The Professional CPA Review Schoo! me CN a) Reel evn TomeLe ‘email add: crc_ace@yahoo.com _ Baaulo Paves Rudel Bidg. V, Lower Mabini cor Diego Silang, Baguio City: 3/F GCAM Bidg. Monteverde St. Davao City ‘WF (074) 442-1440 / 0922-8499196 ‘© (082) 285-8905 / 0925-72723 ADVANCED FINANCIAL ACCOUNTING & REPORTING MAY 2018 BATCH JAN 30, 2018; 2:00PM — 4:30PM FIRST PRE-BOARD EXAMINATIONS. SET ”A 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. 4. The following selected accounts appeared in the trial balance of Melrose Sales as of December 31, 2018. Debit Credit Installment Accounts Receivable ~ 2017 Pp 15,000 Installment Accounts Receivable - 2018 200,000 Inventory, December 31, 2017 70,000 Purchases 555,000 Repossessions 31000 58 000 Installment Sales ; 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 135,000 Inventory of new and repossessed merchandise as of December 31,2018, 96,000 Gross profit percentage on regular sales during the year Repossession was made during the year. It was a 2017 sale, and the corresponding uncollected ‘account 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. P 201,000 Cc. P 244,200 D. 245,880 2. The following balance sheet was prepared for the X, Y and Z Partnership on March 31, 2048: Assets . siabiliti anit Cash P 25,000 Liabilities P 52,000 Other Assets 180,000 _ X, capital (40%) 40,000 Y,, capital (40%) 65,000 . ___ Z, capital (20%) 48,000 Total Assets 205,000 Total liabiities and capital F205,000 ‘The partnership is being liquidated by the ‘sale of assets in instaliments. The first sale of non-cash assets having @ book value of P 90,000 realizes P 50,000. Assume 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 P 6,000 book value remain. How should the P 14,000 be distributed to X, Y and Z respectively, A. P5600; P 6,500; P2,800 C. PO; P11,200; P 2,800 B. P5,000; P 5,000; P4,000 D. P5600; P 5,600; P 2,800 3. Partners Joy and Rachel have a profit and loss agreement with the following provisions: Salaries 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 rea =a Rachel respectively. One-third of any remaining profits are allocated to Joy and the balance ‘achel 0 {if the partnership had net income of P 102,500, how much should be allocated A. P 44,250 B. P 47,500 Cc. P41,000 DP ar aadCRC-ACE/AFAR:: First Pre-board Exams - May 20! 4 Joseph. Bemard Company's creot rating Present value at December 31, 2017 of the three an for a loan of this type) is P 23,220. 18 batch ‘On December 31, 2017. Bemard Company should record unearned franchise fees of: ©. P 23,220 A. P50,000 8. P-30,000 5. CRC-ACE Corporation transfers merchandise above cost. The average gross margin on the C. P43,220 inventory from its home office to its branch at an amount transfers is 40 percent. At the beginning of the year, the branch held merchandise purchased from the home office in the amount of P 36,000. During the year, the home office made three shipments of in 64,000. and P 50,000. At the end of the yea home office at an amount of P 40,000. ventory to the branch at transfer prices of P 30,000, P 9, the branch had on hand inventory purchased from the What entry should the home office make to record Intracompany profit realized during the year? A. Unrealized intracompany profit Branch Income Summary 8. Unrealized intracompany Profit Branch Income Summary C. Branch income Summary Unrealized Intracompany Profit D. Investment in Branch Branch Income Summary ‘41,600 41,600 55,600 55,800 55,600 55,600 5,600 55,600 \tems 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 6 7. 8. December 31, 2018 are as follows: Inventory, Jan 2018 Branch A Branch B Purchases Expenses Shipments from home office Home office Sales Shipments to Branch A ‘Shipments to Branch B Loadings in Branch Inventory - Jan 1 Additional information: Home Office BranchA - Branch B 34,000 8,800 100,000 - 81,000 - - 600,000 - - 420,000 35,000 38,000 - 68,200 41,800 94,000 75,000 500,000 150,000 120,000 73,700 46,200 1,300 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. Combined cost of goods sold A. P601,900 B. P 503,000 C.. P.482,000 D. P 383,100 \dise inventory on the combined balance sheet as of December 31, 2018. tae " B. P 65,000 C. P 46,500 D. P 45,100 A. P68,400 On December 1, Philip Company opened was shipped. During t he month, adationl shipmer yhandise that was fh returned rere its inventory at P 18,500, which is from the fa branch in Cebu to which merchandise billed at P 30,000 shipments were made at billed prices of P 12,000. During defective and received credits of P 750 on the bu branct December f the month, the branch record returns. At the end of following sources: ‘Merchandi Merchandise a Total inventory ise acquired from home office at billed price quired from outsiders P 16,500 2,000 P- 48,500Page 3 A branch loss for December is calculated at P2,600. The home office has followed biting the branch at 20% above mercharehee cook coraseresct (ZCRO-ACH/AFAR: First Pre-board Exams - May 2018 batch Compute: 1) the balance of the allowance for overvaluation of branch inventory at December 31, Pefofe adjustments, and 2) the net income (oss) of the branch in so far as the home cfice is concerned; A. (1) P 4,126; (2) P(2,600) , ©. (1) P 7,000; (2) P1,525 B. (1) P 6.875; . (2) 1,525 - D. (1).P 6,875; (2) (P2,600) 8. . On March 1, 2016, Cameron Constniction Company was contracted to construct a townhouse for Wit ‘Company for a total contract price of P 8,400,000. The building was completed by October 31, 2018, The annual contract costs incurred, estimated costs to complete the contract, and billings for 2016, 2017 and 2018 are giving below: . 0 ‘ 2018 2017 2018 Contract cost incurred during the year 3,200,000 2,600,000 4,450,000 Estimated cost at completion 6,400,000 7,250,000 7,250,000 Billings during the year 3,200,000 3,600,000 1,700,000 The entry to record the recognized profit in 2018 includes a credit to: A. Construction revenue P 1,680,000 8. Construction in progress 230,000 C. Construetion revenue 1,700,000 D. Construction in Progress 1,450,000 10. Hilda, Irma, and Julie were partners with capital balances on January 2, 2018 of P 560,000, P 672,000, and P 496,000, respectively. Their profit and loss ratio is 3:5:2. On August 1, 2018, Hilda fetires from the partnership, On the date of retirement, the partnership net loss from January 2 is P 384,000; and the partners agreed to revalue inventories to P 296,000 (from the carrying amount of « P2720). The payment to Hilda in settlement of her interest is to be 5 P 454,800. Upon the retirement of Hitda, which of the following will result? A. Bonus to Irma of P 2,000 B. Bonus to Julie of P 800 C. Goodwill to Julie of P 2,800 D. _Inma’s capital is P 66,800 more than Julie's. 11. On September 2, 2018, Nino, Olan, and Pete formed a partnership investing cash of P 945,000, P 850.500, and P 264,600., respectively. The partners share profits and losses in the ratio of 3:2:2 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. 3 How much should be distributed to Olan upon liquidation of the partnership? A. P 128,520 Cc. PO B. P 306,180 D. P 268,380 12. _E,J, and N agree to liquidate their consuiting practice as soon as possible after the close of business on July 31, 2018, The trial balance on that date shows the following account balances. Cash P 130,000 Accounts payable P 60,000 Accounts receivable 120,000. Loanto E 40,000 Furniture and fiures 350,000" E, capttal 200,000 . 3, capt 150,000 |, capital . = 150,000 5 800.000 600.000 ‘The partners share profits and losses 50%, 20%, and 30% to E, J, and N, respectively, after N is allowed a monthly salary of P 40,000. August transactions and events are as follows: 4. The accounts payable are paid. 2. Accounts receivable of P 80,000 are collected in full, N accepts accounts receivable with a face yalue and fait value of P 30,000 in partial satisfaction of his capital balance. The remaining ‘accounts receivable are written off as uncollectibie.