FATHER SATURNINO URIOS UNIVERSITY

ACCOUNTANCY PROGRAM

FINANCIAL ACCOUNTING AND REPORTING

MIDTERM EXAMINATION

NAME: Date: Score:

INSTRUCTOR: SEAN JUSTIN F. ESPINA, C.P.A. SET: A

Instruction: Shade the letter of your choice on the answer sheet provided. Provide your solutions.
Use the questionnaire for your solutions. NO SOLUTION(s), NO POINT(s). Pray before you start
answering. God Bless.

1. A cash over or short account

a. Is not generally accepted
b. Is a contra account to cash
c. Is debited when the petty cash fund proves out short
d. Is debited when the petty cash fund proves out over

2. If the cash balance shown in the accounting records is less than the correct cash balance and neither the
entity nor the bank has made any errors, there must be
a. Deposits in transit
b. Outstanding checks
c. Bank charges not yet recorded by the entity
d. Deposits credited by the bank but not yet recorded by the entity

3. In preparing a bank reconciliation, interest paid by bank on the combined current and saving account is
a. Added to the bank balance.
b. Subtracted from the bank balance.
c. Added to the book balance.
d. Subtracted from the book balance.

4. In preparing monthly bank reconciliation, which of the following would be added to the balance per bank
statement to arrive at the correct cash balance?
a. Outstanding check.
b. Bank service charge.
c. Deposit in transit.
d. A customer’s note collected by the bank on behalf of the depositor.

5. It is a report that is prepared for the purpose of bringing the balances of cash per records and per bank
statement into agreement.
a. Bank statement
b. Check Disbursement Voucher
c. Bank reconciliation
d. Bank deposit slip

6. When the direct writeoff method of recognizing bad debt expense is used, the entry to write off a specific
customer account would
a. Increase net income
b. Have no effect on net income
c. Increase both accounts receivable and net income
d. Decrease both accounts receivable and net income

7. Nontrade receivables are classified as current assets only if these are reasonably expected to be realized in
cash
a. Within one year or within the operating cycle, whichever is shorter
b. Within one year or within the operating cycle, whichever is longer
c. Within the normal operating cycle
d. Within one year, the length of operating cycle notwithstanding

8. A method of estimating bad debts that focuses on the balance sheet rather than the income statement is the
allowance method based on
a. direct write-off.
b. aging the trade receivable accounts.
c. credit sales.
d. specific accounts determined to be uncollectible.

9. The entry

Accounts Receivable xxx

Allowance for Uncollectible Accounts xxx

would be made when

a. a customer pays its account balance.

 b. a customer defaults on its account.
c. a previously defaulted customer pays its outstanding balance.
d. estimated uncollectible receivables are too low.

10. Which of the following statements is correct?

a. Accounts receivable is initially recorded at net realizable value
b. Receivables from subsidiaries is normally classified as current asset
c. A customer’s account receivable with credit balance is generally offset with other customers’
account
d. An accounts receivable that is collectible after two years may still be classified as current asset

Problems 11 – 20.

● On December 31, 2023, Dave had the following balances in the accounts it maintains at XYZ Bank:
Checking account #101 175,000
Checking account #201 (10,000)
Money market account 25,000
90-day certificate of deposit, due 2/28/24 50,000
180-day certificate of deposit due 3/15/24 80,000
Dave classifies investments with original maturities of three months or less as cash equivalents.

11. In its December 31, 2023 statement of financial position, what amount should Dave report as cash and
cash equivalents?
a. 190,000 b. 240,000
c. 200,000 d. 320,000

● Valir Company had net sales in 2018 of 8,000,000. On December 31,2018, before adjusting entries, the
balances in selected accounts were accounts receivable 2,000,000 debit, and allowance for doubtful accounts
20,000 debit. The entity estimated that 5% of its accounts receivable will prove to be uncollectible.

12. What is the net realizable value of the accounts receivable of Valir Company on December 31, 2018?
a. 2,000,000 b. 1,900,000
c. 1,880,000 d. 1,920,000

● The Helcurt Company’s ledger showed a balance in its cash account at December 31, 2019 of 68,225 which
was determined to consist of the following:
Petty cash fund 360
Cash in Metro bank, per bank statement, with a check
for 600 still outstanding 33,675
Notes receivable in the possession of a collecting agency 2,500
Undeposited receipts, including a postdated check for 1,050
and a traveler’s check for 1,000 17,800
Bond sinking fund – cash 12,750
IOUs signed by employees 495
Paid vouchers, not yet recorded 645
Total 68,225

13. At what amount should “Cash on hand and in bank” be reported on Helcurt’s statement of financial position?
a. 50,185 b. 62,935
c. 53,475 d. 66,225

● Gekko, Inc. reported the following balances (after adjustment) at the end of 2002 and 2001.

12/31/2002 12/31/2001
Total accounts receivable ................. ₱105,000 ₱96,000
Net accounts receivable ................... 102,000 94,500

During 2002, Gekko wrote off customer accounts totaling ₱3,200 and collected ₱800 on accounts written off in
previous years.

14. Gekko's doubtful accounts expense for the year ending December 31, 2002 is
a. ₱1,500 b. ₱2,400
c. ₱3,000 d. ₱3,900

● As of December 31, 2019, Nova Company’s balance sheet showed a notes receivable totalling P5,000,000.
This notes receivable consists of the following
❖ P1,000,000 note dated August 1, 2019, with principal and 12% interest payable on August 1, 2020.
❖ P1,500,000, 10% note dated December 1, 2019 with principal and interest payable after two years
❖ P2,500,000, 8% note dated April 1, 2019 with principal and interest due in 3 years

15. On December 31, 2019 income statement, Nova recognized total interest income of
a. 670,000 b. 215,000
c. 212,500 d. 215,500
● Feasible Company sold to another entity a tract of land costing 5,000,000 for 7,000,000 on January 1, 2019.
The buyer paid P2,000,000 down and signed a three-year promissory note for the remainder of the purchase
price plus 12% interest compounded annually. The note matures on January 1, 2022.

16. What amount should Feasible Company report as Accrued Interest Receivable as of December 31, 2020?
a. 672,000 b. 1,272,000
c. 1,200,000 d. 0

● On December 31, 2015, Jet Company received two notes receivable from customers in exchange for services
rendered. On both notes, interest is calculated on the outstanding principal balance at the annual rate of 3%
and payable at maturity.

The 500,000 notes receivable from Maxx Company, made under customary trade terms, is due in nine
months and the 1,000,000 notes receivable from Hart Company is due in five years.
The market interest rate for similar notes on December 31, 2015 was 8%. The compound interest factors to
convert future value into present value at 8% follow:
Present value of 1 due in nine months .944
Present value of 1 due in five years .680

17. What is the total carrying amount of Jet Company’s notes receivable at December 31, 2015?
a. 1,782,000 b. 1,152,000
c. 1,254,000 d. 1,282,000

● Vans Company reported the following analysis of current receivable at year-end:

Trade accounts receivable 2,000,000
Allowance for doubtful accounts (100,000)
Claim against shipper for goods lost in transit in November 300,000
Selling price of unsold goods sent by Vans on consignment at
150% of cost and not included in ending inventory 600,000
Security deposit on lease of warehouse 200,000
Total 3,000,000

18. What total amount should Vans Company be reported as current trade and other receivables?
a. 2,200,000 b. 2,400,000
c. 2,300,000 d. 3,000,000

● At January 1, 20x1, Judy Co. had a credit balance of ₱260,000 in its allowance for uncollectible accounts.
Based on past experience, 2% of Judy 's credit sales have been uncollectible. During 20x1, Judy wrote off
₱325,000 of uncollectible accounts. Credit sales for 20x1 were ₱9,000,000.

19. In its December 31, 20x1, balance sheet, what amount should Judy report as allowance for uncollectible
accounts?
a. 115,000 b. 180,000
c. 245,000 d. 440,000

● Mimosa Company had the following account balances on December 31, 2019:

Petty cash fund 50,000

Cash on hand 500,000
Cash in bank – current account 4,000,000
Cash in bank – payroll account 1,000,000
Time deposit 2,000,000
Cash in bank – restricted account for plant addition,
expected to be disbursed in early 2020 500,000
Cash in sinking fund set aside for bond payable due June 30, 2020 1,500,000
The petty cash fund included unreplenished December 2019 petty cash expense vouchers of 5,000 and
employee IOU of 5,000. The cash on hand included a 100,000 check payable to the entity dated January 31,
2020.

20. What total amount should Mimosa Company report as cash and cash equivalents on December 31, 2019?

a. 6,940,000 b. 8,940,000
c. 7,940,000 d. 7,440,000

Black Bulls Company had a checkbook balance on December 31, 2019 of 8,000,000 and held the following items
in the safe:
Check payable to Black Bulls, dated January 5, 2020, included
in December 31 checkbook balance 2,000,000
Check payable to Black Bulls, deposited December 20, and included in
December 31 checkbook balance, but returned by bank on December 30
stamped “NSF”. The check was redeposited January 2, 2020 and cleared
January 3, 2020 500,000
Check drawn on Black Bulls’ account and payable to a vendor, dated and
recorded December 31 but not mailed until January 15, 2020. 1,500,000
Cash on hand – undeposited collections 400,000
Change fund 40,000
Time deposit for plant expansion 1,000,000
Treasury Bill 2,500,000
Money market placement 3,000,000
Postage stamps unused 10,000

21. What total amount should be reported as cash on December 31, 2019?
a. 7,400,000 b. 7,440,000
c. 8,440,000 d. 7,450,000

22. What total amount should be reported as cash equivalents on December 31, 2019?
a. 6,500,000 b. 3,000,000
c. 5,500,000 d. 2,500,000

For the year ended 2018, the following selected items are included the trial balance of Black Bulls Company.

Accounts receivable 5,000,000 trade

Advances to shareholders, collectible w/ in 15 months 500,000 non-trade NCA
Customer’s account credit balance 50,000 current liab
Allowance for doubtful accounts 200,000 trade, deduct
Receivables from officers, collectible w/ in 5 months 200,000 non-trade, CA
Claims for rebates and tax refunds 50,000 non-trade, CA
Dividends receivable 100,000 non-trade, CA
Accrued interest on bond investments 20,000 non-trade, CA
Advances to affiliates 50,000 non-trade, NCA
Notes receivable 1,000,000 trade
Creditor’s account debit balance 10,000 non-trade, CA
Advances to directors, due in 5 months 100,000 non-trade, CA
Subscription receivable, collectible w/in 14 months 50,000 deduction to SHE
Advances to suppliers 800,000 non-trade, CA
Accrued interest on notes receivable 50,000 trade
Accrued rent income 10,000 non-trade, CA

23. What amount should be reported as Non-Trade Receivables under current assets?
a. 940,000 b. 490,000
c. 1,040,000 d. 1,290,000

24. What amount should be reported as Trade and other receivables under current assets?
a. 7,140,000 b. 6,790,000
c. 6,340,000 d. 6,890,000

Gray Company had an accounts receivable balance of ₱50,000 on December 31, 2001, and ₱75,000 on
December 31, 2002. The company wrote off ₱20,000 of accounts receivable during 2002, and collected ₱3,000
on an account written off in 2000. Sales for the year 2002 totaled ₱620,000. All sales were on account.

25. The amount collected from customers on accounts receivable during 2002 was
a. ₱575,000 b. ₱578,000
c. ₱600,000 d. ₱595,000

Pearl Company maintains a checking account at the City Bank. The bank provides a bank statement along with
canceled checks on the last day of each month. The July bank statement included the following information:
Balance, July 1 550,000
Deposits 1,800,000
Checks processed 1,400,000
Service charge 30,000
NSF check 120,000
Monthly loan payment deducted by bank from account 100,000
Deposits outstanding totaled 100,000 and all checks written by the depositor were processed by the bank except
for check of 150,000. A 200,000 July deposit from a credit customer was recorded as 20,000 debit cash and
credit accounts receivable. A check correctly recorded by the entity as 30,000 disbursements was incorrectly
processed by the bank as 300,000 disbursement.

26. What is the balance per bank on July 31?

a. 700,000 b. 550,000
c. 800,000 d. 950,000
27. What amount should be reported as cash in bank on July 31?
a. 650,000 b. 920,000
c. 380,000 d. 970,000
28. What is the cash in bank balance per ledger on July 31?
a. 1,350,000 b. 1,170,000
c. 990,000 d. 890,000

Based on the aging of its accounts receivable at December 31, Pribob Company determined that the net
realizable value of the receivables at that date is ₱760,000. Additional information is as follows:
 Accounts Receivable at December 31 ₱880,000
Allowance for Doubtful Accounts at January 1 128,000 (cr)
Accounts written off as uncollectible during the year 88,000

29. Pribob's doubtful accounts expense for the year ended December (31 is

a. ₱80,000 b. ₱96,000
c. ₱120,000 d. ₱160,000

Ned Company provided the following information for the current year in relation to account receivable:

Accounts receivable, January 1 1,300,000

Credit sales 5,500,000
Sales return 150,000
Accounts written off 100,000
Collections from customers 5,000,000
Estimated future sales return on December 31 50,000
Estimated uncollectible accounts per aging at year-end 250,000

30. What amount should be reported as net realizable value of accounts receivable on December 31?
a. 1,550,000 b. 1,250,000

c. 1,300,000 d. 1,500,000

31. If a 12%, 2-year non-interest bearing note receivable has a face value of P2,000,000, what is it present
value? Consider the following present value factor below:
Present value of 1 = 0.797
Present value of ordinary annuity = 1.690
Future value of 1 = 1.254
a. 1,594,000 b. 3,380,000
c. 2,508,000 d. 2,000,000

On January 1, 2011, ABC Co. sold transportation equipment with a historical cost of ₱1,000,000 and
accumulated depreciation of ₱300,000 in exchange for cash of ₱100,000 and a noninterest-bearing note
receivable of ₱800,000 due on January 1, 2014. The prevailing rate of interest for this type of note is 12%.
(PV of 1 for 3 periods = 0.7118 PV of Ordinary Annuity for 3 periods= 2.4016)

32. How much is the gain or loss on sale of the equipment?

a. 330,560 b. (330,560)
c. 30,560 d. (30,560)

33. How much is the carrying amount of the receivable on December 31, 2012?
a. 800,000 b. 569,424
c. 637,755 d. 714,306

Yuls Company provided the following information:

Balance per bank statement – January 31 2,600,000

Deposits outstanding 300,000
Checks outstanding ( 100,000)
Correct bank balance – January 31 2,800,000

Balance per book – January 31 2,810,000

Bank service charge ( 10,000)
Correct book balance – January 31 2,800,000

February data are as follows: Bank Book

Checks recorded 2,100,000 2,500,000

Deposits recorded 1,600,000 1,800,000
Service charges recorded 50,000
Note collected by bank, ₱500,000 plus interest 550,000
NSF check returned with February 29 statement 100,000
Balances 2,400,000 2,100,000

34. What is the amount of outstanding checks on February 29?

a. 300,000 b. 400,000
c. 200,000 d. 100,000
35. What is the amount of deposits in transit on February 29?
a. 300,000 b. 100,000
c. 200,000 d. 500,000
36. What is the adjusted cash in bank on February 29?
a. 2,500,000 b. 2,400,000
 c. 2,100,000 d. 2,800,000

Alpha Company sold goods to wholesalers on terms 2/15, net 30. The entity had no cash sales but 50% of the
customers took advantage of the discount. The entity used the gross method of recording sales and accounts
receivable. An analysis of the trade receivable at year-end revealed the following:

Age Amount Collectible

0 – 15 days 2,000,000 100%
16 – 30 days 1,400,000 95%
31 – 60 days 400,000 90%
Over 60 days 200,000 50%

37. What amount should be reported as allowance for sales discount at year-end?
a. 20,000 b. 32,400
c. 33,500 d. 40,000

38. What amount should be reported as allowance for doubtful accounts at year-end?
a. 230,000 b. 210,000
c. 190,000 d. 200,000

On January 1, 2020 received the following notes receivables:

i. Short term notes receivable with fair value of 300,000; net realizable value of 350,000; & face
value of 400,000.
ii. Long-term interest-bearing notes receivable with amortized cost of 1,050,000; face value of
1,000,000; and present value of 1,100,000.
iii. Long-term noninterest bearing notes receivable with present value of 1,500,000; face value of
1,300,000; and amortized cost of 1,400,000.

39. At what amount should the total notes receivable be measured initially on January 1, 2020?
a. 2,850,000 b. 2,800,000
c. 2,750,000 d. 2,900,000

Use the following information for the next two questions:

A trial balance before adjustments included the following:

Debit Credit
Sales ₱425,000
Sales returns and allowance ₱14,000
Accounts receivable 53,000
Allowance for doubtful accounts 760

40. If the estimate of uncollectibles is made by taking 1% of net sales, the amount of the bad debt expense is
a. ₱3,350. b. ₱4,250.
c. ₱4,110. d. ₱4,870.

41. If the estimate of uncollectibles is made by taking 10% of gross account receivables, the amount of the bad
debt expense is
a. ₱4,540. b. ₱5,224.
c. ₱5,300. d. ₱6,060.

The following information is available for Reagan Company:

Allowance for doubtful accounts at December 31, 2003 ₱ 8,000
Credit sales during 2004 400,000
Accounts receivable deemed worthless and written
off during 2004 9,000

42. As a result of a review and aging of accounts receivable in early January 2005, however, it has been
determined that an allowance for doubtful accounts of ₱9,500 is needed at December 31, 2004. What amount
should Reagan record as "bad debt expense" for the year ended December 31, 2004?
a. ₱8,500 b. ₱10,500
c. ₱9,500 d. ₱17,500

Jane Company provided the following bank reconciliation on May 31

Balance per bank statement 2,100,000
Deposits outstanding 300,000
Checks outstanding (30,000 )
Correct cash balance 2,370,000

Balance per book 2,372,000

Bank service charge ( 2,000)
Correct cash balance 2,370,000

Data for the month of June:

 Bank Book
Checks recorded 2,300,000 2,360,000
Deposits recorded 1,620,000 1,800,000
Collections by bank, P400,000 note plus interest 420,000 --
NSF check returned with June 30 statement 10,000
Balances 1,830,000 1,810,000

43. What is the balance of deposits in transit on June 30?

a. 480,000 b. 180,000
c. 120,000 d. 680,000

44. What is the adjusted cash in bank on June 30?

a. 1,810,000 b. 2,240,000
c. 2,220,000 d. 2,780,000

Tan Company provided the following information in relation to accounts receivable at year end:
Days outstanding Estimated Amount % Uncollectible
0- 60 1,200,000 1%
61 – 120 900,000 2%
Over - 120 1,000,000 5%
3,100,000

During the current year, the entity wrote off P70,000 in accounts receivable and recovered P20,000 that had
been written off in prior years.
At the beginning of the year, the allowance for uncollectible accounts was P60,000.

45. What is the net realizable value of accounts receivable at year end?

a. 3,100,000 b. 3,010,000
c. 3,020,000 d. 3,030,000

The Eric Manufacturing Company received its bank statement for the month ended May 31. The bank statement
indicates a balance of P32,400. In reconciling the balances, the following items are discovered:
Collection by bank of note of P1,500 less collection fees of P250
Deposits in transit, P51,000
The bank charged the depositor P800 for overdrafts
Checks outstanding on May 31, P79,100
A cancelled check issued to Scott Corp was not recorded on Eric Company’s books

46. How much is the adjusted balance of cash?

a. 6,300 b. 8,900
c. 4,300 d. 5,200

47. How much is the cash in bank balance per ledger?

a. 3,850 b. 12,850
c. 8,350 d. 8,900

On December 31, 2020, Lara Company sold an equipment with carrying amount of ₱2,000,000 and received a
noninterest bearing note requiring payment of ₱500,000 annually for ten years. The first payment is due
December 31, 2021. The prevailing rate of interest for this type of note at date of issuance is 12%.

Present value of 1 at 12% for 10 periods 0.322

Present value of ordinary annuity of 1 at 12% for 10 periods 5.650

48. What is the gain on sale of equipment to be recognized in 2020?

a. 3,000,000 b. 2,175,000
c. 825,000 d. 0
49. What amount of interest income should be recognized for 2021?
a. 600,000 b. 339,000
c. 319,800 d. 300,000

50. What is the carrying amount of the note receivable on December 31, 2021?
a. 2,325,000 b. 4,500,000
c. 2,825,000 d. 2,664,000

Philippine Bank granted a loan to a borrower on Jnauary 1, 2018. The interest on the loan is 8% payable
annually starting December 31, 2018. The loan matures in three years on December 31, 2020.

Principal amount 3,000,000

Origination fee charged against the borrower 100,000
Direct origination cost incurred 260,300
Indirect origination cost incurred 50,000

After considering the origination fee charged to the borrower and the direct origination cost incurred, the
effective rate on the loan is 6%.
51. What is the carrying amount of the loan receivable on January 1, 2018?
a. 3,160,300 b. 3,260,300 c. 2,900,000 d. 3,000,000
52. What is the carrying amount of the loan receivable on December 31, 2019?
a. 3,160,300 b. 3,109,918 c. 3,210,682 d. 3,056,513
53. What is the interest income for 2020?
a. 248,793 b. 183,487 c. 186,595 d. 180,000

Aparri Bank granted a loan to a borrower on January 1, 2018. The interest rate on the loan is 10% payable
annually starting December 31, 2018. The loan matures in five years on December 31, 2022.

Principal amount 4,000,000

Origination fee charged against the borrower 350,000
Direct origination cost incurred 61,500
Indirect origination cost incurred 30,000

The effective rate on the loan after considering the direct origination cost incurred and origination fee received is
12%.

54. What is the carrying amount of the loan receivable on December 31, 2018?
a. 4,000,000 b. 3,756,880 c. 4,243,120 d. 3,600,000
55. What is the interest income for 2018?
a. 400,000 b. 558,000 c. 529,380 d. 445,380

Yokohana Bank Loaned 5,500,000 to Bargain Company on January 1, 2014. The initial loan repayment terms
include a 10% interest rate plus annual principal payments 1,100,000 on January 1 each year. Bargain made the
required interest payment in 2014 but did not make the 1,100,000 principal payment nor the 550,000 interest
payment for 2015. Yokohana is preparing its annual financial statements on December 31, 2015. Bargain is
having financial difficulty, and Yokohana has concluded that the loan is impaired. Analysis of Bargain’s financial
condition on December 31, 2015, indicates the principal payments will be collected, but the collection of interest
is unlikely. Yokohana did not accrue the interest on December 31, 2015. The projected cash flows are:
December 31, 2016 1,750,000
December 31, 2017 2,000,000
December 31, 2018 1,750,000

56. What is the loan impairment loss on December 31, 2015?

a. 941,500 b. 550,000 c. 0 d. 5,500,000
57. What is the interest income to be reported by Yokohana Bank in 2016?
a. 501,435 b. 326,435 c. 455,850 d. 550,000
58. What is the carrying value of the loan receivable on December 31, 2017?
a. 1,590,785 b. 1,750,000 c. 3,264,350 d. 4,558,500
59. What is the interest income in 2017?
a. 159,079 b. 550,000 c. 455,850 d. 326,435
60. What is the interest income in 2018?
a. 159,079 b. 550,000 c. 326,435 d. 455,850

61. Which of the following statements is incorrect?

a. An allowance for doubtful account is a contra-asset account whose normal balance is credit
b. An allowance for doubtful account may have a debit balance
c. Allowance for doubtful account is debited when an account receivable is written off
d. The amount computed using the aging of account receivable is the amount of bad debt expense to
be recognized in profit or loss

62. When comparing the allowance method of accounting for bad debts with the direct write-off method, which
of the following is true?
a. The direct write-off method is exact and also better illustrates the matching principle.
b. The allowance method is less exact but it better illustrates the matching principle.
c. The direct write-off method is theoretically superior.
d. The direct write-off method requires two separate entries to write off an uncollectible account.

63. As an internal control, bank reconciliation statements are usually prepared

a. on a daily basis.
b. on a monthly basis.
c. every two months.
d. on a bi-monthly basis

64. The following reconciling items are deducted from the bank balance of cash in order to arrive at the
unadjusted book balance of cash except
a. Erroneous bank credit
b. Erroneous bank charge
c. Outstanding checks
d. Credit memo

65. Bank statements provide information about all of the following, except
 a. Checks cleared during the period
b. NSF checks
c. Bank charges for the period
d. Errors made by the depositor

66. A proof of cash would be useful for

a. Discovering cash receipts that have not been recorded in the journal
b. Discovering time lag in making deposits
c. Discovering cash receipts that have been recorded but have not been deposited
d. Discovering an inadequate separate of incompatible duties

67. Which of the following is false about erroneous book debit?

a. Cash balance per book is overstated
b. Receipts per bank is overstated
c. It should be recorded as credit to cash in bank account
d. It should be deducted from balance per book in preparing bank reconciliation

68. When preparing a proof of cash, a credit memo from the previous month is
a. extended to the book receipts column as an addition
b. extended to the bank receipts column as an addition
c. extended to the book receipts column as a deduction
d. not extended in any of the book columns

69. On July 1 of the current year, an entity obtained a two-year 8% note receivable for services rendered. At
that time, the market rate of interest was 10%. The face amount of the note and the entire amount of interest
are due on the date maturity. Interest receivable on December 31 of the current year is
a. 5% of the face amount of the note
b. 4% of the face amount of the note
c. 5% of the present value of the note
d. 4% of the present value of the note

70. Which of the following is correct regarding Notes Receivables’ initial measurement?
Short-term Long-Term Interest Bearing Long-Term Noninterest Bearing
a. Present Value Present Value Amortized Cost
b. Face value Present value Face value
c. Face value Face Value Present Value
d. Face Value Face value Amortized Cost