CPA REVIEW SCHOOL OF THE PHILIPPINES

Manila

ADVANCED FINANCIAL ACCOUNTING AND REPORTING

First Preboard Examination

SOLUTIONS

1. D
2. A
3. A

2022 2023 2024

Contract Price 25,500,000 24,100,000 25,000,000
Cost Incurred (6,000,000) (11,000,000) (20,000,000)
Est. Cost to
Complete (18,000,000) (16,500,000) -
Est. Gross Profit 1,500,000 (3,400,000) 5,000,000
% of Completion 25% 100% 100%
RGP to date 375,000 (3,400,000) 5,000,000
RGP PY - (375,000) 3,400,000
RGP CY 375,000 (3,775,000) 8,400,000

Cost Incurred 6,000,000 11,000,000 20,000,000

RGP to date 375,000 (3,400,000) 5,000,000
CIP, gross 6,375,000 7,600,000 25,000,000

Constr. Rev 6,375,000 17,725,000 900,000

Cost of constr. 6,000,000 21,500,000 (7,500,000)
RGP CY 375,000 (3,775,000) 8,400,000

4. D

5. D
6. C

2022 2023 2024

Contract Price 40,800,000 40,800,000 40,800,000
Cost Incurred (4,686,000) (11,115,000) (15,600,000)
Est. Cost to Complete (42,174,000) (33,345,000) (23,400,000)
Est. Gross Profit (6,060,000) (3,660,000) 1,800,000
% of Completion 100% 100% 40%

RGP to date
(6,060,000) (3,660,000) 720,000
RGP PY - 6,060,000 3,660,000
RGP CY (6,060,000) 2,400,000 4,380,000

Constr. Rev 4,080,000 6,120,000

Cost of constr. 10,140,000 3,720,000
RGP CY (6,060,000) 2,400,000
7. D
8. C

DP 300,000
Bal 909,600
IFF 1,209,600
IDC (665,280)
RGP 544,320
Int 45,480
CFF 195,000
OPEX (311,850)
NI 472,950

9. A
10. A
11. C

scenario 1
SASP CP REVENUE
License 1,200,000 1,200,000 x20% 240,000
Fixed assets 200,000 200,000 x100% 200,000
Training 100,000 100,000 x100% 100,000
Merchandise 200,000 x40% 80,000
1,700,000

scenario 2
SASP CP REVENUE
License 1,200,000 60% 1,020,000 x20% 204,000
Fixed assets 200,000 10% 170,000 x100% 170,000
Training 100,000 5% 85,000 x100% 85,000
Merchandise 500,000 25% 425,000 x40% 170,000
2,000,000 1,700,000

scenario 3
SASP CP REVENUE
License 1,200,000 48.00% 816,000 x100% 816,000
Fixed assets 200,000 8.00% 136,000 x100% 136,000
Training 100,000 4.00% 68,000 x100% 68,000
Merchandise 1,000,000 40.00% 680,000 x40% 272,000
2,500,000 1,700,000 1,292,000

12. C
13. B

Sales 325,000
Commission (65,000)
to consignee (10,000)
to customer (30,000)
inst (25,000)
Mktg (15,000)
Remit 180,000

sold 325
unsold 75
shipped out 400

14. B

SR 400,000
to consignor 45,000 COGS (248,000)
to consignee 10,000 GP 152,000
Com (60,000)
F-out (30,000)
Inst (25,000)
Mktg (15,000)
NI 22,000

15. C

Cost 30,600
To consignor 4,500
To consignee 1,000
36,100

16. B
17. C
18. D

19. D
20. C
21. A

Schedule of Income Distribution:

Thor Jane Valkyrie Total
Salaries ........................................... P12,000 P10,000 P 8,000 P30,000
Interest (see computation below) ... 7,200 9,600 13,800 30,600
Balance, equally ............................. __3,133 __3,133 __3,134 __9,410
Total ............................................... P22,333 P22,733 P24,934
P70,000
Interest on Average Capital:
Thor:
P80,000 x 8% x 6 months .................. P 3,200
P100,000 x 8% x 6 months ................ __4,000 P 7,200
Jane:
P120,000 x 8% ................................... 9,600
Valkyrie:
P180,000 x 8% x 9 Mos. .................... P10,800
P150,000 x 8% x 3 Mos. .................... __3,000 _13,800
Total ........................................................... P30,600

b. Statement of Partners Capital:

Thor Jane Valkyrie Total
Balances, Jan. 1 .............................. P 80,000 P120,000 P180,000 P380,000
Additional Investment .................... 20,000 – – 20,000
Capital Withdrawal ........................ – – ( 30,000) ( 30,000)
Net Income ..................................... 22,333 22,733 24,934 70,000
Drawings ........................................ ( 10,000) ( 10,000) ( 10,000) ( 30,000)
Balance, Dec. 31 ............................ P112,333 P132,733 P164,934 P410,000

22. C
23. B
24. A
25. B

Contributed Capitals:

Steph: Capital before adjustment .............................................. P 85,000

Notes Payable................................................................. 62,000
Undervaluation of inventory .......................................... 13,000
Underdepreciation .......................................................... ( 25,000) P 135,000
Klay: Cash................................................................................ 28,000
Dray: Cash................................................................................ 11,000
Marketable securities ..................................................... _57,500 ___68,500
Total contributed capital .................................................................... P 231,500

Agreed Capitals:
Bonus Method:
Steph (P231,500 x 50%) ...................................................... P115,750
Klay (P231,500 x 25%)........................................................ 57,875
Dray (P231,500 x 25%) ....................................................... __57,875
Total ..................................................................................... P231,500

Asset Revaluation Method.

Contributed Agreed
Capital Capital AR
Steph P135,000 P137,000 (50%) 2,000
Klay 28,000 68,500 (25%) 40,500
Dray __68,500 __68,500 (25%) _____–
Total P231,500 274,000 42,500

Total agreed capital (P68,500 ÷ 25%) = 274,000

 Steph, Klay and Dray Partnership
Statement of Financial Position
June 30, 2022

Bonus Method AR Method

Assets:
Cash P 49,000 P 49,000
Accounts receivable (net) 48,000 48,000
Marketable securities 57,500 57,500
Inventory 85,000 85,000
Equipment (net) 45,000 45,000
Goodwill ______– __42,500
Total P284,500 P327,000

Liabilities and Capital:

Accounts payable P 53,000 P 53,000

Steph, capital (50%) 115,750 137,000
Klay, capital (25%) 57,875 68,500
Dray, capital (25%) __57,875 __68,500
Total P284,500 P327,000

26. A

Payment to Jayson 180,000

Capital balance of Jayson 160,000
Excess payment to Jayson 20,000

Jaylen Marcus
Capital balances before retirement 96,000 64,000
Share in excess payment to Jayson (12,000) (8,000)
Capital balances after retirement 84,000 56,000

27. B

Jayson, capital 160,000

Jaylen, capital 96,000
Marcus, capital 64,000
Investment of Al 140,000
Total partnership capital after admission 460,000
Multiply by: Interest of Al 25%
Capital credit to Al 115,000
Investment of Al 140,000
Bonus to old partners (25,000)

Jayson, capital (before admission) 160,000

Share in bonus to old partners (25K x 50%) 12,500
Jayson, capital (after admission) 172,500

28. A
29. B
30. D
31. D

(348,000 + 232,000) = 580,000 ÷ 80% = 725,000 capital after admission x 20% = 145,000

32. B

Sale of other assets 500,000

Carrying amount of other assets (625,000)
Total loss on sale (125,000)

The partial settlement to partners is computed as follows:

Alpha Thunder Totals
Capital balances before liquidation 348,000 232,000 580,000
Receivable from Thunder (20,000) (20,000)
Total 348,000 212,000 560,000
Allocation of loss
[125K x (60% & 40%)] (75,000) (50,000) (125,000)
Amounts received by the partners 273,000 162,000 435,000

33. B

A (50%) B (25%) C (25%) Totals

Cap. bal. before liquidation 76,000 64,000 56,000 196,000
Allocation of loss (actual and theoretical loss) (78,000) (39,000) (39,000) (156,000)
Total (2,000) 25,000 17,000 40,000
Allocation of deficiency 2,000 (1,000) (1,000) -
Total - 24,000 16,000

34. C

Net proceeds 320,000

Carrying amount of all other assets (720,000)
Loss (400,000)

A (50%) B (30%) C (20%) Totals

Cap. bal. before liquidation 250,000 86,000 40,000 376,000
Payable to partners 64,000 20,000 84,000
Total 250,000 150,000 60,000 460,000
Allocation of loss (200,000) (120,000) (80,000) (400,000)
Total 50,000 30,000 (20,000) 520,000
Additional contribution 20,000 20,000
Total 50,000 30,000 - 540,000

35. A
36. A

37. B

1,440,000 x 125% = 1,800,000 Markup of shipment

288,000 / 225% x 125% = 160,000 Markup of beginning inventory
1,960,000 Before adjustment
228,000 After adjustment
1,732,000 Realized markup
38. B

Unadjusted HOC balance: 772,000 + 9,600 - 3,000 + 4,200 = 782,800

39. D

520,000 /130% x 30% = 120,000 Markup of shipments during the year

196,000 - 120,000 = 76,000 Markup of beginning inventory
76,000 + 380,000 = 456,000 (BI) + 520,000 (Shipments) = 976,000

40. C

280,000 x 125% = 350,000 + 2,100 = 352,100 / 2 = 176,050

The journal entry would be:

HOC 176,050
Shipments from HO 175,000
Freight-in 1,050

41. A

42. B

7,500,000 / 12,000,000 = 62.5%

43. B
44. A
45. A

46. C

115,000 + 200,000 - 105,000 = 210,000 Net Free

500,000 + 200,000 = 700,000 Total Unsecured
200,000 x 30% = 60,000 + 125,000 = 185,000

47. B

18,000 (Interest expense) + 3,000 (Loss on AR) - 12,000 (Profit on Mdse) + 16,000 (loss on
Furniture) + 10,000 (Admin Expense) - 6,000 (Profit on Mdse) = (29,000)

48. D

40,000 (Estate Equity beg) - 29,000 (Loss during the year) = 11,000

49. A

80,000 + 5,000 + 60,000 + 44,000 - 10,000 = 179,000

50. C

51. A

672,000 / 120% x 20% = 112,000 markup on shipments during the year

52. B

252,000 before adjustment

Less: 98,000 after adjustment (490,000 x 20%)
154,000 realized markup

53. C

1,050,000 + 175,000 + 672,000 - 700,000 = 1,197,000 CGS

2,100,000 - 1,197,000 - 126,000 = 777,000 NI per branch

54. B

55. A

Job 05 Job 06 Job 07

Beginning inv 11,000 15,400 5,500
Direct materials 3,300 2,750 16,500
Direct labor 2,200 3,300 1,650
Applied OH
Job 05: (2,200 ÷ 10 x 5)
1,100 1,650 825
Job 06: (3,300 ÷ 10 x 5)
Job 07: (1,650 ÷ 10 x 5)
Total Cost 17,600 23,100 24,475

56. A

Job 06
Beginning inv 15,400
Direct materials 2,750
Direct labor 3,300
Applied OH (4,400 ÷ 10 x 5) 1,650
Total Cost 23,100

57. D

Job 08
Beginning inv 8,250
Direct materials 44,000
Direct labor 4,400
Applied OH (4,400 ÷ 10 x 5) 2,200
Total Cost 58,850
58. B

Job 168
Direct materials 175,000
Direct materials 262,500
Applied OH *inclusive of allowance* (150,000 x 3) 450,000
Total initial cost in WIP 887,500
Cost of spoiled *inclusive of allowance* (45,600)
Total cost transferred to FG 841,900

59. C

Job 168
Direct materials 175,000
Direct materials 262,500
Applied OH *exclusive of allowance* (150,000 x 2.25) 337,500
Total initial cost in WIP 775,000
NRV of spoiled goods (17,000)
Total cost transferred to FG 758,000

60. C

Assembly
Maintenance OH (149,600 x 40/80) 74,800
Personnel OH (72,000 x 30/90) 24,000
Total OH cost allocated to Assembly 98,800

61. A

Allocation table:
Maintenance Personnel Assembly Finishing
Maintenance - 20/100 40/100 40/100
Personnel - - 30/90 60/90

Application table:
Maintenance Personnel Assembly Finishing
149,600 72,000 - -
Maintenance (149,600) 29,920 59,840 59,840
Personnel - (101,920) 33,973 67,947
Total - - 93,813 127,787

62. D

NRV of Product A [(20 - 5) x 1,600] 24,000

NRV of Product B [(25 - 7) x 2,000] 36,000
60,000

Joint cost allocated to Product B: (40,800 x 36/60) 24,480

63. C

Sales of Product A (20 x 1,400) 28,000

Sales of Product B (25 x 1,500) 37,500
Additional sales revenue [(10 - 6) x 300] 1,200
Total sales revenue 66,700

64. D

Direct materials 168,000

Applied conversion cost 680,000
Total cost (CGM) 848,000
÷ 20,000
Cost per unit 42.40
x 18,000
Cost of goods sold 763,200

Unsold units 2,000

Applied conversion cost x 42.40
Finished goods at the end 84,800

To record the sale:

Cost of goods sold 763,200

Finished goods inventory 84,800
Accounts payable 168,000
Various accounts 680,000

65. D

66. B

MPV:
AQ x AR: (500 x 20) 10,000
AQ x SR: (500 x 18) (9,000)
1,000 U
MQV:
AQ x SR: (500 x 18) 9,000
SQ x SR: (450 x 18) (8,100)
900 U

To record the purchase:

Raw materials inventory 9,000
Materials price variance 1,000
Accounts payable 10,000

To record the usage to production:

Work-in-process 8,100
Materials quantity variance 900
Raw materials inventory 9,000
67. A

LEV:
AQ x SR: (1,580 x 15) 23,700
SQ x SR: (1,500 x 15) (22,500)
1,200 U
LRV:
AQ x AR: (1,580 x 12) 18,960
AQ x SR: (1,580 x 15) (23,700)
4,740 F

To record the direct labor into production:

Work-in-process 22,500
Labor efficiency variance 1,200
Labor rate variance 4,740
Payroll account 18,960

68. A
69. B
70. D

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