FINAL ACTIVITY – AEC 56.

INSTRUCTIONS:

 Answer honestly (don’t let karma get back on you)

 Minus 10 points for every instruction not followed.
 Submission should be in a PowerPoint format.
 Handwritten solution for every question.
 Each solution should be posted in each slide of the ppt (meaning, take a pic of
each).
 Each solution in each slide should have your name and signature.
 First slide should contain a picture of your ID with signature.

Problem 1: Partnership

Jennie K and Lisa M are partners sharing profits and losses 60% and 40% to Jennie K and
Lisa M, respectively. The partnership’s Statement of Financial Position at July 1, 2020
follows:

The two partners agreed to admit Jisoo K for a one-fourth interest in capital and in
profits for a consideration of P140,000. At the time of admission, the fair value of the
plant assets is appraised at P510,000 and the market value of the merchandise inventory
is P45,000. Unrecorded profit from January 1 is estimated at P120,000. The old partners
have decided to adjust their records before the admission of Jisoo K.

Assuming Jisoo K is admitted by investing the P140,000 into the partnership, determine
the capital credit of Jisoo K upon admission.

Problem 2: Partnership

The following balances at October 1, 2020 for the BLACKPINK Partnership were as follows:

ROSE P is to withdraw from the partnership at this date. To reflect fair values, the
partners agreed to adjust the non-cash assets to their fair value of P775,000 and to
recognize an estimated net profit of P150,000 from January 1. ROSE P will be paid P328,750
for his adjusted interest. Their profit and loss ratio is 4:2:4 to ROSE P,LISA M and
JENNIE K, respectively.

What will be the balance of JENNIE K’s total interest after the withdrawal of ROSE P?
Problem 3: Home & Branch

The home office consistently bills its branch for shipments at 125% of cost. In turn,
the branch sells the shipments to external customers at 120% of the billed price. On
November 1, 2020, all of the stocks of merchandise of the branch were destroyed by fire.

The following information was determined:

Compute for the cost of inventory destroyed by fire.

Problem 4: Corporate Liquidation

BANGKRAP Enterprises is in bankruptcy and is in the process of liquidation. The trustee

has converted all non-cash assets into P60,000 cash and has prepared the following list
of approved claims:

How much is the deficiency to creditors?

Problem 5: Consignment

On May 1, 2020, YGE Company consigned 80 freezers, costing P5,000 each, to SM Enterprises.
The cost of shipping the freezers amounted to P8,400 and was paid by YGE Company. On
December 30, 2020, a report was received from the consignee indicating that 45 freezers
had been sold for P7,500 each. Remittance was made by the consignee for the amount due,
after deducting a commission of 6%, advertising of P2,000, and total installation costs
of P3,200 on the freezers sold.

The amount of cash that will be remitted by the consignee is?

Problem 6: Home & Branch

The YGE Enterprises in SEOUL has a branch in BUSAN. The branch gets its merchandise from
the home office and from a local vendor. The following are some of the relevant account
balances in their individual records at December 31, 2020.

The combined net income reported by the Home Office for 2020 is?
Problem 7: Franchise

On December 31, 2020, YGE Ltd. Co., authorized BLACKPINK’s, Inc. to operate as a
franchisee for an initial franchise fee of P150,000. Of this amount, P60,000 was received
upon signing the agreement and the balance, represented by a note, is due in three annual
payments of P30,000 each beginning December 31, 2021. The present value on December 31,
2020 of the three annual payments appropriately discounted is P72,000. According to the
agreement, the nonrefundable down payment represents a fair measure of the services
already performed by YGE Ltd; however, substantial future services are required of YGE
Ltd. Collectability of the note is reasonably certain.

In YGE’s December 31, 2020 balance sheet, unearned franchise fees from BLACKPINK’s
franchise should be reported as?

Problem 8: Construction Contracts

The YGE BUILDERS started work on three job sites during the current year. Any costs
incurred are expected to be recoverable. Data relating to the three jobs are given below:

Site Contract Actual Cost Estimated Billings on Collection

Price Cost to Contract from
Complete Customers
Seoul P500,000 P375,000 - P500,000 500,000
Incheon 600,000 254,167 381,250 180,000 100,000
Busan 250,000 100,000 100,000 150,000 100,000

Due from customers/ (Due to customers) under percentage of completion?

Problem 9: Home & Branch

After examining on a comparative basis, the interoffice account of the YGE Company with
its suburban branch and the similar account carried on the latter’s books, the following
discrepancies at the close of the business on June 30, 2021 were seen:

a. A charge for labor by the home office, P500 was recorded twice by the branch.

b. A charge of P895 was made by the home office for freight on merchandise, but the
amount was recorded by the branch as P89.50.

c. A charge of P980 (Fixtures) on the home office books was taken up by branch as P890.

d. A credit by the home office for P350 (merchandise allowances) was taken up by the
branch as P400.

e. The home office charged the branch P425 for interest on open account which the branch
failed to take up in full; instead, the branch sent the home office a wrong adjusting
memo, reducing the charge by 125 and set up a liability for the amount.

f. The home office received P5,000 from the sale of a truck which it erroneously credited
to the branch; the branch did not charge the home office therewith.

g. The branch by mistake sent the home office a debit note for P370 representing its
portion of a bill for repairs of truck; the home office did not record it.

h. The branch inadvertently received a copy of the home office entry dated July 1,2021
correcting item (f) and entered a credit in favor of the home office as of June 30, 2021.

At June 30, 2021, the unadjusted balance of the Branch current account on the home office
books showed P170,020. At the beginning of the year, the interoffice accounts were in
balance.

Provide the adjusted balance of the Branch Office current account on June 30, 2021
Problem 10: Installment Sales

Light Drops Company started operations on January 1, 2016, selling home appliances on
the installment basis. For 2016 and 2017, the following information are available:

On January 6, 2017, an installment sale account balance of 2016 was defaulted and the
merchandise, with current value of P15,000 was repossessed. The account balance defaulted
was P24,000.

The balance of the unrealized gross profit account as at the end of 2017 was?