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Question No. 1 - C: Rey Ocampo Online Ap Diagnostic Exam
Question No. 1 - C: Rey Ocampo Online Ap Diagnostic Exam
AP DIAGNOSTIC EXAM
Suggested answers/solutions
Question No. 2 - B
Sales for 11 months ended 11/30 3,400,000
Less cost of goods sold for 11 months ended 11/30
Inventory, 1/1 350,000
Net purchases up to 11/30 (see no. 1) 2,696,000
Inventory, 11/30 (P380,000 - P22,000) (358,000) 2,688,000
Gross profit for 11 months ended 11/30 712,000
GPR for 11 months ended 11/30 (GP/Sales) 20.94%
Question No. 3 - C
Sales for the year ended 12/31 3,840,000
Sales for 11 months ended 11/30 (3,400,000)
Sales month of December 440,000
Less cost of goods sold month of December:
Sold without profit 40,000
Sold with profit [(P440,000 - P40,000) x .7906] 316,240 356,240
Gross profit for the month of December 83,760
Question No. 4 - A
Inventory, 11/30 (see no. 2) 358,000
Net purchases December (P3,186,000 - P2,686,000) 490,000
Cost of goods sold month of December (see no. 4) (356,240)
Estimated inventory, 12/31 491,760
Question No. 5 - B
Question No. 7 - A
Trade-in value 24,000
Carrying amount, 9/1
Carrying amount, 1/1 (P180,000 - P67,500) 112,500
Depreciation - 2020 (P180,000 x .25 x 8/12) (30,000) 82,500
Gain (loss) on trade-in (58,500)
Question No. 8 - B
Recorded 1,734,000
Should be (See No. 9) 1,224,000
Over (under) 510,000
Question No. 10 - A
Adjusted cost 1,224,000
Adjusted accumulated dep. (199,500)
Carrying amount 1,024,500
Question No. 11 - B
Question No. 12 - C
Purchase price 200,000,000
Non-refundable transfer taxes 20,000,000
Legal costs 1,000,000
Total cost 221,000,000
Question No. 13 - A
Fair value of investment properties (P25 million x 9) 225,000,000
Cost of investment properties (P221 million x 9/10) 198,900,000
FV adjustment gain 26,100,000
The fair value of the units can be determined reliably without undue cost or effort on an ongoing
basis. Therefore, the entity accounts for the units using the fair value model.
Question No. 14 - C
Property taxes for 2020 20,000
Advertising 500,000
Opening function 200,000
Day-to-day repairs and maintenance 120,000
Depreciation of owner-occupied property (see no. 12) 353,600
Total expense in profit or loss 1,193,600
Question No. 15 - B
Property taxes for 2020 20,000
Advertising 500,000
Opening function 200,000
Day-to-day repairs and maintenance 120,000
Depreciation of properties (P221 million x .8 x 1/50) 3,536,000
Total expense in profit or loss 4,376,000
The fair value of the units cannot be determined reliably without undue cost or effort on an ongoing
basis. Therefore, the entity accounts for the units using the cost-depreciation-impairment model.
Question No. 18 - C
Impairment loss
Patent A
CA (P1,680,000 - P280,000) 1,400,000
RA 1,350,000 50,000
Trademark
CA (P8,000,000 x 3/4) 6,000,000
RA 5,500,000 500,000
Noncompetition agreement
CA (P2,000,000 - P400,000) 1,600,000
RA 1,800,000 -
550,000
Question No. 19 - C
Patent A (RA) 1,350,000
Trademark (RA) 5,500,000
Noncompetition agreement (CA) 1,600,000
Carrying amount of intangible assets, 12/31/20 8,450,000
Question No. 20 - A
Question No. 22 - A
Petty cash fund per total 10,300
Employees' vales (1,600)
Currency in envelope marked "collections for charity" (1,200)
Unreplenished petty cash vouchers (800)
Petty cash fund, as adjusted 6,700
Alternative computation:
Currency and coins 2,100
Replenishment check 4,600
Petty cash fund, as adjusted 6,700
Question No. 23 - A
BPI current account, per trial balance 950,000
Unreleased check 50,000
Post dated check delivered 86,000
BPI current account, as adjusted 1,086,000
Question No. 24 - A
Cash on hand (see no. 21) 282,000
Petty cash fund (see no. 22) 6,700
BPI current account (see no. 23) 1,086,000
Security Bank current account no. 1 1,280,000
Security Bank current account no. 2 (40,000) 1,240,000
PNB time deposit (cash equivalent) 300,000
Cash and cash equivalents, as adjusted 2,914,700
Note: The P500,000 PNB savings account should be presented separately from
cash and cash equivalents since it has been earmarked for the acquisition
of a noncurrent asset.
Question No. 25 - D
Page 3 of 6 facebook.com/reyocampo.ol.3 AP.Diagnostic
SITUATION 6 - Cavite Corporation
Question no. 26 - C
Year Credit sales AR writen-off Recoveries Net
2017 1,110,000 26,000 2,150 23,850
2018 1,225,000 29,500 3,750 25,750
2019 1,465,000 30,000 3,600 26,400
3,800,000 85,500 9,500 76,000
Net accounts written off (2017 to 2019) 76,000
Divide by credit sales (2017 to 2019) 3,800,000
Percentage of uncollectible accounts to charge sales 2.00%
Question no. 27 - C
Doubtful accounts expense for 2020 (P1,500,000 x 2%) 30,000
Question no. 28 - D
Accounts receivable, 1/1/20 209,000
Credit sales for 2020 1,500,000
Collections during 2020 (1,380,200)
Accounts written off - 2020 (31,000)
Accounts receivable, 12/31/20 297,800
Question no. 29 - A
Allowance for doubtful accounts, 1/1/20 7,600
Provision for doubtful accounts - 2020 30,000
Accounts written off - 2020 (31,000)
Recovery of accounts written off - 2020 4,200
Allowance for doubtful accounts, 12/31/20 10,800
Question no. 30 - D
Question No. 31 - B
Unadjusted CA (Debits minus credits) 700,000
Adjusted CA (Fair value, the investment is FA@FVTPL) 900,000
Over (Under) (200,000)
Question No. 32 - B
PVF at 8%,
Cash flows 3 periods CA, 1/1/20
Principal 1,000,000 0.7938 793,800
Interest 100,000 2.5771 257,710
1,051,510
Question No. 33 - B
Unadjusted CA 1,051,510
Adjusted CA (AC, the investment is FA@AC)
PV of Principal (P1,000,000 x 0.8573) 857,300
PV of Interest (P1M x .1 x 1.7833) 178,330 1,035,630
Over (Under) 15,880
Question No. 34 - B
Gain on sale of investment in OS
Sales proceeds 800,000
CA (P1.5M x 1/2) (750,000) 50,000
Remeasurement gain on remaining inv. in OS
[P900,000 - (P1.5M x 1/2)] 150,000
Interest income on investment in bonds
(P1,051,510 x .08) 84,121
Total amount in profit or loss 284,121
Question No. 35 - C
Question No. 37 - D
Estimated liability from warranties, 1/1/20 136,000
Add warranty expense for 2020 108,000
Total 244,000
Less actual expenditures for 2020 164,000
Estimated liability from warranties, 12/31/20 80,000
Question No. 38 - A
Premium expense [(1,800,000 x 60%)/200 x P14] 75,600
Question No. 39 - D
Inventory of premium, 1/1/20 39,950
Add premium purchases (6,500 x P34) 221,000
Total premium available 260,950
Less premiums issued (1,200,000/200 x P34) 204,000
Inventory of premium, 12/31/20 56,950
Question No. 40 - B
Estimated premium claims outstanding, 1/1/20 44,800
Add premium expense for 2020 75,600
Total 120,400
Less premiums issued (1,200,000/200 x P14) 84,000
Estimated premium claims outstanding, 12/31/20 36,400
Question No. 42 - A
Proceeds - 2018 share issuance 1,600,000
Proceeds - 2019 share issuance 18,000
Par value of shares issued (see no. 41) (1,010,000)
Share issue costs - 2018 share issuance (15,000)
Share premium 593,000
Question No. 43 - C
2018 2019 2020
Unadjusted profit (loss) (175,000) 220,000 410,000
Depreciation (15,000) (17,000) (23,000)
Miscellaneous (20,000) (25,000) (5,000)
Land write-up (100,000)
Adjusted profit (loss) (210,000) 78,000 382,000
Question No. 44 - C
Share capital (see no. 41) 1,010,000
Share premium (see no. 42) 593,000
Retained earnings (see no. 43) 242,000
Treasury shares [(10,000 - 5,000) x P7] (35,000)
Total equity 1,810,000
Question No. 45 - D
Question No. 46 - A
Cash payments for inventory purchases 300,000
Accounts payable, 12/31/20 25,000
Accounts payable, 12/31/19 (22,000)
Purchases 303,000
Inventory, 12/31/19 34,000
Inventory, 12/31/20 (30,000)
Cost of goods sold 307,000
Question No. 47 - A
Accumulated depreciation, 12/31/20 103,500
Accumulated depreciation associated with asset sold
(P75,000 - P22,000) 53,000
Accumulated depreciation, 12/31/19 (128,900)
Depreciation expense 27,600
Question No. 48 - B
General expenses (P102,000 - P5,700 + P5,000) 101,300
Wages expense (P150,000 + P12,000 - P10,300) 151,700
Amortization expense (P40,000 - P36,000) 4,000
Depreciation expense (see no. 47) 27,600
Total operating expenses 284,600
Question No. 49 - A
Carrying amount of bonds retired (P120,000 - P100,000) 20,000
Cash paid for retirement of bonds payable 23,000
Loss on retirement of bonds payable (3,000)
Question No. 50 - D
Sales (P685,300 + P25,000 - P18,000) 692,300
Cost of goods sold (see no. 46) (307,000)
Gross profit 385,300
Operating expenses (see no. 48) (284,600)
Operating income 100,700
Other income (expense)
Interest expense (P11,000 + P2,800 - P4,000) (9,800)
Loss on retirement of bonds payable (see no. 49) (3,000)
Gain on sale of PPE (P27,200 - P22,000) 5,200 (7,600)
Income before income taxes 93,100
Income tax expense (P23,900 + P1,600 - P1,200) (24,300)
Net income 68,800