PRACTICAL ACCOUNTING PART 1 FIRST CHECK-UP TEST 1.

The accounts and balances show below were taken from Basic Companys trial balance on December 31, 2010. All adjusting entries have been made. Wages payable P250, 000;Cash P175, 000;Bonds Payable P600,000;Dividends Payable P140, 000;Prepaid Rent P136, 000;Inventory P820, 000;sinking fund Asset; P525, 000;Trading securities P153,000;Premium on Bonds Payable P48, 000;Investment in Subsidiary P1, 020, 000. Taxes Payable P228, 000;Accounts Payable P248, 000;Accounts Receivable P336, 000;Property Plant & Equipment P1, 200, 000 Patents net P150, 000 Accumulated Depreciation-PPE P400, 000 Land held for future Business site P900, 000. How much should be reported in Basics December 31, 2010 balance sheet as current and noncurrent assets, respectively? a. P1, 650, 000 and P2, 375, 000 b. P1, 650, 000 and P3, 395, 000 c. P1, 800, 000 and P2, 225, 000 d. P1, 800, 000 and P3, 795, 000 2. Halo, Inc. reported the following items in its December 31, 2010 trial balance: Accounts Payable .P1. 089, 000 Advances to Employees.. 45, 000 Unearned rent revenue 288, 000 Estimated liability under warranties.. 258, 000 Cash surrender value of officers life insurance75, 000 Bonds payable. 5, 000, 000 Discounts on bonds payable ..225, 000 Trademark ..390, 000 How much should Halo report as total liabilities in its December 31, 2010 balance sheet? a. P6, 410, 000 B. P6, 800, 000 C. P6, 845, 000 D. P7, 410, 000 3. Presented below is selected information pertaining to the Bone Company: Cash Balance, January 1, 2010 Accounts receivable, January 1, 2010 Collections from Customers in 2010` Capital Account balance, January 1, 2010 Total Assets, January 1, 2010 Cash Investment Added, July 1, 2010 Total Assets, December 31, 2010 13, 000 19, 000 210, 000 38, 000 75, 000 5, 000 101, 000

Cash Balance, December 31, 2010 Accounts receivable, December 31, 2010 Merchandise taken for personal use during 2010 Total liabilities, December 31, 2010 How much is the net income for 2010? a. P22, 000 B. P26, 000

20, 000 36, 000 11, 000 41, 000

C. 28, 000

D. P30, 000

4. Super corporation reported the following real accounts for the past 2 years of operation: 2011 2010 Current assets P 450, 000 P 365, 000 Noncurrent assets 1, 350, 000 1, 435, 000 Total assets 1, 800, 000 1, 800, 000 Current liabilities P200, 000 P400, 000 Noncurrent liabilities 500, 000 400, 000 Total Liabilities P700, 000 P800, 000 During 2011, the company issued additional shares receiving a total proceeds of P1, 200, 000. And paid during amounting to P900, 000. What is the amount of net loss for the calendar year 2011? a. P200, 000 B. P300, 000 C. P900, 000 D. P1, 000, 000 5. Jungle companys account balance during 2010 showed the following changes, all increases: Assets Liabilities Ordinary share capital Share premium P3, 560, 000 1, 080, 000 2, 400, 000 240, 000

There were no changes in accumulated profits for 2010 other than a P520, 000 dividend payment and years earnings. How much is Jungle net income/loss for 2010? A. P160, 000 B. P360, 000 C. P520, 000 D. P680, 000 6. The following information were taken from the accounting records of Gomez Company for the year ended December 31, 2010: Decrease in finished goods inventory Increase in raw material Inventory Freight-out Factory Overhead Direct Labor P700, 000 300, 000 900, 000 6, 000, 000 4, 000, 000

Raw materials Purchased

8, 600, 000

There was no work in process inventory at the beginning or at the end of the year. The cost of goods sold is: a. P17, 600, 000 B. P18, 200, 000 C. P18, 400, 000 D. P19, 000, 000 7. Lakers companys income statement for the year ended December 31, 2010 reported net income of P7, 410, 000. The Auditor raised questions about the following amounts that had been included in net income. Unrealized loss on available for sale securities (540, 000) Gain on early retirement of bonds payable (net of tax effect) 2, 200, 000 Adjustment to profits of prior years for errors In depreciation (net of tax effect) (750, 000) Loss from fire ( net of tax effect) (1, 400, 000) How much should Lakers report as net income in its December 31, 2010 income statement? A. P6, 500, 000 B. P6, 610, 000 C. P8, 160, 000 D. P8, 700, 000 B. P12, 300 C. P40, 500 D. P42, 000 8. Mango Company bought a machine on January 1, 2008 for P240, 000 at which time it had an estimated useful life of eight years, with no residual value. Straight line method of depreciation is used for all of mangos depreciable assets. On January 1, 2010, the machines estimated useful life was determined to be only 6 years from the acquisition date. In mangos 2010 financial statements, how much be reported as the cumulative effect on prior years because of the change in the estimated useful life of the machine? a. None B. P12, 000 C. P20, 000 D. 28, 0000 9. On December 31, 2010, Sunkist Company Appropriately changed its inventory valuation method to the FIFO cost method for the average cost method for financial statement end income tax purposes. The changes will result in a P350, 000 increase in tb6 beginning inventory at January 1, 2010. Assuming an income tax rate of 32%, how much is the cumulative effect of this change that should he reported in the income statement for the year ended December 31, 2010? A. None B. P112, 000 C. P238, 000 D. P350, 000 10. During 2010, Tricky Company decided to change from FIFO method of inventory valuation to the weighted-average method. Inventory balance under each method were as follows: FIFO Weighted-Average Mehtod January 1 1, 420, 000 1, 540, 000 December 31 1, 580, 000 1, 660, 000 Ignoring income tax 1 in its year 2010 statement of retained earnings, what amount should tricky report as the effect of this accounting change? a. None B. P80, 000 C. P120, 000 D. P200, 000

11. Pale company uses the direct method to prepare its statements of cash flows. Pale had the following cash flows during 2010: Cash receipts from issuance of bonds Cash receipts from issuance of ordinary shares Cash receipts from customers Cash receipts from dividends on long term investment Cash receipts from payment of loan made to another company Cash payments for wages & other operating expenses Cash payments for reacquisition of treasury shares Cash payments for dividends Cash payments for taxes Cash payment to purchase land P800, 000 1, 400,000 700, 000 105, 000 660, 000 420, 000 250, 000 70, 000 140, 000 280, 000

What is the net cash provided (used) from financing activities? A. P1, 530, 000 B. P1, 670, 000 C. P1, 880, 000 D. P1, 950, 000 12. The net income for the year ended December 31, 2010 for know corporation was P3, 520, 000. Additional data follow. Purchases of plant assets P2, 800, 000 Depreciation of plant assets 1, 480, 000 Dividends declared on plant assets 970, 000 Net decrease in non-cash current assets 290, 000 Loss on sale of equipment 130, 000 What should be the cash provided from operating activities in knots statement of cash flows for the year ended December 31, 2010? a. P5, 130, 000 B. P5, 290, 000 C. P5, 420, 000 D. P7, 250, 000 13. Canary, Inc., sells products to department stores in Metro manila. The beginning and ending balance of the companys inventory and accounts payable during 2010 follow. January 1, 2010 December 31,2010 Inventory P150, 000 P120, 000 Accounts payable 102, 000 78, 000 Canarys cost of sales was reported at P1, 380, 000 on its income statement and uses the indirect method in preparing the statement of cash flows. How much was the cash payments made to its suppliers? A. P1, 286, 000 B. P1, 374, 000 C. P1, 626, 000

D. P1, 680, 000

PRACTICAL ACCOUNTING PART 1 SECOND CHECK-UP TEST 1. Canary, Ins. Sells products to department stores in metro Manila. The beginning and ending balances of the companys inventory and accounts payable during 2008 follow: January 1, 2008 P150, 000 102, 000 December 31, 2008 P120, 000 78, 000

Inventory Accounts payable

Canarys cost of sales was reported at P1, 380, 000 on its income statement and uses the indirect method in preparing the statement of cash flows. How much was the cash payments made to its suppliers? a. P1, 286, 000 B. P1, 374, 000 C. P1, 626, 000 D. P1. 680, 000 2. In 2008, a typhoon completely destroyed a building belonging to carpet corporations, the building cost P2, 500, 000 and had accumulated depreciation of P1, 200, 000 at the time of the loss. Carpet received a cash settlement from the insurance company and reported a loss of P525, 000. In carpets 2008 cash flow statement. How much would be the net changes that would be reported in the cash flows investing activities sections? a. P250, 000 increase B. P525, 000 Increase C. P775, 000 Increase D. P1, 300, 000 increase 3. Power Company does not keep a full set of business records, but the following information is available for the month of June 2008. Trade receivables, June 1, 2008 Trade receivables, June 30, 2008 Credit sales Cash received from customers Bad debts written-off General provision for doubtful debts set up in June P80, 000 55, 000 680, 000 673, 000 4, 000 10, 000

Assuming no other transactions, how much discount was allowed to customers during the month of June? a. P24, 000 B. P28, 000 C. P34, 000 D. P38, 000 4. Holiness Company owns an office building and lease the offices under a variety of rental agreements involving rent pair in advance monthly or annually. Not all tenants make timely payments of their rent. The following data were taken from the balance sheets of holiness Company.

Rentals receivable were P96, 000 and P124, 000 fro 2007 and 2008, respectively; un earned rentals were P320, 000 and P240, 000 for 2007 and 2006 respectively. During 3008, holiness received P800, 000 cash from tenants. What amount of rental revenue should holiness record for 2008? a. P692, 000 B. 748, 000 C. P852, 000 D. P908, 000 Smart Company has the following financial Assets as of December 31, 2008: a. A P300, 000 accounts receivable that is not held for trading b. An P800, 000 investment in an equity instrument quoted in an active market that is not held for trading. c. A P500, 000 investment in equity instruments that is not held for trading and does not have a quoted price, and whose lair value cannot be reliably measured d. A P600, 000 purchased debt security that is not quoted in an active market and that is not held for trading e. A P700, 000 purchased debt security quoted in an active market that smart company plans to hold to maturity. If market interest rates fall sufficiently, Smart Company will consider selling the debt instrument to realize the associated gain. f. A P400, 000 strategic investments in equity instrument that is not quoted in an active market Smart Company has no intention to sell the investment. g. A P600, 000 investment in a financial asset that is held for trading 5. What amount of financial assets under the category-loans and receivables should be separately reported in the December 31, 2008 balance sheet? a. P300, 000 B. P600, 000 C. P700, 000 D. P900, 000 6. What amount of financial asset under the category-held for trading should be separately reported in the December 31, 2008 balance sheet? a. P300, 000 B. P600, 000 C. P700, 000 D. P900, 000 7. What amount of financial asset under the category available0for sale should be separately reported in the December 31, 2008 balance sheet? a. P1, 200, 000 B. P1, 300, 000 C. P2, 000, 000 D. P2, 400, 000 8. On January 1, 2003,Caf Company purchased heavy equipment for P10, 560, 000 and depreciated it by the straight line method using an estimated useful life of eight years with no salvage value. On January 1, 2006, caf Company determined that the equipment has a useful life of 6 years from the date of a acquisition and will have a salvage value of P960, 000. An accounting change was made in 2006 to reflect these additional data. How much should be the balance of the Accumulated depreciation for this equipment on December 31, 2006? A. P5, 840, 000 B. P6, 160, 000 C. P6, 400, 000 D. P7, 040, 000

9. During 2006, Tricky Company decided to change from FIFO method of inventory valuation to the weighted average method. Inventory balances under each method were as follows: FIFO Weighted-Average Method January 1 1, 420, 000 1, 540, 000 December 31 1, 580, 000 1, 660, 000 Ignoring income tax, in its year 2006 statement of retained earnings, what amount should tricky report as the effect of this accounting change? a. None B. P80, 000 C. P120, 000 D. P200, 000 10. Bumper Company has there lines of Business, each of which was determined to be reportable segments Bumper Company sales aggregated P15, 000, 000 in 2008 of which segment #1 contributed 40% traceable costs were P3, 500, 000 for September to November out of a total of P10, 000, 000 for the company as a whole. For internal reporting, Bumper allocates common costs of P3, 000, 0000 based on the ratio of a segments income before common costs. In its 2008 financial statements, how much should Bumper report as operating profit for segment no. 1? a. P750, 000 B. P1, 000, 000 C. P1, 500,000 D. 2, 000, 000 11. The following information is shown in the accounting records of container Company: January 1 December 31 Cash P186, 000 Accounts receivable P201, 000 P273, 000 Merchandise Inventory P258, 000 P234, 000 Accounts payable P159, 000 P144, 000 Total sales and cost of goods sold for 2008 were P2, 394, 000 and P1, 749, 000, respectively. All sales and purchases were made on credit. Various operating expenses of P321, 000 were paid in cash. Assume that there were no other pertinent transactions. What is the cash balance on December 31, 2008 of Container Company? a. P324, 000 B. P447, 000 C. P 758, 000 D. P915, 000 12. Rich Company had the following bank reconciliation at March 31, 2008: Balance per bank statement, March 31, 2008 Add: Deposit transit Less: Outstanding checks Balance per book, March 31, 2008 Data per bank statement for the month of April, 2008 follow: Deposits P58, 400 P46, 500 P10, 300 P56, 800 12, 600 P44, 200

Disbursements

49, 700

All reconciliation items at March 31, 2008 declared through the bank in April. Outstanding checks at April 30, 2008 totaled P7, 500. What is the amount of cash disbursements per book in April? a. P44, 600 B. P49, 700 C. P54, 800 D. P57, 200 13. On December 31, 2008, general ledger of Martin Companys account receivable showed a balance of P1, 400, 000. Because of continuing decrease in expected cash flows on its financial assets, martin Company has decided to estimate the cash flows of the outstanding receivables. The estimates are based on the expected peso amount to be received o the outstanding receivables; the category (age) which also includes the length and period of collectability and time factor for similar borrowers. Category A B C D amount P400, 000 300, 000 250, 000 150, 000 Time factor .909 .826 .751 .683

How much should martin Company report its account receivable in its December 31, 2008 balance sheet? a. P779, 150 B. P901, 600 C. P1, 200, 000 D. P1, 400, 000 14. What amount of loss impairment on receivable should Martin Company recognize in its December 31, 2008 income statement? a. P200, 000 B. P300, 000 C. P300, 850 D. P498, 400 15. The balances of selected accounts taken for the December 31, 2007 of adventure Company are shown below: Accounts receivable P674, 000 Allowance for doubtful account 24, 000 The following transactions (in summary) affecting accounts receivable occurred during the year ended December 31, 2008: Sales (all on account, terms, 2/10, 1/5, n160) Cash received from customers The cash received includes the following: Customers paying with the 10-day discount period Customers paying with in the 15-day discount period Recovery of accounts written off Customers paying beyond the discount period Accounts receivable written off as worthless P3, 000, 000 3, 200, 000 1, 764, 000 990, 000 6, 000 22, 000

Credit memo for sales returns 12, 000 It is the companys policy to provide for uncollectible accounts equal to 1% of sales. How much is the carrying value of the accounts receivables as of December 31, 2008? a. P362, 000 B. P368, 000 C. P400, 000 D. P406, 000 16. On June 1, 2008, Thomas Corp. old merchandise with a list price of P300, 000 to peter Company on account peter was given the following trade discounts of 30% and 20%. Credit terms were 2/15, n 140 and the sale was made F.O.B point of destination. On June 101 2008, when the merchandise were delivered, Peter Company paid P5000 of delivery costs for Thomas as an accommodation. What amount should peter company remit to Thomas company payment on June 14, 2008? a. P168, 000 B. P164, 640 C. P159, 740 D. P159, 640 17. On October 31, 2008, Bundle Company engaged in the following transactions: Obtained a P500, 000. Six-month loan from City Bank, discounted at 12% the company pledged P500, 000 of accounts receivable as security for the loan. Factored P1, 000, 000 of accounts receivable without resource on a non notification basis with help Company. Help charged a factoring fee of 2% the amount of receivables factored and with held 10% of the amount factored. What is the total cash received from the financing of receivables? a. P1, 320, 000 B. P1, 350, 000 C. P1, 380, 000 D. P1, 470, 000 18. On March 1, 2008, cursor Company sold goods to matrix Company. Matrix signed a non-interest bearing note requiring payment of P60, 000 annually seven years. The first payment was made on March 31, 2008. The prevailing rate of interest for this type of note at the date of issuance was 10%. Information on present value factors is as follows: Present Value of 1 FV of ordinary Annuity of 1 Periods at 10% at 10% 6 0.56 4.36 7 0.51 4.87 How much should cursor company report as sales revenue in March 2008? a. P214, 200 B. P261, 600 C. P292, 200 D. P321, 600 19. Marker company has the following information pertaining to its merchandise inventory as of December 31, 2008: Inventory on hand (including merchandise received consignment of P20, 000) Inventory purchased with a buyback agreement Merchandise in transit, FOB, shipping point, including P5, 000 freight cost Merchandise in transit, free a long side, including delivery cost alongside P200, 000 100, 000 155, 000

The vessel of P6, 000 but exceeding the cost of shipment of P3, 000 Merchandise in transit, CIF (including insurance costs and freight of P8, 000)

250, 000 75, 000

What amount should marker company report as value of its inventory in its 2008 balance sheet? a. P749, 000 B. P757, 000 C. P763, 000 D. P857, 000 20. On October 16, 2008, a fire destroyed all the stock of equipment of modern equipment center in its rented stocks room. The records of the firm show the following information. 2007 2006 2005 2004 Sales P925, 000 P880, 000 P790, 000 P710, 000 Cost of sales 758, 500 739, 200 679, 400 624,800 Gross profit P165, 000 P140, 000 P110, 000 P85, 200 Inventory, January 1, 2008 Sales, January 1 to October 15, 2008 Sales returns and allowances Purchases, January 1 to October 15, 2008 Purchase returns and allowances Cost of stock in display room not destroyed P130, 500 960, 000 15, 000 890, 000 12, 000 85, 000

How much is the estimated cost of merchandise lost in the fire of October 15, 2008? A. P120, 250 B. P148, 600 C. P167, 500 D. P252, 500 21. Horseshoe corporation uses the FIFO retail method of inventory valuation following are the information available. Cost retail Beginning inventory P24, 000 P60, 000 Purchases 120, 000 220, 000 Net markups 20, 000 Net markdowns 40, 000 Sales revenue 180, 000 If the lower of cost or market rule is disregarded, what would be the estimated cost of ending inventory? a. P38, 400 B. P40, 000 C. P41, 600 D. P48, 000 22. Primary company purchased the following portfolio of trading securities during 2008 and reported the following balances at December 31, 2008. No sales occurred during 2008. Security cost December 31, 2008 Market Value M P400, 000 P390, 000 N 800, 000 630, 000 O 500, 000 540, 000 Total P1, 500, 000 P1, 560, 000 How much should primary company report as unrealized gain or loss related to the securities Transactions in its 2008 income statement?

a. None B. P60, 000 unrealized loss C. P60, 000 unrealized gain D. P70, 000 unrealized gain 23. Glenn Company acquired available for sale securities during the year 2008 to be held as current investments. An analysis of the current investment on December 31, 2008 showed the following: Securities A B C D Total Cost P1, 600, 000 2, 200, 000 3, 000, 000 3, 800, 000 P10, 500, 000 Market P1, 400, 000 2, 000, 000 2, 900, 000 3, 600, 000 P9, 900, 000

What amount of UN realized loss should be reported in Glenns December 31, 2008shareholders equity? A. None B. P200, 000 C. P200, 000 D. P600, 000 24. On December 30, 2008, tandem Company acquired 5, 000 ordinary shares (P120 par) and to be classified as available for sale shares of thermal company. Tandem Company settled the shares by exchanging its equipment with a carrying value of P900, 000 but currently has a market value of P800, 000. Shares of thennal Company are not actively traded in the market and its market value cannot be reliably determined. At what amount should the investment in equity instrument be recorded? a. P600, 000 B. P700, 000 C. P800, 000 D. P900, 000 25. On January 1, 2008. Align corporation acquired as a long term investment for P2, 500, 000, a 30% ordinary share interest in parallel company. On that date, parallel had net assets with a book value and current market value of P8, 000, 000. The difference of the cost of acquisition and the book value of net asset acquired is attributable to a depreciable asset with a remaining life of 5 years. During 2008, parallel reported net of tax income of P900, 000, declared and paid cash dividend of P200, 000, income tax rate is 32%. What is the maximum amount of income that parallel should report from this investment for 2008? a. P60, 000 B. P210, 000 C. P250, 000 D. P256, 400

PREBOARD EXAMINATIONS PRACTICAL ACCOUNTING PROBLEMS 1 1. During 2010, manila Company filed suit against west company seeking damages for patent infringement at December 31, 2010, Mariss legal counsel believed that is was probable that Maria would be successful against West for an estimated amount in the range of P750, 000 to P1, 500, 000, with all amounts in the range considered Equally likely. In March 2011, Maria was awarded P1, 000, 000 and received full payment thereof. In its 2010 financial Statements issued in February 2011, how should this award be reported? a. As a receivable and revenue of P1, 000,000 b. As a receivable and deferred revenue of P1, 000, 000 c. As a disclosure of a contingent gain of P1, 000, 000 d. As a disclosure of a contingent gain of an undetermined amount in the range of P750, 000 to P1, 500, 000. 2. Zen Company acquired a tract of land on which a building was located. The plan was to demolish the existing building and build a new building on January 2, 2010 construction was completed and the following information was made available. Cost of land and building acquired 1, 250, 000 Cost of demolish the acquired building 150, 000 Cost of new building having a useful life of 20 years and salvage value of P450, 000 5, 250, 000 Zen Company uses the double declining balance method of depreciation. The depreciation of the building for 2010 should be a. P525, 000 B. 480, 000 C. 540, 000 D. 495, 000 3. On March 3, able Company received bank statement but the closing balance of the account was unreadable. The available information is summarized below. February 28 book balance Not collected by bank Interest earned on note NSF check from customer Bank service charge on NSF check Other bank service charges Outstanding checks Deposits of February 28 in transit Check issued by axle company charged to ables account What is the closing balance of the bank statements? a. 1, 435, 000 B. 1, 530, 000 C. 1, 320, 000 1, 460, 000 100, 000 10, 000 130, 000 2, 000 3, 000 200, 000 85, 000 20, 000

D. 1, 300, 000

4. On april 1, 2010. Maryjoy Company had 6, 000 units of merchandise on hand that cost P120 per unit during the month. Maryjoy had the following transantions: April 5 8 29 purchased 15, 000 units at P140 per unit returned 1, 000 defective units from the April 5 purchase sold 16, 000 units at P200 per unit

Assuming a FIFO perpetual cost flow method the inventory on April 30, 2010 should be. a. 560, 000 B. 480, 000 C. 536, 000 D. 520, 000 5. On October 1, 2009. Julie Company committed itself to a formal plan to sell its Kam Divisions assets on that date. Julie estimated that the gain from the disposal of assets in February 2010 would be P50, 000. Julie also estimated that Kam would incur operating losses of P500, 000 from January 1, 2009 to September 30, 2009 and P200, 000 for the period October 1, 2009 through December 31, 2009 and P100, 000 for the period January 1, through February 28, 2010. These estimates were materially correct disregarding income taxes, what should Julie report as loss from discontinuing operations in its comparative 2009 and 2010 income statement? 2009 2010 a. 700, 000 0 b. 650, 000 100, 000 C. 700, 000 50, 000 D. 650, 000 50, 000 6. for the year ended December 31, 2010, Anna Companys pretax financial statement income was P2, 000, 000 and its taxable income was P1, 500, 000. The difference is due to the following: Interest income on saving deposit 700, 000 Premium expense on officers life insurance policies of which the company Is beneficiary (200, 000) -----------------500,000 The income tax rate 33% for 2010 and 35% for 2011 and thereafter, in its 2010 income statement what amount should anna report as current provision for the income expense? a. 495, 000 B. 480, 000 C. 660, 000 D. 640, 000 6. When preparing a draft of its December 31, 2010 balance sheet Company reported net assets totaling P5, 000, 000. Included in the asset section of the balance sheet were: Treasury stocks of Ella Company at cost which approximately market value on December 31 idle and abandoned property cash surrender value allowance for decline in value of noncurrent investment

500, 000 100, 000 50, 000 200, 000

at what amount should Ellas net assets be reported in the December 31, 2010 balance sheet? a. 4, 500, 000 B. 5, 500, 000 C. 4, 300, 000 D. 4, 400, 000 7. The adjusted trial balance of Pia Company on December 31, 2010 includes the following account balances: Common stock Additional paid in capital Net unrealized loss on noncurrent marketable equity securities Retained earnings appropriated for earthquake losses Retained earnings inappropriate Treasury stock 5, 000, 000 3, 000, 000 100, 000 500, 000 1, 000, 000 200, 000

What should Pia Company report as total stockholders equity? a. 9, 200, 000 B. 9, 400, 000 C. 9, 500, 000 D. 9, 300, 000 8. On January 2, 2010, Hazel corporation granted dan its president 20, 000 stock appreciation rights for past services. Those rights are exercisable immediately and expire on January 1, 2013 on exercise. Dan is entitled to receive cash for the excess of the stocks market price on the exercise data over the market price on the grant date. Dan did not exercise any of the rights during 2010. The market price of Hazels stock was P30 on January 2, 2010 and P45 on December 31, 2010. As a result of the stock appreciation rights. Hazel should recognize compensation expense for 2010 for a. 0 B. 100, 000 C. 300, 000 D. 600, 000 9. On December 28, 2010. Bess Company purchased goods costing P200, 000 the terms were FOB destination some of the costs incurred in connection with the sale and delivery of the goods were as follows: Packaging for shipment Shipping Special handling charges 4, 000 6, 000 5, 000

These goods were received on December 31, 2010. In Bess December 31, 2010, balance sheet, what amount of cost for these goods should be included in inventory? a. 215, 000 B. 211, 000 C. 205, 000 D. 200, 000 10. On January 1, 2010, easter Company entered into a 10 year lease for a plant the annual minimum lease payment is P100, 000. In the notes to the December 31, 2011 financial statements. What amount of subsequent years lease payments should be disclosed? Required for appropriate Required period a. 100, 000 b. 300, 000 c. 500, 000 aggregate amount for the period thereafter 0 500, 000 300, 000

11.

12.

13.

14.

d. 500, 000 0 Verms Corporation discounted its own P1, 000, 000 one-year note with a bank at a discount rate of 12%. When the bank prime interest was 10%. In reporting the note on the balance sheet prior to the notes maturity what rate should Verms use for the accrual of interest? a. 13. 6 B. 10. 0 C. 12. 0 D. 10. 7 Cheery Company has earnings per share of P120 for 2010 before taking any dilutive securities into consideration no conversion or exercise of dilutive securities took place in 2010. However, possible conversion of convertible preferred stock would have reduced earnings per share to P119. The effect of possible exercise of common stock. Warrants would have reduced earnings per share by an additional P0.50 for 2010, what is the maximum amount that Cherry may report as a single presentation of earnings per share? a. 120. 0 B. 119. 50 C. 119. 00 D. 118. 50 Takila Company reported cost of goods sold of P3, 000, 000 for 2010. Additional information is as follows: December 31 January 1 Inventory 600, 000 500, 000 Accounts Payable 200, 000 400, 000 If Takila uses the direct method, what amount should be reported as cash paid to supplier in its 2010 statement of cash flows? a. 3, 100, 000 B. 3, 300, 000 C. 2, 900, 000 D. 3, 200, 000 Lani companys statement of cash flows for 2010 was prepared using the indirect method and included the following: Net income Depreciation Increase in account receivable Decrease in inventory Decrease in account payable

5, 000, 000 100, 000 (200, 000) 400, 000 (500, 000) -------------Net cash flow from operating activities 4, 800, 000 Lani reported revenues from customers of P6, 000, 000 in its 2010 income statement. What amount of cash did Lani receive from its customers during the year? a. 6, 200, 000 B. 5, 800, 000 C. 5, 200, 000 D. 4, 800, 000 15. During 2010, Kay company had P400, 000 in cash sales and P6, 000, 000 in credit sales. The accounts receivable balances were P800, 000 and P1, 000, 000 at December 31, 2009 and 2010 respectively. If Kay desires to prepare a cash basis income statement, how much should be reported as sales for 2010? a. 6, 600, 000 B. 6, 400, 000 C. 6, 200, 000 D. 5, 800, 000 16. On April 1, 2010 Kate Began operating a service proprietorship with an initial cash investment of P200, 000. The proprietorship provided P600, 000 of service in April and received full payment in May. The proprietorship incurred expenses of P200, 000 in April which were paid in June.

During May, Kate drew P50, 000 against the capital account. What was the proprietorship income for the two months ended May 31, 2010 under the cash Basis? a. 400, 000 B. 600, 000 C. 350, 000 D. 550, 000 17. Tess Company was organized on January 1, 2010 with the following capital structure: Preferred stock 10% P100 par, P120 Liquidation value, P10, 000 shares issued Common stock, P100 par, 40, 000 shares authorized 30, 000 share issued

1, 000, 000 3, 000, 000

Net income for the year ended December 31 2010 was P6, 000, 000 and no dividends were declared what is the book value per share of common? a. 290 B. 293 C. 300 D. 333 18. The directors of sally company whose P50 par value common stock is currently selling at P60 per share, have decided to issue a stock dividend. The selling price is not expected to be affected by the stock dividend. Sally Company, which has an authorization for 100, 000 shares of common, ha issued 50, 000 shares of which 10, 000 shares are held as treasury stock, in order to capitalize P240, 000, of the retained earnings, what percentage should be declared as stock dividend? a. 10% B. 10% C. 8% D. 4% 19. Rem companys capital accounts on June 30, 2010 were as follows: Common stock, P20 par 30, 000 shares Contributed capital in excess of par Retained earnings 600, 000 150, 000 887,500

On July 1, 2010, Rem Company declared a 100% stock dividend. The market value of common on this date was P32. 50 the common stock outstanding after the stock dividend would be. a. 1, 200, 000 B. 1, 575, 000 C. 600, 000 D. 750, 000 20. On July 1, 2010 Shella Company issued 2, 500 shares of its P100 par common and 5, 000 shares of its P100 par convertible preferred stock for a lump sum of P2, 000, 000. At this date, Shellas common was selling at P360 and the preferred for P270 per share. The amount of the proceeds all allocated the preferred stock should be. a. 1, 100, 000 B. 1, 200, 000 C. 1, 350, 000 D. 1, 500, 000 21. Rosy Company started a new promotional program, for every 10 box tops returned to Rosy, customers receive basketballs. Rosy estimates that only 60% of the box tops reaching the market will be redeemed. Additional information it as follows: Sales of product Basketballs purchased Basketballs distributed to customers

100, 000 5, 500 2,340

9, 000, 000 412, 500

What is the amount of the year-end liability associated with this promotion? a. 274, 500 B. 237, 000 C. 574, 500 D. 37, 500 22. On April 1, 2010 Lulay Company purchased 2, 000, P1, 000 8% bonds at 104 plus accrued interest as a short-term investment interest is payable semi annually on July 1 and January 1 of each year. How mush cash did Lulay Spend on April April 1, 2010? a. 2, 040, 000 B. 2, 080, 000 C. 2, 120, 000 D. 2, 000, 000 23. Vera company began operations on January 1, 2010 and uses the FIFO method of costing inventory. Management is contemplating a change ot the average method to be consistent with veras parent company. The following information has been developed: 2010 Ending inventory: FIFO Average Income under FIFO 960, 000 800,000 5, 800, 000 2011 1, 080, 000 840, 000 7, 800, 000

What will the 2011 income be after a change to the average method? a. 7, 400, 000 B. 7, 560, 000 C. 7, 720, 000 D. 7, 800, 000 24. On January 1, 2010, Maris Company purchased a truck for P2, 000, 000 it was being amortized on a straight basis over six years, with a P200, 000 residual value. At the end of 2012 and prior to closing the books for 2012, it is determined that the total useful life should be 10 years and the residual value should be zero. What is the 1999 depreciation expense? a. 175, 000 B. 200, 000 C. 300, 000 D. 157, 143 25. Elaine company uses a perpetual inventory system. At the end of 2010, the balance in the inventory account was P360, 000.P30, 000 of which was purchased FOB shipping point and did not arrive until 2011. Purchase in 2011 were P3, 000, 000. The perpetual inventory records showed an ending inventory of P420, 000 for 2011. A physical count of the goods on hand at the end of 2011 showed an inventory of P300, 000. Inventory shortages are included in cost of goods sold. What should the company report on its 2011 income statement for cost of goods sold? a. 2, 940, 000 B. 2, 980, 000 C. 3, 000, 000 D. 3, 010, 000