000 - 1,100,000 - 55,000 - 30,000 =  1,250,000)
(60,000 + 15,000 - 55,000 = 20,000)
Requirement 3
Accounts Receivable
Allowance for Doubtful Accounts
Net Realizable Value
1,250,000
( 50,000)
1,200,000
PROBLEM 5-6 (PHILCPA) - RAMPANT COMPANY
Amount
1,700,000
1,200,000
100,000
150,000
1,200,000
 3,270,000
1. Not yet due
1 – 30 days past due
31 – 60 days past due
61 – 90 days past due
Over 90 days past due
Percent of
Uncollectible
5%
25%
50%
100%
2. Allowance – January 1
Receivables
Doubtful Accounts Expense (SQUEEZE)
Total
Less: Writeoff (235,000 + 30,000)
Required Allowance – December 31
Required
Allowance
60,000
25,000
75,000
120,000

280,000
170,000
30,000
345,000
545,000
265,000

280,000
3. Doubtful Accounts
Allowance for Doubtful Accounts
345 000
345 000
mariapatricia.arana-19@cpu.edu.ph
0
0
4. Accounts Receivable
Less: Allowance for Doubtful Accounts
Net Realizable Value
3,270,000
 280,000
2,990,000
PROBLEM 5-7 (AICPA) - SAVVY COMPANY
170,000 – 10,000
Rate in 2019 = ------------------------ = .016
10,000,000
258,000 – 20,000
Rate in 2020 = -------------------------- = .017
14,000,000
1. Retained Earnings (.016 x 1,250,000)
Allowance for Doubtful Accounts
20,000
20,000
2. Allowance – January 1
Recoveries – 2020
Doubtful Accounts – 2019 (SQUEEZE)
Total
Less: Writeoff – 2020
Allowance – December 31 (.017 x 2,000,000)
20,000
10,000
92,000
122,000
 88,000
 34,000
3. Accounts Receivable
Less: Allowance for Doubtful Accounts
Net Realizable Value
2,000,000
 34,000
1,966,000
PROBLEM 5-8 (AICPA) - PARAMOUNT COMPANY
1. Allowance – January 1, 2020
Doubtful accounts recorded (2% x 20,000,000)
Recovery
Total
Less: Writeoff (300,000 + 100,000)
Allowance balance before adjustment
500,000
400,000
 50,000
950,000
400,000
550,000
2. 5,000,000 x 5%
2,000,000 x 10%
1,000,000 x 25%
500,000 – 100,000 x 75%
Required Allowance – December 31, 2020
250,000
200,000
250,000
 300,000
1,000,000
3. Doubtful accounts
Allowance for doubtful accounts (1,000,000 – 550,000)
mariapatricia.arana-19@cpu.edu.ph
0
0
450,000
450,000
PROBLEM 5-9 (AICPA) - SCION COMPANY
1. Allowance – 1/1/2020 (1% x 2,800,000)
28,000
2. Allowance – 1/1/2020
Doubtful Accounts recorded in 2020 (1% x 3,000,000)
Recovery
Total
Writeoff
Allowance before adjustment
28,000
30,000
7,000
65,000
(27,000)

38,000
3. 300,000 x 1%
80,000 x 5%
60,000 x 20%
25,000 x 80%
Required allowance – 12/31/2020
3,000
4,000
12,000
20,000
39,000
4. Doubtful accounts
Allowance for doubtful accounts (39,000 – 38,000)
1,000
1,000
PROBLEM 5-10 (IAA) - GRUESOME COMPANY
Allowance – January 1
Doubtful Accounts Expense (SQUEEZE)
Total
Less: Writeoff
Required Allowance – December 31
200,000
500,000 → C.
700,000
300,000

400,000

PROBLEM 5-11 (AICPA) - TANTRUM COMPANY
1,200,000 x 1%
900,000 x 2%
1,000,000 x 6%
Allowance – December 31
12,000
18,000
60,000


90,000
Allowance – January 1
Uncollectible Accounts Expense (SQUEEZE)
Recovery
Total
Less: Writeoff
Allowance – December 31
mariapatricia.arana-19@cpu.edu.ph
0
0
60,000
80,000 → B.
20,000
160,000
 70,000

90,000
PROBLEM 5-12 (AICPA) - DELTA COMPANY
Available Discount (2,000,000 x 2%)
Allowance for Sales Discount (40,000 x 50%)
40,000
20,000 → A.
1,400,000 x 5%
400,000 x 10%
200,000 x 50%
Allowance for Doubtful Accounts
70,000
40,000
100,000

210,000

→ B.
Accounts Receivable
Less: Allowance for Doubtful Accounts
Allowance for Sales Discounts
Net Realizable Value
4,000,000
210,000
20,000

3,770,000
→ C.
PROBLEM 5-13 (AICPA) - NAMESAKE COMPANY
Doubtful Accounts Expense (3% x 3,000,000 + 10,000)
100,000 → B.
PROBLEM 5-14 (AICPA) - BESTIAL COMPANY
Doubtful Accounts Expense (2% x 7,000,000)
140,000 → A.
PROBLEM 5-15 (AICPA) - CASTAWAY COMPANY
Allowance – January 1
Doubtful Accounts Expense (5% x 8,000,000)
Recovery
Total
Less: Writeoff
Allowance – December 31
200,000
400,000
50,000
650,000
 100,000
550,000 → D.
PROBLEM 5-16 (AICPA) - FATEFUL COMPANY
Allowance – January 1
Doubtful Accounts Expense (SQUEEZE)
Total
Less: Writeoff
Allowance – December 31
250,000
175,000 → D.
425,000
 205,000

220,000
mariapatricia.arana-19@cpu.edu.ph
0
0
PROBLEM 5-17 (AICPA) - COMPREHENSIVE COMPANY
Allowance – January 1
Provisions for Doubtful Accounts (20,000,000 x 2%)
Recoveries
Less: Writeoff (200,000 + 100,000)
Allowance – December 31 before adjustment
1,000,000
400,000
50,000
 300,000
1,150,000

→ B.
6,000,000 x 10%
2,000,000 x 20%
1,500,000 x 30%
(500,000 - 100,000) x 50%
Allowance for Doubtful Accounts – December 31
600,000
400,000
450,000
 200,000
1,650,000

→ A.
Allowance – January 1
Recoveries
Doubtful Accounts Expense (SQUEEZE)
Total
Less: Writeoff
Allowance – December 31
1,000,000
50,000
900,000 → C.
1,950,000
 300,000

1,650,000
Doubtful Accounts Expense
Less: Recorded Amount (20,000,000 x 2%)
Year-end Adjustment to the Allowance Account (Credit)
Accounts Receivable – December 31
Less: Allowance for Doubtful Accounts
Net Realizable Value
900,000
400,000
500,000 → D.
9,900,000
1,650,000

8,250,000
→ B.
PROBLEM 5-18 (PHILCPA) - EASY COMPANY
855,000 – 95,000
Rate in 2020 = ---------------------------- = .02

or 2%
38,000,000
Doubtful Accounts Expense (2% x 7,000,000)
300,000 → B.
Allowance – January 1
Doubtful Accounts Expense
Recovery
Total
Less: Writeoff
Allowance – December 31
80,000
300,000
40,000
420,000
 310,000
110,000 → A.
mariapatricia.arana-19@cpu.edu.ph
0
0
Accounts Receivable – January 1
Credit Sales
Less: Collection from Customers
Writeoff
Accounts Receivable – December 31
2,070,000
15,000,000
14,000,000
310,000
2,760,000
Accounts Receivable
Less: Allowance for Doubtful Accounts
Net Realizable Value
2,760,000
110,000
2,650,000 → A.
PROBLEM 5-19 (AICPA) - FLAPPABLE COMPANY
3,000,000 x 5%
1,500,000 x 20%
1,200,000 x 25%
1,200,000 x 50%
Allowance for Doubtful Accounts – December 31
150,000
300,000
300,000
 600,000
1,350,000

→ A.
Doubtful Accounts Expense 2017, 2018, 2019 (5% x 23,500,000)
Recoveries 2018, 2019
Less: Writeoff 2018, 2019
Allowance – December 31 before adjustment
1,175,000
75,000
 200,000
1,050,000

Allowance – January 1
Recoveries 2020
Doubtful Accounts Expense (SQUEEZE)
Total
Less: Writeoff
Allowance – December 31
1,050,000
100,000
500,000 → A.
1,650,000
 300,000

1,350,000
Accounts Receivable
Less: Allowance for Doubtful Accounts
Net Realizable Value
6,900,000
1,350,000
5,550,000 → C.
(3,000,000 + 1,500,000 + 1,200,000 + 1,200,000 = 6,900,000)
PROBLEM 5-20 (AICPA) - SKY COMPANY
Allowance for Doubtful Accounts – December 31, 2019
Doubtful Accounts Expense 2020
Total
Less: Allowance for Doubtful Accounts – December 31, 2020
Accounts Written-off – 2020
mariapatricia.arana-19@cpu.edu.ph
0
0
15,000
30,000
45,000
10,000


35,000
→ A.
Accounts Receivable – December 31, 2019
Gross Sales
Total
Less: Accounts Receivable – December 31, 2020
Accounts Written-off – 2020
Sales Returns – Actual
Allowance – December 31
Allowance for Sales Returns – December 31, 2019
Estimated Sales Return (SQUEEZE)
Total
Less: Sales Returns – Actual
Allowance for Sales Returns – December 31, 2020
Gross Sales
Less: Estimated Sales Returns – 2020
Net Sales
25,000
10,000 → A.
35,000
15,000
20,000

6,150,000
10,000
6,140,000 → B.
PROBLEM 5-21 (AICPA)
1. C.
2. A.
3. A.
4. B.
5. C.
6. D.
7. A.
8. A.
9. D.
10. B.
mariapatricia.arana-19@cpu.edu.ph
0
800,000
6,150,000
6,950,000
880,000
35,000
15,000
6,020,000 → C.
0