CASE 1 - Chainsmoker Company

Trade Current Non-current

Trade installment receivable due in 30 months, including unearned interest of P75,000 900,000 900,000 -
Trade receivables from the officers 130,500 130,500 -
Advances to officers - - 250,000
Past due trade accounts receivables 950,000 950,000 -
Customers NSF check returned by bank 150,000 150,000 -
Advances to employees - 80,000 -
Receivable from customer arising from sale of goods 280,000 280,000 -
Interest receivable on bonds - 30,000 -
Other trade accounts receivable – unassigned 400,000 400,000 -
Trade accounts receivable - assigned 420,000 420,000 -
Trade accounts on which post-dated check is held 365,000 365,000 -
Notes receivable - 3 years - - 479,541
Notes receivable collectible every June 30 and December 31, P200,000 each payment period
1,200,000 1,200,000
due in three years arising from sale of goods. -
TOTAL 4,795,500 4,905,500 729,541
3 - year notes receivable:
PV of principal (500,000 x 7.711780) 355,890
PV of interest (500,000 x 10% x 2.401831) 120,092
Total 475,982

Date NI (10%) EI (12%) Amort. CV

7/1/15 475,982
12/31/2015 25,000 28,559 3,559 479,541

Current 4,905,500
Allowance (4,795,500 x 5%) (239,775) 4,665,725
Non current 729,541
Total receivables in FS 5,395,266

Allowance for BD
15,000 95,000
50,000 209,775
239,775
CASE 2 - Twenty One Pilots

< 60 days 61 to 90 >90 days Advances Cr. bal. Per SL Per GL Proposed adjusting entries:
Unadjusted balances 477,000 234,400 170,800 32,800 (30,000) 885,000 885,000
Reinstatement of account 30,000 30,000 30,000 a. Accounts receivable 30,000
Reclass (32,800) (32,800) (32,800) Allowance for BD 30,000
Write off (40,000) (40,000) (40,000)
Unrecorded return (30,000) (30,000) (30,000) b. Advances to suppliers 32,800
Sales discount (2,500) (2,500) (2,500) Accounts receivable 32,800
Consigned goods (40,000) (40,000) (40,000)
Total 404,500 234,400 130,800 - - 769,700 769,700 c. Allowance for BD 40,000
% uncollectible 1.50% 4% 8% Accounts receivable 40,000
Allowance for BD 6,068 9,376 10,464 (25,908) (25,908)
NRV 743,793 743,793 d. Sales return 30,000
Accounts receivable 30,000
Allowance for BD
40,000 30,000 e. Sales discount 2,500
30,000 Accounts receivable 2,500
5,908 bad debts expense
25,908 f. Sales 40,000
Accounts receivable 40,000

Inventory 19,000
Cost of sales 19,000
CASE 3 - Calvin Harris

< 60 days 61 to 90 91 to 120 days > 120 days Per SL

Unadjusted balances 536,200 300,100 70,400 35,960 942,660
Write off (3,600) (3,600)
Credit balance 30,200 30,200
Adjusted 536,200 330,300 70,400 32,360 969,260
Uncollectible 1.50% 4% 12% 32%
Allowance for BD 8,043 13,212 8,448 10,355 (40,058)
Net realizable value 929,202

Allowance Bad debts expense

3,600 5,635 11,125 10,240
10,240 11,620
11,602 59,865 bad debts expense 9,427
40,058 37,933
CASE 4 - Shawn Mendez

Days outs. 0-30 DAYS 31-60 61-90 91-120 >120 DAYS PER SL PER GL
Marvin Rich Co. 12/10/2015 100,000 21 100,000 100,000
10/1/2015 128,560 91 128,560 128,560
Lydio’s Lechon Inc. 8/15/2015 80,000 138 80,000 80,000
9/20/2015 46,900 102 46,900 46,900
Lyra Victoria Co., 12/27/2015 44,000 4 44,000 44,000
12/1/2015 82,000 30 82,000 82,000
10/12/2015 61,600 80 61,600 61,600
Lim Whitening Corp. 12/20/2015 133,000 11 133,000 133,000
10/9/2015 156,000 83 156,000 156,000
Ryan Foods Inc. 12/12/2015 134,000 19 134,000 134,000
7/25/2015 84,600 159 84,600 84,600
Andrew Sunrise Co. 7/12/2015 108,300 172 108,300 108,300
Total 493,000 - 217,600 175,460 272,900 1,158,960 1,200,000
Reconciliation:
a. Pricing error (31,480) (31,480) (31,480)
b. Posting error 46,900 (46,900) - -
c. Sales return (10,000) (10,000) (10,000)
d. write off (108,300) (108,300) (108,300)
Adjusted 508,420 - 207,600 128,560 164,600 1,009,180 1,050,220
Unlocated difference (41,040)
Adjusted balances 508,420 - 207,600 128,560 164,600 1,009,180 1,009,180
Uncolletcible 1.5% 3% 6% 15% 45%
Allowance 7,626 - 12,456 19,284 74,070 (113,436) (113,436)
NRV 895,744 895,744

Proposed adjsuting entry for unlocated difference: Allowance

Sales 41,040 108,300 35,040
Accounts receivable 41,040 42,000 12,000
216,696 bad debts expense
113,436
CASE 5 - Charlie Puth Company

Unadjusted Trade Notes Receivable 3,036,915

Less Non-Trade Notes Receivable:
Buko Company (Cash Loan) 500,000
Mr. Presi (Loan to officer) 1,000,000 1,500,000
Adjusted Trade Notes Receivable 1,536,915

Adjusted Trade Notes Receivable 1,536,915

Less allowance for doubtful accounts
(P357,416 x 25%) 89,354
Net realizable value 1,447,561

Interest
Maker Date Amount Rate AIR
Apple Co, Oct. 1 57,416 18% 2,584 2,584
Oct. 1 100,000 18% 4,500 4,500
Oct. 1 100,000 18% 4,500 4,500
Oct. 1 100,000 18% 4,500 4,500
Buku Co, Jul. 1 500,000 18% 45,000 45,000
Cooco Co. Oct. 1 251,636 15% 9,436 -
Mr. Presi Feb. 1 1,000,000 18% 165,000 165,000
Dodle Co. Nov. 1 546,387 15% 13,660 13,660
Ebio Inc. Dec. 10 381,476 18% 4,005 4,005
253,185 243,749
 CAES 6 -- LIL wayne Corp.

Current Non- current

Note receivable from sale of plant 3,000,000 3,000,000 Note from Rihanna:
Note receivable from officer 2,400,000 PV of note (1,200,000 x 0.783147) 939,776
Note receivable from sale of equipment 1,031,404
Note receivable from sale of land 820,500 3,179,500 Date EI (13%) CV
Total 3,820,500 9,610,904 4/1/2016 939,776
12/31/2016 91,628 1,031,404
*** The discounted note receivable is not shown because it matured on Oct. 30
and must be reclassifed to accounts receivable at maturity value. Note from Khalifa:
Annual payment of principal and interes 1,300,500
Less: Interest (4M x 12%) 480,000
Accrued Interest Income Current due to principal 820,500
Note receivable from sale of plant
9M x 10% x 4/12 300,000
6M x 10% x 8/12 400,000 400,000
Note receivable from officer
2.4M x 11% 264,000
Note receivable from sale of equipment 91,628
Note receivable from sale of land
4M x 12% x 6/12 240,000 240,000
Discounted notes receivble
1M x 10% x 6/12 50,000
Total 640,000 1,345,628
CASE 7 - Cold Play Co.

***Note: correction in problem for additional information in Letter A, extension of note must be FOUR years and not two years.

PV of note:
PV of principal (600,000 x 6.864081) 4,118,449

AMORTIZATION TABLE Impairment in 2016: NEW AMORTIZATION TABLE

Date Payment EI (7.5%) CV PV of future cash flows: Date Payment EI (15%) CV
1/1/2015 4,118,449 2017 500,000 0.869565 434,783 12/31/2016 2,706,072
6/30/2015 600,000 308,884 3,827,332 2018 1,000,000 0.756144 756,144 12/31/2017 500,000 405,911 2,611,983
12/31/2015 600,000 287,050 3,514,382 2019 1,000,000 0.657516 657,516 12/31/2018 1,000,000 391,797 2,003,781
6/30/2016 600,000 263,579 3,177,961 2020 1,500,000 0.571753 857,630 12/31/2019 1,000,000 300,567 1,304,348
12/31/2016 600,000 238,347 2,816,308 Total 2,706,072 12/31/2020 1,500,000 195,652 -
6/30/2017 600,000 211,223 2,427,531
12/31/2017 600,000 182,065 2,009,596 CV as of 12/31/16 2,816,308
6/30/2018 600,000 150,720 1,560,315 PV of future cash flows 2,706,072
12/31/2018 600,000 117,024 1,077,339 Impairment loss 110,235
6/30/2019 600,000 80,800 558,140
12/31/2019 600,000 41,860 (0)

Interest income-2015 (308,884+287,050) 595,934

CV end of 2015 3,177,961

CV end of 2016 2,706,072

Interest income - 2017 405,911

CV end of 2018 1,077,339

*** note should not be reported at an amount higher that its CV if no impairment happen.

No recovery in 2018 P0
CASE 8 - Usher Company

Company S - with objective evidence that the asset is impaired

Carrying Value (4,000,000 + 480,000) 4,480,000
Recoverable Value @ 12% (3,401,831)
Impairment Loss 1,078,224

Company T - with objective evidence that the asset is impaired

Carrying Value 1,000,000
Recoverable Value @ 12% 982,143
Impairment Loss 17,857

Company U - without objective evidence that the asset is impaired

Impairment Loss P0

Company V - without objective evidence that the asset is impaired

Impairment Loss P0

D. An event requiring disclosure in the notes to the financial statements

COMPREHENSIVE - Eli Buendia Company

Accounts receivable - assigned

(5,000,000 - 3,000,000) 2,000,000
Accounts receivabe (pledge) 360,000
Total Accounts receivable 2,360,000
Allowance for bad debts (47,200)
Account receivable - net 2,312,800

1/1 Notes receivable 25,000

Accounts receivable 25,000

2/28 Notes receivable 24,960

Loss on discounting (P25,250 - P24,960) 290
Notes receivable - discounted 25,000
Interest income (P25,000 x .06 x 2/12) 250

3/31 Notes receivable - Officers 6,200

Notes receivable 6,200

8/30 Notes receivable 4,200

Interest receivable 1,400
Interest income 2,800

9/4 Notes receivable dishonored 500

Notes receivable 500

Notes receivable dishonored 40,000

Notes receivable 40,000

11/1 Notes receivable 8,120

Cash 8,120

11/4 Notes receivable dishonored (AR) 26,031

Notes receivable 26,031
Unadjusted NR 12,014
Add (Deduct) adjustments:
1/1 25,000
2/28 24,960
3/31 (6,200)
8/30 4,200
9/4 (40,500)
11/1 8,120
11/4 (26,031)
(25,000)
12/27 24,000
12/31 6,200
12/31 42,437
12/31 (1,200)
Adjusted NR, 12/31 48,000

Composition:
Robinson (P70,000 - P30,000) 40,000
Tripper (received PDC on 11/1) 8,000
Adjusted notes receivable 12/31 48,000

Robinson:
Jan. to Aug. (P70,000 x .06 x 8/12) 2,800
Sept. to Dec. (P40,000 x .06 x 4/12) 800 3,600
Trinoma (P8,000 x .06 x 12/12) 480
Pedro J (P42,437 - P40,500) 1,937
Anastasia (P25,000 x .06 x 2/12) 250
Total interest income 6,267

Allowance
30,000 5,000
20,000
52,200 Bad debts expense