CASH AND ACCRUAL BASIS

ACCRUAL TO CASH BASIS

Speed Company provided the ff. information for the current year:
Cash sales
Gross
Returns and allowances
Credit sales
Gross
Discounts
Customers owed P1,000,000 on January 1 and P750,000 on December 31. The entity used
direct write off method for bad debts. No bad debts were recorded in the current year.

Under cash basis of accounting, what amount of sales revenue should be reported for the
current year?

P 5,000,000
ACCRUAL TO CASH BASIS
Jacqueline Company began the current year with the following:
Accounts receivable 1,000,000
Allowance for Doubtful accounts 50,000

During the current year, the ff events occurred:

Accounts written off 100,000
Cash sales 500,000
Sales on account 3,000,000
Bad debt expense recognized 200,000

At the end of the current year, the entity showed a balance in accounts receivable of P1,700,000 before
the allowance for doubtful accounts.

Under the cash basis, what amount should be reported as sales for the current year?

P 2,700,000
ACCRUAL TO CASH BASIS
Zeta Company reported sales revenue of P4,600,000 in the income statement for the current
year.
Jan 1 Dec 31
Accounts receivables 1,000,000 1,300,000
Allowance for uncollectible accounts 60,000 110,000
Advances from customers 200,000 300,000

The entity wrote off uncollectible accounts P50,000 during the current year.

Under the cash basis of accounting, what amount should be reported as sales revenue for the
current year?

P 4,350,000
ACCRUAL TO CASH BASIS
Royal company provided the ff data for the current year:
Sales 10,000,000
Cost of goods sold 5,300,000
Operating expenses 3,800,000

Dec 31 Jan 1
Prepaid operating expenses1,000,000 700,000
Accounts payable 1,350,000 1,200,000
Inventory 2,500,000 2,100,000
Accounts receivable 1,400,000 1,375,000

Under cash basis, what amount should be reported as purchases for the current year?

P 5,550,000
ACCRUAL TO CASH BASIS
Under the Gerber Company’s accounting system, all insurance premiums paid are
debited to prepaid insurance.

For interim financial statements, the entity made monthly estimated charges to
insurance expense with an offset to prepaid insurance.

Prepaid insurance – January 1 150,000

Charges to insurance expense during the current year
Including a yr end adjustment of P25,000 625,000
Prepaid insurance – Dec 31 175,000

What was the amount of insurance premium paid during the current year?

P 650,000
ACCRUAL TO CASH BASIS
Miramar Company mused the accrual basis of accounting.
Dec 31 Jan 1
Inventory 8,000,000 9,000,000
Prepaid expenses 100,000 50,000
Accounts payable 7,500,000 7,000,000
Accrued expenses 500,000 300,000
Cost of goods sold 15,000,000
Expenses 3,000,000

The expenses for the current year included depreciation of P200,000 and amortization of
P100,000.

What total amount was paid for expenses during the current year?

P 2,550,000
ACCRUAL TO CASH BASIS
Under the accrual basis, Hamtikan Company reported rental income for the current
year at P600,000.

The entity provided the ff additional information regarding rental income:

Unearned rental income , January 1 50,000

Unearned rental income, December 31 75,000
Accrued rental income, January 130,000
Accrued rental income, December 31 40,000

What total amount of cash was received from rental in the current year?

P 615,000
ACCRUAL TO CASH BASIS
Katelyn Company provided the ff data for the current year:
Cash sales 2,500,000 Inventory, Jan 1 500,000
Sales on account850,000 Inventory, Dec 31 600,000
Cash purchases 1,700,000 Accr Exp., Dec 31 20,000
Credit purchases400,000 Prep Exp., Dec 31 30,000
Expenses paid 750,000 Equipment, Dec 31 1,000,000
Accts Rec., Jan 1 250,000 Interest received 40,000
Accts Rec., Dec 31 300,000 Interest rcvbl,Jan1 10,000
Accts Pay., Jan 1 150,000 Interest rcvbl,Dec31 20,000
Accts Pay., Dec 31 200,000

On July 1 of the current year, an equipment was acquired for P200,000. The terms are P50,000 down and the
balance to be paid after one year. The useful life of the equipment is 10 yrs with no residual value.

What is the amount of sales under cash basis?

P 3,300,000
ACCRUAL TO CASH BASIS
Katelyn Company provided the ff data for the current year:
Cash sales 2,500,000 Inventory, Jan 1 500,000
Sales on account850,000 Inventory, Dec 31 600,000
Cash purchases 1,700,000 Accr Exp., Dec 31 20,000
Credit purchases400,000 Prep Exp., Dec 31 30,000
Expenses paid 750,000 Equipment, Dec 31 1,000,000
Accts Rec., Jan 1 250,000 Interest received 40,000
Accts Rec., Dec 31 300,000 Interest rcvbl,Jan1 10,000
Accts Pay., Jan 1 150,000 Interest rcvbl,Dec31 20,000
Accts Pay., Dec 31 200,000

On July 1 of the current year, an equipment was acquired for P200,000. The terms are P50,000 down and the
balance to be paid after one year. The useful life of the equipment is 10 yrs with no residual value.

What is the amount of purchases under cash basis?

P 2,050,000
ACCRUAL TO CASH BASIS
Katelyn Company provided the ff data for the current year:
Cash sales 2,500,000 Inventory, Jan 1 500,000
Sales on account850,000 Inventory, Dec 31 600,000
Cash purchases 1,700,000 Accr Exp., Dec 31 20,000
Credit purchases400,000 Prep Exp., Dec 31 30,000
Expenses paid 750,000 Equipment, Dec 31 1,000,000
Accts Rec., Jan 1 250,000 Interest received 40,000
Accts Rec., Dec 31 300,000 Interest rcvbl,Jan1 10,000
Accts Pay., Jan 1 150,000 Interest rcvbl,Dec31 20,000
Accts Pay., Dec 31 200,000

On July 1 of the current year, an equipment was acquired for P200,000. The terms are P50,000 down and the
balance to be paid after one year. The useful life of the equipment is 10 yrs with no residual value.

What is the amount of cost of goods sold under cash basis?

P 1,950,000
ACCRUAL TO CASH BASIS
Katelyn Company provided the ff data for the current year:
Cash sales 2,500,000 Inventory, Jan 1 500,000
Sales on account850,000 Inventory, Dec 31 600,000
Cash purchases 1,700,000 Accr Exp., Dec 31 20,000
Credit purchases400,000 Prep Exp., Dec 31 30,000
Expenses paid 750,000 Equipment, Dec 31 1,000,000
Accts Rec., Jan 1 250,000 Interest received 40,000
Accts Rec., Dec 31 300,000 Interest rcvbl,Jan1 10,000
Accts Pay., Jan 1 150,000 Interest rcvbl,Dec31 20,000
Accts Pay., Dec 31 200,000

On July 1 of the current year, an equipment was acquired for P200,000. The terms are P50,000 down and the
balance to be paid after one year. The useful life of the equipment is 10 yrs with no residual value.

What is the amount of depreciation under cash basis?

P 90,000
ACCRUAL TO CASH BASIS
Katelyn Company provided the ff data for the current year:
Cash sales 2,500,000 Inventory, Jan 1 500,000
Sales on account850,000 Inventory, Dec 31 600,000
Cash purchases 1,700,000 Accr Exp., Dec 31 20,000
Credit purchases400,000 Prep Exp., Dec 31 30,000
Expenses paid 750,000 Equipment, Dec 31 1,000,000
Accts Rec., Jan 1 250,000 Interest received 40,000
Accts Rec., Dec 31 300,000 Interest rcvbl,Jan1 10,000
Accts Pay., Jan 1 150,000 Interest rcvbl,Dec31 20,000
Accts Pay., Dec 31 200,000

On July 1 of the current year, an equipment was acquired for P200,000. The terms are P50,000 down and the
balance to be paid after one year. The useful life of the equipment is 10 yrs with no residual value.

What is the amount of net income under cash basis?

P 550,000
CASH TO ACCRUAL BASIS
Reid Company , which began operations on January 1, 2022 has elected to use
cash basis accounting for tax purposes and accrual basis accounting for the
financial statements.

The entity reported sales of P1,750,000 and P800,000 in the tax returns for the
years ended Dec 31, 2023 and 2022, respectively.

The entity reported accounts receivables of P300,000 and P500,000 ON

December 31, 2023 and 2022, respectively.

What amount should be reported as sales in the income statement for 2023?

P 1,550,000
CASH TO ACCRUAL BASIS
Class Company maintained the accounting records on the cash basis but restated
the FS to the accrual method of accounting. The entity had P6,000,000 in cash
basis pretax income for 2023.

The entity provided the following information at year end:

2023 2022
Accounts receivable 4,000,000 2,000,000
Accounts Payable 1,500,000 3,000,000

Under the accrual basis, what amount of income before tax should be reported in
the income statement for 2023.

P 9,500,000
CASH TO ACCRUAL BASIS
Mall Company reported the following balances:
Dec 31 Jan 1
Inventory 2,600,000 2,900,000
Accounts payable 750,000 500,000

The entity paid suppliers P4,900,000 during the current year.

What is the amount of purchases under accrual basis?

P 5,150,000
CASH TO ACCRUAL BASIS
Mall Company reported the following balances:
Dec 31 Jan 1
Inventory 2,600,000 2,900,000
Accounts payable 750,000 500,000

The entity paid suppliers P4,900,000 during the current year.

Under accrual basis, what amount should be reported for cost of goods sold
in the current year?

P 4,950,000
CASH TO ACCRUAL BASIS
During 2023, Cookie Company acquired patent right and remitted royalties of
P3,000,000.

The entity reported prepaid royalties of P550,000 and P450,000, royalties

payable of P800,000 and P750,000, respectively, on December 31,2022 and
2023.

What amount should be reported as royalty expense for 2023?

P 3,050,000