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    4 views12 pages

    CEL1 Prac1 Answer Key

    Uploaded by

    Ashley Levy San Pedro
    Prac1

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    © All Rights Reserved
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    of 12
    Hd) 2141 accownrine 1 UNIVERSITY OF SAN CARLOS ‘SCHOOL OF BUSINESS AND ECONOMICS DEPARTMENT OF ACCOUNTANCY ‘COMPRHENSIVE EXAM ONE. PRACTICAL ACCOUNTING ONE "AY. 2012-2013 INSTRUCTIONS: Flead each of the questions careiuly. Shade the letter of your corresponding choice in the answer sheet. Petra irom taking to your seatmates, as such wil be construed ae cheating, Avokd ‘making any erasures. Be wary ofthe time, Aways do your best 1. THISISIT! Corporation had the following transaction in its rst year of operations: ‘Sales (90 percent collected in the fist year) 750,000 Disbursements for costs and expensea 600,000 Purchases of equipment for cash 200,000 ‘Prosoeds rom issuance of common stock 250,000 Payments on short-term borrowings. 25000 ‘Proooeds rom short term borrowings 50,000 Depreciation on equipment 40,000 Debursements for income taxes 445,000 Bad debt write-offs 30,000 ‘Whats the cash balance at Dacember 31 ofthe fist year? ‘AP 75,000 -P 86,000 'B.P105.000 D. P140,000 2. FOCUS Company had he following bank reconliaton on une 30,2012: Balance per bank statement, June 30 3,000,000 ‘Ase: Deposits in tarsi “400,000 Total 400,000 Loss: Outstaneing Chocks 300.000 Balance per book, June 30, 200.000 “The bank statement forthe month of July 2012 showed the fotoning: Deposits (including 200,000 note collected for FOCUS) 9,000,000 Disbursements (inchding P140,000 NSF check and'P10,000 service charge) 7,000,000, ‘All reconcing teme on June 20, 2012 cleared trough the bank in July. The outstanding checks {otalled P600,000 & the deposits in ansit amounted to P1,000,000 on July 31, 2042. ‘Whats the cash balance per book on July 91, 20127 ‘A. P5,400,000 c. P5,550.000 D. 4,500,000 ‘3. Pety cash fund account of QUANDARY Gompany showed its composition as flows: Goins and currency 3,300 Paid vouoners: “Transporation 600 Gazoine 400 Office Suppies 500 Postage Stamps 300 Due fem omployees i200 3.000 Manager's check retued by bark marked "NSF™ 1,000 ‘Gheck drawn by company tothe order of petty cash custodian 2700 ‘Whats the correct amount af petty cash fund for stator AP10,000, P7000 9,000 of fnancal postion purposes? Page 1 of 12 Hd) 2141 accownrine 1 4. All of CATCH22 Company's sales are on a credit basis. The following information is available for pore: ‘Allowance for doubtful accounts, 1/1/2012 1,000,000 ‘Sales ‘Sales returns ‘Aaoounts writen off aa uncollectile Recovery of accounts witton off CATCH? provides for doubtful accounts expense atthe rate of 10% of net sales. At December 31, 2012, the allowance for doubt accounts balance should be ‘A.P3,200,000 1c. P2,800,000 ©. P2,000,000 5. STICKY Company factored PS,000,000 of accounts recsivable to SITUATION Bank on July 1, 2012. Control was surrendered by STICKY. ‘The bank assessed a fee of 5% and retains a holdback equal to 20% of the accounts receivable. In adaton, the bank charged 12% computed on a weighted average time io matuty ofthe recaivables of 30 days. Assuming all receivables are collected, STICKY Companys cost of factoring the receivables would be. ‘A. P250,000 ©. Pag.ats B.P200.315 DP o 6. Tho UNBELIEVABLE Corporation provided for uncallectibe accounts recoivabo under the allowance ‘method since the slart of is operations o Dacember 31, 2012. Provisions were made monthly at 2 percent of crt sales; bad debts wttan off were chargod to tha allowance account; recovers of ‘ad debs previously witlen of were credited fo the allowance account ané no year-end adjustments tothe alowanoo account were made. UNBELIEVABLE'e usual rei erme ao net 20 days Tho credit batano inthe allowance for doubtul accounts was P260,000 a January 1, 2012. During 202, credit sales totaled P18,000.000, interim provisions for doubitul accounts were made a 2 percent of erect eale, P180,000 of ad debe were writen of, and recoveries of accounts previously ‘witlen off amounted fo P30,000. UNBELIEVABLE installed a computer system in Noveriber 2012 and an aging of accounts recoWvable was prepared for the fist ime as of Dacember 31, 2012. A ‘summary ofthe aging sas follows ications fSale Balance in Each Category stim calle ‘Novomber-Cocember 2012, 2,280,000 July October 2012 1200,000 15% ‘January-June 2012 ‘300,000 25% Prior to January 1, 2012 260,000 80% Based on the revow of clletbilty ofthe account balances in the ‘prior lo January 1, 2012" aging Caiegory. addtional receivables toaling 120,000 were writen off as of December 31, 2012. Erfecive with the year ended December 31, 2012, UNBELIEVABLE adopted @ new accounting ‘method for astmating the alowanco for dovblt aocounts at tho amount Indicated by tho yoar-end ‘aging analysis of aocouns receivable How much the agusted balance of the allowance for dovotul accounts as of December 31, 20127 (¢.P350,000 B.P533,600 .P759,600 7. On Decomber 31, 2012, GUESS Company received wo 5,000,000 noles receivable trom Customers in exchanged fo consulting services rendered. On both oles, interest is calculated onthe ‘outstanding principal balance at the annual rele of 4% and payable at maturity. The note fom ‘SORRY Corporation, mado under customary trado toms, is due on October 1, 2013 andthe note ftom TARRY Corporation is due on December 31, 2017. The market intrest ale fer similar notes on December 31, 2012 was 10%. The compound interest faciors to convert fuure value ino present value at 103 folow: present value of 1 due in nine months, 0.3, and present value of due in fve Years, 0.62. AL what amounis shoul these wo notos receivable be reported In GUESS's Decembar 231, 2012 elatoment of tinancial postion? SORRY TARRY u ‘A. P&650,000 3,100,000 8. 5.000.000 3.100.000 B. P4.836,000 P.720,000 Page 2 of 12 Hd) 2141 accownrine 1 8. The MIRACLE Company counted its ending invertory on December 31. Nene of the folowing tems were included when he eal amount of the company’s ending Inventory was computed: ‘+ 150,000 In goods located In MIRAGLE’S warehouse that are on consighment from another company. ‘+ 200,000 In goods that wore sold by MIRACLE and shipped on December 30 and woro In transi fon December 31; the goods were received by the customer on January 2. Terms were FOB Destination ‘+ 300,000 in goods were purchased by MIRACLE and shipped on December 30 ard were in ‘ransit on December 31; the goods were reepived by MIRACLE on Jaruary 2. Terms were FOB shipping point. + 400,000 in goods were sold by MIRACLE and shipped an December 20 and were in transit on December 31; the goods were received by the customer on January 2.” Terms were FOB shioping pont ‘The company’s reported inventory (before any corrections) was P2,000,000. What is the correct ‘amount ofthe company’s inventory on December 317 ‘A. P2.650,000 8B. P1 980,000 B 000, 9. WILLPOWER Company seis one product, which i purchases ‘fom various suppliers. The trial balance at Devember 31,2012, included te folowing accounts: ‘Salos (100,000 units at P10) 15,000,000 ‘Sales dscount #000000 Purchases 91300,000 Purchase clscount “400,000 Freight in 500/000 Freight out 200/000 ‘The inventory purchases during 2012 were as follows: ois Unugost Tacos, Boing inventory, January 1 20,000 7,200,000 Purchases, quarter ended March 31 30,000 Fe 4,950/000 Purchases, quarter ended June 20 40,000 70 2,800,000 Purchases, quarter ended Sept. 30 50,000 6 3,750,000 Purchases, quarter ondod Dec. 31 40,000 20 ‘200,000 450,000 770,500,000 WILLPOWER's accounting pobcy sto repor inventory in its financial statements atthe lower of cost ‘or market, applied fo total invontor. Costs determined under the fstin first-out method. WILLPOWER has determined that, at Docembor 31, 2012, the roplacoment costo ts inventory was 70 per uit and the net realizable valve was P72 per unit. "The normal prof margin is P10 per unit What shoud WILLPONVER report as cost of goods sk forthe yar 20127 nee ‘C.P5,700,000 {2 Pecon000 .P7'100,000 10. OMG Company uses the average cost rela method to estimate its inventory. Data relating to the Inventory at Docomber 31,2012 ar: ost otal Inventory, January 1 2,000,000 ,000,000 Purenases 10,600,000, 14,000,000 Net markups 1800,000 Not markdowns '00,000 Sales 12,000,000 Estimated nocmal hopin losses 100,000 Estimated nocmal shrinkage is 5% of sales ‘OMG's cost of goods sold for he year ended December 31, 2012's, 1C.P3,400,000 8. 8,680,000 0. 7,700,000 Page 3 of 12 Hd) 2141 accownrine 1 11. INSPIRATION Company installs replacement siding, windows, and louvered glass doors for family homes. A December ‘1, 2012, the Bslance of raw materials inventory account was PSO2.000, and the allowance for inveniory witedown was. P83,000. The inventory cost and market daia at December 31,2012, areas folows: Cost Replacement Sales Net Normat Cost Price ‘Reslizable Profit value ‘Auminum siding 80,000 186,000 91500 97,000 5000 Mahogany sing 94,000 921000 93000 85,000 7,000, Louvered glass oor 125000 135.000 129000 111,000 10,000, Glass windows 194.000 14.000 205,000 197,000 20,000 Total 5oz00 © 427,000 «818.500 48000 © «32,000 ‘The coreet balance ofthe raw materials Inventory after any allowance for write down is ‘A. Pa27.000 C.P4a0.000 8.485.500 ‘0. P477,000, 12, LOVELIFE Company has a herd of 10 2-year old animals on January 1, 2012. One animal aged 2.5 Years was purchased on July 1, 2072 fr P108, and ane arimal was born only 1.2012. No animals Wore sold or alsposed of curing the yoar. The fa val loss cast o sal por unit és follows: 2.year old animal on January 1 100 2.Bsyear ld animal on July 1 108 Now born animal on uy 3 70 2-year old animal on December St 105 2.5 yoar old animal on Docomber 31 m New born animal on December 31 72 ‘3.year old animal on Decombor 31 120 (0.5 year ald animal on December 31 80 Whats the tar value ofthe biological assets on December 31, 20127 C.P1,440 B.P1220 0.P1 360 18, CHALLENGE Company purchased marketable equily secures during 2012 to be held 6s “racing” 'An analysis of the current investments on December 31, 2012 showed te folowing cost Market ‘A Company ordinary shares 1,000,000 "800,000 8 Company ordinary sharos 1,500,000 1,800,000 C Gompany preference shares 2,000,000, 41700,000 Company preference shares 2500,000, 2'800,000, ‘Whats the measuromont ofthe fancal assets hold for racing on Decomber 31, 20127 ‘C.P7,000,000 8. 6,600,000 ©. Pe,500,000 14. JOURNEY Company receives dividends trom ts common stock investments during the year 2012 ae Tollowe: + Alok cvdon f 20.00 shares rom A Gompany wn the mara eof shares was P90, per share. ‘+A cash dividend of P2,000,000 from 8 Company in which JOURNEY owns a 20% intros ‘cash dividend of P1,$00,000 from C Company in which JOURNEY owns a 10% interest. + 10,000 shares of common siock of D Company in isu of cash dividend of P20 per share. Tho market price of D Company's shares was P1860. JOURNEY holds orginally 100,000 shares of D Company comman soak. Revoluton owns 5% infeest nD Company. \What amount of vidand revenve shouts JOURNEY report in is 2012 Income statement? ¢.P 5,300,000 3.500.000 .P2'500,000 Page 4 of 12 Hd) 2141 accownrine 1 15. On July 1, 2012, TOPNOTCHER Company paid P8,585,00 for 10% bonds wih a face amount of B,000,000.Inforest is paid on June 30 and December $1. The bands were purchased io yet 8% TOPNOTCHER uses the effective interest method to recognize interest income ftom this investment. ‘What shouldbe reported as the carrying amount ofthe bonds in the December 31, 20012 staoment ‘ol financial postion? .P9.601.600 8. P9's51,200 D. P9.618,200 Use the fallowing information for numbers 18 and 17: TITANIUM Company ventured into construction of @ condominium in Makati which is rated as the largest stateotshe-at stucture. The ently’s board of drecors deciéed that instead of seling the condominium, the entity would hols this property for the purpose of earning rentals by leting out ‘pape to business executives in the area ‘The constuction of the condominium was completed and the property was placed in service on January 1, 2012. The cost ofthe construction was PS0,000,000. The useu ie of the condominium is 28 years and is residual value is PS,000,000. An independent valuaton expert provided the folowing fairvalua a each subsoquont year-ond: December 31, 2012 5,000,000 December 31; 2013 3,000,000 December 31, 2014 60,000,000 16, Undor the cost model, what amount should TITANIUM Company prt as deprecation of investmant rope for 20127 c.P2,200,000 8. 2,000,000 DP oO 17, Under the fair value model, what amount should TITANIUM Company recognize as gain rom change In far valuo in 20147 ‘A P5,000,000 ©. P7,000,000 3,000,000 DP 0 Uso tho fallowing information for numbors 18 to 20: ‘Selected aocounis included in the property, plant and equipment of RISKTAKER Company on December 31,2012, had the following balances: Lana 400.000 Land improvements 430,000 Bulings 2,000,000 Machinery and equipment "800,000 During 2013, the folowing transactions occurred: ‘+ Atrack of and was acquired for P200,000 as a potent future buldng ste. ‘A plant facity consisting of land and buicing was aoqured in exchange for 20,000 shares of FRISKTAKER Company. On the acauistion dato, RISKTAKER's share had a closing market price of Pa2 per share on a stock exchange. The plant faclly was carried on the salla's Books at 'P176,000 for lané and P520,000 forthe building at tho oxchango rato. Curent appraised valuos forte fand and bung, respectively, are P200,000 and P800,000. The bulding has an expected Mo of forty years with a 20,000 residual val. ‘+ ltoms of machinory and equipment wore purchased at a total cost of P400,000. Adctional costs ‘wore incuted as fellows: freight and unloading, 13,000: instalation, P26,000. The equipment had useful of on yeare with no residual value. ‘+ Expenditures toiaing 120,000 were made for new parking lots, street and sidewalks at the companys various plant locations, These expenditures had an estimated useful ie of teen years. Research and development costs were Pt 10,000 forthe year ‘+ Armachine costing P16,000 on January 1, 2006 was scrapped in June 20, 2013, Straight tino Sepreciation had been recorded on the basis of @ 10 year He with ao residual valua. A machine ‘wae sold for Pa8,000 on July 3, 2073. Original cost ofthe machine was P74,000 on Janus 1, 2010 and it mas deprecated nthe straight Ine basis over an estimated usefl Ife of eight years ‘and resiual value of P2000. 18, Whats the total cost of land on December 31, 2013? °c. Pag6.000 B.PT78,000 . P30e,000 Page 5 of 12 Hd) 2141 accownrine 1 18, Whats the total cost of buldings on December 31,2018? ¢.P2,792,000 B.P2,520,000 . P2\640,000 20. Whats the total cost of machinery and equipment on December 31, 2018? (¢.1,223,000) 8. P1-209,000 .Pt.175,000 21, A schedule of plant assets owned by HAVEMERCY Company is presented below. Gost Sorap Depreciable Lute ‘Annual ‘Cost ‘Dep. Building 8,800,000 800,000 20 years Machinery 3200,000 320,000, 15 years Equipment 640,000 S years HAVEMERCY computes depreciation onthe straght line method. The composite Ife ofthe assets, should be Ree yas C133 year Basen D180 yeu 22, FEARLESS Compary soaed propery in 2012 whch contsns mineral depost. The aca ost rine propery wae 220300005, Gove sme seats te 600000 os of tral ay borociaced i's tater tired tte pope ca be 80d for 8.000000 flowy meer ‘exvaction. For P2,000,000, FEARLESS 's legally requited to restore the land to a condition appropiate for resale. After aczusiton, the flowing costs were incured: Exploration cost 18,000,000 Doveloomant cost lated to dling of wells 10,000,000, Development cost related to production equipment 15,000,000 ‘The company extracted 600,000 tons of the mineral in 2012 and sold 460,000 tons. In the 2012 Income staamont, what amount of dopltion is included in costo! salos? ‘A. P&800,000 8. P5,400,000 .P 4,050,000 128, On January 1, 2012, the Pistoricl balances othe land and bulsing of FORMIDABLE Company a: Gost Accumulated depeocation Lana 50,000,000 Bulcing 300,000,000 190,000,000 ‘Tho land and bulding were aopralsed on same date an the revaluation roveale th flowing ‘Sound value Lana 80,000,000, Bulging 350,000,000 ‘Thoro wore ro actions or deposals during 2012. Depreciation Is computed on the straight lino. Tho estimated Ie of the bulcing Is 20 years. The depreciation of the bulldng for the year ended December 31,2012 should be ¢.P10,000,000 ©. 17,800,000 24, During December 2012, FIERY Company determined that there hed been a significant decrease in market value of ts equipment. At December 31, 2012, FIERY compiled the folowing information ‘concerning the equipment riginal cost 20,000,000 ‘Acoumulated depreciation 12,000,000 Expected uncisceunted ret tur cash infions from the continued use and eventual deposal 7,000,000, Expected dscourted net future cash inflows trom the Continued use and eventual sposal 5,000,000, Fair valuo loss ost to sa 6,500,000, Page 6 of 12 Hd) 2141 accownrine 1 ‘Whats the impaiment los that should be reported inthe 2012 income statement? 1.000.000" (C.P2,000,000 DP Use the following information for numbers 25 and 25: Transactions during 2019 of the newy organized PARADIGMSHIFT Corporation included the ‘alewing vlan. 2 Paid legal fees of P150,000 ani stock certcate costs of P83,000 fo compete ‘organization of the corporation, 15 Hired a clown to standin ron ofthe corporate offce for 2 weeks and hand out pamphlets ‘and candy to create gooduil forthe new enterprise. Clown cost, P10,000; pamphlets and candy P5,000, ‘Aart Patented new developed process win costs as follows Logal fees 0 obtain patent 429,000 Patont application and leansin foes 163,500 Total ag2.500 Its estimated that in 6 years other comparies wl have developed improved processes, ‘making the PARADIGMSHIFT Corporation procoss absolto. May 1 Aequited both a license o uso a special type of container and a distinctive trademark to be printed on the container in exchange fr 6,600 shares of PARADIGMSHIFT's no-par ‘oranary shares soling for PSO por shar. The conse s worth twice as much asthe trademark, bath of which may be used Tor 8 years July Constructed a shed for P1,810,000 to house protalypes of experimental models tobe developed in future research projets Doc. 31 Incurred salts or an onginaer and chemist involved in predict development iotaling 1,750,000 in 2013, 25, Whats the cos of patent recorded inthe statement of nancial postion? c.P53.500 B P429,000 DP Oo 28. Whalis the carrying amount of Intangible Assets tobe recorded inthe statement of fnancial poston? AP 712608 B P2a77.604 DP 27. FAILUREISNOTANOPTION Gompary acquired thee patents in January 2019. The patents have torent ives aa incited inthe folowing schedule cost omaining useful ite Remaining legal ito Patent A 2,000,000 10 8 Patent 8 3,000,000 5 10 Patent © 6,000,000 Indetite % Patent is believed to be uniquely useful as fog as the company retains the ight fo use i In June 2013, the company succesctuly dofended its rght to Patent B. Logal fees of P800,000 were incurred inthis action. "The company's palcy is lo amortize inlangibie assets by the saightline method to the ‘nearest hat year. The company tepors on a calancar-year asia. The amount of amortzation that ‘shoud be recognized for 2018s ‘A. P1,330,000. ‘©. P1,250,000 8. P2.050,000, DP 950,000, 28, TRUSTINYOURSELF Company provided the folowing information relevant to the research and

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