PART 1: THEORIES

1. Which of the following is not considered an ”other long-term investments”?

a. Tax fund c. Preference share redemption fund
b. Sinking fund d. Contingency fund

2. An entity determines that the credit risk on a loan receivable has not increased significantly since
initial recognition. The entity should recognize loss allowance equal to?
a. The 12-month expected credit losses on the instrument
b. The lifetime expected credit losses on the instrument
c. Sum of a and b
d. None; credit losses should be recognized only when there is objective evidence of a loss
event.

3. Tremolo Co. transferred loans receivables with carrying amount and fair value of ₱200,000 to XYZ,
Inc. for cash amounting to ₱200,000. Under the terms of transfer, Tremolo Co. is obligated to
repurchase some of the loans transferred not exceeding ₱20,000. The entry to record the transfer
includes all the following except
a. A credit to loans receivable of ₱200,000
b. A credit to liability on repurchase agreement of ₱20,000
c. A credit to loans receivable of ₱180,000
d. A debit to cash for ₱200,000

4. The following statements relate to the fair value and equity methods of accounting for a stock
investment
I. Whenever an investment in equity securities does not qualify for equity method, the investor is
required to use PFRS 9 in accounting for a stock investment received from the investee.
II. The fair value method of accounting for a stock investment recognizes the legal fact that the
investor and investee are one economic unit.
III. An investor may still be able to exercise significant influence over an investee even if the
investment is less than 20% of the voting stock of the investee.
IV. No adjustment to the investment account is made when changing from the equity to the fair
value method or vice versa.

State whether the forgoing statements are true

a. All of the statements are true c. Three statements are true
b. Only one statement is true d. Only two statements are true

5. Billy Goat Co. calculates the interest income on an investment in debt securities using the effective
interest method but reports the investment at fair value. Billy’s investment must have been classified
a. FVOCI asset
b. Amortized cost asset
c. FVPL asset
d. Fair value asset

6. If the balance shown on a company’s bank statement is less than the correct cash balance, and
neither the company nor the bank has made any errors, there must be
a. Deposits credited by the bank but not yet recorded by the company
 b. Outstanding checks
c. Bank charges not yet recorded by the company
d. Deposits in transit

7. An entity’s asset included the following. Which is not a debt security?

a. Convertible bonds c. Commercial paper
b. Loans receivable d. All of these are debt securities

8. A note that the maker fails to pay on the due date is referred to as
a. Discounted note c. Disappointed note
b. Expected credit loss note d. Dishonored note

9. Short-term receivables including non-trade receivables that are currently collectible may not be
discounted to their present value because
a. Their face value are normally immaterial
b. They are so near their maturity dates that their values do not change
c. The effect of discounting may be immaterial
d. Present value computation is very complex

10. According to PAS2, inventories are measured at

a. Cost c. Net realizable value
b. Fair value d. Lower of a and c

11. Which of the following statements is incorrect regarding the initial recognition of the receivables?
a. On initial recognition, the fair value of a short-term receivable may be equal to its face
amount.
b. On initial recognition, the fair value of a long-term receivable bearing a reasonable interest
rate is deemed equal to its face amount.
c. On the initial recognition, the fair value of a long-term non-interest bearing receivable is
deemed equal to the present value of future cash flows from the instrument discounted at
the effective interest rate on initial recognition.
d. On initial recognition, the fair value of all interest-bearing receivables is deemed equal to
their face amount.

12. Unearned income can best be described as an amount that is?

a. Collected and currently matched with expenses
b. Collected but not currently matched with expenses
c. Not collected but currently matched with expenses
d. Not collected and not currently matched with expenses

13. The application of the expected credit loss (ECL) model of PFRS 9 requires the measurement of
expected credit losses in a manner that reflects reasonable and supportable information that is
available without undue cost or effort at the reporting date. Such reasonable and supportable
information does not include
a. Past event
b. Current conditions
c. Forecast of future economic conditions
d. All of these are included
14. It is a bond that gives the holder the right to exchange the par amount of the bond for ordinary
shares of the issuer at some fixed ratio during a particular period.
a. Exchangeable bond c. Optimus prime bond
b. Extendible bond d. Convertible bond

15. According to PFRS 9 Financial Instruments, a financial instrument is recognized

a. When the entity purchases investments in equity securities
b. When the entity has a codified business model with an objective of holding assets in order
to collect
c. When the entity becomes a party to the contractual provision of the instrument
d. All of these

PART 2: COMPUTATION
1. On October 1, 20x1, the warehouse of ABC Co. and all the inventories contained therein were
damaged by flood. Off-site back up of data base shows the following information:
Inventory, Jan. 1 10,000
Accounts Payable, Jan. 1 3,000
Accounts Payable, Sept. 30 2,000
Payments to suppliers 50,000
Freight-in 500
Purchase Returns 500
Sales from January to September 80,000
Sales Returns 5,000
Sales Discounts 2,000
Gross profit rate based on sales 30%

Additional Information:
Goods in transit as of October 1, 20x1, purchased FOB shipping point, amounted to ₱1,000, cost of
goods out on consignment is ₱1,200, and materials damaged by flood can be sold at a salvage value
of ₱1,800. How much is the inventory loss due to the flood?
a. 2,500 c. 4,400
b. 3,000 d. 4,900

Use the following information for the next two questions (2 and 3)
Presented below is information pertaining to ABC Co.:
Costs Retail
Inventory, Jan. 1 21,750 35,000
Purchases 138,250 200,750
Freight-In 5,000 -
Purchase discounts 1,250 -
Purchase returns 13,000 21,500
Departmental Transfers-In (Debit) 2,500 3,750
Departmental Transfer-Out (Credit) 2,000 3,000
Markups 15,000
Markup cancellations 5,000
Markdowns 30,000
 Markdown cancellations 7,500
Abnormal Spoilage (theft and casualty loss) 12,500 17,500
Sales 109,500
Sales returns 6,250
Sales discounts 2,500
Employee discounts 1,250
Normal Spoilage (shrinkage and breakages) 500

2. How much is the ending inventory under the Average cost method?
a. 60,000
b. 60,750
c. 61,050
d. 62,400

3. How much is the ending inventory using the FIFO cost method?
a. 60,750
b. 60,000
c. 61,050
d. 62,400

4. Haze Co. provided you the following information for the purpose of determining the amount of its
inventory as of December 31, 20x1:
Goods located at the warehouse (physical count) 3,400,000
Goods located at the sales department (at cost) 15,800,000
Goods in-transit purchased FOB Destination 2,400,000
Goods in-transit purchased FOB Shipping Point 1,600,000
Freight incurred under “freight prepaid” for the goods purchased under
FOB Shipping Point 80,000
Goods held on consignment from Smoke, Inc. 1,800,000

How much is the total inventory of December 31, 20x1?

a. 20,080,000
b. 20,880,000
c. 25,080,000
d. 25,880,000

5. Assume that a company records purchases net of discount. If the company bought merchandise
valued at ₱10,000 on credit terms of 3/15, net 30, the entry to record the payment for half of the
purchase within the discounted period would include a debit to:
a. Accounts Payable for ₱4,850 and to Interest Expense for ₱150, and a credit to Cash for
₱5,000
b. Accounts Payable for ₱5,000 and to Interest Revenue for ₱150, and to Cash for ₱5,000
c. Accounts Payable for ₱4,850 and a credit to Cash for ₱4,850
d. Accounts Payable for ₱5,000 and a credit to Cash for ₱5,000

Use the following information for the next two questions (6 and 7)
 Campbell’s Clothing Store sells jeans. During January 2002, its inventory records for one brand of
designer jeans were as follows:
Beginning Inventory------------------- 10 pairs @ ₱20 = 200
January 6 Purchase-------------------- 4 pairs @ ₱25 = 100
January 10 Sale------------------------- 5 pairs
January 15 Purchase------------------- 7 pairs @ ₱30 = 210
January 20 Sale------------------------- 10 pairs
January 25 Purchase------------------- 4 pairs @ ₱30 = 120

6. How much is the cost of goods sold using periodic FIFO?

a. 250
b. 300
c. 330
d. 430

7. How much is the cost of goods sold using the weighted average cost method applied in a periodic
inventory system?
a. 236
b. 265
c. 358
d. 378

8. How much is the cost of goods sold using the weighted average cost method applied in a periodic
inventory system?
Security Classification Cost Year-End Fair Value
A Held for Trading ₱18,000 ₱23,000
B Held for Trading ₱25,000 ₱27,000

The year-end adjusting entry would most likely include a:

a. ₱5,000 net credit to loss
b. ₱7,000 net debit to held for trading securities
c. ₱7,000 net credit to a fair value adjustment account
d. ₱11,000 net debit to gain

9. There are multiple active markets for a financial asset with different observable market prices:
Market Quoted Price Transaction Costs
A 76 5
B 74 2

There is no principal market for the financial asset. What is the fair value of the asset?
a. 76
b. 74
c. 72
d. 71

10. Walsh, Inc. began business on January 1, 2002, and at December 31, 2002, Walsh had the following
investment portfolios of equity securities:
FVPL FVOCI
 Aggregate Cost ₱150,000 ₱225,000
Aggregate fair value ₱120,000 ₱185,000

None of the declines is judged to be other than temporary. Unrealized losses at December 31, 2002,
should be recorded with corresponding charges against:

Profit or loss/Equity
a. 70,000/0
b. 0/70,000
c. 40,000/30,000
d. 330,000/40,000

11. Martin Co. purchased the following portfolio of held for trading securities during 2002 and reported
the following balances at December 31, 2002. No sales occurred during 2002. All declines are
considered to be temporary:
Security Cost Fair Value at 12/31/02
X ₱80,000 ₱82,000
Y ₱140,000 ₱132,000
Z ₱32,000 ₱28,000

The carrying value of the portfolio at December 31, 2002, on Martin Co.’s balance sheet would be:
a. 252,000
b. 242,000
c. 240,000
d. 222,000

12. On January 1, 20x1, MX Co. purchased 10%, ₱3,000,000 bonds for ₱3,105,726. The bonds are
classified as financial asset measured at amortized cost. Principal on the bonds mature as follows:
December 31, 20x1 1,000,000
December 31, 20x2 1,000,000
December 31, 20x3 1,000,000
Total 3,000,000

Interest is due annually at each year-end. The effective interest rate on the bonds is 8%. How much is
the current portion of the investment on December 31, 20x1?
a. 1,051,542
b. 2,054,184
c. 1,035,665
d. 1,018,519

Use the following information for the next two questions (13 and 14)
On January 1, 20x1, ABC Co. acquired 14%, ₱1,000,000 bonds for ₱1,099,474. The principal is due on
December 31, 20x3 but interest is due annually starting December 31, 20x1. The effective interest
rate on the bonds is 10%. The bonds are classified as investment measured at amortized cost.

13. How much is the carrying amount of the investment on December 31, 20x2?
a. 1,000,000
 b. 1,069,421
c. 1,044,312
d. 1,036,364

14. Assume that half of the investment was sold on January 1, 20x2 for ₱480,000. Transaction costs
incurred on the sale amounted to ₱15,000. How much is the gain (loss) on the sale?
a. (69,711)
b. (54,711)
c. (39,711)
d. 16,341

15. On January 1, 20x1, Skid Row Co. acquired 10%, ₱2,000,000 bonds for ₱1,903,927. The bonds were
measured at amortized cost. The principal is due at maturity but interest is due annually starting
December 31, 20x1. The effective interest rate is 12%. On December 31, 20x2, the investee entered
into a rehabilitation program resulting in the extension of the maturity of the bonds to January 1,
20x6. Skid Row sees this as a loss event. Skid Rod estimates only the face amount of the bonds will
be collected in lump-sum on January 1, 20x6. There is no interest receivable as of December
31,20x2. The current market rate on December 31, 20x2 is 14%. How much is the impairment loss?
a. 0
b. 223,734
c. 483,914
d. 540,726

16. On January 1, 20x1, Cloudy Day Co. acquires ₱2,000,000 face amount, 10% bonds for ₱1,903,927.
The bonds are due on January 1, 20x4 but pay annual interest every December 31. The yield rate is
12%. Cloudy changes its business model for managing financial assets on September 1, 20x2. Cloudy
only reports annually every December 31. The bonds are quoted at 101 on September 1, 20x2, 103
on December 31, 20x2 and 104 on January 1. 20x3.

The bonds are reclassified from amortized cost to fair value through profit or loss. How much is the
gain (loss) on reclassification and where is that amount presented?
a. 115,714 in P/L
b. 115,714 in OCI
c. 128,471 in P/L
d. (143,292) in OCI

17. On January 1, 20x1, Halilikaw Co. makes a one-time contribution of ₱1,000,000 to a sinking fund that
earns compound interest of 12% per annum. Relevant future value factors are as follows:
FV of ₱1 @ 12%, n=10-------------------------------------- 3.10585
FV of an ordinary annuity of ₱1 @ 12%, n=10-------- 17.54874
FV of an annuity due of ₱1 @ 12%, n=10-------------- 19.65458

How much sinking fund balance could Halilikaw Co. expect to accumulate in 10-years’ time
a. 19,654,580
b. 17,548,740
c. 3,105,850
d. 1,287,892
18. ABC Co. records all disbursements using the nominal accounts. On December 31, 20x1, ABC Co. has
total expenses of ₱4,000,000 before considering the following:
• Advertisement costs paid during December 20x1 totaled ₱40,000. The advertisement was aired
on TV on January 5, 20x2
• A two-year insurance on assets was obtained on July 1, 20x1 for ₱96,000
• On July 15, 20x1, ABC Co. entered into an operating lease requiring monthly payments of
₱240,000 starting on the date of the lease contract and every 15th of the month thereafter
• Office supplies expense has a balance of ₱80,000. The physical count of office supplies revealed
a balance of ₱64,000

How much is the adjusted total expense?

a. 4,022,000
b. 3,896,000
c. 3,704,000
d. 2,894,000

19. Paulaner Co.’s Dec. 31, 20x1 cash and cash equivalents consist of the following:
Petty cash fund (with unreplenished voucher of ₱9,763) 15,000
Cash on hand 45,000
Cash in bank 7,809,424
Investment in 90-day commercial paper, due 1/26/x2 150,000
180-day certificate of deposit, due 3/1/x2 80,000
Tax fund 56,000
Payroll fund 235,000
Plant expansion fund 198,034
Sinking fund 467,000
Total Cash and Cash equivalents 9,055,458

What is the correct amount of Cash and Cash Equivalents to be reported in Paulaner Co.’s 20x1
statement of financial position?
a. 8,390,424
b. 8,380,661
c. 8,310,424
d. 8,300,661

20. Jane Co. is preparing its September 30, 20x1 bank reconciliation. Relevant information is shown
below:
Balance per books 1,480
Balance per bank statement 2,800
Collection on note by bank (including ₱250 interest) 2,500
NSF check returned by bank 500
Bank service charges for December 70
Deposit in transit 2,200
Outstanding checks (including certified checks of ₱100) 1,000

• A ₱600 loan amortization of Jane Co. was erroneously debited by the bank to Tarzan Co.’s
account. Jane made the correct entry.
 • A ₱650 collection of accounts receivable was erroneously recorded in the books as ₱560. The
actual amount deposited to the bank is ₱650

The compound entry to reconcile the accounts includes a?

a. Net credit to cash for ₱700
b. Net debit to cash for ₱2,020
c. Credit to notes receivable for ₱2,500
d. Net debit to accounts receivable for ₱590

21. The overdraft per bank statement of ABC Co. was ₱36,088 as of March 31, 20x1. The following
information was gathered:
• Interest on overdraft for the quarter ended March 20x1 — ₱1,248 (not yet entered in cash
book)
• Check deposited with the bank but did not yet clear — ₱4,680
• Check issued but not yet presented for payment — ₱6,110
• A check for ₱2,600, discounted with the bank earlier, was dishonored. ABC Co. is not yet aware
of the dishonor

How much is the overdraft per ABC’s cashbook on March 31, 20x1?
a. 33,670
b. 37,518
c. 43,201
d. 46,370

22. Ramos Company had the following bank reconciliation at March 31:
Balance per bank statement ,3/31 ₱93,000
Add: deposit in transit 20,600
Subtotal ₱113,600
Less: Outstanding checks (25,200)
Balance per books, 3/31 ₱88,400

Date per bank statement for the month of April follow:

Deposit ₱116,800
Disbursement ₱99,400

All reconciliation items at March 31 cleared through the bank in April. Outstanding checks at April 30
totaled ₱15,000. What is the amount of cash disbursement per books in April?
a. 92,200
b. 91,900
c. 89,200
d. 78,900

23. ABC Co. has been recognizing bad debt expenses based on the direct write-off method. in 20x4, ABC
Co. decided to change to the allowance method and that doubtful accounts shall be estimated using
the percentage of receivables method. The percentage is to be computed based on all available
historical data up to a maximum of four years. Information for five years is shown below:
 Year Write-offs Recoveries Net Credit Sales
20x0 10,000 600 80,000
20x1 7,000 1,000 100,000
20x2 10,000 3,000 160,000
20x3 15,000 5,000 200,000
20x4 28,000 2,000 240,000
70,000 11,600 780,000

The balances of accounts receivable on January 1, 20x4 and December 31, 20x4 are ₱100,000 and
₱200,000, respectively. How much is the doubtful accounts expense to be recognized in 20x4
a. 38,980
b. 34,890
c. 34,000
d. 24,980

24. On January 1, 20x1, ABC Co. sold inventory costing ₱1,800,000 with a list price of ₱2,200,000 and a
cash price of ₱2,000,000 in exchange for a ₱2,400,000 noninterest-bearing note due on December
31, 20x3.

How much is the initial measurement of the receivable?

a. 1,800,000
b. 2,000,000
c. 2,200,000
d. 2,400,000

25. Om July 1, 20x1, ABC Co. discounted a 90-day, ₱800,000, 12% note, received from a customer on
June 1, 20x1 with a bank at 16% on with recourse basis. The discounting is treated as conditional
sale. The bank uses 365 days per year in computing for discounts. On August 30, 20x1 (maturity
date), the maker of the note defaulted and the bank charged ABC Co. the maturity value of the note
plus a ₱3,000 protest fee. How much is transferred to accounts receivable due to the dishonor?
a. 823,671
b. 826,671
c. 827,000
d. 862,671

ANSWER KEYS
PART 1: THEORIES
 1. A 6. D 11. D
2. A 7. B 12. B
3. A 8. D 13. D
4. D 9. C 14. D
5. A 10. D 15. C

PART 2: COMPUTATION
1. B 6. C 11. B 16. A 21. A
2. A 7. D 12. B 17. C 22. C
3. D 8. B 13. D 18. C 23. C
4. B 9. B 14. A 19. D 24. B
5. C 10. D 15. D 20. B 25. A

1. B
Solution:
A/R
3,000 Beginning balance
Payments to supplier 50,000 49,000 Net Purchase (squeeze)
Ending balance 2,000

Inventory
Beginning balance 10,000
Net Purchase 49,000
Freight-in 500 52,500 Cost of goods sold*
7,000 Ending balance (squeeze)

*Cost of goods sold computation

Gross sales 80,000
Sales Returns (5,000)
Net Sales 75,000
Multiply by: Cost ratio (100%-20% GPR based on 75%
sales)
Cost of goods sold 52,500

Inventory, September 30, 20x1 7,000

Goods in transit (1,000)
Goods out in consignment (1,200)
Salvage Value loss due to flood (1,800)
Inventory loss due to flood 3,000

2. A
 Solution:
Cost Retail
Inventory, January 1 21,750 35,000
Net purchase * 129,000 179,250
Departmental Transfer-in (Debit) 2,500 3,750
Departmental Transfer-out (Credit) 2,000 3,000
Net Markups (15k-5k) 10,000
Net Markdowns (30k-7.5k) (22,500)
Abnormal Spoilage (12,500) (17,500)
TGAS 138,750 185,000
Net sales * (105,000)
Ending inventory @ retail 80,000

*Net Purchase Computation

Cost Retail
Purchase 138,250 200,750
Freight-in 5,000
Purchase Discount (1,250)
Purchase Return (13,000) (21,500)
Net Purchase 129,000 179,250

*Net Sales Computation

Sales 109,500
Sales return (6,250)
Employee Discount 1,250
Normal Spoilage 500
Net Sales 105,000

TGAS @ cost 138,750

= = 0.75 or 75%
TGAS @ retail 185,000

Ending inventory 80,000

Multiply by: Average cost Ratio 75 %
Ending inventory @ cost 60,000

3. D
Solution:
TGAS @ cost - beg. Inv.@ cost 138,750 - 21,750 117,000
= = = 0.78 or 78%
TGAS @ retail - beg. Inv.@ retail 185,000-35,000 150,000

Ending inventory 80,000

Multiply by: Average cost Ratio 78 %
Ending inventory @ cost 62,400
4. B
Solution:
Goods located at the warehouse (physical count) 3,400,000
Goods located at the sales department (at cost) 15,800,000
Goods in-transit purchased FOB Shipping Point 1,600,000
Freight incurred under “freight prepaid” for the goods purchased under
FOB Shipping Point 80,000
Ending Inventory, December 31, 20x1 20,880,000

5. C
Solution:
(10,000 x 3%) / 2 = 150

(10,000/2) - 150 = 4,850

Accounts Payable 4,850

Cash 4,850

6. C
Solution:
Beginning Inventory 200
Less: Purchase (430)
TGAS 630
Less: Ending Inventory (300)
Cost of goods sold 330

7. D
Solution:
Weighted Average 630
= = 25.2
Cost per Unit 25

EI in units 10 TGAS in Peso 630

Multiply by: Weighted average cost per unit 25 Less: EI @cost (252)
EI @ cost 252 COGS 378

8. B
Solution:
Cost Year-End Fair Value
₱18,000 ₱23,000
₱25,000 ₱27,000 Total
₱43,000 - ₱50,000 = 7,000

9. B (Given)

10. D
 Solution:
Profit or loss Equity
₱150,000 ₱225,000
(₱120,000) (₱185,000)
30,000 40,000

11. B
Solution:
Fair Value at 12/31/02
₱82,000
₱132,000
₱28,000
₱242,000
12. B
Solution:
Collection
20x1 (3,000,000 x 10%) = 300,000 + 1,000,000 = 1,300,000
20x2 (2,000,000 x 10%) = 200,000 + 1,000,000 = 1,200,000
20x3 (1,000,000 x 10%) = 100,000 + 1,000,000 = 1,100,000

Date Collection Interest Income Amortization PV

Beginning 3,105,726
20x1 1,300,000 248,458 1,051,542 2,054,184
20x2 1,200,000 164,335 1,035,665 1,018,519
20x3 1,100,000 81,482 1,018,518 0

13. D
Solution:
Date Interest Rate Interest Income Amortization PV
Beginning 1,099,474
20x1 140,000 109,947 30,053 1,069,421
20x2 140,000 106,942 33,058 1,036,364
20x3 140,000 103,636 36,364 1,000,000

14. A
Solution:
Investment sold on January 1, 20x2 480,000
Transaction Cost (15,000)
465,000
Ending 20x2 (1,069,421 / 2) (534,711)
Loss on Sale (69,711)
15. D
Solution:
Date Interest Rate Interest Income Amortization PV
Beginning 1,903,927
20x1 200,000 228,471 28,471 1,932,398
20x2 200,000 231,888 31,888 1,964,286
20x3 200,000 235,714 35,714 2,000,000

Face Amount 2,000,000

(1.12^(-3)) 0.71178
1,423,560

1,964,286
(1,423,560)
540,726

16. A
Solution: (Use Amortization Table in Number 15)

(2,000,000 x 104%) - 1,964,286 = 115,714

17. C
Solution:
1,000,000 x 3.10585 = 3,105,850

18. C
Solution:
12/31/x1 Total Expenses 4,000,000
Advertisement Costs (40,000)
Two-year Insurance claimed (96,000)
Operating lease (240,000)
Office supplies expense 80,000
Total Expense (Adjusted) 3,704,000

19. D
Solution:
Petty cash fund (15,000 - 9,763) 5,237
Cash on hand 45,000
Cash in bank 7,809,424
Investment in 90-day commercial paper, due 1/26/x2 150,000
Tax fund 56,000
 Payroll fund 235,000
Total Cash and Cash equivalents 8,300,661

20. B
Solution:
Accounts Receivable = 500 - (650 – 560)
= 410

Cash in Bank = 2,500 – 70 – 410

= 2,020

Journal Entry:
Cash in bank 2,020
Accounts Receivable 410
Bank Service Charges 70
Notes Receivable (2,500 - 250) 2,250
Interest Income 250

21. A
Solution:
Book Bank
Book Balance (squeeze) (33,670) Bank Balance (36,088)
Bank charge (1,248) Deposit in Transit 4,680
Dishonored Check (2,600) Outstanding Check (6,110)
Adjusted Balance (37,518) Adjusted Balance (37,518)

22. C
Solution:
Disbursement 99,400
Less: Outstanding Check (25,200)
Add: Outstanding Check in April 1 15,000
Cash Disbursement per books in April 89,200

Outstanding Checks
25,200 OC on March 31
Disbursement 99,400 89,200 (squeeze)
Ending balance 15,000
23. C
Solution:
20x0 to 20x3
Year Write-offs Recoveries Net Credit Sales
20x0 10,000 600 80,000
20x1 7,000 1,000 100,000
20x2 10,000 3,000 160,000
20x3 15,000 5,000 200,000
42,000 9,600 540,000

Write-offs - Recoveries 42,000 - 9,600 32,400

= = = 0.06 or 6%
Net Credit Sales 540,000 540,000

20x1 to 20x4
Year Write-offs Recoveries Net Credit Sales
20x1 7,000 1,000 100,000
20x2 10,000 3,000 160,000
20x3 15,000 5,000 200,000
20x4 28,000 2,000 240,000
60,000 11,000 700,000

Write-offs - Recoveries 60,000 - 11,000 49,000

= = = 0.07 or 7 %
Net Credit Sales 700,000 700,000

ADA
20x4 Write-offs 28,000 6,000 Jan. 1, 20x4 (100,000 x 6%)
2,000 Recoveries
34,000 Squeeze
Dec. 31, 20x4 (200,000 x 7%) 14,000

24. B (Given)

25. A
Solution:
(800,000 x 12%) x 90/365 823,671
Protest Fee 3,000
826,671