SUMMER REVIEW SESSION NO.

5
Financial Accounting 1- Solution

1.

Carrying value of inventory transferred P 2,000,000

Cash Paid 700,000

Cost of inventory received P 2,700,000

Answer: B.

2. Answer: B.

3.

Total borrowing costs (192,000 + 96,000 + 160,000) P 448,000

Divided by: Total Borrowings (2,400,000 + 1,600,000 + 2,000,000) 6,000,000

Average Capitalization Rate 7.47%

Date Principal/Cost Time Average Rate Interest

incurred

January 1 P 400,000 12/12 7.47% P 29,880

April 1 1,000,000 9/12 7.47% 56,025

July 1 1,200,000 6/12 7.47% 44,820

October 1 1,000,000 3/12 7.47% 18,675

December 31 400,000 00/12 7.47% 0

Total borrowing cost to be capitalized P 149,400

Answer: B.

4.

Purchase Price P 4,000,000

Legal Fees 50,000

Title Guarantee 30,000

Cost of Land P 4,080,000

Answer: A.

5.

Depreciable Cost (P240,000 / 8/55) P 1,650,000

Add: Estimated salvage value 50,000

 Acquisition Cost P 1,700,000

Answer: B.

6. Double-declining rate = 100% / 10 x 2 = 20%

Answer: C.

7.

Purchase Price P 129,000,000

Present Value of restoration Cost 3,850,000

Development Costs 2,150,000

Total Costs P 135,000,000

Divided by Life in Tons 10,000,000

Depletion per units P 13.50 per ton

Multiply by units produced 540,000

Depletion P 7,290,000

Answer: D.

8.

Original Cost P 10,000,000

Less: Accumulated Depreciation from 1/1/10 to 1/1/14 (P 10,000,000 x 4/25) 1,600,000

Carrying value, January 1,2014 P 8,400,000

Less: Recoverable Value 5,310,000

Impairment Loss P 3,090,000

Answer: C.

9.

Recoverable Amount P 5,310,000

Divided by Remaining Useful Life 15 years

Depreciation, 2014 P 354,000

Answer: B.

10. Answer: D.
11. Answer: A.

Yellow Blue

Carrying Value P 10,000,000 P 15,000,000

Office Building (10;15) 2,000,000 3,000,000

Total P 12,000,000 P 18,000,000

Fair Value 9,000,000 19,000,000

Impairment Loss P 3,000,000 None

12-15

BDO Checkbook balance P 15,000- Cash reported in ledger

BDO Bank Statement balance 18,000-Cash in bank
BPI- payroll account 10,000-Cash fund
Time deposit. 5,000-Cash equivalent
Cash in sinking fund 50,000-Long-term investment
Vouchers paid out of collections, not yet recorded 9,000-DISREGARD
Treasury bill 7,000-Cash equivalent
Money market placement 5,000-Cash equivalent
RCBC Current account (including compensating balance of
P5, 000 legally restricted related to non-current liability) 45,000-Cashof P40,000; P5,000 ONCA
Landbank Current account (including compensating balance of P10 ,000 not legally restricted) 25,000-Cash in bank
Investment securities traded in PSE 19,000-Long-term investment
Value Added Tax Account 4,000-Cash fund
Cash in foreign bank restricted due to exchange control 6,000-Other non-current asset
Change fund 13,000-Cash fund
Treasury bonds 15,000-Long-term investment
Unrestricted foreign bank account in dollars (Current Exchange rate $1=P50) $3,000-Cash of P150,000
Credit memo from a vendor for a purchase return 3,000-(Accounts Payable)
Traveler’s check 1,000-Cash on hand
Customer’s NSF check 4,500-Accounts Receivable
Petty cash fund (of which P 10,000 in the form of paid vouchers-Expenses*
and P3,000 IOUs signed by employees-Non-trade receivable*)20,000-Cash of P7,000

Cash balance, 12/31/17–P265,000 Cash equivalents–P17,000

Long-term Investments –P84,000 Other Non-current Assets–P11,000
Receivable –P7,500 Investments –P34,000
Current Liability –(P3,000) Current Assets–P289,500

16-25 B
SUMMER REVIEW SESSION NO. 5
Financial Accounting 2- Solution

1-9 D