RIZAL TECHNOLOGICAL UNIVERSITY

COLLEGE OF BUSINESS & ENTREPRENEURIAL TECHNOLOGY DEPARTMENT

OF ACCOUNTANCY

FAR
General Instructions:
a. Answer on a clean intermediate pad. (Show your solution very clearly)
Erasures are allowed
b. Once done, take a photo of your solutions and scan via “clear scanner” c. Convert
the scanned copy to pdf file and send to google classroom (rename your file as
“student number_Surname, First Name_FAR” eg “2019_123456_Cruz, Juan_FAR”
d. Go back to google classroom and accomplish the 2nd google form e. Make
sure to submit everything before the deadline to ensure inclusion in the ranking of
scores
Problem # !

An entity reported the checkbook balance on December 31, 2021 at P7,000,000. In

addition, the entity held the following items in the safe on that date:

Check payable to the entity, dated January 2, 2022 in payment of a sale,

1,000,000
was included in December 31 check book balance
Check payable to the entity, deposited December 15 and included in
3,000,000
December 31 checkbook balance, but returned by bank on December 30
stamped “NSF”. The check was redeposited on January 2, 2022 and cleared on
January 5, 2022
Check drawn on the entity’s account, dated and recorded on December
2,500,000
31, 2021 but not mailed until January 15, 2022
Coins and currencies on hand 800,000
Money Market Placements 1,000,000

1. What is the correct amount of “cash and cash equivalents” on December 31, 2021?

Problem # 2

An entity had the following bank reconciliation on March 31, 2021:

Balance per bank statement, March 31 3,000,000Deposit transit 400,000Total
3,400,000Outstanding checks ( 750,000)
Balance per book, March 31 2,650,000The bank statement for the month of April
 showed the following:
Deposits (including P200,000 note collected for the depositor entity)
9,000,000Disbursements (including P140,000 NSF check and P10,000 service charge)
7,000,000

RIZAL TECHNOLOGICAL UNIVERSITY

COLLEGE OF BUSINESS & ENTREPRENEURIAL TECHNOLOGY DEPARTMENT
OF ACCOUNTANCY

All reconciling items on March 31 cleared through the bank in April. The deposit in
transit amounted to P1,000,000 and the outstanding checks totaled P600,000 on April.

Determine the following

2. Adjusted Cash Balance that should be reported on April 30, 2021 3. What is
the amount of cash receipts per book for the month of April 4. What is the cash
balance per ledger on April 30, 2021?

Problem # 3

From inception of operations, an entity provided for uncollectible accounts expense under
the allowance method and provisions were made monthly at 3% of credit sales. No year-end
adjustments to the allowance account were made. The balance in the allowance for doubtful
accounts was P1,200,000 on January 1, 2021. During 2021, credit sales totaled
P21,000,000, interim provisions for doubtful accounts were made at 3% of credit sales,
P250,000 of bad debts were written off, and recoveries of accounts previously written off
amounted to P50,000. An aging of accounts receivable was made for the first time on
December 31, 2021 as follows:
Classification Balance Uncolletible November – December 6,000,000 10%July –
Prior to January 1, 2021 500,000 50%
October 2,000,000 20%January – June 1,500,000 30%

Based on the review of collectability of the account balances in the “prior to January 1
2021” aging category, additional accounts totaling P150,000 are to be written off on
December 31, 2021. Effective December 31, 2021, the entity adopted the aging method
for estimating the allowance for doubtful accounts.

Determine the following

5. Ending balance of Allowance for Bad Debts

6. Total Bad debts expense for the year
7. Net Realizable value of Receivable

Problem # 4
An entity reported inventory on December 31, 2021 at P5,000,000 based on a physical
count at cost and before any necessary year-end adjustments relating to the following:

RIZAL TECHNOLOGICAL UNIVERSITY

COLLEGE OF BUSINESS & ENTREPRENEURIAL TECHNOLOGY DEPARTMENT
OF ACCOUNTANCY

 Included in the physical count were goods billed to a customer FOB shipping point on
December 30, 2021. These goods had a cost of P400,000 and were picked up by the
carrier on January 7, 2022.
 Goods shipped FOB shipping point on December 28, 2021 from a vendor to the entity
were received on January 4, 2022. The invoice cost was P300,000.

8.What amount should be reported as inventory on December 31, 2021?

Problem # 5

During 2021, an entity constructed an asset costing P10,000,000. The weighted average
accumulated expenditures on the asset during the year totaled P8,000,000. To help pay
for construction, P4,400,000 was borrowed at 10% on January 1, 2021, and funds not
needed for construction were temporarily invested in short-term securities, yielding
P50,000 in interest revenue. Other than the construction funds borrowed, the only other
debt outstanding during the year was a P5,000,000, 10-year, 12% note payable dated
January 1, 2017.

9. What is the amount of interest that should be capitalized during 2015? Round of
interest rate to 4 decimal places (e.g 12.1234%)

Problem # 6

In 2019, an entity purchased property with natural resources for P28,000,000. The
property had a residual value of P5,000,000. However, the entity is required to restore
the property to the original condition at a discounted amount of P2,000,000. In 2019, the
entity spent P1,000,000 in development cost and P3,000,000 in building. In 2020, an
amount of P4,000,000 was spent for additional development on the mine. Production
began in 2020 and the tons extracted totaled 3,000,000 in 2020 and 2,500,000 in 2021
The remaining tons totaled 7,000,000 and 3,500,000, respectively on December 31,
2020 and December 31, 2021.

10.What amount of depletion should recognized in 2021?

Problem #7

An entity had the following beginning and ending balances in prepaid expenses and
accrued liabilities for the current year

Prepaid expenses Accrued liabilities

Beginning balance 20,000 13,000Ending balance 12,000 25,000

RIZAL TECHNOLOGICAL UNIVERSITY

COLLEGE OF BUSINESS & ENTREPRENEURIAL TECHNOLOGY DEPARTMENT
OF ACCOUNTANCY

11. Debits to operating expenses totaled P110,000. What amount was paid for operating
expenses during the current year?

Problem #8

Sing Company provided the following sales and services transaction as of December 31, 2021

 On January 1, 2020, Sing Company sold an equipment for 2,500,000 to Dance Company,
Dance company paid 250,000 down-payment and signed a non-interest-bearing note for the
balance which is payable in 3 equal annual installment every December 31 of each year. The
machine has a carrying value of 2,000,000

 A 3 year note of 100,000 with a contract rate of 10% received from Blue company
dated January 1, 2020 was accepted in exchange for consultation rendered. The
note considered to have a prevailing market interest rate of 12%. Interest are
collectible every December 31,

12. How much is the gain(loss) on the sale of equipment

13. What is the total balance of note receivable for both transaction (net of discount )

Problem #9

Chinaware engaged in the following transactions with regards to financing of

receivable during 2021

 On March 1, 2021, Chinaware factored receivable with a face amounting to 300,000 BDO.
BDO assessed a factoring fee of 3% of the receivables and retaines 5% of the receivables
factored. The factoring was done without recourse basis
 On October 31, 2021, Chinaware discounted 1 year 10% 50% interest bearing notes
receivable that will mature on December 31, 2021 to Korebank without recourse. The bank
discount rate was 15%

14. How much is the cash received from the financing of the receivables 15.
How much is the net gain(loss) from sale of receivable

Problem #10
ABC Company provided you the following transactions pertaining to different acquisitions on newly
acquired PPEs for the year 2021

 On January 1, 2021, ABC purchased several office machineries that will be used in th
production of goods at a purchase price of 1,000,000. ABC paid import duties of 10,000

RIZAL TECHNOLOGICAL UNIVERSITY

COLLEGE OF BUSINESS & ENTREPRENEURIAL TECHNOLOGY DEPARTMENT
OF ACCOUNTANCY

and non-refundable taxes of 5,000. ABC also incurred 30,000 installation cost. The
company expects that it will dismantle the machineries after its useful life . The present
value of dismantling cost is 75,000.
 On May 1, 2021, ABC Company issued 300,000 shares for a factory machinery having a fair
value of 5,000,000 on the date of acquisition. The par value per share is 10 and the fair value
per share is 15
 ABC owns a tract of Land which was purchased in 2018 for 1,000,000. The land is held as
plant site and has a fair value of 1,500,000 as of June 30, 2021. On this date, ABC
exchanged its Land for a new Land and paid 500,000 pesos. The exchange has
commercial substance
 Various Furniture and Fixtures were acquired at the beginning of 2021 from a single supplier
with the following terms

Down payment 1,300,000 3 year non interest bearing note 2,400,000

10,000 shares par value 50 300,000

The cash price value of the assets was to 3,500,000

Determine the following
16. Cost of Office Machineries
17. Cost of New Land
18. Gain (Loss) on the exchange of Land
19. Share Premium arising from the issuance of shares

Problem #11

As of January 1, 2021, Seniors decided to change the method of computing depreciation on its sole
piece of equipment from the sum-of-the-years' digits method to the straight-line method. The
equipment, acquired in January 2018 for P520,000, had an estimated life of five years and a salvage
value of P20,000.

20. The amount of the depreciation expense for 2021 is

21. Book value of the equipment as of December 31, 2021

Problem #12

On June 30, 2021, an entity reported the following information:

Equipment at cost 15,000,000

RIZAL TECHNOLOGICAL UNIVERSITY

COLLEGE OF BUSINESS & ENTREPRENEURIAL TECHNOLOGY DEPARTMENT
OF ACCOUNTANCY

Accumulated depreciation 5,250,000

The equipment was measured using the cost model and depreciated on a straight line
basis over 10-year period. On December 31, 2021, the management decided to change
the basis of measuring the equipment from the cost model to the revaluation model. The
equipment was revalued to the fair value of P13,500,000 with remaining useful life of 5
years.

22. What amount should be reported as revaluation surplus on December 31, 2021?

Problem #13

An entity provided the following increases (decreases) in the statement of financial

position accounts.

Cash and cash equivalents 120,000Available for sale securities 300,000Accounts

receivable, net -Inventory 80,000Long-term investments (100,000)Plant assets
700,000Accumulated depreciation -Accounts payable ( 5,000)Dividend payable
160,000Short-term bank debt 325,000Long-term debt 110,000Share capital, P10 par
100,000Share premium 120,000Retained earnings 290,000

 Net income for the current year was P790,000.

 Cash dividend of P500,000 was declared.
 Building costing P600,000 and with carrying amount of P350,000 was sold for
P350,000.  Equipment costing P110,000 was acquired through issuance of
long-term debt.
 A long-term investment was sold for P135,000. There were no other transactions
affecting long-term investment.
 The shares were issued for cash.
 23.What is the net cash provided by operating activities?

24.What is the net cash used in investing activities?

25What is the net cash provided by financing activities?

RIZAL TECHNOLOGICAL UNIVERSITY

COLLEGE OF BUSINESS & ENTREPRENEURIAL TECHNOLOGY DEPARTMENT
OF ACCOUNTANCY

Problem #14

An entity had the following liabilities on December 31, 2021:

Accounts payable 60,000Unsecured notes, 8% due 7/1/2022 400,000Accrued
expenses 35,000Contingent liability 450,000Deferred tax liability 25,000Senior bonds,
7%, due 3/31/2022 1,000,000
The contingent liability is an accrual for possible loss on a P1,000,000 lawsuit filed
against the entity. The legal counsel expects the suit to be settled in 2022 and has
estimated that the entity will be liable for damages in the range of P450,000 to
P750,000. The deferred tax liability is expected to reverse in 2022.

26. What amount should be reported on December 31, 2021 for current liabilities?

Problem #15

An entity had the following financial statement elements for which the December 31,
2021 carrying amount is different from the December 31, 2021 tax basis:

Carrying amount Tax basis Difference

Equipment 5,500,000 4,000,000 1,500,000 Accrued liability – health care 500,000 0 500,000
Computer software cost 2,000,000 0 2,000,000

The difference between the carrying amount and tax basis of the equipment is due to
accelerated depreciation for tax purposes.

The accrued liability is the estimated health care cost that was recognized as expense in
2021 but deductible for tax purposes when actually paid.

In January 2021, the entity incurred P3,000,000 of computer software cost. Considering the
technical feasibility of the project, this cost was capitalized and amortized over 3 years for
accounting purposes. However, the total amount was expensed in 2021 for tax purposes
27. What amount should be reported as current tax expense
28. What amount should be reported as total tax expense
29. What amount should be reported as deferred tax liability on December 31, 2021 30.
What amount should be reported as deferred tax asset on December 31, 2021

RIZAL TECHNOLOGICAL UNIVERSITY

COLLEGE OF BUSINESS & ENTREPRENEURIAL TECHNOLOGY DEPARTMENT
OF ACCOUNTANCY

Problem #16

An entity provided the following information for the current year:

Current service cost 500,000Interest on projected benefit obligation 600,000Interest
income on plan assets 350,000Loss on plan settlement 250,000Past service cost
during the year 300,000Actual return on plan assets 850,000Actuarial loss during the
year 200,000Contribution to the plan 1,500,000

31. What is the employee benefit expense for the current year?