COLLEGE OF ACCOUNTANCY

FINAL EXAMINATION
ACCTG 207B
INSTRUCTIONs:
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Multiple Choice
A, B and C are partners in an accounting firm. Their capital account balances at year-end were: A,
P90,000; B, P110,000; C, P50,000. They share profits and losses in a 4:4:2 ratio, after the following
special terms:
a. Partner C is to receive a bonus of 10% of the net income after the bonus.
b. Interest of 10% shall be paid on that portion of a partner’s capital in excess of P100,000.
c. Salaries of P10,000 and P12,000 shall be paid to partners A and C, respectively.
1. Assuming a net income of P44,000 for the year, the total profit share of partner C would be:
a. P7,800 c. P19,400
b. P16,800 d. P19,800
ABC Company operates a branch in Cebu City. Selected accounts taken from the May 31, 2016
statements of ABC and its branch follow:
Head Office Branch
Sales P380,000 P353,000
Shipments to branch 150,000 -
Branch merchandise mark- 39,500 -
up
Inventory, June 1, 2015 24,000 16,000
Purchases 300,000 60,000
Shipments from home - 187,500
office
Inventory, May 31, 2016 28,000 20,700
The branch ending inventory included items costing P8,700 that were acquired from outside
suppliers.
2. The realized mark-up on branch merchandise that would be recognized by the home office is
a. P36,000
b. P36,700
c. P37,100
d. P38,040
e. None of these
3. How much is the cost of sales presented in the Branch books?
a. P263,500
b. P222,800
c. P204,500
d. P242,800
e. None of these
4. How much is the mark-up from beginning inventory of the Branch?
a. P2, 400
b. P4, 140
c. P3, 200
d. P38,300
e. None of these
5. How much is the combined ending inventory of ABC Company?
a. P48,700
b. P46,300
c. P38, 300
d. 47, 800
e. None of these
For the year 2009, the Thailand branch of ABC Shoes, Inc., reported that its ending inventory had a
cost of 850,000 baht and a market value of 835,000 baht. The inventory was purchased when one
Thailand baht was worth P1.37 and on December 31, 2009 the closing rate for one Thailand baht
was P1.30. ABC Shoes values inventories at the lower of cost or market.
6. In its December 31, 2009, balance sheet, how much in Philippine pesos should ABC Shoes, Inc.
report the Thailand branch inventory?
a. 1,085,500
b. 1,905,500
c. 1,605,900
d. 1,800,000.

ABC Co sold merchandise to a foreign company on April 1, 20x8 for FC35,000 payable on August
31, 20x8. At the time of sale, the spot rate was P27 per foreign currency. By the fiscal year ending
June 30, 20x8, the exchange rate was P16 per foreign currency and P19 per foreign currency when
payment was received.
7. Determine the amount to be reported as foreign exchange gain or loss on the company’s current
earnings.
a. P 385,000 loss
b. P 385,000 gain
c. P 280,000 loss
d. P 280,000 gain

In October 2008, ABC Co obtained a loan amounting to US$120,000 for the purchase of machinery
and equipment. By the end of year, one-half of the loan was still unpaid and the peso weakened by
ten percent.
8. If the foreign loan payment account is correctly reported in the balance sheet at P1,848,000,
determine the peso equivalent of the peso to the US$ at the date of the transaction.
a. P 34,22
b. P 28
c. P 30.80
d. P 27
Par Company owns 80% of S Company’s common stock. During 2011, Par sold S P250, 000 of
inventory on the same terms are sales made to third parties. S sold the entire inventory purchased
from Par in 2011. The following information pertains for S and Pat’s sales for 2011.
Par S
Sales P1, 000, 000 700, 000
Cost of sales 400, 000 350, 000
Gross profit 600, 000 350, 000
9. Assuming the unrealized gross profit on intercompany sale of inventory during 2010 is P10, 000,
the consolidated cost of sales presented in 2011 consolidated statement of comprehensive
income?
a. 760, 000
b. 750, 000
c. 500, 000
d. 490, 000
10. The consolidated cost of sales presented in 2011 consolidated statement of comprehensive
income?
a. 1, 700, 000
b. 1, 250, 000
c. 1, 450, 000
d. 1, 950, 000
On January 1, 2011, Parent Company acquired 90% of the subsidiary company in exchange for 5,
400 shares of P10 par value commons stock having a market value of P120, 600. Parent and
Subsidiary condensed balance sheets were as follows:
Parent Subsidiary
Cash 30, 900 37, 400
Accounts receivable 34, 200 9, 100
Inventories 22, 900 16, 100
Equipment(net) 179, 000 40, 000
Patents (net) 10, 000
Total asset 267, 000 112, 600
Accounts payable 4, 000 6, 600
Bonds payable, 10% 100, 000
Common stock, P10 par 100, 000 50, 000
Additional paid in capital 15, 000 15, 000
Retained earnings 48, 000 41, 000
Total liab. And equity 267, 000 112, 600
At the date of acquisition, all assets and liabilities of Subsidiary Company book value approximately
equal to their respective market values except the following as determined by the appraisal as
follows:
Inventories P17, 100
Equipment, net 48, 000 (remaining useful life – 4 years)
Patents 13, 000(remaining life-10 years)
On December 31, 2011, Parent Company reported separate income of P30, 200 and paid dividends
of P15, 000, Subsidiary Company reported separate income of 9, 400 and paid dividends of 9, 400.`
11. How much is goodwill at the date of acquisition?
a. 2, 600
b. 3, 800
c. 14, 400
d. 25, 200
12. The NCI in the net asset of subsidiary on January 1, 2011?
a. 10, 600
b. 11, 200
c. 11, 800
d. 13, 090
13. The non-controlling interest in the net income on December 31, 2011?
a. 0
b. 540
c. 610
d. 940
14. Compute the non-controlling interest on December 31, 2011?
a. 10, 600
b. 11, 140
c. 12, 010
d. 12, 300
15. The profit attributable to Parent Company on December 31, 2011?
a. 26, 600
b. 32, 090
c. 32, 700
d. 44, 100
16. Compute the consolidated retained earnings attributable to Parent Company on December
31, 2011?
a. 64, 760
b. 65, 090
c. 69, 400
d. 69, 800
ABC, a partner in the Financial Brokers Partnership, has a 30 percent share in partnership profits
and losses. ABC's capital account had a net decrease of P100,000 during 2008. During 2008, ABC
withdrew P240,000 as withdrawals and contributed equipment valued at P50,000 to the
partnership.
17. What was the net income of the Financial Brokers Partnership for 2008?
a. 633,334
b. 466,666
c. 300,000
d. 190,000
Income statement Information for the year 2012 taken from the separate company financial
statement of Pears Company and its 75% subsidiary, Sky Corporation is presented as follows:
Pears Sky
Sales 1000, 000 460, 000
Gain on sale of building 20, 000
Dividend income 75, 000
Cost of goods sold (500, 000) (260, 000)
Depreciation expense (100, 000) (60, 000)
Other expenses (200, 000) (40, 000)
Net income 295, 000 100, 000
Pears gain on sale of building relates to a building with a book value of P40, 000 and a 10-year
remaining useful life that was sold to Sky on January 1, 2012.
18. At what amount of will the gain on sale of building appear on the consolidated statement of
comprehensive income for the year 2012?
a. 20, 000
b. 5, 000
c. 15, 000
d. 0
e. None of these
19. The consolidated depreciation expense for the 2012 should be:
a. 180, 000
b. 160, 000
c. 162, 000
d. 158, 000
e. None of these
20. The profit attributable to Pears for 2012 should be;
a. 295, 000
b. 277, 000
c. 275, 000
d. 220, 000
e. None of these
ABC Furniture uses the installment sales method. No further collections could be made on an
account with a balance of P12,000. It was estimated that the repossessed furniture could be sold as
is for P3,600, or for P4,200 if P200 were spent reconditioning it. The gross profit rate on the original
sale was 40%.
21. The loss on repossession was
a. P3,200.
b. P3,000.
c. P8,000.
d. P8,400.
ABC Co. uses the installment method. Information on installment sales in 2021 and 2022 is shown
below:
  2021 2022
Sales 400,000 640,000
Cost of sales 320,000 448,000
Gross profit rate 20% 30%
Installment receivable - 2021 180,000 60,000
Installment receivable - 2022 288,000
During 2022, ABC Co. repossessed a property which was sold in 2021 for P40,000. Prior to
repossession, P10,000 were collected from the buyer. The estimated resale price of the repossessed
property was P34,000 after reconditioning costs of P6,000.
22. How much is the gain or loss on repossession?
a. 17,800
b. 6,200
c. 12,800
d. 5,400
23. How much is the profit recognized in 2022?
a. 123,600
b. 352,000
c. 117,400
d. 90,000

At the beginning of the year, ABC got a 5 year the franchise of Y Company, a known steak house of
upscale patronage. The franchise agreement required a P500,000 franchise fee payable P100,000
upon signing of the franchise and the balance in four annual installments starting the end of the
current year. At present value using 12% as discount rate, the four installments would approximate
P303,700. Further, the franchisor is emitted to a 5% fee on gross sales payable monthly within the
first ten days of the following month. The first year of operations yielded gross sales of P9 million.
The direct transaction cost incurred related to franchise is P20,000 and an indirect cost of P 5,000.
The company determine that the performance obligation is satisfied over time.
24. How much total revenue recognized from continuing franchise fee at the end of the current
year?
a. 450,000
b. 1,080,000
c. 15,185
d. 0
25. How much total expenses recognized at the end of the current year?
a. 5,000
b. 25,000
c. 20,000
d. 9,000

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