EXERCISE 3

Your sales cut-off examination for Mahogany Co. revealed the following information in relation
to the sales register for December 2018 and January 2019:
December 2018

Invoice No. FOB Term Date Shipped Amount

101 Destination 12/27 P16,250
102 Shipping Point 12/28 20,800
103 Shipping Point 12/29 30,500
104 Destination 12/29 19,200
105 Shipping Point 12/30 17,850

January 2019

Invoice No. FOB Term Date Shipped Amount

106 Destination 12/27 P22,200
107 Shipping Point 12/29 14,400
108 Destination 12/31 30,800
109 Shipping Point 12/31 7,600
110 Destination 01/02 12,800

Additional information:

 It takes approximately three days for goods to arrive at their destination.

 The company sells at 20% gross profit rate.
 Sales in 2018 amounted to P1,475,000.
 The December 31 inventory was determined by a physical count on December 29 and
based on such count, the inventory was recorded at P305,000.
Required:
1. Compute for the adjusted sales in 2018
2. What is the adjusted inventory balance at December 31, 2018?
EXERCISE 4
The following long-term receivables are reported in the December 31, 2018 balance sheet of
Cianwood Corporation:
Note receivable from sale of plant P5,000,000
Note receivable from officer 1,200,000

The following transactions during 2019 and other information relate to the company's long-term
receivables:
A. The note receivable from sale of plant beats interest at 8% per annum. The note is
payable in four (4) equal annual installments plus interest on the unpaid balance every
April 1. The initial principal and interest payment was made on April 1, 2019.
B. The note receivable from officer is dated December 31, 2018, cam interest of 10% per
annum, and is due on December 31, 2021. The note is due from John Myers, president
of Cianwood Corporation and is collateralized by 10,000 of Cianwood ' s ordinary
shares. The quoted market price of Cianwood's ordinary shares was P45 per share on
December 31, 2019. The 2019 interest was also received that day.
C. Cianwood Corporation sold a piece of equipment to Littleroot, Inc. on April 1, 2019 in
exchange for a P750,000 non-interest bearing note due to April 1, 2022. The note had
no ready market, and there was no established exchange price for the equipment. The
prevailing interest rate for a note of this type at April 1, 2019 was 11%.
D. A tract of land was sold by Cianwood Corporation to Goldenrod, Inc. on July 1, 2019 for
P3,000,000 under an installment sale contract. Goldenrod signed a 4-year, 12% note for
P2,000,000 on July 1, 2019, in addition to the down payment of P1,000,000. The equal
annual payments of principal and interest on the note will be payable on July 1, 2020 to
2023. The land had an established cash price of P3,000,000 and its cost to Cianwood
was P2,500,000. Collection of the installments is reasonably assured.

Required:
1. Current portion of noncurrent receivables as of December 31, 2019
2. Noncurrent receivables as of December 31, 2019
3. Accrued interest receivable at December 31, 2019
4. Interest income for the year ended December 31, 2019