CPA REVIEW SCHOOL OF THE PHILIPPINES Manila FINANCIAL ACCOUNTING AND REPORTING —_VALIXISIY/VALIN/ESCALASANTOSDELA CRUZ. SELF TEST 1. Anentity used the direct method to prepare the statement of cashflows. The entity had the following cash flows during the current year: ‘Cash receipts from issuance of ordinary shares 4,000,000 Cash receipts from customers 2,000,000 ‘Cash receipts from dividends on long-tenm investments 300,000 Cash receips from repayment of loan made to anober entity 2,200,000 Cash payments for wages and other operating expenses 1,200,000 Cash payments for insurance 100,000 Cash payments for dividends 200,000 Cash payments for taxes 400,000 Cash payment to purchase land 800,000 Cash balance - beginning 3,500,000 |, What i the met ensh provided by operating activities? a 600,000 400,000 300,000 4. 200,000 2. Whats the met cash provided by investing netlvties? 2,200,000 ' 1'400.000 © 3,000,000 & "800,000 3. What isthe net cash provided Fy financing activities? 4.000.000 '. 6.000.000 ©. 3,800,000 6.200.000 2. An entity reported ret income of P7, surveat yea? Ssnunry 1 December 31 ‘Accounts receivable 13200,0%0 1,600,000 Allowance for doubt ecounts Yw0.000 200,000 Prepaid rent expense 400,000 ‘Accoums payahle 900,000 1,400,000, ‘What isthe net cash provided by operating activites? 8,000,000 b. 7,300,000 ©. 6,600,000 4. 7,400,000 3. An entity reported net income of P6,000,000 forthe curent yeas, Investment in shares carvied on the equity basis 690,000 increase Accumulated deprciatian, caused by major repair wo equipment 200,600 decrease Premium on bands puycble 100,000 decrease Deferred tx lability 300,000 increase ‘What isthe met cash provided by operating activities” a. 6,400,000 . 5.400.000 5,600,000 4. 5,800,000 6719| Page 2 ‘4. An entity reported the following information for the current year: Capital expenditures 1,000,000 Capital lease payments 125,000 Income taxes paid 325,000 Dividends paid 200,000 ‘Net interest payments 220,000 ‘What total amount should be reported as supplemental disclosure inthe statement of cash flows ‘Prepared using the indirect method? 1,125,000 . 1,870,000 745,000 4 545,000 . An entity provided the following data for the current year: Purchase of real estate for cash 5,500,000 ‘Cash borrowed ftom bank to purchase the realestate 5,500,000 Sale of investment securities for cash ',000,000 Purchase of patent for cash 1,250,000, Dividend paid 6,000,000 Issuance of ordinary shares for cash 22,500,000 Payment of bank loan 1300.00 Issuance of bonds payable for cash 3,000,000 Increase in customers’ deposit 200,000 1, What isthe net cash used in investing activities? & 6,750,000 . 3,750,000 ©. 1,750,000 ‘500,000 2. What is the net eash provided by financing activities? 5,000,000, . 3,300,000 4,500,000 4. 5,500,000 ‘An Entity paid salaried employees biweekly. Advances made to employees are paid back by payroll deductions. The entity provided the following information: December 31,2018 December 31,2019 Employee advances 24,000 36,000 ‘Accrued salaries payable 40,000 > ‘Salaries expense during the year 420,000 Salaries paid during the year (gross) 390,000 ‘On December 31, 2019, what amount should be reported as accrued salaries payable? a. 64,000 b. 82,000, ©. 70,000 4. 30,000 . An éatty reported rental revenue of P2,210,000 inthe cash bass income tax retum forthe year ended! November 30, 2019. Rept receivable - November 30, 2019 1,060,000 Rept receivable -November 30, 2018 '800,000 Uncollectible rent written off during the fiscal year 30,000 Under aceraal basis, what amount shouldbe reported s reba revenue? , 920,000 | 980,000 $40,000 1 500,000 peee 6719Page 3 8. An entity paid P72,000 to renew its only insurance policy for three years on March 1, 2019, the effective date ofthe policy. On March 31, 2019, the unadjusted tral balance showed a balance of 'P3,000 for prepaid insurance and P72,000 for insurance expense. | What amount should be reported for prepaid insurance on March 31, 20197 65,000 70,000 72,000 73,000 pege 2, What is the insurance expense for the three months ended March 31, 2019? & 3,000 b. 5,000 © 2000 4. 1,000 9. An entity eported the following unadjusted prepaid expense om December 31, 2019: An opening balance of P150,000 for the entity's comprehensive insurance policy. The entity ‘had paid an anual premium of P300,000 aa Ty 1, 2018. + A.P320,000 anmual insurance premium payment made July 1, 2019. * 7200.00 advance rental payment fora warehouse he ey leased for one yer beginning january I, (On December 31, 2019 what amount should be reported as prepaid expenses? $20,000 . 360,000 © 200,000 160,000 10, An entity acquired rights to patent under a licensing agreement that required an advance royalty payment when the agreement was signed. The entity remitted royalties earned and due under the agreement on October 31 each year. Additionally, on the same date, the entity paid in advance estimated royalties for the next year. The entity adjusted prepaid royalties at year-end. The entity provided the following information for current year January 1 Prepaid royalties 650,000 October 31 Royalty payment charged to royalty expense 1,100,000 December 31 ‘Year-end credit adjustment fo expense 250,000 ‘What amount should be reported as prepaid royalties at year-end? © 250,000 . 400,000 ©. 850,000 . 900,000 11, An entity had a balance of P1,500,000 in the professional fees expense account on December 31, 2019, before considering year-end adjustments relating tothe following: ‘© Consultants were hired for a special project at a total fee not to exceed P650,0000, The entity hd recorded P550,000 ofthis fee based on billings for work performed in 2019. ‘+ The attomey's letter reauested by the auditors dated January 31, 2020 indicated that legal fees ‘of 50,000 were billed on January 15, 2029 for work performed in November 2019 and unbilled fees for December 2019 were P100,000. ‘What amount should be reported for professional feee expense for 2019? 1,750,000 1,650,000, 1,850,000 1,700,000, aege END 6719