Review - PRACTICAL ACCOUNTING 1

Identify the letter of the choice that best completes the statement or answers the question.

1. Delta Corporation has applied you with the following list of its bank accounts and cash at December 31, 2007? Checking
account (compensating balance of P15, 000with no restriction) P48, 000
Savings account, 2% 30, 000
Certificate of deposit, 6 months; 10%, due April 20, 2008 60, 000
Money market (30-day certificate), current rate, 9.75% 40, 000
Payroll account 20, 000
Certificate of deposit, 2 years, 12%, due February 15, 2008 75, 000
Petty cash 1,500
Total P 274,500
What should be the balance to be reported as “Cash and Cash Equivalent” in the December 31, 2007 balance sheet of Delta
Corporation?
a. P 139,500 b. P199, 500 c. P214,500 d. P274,500

2.The December 31,2008 trial balance of Jasmine Company includes the following accounts:
Petty Cash Fund 50,000
Current account — PNB 4,000,000
Current account—ONE Bank (250,000)
Money market placement-Land Bank 1,000,000
Time deposit — Security Bank 2,000,000
The petty cash fund is composed of the following:
Coins and currencies 17,000
Petty cash vouchers
- Gasoline 1,000
- Supplies 2,000
- Cash advances to employees 3,000
Employee’s check returned by hank marked NSF 4,000
Check drawn by the company payable to the order of the petty cash
custodian, representing salary for the month 18,000
A sheet of paper with names of employees together with contribution
for a birthday gift of a co-employee in the amount of 5,000
Total 50,000
* A check of P100,000 wash drawn against PNB current account dated and recorded December 29,2008 but delivered to payee
on January 15,2009.
* Security Bank time deposit is set aside for land acquisition in early January 2009

The December 31, 2008 balance sheet should report “cash and cash equivalents” at
a. P5,150,000 b. P5,135,000 c. P5,140,000 d. P7,135,000

3. On July 31, 2010, Elvira’s cash book showed a balance on hand of P198,270 compared with a balance of P190,910 shown in
his bank statement. He discovered the following:
a. Checks drawn by Elvira during July, amounting to P6,350, P9,490 and P7,000, had been entered in the cash book hut had not
been presented at the bank by the end of the month.
b. Elvira had forgotten to enter in the cash payment book a standing order of P5,000 relating to a trade subscription.
c. The bank had incorrectly credited Elvira’s account with a dividend receipt, of P2500 relating to another customer.
d. Bank charges of P10,500 shown on the bank statement had not yet been entered In the cash book.
e. Checks received from customers amounting to P21,100 were entered in the cash book on July 31 but were not credited on the
bank statement until August 3.
f. Direct credits from customers of P18,000 and P34100 had been paid direct into the bank but no entry had
been made in the cashbook.
g. The payments side of the cash book for July had been undercast by P10,000 (this means that the total of the payments side is
understated by P10,000).
h. The statement shows an item “return check P7,200”. This has not yet been accounted for in the cash
book.
What is the correct cash balance? . .
a. 173,670 b. 184,170 c. 191,670 d. 186,670

4. On December 31,2009, the balance of accounts receivable of Jalena Company was P6,000,000 and the January
1,2009 balance of allowance for doubtful accounts was P800,000. The following data were gathered:
 Credit Sales Writeoffs
Recoveries
2006 9,000,000 400,000 30,000
2007 13,000,000 600,000 70,000
2008 15,000,000 700,000 120,000
2009 20,000,000 650,000 150,000
Doubtful accounts are provided for as percentage of credit sales. The accountant calculates the percentage annually by
using the experience of the three years prior to the current year. How much should be reported as allowance for doubtful accounts
on December 3I 2009?
a. 1, 100,000 b. P800,000 c. P1,300,000 d. P1,250,000