CPA REVIEW SCHOOT OF THE PHILIPPINES

MANITA

Sunday, September 15, 2013

FnRCTICII ACCOUNTING PROBLEMS II
Batch 74
FINAL PREBOARD EXAMINATION

Pxosrcm t
on August 1,20!4,the business accounts cf chris a untr Pai,l DJ appear below:

IAr*tt -
I c,;h
Accounts Receivable
19?|E_s _l| z+t.toz
428,267
La nd 60-r,000 I

Build 20a3A5 I 384,789 ;

Other Assets 23,60C

Liabilities and Ca
Accounts Payable P178,940 lr Zaa,sso

Chris G., Capital

Pau!_!l!9p119!

and paul DJ agreed to form a partnership cr:ntributing their respective assets and
liabitities
chris G
subject to the following adjustments:

. Accounts Receivable of F20,000 ancl P:.5,CC0 are uncciiectible in Chris G and Paul DJ's respective
books.
r lnventories of p5,500 and P6,700 are wortl,less in Chris G and Paul DJ's respective books
" Other assets of p2,2OO and P3,600 in Chris G arrri I'aul DJ's books are written off.

interest !n
Afterfive days Brian L was offered to join Chris G antJ Paul Di and will contribute for a 20%
on thqir
the firm. They also agreed to divide profit and loss lr the ratio of 40:40:20, same ratio based
capital credit as agreed upon formation, As a res;l't of the said agreement, as a personal transaction i

ir. P34,388
c. P32,930
D. P37,272 i

z.
I

PnoarcNl l
On May I,2AL4,the capital accounts of 5, T anrJ C are P1,260,000; P787,50A and P477,500 , resPertivelY,
At this time, I is admitted to the firm, he prrrchaseci a 1/6 interest in the firm for P288,750. The lld
partners equalized their capital investntenls. lrterwar"ds, ali the partners agree to divlde profits a$d
losr;es equally. The new partnership closes its bor:ks cn jur-r3 3A,2014 reporting profit of P44,1"O0
for trrfo
months. Each partner made the following vuithdrarvais:S and CP?,625 per month wirile T and l, P3,5fO
per month. On June 30,2OL4,l invest enough cash tc increase his capital to a 1/3 interest in tfe
partnership. I

__i_l
A. P211,165.50 I

B. P70,000 i

c. P632,642.50
D. P633,762.50
 Pnoagm Z
A business owned by C was shgrt of cash and C decided to form a pai"tnership with D and E, D was able
to contribute cash thrice the iAterest of C in the partnershlp v,rhile E lvas able to contribute cash twice
the interest of D in the parthership' The assets contributed by C were as fcllows: Cash P18'000;
Accounts receivable P378,000 with allowance for doubi:ul account of P12,C00, lrrverltory P840,000I i;t_
and store equipment of P300,000 with accumulated depreciatiorr of P30,r-100 but with current worth ot
P250,000 and agreed value of P200,000. I

C, D and E agreed that the alloWance for doubtfulaccounts rlvas inadeqr;ate and sircuid be l'2C,C00 They
also agreed tf,ut tf," fair value $f tf,u
]:

[-Th. t"tri;tt"tr or tnu p.rtr"rll hip are: I

A. P7,880,000
B. P7,092,000
c. P14,960,000
D. P15,460,000

lnosrcrw q.
A and B agreed the lists of the followirrg assets t* be coniributeci in the partnership.

Cash
I nve nto ry

#-
Buildins ___1* - ___ijilOjqu ,

Lrrr11tgt"_q!qji*tg$_ __-i!illl0(.,, i

Ihe building is subject to a mortgage loan, alreaciy pa:t due ; in thc anrount of P1C,CCO. A oaid this out of
his personal funds aside fronl his cash contriburion ii:rr-,o;L,ovo Fartners agrr:ecl that A should be
credited forthis. Pertnersiiip agreei',rent calls ft,- e'ien ci:v;s;o:-r oi proiit lnd icss.

iwlgluglt':lqylg_lgjlgqjgqta i fo ea i

Als
A. P35,000 P85,000
B. P45,000 P75,UOA
c. P45,000 P85,000.
D. P60,000 P60,000

Pnoarcwt s. i

Paul, lram, and lvonne are inlthe proce:s cf liq.rillaiing lheir par'n:rsnr;;. ivoni,,.. il;,s agreed to accept
the inventory, which has a fair value cf p60,0cr0, as p.*:t of h::i :,'.itleri'ierit. A:lr;tc;^rrent of Financial
Position and the residual profit and loss snaring psrc?ntagej wei. lr 1'ulir,,r':

Cash 198,000 ,ti:ci:unts p;vi,i:!e L49,000

lnventory 80,000 t,a,Ji, capital(40i:) 79,000
Plant assets 230,Occ lrarn, calrta ; (jt(\%i 140,000
lvonne, canitai {107n) 140,C00

Total assets 508,000 Totalli;b.leqr;;tri, 508,000

lf the partners distribute the available cash, lvonrre vrill i eceive

A. P23,000
B P29,000
c, P30,000
D. P34,000
 Pnoarcu o.
RAGE AGAINST THE MACHINE charges an initi:l franchise fee of P75,000 for the right to operate as a
franchise of Speed Racer. Of this amount, P25,000 is collected immediately. The remainder is collected
in four equal annual installment payments of pl-2,500 each. These installments have a present value of
P3g,623. There is reasonable expectation that the dorvn payment may be refunded ancl substantial
future services are yet io be perforned by BAGi: AGAINST THE f\4ACHlNE.

[-rng-,:glgr"ntrv io iTgtq lh"-f*1.-Eg fu"*,:uiJ n;,

- - *- -- - ---
-i
A. Cash 25,000
Notes Receivable 50,000
Unearned lnterest lncome i0,377
Franchise Revenue 64,623

Cash 25,000
Notes Receivable 50,000
Unearned lnterest lncome LA,377
Unearned Franchise Revenue 64,623

C. Cash 25,000
Notes Receivable 50,000
Unearned lnterest lncome 10,377
Unea rned Franchise Revenue 39,623
Franchise Revenue 39,623

D. Cash 25,000
Ncles Receivable 50,000
Unearned lnterest lncome 3.A,377
Unearned Franchise Revenu : 3!1,623
Franchise Revettue 25,000

PAaercAZ
On.lanuary L,2A1J, Federrer lnc. signed ari agreement authorizing Sculptured Body works to operate as
a franchisee over ten years period for initial franchise fee of P100,00C plus P20,000 interest income
received annually when the agreement was:!gn;:r.1. Sculptured Body works commenced operations on
/l.ugt.rst t,2Ai3, at which date all the initiai :;e.rv!ces reouired of Federrer had been performed' The
agreement also provides that Sculptured Body works inust pay annually to Federrer a continuing
franchise fee equal to five percent of the rpverrrle irorn the franchise. Sculptured Body works sales
revenue for 2013 was P800,000.

f_-- . -
I l-or the year ended December 3!,7013, how much shouid Federrer record as revenue from franchi
t-
Lt-g'l
'.i
__l
A. P100,000
B. P160,000
c. Pi,40,000
D, P500,000

Pnoaffrvt a.
SugarFree has two construciiorr jobs, which .i)r',lnrerced ciuring 20L4:
--t'_,.l- - - - "--' "1-- _-- * -__-'- ^__"--l

l{Ji i Project 202

--1i.,,_rl,irm - I-lqgqq ._.'l
, Proiect
a;;t;Tp'i.. " _ _ _l
incurred during iu
Cost inculrqg_{grI€:99_ I -,:OC,i'1, T-zoopoO
__l 700,000 _
sti nlgle c! ce:Llo
Estimated
_E
cgg!!o_c_omg!gtg_-l r _ i:o_c_,-i;0
qgl"n!lg!g__ t0OJt)C l75r0g0_
_

uring 20L4_L
_coftlgq biLlIEtaglA?o_ll lgLl ji _ f?s,cot
625,L'00
I _gs 725,OOO _
i

6ii".tions J-J L 600,000 : ----l

700,000
Expelses __-___ i _.r:1,,I i __ ___4,090 ____-,
 -.:
net rncome ;;l-";; ,, ::i' t su,r. ".* "" ,-.-;;il*;l
lncome.
-* __ tl
Zero-Profit Percentage of Completir"rn
A. P(150,000) P750,C00
D. P(150,000) P600,roc
C. P(100,000) P675,00U
D. P(200,000) P603.000

Pnoarcrq g,
Psalms sold fast food restaurant franchise to []eter. The lale aBreernent, sigrlsil cn January, 1,,2A13,
calied foi'a P30,000 down payntent plus r:,-ln-;nitrr:st i:errin;-l ircie fr:r the halance rryhich it P20,000
payable in tr,vt rr,u6l 1,1y-..-,rl pa',.,rr.e ,lrs, ;ri.rr;5-,.",' tq {l-ie: liue;f rnitial fr tr chise sE.-vi:es rendered by
Psalms. in atldttion, the agreslntenl i-equii"..d ii"e franclrs;€- fo .:r;y fil,e c.i'a nr ,;f it grtir revenues to
Ihe franchisor, this was deemed sl'fficicnt to co\,er tl.t i:os:. '- rti ii..rr/:d€.ii r-c:t;;r,-,.:,hle ;.ictrt rnargin on
coirtinuing franchise services lr i.re pe.tr::r^,;e,d b)r Fsairt.. [,:r'iits, ilcrt.i ej ::ir.l:i cr-,si ci P2f],C00 in
providing the initiai services. The restar-,i'.,nt coeija,i ln ihe lir:' nicnih cl th+ i.r,.toili"l {juartei'of 2013,
and its sales amounted to P500,000 each y;.,ar for \it iti.si i,,yr;'y'i..-r'r, .

Assuming a 1O% interest rate is appropriats and the coi!ectai.'ilrii i,i'he rr;te i: rrlt r'e6sortably assured.
(the PV of annuity of P1 at 1,A%far 2 periods it I 7:155) t-tse tl,,-,o r-,e .',i.,ill , lrct:.

------t
l;h; totai :-errenue ri'r 201.4 is
A P7.+,09A
3. P31,161
c. P31,510
D, P35,000

PSpALEMJz.
TtviCSSIY lnc. opened an agency ir, Marikina. Tlre f;iilowir.rg are lr.1nsac,:ior":i fcl,-Jiir7 2013. Sanrples worth
P10,C100, advertising materials of P5,000 and ch,:cks for 75C,Lt0i \r/ere s(rnt tc the ag,enc\/, Agencr/ sales
amounted to P22-0,000 (cost P150.000). The colte,.t;a,t f;;,'a.4zn:...rrnouni3C t( i11,7b,10A net of 2%
discourit,-ih: agency's worl<rng fur,C v,ras repieiri:i.ac 1tc,r r.-; : fllio,t,i;.,-r pxp(.'tse) rrc, rr-erl; i"enr for two
months P10,000; delivery experises P2.,s00 anc nrislel:arreDu.; rrv.i)ensr j c,1'Fr,ili-,i-' Hcme office clrarges
the following to the agency, after .rnalysis of ar.coLrnts :'elcr{jr:.,,i ,tr; ii:e boiri<s ii,r the month of July;
salaries and wages P15,000 ancl conrrqi:;sir:n which is 5a/, ci' s,:ies. ilrE cqtn('/ sanple iriventr:ry at the
end of the month was 25% nf the quaniity shi;,pe,i The at:;':ci i131, 115gr! i.Ooto of tire aclvertising
rnaterials sent by the home office.

lhe agency
It__.. net incorne
_:-_- _- t_ .._=--*
1'or the rnonth of Julv is.
A. P1"7,4AA
B. P22,40C
c. P23,650
D. P28,650

Pno\rcm tt
CTV sells DVD on instalnrent basis, On iiugust 15.,.-01!, a J1o,,.:/ j,,,L' ,^r;r.; soli.i to r'rlary Rose with a list
price P275,000. CTV gave its customers aZOg'c r',arjr- disccunt i..,s,;le:; Tne Lil,i.ic)t was P165,000. lt
granted Mary Rose an aiiowance of P85,000 for her olci D\rD;):j :ri.'i ir:, iire cL;t'rrrtl ,.,aiue of which was
estimated to be P81,7C0. The balance was pavabie rs fciic',vs'-',-:{.,,..,rr} payi-r-ir,-i . ci p35,000 and the
balance to be paicl in 20 monthly instalment stat'ti,rg !er:tr rl,e. 1 li.t1 ::. ON I'.:r"rl i,201,4, Mary Rose
defaulti:d paYmerit of I'vlar-cil L,2A''4 inslali'ncni,'I'ie r:*w t, r \,r<r., rr. l'i5€,::d. ir,: v iirc to the seller is
P40,000 (use two decinralpiace:; for the gross trrr'fit 5ie.c1r -c,li: .

LG total realized gross profit on ir:sialmerri sales irr 2i,i1,4 i:,. i

A. P 2,386
B. P32,617
c. PL3,123
D. P37,gg9
 Pnoamu p.
tram Co. uses a predetermined overhead rate based on direct labor-hours to apply manufacturijn8
overhead to jobs. For the month of October, lram's estimated manufacturing overhead cost v!as
P300,000 based on an estimated activity leveiof 100,000 direct labor-hours. Actualoverhead amount,ed
to P325,000 with actual direct labor-hours totaling, 11il,0UC for the month. l
I

-n" PZSPOO ouerippr,uO

B. P25,000underapplied
C. P5,000 overapplied
D. P5,000 underapplied

PApELgtv'l_!_3,
At the beginning of June, Marie Manufactu"ing Company had a P320 balance in its Work in Process
inventory account. At the end of June, Marir.'s Wcrk in Pl'c;cess inventory account had a balance of P970.
During June, Marie made the following journal entries:

Flnished Goods 6,160

Work in Process 6,1 60

Cost of Goods Sold 5,830

Finished Goods s,83u

l;r
-l
, What is Marie's cost of goocis rnanUfaCtUi-g6l .'r1i-,, t;
i

A. P5,180
B. P5,510
c. P6,160
D. P6,480

Pnoercm td-
URBANDLIB manufactures lifting equipment. One order from OX Co, for 3.000 lifting equipment shor,t'ed
the foliowing costs per urrit: Maierials P3.5; Lahor P2; and FOi-l applied at 150% of direct labor cost
ant defective unit costs are to be charged io specific orderor a25% allowance
11.2r')t in cases in which
for reworking defective units). Final ins;reiiicn shcil^;ecj that 250 units were not properly produced'
Correction of each defective unit requires i:r.35 flr r;';.rterials, P.40 for Labor and FOH at the appropriate
rate.

Assuming the defective units are the result of int.:rnal failure how much is the unit cost for each u,nit '
nranufactured? i
I

A. P8
B. P8.61
c. P8.10
D. P8.50

PnaBrcut rc.
The following information is availabie for i l pd lll i'r'n;;c,r rrrn Corporatio n for the cu rrent mo nth:

Started this month tc,000 units

Beginning WIP
(3/5 incomplete) 7,5CC units
Tr:tai spr",!age 2.000 u ir its

Abriormal sooilage !lOtr i.; i.: it s

Inding WIP l units
(30% to be donei
'l'ransferred
out 77,300 units

Beginning Work in Process Costs;

Material l) 10,,i00
Conversion 13,800

5l
 Current Costs:
Material P 1.20,000
Conversion 350'ooo

All materials are added at the start of production and the inspection point is at the end of the process.
(use four decimal places)

I Uo* much is the total product cost as accounted using tlre rnore accurate method representing the
flow of units?
l I

Ilt ohvsical
_-1___.._.
I

A. P488,942
B. P494,200
c. P423,497
D. P429,924

Pnosrcw rc,
Housemartins Corporation has the following inforrnaticn for the current month:

Units started :-0o,o0c '.Jniis

Beginning Work in Process: (65% to Ie done ] ?C,ili-;0 t"'nits
Totalspoilage 8,-r.C0 Linits
Spoilage within tolerance level 3,500 units
Ending Work in Process: (30% incomplete) 14.500 units
Transferredout ? units

Beginning Work in Process Costs:

Material Pi5,O00
Conversion 10,0C0

All materials are added at the start of the production prccess, Housemartins Corporation inspects goods
at 75 percent completion as to conversion.

i of prcduction for conve;'siorr r-osi, ullng the rneiitod that does not comnringle
Wt'.rat are equivalent units I

I tne beginning ancl current period produclicn activity,r =--=---f

A. rtl6^srs
B. 96,s00
c. 95,000
D. 120,000

PnoatrM fi.
The following information is available forJames Taylor Corporation for the current year:

Beginning Work inProcess Cgsts of Beginnin3 Vy'ork in Process:

donei 14,500 units
(1/4 to be llaterial P :5,L0cl
Started 75,000 units Conrrersion 5i,),0ti0
Ending Work in Process Currcni Costs:
(2/5 incomplete) L6 000 units Material P1:10,000
Spoilage beyond Conversion 3i;,),00{}
expectation tl3 units
Total spoilage
i

(continuous) ? units :

Transferred out 66,000 units

All materials are added at the start of production

I What is the cost assigned torrormal sp_oitugg u_11g_ylglFl qlryE:?

A. P31,000
B. P15,500
c. P30,850
D, None of the responses are correct
 Pnoawtq $.
The BRIANTOPOT Manufacturing company uses the N4lP (Llaterials and ln-Process) lnventory accountl
At the end of each month, all inventories are counted, their conversion costs components arq
estimated, and inventory account balances are adjusted accordingly. Raw materials is backflushed fro(
MIP account to Finished goods account. The foliawing Cata is for the monthJANUARY: I

MIP account, February 1 ?25,1.40

Ccnvelsion cost debited for rrariorrs accounts 2,BBO

Dei:iceC to MtP account this r;rontl-' 408,000

Conversii:n cost applied 3.180
MIP account, December 3L 23,220

i Tho rmnrrnt nf
The amount of r{irort
direct m:fari:lc :rrrl rnnrrerqlnn
materials arrd co:i: ta
conversion cn.-ii io he
be hacl
backflushed ,l
lare, _ --______.1
I

A. P409,920 and P2,880

B. P406,080 and P3,180
C. P406,080 and P2,880
D. P409,920 and P3,180

FnaercM rc.
Script Company manufactures three products irr a joint process which costs P25,000. Each product can
be sold at split-off or processed further and then scld. 1.0,C00 units of each product are manufactured,
The following information is available fcr the three prorjucts:

Separable Processing,
-cs-g!:-oller-s-p!ii:x Sales Value

::912

it_To maximize profits, which products

A. Product ABC only
should Scr ipt nrr;cess further? I
3. Product NOP only
C. Froduct TUV only
D. Ali Products
I

Pnoercrw zo.
Greyhoundz Company manufactures products XC and YE frorn a joint process that also yierAs uj- .
product, ZU. Revenue from sales of ZU is ireated as a reCirctioircf joint costs. Additional informatioh
were as follows:
Products
XO YE
-ijt Tota I

l-lrrits produced 90,000 90,000 4s.000 7-25,OAO

Joint costs ? ? ? P1,,1,7 -a,oao
5aies value at
split-rl f F'..J50,0ci P57:,000 P45,1100 P2,070,000

loint costs were allocated using the sales vai:r at spiit-off approach

]T re joint costs allocated to product YE were

-l
L. P453,600
c. P675,000
D. P756,000
 Pnoeteu zt.
Moonpools Corporation's standard wage rate is P1,2.2a perldirect lahor-hour (Dt-H) and according ,o ,f u
standards, each unit of outpqt requires 3.9 DLHs. ln April,ils,ZOO rrnits were produced, the actual wafe
rate was P12.10 per DLH, and the actual hours were 24,150;DLHs
i

')l
B. credit of P2,41,5 r

tl. debit oi P2,czg

D. debit of P2,41,5

Pnostrfi/t zz.
Warp Manufacturing Corporation uses a standard coe: system tr: collect ccsts reiated to the production
of its ski lift chairs. Warp uses machine hours as an overhead base. i-he variabie overhead standards for
each chair are 1'.2 machine hours at a standard cost of pLg per hor-rr.

During the month of September, Warp incurred 34,A{)0 r'tec.r;ne hours in the proCuction of 32,000 ski
lift chairs. The totalvariable overheacJ cost v,,,as ?ier,4{,A

ilVlglf: Warp's variable overhead s6,en,jing ;ariance for the rnonth of September?
__.1
,C. P37,400 unfavorable
B, P41,800 favorable
C. P79,200 favorable
D. P84,04Afavorable

Pnosrcrw zE.
Parrish Company uses activity-basec costinE. The,:rrnpany proclr.ii:e:, tirc p1-11,.,.is: lpods and Mp3
players,-rhe artnual pro:luctrcrt alc sales vr.rlure c' Irlas:s B,iOL ii rts a,,r o|Mp: plaver,s is
6,000
units. There are three activi'iy,c,rst co;ls witl-; the f -llicy;ing e..[,,:c:ed criviti:s rntj estirnaterJ total costs:
i

Activity Estimated !xpected cciir,'ii)., Irpe:ted /ti:iivity

I

Cost Pool Cost lPods MP3 players

Activity 1 P20,000 i 0i) 400

Activity 2 P37,000 B(10 2UO
activity 3 pg1,,ZOO E00 3,000

Ir;;il;.;i(1*"t per unrt of MP3 niayers E :!Sl91I!2:!-_--

A. P15.90 - _----__--l
B. P 3.90
c. P 6.60
D. P10.59

Pnoarcrw za.
The Home office,shipped merchandise ccsting p47.ti)C ll Llriiririr r.\,_r,rit
,:ajd for" the freight charged of
P7,500' Branch A was subsequently inst;'ucted to tran;fci thc: nie;
-irar.rjise to Branch B wherein Branch
A paid P6,000 freight. lf the shirment was made rlii-eq.tlV fr,:ni i-.jsrpg rffi69
to i:]ranch B, the freight cost
woulci ha,ie be,:n p11,250.

Which of the following is incorrect?

A unon rec.ipt of bt B fr"rr-t B;*;rd[;;,i,ii;..;,;.,unri i,i p;r-,*i
B' Upon transfer of"*;ch;-rJir"
merchandise by A to B, home olfice ;j'i,ils .:-;,.,,.,:;iirrell in Dranch A account by
P59,350
C. Upon transfer of merchandise by home office ro A, h,jr,-..e fi',cr dehits in,restment in branch
< A
account by P54,600
D. Upon transfer of rnerchandise by A to B, A Cehir.: hcmc ofi'it ,ai..r:oJnts by p5g,600

8l
 Paoattrvt zs.
SPIDERMAN Corporation maintains a branch in Pampanga. Selected account balances taken from thp
books of the Home office and its branch as of Decernber 31, 2014 were as follows: I

Home Office Pampangabranch I

Sales P1.Zfi{l,i:f : P540,000 i

lnventory, January L,2015 8C,C00 L22,1AA I

Purchases 5C0,0C0
Shipments to branch 315.tj00
Shipments from Home Office 346,500
lnventory, December 31,,2A33 350,000 157,500
Expenses 113,000 89,00C

ln 20L3, the Home office billed its branch.it 12C96 of ccst which was higher by 5% than the previous
year. All of the units in the beginning invent.:ry cri l ;e irranch were acquirec from the home office in
201,3.

tr:U-eltrerl.-,a]:!_letrreq:rryrs;elg!:lyAlle'erl{e!ryr=rf rf f r913gt]-_-]
A. P732,793
B. P747,750
. c. P743,750
D. P738,500

Pnoercnrt zo.
The following were founcl in your examination of the interpiant accounts between the Home Office and
the lronman Branch:
. Transferof fixedassetsfromHomeOfficearnc'rnti,tgtoP53,960wasnotbookedbythelronman ,

'Pl0,000coveringmarketingexpenseof irrotherhr,ancnwaschargedbyHomeOfficetolronman. l

, lronman recorded a debit note on inventory transfers fronn Home Office of P75,000 twice'
n Home Office recorded cash transfer of P6,5,7110 frir:n lrcnman Branch as coming from THOR Branch
. lronman reversed a previous de bit memo frorn l-li-rLK ii'anch arrounting to P10,500. Home Office
decided that this charge is appr"opriately THOR Branch's cost
. ironman recorded a debit memc from Ho.r:e Oifit': of P4,650 as P'1,560'
r-
,L lfl.
'_l:ln*t
l:' ldebit)/credit adjustment in lronrnan , bc,okt reiated tc tne Home Office account is: _j
':-"1:/l:l:_"1: ""r"":l:'-'ll '1' l'" l: ]

A P2-0,950 net irr.:..:as€.

d. P31,450 net decrease
c. P(20,950)
D. P31,450 net credit
I

I
I

Utosteur zz- I

rotg!lq*igl of_:l,aTp'-li.90,9irl qg.!_g€[y.3_!t,

l-r
i*-r_hg g.n1'v I!,r.1e11i1y,enl 9f ]--]
I

A, Stamps
Cash- NT, MDS

B. Stamps expense
Cash - NT. MDS
C. Memo entry - RAOMO

D. Petty Cash fund

Cash - NT, MDS
 Pnoari/t za,
't
I

Agency XOX issued a bill for rent of office space to VOP Holdings, Pzt0C,00C" Tlre agency is authorlzed .is
per special provision to use recleipts from rentals for their operation-c.
I

1:

] The entry on the Agency books to record the fci"egoing tran cticns,v,,cuici be: I

A. Memo entry

B. Accounts Receivable 400,000

Subsidy lncome from Nationai Gov,.:rnment l
4OL],GCC

C. Accounts Receivable 400,000

Rent income 4C0 C00

D. Cash Collecting Officer 400,000

Rent lncorne 400.00c

Pnogrtvl zg.
i,625,(\00;f caf^terii i nd coffeq shop revenues
icARE Hospital, a private not-for prorit hospital, earn,:d
and spent P125,000 on medicai equi,lment Curing the i,€ral eil('3d l.\ecerrtbei 3l, 20:3. The P125,000
spent on equipment was part of a F1.87,500 contribution recei',,t:r, clurinB Deceiriber at 2012 from a
doctor who stipulaieci that the donation be used for rredir:al equit-,nre,'.. {ssume none of the cafeteria
and coffee shop revenues were spent in 2013.

i --..---
I For the year ended December 31, 2013, what '" ,,;."-r"t,,d ;;.t ;;; it", th;l
I events occurring during 201"3? :-l
I

A. P7s0,000
B. P500,000
c. P62s,000
D. P687,500

Pnoerca n.
I h, ;; l";;;"r,r ;; iversity, the governmett grant firnci: 1o tne uni'versity clirectly intended for I
students' activity fund is an example of I

A. A bequest
B. An agency transaction
C. Urrrestricted revenLle
D, A restricted contribution
l

PnoaffM Et.
MAX Company is in bankruptcy and is being liquidaied.-Ihc t:usiee ii::; converiecl ali assets into
P1.20,000 cash and has prepared the foJlowing list of approveci r.li:i,ns.

* Customer deposits (P1,000 from each of trvo customers thnt

ordered products that were never delivered) P 2,000
* Property taxes payable 4,000
* Accounts payable, unsecured 30,000
* Trustee's fees and other costs of liquidation 16,000
* Mortgage payable, secured by property that w'as sckj r'or ;80,11rJfu, 60,000
* Note payable to bank, secured by all accou:-rtr: r:Leivalle ifa6,6;1,,91 cl'which
P30,000 were collected and P10,000 were
',ririiten off as u;'icolle c[ibre 40,000

10
 How much will the bank receive on the note payable? -t
rl
A. P30,000
B. P32,500
c. P32,000
D. P40,000

PnoaEM gz.

The following are the data before liquidating of XXX Corporation:

Cash P 25,000 Accounts Payable P325,000

hort term investmen! 75,AOq Capital stock j zso,ooo
i Accounts Receivable 150,000 Deficit {75,000)
lnventory
ro!ql*q:rq!:_ P500,00J i ]ptel P500,000

Transactions during liquidation that did not in',olve cash were as follows:
Sales of merchandise on account P25,000
Purchase of merchandise on accouni 7,500

Cash receipts and disbursements

Cash Receipts:
Sale of merchandise P125,000
Collections of accounts receivable 57,500
Sale of marketable securities 92,500
lnterest on short term investrnent 75t'

Cash disbursernent:
Payment of accounts payable P175,000
Payment of expenses of trustee 37,500

At the end of the year, assets remaining to be :'ealized and liabilities to be liquidated were as follows:

Add: Sales on account

Less; Collection on account s7,500 l

Balance Cetermine to be uncollectible

_ ii,.qg-
Accounts Receivable end P110,000

Glo-,9c'g
7,500
$1E-qq
Ml end
l_aq!.?q! _ _i

Ag.gUts _layable beg P-1?:r,o-oo

Add: Purchases on account
_ J,!_!Q _ _
Less: Payment on account 175,00C
_4q!qllrts!ryelgg1! l,-Zffq *__l

Accrued expenses ending balance p

Lfhu_19j lo::{Jg|n i1rrga I ization a nct Iiq u ictation

A. P15,000 gain
B. P61,000 loss
C. P36,000loss
D. PL0,000 loss
 On .iulv 1,,2OL3,XtianV inc. acquired most of the cut;tarrdlng oi-clinai'y sl,ares of RnalclV Cornpany for
cash, The incomplete working paper elirnination eirtr;e, ,,nl tii., rJate for the con-soliCated starernent of
financial position of XtianV lnc. and its sribsiciiary are snown, belo,rr;

E(1) Stockholders' equity - nnaltAV Co. ar/v,*7(vtvvvnnn

lnvestment in RnaldV Co
ll
ii

3,168,750
Non-controlling interest i I 1,,7'J5,25i

E(2) Machinery f

i25,000 i

La nd .,? ri or 1f.}

Copyright l -- .' r,rt-r .,

i

Goodwill 1

lnvestment in RnaldV Cc )).7 c,..

;

Non-controlling intcrest

Assurning non-controlling interest is measurecl at f,r l" i,.r;ue , ancJ ll^r* nrice oaid incluCes contral premium
of P137,500.
i'-'-'--..'
I ln the working paper prepared on the date of acquisiticn, what pcrtion cf the go,:r-rr,r,ii, is ailribr-rtable to
I

l"' I

lejl :talglg!g!' eq ri ity?

I

L_!a
A. P370,375
B. P495,769
c. P643,945
D. P569,810

WoaLEMtg" I

NOEL CABANGOI\ Corp owns 75% of the stock of x Cari ana 6'J% of v, Coro. During 2014, NOEL
CABANGON sold inventories purchased from outsi,ler all e-r:OO,OitO to .',. fcr p800,t100. X solcl the
inventcries to Y for P750,000. Prior tc.r Dec. 31, 2014. \'Cofp soid i'z15ur Cuc i;f 1l-,* rnr"ientories to a noh
affiiiate fc. P51,0,00C and held ine rerraining units at.)e:. ,{l t,-)lr,

-. ------.--
wt*t.r.*t --.-------i- in thu;-*rber
i,l ---- ----------- __---l
.l

- rLr"i,fier,:p";!E J1, ,,11+llr*-rcrr* 1,,.,-""",-,r"r.,,1

A. pioofioo ' ' -l
',
B P300,000 i I

c. P200,000 I tl

D. P150,000

Pnosrcffi gs.
Boy macho will issue 50,000 of its P5 par value cornrnon siiares for ihe r,.t asscts of Boy boclyfit. Boy
bodyfit's triai balance at the date of acquisitiorr shows rle foilo'.r;r",r,

i-!_gr-191!agsets i pqzo,coc i

iI PPt
|,PL qn,r--*.-.f-----
gg0,0i0
ri.ro
. _--1
jLiabilities -"_,.+.-
r-- - -- --- r 111!!t!,0itc
i rQmmon stoc!, p5 par i I t-Bl,,,,tl}
rAPtc I | 121.C(]1
-
itet_ained Earnings_ l_ 11o,qor

Boy bodyfit's current assets are i:ppraiscd at p:j50,0r;i,;;i)r^ trie {,ri: V.,,t:, .ti:r'-,, .-l.rF., ii.-L'A al F'1,8CC,0C0.
{tS
liabilities are fairly vaiued. Accorriingly, Br:y rnacho issueii crrmriiLrn sha,'es'xiih totai irrarket value
equal
to Boy bodyfit's net assets including gcoclwill r:f p200,i0li,

What is the market value per share c,f :3,ry mar:ho t, icr-iri,lcr iiol"r x
"f brri**
,-1," ,lrt"
combination?
A. P37
B, P22
C. P41
D. P51
 Pnoenfil, Ea.
U2 acquired 60% ofthe outstanding stock of B52's for P155,000 cash. The book value of B52's net assets
is p200,000. 852's only over or undervalued assets was land that has a book value of P100,000 andr
current value of P170,000.

m* ,"fi1, th" goodwill (income from acqui.itioni to he reported in the consolidated statement o
LIyg.,.t qgISIl
A. P(6,000)
B, P10,000
c. P60,000
D. P(36,000)

P_roatrasz
TOM lnc., pAUL lnc. and CHRIS lnc. ai-e r.,.) r^r|erB€. rirr: stockholders'equity on their respective
STATEMENT OF FINANCIAL POSITION immediately rrrior to combination show:

TGM lnc. PAUL lnc. CHRIS lnc.

Ordinary shares P 300,000 P 280,000 P 580,000
Share premium 70,000 14A,00C
Retained earnings 4t,t,t0 {6c,000) (90,rJ00i

As per appraisal, book values of PAUL's assets and liabilities approxirnal.e their fair iralues except for the
Land and Non-current liabilities, which is undervalued bv ?5C,000 and P10,000, respectively. CHRIS's
Equipment and Long-term debt is overvaluerl by i',i0,010 anC F130,00C, respectively. All other CHRIS's
assets and liabilities equal to their fair values.

it was agreed that TOM shall issue its own shares of :,,tocks to PAUL and CHRIS. % of the total stocks
issued shall be ieceived by PAUL and the remaining, r,vill be given to CHRIS. TOM incurred P2,000 and
P8,000 related costs with PAUL's and CHRIS's brrsiness: respectively. lmnrediateiy after the combination,
TOM has ordinary shares balance of P1,100,00'1. l-O\4'i P1013 par ordinary shares has a market value of
P 150.

l=Ho* n, .n ;.o..,ut.io*.t*r"i", retainecl :arnings must be reporied in the separate hooks

I acquirer company? "*l
__J
I

A. P1,30,000
B. P90,000
c. P(20,000)
D. P(60,000)

Pnosatv, gs.
On January 1", 2A13, RODFER Company pt-rrchased BA% of REDFORD Corporation's P10 pat commonl
stock for P2,437,5AA, On this date, the carrying value cf REDFORD's net assets was P2,500,000. The fairl
value of REDFORD's identifiabie assets and liabiliiies vrere the same as their book values except for plan!
assets (12 years original useful life), purchased on December 31, 2010, which were P250,000 in excess ol
the carrying amount. For the year ended Decernber 3L,2A13, REDFORD's net income amount t9
P475,000 and paid cash dividends to RCDFER in the amount of P250,000 I

ln the December 31, 2013 consolidated statement of financial position, non-cont

be reported at:
A. P704,375
*rT::gl
Ei, P699,375
C. F636,87s
D, P64L,875
 Pnoertvt Eg.
DJSUS Cornpany's oulstanding o.dinF|Y shai'es' DISUS, in
GMAN ov,tns 70% of turn, owns 20%
5010 ii-otn its own
investment in SyLIM Corporation. During 201-3, GMAN urtned a nct ii'lcorne of P320
of affiliates, if any'
operations while DJSUS suffered.la loss of P60,000 excluding itl share in the earning:;
syLlM reported a net incom. of p+3,s00. DJSUS cleclarerj citvirlencs cf Pi5,l00 iionr
its accumulated
profits in previous years.
_------ --*-L---
protit for tne year 20L3
col)solidated :-
IL Tne -._._ is: ____l
A. P284,690
B, P267,1.90
C. P'251,140
D. P269,300

PnostrM ao.
COLDpLAy Corporation acquireci a 7C% irter"est in ,lhrstlerj Clrpora;.io r on J'rnuary i,
2014, when
j-DPLAY :olu merchandiss that cost
Whistle's hook values were equal tc their fair values. Dr"rring ::01,1, aO
P75,000 lo \/Vhistle for P110,(i00' Oe Decembei- 31, 2CLd', scvenirr five percent of the merclrandise
acquii.ed from COLDpLAy remained in Whistle's inventory. Separate inlt:ines
(investment income not
included) of COLDPLAY and \.Vhistie are as follours:
je
COIDPLAY \\'hist

Sales Revenue 1s0,000 p li)c.:iri

Cost of Goods Sold 90,0c1 /C ,lfll
Operating Expenses 12,?0'J_* -_
Separate incomes 48,000 P -.i:.-qoi
I ilr,Cra,0
I

;Y il;'';i*l*-';''r i,t,'''di*\' i"; ;h"

I Decembe; 31,20L4 wili show consoliiat:d cost of sales lfl ,
--
B. P 76,250
c. P133,7s0
D. P160,000

Pnosrcrfl +t. i

Guerrero Corp. owns 65% of Peoro Corpr ordinary sirares t): Jr-rlr: L )-i:, tltrare vrri5 0Il r-lpstreaitt Sale
of an equipment for P1",080,000. The carryirtg a;:rcrrrt'1 r)i lil;.. rr,1J prn,:ni is P1,260,000 and has a
remaining life of 8 years.

How much is th" *t.ff".t * th" p;tirffii|" -..ir;.i.,:,'-, , ,'t,. t"ibutaLle to non-controlling i
I

inte rest? I
I

A. P156,875 increase
B. P108,468.75decrease
C. P108,468.75increase
D. P58,406.25 increase

Pnoatrrw qz.
The SG Company owns 95% of ihe outstandlng she ;'es of GX t,crirr-,1t, 0rr December 3l-, 2013, there
-l-''
was an upstream sale of a depreciable fixed asset fol'Pi,,i3i] Cii-. I isler eriginally cost P2,880,000

and at the end of the reporting per-iod its ca:'ryinE ainolint'rr ti.'l i.t ;ks ;f tl..: :eliing affiliate was
P1,050,000. The gi'oup's consolidated statement of fina:rcial i:ositicti nas been drafted without anY
adjustments in relation to this non-current assel,

l--'*---
I Wf1at adju:tmenis shguici be rr;,Ce tcr tite cons..,ricrale'l si:itei.r nt ;f iil-r' rl.1r' prs:tion r;gures for non-
i -..^+. .,..1 .^r.;^^.t
r1{ieigl1.e nrrai,rnr-)
L ql f:.1
^,,..^,.n
f :se-t I _a t e r
? I l _s :,'a
Non-current assets Retai ;reri e,a ini rrg-c

A. lncrease by P1,500,000 lncrea:;e by P1,42'i,0ilC

B. Reduce by P330,000 Reciuce !:v l"il30,0Ct
C. Reduce by P330,000 Reduce by P31.1,5CCt
D. lncrease by P1,500,000 lncrease gr,r pl lf,Q iji :.r
 Paosteii az.
On March i,201.3 entities A and B each acqu,red 30 percent of the ordinary shares that carry voting
rights at a general meeting of shareholders of entity Zfor P575,000. Entities A and B immediately agreedl
to share control o',rer entity Z. An December 31, 2013 entity Z declared a dividend of P175,000 for the
year 2012. Entity Z repcrrted a profit of P140,000 for the year ended December 31, 201"3, On Decembe(
3L, 2A13 the recoverable amount of investrnent is P507,500, Costs to sell is P5,250. There is no
published price quotation for entity Z,

L
ylglg lt SlgllgyIqJt.t"Igu:'' lqlil_ __
A. The effect in income to be reported in profit and ioss by entity B using the equity model is

P35,000
B. to be reported in profit and loss [:r,,entity B using the cost modelis P35,000
The effect in income
C. The investment in entity Z at the end of 20.l"3 is P507,500 using the cost and the fair value model
D. The effect in income to be reported in profit and loss by entity B using the fair value modei is
P40,250

PnoarcM aq.
On January L,2013 entities X and Y each acquired 25 percent of the ordinary shares that carry voting
rights at a general meetin! of shareholders of entity C for P5,250,000. Entities X and Y immediately
agreed to share control over entity C. For the !ear L"nded December 3L, 2013 entity C recognized a
profit of P7,000,000. On December 30,2013 entity C cleciared and paid a dividend of ?2,625,0A0 for the
year 2012. On December" 31, 2013 the fair value of each venturers' investment in entity C is P7 ,437 ,5OO'
However, there is a published price quotation ior entity C.

Assuming Entity X uses the cost model to "icccunt for its investment in entity C, how much is rr"l
I investment in December 31, 2013?
A. P5,250,000
B. P7,350,000
c. P7 ,437,500
D. P6,562,500

Pnoaurvt qs.
On October 1-, ?A\3, Davao Philippines ti;cx cJelivei"y +rom Ohio, USA firm of inventory costing
S1,425,000. Payment is due on January 30,2A1.4. Concurrently, Davao Philippines paid an amount of
cash to acquire an at-the-nroney calloption for tlre $-1,i2; t00.
. The option premium paid is P19,625
' The spot price at the inception date is ?44.40
. The spot price at the balance sheet date is P44.423
. The effective portion of the option contract on January 3A,2A14 amount to P38,475
' The gain on the derivative instrument on January 30, 20L4 using non-split accounting amount to
P3,225.

The foreign exchange gainl(loss) on hedging instrument due to change in the ,"ff".W" p"ttb" ;l
December Jl,, 2013 ; The foreign exchange gain/(loss) on hedging instrument due to change in the
| gfg.l,u" porirg-1_91p_9c9mbe-r 31,l0 a1 r__l
i

A. P17,150; P5,700
B. P17,150; P(5,700)
C. P(17,150); P5,700
D. P(17,150) : P3,225

Pnoattrq aa..
On August 1, Cebu Company forecasted the purchase of 20,000 units of Inventory from Arkansas, US,t\
Company. The purchase would probablyoccui on November2 anri requirethe payment of 5780,000. I't
is anticipated that the inventory could be further processed and delivered to customers by early
December. On August 1, the company purchased a call option to buy $780,000 at a strike price P40.9$.
An option premium of P2,950 was paid. Changes in the value of the option will be exclucJed from thp
assessment of hedge effectiveness. Spot rate at the inception date is P40.93; on August 31, P40.9521;
September 30, P40.963 and on November 2,P4a.97. The fairvalue of the option contract on August 3["
amount to P5,230 arrd on September 3A,P1.1",470 I

lq I
 I

On November 2, Cebu Company purchased 20,000 units cf i entory at a ccst of 5792,000. The oPtl

was settled/sold on November 2 at its fair value' After !nc {u;iher processing costs of P80,000,
I

inventory was sold for P32.66 M on December 7' i

l

The foreign exchange gain/loss on oPtion contratt 1on

September 30 that wouldr affe
(increase/decrease) other comprehensive income; Wnalii!s the net income effect of the a

transactions?
A. P10,140 ; PL44,414
B. P8,580 ', P1.47,360
C. P10,140 ; Pt47 ,364
D. P8,580 : PL44,41A

Pnoanrw qt,
i
I
I

in New Zealand
The following are taken frorn the recor:ls of Eiite lmports Co:'nran" , a ;creigr-risu)si'."liary
l';Z dio!iar
Total Assets 12131,113 14o;000
Total Liabilities Lu31./t:3 45;000
Cornmon Stock 1.213L/1.3 50,000
Retained Earnings 01/a1./1.3 29,000
Net lncome 2013 I5,0C0
Dividends Declared t2/3111.3 3,000

Exchange rates:
Current rate P10
Historical rate 11. i

Weighted Average Rate lZ i

The peso balance of retained earnings cn Decembe r 3t,7Orl is P325,00c.

rl

lWnutamountof CumuiativeTiansiationA.itrrstmcnlisili:qireportedinrlieCons'rlicJatedStatement
] rygl ?_1tron
on Decemb4r 31, 291:1
- r,r-
A. pizz,ooo oeuit I - I
- -
B. P1"19,000 credit
C, P125,000 debit
D. P1"25,000 credit

Pnoatrrw ea.
Uragon Company sold warehouse facilities for $8.340,0C0 to a customer in Oregcin, USA on November
A2,20L3.Collection in US dollars was Jue on janr..rary 31",2074. On ttre sarne date, to hedge this foreign
currency exposure, Uragon Company erriered into a futu,'es t:ori,-:,i r , seil $8,340,000 to Export bank
for delivery on January 3L,2A1,4.lnciii'ect exchange raies oridifferen; iaie: ''"'ere as follo'rvs:
Nov. 2 Dec.11 Jan.31
Spot rate .02387 i)?41,-; .a2494
30-day futures .42354 .0'2415 .a2278
60-day futures .02392 .02^81. .a?437
90-day futures .c?-463 .a2403 .c23C4

Ho* *uir.r ii ir.," on u.rningr Jru to hecr;eri lt.:rrr irr the necernber 31-, 2013 profit and loss
.it".i
statement?; How rnuch is the effect on earnings iue io neCging insr.runierit inr tlre 2014 profit and loss
state ment? I

A. P(10,008,000) ; P2,502,000
B. P(5,838) ; P1,585
C, P10,008,000; P(2,502,000)
D. Ps,838; P(1,s8s)
 I

Pnoeterfi dg. I

Barako Company acquired a heavy equipment for $14,iurtt from a suppiier in Detroit, USA on Decembrer l

1, 2013. Payment in US dollars was due on Marcn 31", ZO+4. On the same date, to hedge this foreiln
currency exposure, Barako entered into a futures contllct to purchase S14,100 from Citibank {or
delivery on March 3t,201-4. pirect exchange rates for dolll'rs on different dates were as follows:
Rates
I

Spot I

i Bid Offer
December t,20L3 l 4L.6 4!,.4
December 3L,2013 /i2.\ 421:.1
ll
March 3L,2AL4 43.4 tl,l
l

i:orwarci Rates
1
Dec. 31,
Dec. Marcn 31
30-day futures 42.3 -11.8 43.2
60-day futures 4L.8 42.2 42.6
90-day futures 40.6 42.5 43.4
120-day futures 42.2 42.3 42 9

whrt ir th" *prrt"d;lr. th. li;u-i[tv t" ir,.

"";;;t a;;it..i..- z;t:,t' , !^;t.t ** *;Jl
I rmpact in Barako Company's
"f
lvvlldl'I)tlltrltrPL,lttruvclluctJ,LllElloUll!tyLUL!:UvglluL.}c]|L'!.:i-'!i
incorne in 201-] as a resuit of this i:e'J5i r5l aliir ity:' I

A. P595,430 ; P8,460 net gain

B. P599,250 ; P8,46O net loss
C. P595,430 ; P8,46O net loss
D, P599,250 ; P8,460 net gain

Pnoaarvt so. :

BanksJ and K (the parties) agreed to combine their corporate, investrnent banking, asset managemenl
and service activities by establislring a separate v,,.hi:ie (Bar k Q) [3oth parties expect the ai'rangemenlt
to benefit them in different rlvays. (IFRS 11) I

The assets and liabilities helb in Bank Q are th. as:Llrs and liabiiiries cf 3:rnk Q and not the assets qnd I

liabllities of the parties. Sbnks J and K each have a 4O?, cr.vnership interest ln Bank Q, with the
remaining 2A%beinglisted Jnrl wi,jely hejci. T re'locl(ho'rtrrs'at-e.:nert b.etrnreen iank J and Bank K
establishes a joint controlof actr;ities of Bank Q.
lthe

Transactions for year 2013:

lnvestments: Bank J P6,250,000
Bank K P6,250,000

Revenues Pl-,250,000
Cost and Expenses P 750,000
Dividends paid * Bank Q P-
t What is the interest of Bank J in the joint arrangemer;i at DecentLre, :
L
l, ?C1,3?
A" P6,250,000
B P6,450,000
c. P6,050,000
D. P5,000,000
-End of Examination-

CHRISTOPHER GERMAN *J
PAUi. AN lr-iONY l)E jEStrS * BRIAN LtM
TOMAS SIY X RODIEL FERRER and Prr:nu P. Surnnrno
Goodluck ond Godbless Batch 74 lll
 Manila

PRACTICAL .qCCOU NTI NG II FINAL PREBOARD SOLUTION

1. B

?aul Chris

641,97 5 728,352

AR (20,000) (35 C0l.)) TCT- IAL

Mr (5lr00) lii 700) Paul O14.lr t

,{ il0/
.t\/ /0 648 664 34.388

oA (2,2q0) i3 6Cui; chris hF, I"

^','
A t\ol
+u /o 648,664 (34,388)

Total 614,2'i5 083,(j52 0td a,

,21,7
',i2g
80% 1,297 ,328

Brian bria:r 204/o

tctai r,621,600 1,621,660

D
Capital o{ olr:j 2,52O,AAA -
1/6 interest .}10,0C0 = 2,100,000 + ul share % 33, 075 - 7000 T
drawing-10,500SandCdrawing=?.,115,i75/Zll=TPC3,173,362.5x713=1",057,787.5capof
I

I cap: 420,C00 + i share L1,42\'- 7,000 d;'atui;tg . 424,O25 -- 1,A57 ,787.5 = additionaI investment
6J3,762.s0

3, C

Answer C 1,496 C00 + (1-496,C;Ot,r'3) I (1.,496 0C0x3x2)= 14,960,000

';
4.8
5,A
40% 40% 20%
Paul lram lvonne
Eq u ities P 79,0C0 140,000 L40,000
Distribute inveni.,-'ti',7 '., 1.,,,trn€ and 60,000
recognize P20,0ii;l ilss ( 8,(100 )( 8,000 4,000
Possible losses rn l lanl (
_ 92,900. )( 92,000 46,000
Subtotal P( 21,000 )P 40,000 P 30,000
Eliminate PAul's cit.;ri
balance to lram &i'.'r;i-loC 2i.001 ( 14,000 )( 7,000
Ba la nce 0 P 26,0C0 23,000

6,8
7C
Initial fte i00,00rJ + (600,000)5% = 140,000. lnterest iricorne is not included

LD
D,,I

2,10C,Ofrer
900,000
!2,qqr0q0_ _

6656665

750,000 ( 150,000) l
% = 750,000 + (150,ir]!) -600,000
Cost recoverY = P2 i', ::J,000) + expenses 50,00CP1'200,000 k:ss
 9,8 I
47,355
Adjusted lnst Sales (P\ of note 17,355 + 30,000)
20,000
Direct Cost
Gross Profit I
2],355
GPR (27,355147 ,355) = 57.76%

Secondyear lnstallment payment - principal (9,090'50 x 57 76%J s,2s0. 67

lnterest income 909.0s
Continuing revenue (500,000 x 5%) as-aaa
Total 3L,159.72

10. B

Sales 220,000
Sales Disc 3,600 1L76,400198% = 18O,AOA x2?6)
COGS 1s0ro99
GP 65,400
Expe nses
Rent s,000
Delivery ?, s00
Misc 2,OOA

Sala ries 15,000

Commission L 1,000 (220,000 x 5%)
Samples 7,500 i75% x 10,000)
Advertising l7-Oa/o x 5,000)
_L_O_c!_ _
NI 22,404

L1. A - Answer compute the collection ot 2011" and not 2010

12. C
Actual manufacturing overheaC. ...... .'. .'. . '
P32 5,000

Applied manufacturing overhead (P3 per DLH* x l-10,000 DLHs) ' ' 330,00!
D 5.000
Manufacturing overhead overapplied
*predeterrnined overhead rate = P300,000 + 100,000 direct labor-hours
= P3 per direct labor-hour

Since applied manufacturing overhead exceeds actual i"'ranufacturing overhead,

manufactur-ing

overhead is overa pplied.

13. C

1.4. D
Answer Mat 3'5 labor 2 oH (150% x 2 Dt) = 8'5 it will not change

15. A
Total cost 4g4,2OO- abnormal lost 5,2.56 = 498,944 due tc rounding off

16. A
-'---r- i:,ooo
B IFT I zoaoo
I
i ai;r, l
.-----,---l
I !.P iT i zz'ooo
EI i 14,s00 ---"1
F-
tlINL
I
i 3,s00 i. t1n |
7,525 r_l
tlt- .
IAL
f-
I s,ooo
1
l':^ r3'7sp
5EUP I
.-l

i
i
i

17 n i

ntinuous spoilage. l-iigher costs are assigned to good units produ]ced.

o C unit
No costs are asslgned to normal, CO
c

18. B

Answer: 23,220t'4A8,000-25,140 = 406,080 and 3180 CC aPPlied allocated

 Page 3

--lGpa't-,bd;.*-*hA
Cq st s af t_ejLplt!:9_ti tncrementa I

TUV

2A A
JC 262,00t1 "' tsy orr:duct 10,000 = P?.52,000 x150/450 = 84.,000

11
LI, B

La[:or rate variance = Actual houi's x (Actual rate - Siarroard raie)

= 24,150 x (P12.10 - ?i2.7*)
= P),11"5 favorable

')1 n

Variable overheaC splnciing vanarrce =. {Actuai hcurs x Actual rate) - (Actual hours x Standard
rate)
= P649,400 - (32i,0J0 x P18)
= P37 ,4A0 unfa vc,r,,rr,,le

23. A
a:Hi Csst per Unit
1 P:10,0c0 '" 1+00/5d0 = t, 16,000 i' b,00u 2.61
2 -s::!l*3tligt
P37,0{10 ' ;CO1L,OOC = P7,4AC
Pgi,20{t '" Z.rCO,i3,8AA =
/ 6OAC
P72,OO'3 7'6,000
1 11

L2
"li:hri {.ost per Unit 15.9

24. B
Excess freig'rt 2,250
investment B 58,35(l
ln',,,estmeni A 60.600
25. B
26. C
53,qt)rl - 75,000 + !0 = (10,950)

2t-. C
28. C
29C
. Only the inccr''re lruri r,::feteria will he unrestricted krecause reclassification of fund will be
offset

30. B - l-he Unir,,eisii,, i,cir,.:iriy as irustee or agertt of funcl

31. C

Cash P 120,C00
Mortgage payahie, ;:,:i,1 ,ir i'irii ( 60,000
60,000
Ncte payabl€ to b.:iri, secured portion 30,000 )

3C,000
Priority claims (P16,000 of administrntlve r:o:ts-r
P2,000 of cl.rstomer deposits + P4,000 propertv 'iaxl 22,000 )

Ava iia ble fr.r r Lt n5eg t red n1,n crl,: ritv cia i,ns 8,000
 Page 4

32. C

Gain Loss
Assets to be realized Assets Realized
Short.term investment 75,000 92 500 Short term investment
Accounts Receivable 150,000 57 5C0 AR
MI 250,000

Assets Acquired Assets not realized

AR 25,000 1 1C,000 AR
100,000 Mr

Liabilities Liquidated Liabilities to be liquidated

/rP 175,000 325 000 AP

Liabilities Liquidated Liabilities Assumed

AP 157,500 7,5C0 AP
Accrued expense 1 750

Supplementary charges Supplementary credits

Purchases 7,500 25,00C Sales on account
Payment of expenses 37,500 /50 lnterest on short term investment
125,000 Sales for cash

879,25A r A+S,ZSO

36,000
?? A

34. C
450,0001750,000 x 500,000 original cc,st = 300,000 sold to outsider less 500,000 total cost prior
to intercompany sale = 200,000 El at cost
3s. c
2,050,000/50,000 sh =.41
FMV 1,850,000 GW
200,000
36 A
AC cash 156,000 Est FV 156,000 160% = 260,000 x 40% = 104,000
NCt 108,000 NCI Pr"op share BV 200,000+70,000= FV 250,000 x 40%=108,000 I

Total 264,OAO
BV ?0q.a!a
E xcess 64,000
Allocation irc-qaal
gain (6,000 )

37. S
38. C
NC l, J anua ry t, 2Ot32,437,500 I AAV"1 x 2 Cgdl
l(P P609,375
NCI in subsidiary dividends (P312,50O x20%) (62,500)
NCI in adjusted net of subsidiary {Pa-/5,OOO -- P25,000) x20% 90,000
NCl, December 37,2073 p6g6,B7S
 I

i : Page5
I

39,D I

Net income of Parent --lown operations

I

P320,600
Net loss of subsidiary (60,000 - 8,700) -t5i-lAA)
Consolidated net incom e Y,4€EqA

40. B
Combined cost of sales P 160,000
Less: lntercompany sales revenue ( 110,000
Plus: Unrealized profit taken out of inventory
(7s%)x(3s,000) = 201le_-*
Consolidated cost of sales P 76,250

41. D SP 1,080,000 * CA 1,260,000 = unrealized loss 180,000 -'realized loss (180,000/8 x711"2) =
(166,875x )5%o = 58,406.25)

42. C'NCA 1,380,000 - L,050,000 = 330,000 RE 330,000 x959/o = 313,500

213. C Cost 502,250 reduced by impairrnent FV 507,500
44, C - Use the fair value because there is publish price quotatiorr
45. C

46. D
47. C
t' -l

TotalAssets 1.2131/13 i46,000 x 10 = i.46O0,001

Total Liabilities 7213U13 45,000x10=450,000
Common Stock L2/3L11.3 60,000x11 =660,C00
RE (beg 325,000 + (15,0C0 x l2) - 3,000 x 10) 47 5,O00
Translation adjustment {L25'000) {ebit
Total 1,460,000

48. A
(1.1 .02387 - .02457) x 8,340,000 = 10,008,000 loss
1./
(1,/ .02475 - U .02494) x 8,340,000 = 2,502,000 gain

49, C

i4JOAx 42.3 off er rate dec. -11 = 596,43C

Hedge item 42.3 -41.4 = loss.9 and hedge insti"urnertt 4).2 "42,5,,.3 gain = .6 net loss x 14,100
= 8,460 loss

50. B lornt venture - equity method 6,250,000 + (Rev 1,250,000 - cost 750,000= 500,000 x 40%) =

6,450,000

END