On December 1, Ken Company established an imprest petty cash fund of P10,000 by writing a check drawn against its general checking account. On December 31, the fund contained the following: Currency and coins P 3,500 Receipts for miscellaneous expenses 2,200 Receipts for office supplies 2,300 Envelope containing contributions of employees 1,200 Receipts for transportation 500 On December 31, Ken Company wrote a check to replenish the fund. The amount of the replenishment check i

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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FINANCIAL ACCOUNTING AND REPORTING

 

1. On December 1, Ken Company established an imprest petty cash fund of P10,000 by writing a check drawn

against its general checking account. On December 31, the fund contained the following:

Currency and coins P 3,500

Receipts for miscellaneous expenses 2,200

Receipts for office supplies 2,300

Envelope containing contributions of employees 1,200

Receipts for transportation 500

On December 31, Ken Company wrote a check to replenish the fund. The amount of the replenishment check is

 

2. On January 1, 2017, Martian Manhunter Company sold land costing P600,000 and received in exchange a four-

year, with a face amount of P1,000,000 bearing an interest rate of 6%. The stated rate on the note was

determined to be substantially low compared to the prevailing rate for a similar transaction being at 12%. Martian

Manhunter Company uses the calendar year for reporting purposes. What is the discounted value of the note?

 

3. On August 1, 2017, Marvel company sold land costing P2,200,000 and received in exchange a note with a face

amount of P3,000,000 maturing on August 1, 2020. It bears an interest rate of 12% which approximates the

current interest rates in the market. Marvel Company uses the calendar year for reporting purposes

 Gain reported arising from the sale

 Interest income for 2017

 Note receivable amount reported in December 31, 2017 statement of financial position

 

4. On April 1, 2017, Incredible Hulk Company sold a machine to Banner Enterprises in exchange for a P450,000

non-interest bearing note due on April 1, 2021. There was no established exchange price for the equipment and

the note has no ready market. The prevailing rate of the interest for a note of this type at April 1, 2017 was 12%.

The equipment had a carrying value of P275,000 at the time of sale. The collection of the note from Banner

Enterprises is reasonably assured. Incredible Hulk Company uses the calendar year for reporting purposes

 Initial measurement of the notes receivable

 Interest income for 2017

 Unearned interest as of December 31, 2018

 

5. On January 1, 2017 Hawkeye Company sold a parcel of land which it has acquired previously for P215,000 and

received in exchange a non-interest bearing note whose face value amounted to P450,000. The note shall be

collected every December 31 as follows: P100,000 in 2017; P150,000 in 2018 and P200,000 in 2019. The

effective interest rate for a similar note was 8%. Hawkeye Company uses the calendar year for reporting

purposes

 Gain (loss) on the sale of the land

 Interest income for 2017

 Note receivable reported in the non-current asset section in the December 31, 2018 statement of financial

position

 

6. Steve Company factors P3,000,000 of accounts receivable with Marium Finance on a without recourse (without

guarantee) basis on July 1, 2017. The receivable records are transferred to Marium Finance, which will receive

the collections. Marium Finance assesses a service charge of 2% of the factored accounts and retains an amount

equal to 6% of accounts receivable factored to cover sales discounts, returns, and allowances.

 Prepare the entries in relation to the receivalbles

 The net cash proceeds arising from the factoring of the receivable is

 The gain (loss) arising from the factoring of the receivable is

 

7. Determine the cash proceeds from the following discounted notes.

 10-month, 12% note for P6,400,00 dated May 1, 2018, discounted on August 1,2018 at the bank at 15%

 1-year, 9% note for P1,800,000 discounted at the bank at 12% after holding the note for 5 months

 120-day, non-interest bearing note for P800,000 dated May 16, 2018 was discounted at the bank on June

30,2018 at 12%. (Use 360)

 

 P700,000 note bearing interest at 9% dated January 1, 2017. The note is payable in two equal

installments of P350,000 plus accrued interest on December 31, 2017 and December 31, 2018. The note

was discounted on July 1, 2018

 

 

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