If bonds are issued a t a premium, this indicates Related parties include all of the following,

that except.

The nominal rate of interest exceeds the yield Sold a car to the uncle of the entity’s finance
rate director

Under cash basis, revenue is record An entity that entered into a related party
transaction would be required to disclose all of
When realized
the following information except.
Which of the following basic financial
Nature of any future transactions.
statements are prepared as a minimum for
interim financial reporting? The major financial statements include all
except.
Statement of Financial Position, Statement of
Comprehensive Income, Statement of Cash Statement of retained earnings
Flows, and Statement of Changes in Equity
A cash over or short*
The cost of the land usually includes all except*
 Is debited when the petty cash fund proves out
c. Private driveway and parking lot
short
An operating segment is considered reportable
Which of the following is a characteristic of a
when any of the following conditions are met,
perpetual inventory system?
except*
Cost of goods sold is recorded in every sale.
a. Segment liabilities are 10% or more of the
combined liabilities of all segments When the accounts receivable are sold outright,
the accounts receivable have been
If a company fails to record accrued salaries at
year-end results in* Factored
a. Overstated retained earnings Which of the following costs are expensed
immediately?
Standard setting body
d. All of these are expensed immediately
Financial Reporting Standards Council

The operating cycle of the entity.

Is the time between the acquisition of

materials entering into a process and their
realization in cash.

Related parties include all of the following,

except.

Two ventures simply because they share joint

control over a joint venture.
On April 30, 2021, Honey Company issued at
105 plus accrued interest 5,000 bonds of 11%,
P1,000 face amount. The bonds are dated
January 1, 2019 and mature on January 1, 2029.
Interest is payable semiannually on January 1
and July 1. The entity paid bond issue cost of
P300,000. What is the net cash received from
the bond issuance?*
200,000 was mailed on Jan. 5, 2020. What is the
adjusted cash in bank on Dec. 31, 2019?*
a. 2,550,000
Using previous problem, what amount should
be reported as cash?*
c. 3,146,000

a. 5,033,333 Able Company provided the following data for

the purpose of reconciling the cash balance per
b. 5,133,333 book with the balance per bank statement on
Dec. 31:Balance per book 950,000; Proceeds of
c. 5,387,500
note collected by bank for Able Company
d. 5,087,500 550,000 (net of service charge of 10,000);
Interest earned on note 20,000; NSF check of
Sunny Company acquired a machine on July 1,
customer 400,000; outstanding checks 220,000;
2019 and paid 5,200,000 including freight
deposit placed in night depository 180,000;
50,000 and installation 150,000. The estimated
erroneous credit to Able Company’s account
life of the machine is 8 years or a total of
representing proceeds of loan granted to
100,000 working hours with no residual value.
another Company 250,000. What is the
The operating hours of the machine totaled
adjusted balance per book?
3,000 hours in 2019 and 12,000 hours in 2020.
The entity followed the working hours method Ans: 950k+550k+20k-400k =1,120M
of depreciation. On December 31, 2020, what is
Honey Company had the following account
the carrying amount of the machine
balances on December 31, 2019:Cash in Bank
b. 4,420,000 1,550,000; Cash on hand 250,000; Petty Cash
fund- all funds were reimbursed at year end
Hope Company reported the following
30,000; Share investment of 1,000,000 that are
information: Undeposited collections 550,000;
very actively traded in the stock market;
Checkbook balance 2,500,000; Petty Cash Fund
Treasury bills of 1,500,000 with a 5 year term
of 50,000 (comprised the following on Dec. 31,
but purchased on Aug. 31 4 months before its
2019: Coins and currencies 15,000, petty cash
maturity date. The cash in bank included
vouchers 31,000, refundable deposit for
400,000 of compensating balance against short
returnable containers 4,000); a check of 31,000
term borrowing. The compensating balance is
was drawn on Dec. 31, 2019 payable to Petty
legally restricted as to withdrawal. What total
cash; Customer A check amounting to 150,000
amount should be reported as Cash?
dated Jan. 3, 2020 was included in the Dec. 31,
2019 checkbook balance; customer B check for Answer: 1550M + 250k + 30k – 400k =1,430M
325,000 deposited on Dec. 15, 2019 was
included in the checkbook balance but returned
by the bank for insufficiency of fund. This was
redeposited on Dec. 26, 2019 and cleared after
3 days; a check payable to vendor dated and
recorded on Dec. 31, 2019 amounting to
Love Company has given the following
information: Accounts receivable Jan. 1 is
650,000; credit sales 2,700,000; sales return
75,000 (sa exam 200k bay na di); accounts
written off 40,000; collections from customers
2,150,000; estimated future sales return at Dec.
31 is 50,000; estimated uncollectible accounts
at Dec.31 per aging is 110,000. Additional credit
sales of 200,000 was noted. What is the net
realizable value of the accounts receivable on
Dec. 31?
Answer: 2.7m-75k-2,150m=1,125m
Lovely Company provided the following
information: AR beginning 4,000,000; AR
collected 8,400,000; Cash sales 2,000,000;
Inventory Beg 4,800,000; Inventory end
4,400,000; Purchases 10,000,000; Gross margin
on sales 4,200,000. What amount should be
reported as accounts receivable on Dec. 31?
Answer: 4.8M + 10M – 2M – 4.4M + 4.2M –
8.4M + 4M = 8.2M
Happy Company provided the following data for
the current year: Sales 9,500,000; Sales return
and allowances 800,000; sales discounts
200,000; accounts written off as uncollectible
200,000; allowance for doubtful accounts Jan.1
is 180,000. The entity provided for doubtful
accounts expense at the rate of 15% of net
sales.What amount should be reported as
doubtful accounts expense?
Answer: 9.5M – 800k – 200k = 8.5M x 15% =
1,275M
Hope Corp. provided the following information
during the first year of operations: Total
merchandise purchases for the year 7,000,000;
merchandise inventory Dec. 31 is 1,400,000;
collections from customers 4,000,000. All
merchandise was marked to sell at 40% above
cost. All sales are on a credit basis and all
receivables are collectible. What amount should
be reported as accounts receivable on Dec. 31?
Answer: 7M – 1.4M = 5.6M + 2,240M (5.6M x
40%) – 4M = 3,840M
Hope Company factored without recourse
5,000,000 of accounts receivable with a bank.
The finance charge is 2% and 3% was retained
to cover sales discounts, sales returns and sales
allowances. What amount of cash was received
on the sale of accounts receivable?
Answer: 5M – 2% and 3% = 4,750M
On July 1, 2019, Honey Company sold
equipment to Love Company for 1,000,000.
Honey accepted a 20% note receivable for the
entire sales price. This note is payable in two
equal installments of 500,000 plus accrued
interest on Dec. 31, 2019 and Dec. 31, 2020. On
July 1, 2020, the entity discounted the note at a
bank at an interest rate of 12%. What is the
amount of discount of the note?
Answer: 500 x 20% =100k plus 500,000= 600k
x12%x6/12 = 36k
BPI granted a loan to a borrower on January 1,
2019. The interest on the loan is 8% payable
annually starting December 31, 2019. The loan
matures in three years on December 31,
2021.Principal amount is 3,000,000, origination
fee charged against the borrower 100,000;
Direct origination cost incurred 260,300. After
considering the origination fee charged to the
borrower and the direct origination cost
incurred, the effective rate on the loan is 6%.
What is the carrying amount of the loan
received on January 1, 2019?
Answer: 3M + 260,300 – 100k = 3,160,300
Based on a physical count, Spirit Company
revealed inventory on Dec. 31, 2019 at
3,050,000 but before of any of the necessary
adjustments of the following: Merchandise
costing 250,000 FOB shipping point from a
vendor on Dec. 31, 209 was received on Jan. 15,
2020; Merchandise costing 350,000 shipped
FOB destination from a vendor on Dec. 28, 2019
was received on January 5, 2020; Merchandise
costing 170,000 shipped to a customer FOB
destination on Dec. 28, 2019 arrived at the
customer location on January 2, 2020;
Merchandise costing 180,000 was being held on
consignment by Love Company, a consignee of
Spirit Company. What amount should be
reported as inventory on Dec. 31, 2019?
Answer: 3,050M + 250k + 350k = 3,650M
Palawan Company presented the following
data:Beginning Raw Materials is 90,000 units at
P7, Purchases 75,000 units @P8, and another
purchases of 120,000 units @P8.50; 195,000
units of raw materials were transferred to work
in process during the year. Work in process
beginning 50,000 units @P14, Direct labor
3,100,000; Manufacturing overhead 2,950,000;
and Work in process ending 48,000 units @15.
The entity used the FIFO method of valuing
inventory. What is the cost of raw materials
used?
Answer: 90k x 7 = 630k + 600k + 1,020M (75k x
8 and 120k x 8.50) = 2,250M
Based on a physical inventory, Candy Company
determined the candy inventory on a FIFO basis
at 5,200,000 with a replacement cost of
4,000,000. The entity estimated that after
further processing costs of 2,400,000, the
candies could be sold as finished bars for
7,500,000. The normal profit margin is 10% of
sales. Using the measurement at the lower of
cost or net realizable value, what amount
should be reported as candy inventory at year-
end?
Answer: 7.5M – 2.4M = 5.1M
Metrobank Company used the retail method of
inventory valuation. The entity provided the
following information: Cost of Beginning
inventory is 600,000 and purchases of
3,000,000. The retail amount for beginning
inventory is 1,500,000; retail purchases of
5,500,000; net markups 500,000; Net
markdowns 1,000,000; and sales revenue of
4,500,000. What is the estimated cost of ending
inventory under the average cost retail
method?
Answer: Cost = 600k +3M = 3.6M
Retail = 1.5M + 5.5M + 500k – 1M = 6.5M
3.6M/6.5M = 55.38%
Net sales = 4.5M
Ending Invty at retail = 5.5 – 4.5 = 1M + 1M =
2M
Average cost= 2M x 55.36% 1,107,600
Love Company had the following property
acquisitions during the current year:Acquired a
tract of land in exchange for 50,000 shares of
Precious Company with 100 par value that had
a market price of 120 per share on the date of
acquisition. The last property tax bill indicated
assessed value of 2,400,000 for the
land.Received land from a major shareholder as
an inducement to locate a plant in the city. No
payment was required but the entity paid
50,000 for legal expenses for land transfer. The
land is fairly valued at 1,100,000. What is the
total increase in land as a result of the
acquisitions?
Answer: 7.1M
ABC Company has a policy about the bonus of
managers which is equivalent to 10% of the net
income after bonus and tax. The income tax
rate is 30%. A manager received P280,000 for
the current year as bonus. What is the income
before bonus and tax?
Answer: 280k/10% = 2.8M /70% = 4M +280k =
4,280M
Happy Company sold 375,000 boxes of cake mix
under a new sales promotional program during
the year. Each box contained one coupon,
which entitled the customer to a baking pan
upon remittance of P50. The entity paid P60 per
pan and P15 for handling and shipping and
estimated that 80% of the coupons would be
redeemed, even though only 140,000 coupons
had been processed during the year. What
amount should be reported as premium
expense for the current year?
2.8M/70% = 4M + 280k = 4,280,000
4,280,000 – 280k = 4M – 1.2M (4M x 30%) =
2.8M
Interim segment sales of product, sold to
unaffiliated customers 5M, sales to
unaffiliated customers 30M, Interest earned
400k, Indirect Expenses 3M, General
corporate expenses 5M.
Answer: 3.5M
Cost of the land = 9,600,000 x 40% =
3,840,000 + 5,400,000 = 9,240,000 –
2,000,000 = 7,240,000
Cost of the building = 8,160,000

Answer: 60-15 = 25
Net purchases = 900k
375k x 80% = 300k – 140k = 160k
Ending MI – 20k
300k x 25 = 7.5M
Beginning MI – 250k
Believers Inc. used the direct method to
prepare the statement of cash flows. the entity What is the COGS = 920k
had the following cash flows during the current
year: Cash receipts from customers 2,000,000;
Cash receipts from issuance of ordinary shares East Company = 4,083,500
4,000,000; Cash receipts from dividends on long
term investments 300,000; Cash receipts from 650k x 5.95 = 3,867,500
repayment of loan made to another entity 800k x 0.27 = 216,000
2,200,000; Cash payments for wages and other
operating expenses 1,200,000; Cash payments = 4,083,500
for insurance 100,000; cash Payments for Abby Company = 140k
dividends 200,000; Cash Payments for taxes
400,000; Cash payment to purchase land Mavi Company = 2.7M premium exp. 2020
800,000; Cash balance beginning 3,500,000. (600k/10x (50-10+5)
What amount should be reported as net cash Premium exp. 2021 = 750k/10x (50-10+5)
provided by operating activities?
*2.5M x 30% = 750k
Answer: 600k
Estimated liability 2020 = 200k/10 x 45 =
900K

ABC Company: Estimated liability 2021 = 250k/10 x (50-

10+5) = 1,125,000
280k/10% = 2.8M
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