MQ 1 Receivables and Inventory
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Father Saturnino Urios University Accounting 520 Accountancy Program Program MQ 001 Butuan City Anbert Angelo CCayna! CPA 1 "he #ollo$ #ollo$ing ing in#orma in#ormation tion is is available available #or #or the Beta Beta Com%any Com%any&& Cre'it sales 'uring 2010 P200!000 Allo$ance #or 'oubt#ul accounts at 12()1(200* 2!+00 Accounts receivable receivable 'eeme' $orthless an' $ritten o## o## 'uring 2010 )!200 ,uring 2010! Beta estimate' that its ba' 'ebts e-%ense shoul' be 1. o# all cre'it sales As a result o# a revie$ an' aging o# accounts receivable in early /anuary 2011! it has been 'etermine' that an allo$ance #or 'oubt#ul accounts o# P2!200 is nee'e' at ,ecember ,ecember )1! 2010 hat amount shoul' Beta Beta recor' as ba' 'ebts e-%ense #or the year en'e' ,ecember )1! 2010 a P2 P2!000 b P)!000 c P)!200 ' P+!200 ,ysas PAS 1 )2 b 2 3ri4 Com%any Com%any is a lea'ing e'ucati e'ucational onal instituti institution on $ith stu'ent stu'ent %o%ulatio %o%ulation n o# more than 50!000 50!000 3ri4 continuously maintains goo' uality e'ucation an' a roster o# uali#ie' instructors As a result! 3ri4 continuously %ro'uces to% gra'uates in several several #iel's As As o# ,ecember )1! 2010! 3ri4 has an outstan'ing receivable balance o# P2)!250!000 bro6en 'o$n into& 0780 'ays outstan'ing! P*!000!0009 817120 'ays outstan'ing! P8!:50!0009 an' over 120 'ays outstan'ing! P:!500!000 ;stimate' %ercent uncollectible uncollectible o# these accounts is 2.! +. an' 10.! res%ectively 3ri4 $rote o## P525!000 o# its receivables an' recovere' P)00!000 #rom accounts %reviously $ritten o## in %rior year As o# ,ecember )1! 200*! 3ri4 has an allo$ance #or uncollectible accounts o# P850!000 Base on the aging analysis! 3ri4 shoul' re%ort an allo$ance #or 'oubt#ul accounts as o# ,ecember )1! 200* at & a P1!200!000 b P1!500!000 c P::5!000 ' P8:5!000 ,ysas Pas 1 )5 a ) From ince%ti ince%tion on o# o%erations! o%erations! Celina Celina Com%any Com%any %rovi'e' %rovi'e' #or uncollecti uncollectible ble accounts accounts e-%ense e-%ense un'er the allo$ance metho' an' %rovisions $ere ma'e monthly at +. o# cre'it sales ctober 0 20. 1!500!00 /anuary 7/une 0 )0. Prior to /anuary 1! 2012 500!000 50. Base' on the revie$ o# collectibility o# the account balances in the ?%rior to /anuary 1! 2012@ aging category! a''itional accounts totalling P100!000 are to be $ritten o## on ,ecember )1! 2012 ;##ective $ith $ith the year en'e' ,ecember )1! 2012! the entity a'o%te' a ne $ accounting metho' #or estimating the allo$ance #or 'oubt#ul accounts at the amount in'icate' by the year7en' aging o# accounts receivable hat is the year7en' a'=ustment to the allo$ance #or 'oubt#ul accounts on ,ecember )1! 2012 a *00!000 'ebit b *00!000 cre'it c 100!000 'ebit ' 100!000 cre'it 5+)+ 8 ' + B Cor%oratio Cor%oration n began o%eratio o%erations ns in 2010 For For the year en'e' en'e' ,ecember ,ecember )1! 2010! 2010! B ma'e availabl available e the #ollo$ing in#ormation& "otal merchan'ise %urchases #or the year P)50!000 Merchan'ise inventory at ,ecember )1! 2010 :0!000 Collections #rom customers 200!000 All merchan'ise $as mar6e' to sell at +0. above cost Assuming that all sales are are on a cre'it basis basis an' all receivables are collectible! $hat shoul' be the balance in accounts receivable at ,ecember )1! 2010 a P50!000 b P1*2!000 c P250!000 ' P2*0!000 ,ysas %as 1 2 b 5 Cherry Cherry Ban6 grante' grante' a loan to a borro$er borro$er on /anuary /anuary 1! 2012 2012 "he interes interestt on the loan is 10. %ayabl %ayable e annually starting ,ecember )1! 2012 2012 "he loan matures in three years on ,ecember ,ecember )1! 201+ ,ata relate' to the loan are& Princi%al amount 5!000!000 >rigination #ee charge' against the borro$er )+0!000 ,irect origination cost incurre' 100!000 n'irect origination cost incurre' 50!000 A#ter consi'ering the origination #ee #ee charge' against the borro$er an' the 'irect 'irect origination origination cost incurre'! the the e##ective rate on the loan is 12. hat is the carrying amount o# the loan receivable on ,ecember )1! 2012 a 5!000!000 b +!:80!000 c +!)1!200 ' +!*10!*++ 5+)5 1 c Melissa Ban6 loane' P10!000!000 to a borro$er on /anuary 1! 2010 "he terms o# the loan reuire %rinci%al %ayment o# P2!000!000 each year %lus interest at 10. "he #irst %rinci%al an' interest %a yment is 'ue on /anuary 1! 2011 "he borro$er ma'e the reuire' %ayments 'uring 2011 an' 2012 o$ever! 'uring 2012! the borro$er began to e-%erience #inancial 'i##iculties reuiring the ban6 to reassess the collectibility o# the loan n ,ecember )1! 2012! the ban6 has 'etermine' that the remaining %rinci%al %ayments $ill be collecte' but the collection o# the interest is unli6ely "he ban6 has accrue' the interest #or 2012 "he %rinci%al %ayments are e-%ecte' to be as #ollo$s& /anuary 1! 201) 1!000!000 /anuary 1! 201+ 2!000!000 /anuary 1! 2015 )!000!000 "he %resent value o# 1 at 10. is 0*1 #or one %erio'! 0) #or t$o %erio's! an' 0:5 #or three %erio's hat is the loan im%airment loss to be recogni4e' on ,ecember )1! 2012 a 1!10!000 b 2!000!000 c 1!2*0!000 ' 8*0!000 hat is the interest income to be re%orte' by the ban6 in 201) a 5)1!000 b +)1!000 c 800!000 ' 500!000 hat is the carrying amount o# the loan receivable on ,ecember )1! 201) a 5!000!000 b +!:+1!000 c +!)10!000 ' )!122!000 5+)5 ) 1! 2 an' ) c!b an' b n A%ril 1! 2012! the entity 'iscounte' the note $ith recourse "he ban6 'iscount rate is 12. "he 'iscounting transaction is accounte' #or as con'itional sale $ith recognition o# a contingent liability >n >ctober 1! 2012! the ma6er 'ishonore' the note receivable "he entity %ai' the ban6 the maturity value o# the note %lus %rotest #ee o# P10!000 >n ,ecember )1! 2012! the entity collecte' the 'ishonore' note in #ull %lus 12. annual interest on the total amount 'ue hat is the amount collecte' by the entity #rom the customer on ,ecember )1! 2012 a 2!150!000 b 2!22+!00 c 2!180!000 ' 2!21+!500 5+)8 + b /et Com%any %urchase' 'i##erent goo's $ith #ollo$ing 'etails o# the costs incurre' 'uring the current year& Merchan'ise in transit %urchase' F>B shi%%ing %oint P100!000 Abnormal #reight charge #or e-%ress shi%%ing 20!000 m%ort 'uties 10!000 Bro6erage commission %ai' to agents #or im%orts 10!000 Sales commissions %ai' to sales agents )0!000 Merchan'ise sent to customer #or a%%roval 50!000 A#ter7sale $arranty costs 10!000 Merchan'ise shi%%e' on consignment to el 110!000 Freight %ai' by /et on consigne' goo's 20!000 hat is the amount o# inventory to be re%orte' in /etDs statement o# #inancial %osition a P)00!000 b P)20!000 c P))0!000 ' P)80!000 Pas 2 28 a nventory on han' at ,ecember )1! 2011 #or the 3ing Com%any is value' at a cost o# P*+:!00 "he #ollo$ing items $ere not inclu'e' in this inventory amount& a Purchase' goo's in transit! shi%%e' F>B 'estination nvoice %rice P)2!000! $hich inclu'es #reight charges o# P1!800 b oo's hel' on consignment by 3ing at a sales %rice o# P2!000! inclu'ing sales commission o# 20. o# the sales %rice c oo's sol' to 3en Com%any! un'er terms F>B 'estination! invoice' #or P2+!+00 $hich inclu'es P1!000 #reight charges to 'eliver the goo's "he goo's are in transit ' Purchase' goo's in transit ! terms F>B shi%%ing %oint nvoice %rice P+!000 Freight cost P)!000 e oo's out on consignment to 3i' Com%any! sales %rice! P)8!+00 Shi%%ing cost o# P2!000 Mar67u% on cost #or all sales is )0. hat is the cost o# the inventory to be re%orte' in 3ingDs #inancial statements a P1!022!+00 b P1!0+1!00 c P1!0+8!00 ' P1! 0:!00 Pas 2 2: c
15 Mi- Com%any has the #ollo$ing in#ormation %ertaining to its merchan'ise inventory as o# ,ecember )1! 2011& nventory on han'G inclu'ing merchan'ise receive' on consignment o# P20!000H P200!000 nventory %urchase' $ith a buybac6 agreement 100!000 Merchan'ise in transit! F>B shi%%ing %oint! inclu'ing P5!000 #reight cost 155!000 Merchan'ise in transit! Free Alongsi'e! inclu'ing 'elivery cost alongsi'e the vessel o# P8!000 but e-clu'ing the cost o# shi%ment o# P)!000 250!000 Merchan'ise in transit! CF Ginclu'ing insurance costs an' #reight o# P!000H 1:5!000 hat amount shoul' Mi- Com%any re%ort as value o# its inventory in its 2011 balance sheet a P:+*!000 b P:5:!000 c P:8)!000 ' P5:!000 Pas 2 2 b 18 >n n /une 1! 2012! /eanah Com%any sol' merchan'ise $ith a list %rice o# P5!000!000 to a customer "he entity allo$e' tra'e 'iscounts o# 20. an' 10. Cre'it terms $ere 5(10! n()0 an' the sale $as ma'e F>B shi%%ing %oint "he entity %re%ai' P100!000 o# 'elivery cost #or the customer as an accommo'ation >n /une 11! 2012! $hat is the #ull remittance #rom the customer a )!800!000 b )!+20!000 c )!:00!000 ' )!520!000 5+) 2 ' 1 an Com%any sells one %ro'uct $hich it %urchases #rom various su%%liers ts trial balance at ,ecember )1! 2011 inclu'e' the #ollo$ing items& SalesG))!000 unitsH P52!000 Sales 'iscounts :!500 Purchases )8!*00 Purchase 'iscounts 1!000 Freight in +!00 Freight out 11!000 anDs inventory %urchases 'uring 2011 $ere as #ollo$s& Units Unit cost Beginning inventory! /anuary 1 !000 P20 Purchases!1st uarter 12!000 25 Purchases! 2n' uarter 15!000 :*0 Purchases!)r' uarter 1)!000 :50 Purchases!+th uarter :!000 ::0 anDs accounting %olicy is to re%ort inventory at lo$er o# cost or net reali4able value! a%%lie' to total inventory Cost is 'etermine' un'er the $eighte' average metho' t 'etermine' at ,ecember )1! 2011 the re%lacement cost o# its inventory at P20 %er unit an' the net reali4able value $as P00 %er unit ts normal %ro#it margin is P105 %er unit t uses the 'irect metho' o# re%orting losses #rom the mar6et 'ecline o# inventory hat is the cost o# sales #or the year 2011 a P2+1!100 b P2+5!500 c P252!:0 ' P28+!200 Pas 2 2* c "he Com%uter ;-%ress Com%any sells only one %ro'uct! a $on'er calculator 'esigne' s%eci#ically #or accounting stu'ents A#ter e-%eriencing recor' sales o# P500!000! the accountant is rea'y to %re%are the annual #inancial statements At the start o# the year! there $ere 21!000 calculators on han' at a cost o# P15 %er unit ,uring the year! the com%any %urchase' three shi%ments o# $on'er calculators consisting o# *!000! 5!000 an' 12!000 units costing P1++!000! P5!000 an' P128!000 res%ectively "hroughout the entire year! Com%uter ;-%ress sol' the $on'er calculators #or P20 each 1* "he cost o# en'ing inventory using the $eighte' average cost metho' $oul' be& a P)1)!:20 b P)8)!000 c P+0+!250 ' P+12!500 20 "he cost o# goo's sol' using FF> $oul' be& a P))1!000 b P):*!000 c P)1!000 ' P+2*!000 Pas 2 )0 an' )1 a an' b 21 Ii#t Com%anyDs %ricing structure has been establishe' to yiel' a gross %ro#it o# )0. "he #ollo$ing 'ata %ertain to the year en'e' ,ecember )1! 2011& Sales P2!200!000 nventory! /anuary 1! 2011 00!000 Purchases 1!200!000 Freight cost on %urchases 50!000 Freight cost on merchan'ise sol' )0!000 nventory insi'e the com%anyJs $arehouse! %er actual count on 12()1(2011 180!000 Cre'it memo issue' to customers #or goo's returne' an' receive' 50!000 Cre'it memo issue' to customer #or merchan'ise to be returne'! 1((2(2012 +0!000
Sales 'iscount 100!000 Ii#t is satis#ie' that all sales an' %urchases have been #ully an' %ro%erly recor'e' o$ much shoul' Ii#t reasonably estimate as a shortage in inventory at ,ecember )1! 2011 a P5:)!000 b P+1)!000 c P)5!000 ' P):)!000 Pas 2 ): c 22 >n the eve o# /une 15! 2011! a #ire 'estroye' the entire merchan'ise inventory o# Can Cor%oration "he merchan'ise $ere not insure' "he #ollo$ing 'ata $ere gathere'& nventory! /anuary 1 P250!000 Purchases! /anuary 1 to /une 15 1!500!000 Sales! /anuary 1 to /une 15 2!000!000 Mar6u% %ercentage on cost 25. hat is the a%%ro-imate inventory loss as a result o# the #ire a P150!000 b P250!000 c P)12!500 ' P1!500!000 Pas2 )5 a 2) ,ean Com%any uses the retail inventory metho' to estimate its inventory #or the interim statement %ur%oses ,ata relating to the com%utation o# the inventory at /uly )1! 2 011 are as #ollo$s& Cost Eetail nventory! February 1! 2011 P10!000 P250!000 Purchases 1!020!000 1!5:5!000
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