(CPA REVIEW SCHOOL OF THE PHILIPPINES ‘MANILA ADVANCED FINANCIAL ACCOUNTING AND REPORTING Sunday, July 28, 2019 First Preboard Examination 3:30 p.m. to 6:30 p.m. ‘Number 1 ‘A, Band C re partners with average capital balances during 020 P472,500; P238,650 and P162.350, respectively. The parmers receive 10% interest on their average capital balances; afer deducting salaries ‘of P122,325 oA and P82,625 tC, the residual profit or lossis divided equally. In 2020, the parmership hed net oss of P125,624 before the interest and salaries to partners. ‘What amount should A and C capital account change? A, capital capital 40,844 decrease 31,237 decrease B. 28,358 increase 32,458 increase ©. 291876 increase 177536 increase 4. 30,267 increase 40,448 decrease Number 2 D and E emtered into partnership on February 1,2020 by investing the following: D E Cash 15,000 Inventory 45,000 Land 15,000 Building 65,000 Fumiture and Fixtures 100.000 ‘The agreement between D and E provides that profits and losses ere tube divided into 40% and 60% to Deand E, respectively. The partnership isto assure the P30,000 mortgage loan on the building. ‘Assuming that E invests P50,000 cash and each partner isto be credited forthe full amount ofthe net assets invested, ‘What is the total capital of the parsnership? 2. 210,000 . 250,000 «260,000 4. 290,000 Number 3 Vand A are partners having capital balances of P150,000 ard P| 80,000, respectively, and sharing profits ‘and losses equally. They edmit Lio a 1/3 interest in the partnership capital and profits for an investment ‘of P195,000. If the asset revaluation method is used in recording the admission of L to the,partnership. 4. Asset revaluation wll be at P45,000,| Namber 4 | ! Partners A ,B and C have capital balances of P120,000, P70,000 and P80,000 31, 2019. The partners share profits and losses in the ratio of 3:2:5, respectively| During the calendar ‘year 2020, the partnership suffered net loss of P32,000 and each partner withdraw [24,000 in cash from the parmetship.B it unhappy with the operations ofthe partership and has decided to withéraw a8 of December 31, 2020, i B will accept P30,000 for his interest from the partnership and assuming the ‘of Bis that the inventory ofthe partnership is overvalued. ‘The total overvaluation of inventory is P9,600 ‘A's capital will be reduced by 24,000 because ofthe overvaluation ‘The total share of Cin the overvaluation of inventory is P14,400 ‘The total interest of B before withdrawal is P39,600, pege Which of the following sutement i tue? | | ! | Number 5 ‘The partnership of X and ¥ provides for equal sharing of profits and losses. Priot tothe admission of a third partner Z, the capital account of X, P75,000 and Y, P105,000. Z invest P90,000 for a P75,000 interest and partners agreed that the net assets of the new partnership would be P270,000. ‘Which ofthe following statement is tue? ‘Asset revaluation to old partners of P15,000, Bonus to nev: partner of P1S.000 ‘Borus to old partner of P15,000 ‘Asset revaluation to new partner of P1S,000 eeor Number 6 ‘A contribute P48,000 and B contributed P96,000 to form & partnership, and they agreed to share profits in the ratio of their original capital contributions. During the first year of operations, they made a profit ‘of P32,580; A withdrew P10,100 and B P16,000. At the start ofthe following year, they agreed to admit CC into the partnership. He was to receive a interest inthe capital and profits upon payment of P60,000 to A and B, whose capital accounts were 10 be reduced by trnsfers of C’s capital account of amount sufficient to bring the back to their original capital ratio. How should the P60,000 paid by C be divided between A and B, respectively? a 19,650; 40,350 '. 30,000; 30,000 20,000; $0,000, 4. 18,600; 41,400 i Number 7 and jae partners agreeing to allow an intrest of 6% on the capital investment a the beginning of the year, 300,000 and P230,000, respectively. Ahd a monthly salary of P6,000 to D and J would be given an appropriate salary so that D will received PSB,100 atthe end of the year. Any remaining balance will be shared by the partners equally. The first yeas of operation yielded a net income of P100,000. | hats te ny alors giver et? = 60,000 b. 132,000 © 31,800 | 63,800Page 3 Namber 8 Hand I share profits and losses 1/3 and 23 respectively. H receives a monthly salary ofP 15,000. IF H's . Contract installment receivable account in the asset section ©. Deferred revenue in the noncurrent lsbility section 4d. Share premium in the stockholders equity section Number 41 Entity A provides teak furniture to a Entity B on a consignment basis. The products are immediately proposed forsale inthe garden centre of Entity B. Entity A retins ttle tothe products until they are sold to the end-customer. Entity B does not have an obligation to pay Entity A until a sale occurs, and any ‘unsold products can be returned to Entity A. Entity A also retains the right to take back any unsold ‘products. o 1 transfer unsold products 10 anather retailer. Once Entity B sells the products to the end- ‘customer, Entity A has no further obligations, and the retailer has no furcher return rights. Under PFRS. 15, when shall Entity A recognize revenue with respect to this consignimeat arrangement? ‘When Entity A and Entity B sign the document of consignment arrangement. ‘When Entity B sels the product tothe end-customer. ‘When Entity A delivers the product to Entity B. ‘When Entiy B makes eash remittance 10 Entity A. Number 42 Under installment method of gross profit recognition, how shall the entity recognize gross profit from the revenue? ‘4 Gross profit shall be recognized based on percentage of completion of services rendered atthe end ofthe period. 'b. Gross profit shall be fully recognized atthe time of recognition of revenue ‘Gross profit shall not be recognized until the direct cost of services or cost of production is fully recovered. Gross profit shall be recognized atthe time of collection of revenue. ‘Number 43 Plethora-Large Corporation operates @ number of branches in the provinces. On December 31, 2019, its Davao branch showed a Home Office Account balance of PI64,100 and the home office books showed an Investment in Davao Branch account balance of P1S3,300, The following information may belp in reconciling both accounts 1. A P72,000 shipment, charged by Home Office to Davao Branch, was actually sent to and retained by Cebu Branch, * 2. A P90,000 shipment, intended and charged to Aklan Branch was shipped to Davao Branch and retained by the later. 3, API2,000 emergency cash transfer from Cebu Branch was not taken up in the Home Office books. 4. Home office collects a Davao Branch accounts receivable of P21,600 and fails to notify the branch, 5. Home office was charged for P7,200 for merchandise returned by Davao Branch on December 30. ‘The merchandise isin transit 6. Home office erroneously reconded Davao Branch's net income for 2019 at P97,650. The branch reported a net income of P76,050.31, 20192 2 120,900 . 164,100 | 142,500 4. 130,300 | Whats the adjusted balances of the Home Office and Davao Branch rel on December | wenn ants | Lt rat fe Desi ach rt of Apion Campy hee fee cet cared in the branch's books Shows the following disepancis at Berember 31,2013: 1. A credit memo from the home office for P90O was taken by the branch as P1, 080, 2. A charge by the branch of P1,650 for an advance taken by the president wheq be visited the branch has not yet been recorded by the home office. 3. The branch has not taken up P2,700 covered by a debit memo from the hdae office as share in advertising expenses, | ‘The investment in Desire Branch account inthe home office books had a debit Balance of P129,000 at December 31, 2019. The reciprocal accounts were in agreement atthe beginning of the year, ‘44, What is the unadjusted balance ofthe Home Office account inthe branch’s books at December 31, 20197 & 130,500 b. 128.850 125,970 124,470 45. What isthe adjusted balance? 8 127,350 b. 130,650 127,830 130,080 Number 46 the Eoaelus 10%, On January 1, 2019 the inventories of the Home Office in Manila andthe Cebu City Branch are P40,800 and P11,880 respectively. During 2019 the Home Office purchased merchandise fzating P120,000 and shipped 0% of itt th Cabu City Branch, At December 31,2019, the following 4oural entry to prepare the books forthe nex accounting period was prepared by the branch Unventory, Janwary 1 11,880 : Tr ee ie sr a | ‘What was the actual branch income for 2019 on a cost basis assuming the use of the provisions ff the Sutement of Financial Accovntng 14400 18.960 ! Is.s40 i 20,520 . epeeNumbers 47, 48 and 49 Page 12 ‘Tesh Bark Company operates u branch in Zamboage City. ‘There are shipmenis in transit from home ‘office to the branch. The home office shipped ‘merchandise to the branch at 125% of cost in the year 2019, Operating data for the home office and the branch is as follows: Home Office ‘Branch, Sales 350,000 | _P75,000 Purchases rom out 200,000, 15,000 Shipments to brunch Cost to home office Billing price to branch, 30,000 | “___ 32,500 apenses 46,000. 70,600" lnvenionies, January 1, 2019 Branch: ‘Acquired from outsiders, at cost ‘Acquired from home office, a billed pri 20%: ahove cos, Home office, acquired from outsiders, at cost 80,000 7,500 ice, which average aio00 Inventories, December 31, 2019 Branet: ‘Acquired from outsiders, at cost Acquired from home office, at 2019 bill (physical count) Home office, acquired fom outsiders, at eos ‘i ann 5,500 led price 21,000 47, What is the combined ending inven' ary? & 81,500 77300 78000 4. 81,300 48. What is the combined -st of poods sold? a 241,200 b. 241.580 249,500, 4. 240209 49. What is the combined net insane? 33,800 83.800 27500 4. 7500 Number $0 ‘Which ofthe following transactions wil require debit to home office account inthe separate accounting book of the branch? A Collection by home office of branch's ree b. Payment by hon:e ulfise of branch's payables Net income of the Dri <4. Shipment by hom ive of merchandise to branchPage 13 Number St t ‘Under PAS 2, what isthe measurement of inventory ofthe branch inthe exteralsttement of financial postion ofthe company? & Historical cost Fair value €. Lower of historical cost or net realizable value 4. Bile price of historical cost depending on the sowee of inventory Namber $2, §3,54 and $5 CPAR Company uses a job-order costing system and the following information is available from its records. The company has three jobs in process: #1, #2, and #5. Raw material used 120,000 Direct labor per hour 8.50 Overhead applied based on direct labor cost 120% Direct material was requisitioned as follows for each job respectively: 30 percent, 25 percent, and 25 percent; the balance ofthe requisitions was considered indirect. Direct labor hours per job are 2,500; 3,100; and 4,200; respectively. Indirect labo is 33.000. Other actual overhead costs totaled 36,000. 52. What isthe underover applied overbead atthe end ofthe peti? 30,960 over b. 30)960 under ©. 6960 over € 6.960 under ‘S3.1F Job #5 is completed and transfered, what is the balance in Work in Process Inventory atthe end ‘of the period? a. 96,700 99020 1395540 . 170,720 54, Whats the pme cost of Job #1? a. 42250 b. $7250 ©, 73280 4. 92.750 155. What is the total overhead applied to Job #27 a 18250 b. 26350 ©. 30,000, 4. 31,620Page 14 Numbers 56nd $7 Anton Corp. manufactures baby toys and during the year 2020, Job 125 produced 5,000 units and the following costs per unit were given: Direct Material 250 Diect Labor 100 Overhead. ? Overhead is applied at 150% of direct labor cos, inclusive of a 25% allowance. At the end ofthe year it ‘was discovered that 120 units were defective and 125 units were spoiled. The costs per unt ofthe rework ‘were P50 for direct materials and P25 for direct labor and an applied overhead. The spoiled units can be sold for P350 per unit, ‘56. Assuming the spoilage and defect are due to internal failure, what isthe cost transferred to Finished ‘Goods Inventory? 2,500,000, 2,513,500 1437.50 2,451,000 pose 57. Assuming the spoilage and defect are due to exacting specification, what isthe cost transferred to Finished Goods Inventory? & 2,344,000 . 2378,000 e 2344,750 a 3,387,750 ‘Numbers 58, $9, 60 and 61 WWV Corporation has three production departments A, B, and C. VVV Corporation also has two service departments, Administration and Personnel. Administration cosis are allocated based on value of assets employed, and Personnel costs are allocated based on aumber of employees, Assume that Administration provides more service to the other departments than does the Personnel Department. Dept Overiead Cont Timployecs ‘Raset Vale ‘Admin 7900,000 35 430,000, Persomnl 350,000 To 00,000 a 700.000 i 300,600 B 300,000 5 130,000 uc 250,000 10 800,000 ‘58. Under the direct method, what are the overhead costs allocated to Department B? a 166,333, b. 192,000 & 104,791 a. 140,878, 59. Under the direct method, what isthe total overhead of department B after allocetion? a. 392,000 b. 340,878 366,333, ‘ 4. 308,791 (60. Under the step method, what is the overhead cost allocated to Department A from the Personnel department? a 175,000 b 145,946 320946 4d. 466,892Page 15 61. Under the step method, what is the overbead cost allocated to Department C from the service departments? 505,856 B. 603,153, «416667 4. 540,541 Nambers 62 and 63 Miguel Company produces four floor cleaners from the same process: C, D, E, and G. Joint product ‘costs are 90,000. | Sales pice | Disposal cont ; j Bareis | SN Ree | DURE Sa | Fur processing cons | Final salen price C750, P100.00, PESO 720.00 135.00 D_| 1,000. 80.00 40.00 25.00) 100.00 E1400. 110.00 70.00 40.00. 135.00) {2.0001 150.00 35.00 45.00) 195.00 If Migue! Company sells the products after further processing, the following disposal costs will be incurred: C, 25.00; D, 10.00; E, 35.00; G, 60.00. 62. Using net realizable value a spliff, what amount of joint processing oxi allosid to Product b, 4 15,501 10,172 42,66 21,701 (63. Using approximated net realizable value, what amount of joint processing cost is allocated to Product G? b. 4 43,391 23,286 38,163 23,746 Numbers 64 and 65 ‘The following information is for Sean Company's September production: Standards: Macerial Labor ‘Actual: Production Material Labor (64. What is the material price variance? a be a BSF 735 nNOF nou 4.0 feet per unit @ P3.75 per foot 3.0 hours per unit @ P8.25 per hour 3,500 units produced during the month 14,200 feet used; 14,700 feet purchased @ P3.70 per foot 10,400 direct labor hours @ P8.35 per hourPage 16 65. What isthe labor efficiency variance? 825 F 825U B35 F 35U eesr Number 66 ‘Which ofthe following statements about the manufacturing cycle is correct? 4% The decrease in raw materials inventory during the period will result to decrease in wal ‘manufacturing cost forthe period ended '. The increase in work in process inventory during the period wil result to increase in cost of goods manufactured forthe period ended, © The decrease in finished goods inventory during the period will result o increase in cost of goods Sold forthe period ended. 4. Total manufactunng cost fr the period ended plus total cost of goods manufactured forthe period ended will equal 10 ost of goods sold for the period ended. Number 67 ‘A the time of recording of direct labor variance, the amount debited to work-in-provess accouatis higher than the amount debited to salaries payable account. Which of the following is correct ifthe direct labor hours actually rendered by factory workers are higher than the standard direct labor hours to be rendered. by them? ‘a. Net unfavorable direct labor variance will be recognized. , Direct labor rate variance will be credited. ¢. Direct material efficiency variance will be debited, 4 It would he impossible te determine which types of direct labor variances wil be debited or cred ia the absence of other relevant data. Number 68 ‘Which of the following casts shall be classified as prime cost, conversion cost and product cost atthe 8 Employee benefits of the factory labor secountant ', Freight in ofthe main materials ef the product c. Wage ofthe factory worker 44. Depreciation ofthe factory machinery Namber 69 the actual factory overhead cost is lower than the applied factory overhead, the journal entry to adjust this material difference will includes (Credit to raw materials inventory account Credit to factory overhead account Debit to cost of sales account Credit to work-in-process account Number 70 ‘What accounting system is appropriate for Justin-Time Inventory System? 4. Backflush Costing System Actual Costing System Normal Costing System 4. Tradhtional Costing System END