Reference no: EM132781932
Question 1 - Scorpio Company kept all cash in a checking account. An examination of the accounting records and bank statement for the month of June revealed the following information:
- The cash balance per book on June 30 was P8,500,000.
- A deposit of P1,000,000 that was placed in the bank's night depository on June 30 did not appear on the bank statement.
- The bank statement showed that on June 30 the bank collected note for the entity and credited the proceeds of P950,000 to the entity's account, net of collection charge P50,000.
- Checks outstanding on June 30 amounted to P300,000 including certified check for P100,000.
- The entity discovered that a check written in June for P200,000 in payment of an account payable had been recorded in the entity's records as P20,000.
- Included with the June bank statement was NSF check for P250,000 received from a customer on June 26.
- The bank statement showed a P20,000 service charge for June.
Required -
1. What amount should be reported as cash in bank on June 30?
2. What is the balance per bank statement on June 30?
Question 2 - Miya Company factored P6,000,000 of accounts receivable to a finance entity at the end of current year. Control was surrendered by Miya Company.
The factor assessed a fee of 3% and retained a holdback equal to 5% of the accounts receivable.
In addition, the factor charged 15% interest computed on a weighted average time to maturity of the accounts receivable of 54 days.
Required - What is the amount of cash initially received from the factoring?
Question 3 - Legends Company accepted from a customer P1,000,000 face amount, 6-month, 8% note dated April 1,2019.
On the same date, the entity discounted the note without recourse at a 10% discount rate.
Required -
1. What amount of cash was received from the discounting?
2. What is the loss on note receivable discounting?
Question 4 - On December 31, 2019, Soo Company sold used equipment with carrying amount of P2,000,000 in exchange for a noninterest bearing note of P5,000,000 requiring ten annual payments of P500,000. The first payment was made on December 31, 2020.
The market interest for similar note was 12%. The present value of an ordinary annuity of 1 at 12% is 5.65 for ten periods and 5.33 for nine periods.
Required - What is the carrying amount of the note receivable on December 31, 2019?