Analyzing

1.On December 15, 2010 ABC Co. hired Juanita Perez to begin working on January 2, 2011 at a monthly salary of P4,000. ABC's balance sheet of December 31, 2010 will show a liability of?Ans: zero/none (easy)

2.ABC Co. has current assets of P50,000 and total assets of P150,000. ABC has current liabilities of P30,000 and total liabilities of P80,000. What is the amount of ABC's owner's equity?Ans: 150,000-80,000=70,000(easy)

3.ABC Co. follows the accrual basis of accounting and performs a service on account (on credit) in December 2010. The service was billed at the agreed upon amount of $3,500. The effect of this transaction on the balance sheet is ?

Ans: increase of 3,500( easy)

4. Bates Company has a $300,000 balance in Accounts Receivable and a $2,000 debit balance in Allowance for Doubtful Accounts. Credit sales for the period totaled $1,800,000. What is the amount of the bad debt adjusting entry if Bates uses a percentage of receivables basis (at 10%)?ans: (1800,000+300000)*10%=210,000 difficult

5. Over a period of time,if assets increase by P15,000, then owners’s equity will be increased by?

Ans= 15,000 moderate

Cash and bank recon

1.Prepare the bank reconciliation statement from the following information. 1. Bank overdraft as per Bank Statement P4500. 2. Cheques issued but not presented for payment amounting P250. 3. Cheques deposited into bank has not been yet credited P450. 4. Bank charges P125 have not been recorded in the cash book. 5. Cash collected by bank on the behalf of customer P120 has not been recorded in the cash book.

Ans: difficultBalance per Bank Statement -4,500Less : Outstanding Cheques -250Add : Deposit in Transit 450Add : Unaccounted Bank Charges 125Less : unbooked cash collected by bank -250

Adjusted Book Balance -4425

2.A company's Cash account has a balance of $851 as of October 31. The bank statement for this

account reports a balance of $1,430 as of October 31. There are outstanding checks totaling $840 and a deposit in transit of $60. The bank statement shows interest earned of $19, service charges of $30, a customer's returned check of $100, and a check printing fee of $90. What is the reconciled balance that should be reported on the company's balance sheet as of October 31?

Ans: 1430+60-840=650 easy

3. Compute for the cash balance given the following data:

Post dated checks,P5,000 ; payroll fund,P30,000 ; petty cash fund P500;savings deposit P50,000 ; IOUs, 3,000 ; insurance fund 14,000 ;cash on hand 12,000.

Ans: 30,000+500+50,000+12000=92,500.easy

4. A petty cash fund of P5,000 was established. The company uses the imprest fund system. Records show that supplies and transportation amounting to 1500 and 1,000 respectively had been paid out of the PCF fund. The company also maintains a checking account with a balance of P78,000 and a savings deposit of P32,000.The company received a check amounting to P15,000 dated six months ago and was included in the savings account balance on hand balance. Determine the balance of cash account.

Ans. (5,000-1500-1000)+78,000+32,000-15000=97,500.00.moderate

5. An analysis of the PCF reveals the following: actual cash P100;IOUs from employees P67 ; and receipts of expenses paid out of the fund, P35.What amount should be included in the cash account?

Ans. P100-35 = 65 easy.

merchandising

1. Jetson Company's financial information is presented below.Sales $ ? Purchase Returns and Allowances $ 30,000Sales Returns and Allowances 60,000 Ending Merchandise Inventory 70,000Net Sales 700,000 Cost of Goods Sold 360,000Beginning Merchandise Inventory ?Purchases 340,000

Determine the amount for beginning inventory.

Ans= 360,000+70,000-(340,000-30,000)=120,000 moderate

2.On June 1, $800 of goods are sold with credit terms of 1/10, n/30. How much should the seller expect to receive if the buyer pays on June 8?Ans 800*.99=792. easy

3.On June 1, $800 of goods are sold with credit terms of 1/10, n/30. On June 3 the customer returned $100 of the goods. How much should the seller expect to receive if the buyer pays on

June 8?Ans= (800-100)*.99=693 easy

4. Given the following information, calculate ABC Corp’s Net Income:

Sales: $260,000 Cost of Goods Sold: $100,000 Salaries and Wages: $20,000 Rent Expense: $15,000 Advertising Expense: $35,000 Cost of repairs resulting from fire: $50,000

Ans: 260,000-100,000-(20,000+35000+50,000)=55,000 easy

5. Beginning Inventory: 1,000 units at $4/unit.Purchases: 600 units at $5/unit. Ending Inventory: 900 units.Freight in P120. Calculate Cost of Goods Sold assuming

that the company sells goods earlier purchased.

Ans = 4000+30,000+120-(300*4)-(600*5)= 29,920.00 difficult

Service

Service

1.ABC Co. performed services for Client Kay in December 2010 and billed Kay $4,000 with terms of net 30 days. ABC follows the accrual basis of accounting. In January 2011 ABC received the $4,000 from Kay. In its 2010 balance sheet what amount should be presented as service revenue.

Ans = 4000 easy

2.Bella Laundry Services had wages payable at the beginning of the year of $1,000. During the year her company paid cash wages of $25,000 and at the end of the year she owed wages of $ 3,000. Her income statement for the year will show wage expense of:

Ans= 25,000+3000= 28,000 moderate

3.A construction company purchases equipment for $30,000 on July 1, 2010. It estimates that the equipment will have a salvage value of $2,000 and its useful life will be 7 years. Assuming that the company's accounting year ends on December 31 of each year, what will be the Depreciation Expense for the years 2011 assuming straight-line depreciation?

Ans = (30,000-2000)/7= 4000. Easy

4. ABC Company recorded service revenue when it received an advance payment of P10,000 from a client. As of the balance sheet date the service required of ABC Company is yet to be rendered. What

amount should the company reflect as service revenue?

Ans P10,000. Easy

5. Tom’s Tax Prep’s began operation in February.The monthly rent is $3,500. At the end of February, they had not yet received their monthly rent invoice. In early March, Tom’s Tax Prep receives and pays their rent bill for February.Marla, the consultant, performs services for a client. The agree-upon price was $10,000, due 30 days from the date the services were completed.Services were completed in March.Compute for the net income for the period of March.Ans: 10,000-7000 = 3000 difficult.

6.