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Saint Paul School of Business and Law Multiple Choice: C,B,B,D,C,B,D,B,C,B 1.

During 2008, the assets of Cebu Company increased by P5,000,000, the liabilities increased by P3,000,000 and common stock with par of P1,000,000 was issued for P1,500,000. Except for a dividend payment of P800,000 and the year’s earnings, there were no other changes in retained earnings. What was the net income for 2008? a. 2,000,000 b. 2,800,000 c. 1,300,000 d. 1,800,000 2. Juan Company began operations on January 1, 2008 and appropriately uses the installment method of accounting. The following information pertains to the operations of the company for 2008: Cost of installment sales P18,900,000 Gross profit rate based on cost 25% Collections on installment sales 10,710,000 Balance in the deferred gross profit account at December 31, 2008: a. P3,228,750 c. P2,142,000 b. P2,583,000 d. P2,677,500 3. Gola Company’s statements for 2008 and 2009 included the following errors: December 31, 2008 inventory understated 1,500,000 December 31, 2009 inventory overstated 4,000,000 Depreciation for 2008 understated 200,000 Depreciation for 2009 overstated 500,000 How much should retained earnings be retroactively adjusted on January 1, 2010? a. 3,700,000 increase b. 3,700,000 decrease c. 1,200,000 increase d. 1,200,000 decrease 4. Teofil is trying to decide whether to accept a salary of P980,000 or a salary of P612,500 plus a bonus of 10% of net income after salaries and bonus as a means of allocating profit among the partners. Salaries traceable to the other partners are estimated to be P2,450,000. What amount of income would be necessary so that Winlu would consider the choices to be equal? a. P7,472,500 b. 4,042,500 c. 6,492,500 d. 7,105,000 5. Partners Terio, Berting and Roging share profits and losses in the ratio of 5:3:2. At the end of a very unprofitable year, they decided to liquidate the firm. The partner’s capital account balances at this time are as follows: Terio P2,200,000 Berting 2,490,000 Roging 1,500,000 The liabilities accumulates to P3,000,000 including a loan of P1,000,000 from Terio. The cash balance is P600,000. All the partners are personally solvent. The partners plan to sell the assets in installment. If Berting received P360,000 from the first distribution of cash, how much did Roging received at that time? a. P200,000 b. P120,000 c. P80,000 d. P220,000

000 overstated d.000 for a franchise. 200. The resulting gain should be included as a: a. with P18. Inc. 2009 would be a. Neither bonus nor goodwill if I= L-M and B ( ) . M is the amount of the new partner’s investment. Transaction gain reported as a component of stockholders equity.000 b.000 Assembly Labor hours 4. If the collectibility of the payments is reasonably assured and substantial performance by Naval. Transaction gain reported as a component of income from continuing operations 8. P90.750 c.000 grams P50.000 Job 1234 contains 3. The present value of the annual payments. Good will to the old partners if I ( c. discounted at 9%. charges P90.000 paid when the agreements is signed and the balance in four annual installments. SPBS retained earnings at January 1. Santino Enterprises is a Philippine exporter of souvenir items manufactured in the capital city of Burauen.000 of equipment for P16. Exchange rates between the functional currency and the currency in which the transaction was denominated changed. During 2008.315 d. Naval. is P58. The franchisee has the right to purchase P20.000 units.000 overstated 2008 200.955 b. 100.000 units 200. 26.000 overstated 9. b. B is the amount of the capital credit to the new partner.000.6. then there is: a. P76. 27. A sale of goods. d.000 10.315. It weighs 10.000 hours 120. L bonus to the new partner if I= L+ M and B ) b. Translation gain reported as a component of stockholders’ equity. P31.000 grams and uses 300 hours of labor. P72. a. resulted in a receivable that was fixed in terms of the amount of foreign currency that would be received. The following overhead cost data have been accumulated: Activity Center Cost Driver Amount of Activity Center Cost Materials handling Grams handled 100. c. 32. Inc has occurred.000 7. the amount of revenue from franchise fees that should be recognized is: a.315 c.000 understated Prior to any adjustments for these errors and ignoring income tax. P72.000 d. 200. denominated in a currency other than the entity’s functional currency. Correct b.000 Painting Units painted 50. Compute the total overhead costs that should be assigned to Job 1234. SPBS Company discovered that the ending inventories reported on its financial statements were incorrect by the following amounts: 2007 100. If L is the total capital of a partnership before the admission of a new partner. Translation gain reported as a component of income from continuing operations. I is the total capital of the partnership after the investment of a new partner.000 understated c.

during 2008. On September 27. Mr.099.C. The first installment payment was made on due date.200.A.000.000 but had a current value of P1. RR contributed land to the partnership that cost him P1.220.000. All sales are credit sales and all receivables are trade receivables.600 2.D.000) c. The franchisee commenced business operations on October 5.000) d.000 250.D.000.888. P2.592. P(450.000. P5.500 and incurred indirect costs of P1.944. RR had drawings of P2. 2008.000) b. starting December 31.600. RR. P5. how much is the net income? a. Assuming the collectibility of the note is not reasonably assured. The agreement further povides that the franchisee must pay a continuing franchise fee equal to 5% of its monthly gross sales.100 c.321.000 at the end of the year.100 d. 2.900.000 . 2008. P2.500.A.Average: D.A. 2008. P(270.000 at the beginning of the year and P3.600 b.000 3. January 1 net allowance of P100.100. Compute the partnership’s earnings(loss) for 2008: a. 2.000 cash to be paid upon signing of the contract and the balance in five equal annual payments every December 31.000 2.000 and December sales. The following selected information is provided for Lou Company. P4.A.000 50.000 8.928.250.D 1. P450. P2.848. During 2008. P3.000 d.000 payable as follows: P7.000 Accounts receivable. Accounts receivable. On April 1. The agreement provides for an initial franchise fee of P26.060. the franchisor completed the initial services required in the contract at a costs of P16.250.350.000.620. 2. November sales.541.118. a partner in the RB partnership is entitled to 40% of the profits and losses. The balance of RR’s capital accounts was P3. in its income statement for the year ended December 31. Mr. Also.000 b. P4. December 31 net of allowance of P300.350.000.537. (180.000 c. 2008.150. Bana signs 10% interest bearing note for the balance.000 5.080.B. Bana entered into a franchise agreement with Donya Janna to sell their products.000 1. The gross sales reported to the franchisor are October sales.000 What is the net cash flow from operations that Lou Company would report in its cash flow statement? a.000 Sales for the year Uncollectible accounts written off during the year Bad debt expense for the year Cash expenses for the year Net income for the year P1.

000 Units completed 100 50 200 Number of set ups 1 2 4 Number of inspections 20 10 30 Number of material moves 30 10 50 Engineering hours 10 50 10 If the company uses activity-based costing.000 P12.4. Gross Profit None P408. The total cost assigned to the March 31 WIP inventory should be: a. The only costs associated with the sawdust are selling costs of P6 per ton sold. how much overhead costs should be allocated to Job 101? a. P1. computed under the weighted average method were as follows: Materials P1 Conversion cost 3 Transferred-in 5 Materials are introduced at the end of the process in Department Y.000 P2.500 Materials handling Number of material moves P80.000 increase 408.000 decrease 408. P27.000 decrease Net Income none P408. how would its gross margin and net income be affected? a. Beth Company’s Department Y. d. b.000 c.000 The following information was collected on three jobs that were completed during the year: Job 101 Job 102 Job 103 Direct materials P5. 28.600 . If Uy Textiles changes its method of accounting for sawdust sales to show the net realizable value as other revenue (presented at the bottom of the income statement).800 d.800 6. 24.000 units (40% complete as to conversion costs) in WIP at March 31.000 6. Sawdust sales in 2008 were 12.000 200 Inspection Number of inspections P130.000 tons at P40 each. Uy Textiles Company manufactures various wood products that yield sawdust as a by-product. There were 4. c. P5. During March.000 b.200 b. Castro Company has identified the following overhead costs and costs drivers for the coming year: Overhead Item Cost driver Budgeted Costs Budgeted Activity level Machine set up Number of set up P20.000 P4.000 decrease none none 5. The company accounts for sales of sawdust by deducting sawdust’s net realizable value from the major product’s cost of goods sold. P36. 5.000 8. equivalent unit product costs.000 Engineering Engineering hours P50.300 c.000 Direct Labor P2. 2.000 P8.000 d.000 1.

paying royalties within 30days of year-end. the company maintains limited records.000 d. January 1.100. 2. The following balances are taken from the company’s records: January 1. 625.000 c.000 9.000 Cash paid to creditors 1. 650. non-cash transaction are recorded by making memo entries. 2. December 31. Albert. Under the accrual basis.000 d. and Berting provides for the division of net income as follows: a. P650.520. Gardo Corporation acquires copyright from authors.055.000 b.000.000 Accounts written-off 5.000.000 Sales discounts 4. 2008. Each partner is to be allowed interest at 10% on beginning capital. No other investments or withdrawals were made during 2008.000. The following data are included in the corporation’s December 31 balance sheet: 2007 2008 Prepaid royalties P60. On January 1.000 780. 370. Gardo reported royalty expense of P375.000 b.000 P100. Albert.000 per year.000 . 2008 Accounts receivable P150.000 P50. January 1. c.000 805. December 31. 400. rental income of Olivia Company for the calendar year 2008 is P600.000 b.000 Unearned rental income. 2.000 c. how much rental income should be reported? a. P350. 615.330 918.000 Purchase discounts 2.000 100.400.000 d. Albert. 2008 December 31.7.000 Note receivable-trade 50. who manages the partnership is to receive a salary of P110.000 700.000 and Berting.000.105.000 Royalties payable 75.000 100. 380.000 Accrued rental income. hence. Total capital at year-end was P2. Compute the capital balance of each partner at year-end: Berto Albert Berting a. 2008 40.500 Purchase returns 5.119.330 763.000 90.330 d. P805.000 10.000 How much would be the royalty payments for the year? a.100. b. The partnership agreement of Berto.000 Sales returns and allowances 10.000. 935.000 Accrued rental income.000 Cash received from customers 2.000 P780.000 Under the cash basis.000 and Berting withdrew P40. Additional information regarding rental income are presented below: Unearned rental income.000 c. Albert withdrew P50. During 2008.000 c.000 for the year ended December 31. 2.000 750.000 b.000 in the partnership. 2008 P50. 655. P750.000 How much would be the gross sales for the year? a. 2008 75. Berto invested an additional P40. Remaining profits are to be divided equally. P700. 783. Most of the company’s transactions are summarized in a cash journal. 2008.000 Accounts payable 200. 585. 2008 30.000 P935.000 8. Geron Company is engaged in a small export business. the capital balances were Berto. paying advance royalties in some cases and in others.

000 Collections: 2007 installment contracts 250.D. a sole proprietorship was P3. 1. P 160.190. 2009 the capital was P4.C. 1.000 d.150.A. 1.000 b.000 d.000 with sales value of P400.A.B.000 (10.000 Gain on early extinguishments of debt 175.000 15. To C P6. To O P8.000 for the year ended June 30. 1. The following data were gathered: Impairment loss on available for sale P 2.000 and O P8.500 Depreciation expense 30. The equity of the partnership is as follows: Partners’ accounts Loans to(from) Profit and loss Partnership ratio J P24.D.000 and paid a P500.000) 4 The second cash payment to any Partner under a program of priorities shall be made thus: a.000 b.000 2.000 2008 installment contracts 360.500.000 Bad debts expense 12.000 contracts defaulted Value assigned to repossessed merchandise 7.000 c.435.350.000 Assume perpetual inventory accounts were not maintained.000 6.000.000 300.500 Loss on sale of land 50. 1.C.B. 2009.000 . 1. 64.150.500 d.000 c.500 Increase in balance of accounts receivable during 2008 20.200.000 4.000.000 c.000 3.000 d. Bagsik reported a net income of P1.000 b.000 Defaults and repossessions: Unpaid balance of prior year’s installment 12. On January 1.000 P900.000 3 O 60.000 c. To O P2. 94.Difficult: A. 2008 was: a.272. 1.000 How much was the cash provided by operating activities? a.250. 2008.000 Purchase of long term investment 137.700. The unrealized gross profit on the 2007 installment sales as of December 31.000 600. What was the 2009 net income? a.000 8.000 Cost of installment sales 480. During the year David withdrew merchandise costing P200. 1.A 1. To C P6. the capital of David Garcia Company.000 and on December 31.000 b. The JCO Partnership is being dissolved. Following data were taken from the books of Homer Company for 2008: 2007 2008 Installment sales P800.000 3 C 36.000 note payable of the business with 10% interest for one year with a check drawn on a personal checking account. All liabilities have been paid and the remaining assets are being realized gradually. 120.

000 for the construction of this prestigious tower. The cost assigned to the by-product is its market value less P. Product A and by-product W are sold after separation. P6.500.000  Salary allocations to partners.000 Calculate the revenue.40 per pound for delivery expense (NRV method).550 6.000 4.000 5.500. The project is expected to take three years to complete.000 Total contract cost estimated to complete P5.500. P48. Miracle Construction Company is executing a gigantic project of constructing the tallest building in the country.000 5.000 P900. P5. Olang Company produces joint products A and B in Department One from a process which also yields by. 17. P84.500.600  Interest paid to banks.450 c.000.000 9.000 How much of the joint cost incurred in Department One should be allocated to the joint products? a.000.000. The details of the costs incurred to date in the first year are: Site labor costs P1.000. P15. 5. P12. P17.500.000.000) c.000 d.000 Marketing and selling costs to get the tallest building in the country the right exposure 1.000. but product B must be processed further in Department Two before it can be sold. costs and profit to be recognized: Revenue Costs gross profit(loss) a. P24.5.product W.800 d.50 Joint cost in department One P18.000 b. 21.400  Partners’ withdrawals.400.000 d. (3.000 Depreciation of special plant and equipment used in Constructing to build the tallest building 500.000 Product B additional process cost in Department Two P10. Product Production (in pounds) Sales price per pound A 2.000 P 4. P9.000 Costs of construction material 3.500.600 Compute the partnership net income(loss): a.600 c. 6. 17.250 b. Information relating to a batch produced in July is presented. 6.000 (100.00 W 500 1.50 B 4. The Almark Partnership has the following amounts:  Sales.000  Cost of goods sold.400.000 Total P5. The company has signed a fixed price contract of P12.000 P4. P2.600) 7. 18.500.000 b.000 900.000 1.000  Operating expenses.000 .

000 Total P252. The home office recorded this cash collection on December 23. A branch customer erroneously remitted P3. The billing was at cost but the branch recorded the transaction at P40.400 P252. The branch has not recorded this transaction.400 Home Office Current 118. e. d. 2008. P33. Meanwhile back at the branch.200 Shipments from Home Office 168. b. 2008 was recorded on the Home Office books on January 3. the billing of P24.200 90. you find the following differences: a. b. P50. the Investment in Branch account on the Home Office’s books has a balance of P102. 2008: Unadjusted bal.000 c. The home office incurred P14.800.400 Shipments to the branch are billed at 140% of cost. of the Reciprocal Account P114.000 branch remittances to the home office initiated on December 28.800 Adjusted bal.600 9. P76. 2008 after its first year of operations: Debit Credit Cash P 10.800 52.000 Expenses 10. P6. In analyzing the activity in each of these accounts for December.600 139. was recorded by the branch on January 4.000 was at cost. A home office inventory shipment to the branch on December 28. 2009.400 Accounts Receivable 63.600 to the Home Office. The overstatement of the branch inventory at December 31. P14. c.800 151. On December 31.000 . 2009.600 was sent to the branch by the home office on December 10.200 52.400 of advertising expenses and allocated P6. Compute the balance as of December 3. of the Home Office Account a. The Ace Branch of Diamond Company submitted the following trial balances as of December 31.400 d.000.800 Sales P134. 2008.8. no entry has been made yet. 2008. 2008. A P12. 2008 was: a.000 of this amount to the branch on December 15. P 0 b. c.000 93. 2008. d. Inventory costing P51.400 Merchandise inventory.

500 units 1.800 P120.500 units P10.50 1.100 units 900 units 13.49 1.000 units 7.50 1. The following information is available for David Garcia Company for the month of June: Started this month Beginning.50 P 1. .49 c. materials: FIFO Average a.400 13.49 All materials are added at the start of the production.000 350. 1.000 Compute the cost per equivalent unit of FIFO P 1.49 Average P 1. WIP (40% completed) Normal spoilage (discrete) Abnormal Spoilage (discrete) Ending WIP (70% completed) Transferred-out Beginning Work-in-Process costs: Materials Conversion costs Current Costs: (added) Materials Conversion costs 80.000 units 72.50 d. P 1.10. b.