Problem 1-1 Problem 1-2

Cash in Bank 3, 000, 000 Cash and Cash equivalents:

Stale Customer Check ( 200, 000) Cash on Hand 1, 000, 000
Undelivered Customers’ Check 250, 000 Post-dated customer’s check ( 150, 000) 850, 000
Petty Cash Fund 50, 000
Post-Dated Creditors’ Check 100, 000
Unreplenished Vouchers ( 10, 000)
2020 Collection Recorded in 2019 ( 450, 000)
Employers Check ( 5, 000) 35, 000
2, 700, 000 Cash in Bank-Security Bank 2, 000, 000
Time Deposit- 30 days 1, 000, 000
Petty Cash Fund 20, 000 Cash in Bank- PNB 1, 500, 000
Cash and Cash Equivalents 3, 720, 000 Bond Sinking Fund 2, 500, 000
Total 6, 855, 000
Adjusting Entries: Adjusting Entries:
Accounts Receivable 200, 000 Accounts Receivable 150, 000
Cash in Bank 200, 000 Cash on Hand 150, 000

Cash in Bank 250, 000 Expenses 10, 000

Accounts Payable 250, 00 Advances to Employees 5, 000
Petty Cash Fund 15, 000
Cash in Bank 100, 000
Accounts Payable 100, 000 Items excluded from cash and cash equivalents:
BSP Treasury Bill- Short Term Investment
Accounts Receivable 450, 000 BPI Time Deposit- Long-Term Investment
Cash in Bank 450, 000 Bank Overdraft-BDO- Current Liability

Problem 1-3 Problem 2-6

Cash and Cash equivalents: Bank Balance 3, 500, 000
Cash on Hand 1, 000, 000 Deposit In Transit 550, 000
Customer NSF Check (100, 000) Outstanding Check (650, 000)
Post-dated customer’s check (150, 000) 750, 000 Adjusted bank balance 3, 400, 000
Petty Cash Fund
currency and coins 2, 000 Book Balance ? 3, 130, 000
replenished check 33, 000 35, 000 DM-NSF Check (50, 000)
Cash in Bank: 4, 000, 000 DM-Safety Box Rental (5, 000)
Undelivered creditor’s check 200, 000 Overstated Disbursement 270, 000
Post-dated creditor’s check 300, 000 4, 500, 000 Understated Receipts 180, 000
Savings Deposit 2, 000, 000 Unrecorded Disbursement ( 125, 000)
Total Cash-Deposit December 31, 2019 7, 285, 000 Adjusted Book Balance 3, 400, 000

Adjusting Entries:
Accounts Receivable 250, 000
Cash 250, 000

Advances to Employees 10, 000

Cash Short or Over 5, 000
Petty cash Fund 15, 000

Cash in Bank 500, 000

Accounts Payable 500, 000
Problem 1-4 Problem 2-5
Cash and Cash equivalents:
Cash on Hand 200, 000 Book Balance March 31 800, 000
Customer NSF Check (35, 000) Book Deposit, April 4, 100, 000
Post-dated customer’s check (15, 000) 150, 000 Book Credits, April (3, 800, 000)
Petty Cash Fund 5, 000 Book Balance, April 30 1, 100, 000
DM-NSF Check (25, 000)
Cash in Bank-Philippine Bank 5, 000, 000
DM- Service Charge (5, 000)
Undelivered creditor’s check 25, 000
CM-Note Collected 60, 000
Post-dated creditor’s check 45, 000 5, 075, 000 Adjusted Book Balance 1, 130, 000
Cash in Bank-City Bank 3, 900, 000
Saving Account-Asia Bank 250, 000
Time Deposit-Asia Bank 2, 000, 000 Bank Balance 1, 000, 000
Total Cash and Cash equivalents 11, 375, 000 Outstanding Checks (140, 000)
Deposit In Transit 270, 000
Adjusting Entries: Adjusted Bank Balance 1, 130, 000
Accounts Receivable 50, 000
Cash 50, 000

Advances to Employees 2, 000

Expense 12, 000
Cash Short or Over 1, 000
Petty cash Fund 15, 000

Cash in Bank-Philippine Bank 70, 000

Accounts Payable 70, 000

Problem 1-7
2019 2020
May 2 Petty Cash Fund 10, 000 July 1 Petty Cash Fund 4, 000
Cash in Bank 10, 000 Supplies Expense 2, 000
Postage 1, 000
Transportation Expense 1, 000
29 Postage 1, 000
Supplies expense 3, 000
15 Petty Cash Fund 5, 000
Transportation Expense 2 500 Supplies Expense 1, 500
Miscellaneous Expense 1, 000 Postage Expense 1, 500
Cash in Bank 8, 000 Transportation Expense 1, 500
Miscellaneous Expense 500
June 3 Supplies Expense 2, 000 Cash In bank 12, 000
Postage 1, 000
Transportation Expense 1, 000
Petty Cash Fund 4, 000
2-8 Bank Reconciliation
Book Balance 5, 000, 000
CM-Book Balance 516, 000
Understated Check (180, 000)
Petty Cash Fund ( 10, 000)
Adjusted Book Balance 5, 326, 000

Bank Balance 5, 500, 000

Deposit In Transit 300, 000
Erroneous Debit 50, 000
Omitted Deposit 150, 000
Outstanding Checks (544, 000)
Erroneous Credit ( 130, 000)
Adjusted Book Balance 5, 326, 000

Adjusting Entries:
Cash in Bank 516, 000
Prepaid Interest 77, 000 (84, 000 X 11/12)
Interest Expense 7, 000 (84, 000 X 1/12)
Loan Payable 600, 000
(516, 000 X 86%)

Accounts Payable 180, 000

Cash in Bank 180, 000

Petty Cash Fund 4, 000

Supplies Expense 2, 000
Transportation Expense 3, 000
Postage 1, 000
Cash in Bank 10, 000
Problem 3-3
June 30 Receipts Disbursement July 31
Book Balances 1, 270, 000 3, 400, 000 4, 200, 000 470, 000
CM-Note Collected 1, 500, 000 1, 500, 000
DM-Service Charge 20, 000 (20, 000)
Adjusted Book Balances 1, 270, 000 4, 900, 000 4, 220, 000 1, 950, 000
Bank Balances 1, 720, 000 5, 000, 000 4, 020, 000 2, 700, 000
Deposit in Transit:
June 30 500, 000 (500, 000)
July 31 400, 000 400, 000
Outstanding Checks
June 30 (950, 000) (950, 000)
July 31 1, 150, 000 (1, 150, 000)
Adjusted Bank Balances 1, 270, 000 4, 900, 000 4, 220, 000 1, 950, 000

DIT June 30 (squeeze) 500, 000 OIC June 30 (squeeze) 950, 000
Add: Book debits 3, 400, 000 Add: Bank credits 4, 200, 000
Total deposits to be credited 3, 900, 000 Total checks to be paid 5, 150, 000
Deposits credit by bank Check paid by bank:
Bank Credits 5, 000, 000 Bank debits 4, 020, 000
CM-Note Collected (1, 500, 000) 3, 500, 000 DM-Service Charge (20, 000) 4, 000, 000
DIT, July 31 400, 000 OIC July 31 1, 150, 000

Problem 3-4
June 30 Receipts Disbursement July 31
Book Balances 990, 000 710, 000 1, 200, 000 500, 000
Debit Memos:
Oct-Service Charge (5, 000) (5, 000)
Nov-Service Charge 10, 000 10, 000
Nov-NSF Check 50, 000 (50, 000)
Book Error:
Unrecorded Collections 45, 000 (45, 000)
N/R recorded or receipt 100, 000 (100, 000)
Adjusted book balances 1, 030, 000 565, 0000 1, 255, 000 340, 000

Bank Balances 1, 100, 000 500, 000 1, 000, 000 600, 000
Erroneous bank debit 10, 000 (10, 000)
Deposit in Transit:
Oct 31 45, 000 (45, 000)
Nov 30 120, 000 120, 000
Outstanding Checks
Oct 31 (125, 000) (125, 000)
Nov 30 380, 000 (380, 000)
Adjusted Bank Balances 1, 030, 000 565, 000 1, 255, 000 340, 000
Deposit in Transit, Oct 31 45, 000 Outstanding Checks, Oct 31 125, 000
Add: November book receipts: Add: November book disbursement
Book Debits 710, 000 Book Credits 1, 200, 000
N/R Recorded as receipt (100, 000) Oct 31-Service Charge (5, 000) 1, 195, 000
Unrecorded collections-Oct.31 45, 000__________ Total Checks to be paid by bank 1, 320, 000
Total Deposits to be credited by bank 610, 000 Checks Paid by bank:
Less: Deposits Credited by bank Bank Debits 1, 000, 000
Bank Credited 500, 000 Nov-Service Charge (10, 000)
Erroneous Bank Debit Correction (10, 000) 490, 000 Nov-NSF Check (50, 000) 940, 000
Deposit in Transit, Nov 30 120, 000 Outstanding Checks, Nov.30 380, 000

Problem 3-6
July 31 Receipts Disbursement August 31
Book Balances 1, 200, 000 4, 400, 000 3, 600, 000 2, 000, 000
Note Collected:
July 200, 000 (200, 000)
August 300, 000 300, 000
NSF Check
July (100, 000) (100, 000)
August 50, 000 (50, 000)
Book Errors:
Understated Collection 180, 000 180, 000
Understated Disbursement 540, 000 (540, 000)
Adjusted Book Balance 1, 300, 000 4, 680, 000 4, 090, 000 1, 890, 000

Bank Balances 800, 000 5, 000, 000 3, 940, 000 1, 860, 000
Deposit in Transit
July 31 600, 000 (600, 000)
August 31 480, 000 480, 000
Outstanding Checks:
July 31 (100, 000) (100, 000)
August 31 650, 000 (650, 000)
Bank Errors:
Erroneous Bank Credit (200, 000) (200, 000)
Erroneous Bank Debit (400, 000) 400, 000
Adjusted bank Balances 1, 300, 000 4, 680, 000 4, 090, 000 1, 890, 000
Problem 3-7
Nov. 30 Receipts Disbursement Dec. 31
Book Balances 2, 032, 000 2, 568, 000 1, 440, 000 3, 160, 000
Bank Service Charge:
Nov.30 (2, 000) (2, 000)
Dec.31 4, 000 (4, 000)
Note Collected by Bank:
Nov. 30 (200, 000) 200, 000
Dec. 31 ( 300, 000) (300, 000)
Adjusted Book Balances 1, 830, 000 2, 468, 000 1, 442, 000 2, 856, 000

Bank Balances 1, 890, 000 2, 090, 000 1, 080, 000 2, 900, 000
Deposit in Transit
Nov. 30 80, 000 (80, 000)
Dec. 31 498, 000 498, 000
Outstanding Checks
Nov. 30 (180, 000) (180, 000)
Dec 31 592, 000 (592, 000)
Erroneous Debit:
Nov. 30 40, 000 (40, 000)
Dec. 31 (50, 000) 50, 000
Adjusted bank Balances 1, 830, 000 2, 468, 000 1, 442, 000 2, 856, 000

Problem 5-3
A. Accounts Receivable
Cash 800, 000 Beginning 2, 000, 000 720, 000 Collection
Accounts Receivable 7, 200, 000 Credit Sales 7, 200, 000 5, 940, 000 Collection
Sales 8, 000, 000 80, 000 S/R/A
60, 000 Writeoff
Cash 634, 000 Ending Bal 2, 400, 000
Sales Discount (720, 000 X 5%) 36, 000
Accounts Receivable 720, 000 Allowance for Doubtful Account
Writeoff 60, 000 100, 000 Beginning
Cash 5, 940, 000 10, 000 Recovery
Accounts Receivable 5, 940, 000 50, 000 Unadjusted
60, 000 D/A Expense
Sales Discount 10, 000 120, 000 Required
Allowance for Sales Discount 10, 000 Allowance
(2400, 000 x 5%)
Sales Return and Allowances 80, 000 D/A Expense 70, 000
Accounts Receivable 80, 000 Allowance for D/A 70, 000

Allowance for D/A 60, 000 B.

Accounts Receivable 60, 000 Accounts Receivable 2, 400, 000
Allowance for D/A (120, 000)
Accounts Receivable 10, 000 Allowance for Sales Discount (10, 000)
Allow. For D/A 10, 000 Net Realizable Value 2, 270, 000

Cash 10, 000

Accounts Receivable 10, 000
Problem 5-2
Accounts Receivables
Beg. 1, 000, 000 2, 500, 000 Collections 1.Accounts Receivable 7, 000, 000
Credit Sales 7, 000, 000 3, 900, 000 Collections Sales 7, 000, 000
Recovery 10, 000 30, 000 Write-off 2. Cash 2, 450, 000
10, 000 Recovery Sales Discount 50, 000
70, 000 Sales Return & Allowances Accounts Receivable 2, 500, 000
` Bal. 1, 500, 000 (2, 450, 000 / 98%)
3. Cash 3, 900, 000
Allowance for Doubtful Accounts Accounts Receivable 3, 900, 000
Write off 30, 000 40, 000 Beginning
10, 000 Recovery 4. Allowance for D/A 30, 000
20, 000 Unadjusted Accounts Receivable 30, 000
40, 000 D/A Expense
60, 000 Req. Allowance 5. Accounts Receivable 10, 000
Doubtful Account Expense 40, 000 Allowance for D/A 10, 000
Allowance for D/A 40, 000
40, 000/ 1, 000, 000= 4% Cash 10, 000
1, 500, 000 X 4%= 60, 000 Accounts Receivable 10, 000
Accounts Receivable 1, 500, 000
Less: Allowance D/A 60, 000 6. Sales Returns and Allowances 70, 000
Net Realizable Value 1, 440, 000 Accounts Receivable 70, 000

Problem 5-4

1.Cash 470, 000 Accounts Receivable

Accounts Receivable 2, 600, 000 Beg. 600, 000 1, 000, 000 Collection
Sales 3, 070, 000 Credit Sales 600, 000 1, 500, 000 Collection
20, 000 Write Off
2.Cash 1, 000, 000 55, 000 S/R/A
Accounts Receivable 1, 000, 000
(2, 455, 000 – 1, 455, 000) Balance 625, 000

3.Cash 1, 455, 000

Sales Discount 45, 000 Allowance for D/A
Accounts Receivable 1, 500, 000 Write off 20, 000 25, 000 Beg.
(1, 455, 000 / 97%) 5, 000 Recovery
50, 000 D/A Expense
4.Allowance for D/A 20, 000 60, 000 Balance
Accounts Receivable 20, 000
Accounts Receivable 625, 000
6. Sales Return & Allow. 55, 000 Less: Allow. For D/A 60, 000
Accounts Receivable 55, 000 Net Realizable 565, 000
Doubtful Account Expense 50, 000
7. Sales Return & Allow. 10, 000
Allowance for D/A 50, 000
Cash 10, 000

8.Accounts Receivable 5, 000, Cash 5, 000

Allow. D/A 5, 000 Accounts Receivable 5, 000
Problem 5-4 Problem 5-4

Accounts Receivable 1-30 days 1, 200, 000 x 5% 60, 000

Beginning 1, 500, 000 4, 500, 000 Collection 31-60 days 100, 000 x 25% 25, 000
Credit Sales 7, 935, 000 2, 500, 000 Collection
61-90 days 150, 000 x 50% 75, 000
Recovery 15, 000 15, 000 Recovery
1, 100, 000 Collection Over 90 days 120, 000 x 100 % 120, 000
55, 000 Write off Required Allow. 280, 000
30, 000 S/R/A
Balances 1, 250, 000 Allowance for Doubtful Account
Write off 235, 000 170, 000 Beg.
Add’l write off 30, 000 30, 000 Recovery
Allowance for Doubtful Account Unadjusted 65, 000 345, 000 D/A Expense
Write off 55, 000 60, 000 Beg. 280, 000 Req. Allow.
15, 000
20, 000 Unadjusted
30, 000 D/A Expense
Doubtful Account Expense 345, 000
50, 000 Req. Allowance
Allow. For D/A 345, 000
Doubtful Account Expense 30, 000
Allow. For D/A 30, 000 Accounts Receivable 3, 270, 000
Less: Allowance for D/A 280, 000
Accounts Receivable 1, 250, 000 Net Realizable Value 2, 990, 000
Less: Allowance for D/A 50, 000
Net Realizable Value 1, 200, 000
Problem 5-4

Problem 5-4 1.Allow. D/A Expense (1-01-19) 28, 000x 1% 28, 000

Allowance for Doubtful Account Allowance for Doubtful Account

Write off 300, 000 500, 000 Beg. Write off 27, 000 28, 000 Beg.
Add’l Write off 100, 000 400, 000 Interim Provision 30, 000 Interim Provision
50, 000 Recovery 7, 000 Recovery
550, 000 Balance 38, 000 Unadjusted
450, 000 D/A Expense 1, 000 D/A Expense
1, 000, 000 Req. Allowance 39, 000 Req. Allowance

Doubtful Account Expense 400, 000 AJE

Allow. For Doubtful Account 400, 000 Doubtful Account Expense 450, 000
Allow. D/A 450, 000
Allowance for Doubtful Account 300, 000
Accounts Receivable 300, 000 0-30 days 300, 000 x 1% 3, 000
AJE 31-90 days 80, 000 x 5% 4, 000
Doubtful Account Expense 450, 000 91-180 days 60, 000 x 20% 12, 000
Allow. D/A 450, 000 Over 180 days 25, 000 x 80% 20, 000
Required Allow. 39, 000
November- December 5, 000, 000 x 5% 250, 000
July-October 2, 000, 000 x 10% 200, 000
January-June 1, 000, 000 x 25% 250, 000
Prior-January 1, 2019 400, 000 x 75% 300, 000
Req. Allowance 12-31-19 1, 000, 000

Accounts Receivable 8, 400, 000

Allow. D/A (1, 000, 000)
Net Realizable Value 7, 400, 000
Problem 6-3 Non-Interest Bearing
Face Value of Note 900, 000
2019 Less :PV of Note 720, 549
Jan 1 Cash 100, 000 (300, 000 x 2.401831268)
Notes Receivable 900, 000 Unearned Interest Income 179, 451
Sales 820, 549
Unearned Interest Income 179, 451 PV of A1 = 1-(1.12)^-3 / .12 = 2.401831268
Date Collection Interest Principal PV
1-1-19 720, 549
12-31-19 300, 000 86, 466 213, 534 507, 015
12-31-20 300, 000 60, 842 239, 158 267, 857 Amortized Cost
12-31-21 300, 000 32, 143 267, 857 ----------

Dec 31 Cash 300, 000 Partial Balance Sheet

Notes Receivable 300, 000 December 31, 2019
Current Asset
31 Unearned Interest Income 86, 466 Trade and Other Receivable
Interest Income 86, 466 Notes Receivable 300, 000
Less: Unearned I/I 60, 842 239, 158

Non-Current Asset
Other Non-Current Asset
Notes Receivable 300, 000
Less: Unearned I/I 32, 143 267, 857

Problem 7-1 Interest Bearing

Trial and Error PV at 11%
Loan Receivable 4, 000, 000 PV of Principal ( 4, 000, 000 X 1.11 ^ -3 ) 2, 924, 766
Origination Fees (342, 100) PV of Interest ( 4, 000, 000 X 10% X 1-(1.11)^-3 / 11% 977, 486
Direct Origination Cost 150, 000 Total Present Value 3, 902, 252
Carrying Amount of Loan (1-1-19) 3, 807, 900
PV at 12%
11 % 3, 807, 900 12% PV of Principal ( 4, 000, 000 X 1.12 ^ -3 ) 2, 847, 121
3, 902, 252 3, 807, 854 PV of Interest ( 4, 000, 000 X 10% X 1-(1.12)^-3 / 12% 960, 733
94, 352 46 Total Present Value 3, 807, 854
94, 398

At 11% = (94, 352 / 94, 398) + 11% = 11.9995127

At 12%= (46 / 94, 398) – 12% = 11. 9995127

Date Interest Received Interest Income Amortization Present Value

1-1-19 3, 807, 900
12-31-19 400, 000 456, 929 56, 929 3, 864, 829
12-31-20 400, 000 463, 761 63, 761 3, 928, 590
12-31-21 400, 000 471, 410 71, 410 4, 000, 000

2019
Jan 1 Loan Receivable 4, 000, 000 Dec 31 Cash 400, 000
Cash 4, 000, 000 Interest Income 400, 000

1 Cash 342, 100 31 Unearned Interest Income 56, 929

Unearned Interest Income 342, 100 Interest Income 56, 929
7-5
Requirement #1
Dec. 31, 2012 (1, 000, 000 x 0. 925925925) 925, 926
Dec. 31, 2013 (2, 000, 000 x 0. 85733882) 1, 714, 678
Dec. 31, 2014 (3, 000, 000 x 0. 79832241) 2, 381, 497
Total Present Value of Cash Flows 5, 022, 101

Requirement #2
Loan Receivable 6, 000, 000
Accrued Interest (6, 000, 000 x 8%) 480, 000
Date Payment Interest Principal PV
Total Carrying Value of Loan 6, 480, 000
12-31-11 5, 022, 101
Less: PV of Cash Flow 5, 022, 101
12-31-12 1, 000, 000 401, 768 598, 232 4, 423, 869
Impairment Loss 1, 457, 899
12-31-13 2, 000, 000 353, 910 1, 646, 090 2, 777, 779
Requirement #3 12-31-14 3, 000, 000 222, 221 2, 777, 779 ------------
2011
Dec. 31 Impairment Loss 1, 457, 899 2013
Accrued Interest Receivable 480, 000 Dec 31 Cash 2, 000, 000
Allow. For Loan Impairment 977, 899 Loan Receivable 2, 000, 000

2012 2014
Dec. 31 Cash 1, 000, 000 Dec 31 Cash 3, 000, 000
Loan Receivable 1, 000, 000 Loan Receivable 3, 000, 000

31 Allow. For Loan Impairment 401, 768 31 Allow. For Loan Impairment 222, 221
Interest Income 401, 768 Interest Income 222, 221

Problem 7-7
Requirement #1
Dec. 31, 2014 360, 000 x 0.77218348 277, 986
Dec. 31, 2015 360, 000 x 0 708425211 255, 033
Dec. 31, 2016 360, 000 x 0.649931386 233,957
Dec. 31, 2017 360, 000 x 0.596267326 2, 599, 726
Total PV Cash Flows 3, 366, 720

Requirement #2 Date Payment Interest Principal PV

Loan Receivable 4, 000, 000 12-31-11 3, 366, 720
PV of Cash Flows 3, 366, 720 12-31-12 303, 005 (303, 005) 3, 699, 725
Loan Impairment Loss 633, 280 12-31-13 330, 275 (330, 275) 4, 000, 000

Requirement #3
2011 2014
Dec. 31 Cash 360, 000 Dec 31. Cash 360, 000
Interest Income 360, 000 Interest Income 360, 000
2015
31 Impairment Loss 633, 280 Dec 31. Cash 360, 000
Allow. For loan Impairment 633, 280 Interest Income 360, 000
2012 2016
Dec. 31 Allow. For loan Impairment 303, 005 Dec 31. Cash 360, 000
Interest Income 303, 005 Interest Income 360, 000

2013 2017
Dec. 31 Allow. For loan impairment 330, 275 Dec. 31 Cash 4, 360, 000
Interest Income 330, 275 Interest Income 360, 000
Loan Receivable 4, 000, 000
Problem 7-3
2011 2013
Jan. 1 Loan Receivable 3, 000, 000 Dec 31 Cash 240, 000
Cash 3, 000, 000 Interest Income 240, 000

1 Direct Origination Cost 260, 300 31 Interest Income 56, 513

Cash 260, 300 Direct Origination Cost 56, 513

1 Cash 100, 000 31 Cash 3, 000, 000

Direct Origination Cost 100, 000 Loan Receivable 3, 000, 000

Dec. 31 Cash 240, 000 Date Interest Received Interest Income Amortization PV
Interest Income 240, 000 1-1-11 240, 000 3, 160, 300
12-31-11 240, 000 189, 618 50, 382 3, 109, 918
31 Interest Income 50, 382 12-31-12 240, 000 186, 595 53, 405 3, 056, 513
Direct Origination Cost 50, 382 12-31-13 240, 000 183,487 56, 513 3, 000, 000

2012
Dec. 31 Cash 240, 000 31 Interest Income 53, 405
Interest Income 240, 000 Direct Origination Cost 53, 405

Problem 8-3 Non Notification

July 1 Notes Payable-Bank (640, 000-490, 000) 150, 000
May 1 A/R, assigned 800, 000 Interest Expense ( 150, 000 x 2%) 3, 000
A/R 800, 000 Cash 153, 000
1 Accounts Receivable 60, 000
1 Cash 620, 000 Accounts Receivable, Assigned 60, 000
Service Charge 20, 000
N/P- Bank (800, 000 x 80%) 640, 000 Accounts Receivable, Assigned
800, 000 30, 000
5 Sales Return & Allow. 30, 000 500, 000
A/R, assigned 30, 000 10, 000
200, 000
10 Cash 490, 000 60, 000
Sales Discount (500, 000 x 2%) 10, 000
A/R, assigned 500, 000

June 1 Notes Payable-Bank 490, 000

Interest Expense (640, 000 x 2%) 12, 800
Cash 502, 800

7 Allowances for Doubtful Accounts 10, 000

A/R, assigned 10, 000

20 Cash 200, 000

Accounts Receivable 200, 000
Problem 8-7 NOTIFICATION Problem 8-8 Factoring

July 1 A/R , assigned 800, 000 Selling Price (6, 000, 000 – 900, 000) 5, 100, 000
A/R 800, 000 Carrying Amount
Accounts Receivable 6, 000, 000
1 Cash 616, 000 Less: Allow. D/A 200, 000 5, 800, 000
Service Charge (800, 000 X 3%) 24, 000 Loss on Factoring (700, 000)
Notes Payable-Bank 640, 000
Cash ( 5, 100, 000 -600, 000) 4, 500, 000
Aug 1 Notes Payable-Bank 413, 000 Receivable from factor (6, 000, 000 x 10%) 600, 000
Interest Expense (640, 000x 1%) 6, 400 Allow. For Doubtful Accounts 200, 000
Accounts Receivable, assigned 420, 000 Loss on Factoring 700, 000
Accounts Receivable 6, 000, 000
Sept 1 Cash 91, 336
Notes Payable 226, 400 6, 000, 000 x 15%= 900, 000
Interest Expense 2, 264
A/R, assigned 320, 000
Problem 8-10 Factoring
Collection 320, 000
Less:Loan Balance 226, 400 June 1 Accounts Receivable 500, 000
Interest 2, 264 228, 664 Sales 500, 000
Remittance from loan 91, 336
3 Cash 340, 000
Loan Balance = 640, 000- 413, 600 Sales Discount (500, 000 x 2%) 10, 000
Interest = 226, 400 x 1% Commission Income (500, 000 x 5%) 25, 000
Receivable from factor (500, 000 x 25%) 125, 000
Accounts Receivable 500, 000

9 Sales Return and Allowances 50, 000

Sales Discount (50, 000x 2%) 10, 000
Receivable from factor 49, 000

11 No entry it does not belong to you anymore

15 Cash (125, 000-49, 000) 76, 000

Receivable from factor 76, 000
Problem 9-3
Interest Bearing Note Principal 500, 000
April 5 Notes Receivable 500, 000 Add: Interest (500, 000 x 12% x (60/360)) 10 000
Accounts Receivable 500, 000 Maturity Value 510, 000
Less: Discount (510, 000 x 14% x (45/360)) 8, 925
19 Cash 501, 075 Net Proceeds 501, 075
Loss on N/R discounting 1, 425
Notes Receivable 500, 000 Carrying Amount
Interest Income 2, 500 Principal 500, 000
Add: Discount (500, 000 x 12% x (15/360)) 2, 500 502, 500
Non-Interest Bearing (Short –term based on FV) Loss on Notes Receivable discounting ( 1, 425)
May 3 Notes Receivable 1, 000, 000
Accounts Receivable 1, 000, 000
Principal (Maturity Value) 1, 000, 000
Less: Discount (1, 000, 000 x 12% x (15/360)) 5, 000
16 Cash 995, 000
Net Proceeds 995, 000
Loss on N/R discounting 5, 000
Notes Receivable 1, 000, 000
Principal 1, 500, 000
Add: Interest (1.5M x 12% x 60/360) 30, 000
May 25 Notes Receivable 1, 500, 000
Maturity Value 1, 530, 000
Interest Income 4, 500
Less: Discount (1.530M x 12% x 50/360) 25, 000
Accounts Receivable 1, 504, 500
Credit Given to C 1, 504, 000
June 7 Accounts Receivable (510, 000+20, 000) 530, 000
Cash 530, 000

15 Notes Receivable 800, 000 Adjusting Entries:

Sales 800, 000
N/R Discounted 1, 000, 000
18 Cash 532, 650 Notes Receivable 1, 000, 000
Interest Income 2, 650
Accounts Receivable 530, 000 Accrued Interest Receivable 23, 000
Interest Income 23, 000
(1, 500, 000 x 12% x 46/360)

Accrued Interest Receivable 4, 000

Interest Income 4, 000
(800, 000 x 12% x 15/360)