THEORY OF ACCOUNTS —
RD (February 15 and 16, 2014)
poce eet Frotessional Services, inc.
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‘OPEN ist PREBO,
i
LETTER ANSWER
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Bo ao0Ve ’
Allowance before adjustment (TGAS from HO) P 48,000
Less allowance on current shipment (P192,000 x 20%) 38,400
Allowance on the beginning inventory from HO) P 9,600
B
Allowance before adjustment (TGAS from HO) ° 48,000
Less allowance on the branch ending inventory (from HO)
{ (940,000 - 16,000)/120%) x 20% 4,000
Realized allowance (Overstatement of cost of sales in the branch) 44,000
8
Marco Marvin
Balances, June 1 22,500 17,500
Soncadol (P4,000) ( 2,400) (2,600)
TPL (P33,000 + P1,000) (20,00) (13,600)
Additional possible loss 300 (300)
Free interest Pp P 2,000
‘ 2
A 8 c
Balances, July 1 P 32,000 52,000 P 38,400
Soncadol (12,800) (12,800) (6,400)
Balances P 19,200. P39,200 P 32,000
TPL (28,800) (28,800) ( 14,400)
Balances (9,00) 10,400 P 17,600
APL 9,600 (6,400) ( 3,200)
Free interests Ps P4000 P 14,400
A
‘Adjusted capital (P26,400 ~ P240 + P2,200 + P3S0~ P400) P 28,310
Multiply by 9333/6667
P 14,155
Kyle Martin’s investment34.C
y Total cash to become availabe (P71,000+ P12,500+P11,000) 94,500
3 Total liabilities upon liquidation (P3,000 + P69,000 + P20,000 +
1 18,000) 110,000 *
Estimated deficiency to unsecured creditors (15,500)
35.4
i ‘The depreciation expense on branch fixed assets is always chargeable to the branch
i Operations and the accumulated depreciation account is set up in the books where the
3 Branch fixed asset is being carried. s
4 36.D é
Franchise Revenue — IFF (P1,000,000 + P3,000,000) 4,000,000
Franchise Revenue ~ CFF (P2,702,500 x 0.05) 135,125
Total Franchise Revenues 4,135,125.
37.C
t Franchise Revenue — |FF P 500,000
Franchise cost ( 20,000)
Franchise Revenue-CFF (P400,000 x 10%) 40,000
Net income P 520,000
38.8
Amount paid by Choco P 132,000
Interest acquired by Choco (P444,000 x 1/5) 88,800
Combined gain realized by Van and Hou P 43,200
“ 39.€
Cash to become available (P116,000 + P50,000 + P80,000) P 246,000
Less Priortized claims:
3 Fully secured creditors P 70,000
Partially secured creditors (secured portion) 50,000
e Liabilities with priority 42,000 162,000
Est amount available for unsecured amounts P 84,000
Unsecured amounts:
Partially secured (unsecured portion) P 80,000
Unsecured creditors 200,000 280,000
Estimated deficiency to unsecured creditors wo priority P (196,000)
Estimated Recovery Rate (P84,000 / P280,000) 30%
‘Total book value P 130,000
7 Less secured portion 50,000 x 100% P 50,000
Unsecured portion P 80,000 x 30% 24,000 P - 74,000
3 40. B .
Z Total cash available (P105,000 + 500,000) P 605,000
£ . Less Payments (P280,000 + P12,000 + 120,000) 412,000
Total cash withheld’ P 193,000
Less unpaid liabilities (P460,000 = 280,000) 180,000
Cash withheld for future liquidation expenses P 13,000a.
42.
43.
45.
A
Perez Reyes. Suarez_—_Total
Balances 100,000 150,000 200,000 P 450,000
Adjustment, P160,000 80,000 48,000 32,000 160,000
Total interest P180,000 °P198,000 232,000 P 610,000
Cash paid to Perez (195,000) (195,000)
Bonus to Perez 15,000 (9,000) ( 6,000) -
Ending balances P= 189,000 P226,000 P 415,000
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Franchise Revenue — IFF . P-500,000
Less Franchise cost 150,000
Franchise profit P 350,000
RGP {P200,000 x 70%) 140,000
A
‘The franchisor used the accrual method because of (1) substantial performance, combined with
(2) collection of the note being reasonably assured, hence, no unrealized profit by year-end
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RGP: P8,400,000 x %) = P6,300,000 - (P4,200,000 + P1,000,000) P1,100,000
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RGP: (P8,400,000 x 0.742857} = 6,240,000 - 5,200,000 1,040,000