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Baguio Davao
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 0921-7566143  0917-1332365

ADVANCED FINANCIAL ACCOUNTING & REPORTING MAY 2022 BATCH

PREWEEK QUIZZER 1

1. Andrea, Sunshine, and Lorraine, a partnership formed on January 1, 2022 had the following initial
investment:
Andrea P 1,000,000
Sunshine 1,500,000
Lorraine 2,250,000

The partnership agreement states that the profits and losses are to be shared equally by the
partners after consideration is made for the following:
- Salaries allowed to partners: P 600,000 for Andrea, P 480,000 for Sunshine, and
P 360,000 for Lorraine.
- Average partners’ capital balances during the year shall be allowed 10%.

Additional information:
- On June 30, 2022, Andrea invested an additional P 600,000.
- Lorraine withdrew P 700,000 from the partnership on September 30, 2022.
- Share the remaining partnership profit was P 50,000 for each partner.

Partnership net profit at December 31, 2022 before salaries, interests and partners’ share on the
remainder was:
A. P 1,997,500 B. P 2,077,500 C. P 2,116,250 D. P 2,227,500

1) B
Total Salaries 1,440 .00
Total interest 487.5
Balance (50 x 3) 150.00
NI beg. S & int. 2,077.5
✓ 1,000 x 12/12 1,000
600 x 6/12 300
1,300
✓ 1,500 x 12/12 1,500
✓ 2,250 x 12/12 2,250
700 x 3/12 ( 175)
2,075

Items 2 and 3 are based on the following information:

Partners Tony, Paolo, Marc, and Joseph have been operating TPMJ Partnership for ten years. Due
to a significant reduction in the demand for their product over recent years, the partners have
agreed to liquidate the partnership. At the time of liquidation, balance sheet accounts consisted of
cash, P103,500; noncash assets, P300,000; liabilities to outsiders, P60,000; capital credit balances
for partners Tony, Paolo, and Marc, P90,000, P150,000, and P120,000, respectively; and a debit
capital balance for partner Joseph of P16,500.

Partners share equally in income and loss. It is estimated that the administrative cost of liquidation
will total P4,500. While preparing for liquidation, an unrecorded liability of P7,500 was discovered.

2. Assuming the available cash of P103,500 was distributed, how much must be the share of partner
Paolo?
A. P31,500 B. P30,750 C. P65,167 D. None
CRC-ACE/AFAR: PREWEEK QUIZZER 1 (MAY 2022 BATCH) PAGE 2

2) B
CAFD T P M J Total
103,500 90,000 150,000 120,000 (16,500) 343,500
(67,500) (78,000) (78,000) (78,000) (78,000) (312,000)
( 4,500 ) 12,000 72,000 42,000 (94,500) 31,500
31,500 (31,500) (31,500) (31,500) 94,500 -
(19,500) 40,500 10,500 - 31,500
(19,500) (9,750) (9,750) - -
- 30,750 750 - 31,500
B

3. In order for partner Joseph to receive at least P5,000, how much should the non cash assets be
sold for?
A. P 429,500 B. P 501,500 C. P398,000 D. P386,000

3) C
TE 343,500
J’S 5,000
E (16,500)
G 21,500
x 4 86,000
TP to PS 429,500
TL 67,500
EX 4,500
CB (103,500)
PROCEEDS 398,000

4. The partnership of JKL find it financially infeasible to continue operations and have agreed to
liquidate the partnership. The balance sheet just prior to the start of liquidation appears as follows.
Partners John, Kelly, and Lance share income and loss in the ratio 5:3:2, respectively.

Assets Liabilities and Capital

Cash P 200,000 Accounts payable P 300,000
Noncash assets 1,300,000 Loan from John 50,000
John, capital 350,000
Kelly, capital 600,000
Lance, capital 200,000
P1,500,000 P 1,500,000

If the first sale of noncash assets having a book value of P750,000 realizes P500,000 and all
available cash is distributed, determine the amount of cash distributed to John.
A. P50,000 B. P 360,000 C. P 40,000 D. P 0

4) D
John Kelly Lance Total
200 P400,000 P600,000 P200,000 P1,200,000
500 ( 400,000) ( 240,000) ( 160,000) ( 800,000)
(300) -0- P360,000 P 40,000 P 400,000
400 D
CRC-ACE/AFAR: PREWEEK QUIZZER 1 (MAY 2022 BATCH)
5. A, B, and C are partners in a business and share in its
30%, and 20%. At the beginning of the new fiscal year,
sufficient cash funds to give him a one-third interest
following closing trial balance is taken from the old firm’s
PAGE 3
earnings at the respective rates of 50%,
they admit D, who is to invest in the firm
in the capital and in the earnings. The
books:

Cash P 100,000 Accounts payable P 50,000

Marketable securities 75,000 Bank loan 30,000
Accounts receivable 225,000 A, capital 175,000
B, capital 100,000
C, capital 45,000
P 400,000 P 400,000
The securities have a market value of P50,000, and an allowance of P25,000 is required to cover
bad debts. No other adjustment of net assets is necessary, but the three old partners must among
themselves bring the balances in their capital accounts into agreement with their interests in the
earnings.

The amount that must be invested by D is

A. P135,000 B. P 90,000 C. P160,000 D. 150,000

5) A
Total Capital of Old Partners 320,000
(25,000)
(25,000)
Adj 270,000
x 3/2
Total Capital 405,000
x 1/3
Cash Investment needed 135,000
Items 6 and 7 are based on the following information:
Leni and Rodrigo are partners with capital balances of P32,000 and P68,000, respectively, as of
July 1, 2022. Leni has a 30% interest in profits and losses. All assets of the partnership are at fair
market value except as follows:
Book value Market value Book value Market value
Equipment P 150,000 P 142,000 Building P 274,000 P 250,000
Inventory 43,000 50,000 Land 60,000 105,000
The partnership has decided to admit Vicky and Francisco as new partners. Vicky contributes cash
of P55,000 for a 20% interest in capital and a 30% interest in profits and losses. Francisco
contributes cash of P10,000 and equipment with a fair market value of P50,000 for a 25% interest
in capital and a 35% interest in profits and losses. Francisco is also bringing special expertise and
client contacts to the new partnership.

6. The capital balance of Leni after Vicky and Francisco’s admission under the bonus method is:
A. P40,775 B. P34,775 C. P38,000 D. P70,500

7. The method (bonus or goodwill) advantageous to Vicky and Francisco and the total amount of
advantage is:
A. Bonus method for an advantage of P 2,055
B. Bonus method for an advantage of P 5,944
C. Bonus method for an advantage of P 12,750
D. Bonus method for an advantage of P 4,111.

6) A
BV Valuation Bonus Balance
L 32,000 6,000 2,775 40,775 A
R 68,000 14,000 6,475 88,475
V 55,000 - (8,000) 47,000
F 60,000 - (1,250) 58,750
TOTAL 215,000 20,000 235,000
CRC-ACE/AFAR: PREWEEK QUIZZER 1 (MAY 2022 BATCH) PAGE 4
CAP = PL
CAP < PL BM
CAP > PL GW
7) D
CAP vs PL
45 vs 65 = BM method
GW 235 vs 255.55 = 20,55 x 20%
= 4.11 (D)

8. On January 1, 2022, BMW Corporation issued 6,000 shares of its P10 par value common stock to
acquire the assets and liabilities of Ford Company. BMW Corporation shares were selling at P90 on
that date. Historical cost and fair value balance sheet data for Ford Company at the time of
acquisition were as follows:

Balance Sheet Item Historical Cost Fair Value

Cash and Receivables P 50,000 P 50,000
Inventory 120,000 200,000
Building and Equipment 400,000 300,000
Less: Accumulated Depreciation ( 150,000) .
Total Assets P420,000 P550,000
Accounts Payable P 50,000 P 50,000
Common Stock (P20 par value) 200,000
Retained Earnings 170,000
Total Liabilities and Equities P420,000

BMW Corporation incurred but not paid listing fees of P10,000 and audit fees of P5,000 in issuing
its new shares and paid a finder’s fee of P25,000 in locating the merger candidate. Under the
purchase of interest combination, how much goodwill must be recognized in the books?
A. P40,000 B. P55,000 C. P65,000 D. P80,000

8) A
COA (6,000 x 90) 540,000
FV of NA - - - - - - - - 500,000
GV - - - - - - - - - - - - - 40,000 (A)

 in TA
FV of TA acq. 550 65
GW 40 540-40
COA (Cash) -
OPL (Paid) (25) ______
 ----------- - 565 565

9. On January 1, 2022, Good Shepherd Products Corp. issues 12,000 shares of its P10 par value
stock to acquire the net assets of Octagon Steel Company. Underlying book value and fair value
information for the balance sheet items of Octagon Steel Company at the time of acquisition are as
follows:
Balance Sheet Item Book value Fair value
Cash P 60,000 P 60,000
Accounts Receivable 100,000 100,000
Inventory 60,000 115,000
Land 50,000 70,000
Buildings and Equipment 400,000 350,000
Less: Accumulated Depreciation ( 150,000) -
Total assets P520,000 P695,000
Accounts Payable P 10,000 P 10,000
Bonds Payable 200,000 180,000
Common Stock (P5 par value) 150,000
Additional Paid-in Capital 70,000
CRC-ACE/AFAR: PREWEEK QUIZZER 1 (MAY 2022 BATCH) PAGE 5
Retained Earnings 90,000
Total Liabilities and Equities P520,000

OCTAGON Steel shares were selling at P18 and Good Shepherd Products shares were selling at
P50 just before the merger announcement. Additional cash payments made by Good Shepherd
Corporation in completing the acquisition were:
Finder’s fee paid to firm that located OCTAGON Steel P 10,000
Audit fee for stock issued by Good Shepherd Products 3,000
Stock registration fee for new shares of Good Shepherd Products 5,000
Legal fees paid to assist in transfer of net assets 9,000
Cost of SEC registration of Good Shepherd Products shares 1,000

How much is the increase in the total net assets recorded by Good Shepherd Products?
A. P 310,000 B. P 572,000 C. P 591,000 D. P 487,000

9) B
COA (12K x 50) 600 695
FV of NA 505 95
GW 95 (28)
 in NA/SHE 762
FV of SH. issued 600 572
OPC ( 28) 190
Gain -
572 (B)

10. Pepper Company acquired the assets (except for cash) and assumed the liabilities of GIC Company
on January 2, 2022 and GIC Company is dissolved. As compensation, Pepper Company gave
24,000 shares of its common stock, 12,000 shares of its 8% preferred stock, and cash of P240,000
to the stockholders of GIC Company. On the date of acquisition, Pepper Company had the
following characteristics:

Common , par value P5; fair value, P20 Preferred, par value P100; fair value, P 100
Immediately prior to acquisition, GIC Company’s balance sheet was as follows:
Cash P 132,000 Current liabilities P 228,000
Accounts receivable Bonds payable , 10% 400,000
(net of P4,000 allowance) 170,000 Common stock, P5 par value 600,000
Inventory – LIFO cost 200,000 Additional paid-in capital 380,000
Land 384,000 Retained earnings 310,000
Buildings and equipt. (net) 1,032,000
P1,918,000 P1,918,000

An appraisal of GIC Company showed that the fair values of its assets and liabilities were equal to
their book values except for the following, which had fair values as indicated:
Accounts receivable P158,000 Land P540,000
Inventory 412,000 Bonds payable 448,000

How much must be the goodwill recognized as a result of this business combination?
A. P322,000 B. P454,000 C. P94,000 D. P0

10) B
Cost of investment:
Common shares (24,000 x 20) P 480,000
Preferred shares (12,000 x 100) 1,200,000
Cash 240,000 P1,920,000
CRC-ACE/AFAR: PREWEEK QUIZZER 1 (MAY 2022 BATCH) PAGE 6
Fair value of identifiable net assets acquired:
Accounts receivable P 158,000
Inventory 412,000
Land 540,000
Buildings and equipment 1,032,000
Current liabilities ( 228,000)
Bonds payable ( 448,000) 1,466,000
Goodwill from business combination P 454,000 B

11. ACE Company acquired 60 percent of CRC Company for P 300,000 when CRC’s book value was
P 400,000. The newly comprised 40 percent non-controlling interest had an assessed fair value of
P 180,000. Also at the date of acquisition, CRC had a trademark (with a 10-year life) that was
undervalued in the financial records by P 60,000. Also, patented technology (with a 5-yr life) was
undervalued by P 40,000. Two years later, the following figures are reported by these two
companies (stockholders’ equity accounts have been omitted)

ACE Company CRC Company CRC Company

Book value Book Value Fair Value
Current assets P 620,000 P 300,000 P 320,000
Trademarks 260,000 200,000 280,000
Patented Technology 410,000 150,000 150,000
Liabilities (390,000) (120,000) (120,000)
Revenues (900,000) (400,000)
Expenses 500,000 300,000
Investment income Not given

What is the consolidated net income prior to the reduction for the non-controlling interest’s share
of the subsidiary’s income?
A. P 400,000 B. P 486,000 C. P 491,600 D. P 500,000

11) B
S to DA (2) NCI – NA (MINA)
(1) C 1/S SHE of Sub to date - - - xx
1,300 C-S UE - - - - - - - - - - - - - xx
C-COS UP-end (US) - - - - - - - (xx)
6 C-GP UG US - - - - - - - - - - - (xx)
8 800 C-E UL US - - - - - - - - - - - - xx
400 14 CNI Adj. SHE - - - - - - - - - - xx
(300) 486 Less NCINI x-------------- %
(14) 34.4 CINI (CNI to SP/RE) NCI – NA xx
86 451.6
40%
_____

Items 12 to 14 are based on the following information:

Comparative trial balances of the home office and the two branches of SHOPEE Corporation at
December 31, 2022 were as follows:
Home office Branch A Branch B
Cash P 5,000 P 15,000 P 22,000
Accounts receivable (net) 80,000 30,000 40,000
Inventories 150,000 60,000 48,000
Branch A 170,000
Branch B 165,000
Plant assets (net) 730,000 250,000 200,000
Purchases 900,000
Shipments from home office 300,000 240,000
Expenses 300,000 75,000 50,000
Total P2,500,000 P730,000 P 600,000
CRC-ACE/AFAR: PREWEEK QUIZZER 1 (MAY 2022 BATCH) PAGE 7
Accounts payable P 100,000 P 45,000 P 30,000
Other liabilities 80,000 15,000 5,000
Loading in branch inventories 108,000
Capital stock, P10 par 500,000
Retained earnings 262,000
Home office 170,000 165,000
Sales 1,000,000 500,000 400,000
Shipments to branches 450,000 0 0
Total P 2,500,000 P 730,000 P600,000

Additional information:
Home office and Branch inventories at December 31, 2022 were:
Home office (at cost) P120,000
Branch A (at billed price) 72,000
Branch B (at billed price) 96,000

12. What is the mark-up rate on merchandise transfers to branch?

A. 20 percent of billed price C. 16-2/3 percent of billed price
B. 25 percent of cost. D. 25 percent of billed price
13. How much is the beginning inventory of SHOPEE Corporation?
A. P150,000 B. P258,000 C. P240,000 D. P90,000
14. How much is the correct net income of Branch B as far as home office is concerned?
A. P190,000 B. P158,000 C. P185,000 D. P94,000

Problems 12-14 12) C 13) C 14) A

12) Ship for HO (NO IN-TRANSIT) 540 13) Beg Inv of Brs 108,000
Ship to Br - - - - - - - - - - - - - - 450 x----------- 100/120
M-up - - - - 90 Brs Beg Inv. at cost 90,000
Ho beg. Inv. - - - - 150,000
(A) % = 90/450 Total 240,000
= 20%
(B) % = 90/540 14) Sales - - - - - - - - 400 400
= 16 2/3 COS (48+240-96) 192 160 (40+200-80)
GP 208 240
OE - - - - - - - - (50) 50
UP BNI per Br - - - - - 158
16 8 R. M.-up - - - - - - 32 ______
32 40 Adj. BNI 190 190
48 48

Items 15 to 17 are based on the following information:

The preclosing general ledger trial balances at December 31, 2022, for the NETFLIX Company and its
Pasay City branch office are shown below:
Trial Balance
Home Office Branch Office
Dr. (Cr.) Dr. (Cr.)
Cash P 360,000 P 80,000
Accounts receivable 350,000 120,000
Inventory 700,000 150,000
Plant assets - net 900,000
Branch office 200,000
Accounts payable (360,000) (135,000)
Accrued expenses (140,000) ( 25,000)
Home office ( 90,000)
Capital stock (500,000)
Retained earnings (450,000)
Sales ( 4,400,000) (950,000)
Purchases 2,900,000 240,000
Purchases from Home office 450,000
Expenses 440,000 160,000
CRC-ACE/AFAR: PREWEEK QUIZZER 1 (MAY 2022 BATCH) PAGE 8

Your audit disclosed the following data:

1. On December 23 the branch office manager purchased P40,000 of furniture and fixtures but
failed to notify the home office. The bookkeeper, knowing that all fixed assets are carried on
the home office recorded the proper entry on the branch office records. It is the company’s
policy not to take any depreciation on assets acquired in the last half of a year.
2. On December 27 a branch office customer erroneously paid his account of P20,000 to the
home office. The bookkeeper made the correct entry on the home office books but did not
notify the branch office.
3. On December 30 the branch office remitted cash of P50,000, which was received by the home
office in January, 2023.
4. On December 31 the branch office erroneously recorded the December allocated expenses
from the home office as P5,000 instead of P15,000.
5. On December 31 the home office shipped merchandise billed at P30,000 to the branch office,
which was received in January 2023.
6. The entire opening inventory of the branch office had been purchased from the home office.
Home office 2022 shipments to the branch office were purchased by the home office in 2022.
The physical inventories at December 31, 2022, excluding the shipment in transit, are:
Home office - P550,000 (at cost)
Branch office - P200,000 (comprised of P180,000 from home office and P20,000 from
outside vendors.)
7. The home office consistently bills shipments to the branch office at 20% above cost. The sales
account is credited for the invoice price.

15. How much is the correct ending inventory of NETFLIX Company?

A. P750,000 B. P720,000 C. P745,000 D. P738,000

16. How much is the adjusted balance of reciprocal account before net income of branch?
A. P110,000 B. P190,000 C. P80,000 D. P130,000

17. How much is the correct net income of the branch?

A. P220,000 B. P210,000 C. P234,000 D. P224,000

Problems 15-17 15) C 16) A 17) B

Adj. JE
(1) PPE 40k
Br Cur 40k
(2) HO 20k
AR 20k
(3) Cash 50k
Br Cur 50k
(4) Ex 10k
HO 10k
(5) Pur for HO/Ship 30k
Ho Cur 30k

15)
HO Mdse end - - - - - - - 550
BO Mdse end - - - - - - -
PC 180
In transit 30
Total 210
x------------ 100/120
At cost 175
Fr Pur 20 195
Total - - - - - - - - - - - - - 745
CRC-ACE/AFAR: PREWEEK QUIZZER 1 (MAY 2022 BATCH) PAGE 9

16) 200 90
(1) (40)
(2) (20)
(3) (50)
(4) 10
(5) ___ 30
110 110

17) 950 950

150 125 3,920
240 240 700
480 400 2,900
(230) 640 570 (195) (400)
310 380 (550)
+ 10 (170) 170 2,650
BNI 140 1,270
R. M-up 70 ____ 440
Adj. BNI 210 210 830
210
70 25 1,040
35 80
105 105

18. In 2021, STA. CLARA Builders Corp., successfully bided on a fixed-price contract for a factory
building at a price of P26,000,000. STA. CLARA uses the percentage-of-completion method and
the following data are obtained on the project.

Percentage of Estimated total Income recognized

Completion cost of completion to-date
December 31, 2022 60% P20,800,000 P3,120,000
December 31, 2021 20% 19,500,000 1,300,000

What is the contract cost incurred in 2022 assuming that costs incurred are used to measure the
extent of progress toward project completion?
A. P12,480,000 B. P 9,100,000 C. P 8,580,000 D. P 8,320,000

18) C
CID in 2022 (20,800 x 60%) 12,480,000
CID in 2021 (19,500 x 20%) 3,900,000
CI in 2022 8,580,000

19. SDMC Construction Corporation contracted with the province of Pampanga to construct a bridge at
a contract price of P16,000. SDMC Corporation expects to earn P1,520 on the contract. The
percentage of completion method is to be used and the completion stage is to be determined by
estimates made by the engineer. The following schedule summarizes the activities of the contract
for years 2021-2023.
Estimate Engineer’s
Cost Cost to Estimate of Billings Collection
Year Incurred Complete Completion on Contract on Billings
2021 P4,600 P9,640 31% P5,000 P4,500*
2022 4,500 5,100 58% 6,000 5,400*
2023 5,250 -0- 100% 5,000 6,100
CRC-ACE/AFAR: PREWEEK QUIZZER 1 (MAY 2022 BATCH) PAGE 10
*A 10% retainer accounts for the difference between billings and collections.

Under the percentage of completion method, using the engineer’s estimate as the measure of
completion to be applied to revenues and costs, how much is the gross profit earned each year?
2021 2022 2023 2021 2022 2023
A. P545.6; P 498.4; P 606 C. P1,760; P6,400; P1,650
B. P545.6; P 1,044; P1,044 D. P1,760; P1,800; P1,650

19) A

2021 2022 2023

Contract price P16,000,000 P16,000,000 P16,000,000
Total estimated costs:
Cost incurred to date P 4,600,000 P 9,100,000 P14,350,000
Estimated cost to complete 9,640,000 5,100,000 - ___
Total EC P14,240,000 P14,200,000 P14,350,000
Estimated gross profit P 1,760,000 P 1,800,000 P 1,650,000
Percentage of completion x 31% x 58% x 100%
Gross profit to date P 545,600 P 1,044,000 P 1,650,000
Less: Gross profit prior years 0 ( 545,600) ( 1,044,000)
Gross profit this year P 545,600 P 498,400 P 606,000

20. TVN Enterprise entered into construction agreement in 2021 that called for a contract price of
P 9,600. At the beginning of 2022, a change order increase the initial contract price by P 480. In
relation to the project, the following data were obtained:
2021 2022
Cost incurred to date P 4,920 P 8,640
Estimated cost to complete 4,920 2,160
Billing made to date 5,280 8700
Collections made to date 4,920 8,700

Compute the amount of construction in progress (net) – due from customers or progress billings
(net) – due to customers for the year 2022:
Percentage – of- Cost Recovery Method of
completion Method Construction Accounting
A. P 780– liability P780,000 – liability
B. 780– asset 780 - asset
C. 60 – liability 60 – liability
D. 636– liability 636 – liability
20) A
CIP vs PB
CIP > PB = CA (due from cust.)
CIP < PB = CL (due from cust.) CP CID
% TEC
2022 CRTD
POC CID
CP 10,080 CPTD
TEC 10,800 CPPY
PL 720 CP.UY

CIP PB
✓ ✓
✓ ✓
8,640 720 8,700
7,920

= 780 (Liability)
CRC-ACE/AFAR: PREWEEK QUIZZER 1 (MAY 2022 BATCH) PAGE 11
21. The following information were taken from the records of Pink Sisters Corporation.
Units Costs
Work in process inventory (50% complete) 300,000 P 660,960
Finished goods inventory 200,000 1,009,800
Materials are added to production at the beginning of the manufacturing process and overhead is
applied to each product at the rate of 60% of direct labor costs. There was no finished goods
inventory on Jan. 1. A review of Pink Sisters inventory cost records disclosed the following
information:
Costs
Units Materials Labor
Work in process, January 1 (80% complete) 200,000 P 200,000 P 315,000
Units started - production 1,000,000
materials costs 1,300,000
labor costs 1,995,000
Units completed 900,000

Using weighted average method, the correct cost assigned to the 300,000 units in the ending
work in process inventory is

A. P 900,000 B. P875,000 C. P918,000 D. P903,000

21) D

Mat CC
FT 900 900 900
IPE 300 300 150
1,200 1,200 1,050

Mat. 1,500,000 @ 1.25

CC 3,696,000 @ 3.52
5,196,000 4.77
FT (4,293,00) 900 x 4.77
IPE 903,000

IPE Costs
Mat. 300 x 1.25 375,000
CC 150 x 3.52 528,000
Total 903,000

22. Assume that process conversion costs are uniform but a number of materials are added at different
points in process. Material 1 is added at the beginning of the process. The transferred-in costs are
added at the 20% point in the process. Material 2 is added uniformly from the 50% to 70% points
in the process. Material 3 is added at the 75% point in the process, and Material 4 is added
uniformly at the 90% to the 100 points in the process.

The beginning work in process, was 10,000 units 60% complete, 60,000 units were added, and
ending work in process was 20,000 units 95% complete.

What was the Material 2 equivalent units for the month?

FIFO Weighted average FIFO Weighted average
A. 50,000 60,000 C. 65,000 70,000
B. 60,000 70,000 D. 63,000 67,000
22) C
Mat 2
FT 50,000 50,000
IPE 20,000 20,000
WA 70,000 70,000
IPB (10,000) 5,000
FIFO 60,000 65,000
CRC-ACE/AFAR: PREWEEK QUIZZER 1 (MAY 2022 BATCH) PAGE 12

23. BAMBOO Furniture’s Company, a local company, bought furniture from Ailments Corporation, a US
company, for 35,000 US Dollars in 2022. Pertinent exchange rates relating to this transaction are as
follows:
Buying Rate Selling Rate
Receipt of order P 47.10 P 47.20
Date of shipment 47.25 47.45
Balance sheet date 49.50 49.60
Settlement date 49.45 49.50
What is the foreign exchange gain or loss of BAMBOO Furniture’s Company for 2022?
A. P 78,750 loss C. P 78,750 gain
B. P 75,250 loss D. P 75,250 gain

23) B 49.60 – 47.45 = 2.15 x 35,000 = 75,250 loss

24. In accounting for corporate liquidation, which of the following statements is incorrect?
A. Fully secured creditors no longer share in the remaining free assets after payment of an
secured liabilities without priority.
B. Assets used as security for partially secured liabilities are offsetted to their secured debts and
can no longer be used to pay unsecured liabilities.
C. Unsecured credits with priority such as liabilities to employees and taxes due to government
can always be fully recovered by the said creditors in every corporate liquidation
D. The unsecured portion of the liabilities to partially secured creditors are added to unsecured
credits without priority in the computation of recovery percentage of the unsecured creditors
without priority.

25. KING FISHER College, a private not-for-profit college, received $25,000 from Ms. Mary Smith on
April 30, 2022. Ms. Smith stipulated that her contribution be used to support faculty research
during the fiscal year beginning on July 1, 2022. On July 15, 2022, administrators of KING FISHER
awarded research grants totaling $25,000 to several faculty in accordance with the wishes of Ms.
Smith. For the year ended June 30, 2022, KING FISHER College should report the $25,000
contribution as
A. Temporarily restricted revenues on the statement of activities.
B. Unrestricted revenue on the statement of activities.
C. Temporarily restricted deferred revenue on the statement of activities.
D. An increase in fund balance on the statement of financial position.

26. The following data pertain to SONY Manufacturing Company:

Direct Direct
Materials Labor
Cost incurred: actual inputs x actual prices P400,000 P180,000
Actual inputs x standard prices 428,000 172,000
Standard inputs allowed for actual outputs
achieved x standard prices 450,000 160,000

The entry to record materials issued to production under standard cost system must be:
A. Work in process inventory 450,000
Material quantity variance 22,000
Materials inventory 428,000

B. Work in process inventory 428,000

Material quantity variance 28,000
Materials inventory 400,000

C. Work in process inventory 450,000

Material quantity variance 50,000
Materials inventory 400,000

D. Work in process inventory 428,000

Material quantity variance 22,000
Materials inventory 450,000
CRC-ACE/AFAR: PREWEEK QUIZZER 1 (MAY 2022 BATCH) PAGE 13

26) A
WIP – M 450
MQV 22
RM 428

Items 27 and 28 are based on the following information:

The controller for JVC Mfg. Co. has established the following activity cost pools and cost drivers.
Budgeted Budgeted
Overhead Level for Cost
Activity Cost Pool Cost Cost Driver Driver Pool Rate
Machine setups P100,000 Number of setups 100 P1,000/setup
Material handling 50,000 Weight of raw material 50,000 pounds P1/pound
Hazardous waste control 25,000 Weight of hazardous 10,000 pounds P2.5/pound
chemical used
Quality control 37,500 Number of inspections 1,000 P37.5/inspection
Other overhead costs 100,000 Machine hours 20,000 P5/machine hr.
Total P312,500

An order for 2,000 boxes of film development chemicals has the following production
requirements:
Machine setups 4 setups
Raw materials 10,000 pounds
Hazardous materials 2,000 pounds
Inspections 10 inspections
Machine hours 500 machine hours

27. Under the activity based cost system, how much is the overhead cost per box of chemicals?
A. P 10.9375 B. P 21.875 C. P7.8125 D. P3.90625

27) A

M. Set-up ( 4 x 1,000 ) 4,000

MH 10k x 1 - - - - - - - - - - - 10,000
HW 2k x 2.5 5,000
QC 10 x 37.5 375
MR 500 x 5 2,500
Total- - - - - - - - - - - - - - - - - - = 21,875/2,000
= 10.9375

28. Using a single predetermined overhead rate based on machine hours, compute the rate per box of
chemicals.
A. P 10.9375 B. P 21.875 C. P 7.8125 D. P 3.90625

28) D
PDAR = 312,500/20k
= 15.625
App: 500 x 15.625
2,000
= 7812.5/2000
= 3.90625
CRC-ACE/AFAR: PREWEEK QUIZZER 1 (MAY 2022 BATCH) PAGE 14
Items 29 and 30 are based on the following information:
On January 1, 2022, Golden Products Corp. (SME) issues 12,000 shares of its P10 par value stock
to acquire the net assets of TAN Steel Company (SME). Underlying book value and fair value
information for the balance sheet items of TAN Steel Company at the time of acquisition are as
follows:
Balance Sheet Item Book value Fair value
Cash P 60,000 P 60,000
Accounts Receivable 100,000 100,000
Inventory 60,000 115,000
Land 50,000 70,000
Buildings and Equipment 400,000 350,000
Less: Accumulated Depreciation ( 150,000) -
Total assets P520,000 P695,000
Accounts Payable P 10,000 P 10,000
Bonds Payable 200,000 180,000
Common Stock (P5 par value) 150,000
Additional Paid-in Capital 70,000
Retained Earnings 90,000
Total Liabilities and Equities P520,000

TAN Steel shares were selling at P18 and Golden Products shares were selling at P50 just before
the merger announcement. Additional cash payments made by Golden Corporation in completing
the acquisition were:
Finder’s fee paid to firm that located TAN Steel P 10,000
Audit fee for stock issued by Golden Products 3,000
Stock registration fee for new shares of Golden Products 5,000
Legal fees paid to assist in transfer of net assets 9,000
Cost of SEC registration of Golden Products shares 1,000

29. How much is the increase in the total net assets recorded by Golden Products?
A. P 310,000 B. P 572,000 C. P 591,000 D. P 487,000

30. How much would be the resulting goodwill assuming, Golden measures minority interest at market
price and acquires only 18,000 of TAN shares and both are publicly accountable entities?
A. P 297,000 B. P 316,000 C. P311,000 D. P472,000
Problems 29 - 30
SM F
COA FV of SH 600 600
S F FV of SH (12,000 x 50) 600,000 OPC (DC) (18) (28)
C E DC OPC Dir 10,000 Net 29) 582 572
E E IC 610,000
A A SIC 505,000 COI 610 600
GW - - - - - - - - - - - - - - 105,000 NCI 216 216
Total 826 816
FV 505 505
30) 321 311

31. DREW Construction Company began operations in 2022. Construction activity for the first year is
shown below. All contracts are with different customers, and any work remaining at December 31,
2022, is expected to be completed in 2023.
Cash Contract Estimated
Total Billings Collections Costs Incurred Additional
Contract through through through Costs to
Project Price 12/31/2022 12/31/2022 12/31/2022 Complete

1 P 280,000 P 180,000 P170,000 P225,000 P 70,000

2 335,000 110,000 105,000 63,000 252,000
3 250,000 250,000 220,000 165,000 -0-
P 865,000 P 540,000 P 495,000 P 453,000 P 322,000

Determine the income from construction to be reported in the income statement for the year 2022.
A. P45,000 B. P30,000 C. P43,000 D. P74,000
CRC-ACE/AFAR: PREWEEK QUIZZER 1 (MAY 2022 BATCH) PAGE 15

31) D
P1 P2 P3
CP 280 335 250
% 20% 100%
CRTD 67 250
CID 63 165
CPTD (15) 4 85
CPPY - 0 0
CPCY (15) 4 85 = 74,000

P2 = 63/315
= 20%

32. Cinderella Company owns 65% of the Royal Company. On the last day of the accounting period
Royal sold to Cinderella a non-current asset for P 100,000. The asset originally cost P 250,000 and
at the end of the reporting period its carrying amount in Royal’s books was P 80,000. The group’s
consolidated statement of financial position has been drafted without any adjustments in relation to
this non-current asset.

Under PAS 27 Consolidated and separate financial statements, what adjustments should be made to
the consolidated statement of financial position figures for non-current assets and retained earnings?
Non-current assets Retained earnings
A. Increase by P 150,000 Increase by P 97,500
B. Reduce by P 20,000 Reduce by P 13,000
C. Reduce by P 20,000 Reduce by P 20,000
D. Increase by P 150,000 Increase by P 150,000

32) B
RE 13
NCI 7
PPE 20

33. Shell owns 75% of the Petron Company. On December 31, 2022, the last of the accounting period,
Petron sold to Shell a noncurrent asset for P 100,000. The asset’s original cost was P 250,000 and
on December 31, 2022 its carrying amount in Petron’s books was P 80,000. The groups’
consolidated statement of financial position has been drafted without any adjustment in relation to
this non-current asset.

Under PAS 27 Consolidated and separate financial statements, what adjustments should be made to
the consolidated statement of financial position figures for retained earnings and non-controlling
interest?

Retained Earnings Non-controlling interest

A. Increase by P 112,500 Increase by P 37,500
B. Increase by P 150,000 No change
C. Reduce by P 15,000 Reduce by P 5,000
D. Reduce by P 20,000 No change

33) C
RE 13
NCI 5
PPE 20
34. CALGARY had a receivable from a foreign customer that is payable in the customer’s local currency.
On December 31, 2022, CALGARY correctly included this receivable for 200,000 local currency units
(LCU) in its balance sheet at P 110,000. When CALGARY collected the receivable on February 15,
2023, the Philippine peso equivalent was P 95,000.
CRC-ACE/AFAR: PREWEEK QUIZZER 1 (MAY 2022 BATCH) PAGE 16

In CALGARY’s 2023 consolidated income statement, how much should it report as a foreign
exchange loss?
A. P 0 B. P 10,000 C. P 15,000 D. P 29,000

34) C
Cash 95
FX Loss 15
AR 110

35. Jolly Foods Company, a local company, bought furniture from Ailments Corporation, a US company,
for 35,000 US Dollars in 2022. Pertinent exchange rates relating to this transaction are as follows:

Buying Rate Selling Rate

Receipt of order P 47.10 P 47.20
Date of shipment 47.25 47.45
Balance sheet date 49.50 49.60
Settlement date 49.45 49.50

What is the foreign exchange gain or loss of Jolly Foods Company for 2022? same as item no. 23
A. P 78,750 loss C. P 78,750 gain
B. P 75,250 loss D. P 75,250 gain

35) B
47.45 2022

49.60 = 2.15 x 35,000

49.5 2023 = 75,250 loss

reh/cde