Multiple Choice Problems:

Cash and Cash Equivalents

Layla Company gave the following data on December 31, 2017:

Cash in Hand P50,000

Cash in Bank - Rural Account 1 100,000

Cash in Bank - Rural Account 2 (30,000)

Money Orders 60,000

Time Deposit - Dawn Account 1,000,000

Treasury Bills 300,000

Money Market Placement 20,000

Bond Sinking Fund 1,000,000

- Cash in Hand includes a customer check of P15,000 dated on January 9, 2018.

- Cash in Bank - Rural Account 1 includes a check drawn of P20,000 on December 27, 2017 and
delivered to payee on December 30, 2017.

- The Time Deposit is acquired on October 1, 2017 and will mature on January 20, 2018.

- The bond sinking fund is set aside for bonds payable due on December 28, 2018.

Question 1: What is the total cash to be reported in the statement of financial position?

a. P150,000

b. P135,000

c. P170,000

d. P105,000

Question 2: What is the total cash equivalents to be reported in the statement of financial
position?

a. P1,380,000

b. P1,410,000
 c. P2,380,000

d. P2,410,000

Question 3: What is the total amount of cash and cash equivalents?

a. P2,590,000

b. P2,485,000

c. P1,495,000

d. P1,580,000

Bank Reconciliation

Alice company received the bank statement for the month of July, 2018

Balance per bank statement, July 1 P300,000

Bank Debits 200,000

Bank Credits 450,000

Balance per bank statement, July 31 550,000

The bank debits included the following:

Checks recorded by the bank (including a P54,000 check error which was

corrected by the bank in the proper amount of P45,000) P105,000

Checks that are marked NSF 45,000

 Bank Service Charges 25,000

A check erroneously charged by the bank 25,000

The bank credits included the following:

Deposits collected by the bank P350,000

Credit memo collected by the bank 100,000

In the books of Alice, the company recorded deposits of P500,000 and checks amounting to
P254,000. And the balance of cash per ledger on July 31 is P546,000.

Question 1: What should be the adjusted cash balance on July 31?

a. P595,000

b. P605,000

c. P615,000

d. P585,000

Question 2: The cash balance per ledger after reconciliation resulted:

a. An increase of P29,000

b. A decrease of P29,000

c. An increase of P20,000

d. A decrease of P20,000

Question 3: The cash balance per bank statement after reconciliation resulted:

a. A decrease of P60,000

b. A decrease of P35,000

c. An increase of P60,000

d. An increase of P35,000
Accounts Receivable

Thamuz Company had reported an accounts receivable of P250,000 and allowance for doubtful
accounts of P3,000. The entity consistently uses the 2% provision of net sales for estimating
doubtful accounts. All merchandises are sold on account. Below are informations relating to the
company's operations as of December 31:

Sales 2,000,000

Accounts written off 30,000

Recovery of write-offs 12,000

Sales Returns 20,000

Sales Discounts 15,000

Cash collected from sales 800,000

Question 1: How much is the accounts receivable on December 31?

a. P1,420,000

b. P1,397,000

c. P1,385,000

d. P1,432,000

Question 2: What is the ending balance of allowance for doubtful accounts on December 31?

a. P24,300

b. P25,000

c. P13,000

d. P12,300
Question 3: How much is the doubtful accounts expense on December 31?

a. P39,900 c. P40,000

b. P39,600 d. P39,300

Question 4: Suppose an entity changes its estimation to a percent of accounts receivable, and the
entity estimates that the accounts receivable is to be 95% realizable. The doubtful accounts
expense recorded would be:

a. Understated by P44,950

b. Overstated by P44,950

c. The same

d. Understated by P49,450