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    May 2018 Afar 1st PB CRC Ace

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    ey The Professional CPA Review School Main 3 roman Bi. 873 P campo Scr Epa, Sama, Mani Seo) Pin | FSBO oH aL OL ‘email add: crc_ace@yahoo.com Baguio Davao ‘udel Bidg.V, Lower Mabin or Diego Stang, Baguio Cty 3/F GCAM Bldg. Monteverde St. Davao City 'm (074) 442-1440 / 0922-8499196 (082) 285-8805 / 0625-7272223 ADVANCED FINANCIAL ACCOUNTING & REPORTING MAY 2018 BATCH JAN 30, 2018; 2:00PM — 4:30PM FIRST PRE-BOARD EXAMINATIONS gap pppeogre gp INSTRUCTIONS: Select the correct answer for each of the following questions. Mark only one answer for each item by writing a SHADING corresponding to the letter of your choice on the answer sheet, 1. The following selected accounts appeared in the trial balance of Melrose Sales as of December 31, 2018. Debit Credit Installment Accounts Receivable - 2017 P 145,000 Installment Accounts Receivable - 2018 200,000 Inventory, December 31, 2017 70,000 Purchases 555,000 Repossessions 3,000 Installment Sales P 425,000 Sales 385,000 Unrealized Gross Profit 2017 54,000~. ‘Additional information: as of December 31, 2017 ‘ Installment Accounts Receivable - 2016 as of December 31, 2017 P 136,000. Inventory of new and repossessed merchandise as of December 31, 2018 95,000 * 30% Gross profit percentage on regular sales during the year Repossession was made during the year. it was a 2017 sale, and the comesponding uncollected -zocount at the time of repossession was 7,800. The total realized gross profit in 2018, net of loss on repossession is A. P'130,380 B. 201,000 )_P 244,200 ©. 245,880 2. The following balance sheet was prepared for the X, Y and Z Partnership on March 31, 2018: Assets jablities and Capital Cash P 25,000 Liabilities P 52,000 Other Assets 180,000 X, capital (40%) 40,000 Y, capital (40%) 65,000 capital (20%) ——48,000 Total Assets P205,000 Total liabilities and capital 205,000 The partnership is being liquidated by the sale of assets in installments. The first sale of non-cash assets having a book value of P 90,000 realizes P 50,000, ‘Asgume that each partner properly received some cash after the second sale of assets. The cash to be distributed amount to P 14,000 from the third sale of assets, and unsold assets with a 6,000 book value remain. How should the P 14,000 be distributed to X, Y and Z respectively. A. P5,600; P 6,500; P2,800 Cc. PO ; P11,200; P 2,800 B. P5,000; P 5,000; P4,000 @®) P5800; P 5,600; P 2,800. Partners Joy and Rachel have a profit and joss agreement with the foliowirig provisions. Saialies of P 30,000 and P 45,000 for Joy and Rachel respectively; a bonus to Joy of 10% of net income after salaries and bonus; and interest of 10% on average capital balances of P 20,000 and P 35,000 for Joy and Rachel, respectively. One:third of any remaining profits are allocated to Joy and the balance to Rachel. Ifthe partnership had net income of P 102, much should be allocated to Partner Joy? A. P 44,250 B. P47,500 C. )P 41,000 | D. P41,167 a SETA -—" CRC-ACEIAFAR: First Pre-board Exams - May 2018 batch Page 2 4. On December 31, 2017, Joseph Inc. signed an agreement authorizing Bernard Company to operate as a franchisee for an inital franchisee fee of P 50,000. Of this amount, P 20,000 was received upon Signing of the agreement and the balance is due in three annual payments of P 10,000 each beginning December 2018. The agreement provides that the down payment (representing a fair measure of the services alteady performed by Nike, Inc) is not refundable and substantial services are required of ‘Joseph, Bemard Company's credit rating 's such that colection of the note is reasonably assured. The present value at December 31, 2017 of the three annual payments discounted at 14% (the implicit rate for a loan of this type) is P 23,220. (On December 31, 2017, Berard Company should record unea! foes of: A 80,000 ®@ B30,000 Cc R48.270— 823220 5. _ CRC-ACE Corporation transfers merchandise inventory from its home office to its branch at an amount ‘above cost. The average gross margin on the transfers is 40 percent. At the beginning ofthe year, the branch held merchandise purchased from the home office in the amount of P 38,000. During,the year, the home office made thee shipments of inventory to the branch at transfar prices of P 30,000, P BA,0N0, ee P ED,DOD. At the and of he yea, the braneh had on hand inventory purthated fem the ‘home office at an amount of P 40,000 \What entry should the home office make to record intracompany prof realized quring the year? A. Unrealized iniracompany proft 41,600 Branch Income Summary 41,600 © ssnveaizes iniacompany From 55,600 Branch Income Summary 55,600 C. Branch Income Summary 55,600 Unrealized Intracompany Profi 155,600 D. Investment in Branch 55,600, Branch Income Summary 85,600 Items 6 and 7 are based on the following information: Partial list of accounts from the trial balances of the ALIBABA Corporation, Branch A and Branch B at December 31, 2018 are as follows: Home Office Branch Branch B Inventory, Jan 2018 34,000 ¥ 5,500 * 8.800> "* Branch A 100,000 - Branch B 81,000 - - Purchases 500,000 Expenses 120,000 36,000" 38,000. ‘Shipments from home office : 68,200 41,800 Home office 94,000 75,000 Sales 500,000 180,000 120,000, ‘Shipments to Branch A 73,700. S ‘Shipments to Branch B 46,200 ~ LLoadings in Branch Inventory ~ Jan 1 1,300. ‘Additional information: Shipments to the branches are made at billed prices. Inventory on hand on December 31, 2018 ~ Home office ~ P 31,000; Branch A ~P 7,260; Branch B —P 8,250, 6. Combined cost of goods sold a : A. 801.200 B pasoen, €) paso — v. 7. The merchandise inventory et 1e combined balance sheet as of December 31, 2018, ‘A. P68,400 ~ P 65,000 Cc. P 46,500 D. P 45,100 8. On December 1, Philip Company opened a branch in Cebu to which merchandise billed at P 30,000 wae chipped. During the mo mente ‘2 biled prices of P 42.000. Deane December, Gebu branch returned merchandise that was detective and received credts of > 750 on ne raiane tA ond Of the month, the branch record its inventory at P 18,500, which is from the Merchandise acquired from home office at billed price “ ‘Merchandise acquired from outsiders i: * yb0 Total inventory p P 18,500 10. 1. 12, CRC-ACE/AFAR: First Pre-board Exams - May 2018 batch Page 3 AA branch loss for December is calculated at P2,600. The home office has followed the practice of bilng the branch at 20% above merchandise cost Compute: 4) the balance of the allowance for overvaluation of branch inventory at December 31, before adjustments, and 2) the net income (loss) of the Branch in so far @& the home office is concerned: (1) P 4,125; (2) P (2,600) ©. (1) P 7,000; (2) P 1,525 (1) P 6875; @) P 1,525 - D. (1) P 6.875; (2) (P2,600) : (On March 1, 2016, Cameron Construction Company was contracted fo construct a townhouse for Will ‘Company for n total enntract prine of P 8,400,000 The building war rompiater! by Oninber 31, 2018 ‘The annual contract costs incurred, estimated costs to complete the contract, and bilings for 2016, 2017 and 2018 are giving below: : 2016 2017 2018 Contract cost incurred during the year 3,200,000" “2,600,000 4,450,000 Estimated cost at completion 8400.00 (> 7,250,000 <_ 7,260,000.« 38 during the year 3,200,000 3,500,000“) 1,700,000 entry to record the recognized proft in 2018 includes a credit to: Construction revenue P 1,680,000 'B. Construction in progress 230,000 1s C. Construction revenue 4,700,000 D.~Construction in Progress 1,450,000 Hilda, ima, and Jue were partners with capital balances on January 2, 2018 of P 560,000, 672,000, and P 496,000, respectively. Their proft and loss rato is 3:5:2. On August 1, 2018, Hide ‘retires from the partnership. On the dete of retirement, the partnership net loss from January 2 is P 384,000; and the partners agreed to revah wentories to P 296,000 (from the carrying amount of P 272,000), The payment to Hilda in settlement of her interest is tobe P 454,000, Upon the retirement of Hilda, which of the following will result? A tb lithe OF PD, B. Bonus to Julie of P 800 C. Goodwill to Julie of P 2,800 (2) Irma's capital is P 65,800 more then Julie's. i On September 2, 2018, Nino, Olan, and Pete formed a partnership investing cash of P 945,000, 'P B5D,500, and P'DBA.BNN., reepectively. The par ep id loses in the ratio of 8:2:2 and ‘on October 31, 2018 the firm has cash of P 63,000, other assets of P 2,992,500, and liabilities of P 1,612,800. On this date they decided to go out of business and sell all the assets for P 1,890,000. Pete has personal assets of P 94,500 that may, if necessary, be used to meet partnership obligations. Loss from operations was P 617,400. How much should be distributed to Cian upon iiquidation of the partnership? A. P 128,520 c Po ~ P 306,180 D. P 268,380 E, J, and N agree to liquidate their consulting practice as soon as possible after the close of bi on July 21, 2018. The tal balance an that date shaws the folawing account balances. “SESS Cash P 130,000 Accounts payable, P 60,000 Accounts receivable 120,000 Loan toE 40,000 Fumiture and fixtures’ 360,000, capital 200,000 J, capital 450,000 » NN, capital 150,000 aE, Bsop.0n0 The partners share profits and losses 50%, 20%, and 30% to E, speci allowed a monthly salary of P40,000.—— nn 1 ANG N FOspectively, after Nis August transactions and events are as follows: 1. "The accounts payable are paid. 2 Accounts recewabie of P 80,000 are colecied in ful: N accepts accounts receivabie with a iace ‘value and fair value of P 30,000 in partial satisfaction of his it temair accounts receivable are written off as uncollectible. in eee ie ae CRC-ACE/AFAR: First Pre-board Exams - May 2018 batch Page 4 3. Fumiture with a book value of P 250,000 is sold for P 150,000. : ‘4. Fumiture with a book value of P 40,000 and an agreed upon fair value of P 10,000 is taken by J in partial settiement of his capital balance. The remaining furniture and fixtures are donated to ‘Goodwill Industries. & Liquidation expenses of P 30,000 are paid, 6. Available cash is distributed to partners on August 31 liquidation? A. 25,000 B. P51,000. 194,000 D. none How much of J's equity was recovered from the om | 418. The N, R, and W Partnership has not been successful. Hence, the partners have sadly concluded that aperations must be terninated and thelr paanership tt chared 2 followa: N, 48 percent: R, 36 percent; and W, 20 percent. As the accountant placed in charge of this partnership, you have responsibility for the liquidation and distribution of assets. When you assume Your responsibites, the partnership balance sheet s as fllowe: 120,000 “60,000 300,000 0,000 Cash ‘Other azeete, During the first two months of your duties, the following events occur. 4. Assets having a book value of P 400,000 are sold for P 120,000 cash. 2. Previously unrecorded libiltes of P 10,000 are recognized. 3, Before distributing available cash balances to creditors and partners, you conclude that a cash reserve of P 10,000 should be set aside for future potential expenses. 4. Romig cash belances ate datibuted to cedtrs end partners ; How much cash N should receive? np 42000, PES P 20250 6. P91875 DP 180.000 14, Edward and Ferdinand are partners sharing profits at 60% and 40%, respectively. On January 1, Eawart and Farginana Wo aamR Darl as & new Beant the investment of 8,000. On this date, their interests in the firm are as follows: Edward, P 11,500 and F, P 9,300. ‘Assuming the new partner is given a 1/3 interest in the firm with bonus allowed to the new partner the new capital balances of Edward, Ferdinand and Gerald would be: 5 Ferdinan: Pe P8320 P 7,680 P 8,660 Items 16 and 16 are based on the followit Marcus and Wellington are partners with cop! balances of P&2,000 and P8B,8D, respe: July 1, 2018. Marcus has a 30% interest in profits and losses. All assets of the partnership are at fair market value except as follows: Book value Market value Book value Market value Equipment P150,000 142,000 Building P274,000 250,000 fnventoy 43,000» 0,000 Land 60,000 105,000 ‘The partnership has decided to admit Kelly and Springer as new partners. Kelly contributes cash of 86,000 for a 20% inerest capa and 30% seat n profs and lesaesSpinger conbutos ‘cash of P10,000 and equipment with a fair market value of P50,000 for a 25% interest in capital and a 35% interest in profits and losses. Springer is also bringing special expertise and client contacts to the ‘new partnership. 15. capital balance of Marcus after Kelly and Springer's admission under the bonus method is: 40,775 B. P34,775 C. P38,000 D. P70,500 CRC-ACE/AI ‘FAR: First Pre-board Exams - May 2018 batch a 16. The Tre,method (onus or good) avartageous to Kely nd Springer and the fll amount f A. Bonus method for an advante age of P 2,055 B. Bonus method for an advantage of P 5,944 Bonus method for an advantage of P 12.750 Bonus method for an advantage of P 4,111 7 Congestions have always been a way of lfe most specially in Metro Manila. One way to decongest ‘taffie and minimize use of gasoline is to phase out the internationally known jeepneys as weil as the se of dlapidated, smoke-belohing and full depreciated buses. To partially solve the problem as wel tf 10 motivate tar owners fo une publi: transportation, an underground monorail system sini to that of Hongkong was the solution. The system covered the stretch of the famous Edsa, from Foxes Boulevard to Bonifacio Monument and would go as far as the area of Malabon as well as Navotas, & thickly populated flshermerts vilage. The project covers several stages and was awarded to different ‘contractors here and abroad. Competitive bids were held for stage one ofthe project. The bids are: ‘Norther City Construction 'P560 billon Hongkong Systems ‘382 bi {JJ Ram Construction Company ‘400 billion, 'A project that undergoes competitive bid Is normally awarded to the lowest bidder. However, ne Goverment reserves the ight to reject any and all bids after a careful review of the track record of he Badere Even though J Ram Conetrucion Company had the second foweet bid. Stage one of the project was awarded to them. The contract price was P4U0 billon pesos wich was covered Dy 2 two, Poet construction contract The folowing deta were avaliable from the records forthe years 2017 and 2018: 2017 2018 {in billion of pesos) A Gosts incurred P 120 P16 Progress bilings 100 300 Cash collections on bilings. 96 304 Estimated costs to complete 216 How much is the income from construction in 2018, using the cost to cost percentage of completion amhod? 41.143 billion _ B." P64 billion C. P2887 billion D. P161.143 billion 48. On July 4, 2017, BMW Motors sold a new car to WIR Enterprises for P 850,000. The car costs BMV 'P'650,628. WIR paid 25% cash down payment and received an P 0,000 trade-in allowance on an old Car. The price balance will be paid in equal monthiy installments. The monthly amortization amounts {o £50,000 inclusive of 12% interesi on the unpaid amount of the obligation. The car traded in has a ~ ‘iholesale value of P 120,000 after reconditioning and repainting cost of P 22,500. After paying three {@) installments, the buyer was unable to continue paying so the car was subsequently repossessed ‘When reacquired, the car was appraised to have a fair value of P 300,000. ‘much is the realized gross profit on installment sales during the year? PpE.DD B Potass | . PRote0,000 D. P 71827 49. On January 1, 2018, Tom Bravo sells 20 acres of farmland for P6,000,000 taking in exchange a 10% interest-bearing note, Tom Bravo purchased the farmland in 1984 at a cost of PS,000,000.,The note «wil be paid in three instalments of P2,412,890 each December 31, 2018, 2012, and 2013. How much must be the deferred gross profit at the end of 2018 under the instaiment method of revenue recognition? A. P1,000,000 697,885 \ — C. P637,462 D. P597,885 Items 20 and 21 are based on the following: ‘contractor has 2 Fxed price contract 2,000,002 te const ‘The contractors initial estimate of total contract costs is P8,000,000. It will take two years to construct the building. At the end of the first year of the project (December 31, 2018) the contractor incurred costs of P2,000,000 on the contract, including 2,000 on cement that is held offsite. The entity's estimate of fotal contract costs has stayed the same."°"°" ‘The contractor determines the stage of completion of the construction contract by reference to the proportion that costs incurred for work performed to date bear to the estimated total costs, ’ —_ = cee nore CRC-ACE/AFAR: First Pre-board Exams - May 2018 batch ae 20. 2 22. 23. 24. Determine the revenue, expenses and ; Profit for the year 2018. Revenue Expenses Profit Revenue Expenses Profit {A -PScc0(000 Pre00,000 Pr2t0 000, Psvisusaa Prso0.000 7.390.999 B. ~P3,200,000 2,000,000 P1/200,000 D. P3,339,333 2,000,000 1,339,333 If the contractor determines the stage of completion of the construction contract by reference to independent surveys of work performed. At the end of 2018 the project was certified to be 20% complete: Determine the revenue, expenses and prof forthe year 2018. Raven — Expenses Brot even Bett 000 1,000,000 C. 2,900,000 P1,800,000 P1,120,000 1000 P 800,000 D. PS.120,000 P2,000,000 1,120,000 2,800,000 P+ ~ P2,800,000 2, Building Corporation was contracted by Mr. Eto construct 36 condominium units. The estiviated total Cost of Constucon wae P49 rin’ "Building ile ts clert a 120% of tal cots estimated to ‘Sooiplete & prdjast. Daleks regarding the Sontract are given below: Units Finished ‘Costs incurred to date Estimated cost at completion 2015 10 14,721,875 'P58,887,500 2018 8 36,286,250 55,825,000 2017 7 55,125,000 2 What is the realized gross profit during 2016 using the ouiput measures? ‘A. 2,975,000 2,467,500 B. 2,380,000" 1,933,760 ‘Tweety sold a restaurant franchise to Sivester. The sale agreement signed on January 2, 2017 called {for @ P30,000 down payment plus an interest bearing note of P20,000 payable in two annual payments representing the value of intial franchise services rendered by Tweely. In addition, the agreement required the franchisee to pay 5% of its gross revenues to the franchisor, this was deemed sufficient to ‘cover the cost and provide a reasonable profit margin on continuing franchise services to be performed by franchisee. The restaurant opened early in 2017, and its sales for the year amounted to P500,000, The management of Silvester has estimated that they can borrow a loan of this type at the rate of 10%. ‘The present value factor of an ordinary annufy at 10% for 2 periods is 1.7885. wo should recognize total revenue from the franchise amounting to: 77,000 C. 75,000 i 74,068: D. 72,335 Nancy, Franchisor entered into a franchise agreement with Kyle, Franchisee on July 1, 2018. The total renchice fee agreed upon # PSSB,B00, of which PED and the balance fe Covered by a noninterest bearing note payable fn four equal annual rstalimenta, was agreed that the down payment is not refundable, notwithstanding lack of substantial performance by the franchisor. The direct franchise cost incurred was P325,000. Indirect franchise expense of P31,250 was also incurred. The management of Kyle has estimated that they can borrow a loan of this type at the rate of 12%. The franchise commenced operations on July 31, 2018. How much is the net income/(loss) to be reported? (use a PV factor of 3.04) AL 73,750. ©. 119,750 : £8) 77.550 D. (15,240) (On January 2, 2018, Mama signed an agreement to operate i Yranchlce foe cf P2500,000 for years, OF hie amount, PEDO BOD wae pad none agree signed and the balance payable in four equal annual payments beginning on December 30, 2018, Mama signed an interest bearing note for the balance. Mama's ee Indoalod that h can bones ‘money at 24% for a loan ofthis type. Present value of an annuity of 1 for 4 periods is 24° Acens that, substantial services amounting to P255,000 had already been rendered by Papa ana tne adlonal ndiect franchise cost of P68,000 was also incurred. Ifthe collection of the note is not reasonably assured, i oi eo bly , what is the realized gross profit for the year 898,000 ~ ©. 2,245,000 B. 605,200 D. 1;448,000 $e CRC-ACEIAFAR: First Pre-board Exams - May 2018 batch Page 7 25. The following are the unadjusted tal balances of Chip Corp and is branch on December 31, 2019 Home Office Branch ‘Shipment to Branch 420,000 Branch inventory ellowance 39,960 Shipment from home office 456,000 Purchases eno 5 Inventory Jan 1 \ Inventor u 19,500 Sales ry Dec 31 ene 30, Fxpenses 20,400 ‘The branch ending inventory acquired from the home office is P16,600 at biled price. The branch billed for merchandise shipments at 30% above cost. ee the overstatement or (understatement) of the branch's cost of sales. 36,360 ©. 4,740 37,100 BL tbaR ‘The following balances were taken from the partnership books of Des, Gra and Sya immediately on 20,000 Labities 25,000 Nen-cash assets sooo Bes, Catal (30%) 25.000 Gra, Capital (20%) 50,000 Sya, Catal (402%) 30,00 Total ~¥10,000 Total 710,000 Included in the amount of nan-cash assets is an advance to Des worth P4,000 and also included in the mnunt nf iaitien in an-arvann from Gra worth F3,000 receives P15,000 in the first distribution, how much will Des receive? '3,000 ©. 10,000 B. 5,000 ' De STONES Corporation was’ contracted to construct a warehouse for a price of P13,600,000. {formation below were provided by STONES: 2017 2018 2019 Cost incurred to date 5,850,000 10,276,000 13,600,000 Estimated cost at completion 13,000,000 13,700,000" - ‘much is the realized gross profi/loss during 2018? . B. (100,000) D. 370,000. Presented below are the information taken from the books of IRON Corporation: 2018 2020 {nstament sales 4,500,000 1,875,000 ‘Cott of inetanmnent sates ‘p50,000 4,500,000 Installment accounts receivable at year end 2019 sales. 960,000 440,000 2020 sales 680,000 ‘What Is the total deferred gross proft to be presented in the statement of financial postion on year ‘2020 using cost recovery method’? 375,000 ©. 385,000_ 815,000 D. 10,000 OMG Corporation and its branch in Laguna maintain their respective books of accounts. At close books on Desember 31, 2018, Laauna Srench aooount in the home office booka showed @ bolecee cr 142,500. The interofice accounts were in agreement atthe beginning of the year. For purposes of se {he ntrofce accounts the folowing were ascertained: . ndise biled at P50,000 was shipped by the home office to the branch on December 27 {Te goods, wore in tana as ofthe end of the year and the branch did not recognize the Bh BE Nea rl Seen ce CRC-ACE/AFAR: First Pre-board Exams - May 2018 batch Eee 31. 32, C. The home office recorded the net income of Laguna Branch at P119,000. Laguna Branch reported a P191,000 net income. 1D. The home office is charged P83,000 by the branch due to retumed merchandise to home ‘office on December 28 which was in transit as of December 31, é Qn December 22, OMG Corporation sent a debit memo for P§.400" representing allocated expense to Laguna Branch, ‘The branch journalized the said transaction on December 26 and inadvertently recorded another entry two days before year-end. Determine the adjusted balance if the branch account in the home office books as of December 31, 2018, ‘A 188.500 © 116,600 _ B. 111,100 D. 171,900 LAM, KO and TO share profits and losses as follows: LAM 20%, KO 30%, and KO 50%. The partnership's Statement of Financial Position is presented below: LKT COMPANY. ial Postion jecomber 31, 2018 ASSETS Liabilities and Equity Cash P_ 410,400 Liabilities P 690,760 Noncash Assets 2,028,600. Loan from KO 67,500 Capital 270,000 Ko, Capt 598,250 To, Capital 4,012,500 Total P2435 000, Total P_2,499,00 ‘The partners decided to liquidaie on January 2, 2019. All partners are personally solvent except for Lam. IT rmonivnt RA8,280 for her interest, ow mush were the minnnash Fentn wn for?» A. 476,100 C. 1,512,000 B) 516,600~ D. 1,552,500 Because of their differences, Jessica, Matt and Danny decided to liquidate their partnership on November 40, 2018. Jessica, Matt and Danny have a profit ratio of 4:3:3. The balance sheet of the partherthip oh Dabamiber 81, 2087 repented PPE,DOD; Pen,0ND and PYD,DDD capital balaNe’s OF the three partners respectively. ‘Cash on the most recent balance sheet date amount to 30% of total liabilities. Debt ratio as of December 31, 2017 amounted to 20%. During the eleven months ended, revenues reported amounted to P44,000; expenses incurred totaled P22,000; net cash flows ‘amounted to 15,125 and liabilties increased by P28,750. if Jessica wants to receive 27,600, what shouid be the seiing price of the non-cash assets of the ‘company on November 30, 2017? ‘A. 91,875 c. 127,500 B. 94,225 ~ ©) 96,500 ‘The balance sheet of partners DES, PA and SITO are shown below: DPS Partnerchip Balance Sheet December 31, 2018 Cash P 50,000 Liabilties Non-cash assets 250,000 Des, Capital (50%) Pa, Capital (25%) Sito, Capital (25%) TOTAL P 300,000 TOTAL On January 2019, certain non-cash assets were sold for a certain amount. Liquidation expenses and liabilities of P4,000 and P25,000 were paid. Future liquidation expenses of p00 are anticipated. Pa ‘received P42,760 from the first distribution of available cash. B 130,000 75,000 ‘ CRC-ACE/AFAR: First Pre-board Exams - May 2018 batch 34. 36. 36, 37. per Page 9 ‘Assuming that on February 2019, the remaining non-cash assets were sold for P75,000 and liquidation expenses of PS,000 are paid, how much isthe total cash received by Des from the wo dstrbutons of cast ‘A. 37,500 c. 75,000 . © 73,000. D. 74,000 ‘ANNA and BELL formed a partnership on January 2, 2018. ANNA and BELL contributed capital of 360,000 and P50,000 respectively. They agreed to share profits and losses 60% and 20%, respectively. BELL is given a monthly salary of P5,000 and a 15% bonus based on income before salaries, interest and bonus. Both partners are given an interest of 5% of beginning capital. The ‘nome statement for the year ended prepared by the nompany's honkkesper is shew belo Net Sales 1,750,000, Cost of Sales. __1400,000_ Gross Profit 7 P 350,000 Expenses (including salary, inferest and bonus) 286,000 Net Income \ E_s4.000, ts the amount of bonus to Bell in 20187 25,412 ©. 2087 B. 18,783, DD 7 ‘A,B and C formed a partnership on January 1, 2018 and had the following ial investment: a 470,000 B 255,000 c 382,500 “The partnership agreement states that the profits and losses are to be shared equally by the partners ‘after consideration is made forthe following: ~ Salaries aliowed to partners: P10; for B and P61,200 for C. = Average partner's capital balances during the year shal be allowed 10%. % ‘Additional information: - On June 30, 2018, A invested an additional P'102,000. + G withdrew P119,000 from the pertnership on September 30, 2018. = Share in the remaining partnership profit was P8,500 for each partner. What is the total partnership capital on December 31, 2018? ‘A. 688,500 4,141,550 \ B. 816,000 1,143,675 Following is the balance sheet of the WXYZ Partnership at March 31, 2018, when the partnership is to be liquidated: Cash 6,000. Liabilities 12,400-) Other assets 126,000 W, loan 42,000 loan 14,400 Z, loan 9,600 _| W, Capital (25%) 16,200 X, Capital (25%) 12,000 Y, Capital (25%) 37,700 Z. Ceaitel (25%) 47.700 During the month of April 2018, assets having book value of P18,000 are sold at a loss of P2,400. Liquidation expenses of P600 are paid as well as P7,200 of the liablities. Oftthe liabilities shown in the balance sheet, P240 represents salary payable to Z and P160 represents salary payable to Y. (On Apt 30, 2018, how much Woke or wetoa A 2 DG 9,00 B, 1,950 1,950 1,950 1,950 0 DO 1/950 o. 0 2 9,000 0 cash willbe distributed tothe partners? = CRC-ACE/APAR: First Pre-board Exams - May 2018 batch Page 10 38. MCU Company recognizes construction revenue and expenses using the percentage of completion method, During 2017, a single long-term project was started which continued in 2018. Information on the project was as follows: 2017 Accounts Receivable from construction contract P 200 Construction expense 210,000 - ‘Construction in Progress 244,000 Partial billings on contract 200,000 “The prof to be recognized from the long-term construction contract should amount to: 2017 2018 "7 4 A. 4000 456,000 c. “3,000 B. 44,000 200,000 6.) 34,000 Items 39 and 40 are based on the following informatio ‘The income statement eubmited by the Baguio Bret 31, 2018 folows: Sales Cost of sales Inventory, December 1 P 90,000 Shipments from Home Office 350,000. Local Purchases, 30,000 Total 460,000 Inventory, December 31 100,000, __360,000 Gross Margin 240,000, Operating Expense 480,000__ ‘Net income forthe month 60,0007. ‘The branch inventories consisted of: y2Mi2018. 12/31/2018 Merchandise from Home Office P 70,000, —-P 84,000 Local Purchases 40,000 16,000_ Total 80,000 100,000, After effecting the necessary adjustments, the Home Office ascertained the true net income of the branch to be P156,000. 38. _Atwhat percentage of cost did the Home Office Billthe Branch for Merchandise shipped to it? ‘A. 100% 140% 8 120% ~ ‘B. 150% 40. What is balance of the Allowance for Overvaluation in the Branch inventory at December 31, 20187 ‘A. 10,000 24,000 B. 16,000 ~ D. 34,000 41, Following is the income statement of DCU Branch in Davao City Company, for the six months periods June 80, BBB: ‘Sales “Pp 620,000 Cost of Sales é ‘Shipments from Home Office P 550,000 Purchases 50,000 Total P 600,000 Inventory, June 30, 2018 From Home Office P 75,000 From Purchases 40,000 __85,000___515,000 Gross Margin P 105,000 Expense, 85,000 income @ 20,000 ‘The Home Office ships merchandise to, and bills the Branch Office at 125% of cost. ‘The rent of the Branch office for six months at a monthly rate of P'1,000 was paid by the home. The Home Office net prof rom ts Branch Ofice in Davao City forthe 8x (@) months ending June 30, 14,000 C. 125,000 & 109,000 D. 139,000 » _ CRC-ACE/AFAR: First Pre-board Exams - May 2018 batch Page 11 42, ROEL, JEK, and MIKE, a partnership formed on January 1, 2018 had the following initial investment: ROEL P 470,000 JEK 255,000 MIKE 382,000 The partnership agreement states thet the profts and losses are to be shared equally by the partners after consideration is made for the folowing: = Salaries allowed to partners: P102,000 for ROEL, P81,600 for JEK, and P61,200 for MIKE = _ Average partners’ capital balances during the year shall be allowed 10% ‘Additional information: ~ On June 30, 2018, ROEL invested an addtional P102,000 = MIKE watinteg» P19,000 trom he parineranin nn Sapamper 20,2018 + = Share the remaining partnership- profit was P8,500 for each partner ‘The total partnership capital on December 31, 2018 was: AP 688,500 area tame @) P 1143675 BP 1,161,550. 43. Following is the balance sheet of the ABCD Partnership at March 31, 2018, when the partnership is 1o be liquidated: Cash P 6,000 Liabilities 12,400 Other Assets, 426,000 A, Loan’ 42,000 B,Loan 14,400 1, Loan ‘yj600 A, Capital ~ 25% 16,200 B, Capital ~ 25% 42,000 C; Capital - 25% 37,700 D, Capital - 25% 17,700 During the month of Apri 2018, assets having a book value of p18,000 are sold at a loss of P2,400. Liquidation expenses of P600 are paid as well as P7,200 of the liabilities. Of the liabilities shown in the balance sheet, P240 represents salary payable to D and P160 represents salary payable to D and 460 represents salary payable to C. (On April 30, 2018 cash to be distributed to A, B, C, and D as follows: A Pp -0- Pp -0- Pp -0- Pp BP 1.950 > 4950 «=P 1950 B GP -0- Pp -0- Pp 70- Pp ® PP =o P -0- =P 9000 P 44. OCIAGON Enterpnse entered into construction agreement in 2017 that called for a contract pnce ot 9,600,000. At the beginning of 2018, a change order increase the intial contract price by P 480,000. In relation to the project, the folowing data were obtained: 2017 2018 Cost inured to date P 4,920,000 P 8,840,000~ Ectimated cost te cor o 12,180,000 Biling made to date 280,000 6700.00 Collections made to date 4,920,000 8,700,000 ‘Compute the amount of construction in progress (net) — due from customers or progress bilings (net) ~ ddue to customers for the year 2018 Eercemage — of: ‘Gost Recovery Method of completion Method ¥ 780,000 ~ liability. 'P780,000 — liability ~ 780,000 — asset "780,000 asset Cc. ‘80,000 — liability 60,000 — liability ° {636,000 = ability 636,000 = fability 45. Which of the following statements is false? ‘A. The preparation of combined statements necessitates the elimination of reciprocal accounts (EX The recording of reported branch net income on the home office books represents a home office ~ closing entry. C.

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