PRACTI

CALACCOUNTI
NGTWOREVI
EWERS/TESTBANKS

1. Ji
nkyistryingtodecidewhet hertoacceptabonusof25%ofnet
i
ncomeaf tersalari
esandbonusorasal aryofP97,500plusa
bonusof10%ofneti ncomeaf tersalari
esandbonusasameans
ofallocat
ingprofitamongt hepartners.Salari
estr
aceabletot
he
otherpartnersar eestimatedt obeP450, 000.Whatamountof
i
ncomewoul d benecessar yso thatJi nkywoul d consi
dert
he
choicestobeequal ?
a.P1,100,
000 b.P1,197,500 c.P650, 000
d.P1,262,
500

2.JambyandMi nam j ustfor

medapar tner ship.Jambycont r
ibuted
cashofP2,205,000andof f
iceequi pmentt hatcostP945, 000.The
equi
pmenthadbeenusedi nhersol epr oprietorshipandhadbeen
70% depreciated,t he appr aised value of t he equipment i s
P630,
000.Jambyal socont ri
but edanot epay ableofP210, 000t o
beassumedbyt hepar t
nership.Jambyi st ohav e60%i nterestin
thepart
nership.Miriam contributedonlyP1, 575,000mer chandise
i
nventor
yatf airmar ketval
ue.Assumet heuseofbonusmet hod,
thepart
ners’capi t
almustbei nconf ormi tywi ththeirprofi
tand
l
ossrati
ouponf ormation.

Int
heformationofapar t
nership,
whi choft hefoll
owingistrue?
a.Theagreedcapi t
alofJambyuponf ormat i
onisP2,625,000
b.Thetotalagreedcapit
alofthepartnershipisP4,375,000
c.ThecapitalofMi ri
am wil
lincreasebyP105, 000asar esul
tof
thetr
ansferofcapital
d.Thereiseitheraninvest
mentorwi thdrawalofassetundert he
bonusmet hod

3.BatanesConst ructionCompanyr ecognizedgrosslossofP42,000

onitslong-ter
m proj ectwhichhasaccumul atedcostsofP490,
000.
Tof i
nisht heproject ,t
hecompanyest imatesthatithastoincur
addit
ionalcostofP735, 000.Thecontractpri
ceis:
a.P798,000 b.P1,
330,000 c. P1, 225,000
d.P1,183,000

4.Ester
,Judi
thandMarthawerepar
tner
swit
hcapit
albalanceson
January2,2009ofP70,
000,P84,
000andP62,
000,respecti
vel
y.
 Thei
rlossshar i
ngrati
ois3:5:
2.Onmay1, 2009,Est
erret
iresfor
m
thepartner
ship.Ont hedat eofr eti
rementthepar t
nershipnet
prof
itform operat
ionsisP48,000.Thepartnersagr
eedfur t
herto
payEsterP76,560insett
lementofherinter
est.

Uponreti
rementofEst er
, whichoft
hef
oll
owingwi
l
lresul
t?
a.Goodwi l
lofEsterisP7,840
b.Judit
hcapi t
alafterretir
ementofEst
erisP36,
400highert
han
Martha.
c.Bonusf r
om EsterisP9,440
d.Bonust oJudit
hisP5, 600

5.Thefol
lowi
ngsel
ect
edaccountsappear
edi nthet
rai
lbal
anceof
Val
enti
ne’
sCompanyasofDecember31,2009:

Install
mentr eceivable–2008sal es P 12,
000
Repossessi ons P 2,400
Install
mentr eceivable–2009sal es 160, 000 Inst
all
ment
sales 340,
000
Inventory,
December31, 2008 56, 000 Regular sal es
308,
000
Purchases 440,000 Defer
red gr oss
profit–2008 43, 000
Operati
ngexpenses
92,
000
Addi t
ionali
nf or
mat ion:
Install
mentr eceivable–2008sal es,DecemberasofDecember31,
2008
Inventoryofnew andr epossessedmer chandiseasofDecember
31, 2009
Grosspr ofi
tper centageoni nst
all
mentsal esin2008i s10%hi gher
thant hegrosspr ofitpercent
ageonr egul
arsalesin2009.

Repossessi
ons was made dur i
ng t
he y
earand was recorded
corr
ectl
y.Itwasa2008sal eandt hecorr
espondi
nguncoll
ected
accountatthet
imeofrepossessi
onwasP6,200.

Whatist
heneti
ncomefor2009
a.P108,
360 b.P13,480 c.P105,
880 d.
P107,
200
6.OnNov ember30, 2009, LovelessCompanyaut hori
zedNBSBCor p.
tooperateasafranchiseef oraninit
ialfr
anchisefeeofP1,950,
000.
Of his amount ,P750, 000 was r eceived upon signing the
agreementandthebal ance,representedbyanot e,isdueinfour
annualpayment
sst arti
ngNov ember30, 2010.Presentval
ueofP1
at12%f or4per
iodsis0. 6355.

Pr esentv al
ueofanor di
nar yannui
tyofP1at12%f or4per i
odsis
3.0374.Theper i
odofrefundwi l
lel
apsedonJanuar y31,2010.The
franchisorhasper f
ormedsubst ant
iall
yall
oftheini
ti
alservi
cesbut
theoper ati
onsoft hestorehav eyettostart
.Coll
ectibi
l
ityofthe
not eisr easonabl
ycertain.How muchi st heunearnedfranchi
se
feeont heyearendedDecember31, 2009?

a.P1,
661,
220 b.P750,
000 c.P991,
220
d.P0

7.OnApr i
l30, 2009,thecapi talaccount sofP, Qshowst hef oll
owi ng
balances:P–P150, 000, Q–75, 000andR–P45, 000.Att hist i
me,
Sisadmi ttedtothef i
rm whenhepur chasesaone- si
xthinterestin
thef ir
mf orP27, 5000.Theol dpar tner
sequal i
zedt heircapi tal
i
nvest ment s.Afterwards,al lthepar tner
sagr eetodi vi
depr ofit
s
andl ossesequal ly.Thenewpar tnershipclosesit
sbooksonJune
30,2009r eport
ingapr ofi
tofP4, 200f ortwomont hs.Thepar tners
madet hef ol
lowingwi thdrawals:PandR, P450permont h; QandS
permont h.OnJune30,2009,Si nv
est senoughcasht oincr ease
hiscapi t
alt oaone- thir
di nterestint hepartner
ship.How much
cashi stobei nvestedbyS?

a.P108,
025 b.P68,
025 c.P67,
425 d.
P107,
425

8.Forever,Inc.grant
edaf ranchiset oHopel essRomant icf ort he
mani l
aar ea.Thefr
anchi sewast opayaf r
anchisefeeofP250, 000,
payableinf i
veequalannual install
ment sstart
ingwiththepay ment
uponsi gningoftheagr eement .Thef ranchisewast opaymont hly
3%ofgr osssalesoft hepr ecedingmont h.Shouldtheoper ati
ons
oft he out l
etprovet o be unpr ofi
table,the fr
anchise maybe
canceledwi thwhateverobl igat
ionsowi ngFor ever
,Inc.i
ni nterest
 beari
ngnot eis14%.Thef ir
styeargenerat
edagr osssal
esof
P1,250,000.Whati stheamountofunearnedfr
anchisef
eeaft
er
thefir
sty earofoper
ati
ons?

a.P287,
500 b.P145,
700 c. P195,
700
d.P250,
000

9.Lovebi
rdsCorporat
ionsel
lsgoodsontheinst
all
mentbasi
s.For
theyearj
ustended,t
hefol
l
owingwer
erepor
ted:

Costofinstall
mentsal es P525,000
Lossonr epossession 13,
500
Fai
rvalueofr epossessedmer
chandi
se 112,
500
Accountdef aul
ted 180,
000
Defer
redgr ossprofit
,end 108,
000

Howmuchwast hecol
l
ect
ionsfortheyear
?
a.P210,
000 b.P264,000 c. P390,
000
d.P415,
715

10. DEFCompany ,whi chbeganoperati

onsonJanuary1,2009
appropri
atel
y,uses the i
nst
almentmethod ofaccounti
ng.The
fol
lowingdatapert
aintoDEF’
soperat
ionsfory
ear2009:

Instal
mentsal es(Beforeadjustment
) P450,000 Oper ating
expenses( beforewr i
te-
off
And r epossessions)
P36,000
Regularsales 187,
500 Cash col lecti
ons on
i
nstalmentsal es
Costofregul arsales 107,
500 i
ncludingint
erest
ofP12,000 156,000
Costofinst al
mentsal e 315,
000 Inst
alments
receiv
ableswr it
ten-of
f
Duetodef aults
22,
000
FMVofr epossessed
Mer chandise 27,
000 Repossessed
accounts 50,
000
Actualvalueoft r
ade-in
 Mer
chandi
se 40,
000 t
rade-
in al
l
owance
70,
000

How muchi sthedef er

redgr
osspr ofi
tatDecember31,2009?
Whatisthenetincomefort
heyearendedDecember31,2009?
a.P50,500;P65,000 c.P41,
000;P63,000
b.P50,500;P91,500 d.P41,
000;P75,000

11. Thepartner
shi
p agr
eementofX,Y and Z pr
ovi
desf
ort
he
di
vi
sionofneti
ncomeasfol
l
ows:

I
.Y,whomanagest hepart
nershi
pist orecei
veasal
aryof
P16,500mont hl
y.
II
.Eachpar tneristobeallowedi nt
erestat15% onendi
ng
capit
al.
I
II
.Bal anceistobedivi
ded25:30:
45.

Duri
ng2009,Xi nvest
edanaddi ti
onalP96,000inthepart
nership.Y
madeanadditionalinvest
mentofP60, 000andwi t
hdr
ewP90, 000,
andZ withdr
ew P70, 000.Noot herinvest
ment sorwithdrawals
weremadedur ing2009.OnJanuar y1,2009,thecapi
talbalances
wereX,P280,000;Y,P300, 000;andZ,P170, 000.Tot
alcapi t
alat
year
-endwasP975, 000.

Computethecapi
tal
balanceofeachpart
neraty
ear
-end:
X Y Z
a.P 36,
750 P214, 920 P(20,
670)
b. 412,
750 484,920 77,
330
c. 316,
750 514,920 149,
330
d. 398,
750 412,500 87,
250

12. The bal ance sheet as of Sept ember 30,2009,f or the

part
nershipofD, EandFshowst hefoll
owinginformation:Assets,
P360,000;D,loan,P20,000;D,capital
,P83,
000;E,capital,P77,
000;
F,capital,P180,
000.I twasagr eedamongt hepar t
ner sthatD
ret
ir
esf rom t
hepar t
nership,anditwasalsof ur
theragreedthatthe
assetsshouldbeadj ustedt otheirf
airvalueofP345, 000asof
September30,2009.Netl osspriortotheretir
ementofDamount
toP70, 000.Thepar tnershi
pi st opayD P62, 000cashf orD’s
part
nershipinter
est,whichwoul dincl
udethepay mentofhisloan.
 Nogoodwill
istober
ecor
ded.D,
EandFshar
epr
ofi
t40%,
15%and
45%respect
ivel
y.

Aft
erD’
sret
ir
ement
,howmuchwouldF’
scapi
tal
bal
ancebe?
a.P66,
000 c.P136,
500
b.P147,
000 d.P182,
250

13. PartnersA,BandCshar epr ofi

tsandlossesinther ati
oof5:3:2.
Attheendofav er
yunprof i
tableyear,t
heydecidedt oliquidat
ethe
fi
rm.Thepar tner’
scapit
alaccountbal ancesatt hist i
mear eas
fol
lows:A,P616, 000;B,P697, 200;C,P420, 000.The l i
abi
li
ti
es
accumulatetoP840,000,includingaloanofP280, 000f rom A.The
cashbalanceisP168,000.Al lthepar t
nersareper sonallysol
vent.
Thepartnersplantosel
ltheasset sininstal
ment.

IfB r
eceivedP100,
800from t
hefir
stdist
ri
but
ionofcash,how
muchdidCr ecei
veatt
hatt
ime?
a.P56,000 c.P33,
600
b.P22,400 d.P61,
600

14. OnJul y1,2007,NRConstruct

ionCor p.cont ractedtobuil
dan
officebuil
dingforFM,
Inc.f
oratotalcontractpri
ceofP12, 875.
2007 2008 2009
Contractcostincur
red P9, 375 P65,
625
P56,250
Esti
mat edcoststocomplet
ethecontract 84,375
50,
000 -
Bil
l
ingst oFM, I
nc. 12,750 74,
750
34,
375

How muchi st heConst ructi

oni nPr ogressaccountbal anceat
December31,2008,usi ngt hepercentageofcompl eti
onmet hod?
Howmuchi st heConst ructioni
nPr ogress,netofPr ogressBilli
ngs
atDecember31, 2008,usingthezer o-
profitmet hod?Howmuchi s
thereali
zedgr osspr ofi
t/(l
oss),usingper centageofcompl et i
on
methodin2009?
a.P71,875;P2,875;P(9,375) c. P71,875; P15,625;
P(9,
375)
b.P74,687.
50; P2,875;P(6,250) d. P71,875; P15,625;
P(6,
250)
15. On Januar y2,2009,SD Companysi gned an agr eementt o
operateasaf ranchi
seeofTQPr oducts, inc.foraninit
ialfranchise
feeofP937, 500f or7y ears.Oft hisamount ,P175,000waspai d
whent heagr eementwassi gnedandt hebal ancepay ablei nfour
annualpay mentsbeginningonDecember31,2009.SDsi gneda
non-i
nterestbearingnot efort hebal ance.SD’ sr ati
ngi ndicates
thathecanbor rowmoneyat16%f ort
hel oanoft histype.Assume
thatsubstanti
alservi
cesamount ingt oP283, 500hadal r
eadybeen
renderedbyTQ Pr oductsandt hataddi t
ionalindir
ectf ranchise
costofP25,500wasal soi ncured.PVf
r actoris2.80.

Ift
hecollect
ionoft henotei
snotr easonabl
yassur
ed,t
henet
i
ncomefortheyearendedDecember31,
2009i s
a.P313,
435 c.P168,135
b.P228,
035 d.P253,535

16. OmegaI nc.st

arted a4-yearcontractto buil
d adam.
Acti
vit
iescommencedonFebr uar
y1,2007.Thet otalcont r
act
pri
ceamount edtoP12mi ll
ion,anditwasest i
mat edt hatthe
workwouldbecompl etedatat ot
alcostofP9.5mi ll
ion.Inthe
constr
ucti
on agreement the customer agreed t o accept
i
ncreasesinwagetari
ff
sadditi
onaltothecontr
actprice.

The fol
lowing inf ormation refers cont
ract act
ivi
ti
es for t
he
fi
nanci
alyearendingDecember31, 2007:
a.Costsfortheyear :
P’
000
Mat eri
als………………………………………. .
P1,400
Labor ……………………………………………. .
800
Oper ati
ngov erheads……………………….
150
Subcont ractor
s………………………………. .
180

b.Cur
rentest
imateoftotal
contr
actcost
sindicatest
hef ol
l
owing:
 Materi
alsar
et obeP180,000hi
gherthanexpected.
 Totall
aborcostsaret
obeP300,000hi ghert
hanexpected.
 Ofthisamount,onl
yP240,000wouldbebr
oughtaboutby
i
ncreasedwaget ar
if
fs.Theot
heramountwoul
dbeduet o
i
neffici
enci
es.
 A sav ings of P300,000 i
s expect
ed on operat
ing
overheads.

c.Duri
ng thecurrentfinancialy earthecust omerrequest
ed a
var
iati
ontotheor igi
nalcont ractandi twasagr eedthatthe
contr
actpri
cewoul dbet oi ncreasedbyP900, 000.Thetotal
esti
matedcostofthisextrawor kisP750,000.

d.Bytheendof2007,cer
ti
fi
cat
esi ssuedbyquant
it
ysur
vey
ors
i
ndi
cateda25%st
ageofcomplet
ion.

17. Comput etheamountofgrossprofitorl

osstoberecogni
zedin
2007usingcont ractcost
sinpr oporti
onto est
imatedcontr
act
cost
s(percentageofcomplet
ionmethod):
a.P568,000 c.P610,
000
b.P577,000 d.P755,
000

18. Comput etheamountofgrossprof

itorlosstober ecognizedi
n
2007 using percent
age ofthe work certi
fi
ed (percent
age of
compl
etionmet hod–outputmethodusi
ngact ual
costappr oach)
:
a.P568,000 c.P610,000
b.P577,000 d.P755,000

19. Tam’ sPizza,Inc.char gesani nitialfranchisef eeofP50, 000f

or
therighttooper ateasaf ranchi seeofTam’ sPi zza.Oft hi
samount ,
P10,000 is pay able when t he agr eementwas si gned and the
balancei spay ablei nf iveannualpay mentsofP8, 000each.I n
retur
nf ortheiniti
al f
ranchi sef ee,thef ranchiserwi l
l helplocatet
he
sit
e, negoti
atewi ththeleaseorpur chaseoft hesi te,superviset
he
const r
ucti
onact i
vity
,andpr ov i
det hebookkeepi ngser v
ices.The
creditr at
ing oft he franchi see i ndicates t hatmoney can be
borrowedat8%.Thepr esentv alueofanor dinaryannui tyoffi
ve
receiptsofP8,000eachdi scount edat8%i sP31, 941. 68.

Ift
heinit
ialdownpaymentisnotrefundabl
eandnofut
ureservi
ces
arerequiredbyt hefranchi
ser,butcoll
ect
ionoft
henot eisso
uncer
tai
nt hatr
ecogni
ti
onoft henoteasanasseti
sunwarranted,
 t
heent
ryshoul
dbe:

a.Cash…………………………………………………………………10, 000.
00
NotesReceiv
able………………………………………………. 40, 000.
00
Di
scountsonNotesRecei
vabl
e………….
8,
058.32
UnearnedFr
anchi
seFees………………….
41,
941.68

b.Cash………………………………………………………………. .10,
000.
00
NotesReceivabl
e……………………………………………… 40,
000.
00
Discount
sonNot esRecei
vabl
e………….
8,
058.32
Revenuefrom Fr
anchi
seFees………….
.
41,
941.68

c.Cash……………………………………………………………… 10, 000.

00
Revenuefr
om Fr
anchi
seFees…………………….
10,
000.00

d.Cash……………………………………………………………… 10,000.
00
UnearnedFr
anchi
seFees……………………….
10,000.
00

20. On Apr il1,2004,Mot orola,I nc.ent ered intoaf r

anchise
agreementwi thal ocalbusinessman.Thef ranchiseepai dP45,000
andgav eaP30, 000,8%,3y ear snot espay ablewi thinter
estdue
annual l
y on Mar ch 31.Mot orol ar ecor ded t he P75,000 init
ial
franchisefeeasr evenueonApr il1,2004.OnDecember30,2004,
thef ranchi
seedeci dednott oopent heout letunderMot orola’
s
name.Mot orola cancell
ed t he f ranchisee’s not e and refunded
P24,000l essaccr uedi nt
erestont henot e,oft heP45, 000paidon
Apr i
l1.Whatent ryshoul dMot or olamakeonDecember30, 2004?
a.LossonRepossessedFr anchi se……………………. .
24,
000
Cash……………………………………………………
24,000

b.LossonRepossessedFr
anchi
se…………………….
.
22,
200
 Cash……………………………………………………
22,
200

c.LossonRepossessedFranchi
se…………………….
.
52,
000
Cash…………………………………………………. . 22,
200
Not esRecei
vabl
e…………………………………….
30,000

d.Revenuef r
om FranchiseFees……………………….
75,
000
I
nterestIncome…………………………………… 1,
800
Cash……………………………………………………
22,200
Not esReceivabl
e…………………………………. .
30,000
Rev enuefrom RepossessedFranchi
se…….
.
21,000

21. Mar
ananMotorsSalescarsontheinst
all
mentbasi
s.Pr
esent
ed
bel
owaredat
aforthepastthr
eeyears:

2007 2006 2005

Instal
lmentsales P2,
880,
000 P2,
304,
000 P1,
543,
000
Costofsal es 1,
728,
000 1,440,
000 1,002,
950
Collect
ionon:
2007instal
lment 1,
008,
000
sales
2006instal
lment 391,
000 921,
000
sales
2005instal
lment 478,
000 462,
000 578,
000
sales

Repossessionsondef aul
tedaccountsincl
udedonemadeona
2005saleforwhi cht
heunpaidbalanceamountedtoP20,
000.The
depr
eciatedvalueofthecarr
epossessedwasP10,000.

Theunr
ecov
eredcostoft
hecari
n2005andrepossessedi
n2007
i
s:
a. P6,
500 c.P10,
000
 b. 7,
000 d.13,
000

22.OndoyCompanybeganoper at
ionsonJanuary1,2011and
appropri
atel
yusestheinst
all
mentmet hodofaccounti
ng.The
fol
lowingdataareavai
l
ablefor2011and2012

20112012

I
nstal
lmentsales1,200,
0001,500,
000
Cashcoll
ecti
onsf r
om:
2007sal
es400, 000500,000
2008sal
es600, 000
Grosspr
ofitonsales30%40%

Ther
eal
i
zedgr
osspr
ofi
tfor2012i
s

a. 600,
000
b. 240,
000
c. 390,
000
d. 440,
000

23.OnJanuar y1,AwAwandBeBepool edtheirasset

stof or
ma
part
nership,
withthef i
rmtotakeov erthei
rbusinessassetsand
assumet heli
abil
it
ies.Part
nerscapital
saretobebasedonnetasset
s
tr
ansferr
edaf t
erthefoll
owingadjustments.(Profi
tandlossare
al
locatedequall
y.
)

BeBe'sinventoryi
st obeincreasedbyP4, 000;anall
owancefor
doubtfulofP1,000andPl .500aret obesetupi nbooksofAwAwand
BeBe, r
espectiv
ely
; andaccountspay abl
eofP4, 000istobe
recognizedinAwAw' sbooks.Thei ndivi
dualtr
ialbal
ancesonAugust
,
beforeadjustments,fol
l
ow:

AwAwBeBe
Asset
sP75.000P113,
000
Li
abil
i
ties5,
00034,
500
Whati
sthecapi
tal
ofAwAwandBeBeaf
tert
heabov
eadj
ust
ment
s?

a. AwAw,
P65,000;
BeBe,P76.000
b. AwAw,P65,
000;BeBe,P81.
000
c. AwAw,
P68,750:
BeBe,P77,250
d. AwAw,
P75.000;BeBe,
P81.000

24.ThePar
tner
shi
phast
hef
oll
owi
ngbal
ancesi
nthei
rtr
ial
bal
ance:

(
1)Sal
es=P70, 000
(
2)CostofGoodsSol d=P40,
000
(
3)Operati
ngExpenses=P10, 000
(
4)Sal
aryallocati
onstopart
ners=P13,
000
(
5)I
nterestpaidtobanks=P2,000
(
6)Part
ners'withdrawal
s=P8,000

Thepar
tner
shi
pneti
ncome(
loss)i
s:

a. (3,000)
b. 18,000
c. 20.000
d. 5,000

25.Thef
oll
owi
ngdat
aar
epr
ovi
dedbyt
heTr
oubl
edCompany
:

Asset satbookv al
ue150. 000
Asset satnetreali
zabl evalue105,
000
Liabili
ti
esatbookv alue:
Fullysecuredmor tgage60, 000
Unsecur edaccount sandnot espayabl
e70,
000
Unr ecordedli
abi
lit
ies:
Interestonbanknot es500
Est i
mat edcostofadmi ni
steri
ngest
ate6,
000
Thecour
thasappoi
ntedaTr
ust
eet
oli
qui
dat
ethecompany
.

WhentheTrust
eerecor
dst
heasset
sandl
i
abi
l
iti
es,
itshoul
dincl
ude
anest
atedefi
citof
:

a. 31,
500
b. 25,
000
c. 31,
000
d. 25,
500

26.Mi mi ,Joj
o,andKakaar efor minganewpar tnership.Mi miisto
i
nv estcashofP100, 000andst ampingequipmentor iginall
ycosting
P120. 000buthasasecond- handv aluei
nthemar ketatP50, 000.Joj
o
i
st oinv estcashofP160, 000,whileKaka,whosef ami l
yisengagedi n
sell
ingst ampingequipment ,i
st ocontri
butecashofP50, 000anda
brandnewst ampingequi pmentt obeusedbyt hepar tnershipwitha
regularpr i
ceofP120. 000butwhi chcosttheirfamily'
sbusi ness
P100, 000.Partner
sagr eetoshar eprofi
tsequal
ly.

Thecapi
tal
bal
ancesuponf
ormat
ionar
e:

a. Mi
mi,
P220,000;
Jojo,P160,
000;
andKaka,P150,000
b. Mi
mi,
P176,666;
Jojo,P176,
666;
andKaka,P176,668
c. Mi
mi,
P160,000;
Jojo,P160,
000;
andKaka,P160,000
d. Mi
mi,P150,
000;Joj
o,P160,
000;andKaka,P170,000

27.OnJune30,2012,Ai
da,LornaandFeformedapar
tner
shi
pby
combini
ngthei
rsepar
atebusinesspr
opri
etor
shi
p.

Aidacont r
ibutedcashofP75.000.Lor nacont r
ibutedpr opertywitha
P54,000car r
y i
ngamount ,
aP60.000or i
ginalcost,andP120. 000f ai
r
value.Thepar tner
shi
pacceptedresponsi bil
it
yf ortheP52. 500
mor tgageattachedtotheproper
ty .Fecont r
ibutedequi pmentwi tha
P45,000car r
y i
ngamount,aP112, 500or i
ginalcost,andP82. 500fair
value.Thepar tner
shi
pagreementspeci fi
est hatprof i
tsandl osses
aretobeshar edequal
lybutissi
lentregardingcapi talcontri
butions.
Whoamongt
hepar
tner
shast
hel
argestcapi
tal
bal
ance?

a. Lorna
b Fe
c. Allcapi
tal
accountbal
ancesar
eequal
d. Aida

28.DimagibaCompanybeganoper ati
onatthebeginningof2012.
Duringtheyear,
ithadcashsal
esof6,875,000andsaleson
i
nstallmentbasi
sof16,500,
000.Dimagibaaddsamar kuponcostof
25%oncashsal esand50%oninstal
lmentsales.I
nstall
ments
receiv
ableattheendof2008is6,600,
000.

Ther
esul
ti
ngr
eal
i
zedgr
osspr
ofi
tfor2012i
s:

a. 3,
300,
000
b. 1,
375,
000
c. 4,
675,
000
d. 3,
575,
000

29.OnOct ober1,2011,Mar i
oCor porati
on, ar ealestatedev el
oper,
soldlandtoDi egoCompanyf or5,000,000.Di egopai dcashof
600,000andsi gnedat en-year4,400,
000not ebear inginterestat12%.
Thecar r
yingamountoft helandwasP4, 000,000ont hedateofsale.
Thenot ewaspay ablei
nf ort
yquar t
erl
ypr inci
pal install
ment sof
110,000begi nni
ngJanuar y2, 2012.Marioappr opri
at el
yaccount sfor
thesaleundert hecostrecov erymethod.OnJanuar y2,2012, Di
ego
paidthefirstpri
ncipali
nstall
mentof110, 000andi nterestof132,000.

FortheyearendedDecember31,
2012,whatt
otalamountofi
ncome
shouldMariorecogni
zef
rom t
helandsal
eandthefi
nanci
ng?

a. 309,
640
b. 508.
200
c. 208,
000
d. 0
30.Popoyhasadi l
emna.Hei str
yingt
odecidewhet hertoaccepta
salar
yof40,000orasalaryof25,
000plusabonusof10%ofnet
i
ncomeaf tersal
aryandbonusasameansofal locatingprof
itamong
thepart
ners.Sal
ari
estraceabl
etotheotherpar
tnersareesti
mat edt
o
be100,000.

Whatamountofi
ncomewouldbenecessar
ysot
hatPopoywoul
d
consi
dert
hechoi
cestobeequal
?

a. 165,
000
b. 305,
000
c. 265,
000
d. 290,
000

31.NonoyandMarar econsi der

ingformi ngapar t
nershi
pwhereby
profit
swil
lbeall
ocat
edt hroughtheuseofsal ariesandbonuses.
Bonuseswillbe10%ofneti ncomeaf tertotal
salari
esandbonuses.
Nonoywi l
lrecei
veasal
ar yofP30.000andabonus.Marhast he
optionofr
eceivi
ngasalaryofP40, 000anda10%bonusorsi mpl y
receivi
ngasalar
yofP52,000.Bot hpartnerswill
recei
v et
hesame
amountofbonus.

Det
ermi
nethelevel
ofneti
ncomet hatwoul
dbenecessarysot
hatJo
woul
dbeindi
ff
erenttot
heprof
itshari
ngopti
onsel
ected.

a. 300,
000
b. 240,
000
c. 334,
000
d 94,
000

32. Bat anes Construct

ion Company r ecogni
zed gross loss of
P42,000oni tslong-t
erm pr
ojectwhichhasaccumul at
edcost sof
P490,000.Tof i
nishtheproj
ect,thecompanyestimatesthatithas
toincuraddit
ionalcostofP735,000.Thecontr
actpri
ceis:
a.P798,000 b.P1,330,
000 c. P1, 225,000
d.P1,
183,000

33. Thef
oll
owi
ngsel
ect
edaccount
sappear
edi
nthet
rai
lbal
ance
 ofVal
ent
ine’
sCompanyasofDecember31,
2009:

Install
mentr eceivable–2008sal es P 12,
000
Repossessi ons P 2,400
Install
mentr eceivable–2009sal es 160, 000 Inst
all
ment
sales 340,
000
Inventory,
December31, 2008 56, 000 Regular sal es
308,
000
Purchases 440,000 Defer
red gr oss
profit–2008 43, 000
Operati
ngexpenses
92,
000
Addi t
ionali
nf or
mat ion:
Install
mentr eceivable–2008sal es,DecemberasofDecember31,
2008
Inventoryofnew andr epossessedmer chandiseasofDecember
31, 2009
Grosspr ofi
tper centageoni nst
all
mentsal esin2008i s10%hi gher
thant hegrosspr ofitpercent
ageonr egul
arsalesin2009.

Repossessi
ons was made dur i
ng t
he y
earand was recorded
corr
ectl
y.Itwasa2008sal eandt hecorr
espondi
nguncoll
ected
accountatthet
imeofrepossessi
onwasP6,200.

Whatist
heneti
ncomefor2009
b.P108,
360 b.P13,480 c.P105,
880 d.
P107,
200

34. OnNov ember30,2009,Lov el

essCompanyaut hori
zedNBSB
Corp.tooperateasaf ranchiseeforani nit
ialf
ranchi
sef eeof
P1,950,
000.Ofhisamount,P750,000wasr ecei
veduponsi gni
ng
theagreementandthebalance,represent
edbyanot e,isduein
fourannualpayment
sstarti
ngNov ember30,2010.Pr esentval
ue
ofP1at12%f or4peri
odsis0.6355.

Pr esentv al
ueofanor di
nar yannui
tyofP1at12%f or4per i
odsis
3.0374.Theper i
odofrefundwi l
lel
apsedonJanuary31, 2010.The
franchisorhasper f
ormedsubst ant
ial
lyal
lofthei
nit
ialservi
cesbut
theoper at i
onsoft hestorehav eyettostar
t.Col
lectibi
l
ityofthe
not eisr easonabl
ycertain.How muchi stheunear nedfranchi
se
 f
eeont
hey
earendedDecember31,
2009?

a.P1,
661,
220 b.P750,
000 c.P991,
220
d.P0

35. For ev er,I

nc.grant edaf r
anchiset oHopel essRomant i
cf ort he
mani l
aar ea.Thefranchi sewast opayaf r
anchisefeeofP250, 000,
payabl einf i
veequal annual i
nstall
ment sstart
ingwi t
hthepay ment
uponsi gningoftheagr eement.Thef ranchisewast opaymont hly
3%ofgr osssalesoft heprecedingmont h.Shouldtheoper ati
ons
oft he out l
etprov et o be unpr ofi
table,the fr
anchise maybe
cancel edwi thwhat ev erobligat
ionsowi ngFor ever,I
nc.ininterest
bearingnot eis14%.Thef i
rsty eargener at
edagr osssal esof
P1,250, 000.Whati st heamountofunear nedf r
anchisefeeaf ter
thefirsty earofoper ations?

a.P287,
500 b.P145,
700 c. P195,
700
d.P250,
000

36. Lovebi
rdsCorporat
ionsel
lsgoodsontheinst
all
mentbasi
s.For
t
hey earj
ustended,
thefol
lowingwerer
eport
ed:

Costofinstall
mentsal es P525,000
Lossonr epossession 13,
500
Fai
rvalueofr epossessedmer
chandi
se 112,
500
Accountdef aul
ted 180,
000
Defer
redgr ossprofit
,end 108,
000

Howmuchwast hecol
l
ect
ionsfortheyear
?
a.P210,
000 b.P264,000 c. P390,
000
d.P415,
715

37. DEFCompany ,whi chbeganoperati

onsonJanuary1,2009
appropri
atel
y,uses the i
nst
almentmethod ofaccounti
ng.The
fol
lowingdatapert
aintoDEF’
soperat
ionsfory
ear2009:

Inst
almentsal
es(Beforeadj
ust
ment
) P450,
000 Operat
ing
expenses(bef
orewrit
e-of
f
And r epossessi
ons)
P36,
000
Regularsales 187,
500 Cash col
l
ect
ions on
i
nstalmentsales
Costofregularsales 107,
500 i
ncl
udi
ngi
nter
est
ofP12,000 156,
000
Costofinstal
mentsal e 315,
000 I
nst
alment
s
recei
vableswrit
ten-of
f
Duet
odef
aul
ts
22,
000
FMVofr epossessed
Merchandi
se 27,
000 Repossessed
accounts 50,
000
Actualv
alueoftrade-
in
Merchandi
se 40,
000 t
rade-
in al
l
owance
70,
000

How muchi sthedef er

redgr
osspr ofi
tatDecember31,2009?
Whatisthenetincomefort
heyearendedDecember31,2009?
c.P50,500;P65,000 c.P41,
000;P63,000
d.P50,500;P91,500 d.P41,
000;P75,000

38. OnJul y1,2007,NRConstruct

ionCor p.cont ractedtobuil
dan
officebuil
dingforFM,
Inc.f
oratotalcontractpri
ceofP12, 875.
2007 2008 2009
Contractcostincur
red P9, 375 P65,
625
P56,250
Esti
mat edcoststocomplet
ethecontract 84,375
50,
000 -
Bil
l
ingst oFM, I
nc. 12,750 74,
750
34,
375

How muchi st heConst ructi

oni nPr ogressaccountbal anceat
December31,2008,usi ngt hepercentageofcompl eti
onmet hod?
Howmuchi st heConst ructioni
nPr ogress,netofPr ogressBilli
ngs
atDecember31, 2008,usingthezer o-
profitmet hod?Howmuchi s
thereali
zedgr osspr ofi
t/(l
oss),usingper centageofcompl et i
on
methodin2009?
c.P71,875;P2,875;P(9,375) c. P71,875; P15,625;
P(9,
375)
d.P74,687.
50; P2,875;P(6,250) d. P71,875; P15,625;
P(6,
250)
39. On Januar y2,2009,SD Companysi gned an agr eementt o
operateasaf ranchi
seeofTQPr oducts, inc.foraninit
ialfranchise
feeofP937, 500f or7y ears.Oft hisamount ,P175,000waspai d
whent heagr eementwassi gnedandt hebal ancepay ablei nfour
annualpay mentsbeginningonDecember31,2009.SDsi gneda
non-i
nterestbearingnot efort hebal ance.SD’ sr ati
ngi ndicates
thathecanbor rowmoneyat16%f ort
hel oanoft histype.Assume
thatsubstanti
alservi
cesamount ingt oP283, 500hadal r
eadybeen
renderedbyTQ Pr oductsandt hataddi t
ionalindir
ectf ranchise
costofP25,500wasal soi ncured.PVf
r actoris2.80.

Ift
hecollect
ionoft henotei
snotr easonabl
yassur
ed,t
henet
i
ncomefortheyearendedDecember31,
2009i s
a.P313,
435 c.P168,135
b.P228,
035 d.P253,535

OmegaI nc.starteda4- yearcontracttobui l

dadam.Act ivi
ti
es
commenced on Febr uary 1,2007.The t ot
alcont ract pri
ce
amountedtoP12mi l
lion,andi twasestimatedthatthewor kwould
becompl et
edatat ot alcostofP9. 5mi ll
i
on.Intheconst ructi
on
agreementt he customeragr eed to acceptincreases in wage
tar
iff
saddit
ionaltothecont ractpri
ce.

The fol
lowing inf ormation refers cont
ract act
ivi
ti
es for t
he
fi
nanci
alyearendingDecember31, 2007:
e.Costsfortheyear :
P’
000
Mat eri
als………………………………………. .
P1,400
Labor ……………………………………………. .
800
Oper ati
ngov erheads……………………….
150
Subcont ractor
s………………………………. .
180

f
.Cur
rentest
imateoftotal
contr
actcost
sindicatest
hef ol
l
owing:
 Materi
alsar
et obeP180,000hi
gherthanexpected.
 Totall
aborcostsaret
obeP300,000hi ghert
hanexpected.
 Ofthisamount,onl
yP240,000wouldbebr
oughtaboutby
i
ncreasedwaget ar
if
fs.Theot
heramountwoul
dbeduet o
i
neffici
enci
es.
 A sav ings of P300,000 i
s expect
ed on operat
ing
overheads.

g.Duri
ng thecurrentfinancialy earthecust omerrequest
ed a
var
iati
ontotheor igi
nalcont ractandi twasagr eedthatthe
contr
actpri
cewoul dbet oi ncreasedbyP900, 000.Thetotal
esti
matedcostofthisextrawor kisP750,000.

h.Bytheendof2007,cer
ti
fi
cat
esi ssuedbyquant
it
ysur
vey
ors
i
ndi
cateda25%st
ageofcomplet
ion.

40. Comput etheamountofgrossprofitorl

osstoberecogni
zedin
2007usingcont ractcost
sinpr oporti
onto est
imatedcontr
act
cost
s(percentageofcomplet
ionmethod):
c.P568,000 c.P610,
000
d.P577,000 d.P755,
000

41. Comput etheamountofgrossprof

itorlosstober ecognizedi
n
2007 using percent
age ofthe work certi
fi
ed (percent
age of
compl
etionmet hod–outputmethodusi
ngact ual
costappr oach)
:
a.P568,000 c.P610,000
b.P577,000 d.P755,000

42. Tam’ sPizza,Inc.char gesani nitialfranchisef eeofP50, 000f

or
therighttooper ateasaf ranchi seeofTam’ sPi zza.Oft hi
samount ,
P10,000 is pay able when t he agr eementwas si gned and the
balancei spay ablei nf iveannualpay mentsofP8, 000each.I n
retur
nf ortheiniti
al f
ranchi sef ee,thef ranchiserwi l
l helplocatet
he
sit
e, negoti
atewi ththeleaseorpur chaseoft hesi te,superviset
he
const r
ucti
onact i
vity
,andpr ov i
det hebookkeepi ngser v
ices.The
creditr at
ing oft he franchi see i ndicates t hatmoney can be
borrowedat8%.Thepr esentv alueofanor dinaryannui tyoffi
ve
receiptsofP8,000eachdi scount edat8%i sP31, 941. 68.

Ift
heinit
ialdownpaymentisnotrefundabl
eandnofut
ureservi
ces
arerequiredbyt hefranchi
ser,butcoll
ect
ionoft
henot eisso
uncer
tai
nt hatr
ecogni
ti
onoft henoteasanasseti
sunwarranted,
 t
heent
ryshoul
dbe:

a.Cash…………………………………………………………………10, 000.
00
NotesReceiv
able………………………………………………. 40, 000.
00
Di
scountsonNotesRecei
vabl
e………….
8,
058.32
UnearnedFr
anchi
seFees………………….
41,
941.68

b.Cash………………………………………………………………. .10,
000.
00
NotesReceivabl
e……………………………………………… 40,
000.
00
Discount
sonNot esRecei
vabl
e………….
8,
058.32
Revenuefrom Fr
anchi
seFees………….
.
41,
941.68

c.Cash……………………………………………………………… 10, 000.

00
Revenuefr
om Fr
anchi
seFees…………………….
10,
000.00

d.Cash……………………………………………………………… 10,000.
00
UnearnedFr
anchi
seFees……………………….
10,000.
00

43. On Apr il1,2004,Mot orola,I nc.ent ered intoaf r

anchise
agreementwi thal ocalbusinessman.Thef ranchiseepai dP45,000
andgav eaP30, 000,8%,3y ear snot espay ablewi thinter
estdue
annual l
y on Mar ch 31.Mot orol ar ecor ded t he P75,000 init
ial
franchisefeeasr evenueonApr il1,2004.OnDecember30,2004,
thef ranchi
seedeci dednott oopent heout letunderMot orola’
s
name.Mot orola cancell
ed t he f ranchisee’s not e and refunded
P24,000l essaccr uedi nt
erestont henot e,oft heP45, 000paidon
Apr i
l1.Whatent ryshoul dMot or olamakeonDecember30, 2004?
a.LossonRepossessedFr anchi se……………………. .
24,
000
Cash……………………………………………………
24,000

b.LossonRepossessedFr
anchi
se…………………….
.
22,
200
 Cash……………………………………………………
22,
200

c.LossonRepossessedFranchi
se…………………….
.
52,
000
Cash…………………………………………………. . 22,
200
Not esRecei
vabl
e…………………………………….
30,000

d.Revenuef r
om FranchiseFees……………………….
75,
000
I
nterestIncome…………………………………… 1,
800
Cash……………………………………………………
22,200
Not esReceivabl
e…………………………………. .
30,000
Rev enuefrom RepossessedFranchi
se…….
.
21,000

44. Mar
ananMotorsSalescarsontheinst
all
mentbasi
s.Pr
esent
ed
bel
owaredat
aforthepastthr
eeyears:

2007 2006 2005

Instal
lmentsales P2,
880,
000 P2,
304,
000 P1,
543,
000
Costofsal es 1,
728,
000 1,440,
000 1,002,
950
Collect
ionon:
2007instal
lment 1,
008,
000
sales
2006instal
lment 391,
000 921,
000
sales
2005instal
lment 478,
000 462,
000 578,
000
sales

Repossessionsondef aul
tedaccountsincl
udedonemadeona
2005saleforwhi cht
heunpaidbalanceamountedtoP20,
000.The
depr
eciatedvalueofthecarr
epossessedwasP10,000.

Theunr
ecov
eredcostoft
hecari
n2005andr
epossessedi
n2007
i
s:
 a. P6,
500 c.P10,
000
b. 7,
000 d.13,000

Perez,
ReyesandSuarezwerepart
nerswit
hcapit
albal
ancesasof
January1,2009ofP100,
000,
P150,000andP200,
000respect
ivel
y.
Theyshareprofi
tsona5:
3:2r
ati
o.

OnJuly1,2009,Perezwithdrawfrom thepar tnershi

p.Forthesix
monthperi
odendingJune30,2009,t hepar tnershipgener
ateda
netincome P140,000.Par tner
s agreed thatatt he ti
me of
wit
hdrawal
,cert
aininvent
oryhadt ober evaluedatP70, 000from
i
ts costofP50, 000.Fur t
her,partners agreed t o pay Perez
P195,
000forhi
sinterest
.

45. Whatar et
hecapi
tal
balancesofRey
esandSuar
ezaf
terPer
ez’
s
ret
ir
ement?
Reyes Suarez
a.P217,000 P238,000
b.P189,000 P226,000
c.P177,000 P218,000
d.P187,500 P226,000

46. Assuminggoodwil
ltoPerezisrecor
ded,whatisthecapi
tal
bal
anceofReyesaf
terPer
ez’
sret
ir
ement?
a.P232,
000 b.P186,
000 c.P189,
000
d.P190,000

47. Assumingtotalgoodwil
lofthepar
tner
shipistober ecorded,
whati
sthecapitalbal
anceofSuar
ezaf
terPerez’
sreti
rement
?
a.P238,
000 b.P226,
000 c.P234,000
d.P232,000

48. Per ez,QueandRamosar epar

tner
sshari
ngearni
ngsinther
ati
o
of5: 3:2,respect
ivel
y.As ofDecember31,2008,t hei
rcapi
tal
balanceshowedP95, 000forPer
ez,P80,
000forQue,andP60,
000
forRamos.

OnJanuary1,2009thepartnershi
padmi tt
edSant osasanew
par
tnerand accor
ding t
ot he agreement,Santos wil
linvest
P80,
000incashtothepart
ner shi
pandwi l
lalsopurchase15%of
 Que’sint
erestforP10, 000.SActoswillshare20%i ntheearnings
whil
et heratiooftheor igi
nalpart
nerswillremainproport
ionately
theasbeforeSantos’admi ssi
on.AfterSantos’admissi
on,t
het otal
capi
taloft hepartnershipwillbeP330,000whi l
eSantos’capital
accountwillbeP70,000.

Whatisthebal
anceofQue’scapi
talaccountaft
ert
headmissi
on
ofSant
os?
a.P81,
100 b.P79,
100 c.P74,600 d.P72,
600

49. OnMar ch1,2008,Al

maandBet tyfor
medapar tner
shi
pwi
th
cashi
nvestment
sofAlma,P480,
000andBett
y,P240,
000.

Thepartnersagr eetoal l
ocatepr ofit
sandl ossesasf ol
l
ows:
1.AlmaandBet tywil
lbeal l
owedamont hlysal
aryofP48,000and
P24,000, respecti
vely.
2.Thepar t
nerswi l
lbeal l
owedwi thinter
estof10%oft hei
rcapital
balancesatt hebegi nni
ngofeachy ear.
3.Ther emai nderwi l
lbedi videdont hebasisoft hei
rbeginning
capitalforthey earofoper ati
onandequal lyforthesubsequent
years.
4.Eachpar t
neri sall
owedt owi thdrawupt oP24,000ay ear
.Any
withdrawali nexcessoft hef igurewillbetreatedasadi rect
reductionf r
om theircapit
al balances.

I
n2008t hepart
ner shi
psuf feredanetl ossofP36,
000.Butin2009
theyear ned a profitofP132, 000.The par t
ner
s withdraw t
he
maximum amounteachy ear.OnJanuar y2,2010anew par t
ner,
Cora was admi tted i nt he partner
shi pforan investmentof
P400,000f ora40% i nterest
.Nor evaluat
ionofassetsist obe
recorded.Aftertheadmi ssionofCor a,t
hepartner
sagr eedto
divi
de pr of
it
s and l osses,4: 2:
4,t o Alma,Bet ty and Cora,
respecti
vely
.

OnJanuary2,2010,whati
stheentr
yt or
ecordtheadmi
ssi
onof
Cora?
a.Cash P400,
000
Alma,Capi
tal 33,
000
Bett
y,Capi
tal 33,
000
Cor
a,Capi
tal P467,
000
b.Cash P400,
000
Cor
a,Capi
tal P400,
000

c.Cash P400,
000
Alma,Capi
tal 32,
000
Bett
y,Capi
tal 16,
000
Cor
a,Capi
tal P448,
000

d.Cash P448,
000
Cor
a,Capi
tal P448,
000

50. OnJanuar y1,2009Mr .X andMs.Y for

medapar t
ner
ship
engagedinsell
ingcompactdi
scs.Thei
rcapi
talaccount
sduring
theyearshowthefol
l
owingi
nvest
mentsandwithdr
awals:

Mr
.X Mr
.
Y
Investment
s Wi
thdr
awal
s
I
nvestments Wi
thdr
awal
s
Begi
nningbalance P36,
000
P24,
000
June1 P14,
400
P14, 400
August1 24,000
2,
400
December1 6,
000

Thepartner
ship’
sprofi
tandlossagreementpr ov
idesf
oranannual
sal
aryofP36,000foreachpar
tner
.Int
erestof10%onaveragecapi
tal
bal
ances.Mr.Xisalsotorecei
veabonusof5%onneti ncomeaft
er
bonus.

Assumi
nganeti ncomeofP105,000befor
eanyal
l
ocat
ions,how
muchneti
ncomeisall
ocatedt
oMr
.X?
a.P56,
125 b.P58,408 c.P44,710 d.P36,900

51. Mr.PP andMs.KK ar

epar t
nersinaconstr
ucti
onbusiness
l
ocat
edinCebuCit
y.Theprof
itandlossagr
eementcont
ainsthe
 f
oll
owi
ngpr
ovi
sions:

1.SalariesofP35,000andP40, 000forPPandKK, respect

ivel
y.
2.Abonust oPPequal to10%ofneti ncomeaf t
erthebonus.
3.Inter
estonwei ght
edav eragecapitalattherateof8%.Annual
drawingsi nexcessofP20, 000ar
econsi der
edtobear educti
onof
capitalforpurposesoft hiscal
cul
ation.
4.Profi
tand l oss percentage of40% and 60% f orPP and KK,
respectivel
y.

Capit
alanddr
awi
ngact
ivi
tyoft
hepar
tner
sfort
hey
ear2009ar
eas
fol
l
ows:

PPCapi
talPPDr
awi
ng KK
Capit
al KKDr awi
ng
Begi
nningbalance P120,
000 P0 P
60,
000 P0
Apri
l1 20,
000
June1 15,
000
20,000
Sept
ember1 30,
000
November1 15,
000
40,
000
Endi
ngbalance P170,
000 P30,
000
P100,
000 P20,
000

Assumi
ngnetincomef or2009ofP132,00befor
eanyallocat
ions,
howmuchprof
itshoul
dbeallocat
edtoMr.PP?
a.P69,
660 b.P69,747 c.P72,
774 d.P69,
774

52. OnJanuar y2,2009,BeloandRey esf

ormedapar tner
shi
p.Belo
contri
butedcapi t
alofP350,000andRey es,P50,000.Theyagreed
tosharepr ofit
sandl osses80% and20%,r especti
vel
y.Reyesis
gi
v enasal aryofP10, 000amont h;andi nterestof5% oft he
beginni
ngcapi talofbot hpartner
sandabonusof15% ofnet
i
ncome bef oret he sal
ary,inter
estand bonus.The i ncome
statementoft hepart
nershipfortheyearendedDecember31,
2009asf ol
lows:
 Revenues P1,
750,
000
Costofgoodssol d
1,
400,
000
Grossprofi
t
350,
000
Expenses(i
ncludi
ngpar
tner
ssal
ary
,int
erestandbonus)
286,000
Netprofi
t P 64,000

WhatistheamountofbonustoRey
esin2009?
a.P41,400 b.P32,912 c.P36,
000 d.P26,
800

Number s22t o25ar ebasedont hefollowingdata:

ArmanCompanyhast hef ol
l
owi ngdebi tbalancesasoft
hey ear
endedDecember31, 2009:
Directmat erialsi
nv entory P
90,
000
Wor ki nprocessi nv entor
y
207,
000
Finishedgoodsi nv entory
297,
000
Under -appli
edf actor yoverhead
24,
000
Costofgoodssol d
447,
000
Addit
ional infor
mat ionfor2009
Costofdi r
ectmat erial
spur chased
P246,000
Costofdi r
ectmat erial
srequisiti
oned
282,
000
Costgoodscompl et ed
612,
000
Appl i
edf actoryov erhead( 120%ofdi rectl
aborcost
)
288,
000

53. Whatist
heDir
ectMat
eri
alsI
nvent
oryonJanuar
y1,2009?
a.P180,
000 b.P162,
000 c.P126,
000
d.P108,
000

54. Whatt
heWor
kinPr
ocessI
nvent
oryonJanuar
y1,
2009?
 a.P95,
000 b.P90,
000 c.P9,
000 d.P8,
000

55. Whatist
heFini
shedGoodsInvent
oryonJanuar
y1,2009?
a.P150,
000 b.P144,
000 c.P132,
000
d.P145,
000

56. Whatist
heact
ualf
act
oryover
headi
ncur
reddur
ing2009?
a.P264,
000 b.P280,
000 c.P312,000
d.P321,
000

Numbers57and58ar ebasedont hefoll

owingdata:
Dur
ing August,Marlon Machi ne Companyst art
ed producti
on job
or
ders16,17,and18.Jobor der15wasi nprocessatthebeginning
ofthemont hwithdi
rectmat eri
alcostsofP35,000,di
rectlaborcost
ofP21,000,and appli
ed factoryov er
head ofP25,300.Dur i
ng the
month,directmateri
als werer equisi
ti
oned,and dir
ectl aborwas
i
denti
fi
edwi tht
hejobordersasf ol
lows:

JobOrderNo. Di
rectMat
eri
als Di
rect
Labor
15 P- P26,
000
16 39,
000 45,
000
17 53,
000 47,
000
18 47,
000 16,
000

Fact
oryover
headi
sappli
edtotheor
dersat120%ofdi
rectl
aborcost
.
Joborder
s18wasincomplet
eonAugust31.

57. Whatist
hecostofgoodsmanuf
act
uredforAugust?
a.P432,
900 b.P376,
600 c.P342,800
d.P358,
600

58. Whatist
hecostofworki
nprocessonAugust31?
a.P138,
000 b.P82,
200 c.P18,
400 d.
P156,
400

Quest
ions59and60ar
ebasedont
hef
oll
owi
ngdat
a:
The dat
a has been gat
her
ed f r
om t
he r
ecor
ds of Roque
Manuf
act
uri
ngCompanyf
orApr
il2009:

Unit
s
Workinprocess,Apri
l1(40%completeastoconv
ersi
oncosts)
5,
000unit
s
Star
tedi
nMay 90,400
unit
s
Workinpr ocess,Apri
l30( 70% complet
east oconver
sioncost
s)
4,000unit
s

Cost
Workinprocess,April
1 P
24,
875
Materi
alscosti
ncurredinApri
l
P433,
920
Conversi
oncostsincurredi
nApri
l P115,
250

The companyuses t he FI
FO pr
ocess cost
ing method.Mat er
ial
s
added atthe begi
nni
ng ofprocessi
ng whil
e conversi
on costsis
evenl
yduri
ngtheprocess.

59. Whataretheequi
val
entuni
tsofproduct
ionof
?
Mater
ial
s Conversi
onCosts
a.90,
400 92,
200
b.95,
400 91,
200
c.86,
400 89,
400
d.92,
400 90,
600

60. Whatist
hecostofuni
tstr
ansf
err
edouti
nApri
l?
a.P551,
345 b.P547,
595 c.P522,
720
d.P526,
470

61. Whatist
hecostofendi
ngworki
nprocess?
a.P22,
700 b.P23,
700 c.P19,200 d.P22,
000

Questi
ons31and33arebasedont hefoll
owingdata:
Ji
mmyCompanymanuf act
uresahi ghl
ysensit
ivesmokeal ar
m and
usestheFI
FOmet hodforpr ocesscosti
ng.Thetotalmanufactur
ing
cost
sf orthe month ofJune i s P264,
000 and 2,750 uni
ts are
 compl
eteddur
ingt
hemont
h.

Theinventor
iesatthebegi
nningofJunear
e:
Unit
sinprocess(80%complete) 1,
250uni
ts
P128,000
Unit
sonhand( complet
e) 600uni
ts
76,
800
Theinventor
iesattheendofJuneare:
Unit
sinprocess(50%complete) 500uni
ts
Unit
sonhand( complet
e) 700uni
ts

62. Whati
stheequi
val
entuni
tofproducti
on?
a.2,
000 c.2,200
b.3,
000 d.1,750

63. Whatist
het
otal
costoft
heunit
scomplet
ed?
a.P92,
400 c.P231,
000
b.P79,
200 d.P363,
000

64. Whatist
het
otal
costofuni
tsi
nprocessatt
heend?
a.P33,
000 c.P32,000
b.P32,
200 d.P66,000

EXERCI
SES/PRACTI
CEPROBLEMS:

65. RonSam andTi m deci dedt oengagei nar ealestat

e
ventureasapartnership.Royi nvestedP140, 000cashandSam
providedanoffi
ceandf urni
shi ngv al
ueatP220, 000.(Thereisa
P60,000notepay abl
er emai ningonf urni
shingst obeassumed
byt hepartner
ship).AlthoughTi m hasnot angi
bleasset sto
invest,bot
h Royand Sam bel ievet hatTi m’ssal esmanship
providesanadequateinv estment .Thepar tnersagreet or
eceiv
e
anequalcapi t
ali nt
eresti nt hepar t
nership.Usingt hebonus
met hod,whati
sthecapi talbalanceofTi m?
a.P50,000 b.Zer o c.P140, 000 d.P100, 000

66. KA andLA ar epar t

nerswhoshareprofi
tsandlosses
equal
ly.ThecapitalaccountsofKAandLAhav etr
ipl
edi
nf i
ve
year
sandatpr esenthavethefol
lowi
ngbal
ances.
 Ka,
P90,
000 LA,
P60,
000

MOdesi restojoi
nthef i
rm andof feredtoinvestP50,000f orone-
thi
rdinterest
.KAandLAdecl inedhi soff
erbutt heyext endeda
counter
-offertoMO ofP70, 000f oraone- fourt
hi nt
erestint he
capi
talandpr ofi
tsandl ossesoft hefir
m.I fMO accept edt hei
r
off
erandbonusi srecorded,whatshoul dbet hebalancesint he
capi
talaccountsofKAandLAaf terMO’ sadmi ssi
on?
KA LA KA LA
a.P100,000 P70,000 c.P97,500
P67,500
b.P120,000 P90,000 d.P90,000
P60,000

67. HannahandRi car

doarepartnerswithcapit
alofP100,
000
andP140, 000respectiv
ely
.Theyshar epr
ofit
sequal l
y.Marl
ou
investsP120,000f ora25%i nt
erestinthepartner
ship.Hannah,
Ricardo and Mar lou agree t
hat t he combined capit
alis
P360,000.Theagr eementontheent ryofMarloubri
ngsabout
a.BonusofP60, 000 c.Goodwil
lof
P40,000
b.Goodwi llofP60,000 d.BonusofP30,000

AJ,BJ,andCJar epartner
si nanaccounti
ngf i
rm.Thei
rcapi
tal
accountbalancesatDecember31,2005wer e:AJ,P90,
000;BJ,
P110,000;CJ,P50,000.Theyshareprof
it
sandl ossesina4:4;
2
rat
io,aft
ert
hef ol
l
owingspecialt
erms:

a.PartnerCJi storecei
veabonusof10% oft henetincome
aft
ert
hebonus.
b.Interestof10% shallbepaidont hatport
ionofpar tner
s’
capit
alinexcessof
P100,000.
c.Salari
esofP10,000andP12,000shallbepai
dt opar
tnersAJ
andCJrespectivel
y.

Theincomesummaryaccountf
ort
hey
ear2005showsacr
edi
t
bal
anceofP44,
000.
 68. Whati
sthepr
ofi
tshareofpar
tnerCJ?
a.P19,
400 b.P16,
800 c.P17,
800
d.P19,
800

69. APartnershi
piscur r
entlyholdi
ngP400,000inassetand
P234,000inliabi
li
ti
es.Thepar tner
shipistobel i
quidatedand
P20,000isthebestest i
mat i
onoft heexpensest hatwi llbe
i
ncurredduri
ngt hi
sprocess.Thef ourpar
tnersshareprofitand
l
ossesasshown, Capi
talbalancesatthestar
toftheliquidati
on
areasfoll
ows;

Kevin,
capi t
al (40%) P59,
000
Michael,capital(30%) 39,
000
Brendo,capital (
20%) 34,
000
John,capital(10%) 34,
000

Thepar tnersreal
izethatJohnwi
l
lbet hef i
rstpar
tnertostar
t
receivi
ngcash.Howmuchcashwi l
lJohnreceivebef
oretheot
her
partnercoll
ectanycash?
a.P12,250 b.P14,
750 c.P17,
000 d.P19,
500

70. RoxanneandRoxybegi napar t

nershiponJanuar y1,2006.
Roxannei nvestsP40, 000cashaswel lasi nvent
or ycosti
ng
P15,000butwi thacur rentapprai
sedv alueofonl yP12, 000.
Roxycont r
ibutesabui l
dingwit
haP40, 000bookv alueanda
P48,000 fairmar ketvalue. The par t
nership al
so accept s
responsi
bil
ityforaP10, 000notepay abl
eowedi nconnect i
on
withthi
sbui ldi
ng.Thepar t
ner
sagr eetobeginoper ationswith
equalcapitalbalances.Thearti
clesofpar t
nershipalsoprovide
thatattheendofeachy earpr
ofi
tsandl ossesar eall
ocatedas
foll
ows:

a.Formanagi ng the business,Roxanne is cr edi

ted witha
bonusof10per centofpar tnershi
pincomeaf tersubtr
acting
thebonus.Nobonusi saccr uedifthepart
ner shi
precordsa
l
oss.
b.Bothpartnersareenti
tl
edt ointer
estequalto10per centof
theaveragemont hlycapi talbalanceforthey earwithout
regar
dfortheincomeordr awingsofthatyear.
c.Anyremainingprof
itorlossi sdivi
ded60per centtoRoxanne
 and40percentt
oRoxy.
d.Eachpar
tnerisall
owedt
owi
thdr
awP800permont
hincash
fr
om t
hebusiness.

OnOct ober1, 2006,Roxannei nvestsanaddi tionalP12,000cashi n

thebusi ness.For2006, t
hepar tnershi preportsincomeofP33, 000.
Rojanne,an empl oyee,i s allowed t oj oi
nt he partnershi
p on
Januar y1, 2007.Thenewpar tnerinv estsP66, 000dir
ectlyintothe
businessf oraone- t
hirdi nter
esti nt hepar tnershipproperty.The
revi
sedpar tnershi
pagr eementst il
lal l
owsf orbotht hebonust o
Roxanneaswel last he10 per centi nter
est ,butal lremaining
profi
tsandl ossesar enow spl it40per centeacht oRoxanneand
Rojannewi thther emai ning20per centt oRoxy .Roj annei salso
entit
led t o P800 permont hi n dr awings. Roxy chooses t o
withdraw f r
om t he par t
nership a f ew y earsl ater. Af t
er
negot i
ations,allpart
iesagr eethatRoxyshoul dbepai daP90, 000
settl
ement .Thecapi t
al balancesont hatdatewer easf oll
ows:

Roxanne,
capi
tal88,
000 Roj
anne,
capi
tal
72,
000
Roxy
,capi
tal 78,
000

Assumingt hatthegoodwillmethodisusedexclusi
velybyt hi
s
part
nership,
whatisthecapit
albal
anceofRoxanneaft
erRojanne’
s
admissiontothepar
tner
ship?
a.74,
780 b.75,
360 c.75,
800 d.70,
860

71. Enrel
en,Jeanette,Jul
ieandJani cewerepar t
nerswho
deci
dedt odissol
veandl i
quidatetheaf
fai
rsofthepartner
ship.
Pri
ort o di
ssolut
ion and li
quidat
ion,t
he condensed bal
ance
sheettoget
herwiththeprofi
tandlossshari
ngrati
owasder i
ved
asfoll
ows:

Cash P 50,
000 Li
abiliti
es
P375,
000
Otherasses 900,
000 Jeanet
te,
loan
30,
000
Janice,loan
25,
000
Enrelen,capi
tal(
30%)
210,
000
Jeanet
te,
capi
tal
(30%)
157,
500
Jul
i
e,capi
tal
(20%)
102,
500
_
___
___ Jani
ce,
capi
tal
(20%)
50,
000
P950,
000
P950,
000

Theot herassetswer esoldforP600,000.Payment

swer emadet o
credit
orsandf i
naldistri
buti
onofcashwasmadet opart
ners.The
partnerwhogotpai dt hemostwas:
a.Enr el
enforcapit
al atP210,000 c.Jeanet
te
l
oanofP30, 000andcapi talofP135,000
b.Jeanet t
eloanofP30, 000andcapi t
alofP157,
500 d.Enr elen
f
orcapitalatP120,000

NTVCompanybeganoper at
ioninJanuary1,2009appropr
iat
ely
usestheinst
all
mentmethodofaccounting.Thefoll
owi
ngdat a
pert
aint
oNTV’soper
ati
onsfort
heremainderofthey
ear.

I
nstall
mentsal es P450,
000 Operat
ingexpenses
P36,
000
Regularsales 187,500 Col l
ect
ions on
I
nstall
mentsal es
Costofregularsales 107,500 (incl
uding i
nterest of
P12,000) 156,
000
Costofinstall
mentsales 315,000 Instal
lmentrec.wri
tt
en
offdueto
FMVofr epossessedmdse. 27,000 defaul
t
22,
000
Reconditi
oningcosts 2,000 r
epossessed account
50,
000

72. Cal
cul
atet
hetotaldefer
redgr
ossprof
itatDecember31,
2009
a.P66,
600 b.P122,850 c.P70,200 d.
P126,
450
 The f
oll
owi
ng dat
a wer
etaken f
rom t
he book ofFi
ve Jewel
Company:

2008 2009
Inst
all
mentsal es P800,
000
P900,
000
Costofinstal
lmentsales 480,000
600,
000
Coll
ecti
ons
2008Instal
lmentreceivables 250,
000
300,
000
2009Instal
lmentreceivable -
360,
000
Default
sandr epossessi
ons
Unpaidbalanceofpriory ear
’si
nst
all
ment
Receivabl
edefaulted 12,000
15,
000
Valueassigned tor epossessed merchandise 7,
000
8,000

73. Thegain/(
loss)onrepossessi
onont
hedefault
ed2008
contr
actwas
a.P1,
000gain b.P1,000l
oss c. P3,000 l
oss
d.P3,
000gain

Act i
on,I nc.soldaf it
nessequi pmenton instal
lmentbasison
Oct ober1,2009.Theuni tcostt othecompanywasP60, 000but
thei nstal
lmentsell
ingpricewassetatP85,000.Termsofpay ment
i
ncl udedt heaccept anceofausedequi pmentgi venat r
ade-i
n
valueofP30, 000.ThecashofP5, 000waspaidi nadditi
ontothe
trade-inequipmentwi ththebalancetobepaidinten( 10)monthl
y
i
nst all
ment sdueatt heendofeachmont hcommenci ngatthe
mont hofsal e.Itwoul drequir
eP1, 250torecondit
iont heused
equi pmentsot hatitcouldber esol
dforP25,000.A 15% gross
profitratewasusual from thesal
eofusedequipment .

74. Thereal
i
zedgrossprof
itdur
ing2009asindicatedf
rom
theforegoi
ngi
nfor
mati
onis
a.P4,
000 b.P34,
000 c.P10,000
d.P8,
000
 75. Sherat
onTr adingCompanyopenedabr anchinBinondo
onJanuar y1,2009t o expandt hemar ketf oritsproduct s.
Mer chandiseshi ppedt othebr anchdur i
ng2002,at125% of
cost ,wereP104, 000.Ot hert ransacti
onsr el
atingtothebr anch
wer easf ol
lows:Sal eson account ,P117, 000;Expenses,of
whi chP1,500ar est i
l
lunpai day ear-
end,P20,000;cashrecei v
ed
from thecust omer s’account s,netofdiscountsof2%, P72, 520;
and,cash r emittance t ot he home of fi
ce,P65,000.As of
December31,2009,t hebranchi nv
entorywasP12, 500atbi l
l
ed
price.Asf arast hehomeof ficeisconcer ned,thebranchnet
incomef or2002was:
a.P8,300 b.P22, 320 c.P24,300 d.
P24,
320

76. Nov ellBookstorehasbr anchesinkeyci ti

esnat i
onwide.
Merchandi seshippedt ot hebranchesisbi l
ledat25% abov e
costandar einventori
edbyt hebranchesatbi l
ledpr i
ce.Fi
x ed
assetsoft hebranchesar ecarri
edinthehomeof f
icebooks.All
coll
ectionsoft hebr anchesar edeposit
edi nabankaccount
againstwhi chonl ythehomeof f
icecandr aw.Eachbr anch,
howev er,mai ntai
ns an i mprestf und of P4,000 whi ch is
rei
mbur sedper i
odical
lyforexpenses.Cer
tainexpenses, t
hough,
arepaidbyt hehomeof f
iceandsubsequent l
ychar gedagainst
thebr anches.Pr esented bel
ow isaT- accountoft he2009
Tagum br anchcurrentaccount:

Tagum Br
anch
Jan.bal ance P62,
820 : Remi
tt
ance
P180,
640
Shipment stobr
anch 128,000 :
Adv erti
singandPromoti
on 6,400 :
Depr eci
at i
on 2,400 :
Reimbur sementofexpenses 36,600 :
NetI ncome 9,
260 :

The beginning i
nventor
y oft his br
anch was P31,500,and i t
repor
ted sales ofP192, 690 of which P1,280 pr
ov ed to be
uncol
lect
ible.Theendinginventor
ywasP22, 750.Whati sthenet
i
ncomeofTagum br anchinsofarasthehomeof fi
cei
sconcer ned?
 a.P9,
260 b.P36,
610 c.P45,
860 d.
P27,
350

Bloti
kCompanyhast womer chandiseout l
ets,i
tsmai nstoreand
i
tsGai sanoMal lbranch.Allpurchasesaremadebyt hemai nst
ore
andshi ppedt ot heGai sanoMal lbranchatcostpl us10%.On
January1, 2008, t
hemai nstoreandGai sanoMal li
nventor
ieswere
P17,000andP4, 950,respecti
v el
y.Dur i
ng2008,t hemai nstore
purchasedmer chandisecosti
ngP50, 000andshi pped40%ofi tto
Gaisano Mal l
.AtDecember31,2008,Gai sano Mallmadet he
foll
owingclosingent r
y :

Sal
es P40,000
I
nvent
ory,end 6,050
I
nventory,
beg. P 4,950
Shipmentsfr
om mai
nst
ore
22,
000
Expenses 13,
100
Mainstore 6,
000

77. Ifthe mai

n storei nv
ent oryatDecember31,2008 i s
P14,000,thecombinedmai nst oreandbranchinvent
orythat
shouldappeari
nBlotikCompany ’sDecember31,2008balance
sheetis:
a.P18,950 b.P18,500 c.P20,
050
d.P21,500

Abr anchoper ati

onbuy smostofi tsi
nventoryf
rom out
sideparties.
Howev er,thisyeart he home of f
ice tr
ansf
erred merchandise
cost ingP50, 000tothebr anchf
orP80, 000.Attheendoft hey ear,
20 per centoft hismer chandi
se wasst il
lheld bythe branch.
Althought hei nvent
orywascor r ect
lycountedandr eported,the
branch di d nott el
lthe home of f
ice t
hatthis port
ion oft he
remai ninggoodscamef rom t
ransfers.Consequentl
y,thehome
officeassumedt hatallofthetransferr
edmer chandi
sehasbeen
soldt ooutsideparti
es.

78. Whati
stheresul
ti
ngimpactonthenetincomerepor
ted
fort
hecompanyasawhol e?
a.t
henetincomefi
gurewouldsti
l
lbecor
rect
lycal
culat
ed
 b.t
heneti
ncomef
igur
ewoul
dbeP6,
000overstated
c.t
heneti
ncomef
igur
ewoul
dbeP30,
000overstated
d.t
heneti
ncomef
igur
ewoul
dbeP30,
000under stat
ed

Konst rukConstruct i
onCompanyusest hepercentageof
compl eti
onmet hodofaccounting.I
n2006,Konstrukbegan
wor kingundercont ract#1105A,whichprov
idedforacontract
priceofP12, 000,000.Otherdetai
lswereasfoll
ows:
2006 2007
Costincur r
edduringt heyear P1,
800,000 P9,
450,000
Esti
mat edcostt ocompl ete 7,200,
000
-
Bil
l
ingdur i
ngtheyear 2,
760,000 9,
240,000
Coll
ectionsdur i
ngt heyear 1,500,
000
9,
300,000

79. Theporti
onofthetot
alcont
ractpr
icet
ober ecogni
zedas
rev
enuei s2006is:
a.P1,
920,000 b.P2,
160,
000 c.P2,400,
000
d.P1,
200,000

Jakiro Co.usest hecostt o costpercent

ageofcompl et
ionin
reporti
ngearning;Jakiroassumedl eader
shi
poft hefir
m aft
erthe
reti
rementofhisf atherandinrevi
ewingthefi
rm’srecor
d,fi
ndsthe
foll
owing inf
ormat ion on a r
ecentlycompleted proj
ectwi t
ha
contractpr
iceofP2, 500,
000.

2007 2008 2009

Costincur
redtodate P450,
000 P1,
275,000 ?
GrossProfi
t(l
oss) P50,
000 P175,000 (25,000)

Mr.Jaki
rowantstoknow how ef
fecti
vel
ythecompanyoperat
ed
duri
ngthepastyear
sont heproj
ectandsincehefoundthatt
he
i
nformati
oni
sincomplet
e,hehasaskedyoutohel
pbyansweri
ng:

80. Howmuchwast heest

imat
edcosttocompl
eteat
December2009?
a.1,100,
000 b.1,
725,
000 c.
0 d.
1,
075,000
 In2004, Buil
tri
teCo.agreedtoconst
ructanapar tmentbuil
dingat
apr i
ceofP9, 000,000.Bui
lt
ri
teusest
heper cent ageofcompl etion
met hod.Thei nfor
mat i
onrel
ati
ngtothecost sandbi ll
i
ngsfort he
contractwereasf ol
l
ows:
2004 2005 2006
Costincurr
edt odat e P2,520,000P5,400,000
P7,
065,000
Est
imat edcosty ettobeincurr
ed 4,680,000 1,800,000
-
Customerbi l
l
ingt odate 1,350,000 3,600,000
9,
000,000
Col
lectionofbil
lingtodate 1,080,000 2,880,000
8,
460,000

81. Whatisthebalanceoftheconst
ruct
ioni
nprogress,
netof
contractbi
l
li
ngaccountatBuilt
ri
te’
sDecember31,2004
BalanceSheet?
a.P3,
150,000 b.P3,600,
000 c.P1,
800,
000
d.P2,
250,000

Dapecolmanuf act
uringCompanyusesaraw andi nprocess( RIP)
i
nventoryaccountand expenseal lconversi
on costt o costof
goodssol daccount.Attheendofeachmont h,al
linventori
esar e
counted,thei
rconv ersi
oncostcomponent sareestimat ed,and
i
nventory account balances are adj
usted accordingly. Raw
mat er
ial
scosti sbackflushedfr
om RIPt ofini
shedgoods.The
fol
lowinginf
ormationisforthemont
hofApr i
l:

RIP,
beg.(I
nclusiveofP1,
400conver
sioncost
)
P31,
000
Rawmat er
ial
sr eceiv
edoncredi
t
367,
000
RIP,
endi
ng, i
ncludingP1,
800conver
sioncost
33,
000

82. Computetheamounttobebackf
lushedfr
om RI
Ptocost
ofgoodssold:
a.P365,000 b.P368,
600 c.P367,
000
d.P365,400
 SAMSManuf acturi
ngCompanypr oducesonl yf
orcustomeror der
andmostwor kareshippedwit
hinthir
ty-sev enhoursofthereceipt
ofan or der
.SAMS Companyuses r aw and i n process (RIP)
i
nv ent
oryaccountandexpensesallconv ersioncoststothecostof
salesaccount.Wor kisshi
ppedimmedi at elyuponcompl et
ion,so
therearenof ini
shedgoodsonhand.Att heendofeachmont h,
i
nv ent
oryiscount ed,it
sconversi
oncosti sesti
mated,andRI P
accountbalancei sadjust
edaccor di
ngly.Raw mat eri
alscosti s
backfl
ushedfrom RIPt oCostofSales.TheFol l
owinginfor
mat ion
i
sf orthemonthofMay :

Begi
nni
ngbalanceofRI P P12,
300
Rawmater
ial
spur chased 246,
000
Endi
ngbal
anceofRI P 12,
100

Thebegi nni
ngbal
anceofRI PincludesP1,
300conversi
oncostand
endingbalanceal
soincludesP2,100conver
sioncostest
imates.
83. Computethe amountofcostofgoods sol d af
terall
t
ransacti
onsandadjustmentswer emade:
a.P246,000 b.P246,200 c.P247,
000
d.P245,000

XeroxCompanyi sprepari
ngitsannualprofi
tplan.Aspartofi
ts
analy
sisoft heprobabi
li
tyofindivi
dualproducts,t
hecontrol
l
er
esti
matestheamountofov er
headsthatshouldbeassignedt
othe
i
ndivi
dualproductl
i
nesfrom t
heinfor
mationgivenasfoll
ows:

Ordi
nar
ycopi
er Speci
ali
zed
copi
er
Unit
spr oduced 25 25
Materi
alsmov esper
Productli
ne 5 15
Dir
ectlaborhoursperunit 200 200
Budgetedmat eri
alshandl
i
ngcost
s P50,
000

84. Underact
ivi
tybasedcosti
ng( ABC),themat
eri
alshandl
i
ng
costassi
gnedtooneuni tofor
dinarycopierwoul
dbe
a.P1,
000 b.P500 c.P1,500 d.P5,000

2GO Cor
por
ati
on uses act
ivi
ty based cost
ing t
o det
ermi
ne
 pr
oductcost sf orexter
nalfi
nancialreport
s.TheCompanyhas
pr
ovidedthef oll
owingdataconcerningitsact
ivi
tybasedcosti
ng
syst
em:
Esti
mat ed
Acti
vit
ycostpool s(andacti
vi
tymeasur es)
Ov
erheadCost
Machinerelated(machinehours) P81,600
Batchsetup( set
up) P387,000
GeneralFactory(di
rectl
aborhours) P274,800

ExpectedActi
vit
y
Acti
vit
ycostpools Total Pr
oductA Pr
oductC
Machinerel
ated 8,
000 3,000 5,
000
Batchsetup 10,
000 2,
000 8,
000
Generalf
actory 12,
000 7,
000 5,
000

85. Assumingtheactualactivi
tyaret
hesameasexpect ed,
t
het otalamountofov erhead cost
sall
ocated t
o pr
oductA
wouldbeclosestto:
a.P371,700 b.P387,700 c.P268,
300
d.P149,000

86. Gr
aftCo.whichpr oducesj oi
ntpr oducts.AandBi n
departmentf r
om apr ocesswhi chalsoy ieldby–pr oductW.
productAandBy–Pr oductW ar esol dafterseparati
on,but
productBmustbef ur
therprocessedi nDepar tmentTwobef or
e
i
tcanbesol d.Thecostassi gnedtot heby–pr oductisit
s
mar ketval
uel essP.40perpoundf ordel iveryexpense(NRV
met hod).I
nformationrelat
ingtoabat chpr oducedinJulyis
presented.

Pr
oduct Pr oduct
ion(i
npound)SalesPri
ceperpound
A 2,
000 P4.
50
B 4,
000 9.
00
W 500 1.
50
Jointcostindepar
tmentOne P18,
000
ProductBadditi
onalpr
ocesscostinDepar
tmentTwowas
P10,000

Forj
ointcostal
l
ocat
ionpur
poses,
whati
sthenetr
eal
i
zabl
eval
ue
 att
hespli
t-
offpoi
ntofPr
oductB?
a.P9,
000 c.P26,
000
b.P35,
000 d.P28,000

KaloocanManuf act
uri
ngCompanypr oduceschemi cal
sKaw and
Law.The pr ocessing al
so yi
elds a by -
productHaw anot her
chemi cal
.Thej ointcostsofprocessingarer educedbyt henet
real
izablevalue ofHaw. The Joi ntcosts wer eregi
stered at
P3,840,000.

InThousand
Product Producti
on Marketv
alue
Kaw 2,000 3,
000
Law 3,000 2,
000
Haw* 1,
000 420
*Anaddi t
ionalP180,
000wer espenttocomplet
etheprocessi
ng
ofHaw.

Assumi ngthatt
hecompanyusesthenetr
eal
izableval
uemethod
foral
l
ocat i
ngjoi
ntcost
s,t
heall
ocat
edcost
stoKawwoul damount
to:
a.P2,
160,000 b.P1,
800,
000 c.P2,208,
000
d.P2,
700,000

JobiMacCo. ’
smat eri
alspurchaseddur i
ng2001ar eP25, 590and
mat er
ial
sputi nt
o producti
onar eindir
ectanddi rectmat eri
al s,
respecti
vel
y,wort
hP18, 500andP7, 090.Thetotalf
actorypay r
ollis
P74,000ofwhi chP50,000r epresentsdirectl
abor.Otherf actory
overhead costsamountt o P32,000.Thecompanyappl i
est he
actualfact
oryoverheadcostt othej ob.Costofgoodssol d,and
the costofgoods manuf actured,ar e P135,
000 and 128, 000
respecti
vel
y,.

87. Bywhatamountdi dthecompany’

scl osi
ng goods,in
process inv
ent
ory exceed it
s openi
ng goods in process
invent
ory
?
a.P1,
590 b.P3,590 c.P5,
390 d.10,
590

Pet
ersandCompanycurrent
lyhas30ful
l-
ti
mepr of
essi
onal
son
st
aff
.Eachpr
ofessi
onali
sall
ott
edthef
oll
owingnumberofhour
s
 pery
ear
:

Budget
edbill
abletimeforcli
ents 2,
000
hour
s
Budget
edvacationtime 200hour
s
Budget
edprofessionaldev
elopment 175hour
s
Budget
edunbill
abletimeduet ol
ackofdemand 0
hour
s
Budget
edsickleave 125hour
s

Consumerdemandf orthecompany '

sservi
cesi
sat100percentof
ti
meav ai
l
able.Eachprofessi
onalrecei
vesasal
aryofP35,
000per
yearandfr
ingebenef
it
sofP10, 000peryear
.

88. What is the t otal budget

ed direct -
cost rat
e if
managementbelievest hatcli
entsshoul
dbechar gedforthe
employees'
benef
itsthatPetersandCompanyhast opay
?
a.P17.
50 b.P18. 00 c.P22.
50 d.P5.00

89. Whati
sthebudgeteddir
ect
-costrat
eifthecompanydoes
notwanttochargecli
entsdir
ect
lyf oremployeevacati
on,si
ck
leav
e,andpr
ofessi
onaldevel
opment ?
a.P14.
00 b.P4.00 c.P22.50 d.P18.00

90. Mater
ial
sareaddedatt hestar
toft heprocessinCedar
Company ’
s blendi
ng depart
ment,t he f i
rst st
age of the
product
ioncycl
e.Thef
oll
owinginf
ormationisavail
abl
eforJuly
:

Units
Wor kinprocess,Jul
y1( 60%compl
et eastoconversi
oncosts)
60,000
Start
edinJuly
150,000
Transfer
redtot henextdepar
tment
110,000
Lostinproduction
30,000
Wor kinprocess,Jul
y31( 50%completeastoconversi
oncosts)
70,000
 UnderCedar’scostaccount i
ngsyst
em,thecostsincurr
edont he
l
ostunitsareabsorbedbyt her
emaini
nggooduni ts.Usingthe
weight
edav eragemet hod,whataretheequiv
alentunitsforthe
materi
alsuni
tcostcalculat
ion?
a.180,
000 b.145,000 c.125,
000 d.210,
000

ACompanypr oducessmallpencilerasers.Twoper centofnormal

i
nputs are expected t
o be spoiled int he process.Inspect
ion
occur
satt heendoft hepr ocessandr ejectedunitsaredisposed
ofasscrapwi thnocostrecovery.Inar ecentperi
od,thefoll
owing
datawereobtained:

Uni
t s
Totalunitsst
art
ed
750,000
Defective uni
tsreject
ed (
incl
udi
ng nor
maland abnor
mal
spoi
l
age) 20,
000
Costs
Materials
P14,
750
Conver si
on
7,
750
Total
P22,
500

91. Thecostf
ort heuni
tstr
ansf
erredtofi
nishedgooddur i
ng
thi
s24hourperi
od,assumingnoendingwork-
inprogress,
is
a.P21,
900 b.P22,
350 c.P22,
050 d.P22,
500

GAOGAO Mfg.Cor
p.,makessi
ngleProducti
ntwodepar
tment
s.
Thepr
oduct
iondat
aformixi
ngdepar
tmentforMay
,2008f
oll
ows:

Quanti
ti
es:
Inprocess,
May1( 40%) 4,
000uni
ts
Receivedfr
om depart
ment678 30,
000
uni
ts
Compl et
edandtransf
err
ed 25,
000
uni
ts
Inprocess,
May31( 60%) 6,
000uni
ts
 Pr
oductionCost s: May1 May
31
Transferredi
n P16,
300 P89,100
Materialsadded 3,
800 67,
500
Conver si
oncost 1,
940 81,
000

Mater
ials ar
e added atthe st
artofthe pr
ocess and l
osses
nor
mal l
yoccurduri
ngtheear
lyst
agesoft
heoperat
ion.

92. Assumingaveragecost
ingwasusedt oaccountforthe
process,t
heclosi
ngworkinpr
ocesswas:
a.P44,
640 b.P46,
800 c.P45,
600 d.P51,
680

Marki
eCompany’sdi
rectl
aborcost
sfort
hemont
hofJanuar
y
2003wereasf
oll
ows:

Actualdir
ectlaborhours 20,
000
Standarddir
ectlaborhours 21,
000
Directl
aborratevari
ance–unf
avor
abl
eP 3,000
Totalpayrol
l 126,
000

93. Whatwasdi
rectl
aboref
fi
ciencyv
ari
ance?
a.6,
000f
avor
abl
e c.6,
300favor
able
b.6,
150f
avor
abl
e d.6,
450unfavor
able

Univer
salcompanyusesastandar
dcostsy
stem andpr
epar
edthe
fol
l
owi ngbudgetatnor
mal
capacit
yfort
hemonthofJanuar
y:

Dir
ectlaborhours 24,
000
Vari
ablefactor
yov er
head 48,
000
Fi
xedfactoryoverhead 108,
000
Totalf
actoryover
headperDLH 6.
50

Act
ual dataf
orJanuarywer easfoll
ows:
Directl
aborhoursworked 22,
000
Totalfact
oryoverhead 147,
000
StandardDLHallowedf orcapaci
tyat
tai
ned 21, 000

94. Usi
ngthet
wo-wayanaly
sisofoverheadvar
iance,whati
s
t
hebudget(
cont
rol
l
abl
e)vari
anceforJanuary
?
 a.3,
000fav
orable c.9,
000fav
orable
b.13,
500unfav
orabl
e d.10,
500unfav
orabl
e

Thefoll
owi
nginf
ormat
ionper
tai
nst
oMagl
ulubiCompanymaker
ofcooki
ngoi
lasfol
l
ows:

Actualdir
ectlaborhoursused………………………………………
4,
700
Unitsproduced……………………………………………………. .
.
1,
500
Standardlaborhoursperunitproduced…………………………….
3
Budgeted v ar
iabl
e overhead perst andar
d di
rectl
aborhour
………P 2
Actualvari
ableoverheadincurr
ed…………………………………. P
9,
500

95. Comput et
hev
ari
abl
eov
erheadeff
ici
encyvar
iance
a.P100unfav
orabl
e c.P400favor
able
b.P100fav
orabl
e d.P400unfavor
able

Dwar fCompanyappl iesov erheadont hebasisofdi r

ectl abor
hours.Twodi rectl
aborhour sar er
equi redforeachpr oductunit.
Plannedproduct ionfort heper i
odwassetat9, 000uni ts.
Manuf act
uringov erheadbudget edatP135, 000f ort heper i
od,of
which20%oft hiscost sisfixed.The17, 200hour swor kedduring
theperiodresul t
edinpr oduct i
onof8, 500uni t
s.Var iabl e
manuf act
uringov erheadcosti ncur
redwasP108, 500andf i
xed
manuf act
uringov erheadcostwasP28, 000.Dwar fCompanyuses
fourwayv ariancemet hodsf oranal
y zi
ngmanuf act uringov erhead.

96. Thefixedeffi
ciencyv
ari
ancefort
heperiodis
a.P300unf
avor abl
e c.P300favor
abl
e
b.P1,
200unfavorable d.P1,200favor
able

97. Nena’s Lechon,Inc.f ranchise,enter

ed int
of ranchise
agreementwithAlingNene, fr
anchisee, onMarch31,2008.The
tot
alfranchi
sef eeisP500, 000,ofwhi chP100,000ispay able
uponsigningandt hebalanceinf ourequalannuali
nstallment s.
Thedown- paymenti srefundablei nt heeventthef ranchiser
 fai
lst
or enderserv
icesandnonet husfarhadbeenrender
ed.
WhenNena’ spreparesitsfi
nanci
alstatementsonMarch31,
2008,t
hefranchi
sef eer
evenuetobereportedi
s:
a.P0 b.P100,000 c.P500,
000
d.P400,000

98. On December 31,2009,Pet er Company si gned an

agreementt ooper ateasf ranchi seofWendy ’
sf oraf r
anchise
feeofP80, 000.Oft hisamount ,P30, 000waspai duponsi gning
oft heagr eementandt hebal ancei spay abl
ei nf i
veannual
payment sofP10, 000eachbegi nningDecember31,2010.The
presentv alueoft hef ivepay ment ,atanappr opriaterateof
int
erest,isP56, 000 atDecember31,2009.The agr eement
providesthatt hedownpay menti snotr ef
undableandnof uture
servicesarer equiredoft hef ranchisor.Thecol lecti
onoft he
noter ecei
vablei sreasonabl ycertain.Wendy’sCompanyshoul d
reportunear nedr evenuef r
om franchi sefeeinit
sDecember31,
2009bal ancesheetat :
a.80,
000 b.30,000 c.66,000 d.0

99. Chick 2 Go,I nc.charges an init

ialf ranchise f
ee of
P115,000,withP25,000paidwhent heagr eementwassi gned
andthebalancei nfi
veannualpayments.Thepr evail
ingi
nterest
rat
euponsi gningthecontr
actwas10%.TheFr anchiseehast he
opti
ont opurchaseP15,000ofequi pmentf orP12, 000.Chick2
Gohassubst anti
all
yprovi
dedal lini
ti
alser vi
cesr equir
edand
coll
ecti
bil
it
yoft hepaymentisreasonablyassur ed.Theamount
ofrevenuerecognizedfr
om thefranchi
sefeewas:
a.P25,
000 b.P90,
234 c.P93,
234 d.
P115,
000