Scribd
Upload
72 views12 pages

Cash To Accrual and Single Entry System - Problems

Uploaded by

I am Yeonjun's wife
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
72 views12 pages

Cash To Accrual and Single Entry System - Problems

Uploaded by

I am Yeonjun's wife
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 12

Problems related to

CASH TO ACCRUAL
and
SINGLE-ENTRY SYSTEM

Noel A. Bergonia CPA, MBA

https://news.outsourceaccelerator.com/wp-content/uploads/2020/07/Peso-hits-new-3-year-high-of-P49.19-to-1.jpg
PROBLEM 1
Jungkook Company reported the following
balances at the end of each year:
2020 2019
Inventory P2,600,000 P2,900,000
Accounts Payable 750,000 500,000

The entity paid suppliers P4,900,000 during


the year ended December 31, 2020.

What should be the amount to be reported for


cost of goods sold in 2020?
Noel A. Bergonia, CPA, MBA
PROBLEM 2

For the year ended Dec. 31, 2020, Taehyung


Company paid interest totaling P100,000.
The prepaid interest expense is P23,500 and
P18,000, respectively, on December 31,
2019 and 2020. The interest payable is
P45,000 and P53,500, respectively, on
December 31, 2019 and 2020.

What amount of interest expense should be


reported on December 31, 2020?

Noel A. Bergonia, CPA, MBA


PROBLEM 3

During 2020, Jin Corp. received P8,000,000


from tenants. The balance sheet contained the
following data:
2019 2020
Rentals receivable P960,000 P1,240,000
Unearned rentals 3,200,000 2,400,000

What amount of rental revenue should be


reported for 2020?

Noel A. Bergonia, CPA, MBA


PROBLEM 4
Net income for Jimin Company for 2020
includes the effect of the following
transactions involving the sale of fixed assets:
Asset Sales Price Cost Gain (Loss)
X P20,000 P 80,000 P 10,000
Y 25,000 150,000 (18,000)

Purchases of fixed assets during 2020


amounted to P340,000. The Accumulated
Depreciation account increased P40,000
during 2020.

How much is the depreciation expense for


2020?
Noel A. Bergonia, CPA, MBA
PROBLEM 5
Suga owned a 20% royalty interest in an oil well.
Suga received royalty payments on January 31
for the oil sold between the previous June 1 and
November 30, an on July 31 for oil between
December 31 and May 31. Production revealed
the following sales:
June 1, 2019 - November 30, 2019 P3,000,000
December 1, 2019 - December 31, 2019 500,000
December 1, 2019 - May 31, 2020 4,000,000
June 1, 2020 - November 30, 2020 3,250,000
December 1, 2020 - December 31, 2020 700,000

What amount should be reported as royalty


revenue for 2020?

Noel A. Bergonia, CPA, MBA


PROBLEM 6

Cash sales 2,500,000


Collections of AR (850K-+250K-300K) 800,000
Total Sales 3,300,000
Cash purchases 1,700,000
Payment of credit purchases (400K+150K-200K) 350,000
Total Purchases 2,050,000
Inventory- Jan. 1 500,000
Inventory- Dec. 31 (600,000)
Cost of Goods Sold (1,950,000)
Interest received 40,000
Expenses paid (750,000)
Depreciation expense (200,000 ÷ 10 x 6/12) + (800,000 ÷ 10) (90,000)
Net Income- Cash Basis 550,000

Noel A. Bergonia, CPA, MBA


PROBLEM 7
Euphoria Company had a balance of P820,000 in the
professional fees expense account on December 31,
2020, before considering year-end adjustments
relating to the following:
➢ Consultants were hired for a special project at a
total fee not to exceed P650,000. The entity had
recorded P550,000 of these fees based on
building for work performed in 2020.
➢ The attorney’s letter requested by the auditor
dated Jan. 31, 2021, indicated that legal fees of
P60,000 were billed on Jan. 15, 2021 for worked
performed in Nov. 2020, and the unbilled fees for
Dec. 31, 2020 were P70,000.

What amount should be reported as professional fees


expense for the year ended December 31, 2020?
Noel A. Bergonia, CPA, MBA
PROBLEM 8
Dynamite Company acquired rights to a patent under a
licensing agreement that required an advance royalty
payment when the agreement was signed. The entity
remitted royalties earned and due under the agreement
on October 31 each year. Additionally, on the same
date, the entity paid, in advance, estimated royalties for
the next year. The entity adjusted prepaid royalties at
the end of the year. The entity provided the following
information for the year ended December 31, 2020:

1/1 Prepaid royalties P 650,000


Royalty payment (charged to
10/31 royalty expense) 1,100,000
Year-end credit adjustment to
12/31 expense 250,000
On December 31, 2020, what amount should be reported
as prepaid royalties?
Noel A. Bergonia, CPA, MBA
PROBLEM 9

Noel A. Bergonia, CPA, MBA


PROBLEM 10

Noel A. Bergonia, CPA, MBA


Noel A. Bergonia, CPA, MBA

You might also like