CAT CUP ONE

DIFFICULT ROUND
DIFFICULT 1. JM Company is contemplating on the appropriate depreciation pattern
to apply on one of its manufacturing equipment.
Year Straight- Sum-of-the- Double-declining
line Years’ digit balance
1 74,400 124,000 160,000
2 74,400 99,200 96,000
3 74,400 74,400 57,600
4 74,400 49,600 34,560
5 74,400 24,800 23,840
The cost of the machine is
a. 400,000 b. 380,000 c. 372,000 d. 360,000

DIFFICULT 2. RY Company’s stockholders' equity at January 1, 2012 is as follows:

Common stock, P10 par value; authorized P 750,000
200,000 shares; outstanding 75,000 shares
Paid-in capital in excess of par 300,000
Retained earnings 730,000
Total P
1,780,000
During 2012, RY Company had the following stock transactions:
 Acquired 2,000 shares of its stock for P90,000.
 Sold 1,200 treasury shares at P50 a share.
 Retired the remaining treasury shares.

No other stock transactions occurred during 2011.

The balances of Stockholders’ equity at December 31, 2012 if RY Company uses the
cost method
a. 1,780,000
b. 1,750,000
c. 1,738,800
d. 1,840,000

DIFFICULT 3. The following information was provided to you by Willow Company

Book Tax base

value
Receivable 150,000 200,000
Building – net 300,000 100,000
Machinery and 500,000 550,000
equipment - net

Unearned revenue 100,000 -

Estimated warranty 80,000 -
obligation

Current and future tax rate 30%. Taxable income for the year P300,000.

Deferred tax asset

a. 60,000 b. 84,000 c. 30,000 d. 90,000

11TH REGIONAL MID YEAR CONVENTION

This study source was downloaded by 100000860387069 from CourseHero.com on 02-07-2023 07:10:56 GMT -06:00

https://www.coursehero.com/file/17296057/CAT-CUP-1-DIFFICULT/
 CAT CUP ONE
DIFFICULT ROUND
DIFFICULT 4. On October 1, 2011 Simba Company acquired a biological asset and
paid P450,000. The fair value less cost to sell of the biological asset at the
time of acquisition was P445,000. On December 31, 2011 the fair value less cost
to sell of the biological asset was P475,000.

On July 1, 2012 Simba Company harvested the biological asset and eventually
reclassified it as inventory. The fair value less cost to sell at point of
harvest was P485,000. On December 31, 2011 the harvested biological asset was
still on hand. The fair value less cost to sell of a biological asset similar
to the one harvested in July 1, 2011 was P481,000. The net realizable value of
the harvested biological asset was P480,000

The amount reported in the profit or loss section of the 2011 comprehensive
income statement in relation to the biological asset is
a. 0 b. (5,000) c. 25,000 d. 30,000

DIFFICULT 5. On January 1, 2012 Bashful Company sold its life-size Snow White’s 7
Dwarfs statues to Grumpy Company, accepting a 3%, two-year promissory note having
a face amount of P700,000 (interest payable annually every December 31). The
interest rate in the instrument was substantially low compared to similar notes,
the prevailing rate being at 12%. The statues sold cost P455,000 to manufacture.
 PVF of P1 @ 12 for 2 periods 0.797
 PVF of an ordinary annuity of P1 @ 1.690
12% for 2 periods

The gross profit arising from the sale of the statues is

a. 245,000 b. 138,390 c. 136,370 d. 102,900

DIFFICULT 6. Wolf Corp. began business on January 11, 2012, appropriately uses
the installment sales method of accounting. The following data are available:
December 31, 2012 December 31, 2013
Balance of Deferred Gross Profit
2012 300,000 120,000
2013 440,000 30%
The installment accounts receivable balance on December 31, 2013 is:
a. 1,100,000 b. 1,500,000 c. 1,400,000 d. 400,000

DIFFICULT 7. Ramos Company provides the following information for 2012:

Cash received from customers P8,000,000

Rent received 500,000
Interest received 300,000
Cash paid to suppliers and employees 3,000,000
Taxes paid 400,000
Interest paid on long term debt 600,000
Cash dividend paid 1,000,000

Under the direct method, cash provided by operating activities was

Answer: P4,800,000

11TH REGIONAL MID YEAR CONVENTION

This study source was downloaded by 100000860387069 from CourseHero.com on 02-07-2023 07:10:56 GMT -06:00

https://www.coursehero.com/file/17296057/CAT-CUP-1-DIFFICULT/
 CAT CUP ONE
DIFFICULT ROUND
DIFFICULT 8. Finest Corporation included the following in its unadjusted trial
balance as of 12/31/2010:

Inventory, 12/31/2009 P 19.45M

Purchases P127.85M

Additional Info:
- The inventory at 2010 year end was counted at a cost of P8.5M. This included
P500,000 of slow moving inventory that is expected to be sold for a net
amount of P300,000.
- Sales include P8M for goods sold in December 2010 for cash Futures Co. The
cost of these goods was P6M. Futures Co. has the option to require Finest to
repurchase these goods within one month of year end at their original
selling price plus facilitating fee of P250,000.

The cost of sales for the year ended 12/31/2010 is

Answer: P133,000,000

DIFFICULT 9. On 1/1/2006 Bitter Inc. issued 3,000 0f its 9%, P1,000 bonds when
the market rate was 8%. Interest is payable annually every January 1. The bonds
mature on January 1, 2011. Bitter paid transaction cost of P24,460 in relation to
the issue of the debt instruments and in effect the yield rate is 8.2%. Bitter
uses effective interest method. What is the balance of the unamortized
transaction cost or bond issue cost as of 12/31/2008?(round to 4 decimal places
for the factor)
Answer: P10,818

DIFFICULT 10. The physical inventory of Merlion Companyas of December 26, 2012
totaled P1,965,000. In trying to establish the December 31 inventory, the
accountant noted the following transactions from December 27 to December 31,
2012.

Sales (20% markup on cost) P 600,000

Credit memos issued:
For goods returned on:
December 15 27,000
December 20 35,000
December 29 36,000
For goods delivered to customers not in accordance
with specifications 9,500
Credit memos received:
For goods returned on:
December 10 17,000
December 26 23,000
December 28 8,000
Purchases:
Placed in stock 120,000
In transit, FOB shipping point 50,000
In transit, FOB destination 33,000

The inventory as of December 31, 2012 is

11TH REGIONAL MID YEAR CONVENTION

This study source was downloaded by 100000860387069 from CourseHero.com on 02-07-2023 07:10:56 GMT -06:00

https://www.coursehero.com/file/17296057/CAT-CUP-1-DIFFICULT/
 CAT CUP ONE
DIFFICULT ROUND
Answer: P1,657,000

11TH REGIONAL MID YEAR CONVENTION

This study source was downloaded by 100000860387069 from CourseHero.com on 02-07-2023 07:10:56 GMT -06:00

https://www.coursehero.com/file/17296057/CAT-CUP-1-DIFFICULT/
Powered by TCPDF (www.tcpdf.org)