For items 1-3 :

The cost data and production data for Troy Company for the month of August were as
follows:

Work in process, August 1: Materials P20,800

Conversion costs P27,600

Cost added this month: Materials P240,000

Conversion costs P640,800

Production Data:

Work in process, Aug 1 (60% incomplete) 3,750 units

Started in production this August 40,000 units

Transferred out 36,250 units

Work in process, Aug 31 (30% to be done) 6,500 units

Normal lost units 550 units

Abnormal lost units ?

All materials are added at the start of the process and lost units are detected at the
inspection point of 75% completion.

1. Using the FIFO method, what are the cost assigned to units transferred out and units
in ending work in process?
a. P807,650; P113,450
b. P809,300; P111,80
c. P807,650; P111,800
d. P809,300; P113,450
 2. Using the average method, what are the cost assigned to units transferred out and
units in ending work in process?
a. P807,638; P113,450
b. P799,229; P113,450
c. P809,143; P111,941
d. P799,212; P38,748
3. What is he cost of abnormal lost units under FIFO and average method?
a. P8,100; P8,100
b. P9,900; P9,920
c. P5,430; P5,400
d. P8,100; P8,112
4. Strong Products has no Work in process or Finished Goods Inventories at the close of
business on December 3, 2014. The balances of Strong Products’ accounts as of
December 31, 2014, were as follows:

Cost of goods sold – unadjusted P6,120,000

Selling and Admin. Expenses 2,700,000

Sales 10,800,000

Manufacturing overhead control 2,100,000

Manufacturing overhead applied 1,944,000

Pretax income for 2014 is:

a. P1,824,000
b. P1,980,000
c. P2,136,000
d. P1,860,000
5. A company is to be liquidated and has the following liabilities: Income taxes P8,000;
Notes payable (secured by land) P120,000; Accounts payable P83,000; Salaries payable
P6,000; Bonds payable P70,000 and Administrative expenses for liquidation P20,000.
While the company had the following assets with their respective book values and fair
values: Current assets P80,000 BV, P33,800 FV; Land P100,000 BV, P90,000 FV and
Buildings and Equipment P100,000 BV and P110,000 FV. How much will the holders of
the notes payable collect following the liquidation?
a. 105,000
b. 90,000
c. 108,000
d. 108,300
6. A company processes raw material into products F1, F2 and F3. Each ton of raw
materials produce five units of F1, two units of F2, and three units of F3. Joint
processing costs to the split-off point are P15 per ton. Further processing results in the
following per unit figures:

F1 F2 F3

Additional processing costs per unit P28 P30 P25

Selling price per unit 30 35 35

If joint costs are allocated by the net realizable value of finished product, what
proportion of joint costs should be allocated to F1?

a. 20% b. 30% c. 33 1/3% d. 50%

7. POGI charges an initial franchise fee of P500,000 for the right to operate as a franchise.
Of this amount, P100,000 is payable when the agreement was signed and the balance
is payable in a noninterest bearing note in five equal annual payment. In return for the
initial frachise fee, the franchisor will help locate the site, negotiate the lease or
purchase of the site, supervise the construction activity, and provide the bookkeeping
services. The credit rating of the franchisee indicates that money can be borrowed at
12%. The amount of future services to be provided to the franchisee is minimal and the
 collectability of the note is reasonably assured. How much is the unearned franchise
fee?
a. P388,384
b. P288,384
c. P0
d. P500,000
8. On December 31, 2014, Troy Co. granted a franchise right to CONFUSE for an initial
franchise fee of P250,000 with P100,000 down payment. As of December 31, 2014, Troy
has performed all of the services required under the franchise agreement. How much
should be the franchise revenue for 2014?
a. P100,000 b. P150,000 c. P250,000 d. P0

9. On June 1, 2014, SEI and ICHI agreed to invest equal amounts and share profits equally
to form a partnership. SEI invested PP3,120,000 cash and a piece of equipment. ICHI
invested some assets which are shown below:

BOOK VALUE
ACCOUNTS RECEIVABLE P400,000
INVENTORY 1,120,000
MACHINERIES, NET 2,240,000
INTANGIBLES, NET 920,000

The assets invested by ICHI are not properly valued. P32,000 of the accounts
receivable are proven uncollectible. Inventories are to be written down to
P1,040,000. Included in the machineries is an obsolete apparatus acquired for
P384,000 with an accumulated depreciation balance of P336,000. Part of the intangibles is a
patent with a carrying value of P56,000 which was sued upon by a competitor. ICHI
unsuccessfully defended the case and the final decision of the court was released on
May 2, 2014.

What is the fair value of the equipment invested by SEI?

a. P1,400,000
b. P968,000
 c. P1,344,000
d. P1,560,000

10. The balance in retained earnings at December 31, 2012 was P720,000 and at December
31, 2013 was P582,000. Net income for 2013 was P500,000. A stock dividend was
declared and distributed which increased common stock P250,000 and paid-in capital
P110,000. A cash dividend was declared and paid. The amount of the cash dividend was
a. P248,000. b. P278,000. c. P388,000. d. P638,000.

11. POGI charges an initial franchise fee of P500,000 for the right to operate as a franchise.
Of this amount, P100,000 is payable when the agreement was signed and the balance
is payable in a noninterest bearing note in five equal annual payment. In return for the
initial frachise fee, the franchisor will help locate the site, negotiate the lease or
purchase of the site, supervise the construction activity, and provide the bookkeeping
services. The credit rating of the franchisee indicates that money can be borrowed at
12%. The amount of future services to be provided to the franchisee is minimal and the
collectability of the note is reasonably assured. How much is the unearned franchise
fee?
a. P388,384
b. P288,384
c. P0
d. P500,000

12. United Professionals Co. recognizes construction revenue and expenses using the
percentage-of-completion method. During 2013, a single long-term project was begun,
which continued through 2014. Information on the project follows:

2013 2014
Accounts receivable from P200,000 P600,000
construction contract
Construction expenses 210,000 384,000
Construction in progress 244,000 728,000
Partial billings on contract 200,000 840,000
How much is the profit recognized from the long-term construction contract in 2014?
a. 344,000 b. 484,000 c. 100,000 d. 134,000
 13. The Tacloban Branch of SVF company submitted the following trial balances as of
December 31, 2015, after its first year of operations:
Debit Credit
Cash P 10,400
Accounts receivable 63,200
Shipments from home office 168,000
Expenses 10,800
Sales P 134,400
Home office current 118,000

Merchandise Inventory, P50,400. Shipments to branch are billed at 140% of cost. The
overstatement of the branch inventory at December 31, 2015 was:
A. P -0- B. P 6,000 C. P 14,400 D. P 33,600

14. During 2013, goods were shipped to the branch at 120% above cost. The reciprocal
account in the income statement of the home office amounted to P237,500. The
balance of the contra branch current account reports a balance of P375,000 before
adjustment. The beginning inventory of the branch current from the home office at cost
is P360,000 and from outsiders, P93,000. The branch purchased goods from outsiders
during the year amounting to P125,200. If the ending inventory of the branch as
reported in the combined statement of financial position is P345,000. The branch
income as reported in the combined financial statement and as reported in the branch’s
books are P201,125 and 120,750, respectively.

How much is the cost of goods sold to be reported in the branch’s income statement for the
year ended December 31, 2013?

a. P551,075
b. P514,500
c. P470,700
d. P790,500

15. On May 25, 2014, DARYLL and O’NEIL agreed to form a partnership. The following are
their assets and liabilities:
 ACCOUNTS DARYLL O’NEIL
Cash P136,000 P76,000
Accounts receivable 88,000 48,000
Inventories 304,000 364,000
Machinery 480,000 440,000
Accounts payable 216,000 144,000
Notes payable 140,000 60,000

DARYLL decided to pay-off his notes payable from his personal assets. It was also agreed
that O’NEIL inventories were overstated by P24,000 and DARYLL machinery was over
depreciated by P20,000. O’NEIL is to invest or withdraw cash in order to receive a
capital credit that is 20% more than DARYLL’s total investment in the partnership.
How much cash will be presented in the partnership’s statement of financial position?
a. P486,400
b. 410,400
c. 450,400
d. 274,400

16. How should trade discounts be dealt with when valuing inventories at the lower of cost
or net realizable value?
a. Added to cost
b. Ignored
c. Deducted in arriving at NRV
d. Deducted from cost

17. Which of the following is not classified as an operating cash flow?

a. Interest received
b. Interest paid
c. Dividend received
d. Dividend paid

18. On July 1, Chester Corporation obtained fire insurance at an annual premium of P96,000
payable on July 1 of each year. The first premium payment was made on July 1, 2009.
On October 1, 2009, Chester paid P24,000 for real estate taxes to cover the period
ending September 30, 2010. This prepayment was made to obtain a discount. In its
 December 31, 2009 statement of financial position, what amount of prepaid expenses
should Chester report?
a. P45,000 b. P54,000 c. P66,000 d. P4,000

19. Kristelle and Hannie a Gec & Gel Partnership had total assets of P6,000,000 and Capital
of P3,222,000 at the beginning of the year. During the year assets increased by P830,000
and liabilities decreased by P1,000,000. What is the Capital of Gec & Gel partnership
during the year?
a. P5,000,052 b. P5,050,000 c. P5,052,000 d. P5,000,000

20. The changes in Gaytos Company’s account balances that occurred during the current
year were the increase in assets of P9,800,000, increase in liabilities of P3,420,000,
increase in share capital of P7,000,000, and an increase in share premium amounting to
P659,000. Except for a P1,300,000 dividend payment and the year’s earnings, there
were no changes in retained earnings for the year. What was Gaytos net income for the
current year?
a. P20,000 b. P50,000 c. P25,000 d. P21,000