POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

COLLEGE OF ACCOUNTANCY AND FINANCE

STA. MESA, MANILA

ACCO 4073-Practical Accounting P1

First Evaluation Examination
November 27, 2016

1. If the month-end bank statement shows a balance of P720,000, outstanding checks are P240,000, a
deposit of P80,000 was in transit at month end, and a check for P10,000 was erroneously charged by
the bank against the account, the correct balance in the bank account at month end is
a. P550,000. b.P570,000. c.P410,000. d.P870,000.

2. In preparing its bank reconciliation for the month of April 2016, Ardith Inc. has available the following
information.

Balance per bank statement, 4/30/16 P782,800

NSF check returned with 4/30/16 bank statement 9,000
Deposits in transit, 4/30/16 100,000
Outstanding checks, 4/30/16 104,000
Bank service charges for April 400
What should be the correct balance of cash at April 30, 2016?
a. P787,400 b.P778,800 c.P769,800 d.P769,400

3. Mandy Company reported the following on December 31, 2016: cash in bank-demand deposit,
P6,750, cash on petty cash fund, P250; customer’s DAUD check, P1,750; and a 6-month time deposit,
P62,000. How much cash should Mandy report in its December 31, 2016 statement of financial
position.
a. P6,750 b. P7,000 c. P68,750 d. P69,000

4. In preparing its June 2016 bank reconciliation, Andy Company determined the balance of its general
ledger checking account to be P5,500. On the other hand the bank statement showed an amount,
that was P460 over. However, Andy noted that some P800 worth of deposits in late May did not yet
appear in the statement and there were outstanding checks amounting to P1,360. Also, the bank
statements showed disbursement of P240 but Andy’s accountant incorrectly recorded the check as
P440. Bank charges in June totaled P300. How much is the adjusted cash?
a. P4,540 b. P4,940 c. P5,100 d. P5,400

Items 5 and 6 are based on the following information:

The following information were made available from the cash record of Brandy Company and its bank
statement for the month of December 2016:
Book receipts P4,462,500
Bank receipts 4,830,000
November 30 deposits in transit (of which
P30,000 remained to be outstanding as of December 31, 2016) 650,000
Erroneous bank credit for December 25,000
Erroneous book credit for November, corrected in December 50,000
Erroneous bank debit in November corrected in December 12,500
Credit memo in December not yet recorded by Brandy 300,000
Credit memo for November, recorded by Brandy in December 375,000
Customer’s check received and deposited but posted as disbursement
by Brandy 150,000
5. What is the total amount of deposit in transit on December 31, 2016
a. P245,000 b. P295,000 c. P345,000 d. P375,000

6. What is the correct receipt for December ?

a. P4,237,500 b. P4,2875,00 c. P4,337,500 d. P4,487,500

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7. Lindsay Company shows the following account balances in their financial records as of December 31,
2016:
Checking account at Metrobank, (P20,000); checking account at Land Bank P500,000; payroll
account PNB, P100,000; foreign bank account restricted, P750,000; postage stamps, P22,000;
employees’ postdated checks, P30,000; IOU from president’s brother, P75,000; traveler’s check,
P50,000; non-sufficient funds check, P18,000; petty cash fund (P16,000 in currency and expenses
receipts for P84,000), P100,000 and cashier’s check, P36,000.

What is the correct cash balance to be reported in the balance sheet of Lindsay company on
December 31, 2016?
a. P704,000 b. P702,000 c. P686,000 d. P582,000

8. On December 31, 2016, Finley Company had the following cash balances:
Cash in banks P1,800,000
Petty cash fund(all funds were reimbursed on dec 31, 2016) 50,000
Cash in banks included P600,000 in a separate bank where-in the company is required to maintain a
minimum average of P800,000 of 10 working days on a rolling basis.

In the current asset section of Finley’s December 31, 2016 statement of financial position, what total
amount should be shown as cash?
a. P1,850,000 b. P1,800,000 c. P1,250,000 d. P1,200,000

9. In your audit of Givenchy Company as of December 31, 2016, you gathered the following: Balance
per book, P600,000; Bank charges, P1,500; Balance per bank statement, P605,000; Deposit in transit,
PP180,000; Customer note collected by bank, P225,000; Interest on customer note, P9,000; Customer
check returned NSF, P37,500; Debit memo to charge company’s account, P150,000. What is the total
amount of outstanding checks?
a. P165,000 b. P160,000 c. P150,000 d. P140,000

10. Mackinley Company had the following account balances at December 31, 2016:

Cash on hand and in bank P5,000,000

Cash restricted for bond payable due on June 30, 2018 2,000,000
Time deposit (3 months) 6,000,000
Savings deposit set aside for dividends payable on Jan. 15, 2017 1,000,000

In the current asset section of Mackinley’s December 31, 2016 balance sheet, what total amount
should be reported as cash and cash equivalents?
a.P14,000,000 b. P13,000,000 c. P12,000,000 d. P11,000,000

11. Assume the following facts for Amerith Co. The month-end bank statement shows a balance of
P800,000; outstanding checks total P40,000; a deposit of P160,000 is in transit at month-end; and a
check for P8,000 was erroneously charged against the account by the bank. What is the correct cash
balance at the end of the month?
a. P672,000 b. P688,000 c. P912,000 d. P928,000

12. The following information is available for the Jolly Company on March 31, 2016.
Bank statement balance, March 31 – P146,570
Note collected by bank including interest of P2,500, not yet taken up
inn the books –P62,500
NSF check returned with the bank statement – P21,260
Outstanding checks as of March 31 – P68,470
Bank service charges for March – P1,205

What is the correct cash balance at March 31?

a. P38,145 b. P78,100 c. P118,055 d. P254,995

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13. The cash account in the ledger of Apex Company showed a balance as of June 30, 2016 consist of the
following:

Cash in Far East Bank (a check of P5,000 is still outstanding

per bank statement) P 105,000
Bond sinking fund 50,000
IOUs signed by employees 5,000
Paid vouchers 3,000
Petty cash fund 2,000
Undeposited receipts, including a postdated check of P5,000 85,000
P250,000
======
The amount of cash on hand and in bank that should be reported on the company’s balance sheet is:
a. P197,000 b.P192,000 c. P187,000 d. P182,000

14. Elgin Corporation’s records reveal the following data a year-end:

Commercial paper maturing in four months P1,200,000
Uncashed tax refund check 550,000
Petty cash 100,000
Certificates of deposit (6 months) 1,000,000
Balance in Union Bank savings account 2,500,000
Postage 50,000
Balance in Metrobank current account ( 250,000)
Treasury notes maturing in six months 2,200,000
Cash on hand 500,000
Postdated customer checks 125,000
Employee travel advances 75,000
Treasury bill maturing in one month 2,500,000
What is the correct amount of cash and cash equivalents that will appear as a current asset on Elgin
Corporation’s statement of financial position?
a. P5,900,000 b. P6,150,000 c. P6,900,000 d. P7,150,000

15. The following information was included in the bank reconciliation for Yummy Co. for July.
Checks and charges recorded by bank in July (including a July service charge of P10,000)P986,000;
Service charge made by bank in June and recorded by books in July, P12,000; Total credits to cash
in all journal in July, P977,600; Customer’s NSF check charge in July (no entry was made in the
books), P60,000; Customer’s NSF check returned in June recorded by the company in July,
P75,000; Outstanding checks in July 31, P200,000; checks issued in July for P20,000 recorded by
the company as P2,000; Erroneous bank charge in July P20,000; Erroneous bank credit in June
recorded in July, P30,000; Erroneous book receipt in June corrected in July P5,000.
What is the correct disbursement for the month of July?
a. P995,600 b. P973,600 c. P964,600 d. P949,600

Items 16-17 are based on the following information:

Growee Company assigned P400,000 of accounts receivable to Kool Finance Corporation as security for
a loan of P335,000. Kool charged a 2% commission on the amount of the loan; the interest rate on the
note was 10%. During the first month, Growee collected P110,000 on assigned accounts after deducting
P380 of discounts. Growee accepted returns worth P1,350 and wrote off assigned accounts totaling
P2,980.
16. The amount of cash Growee received from Kool at the time of transfer was:
a. P301,500 b. P327,000 c. P328,300 d. P335,000

17. Entries during the first month would include a:

a. Debit to cash of P110,380.
b. Debit to bad debt expense of P2,980.
c. Debit to Allowance for doubtful accounts of P2,980.
d. Debit to Accounts receivable of P114,700.

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18. Blanch Corporation had 1/1/16 balance in the Allowance for doubtful accounts of P12,000. During
2016, it wrote off P8,640 of accounts and collected P2,520 on accounts previously written off. The
balance in Accounts Receivable was P240,000 at 1/1 and P288,000 at 12/31. At December 31, 2016,
Blanch estimates that 5% of accounts receivable will prove to be uncollectible. What should Blanch
report as its Allowance for Doubtful Accounts at 12/31/16?
a. P14,400 b. P8,280 c. P5,880 d. P5,760

19. On January 2, 2016, Portia Company sold equipment with a carrying amount of P480,000 in exchange
for a P600,000 non-interest bearing note due January 2, 2019. There was no established exchange
price for the equipment. The prevailing rate of interest for a note of this type at January 2, 2016 was
10%. The present value of 1 at 10% for 3 periods is .7513.
What is the carrying value of the note receivable as of December 31, 2016 statement of financial
position?
a. P450,780 b. P495,858 c. P545,444 d. P600,000

20. JUMBO Company factored P3,000,000 of accounts receivable without recourse. The factor required
an assessment fee of 10% of the accounts receivable factored and holdback of 15% of accounts
receivable factored for possible sales returns and allowances. The accounts factored had related
allowance for doubtful accounts of P200,000. What amount of loss on factoring should be
recognized?
a. P750,000 b. P650,000 c. P300,000 d. P100,000

22. At the close of its first year of operations, December 31, 2016, Maxwell Company had accounts
receivable of P1,080,000, after deducting the related allowance for doubtful accounts. During 2016,
the company had charges to bad debt expense of P180,000 and wrote off, as uncollectible, accounts
receivable of P80,000. What should the company report on its balance sheet at December 31, 2016,
as accounts receivable before the allowance for doubtful accounts?
a. P1,340,000 b. P1,180,000 c.P980,000 d.P880,000

23. Gotex Company sells to wholesalers on terms of 2/15, net 30. Gotex has no cash sales but 50% of
customers take advantage of the discount. Gotex uses the gross method of recording sales. An
analysis of accounts receivable at December 31, 2016 revealed the following:

Age Amount Uncollectible

0-15 days P10,000,000 0%
16-30 days 4,000,000 20%
Over 30 days 2,000,000 P800,000

In the December 31, 2016 balance sheet, what amount should be reported as net realizable value of
accounts receivable?
a. P14,300,000 b. P13,900,000 c. P13,800,000 d. P12,000,000

24. On July 31, 2016, Graham Company discounted at the bank a customer’s P2,400,000, 6-month, 12%
note receivable dated May 31, 2016. The bank discounted the note at 10%. How much net proceeds
did Graham received from this discounted note?
a. P2,256,000 b. P2.304,000 c. P2,419,200 d. P2,459,200

25. On January 1, 2016, Random Company sold equipment with a carrying amount of P1,920,000 in
exchange for a P2,400,000 non-interest bearing note due January 2, 2016. There was no established
exchange price for the equipment. The prevailing rate of interest for a note of this type at January 2,
2016 was 10%. The present value of 1 at 10% three periods is 0 .7513

How much should Random Company report as interest income in its 2016 profit or loss?
a. P180,312 b. P198,344 c. P218,176 d. P240,000

26. Using the information given in no. 25, how much should Random report as gain or loss on sale of
equipment in its 2016 profit or loss?
a. P116,880 loss b. P116,880 gain c. P480,000 gain d. P1,080,000gain

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27. On July 31, 2016, Coax Company discounted at the bank a customer’s P1,200,000, 8-month, 10% note
receivable dated May 31, 2016. The bank discounted the note at 12%. How much net proceeds did
Coax receive from this discounted note?
b. P1,128,000 b. P1,152,000 c. P1,209,600 d.. P1,203,200

28. On December 31, 2016, Borax Company’s general ledger of its accounts receivable showed an
outstanding balance of P8,000,000. Below is a summary of the aging schedule of the said general
ledger:
Classification Balances % of collectability
1-60 days P4,000,000 100%
61-120 days 1,600,000 90%
121-180 days 1,200,000 80%
181-350 days 800,000 70%
More than 1 year 400,000 10%
P8,000,000
========
Additional information:
1. During the year the company has made a P120,000 recovery of a previous year write-off. The
amount of recovery did not exceed the previous write-off,

Determine the net amount to be charged against income related to the receivables in 2016:
a. P600,000 b. P656,000 c. P880,000 d. P1,000,000

29. Using the information given in no. 28, what is the balance of Allowance for doubtful accounts to be
reported in Borax’s December 31, 2016 balance sheet?
a. P1,000,000 b. P880,000 c. P656,000 d. P600,000

30. Using the information given in no,28, net realizable value of accounts receivable should be:
a. P7,400,000 b. P7,144,000 c. P7,120,000 d. P7,000,000

31. Modem Company purchased raw materials costing P1,400,000. During the year rent for the room
housing some finished goods amounted to P360,000. Also, delivery cost of goods sold totaled P80,000
while nonrefundable import duties were P120,000. How much of the foregoing shall be capitalized
as cost of inventory purchased?
a. P1,520,000 b. P1,760,000 c. P1,880,000 d. P1,960,000

32. Zone Company reported the following:

Historical cost P4,150,000
Estimated selling price 4,500,000
Expected selling price 4,700,000
Cost to complete and sell 250,000
Replacement cost 4,000,000
At what amount should the inventory be reported?
a. P4,450,000 b. P4,250,000 c, P4,150,000 d. P4,000,000

33. A retailer imported goods at a cost of P260,000, including P40,000 non-refundable import duties and
P20,000 nonrefundable purchase taxes. The risks and rewards of ownership of the imported goods
were transferred to the retailer upon collection of the goods from the warehouse. The retailer was
required to pay for the goods upon delivery. The retailer incurred P10,000 to transport the goods to
its retail outlet and a further P4,000 in delivering the goods to its customer. Further selling costs of
P6,000 were incurred in selling the goods. What amount should the inventory be valued?
a. P240,000 b. P250,000 c. P260,000 d. P270,000

34. Dubai Company uses the average cost retail inventory method to determine the ending inventory.
Dubai’s accounting records for 2016 contained the following information:
Cost Retail
Purchases P216,000 P317,500
Sales 350,000

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 Beginning inventory 64,000 78,500
Net mark ups 12,000
Net markdowns 8,000

In addition, sales returns for 2016 were P28,000, and employee discounts taken were P6,000. What
is the cost of the ending inventory at December 31, 2016?
a. P21,000 b. P35,000 c. P50,400 d. P54,600

35. A physical count on December 31, 2016 revealed that Cadburry Company had inventory with a cost
of P4,400,000. The following items were excluded from this amount:

* Merchandise of P600,000 were held on consignment

* Goods costing P400,000 was shipped by Cadburry FOB Destination to a customer on December
31, 2016. The customer received the goods on January 3, 2017.
* Merchandise costing P500,000 was shipped by Cadburry “free alongside” to a customer on
December 29, 2016. The customer received the goods on January 7, 2017.
* Goods costing P700,000 was shipped by a supplier FOB Shipping point on December 30, 2016
and received by Cadbury on January 10, 2017.
What is the correct amount of inventory on December 31, 2016?
a. P6,000,000 b. P5,500,000 c. P5,400,000 d. P4,900,000

36. The following information is available for the Ruter Company for the three months ended March
31, 2016:
Inventory, January 1 P 12,000,000
Purchases 40,000,000
Sales 56,000,000

A physical inventory taken on December 31, 2016 resulted in an ending inventory of P12,000,000.The
gross margin remained constant 40% on cost in recent years. Ruter suspects some inventory may
have been taken by a new employee. At December 31, 2016, what is the estimated cost of missing
inventory?
a. P13,600,000 b. P12,000,000 c. P1,600,000 d. P-0-

37. The following information pertains to Salvatorre Company, seller of chair for the year ended
December 31, 2016:
Units Unit cost Total cost
January 1 Inventory on hand 400 P1,500 P 600,000
April 3 Purchase 600 1,750 1,050,000
October 1 Purchase 1,000 2,000 2,000,000

The entity sold 800 chairs on June 25 and 800 on December 10. What is the weighted average cost of
the inventory on December 31, 2016?
a.P700,000 b. P730,000 b. P800,000 d. P1,460,000

38. Using the information given in no. 37, what is the cost of inventory on December 31, 2016 under the
FIFO method?
a.P700,000 b. P730,000 b. P800,000 d. P1,460,000

39. On April 1, 2016, the store of Revlon Company was destroyed by flood. The following information was
obtained from available records:
Inventory, December 31, 2015 P1,200,000
Sales Purchases
January P1,280,000 P 800,000
February 1,500,000 1,000,000
March 1,700,000 1,200,000

If the gross profit margin is 40% on cost, the inventory immediately before the fire was:
a.P1,512,000 b. P1,200,000 c. P1,000,000 d. P900,000

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40. Using the information given in no 39, if the gross profit margin is 40% of sales, the inventory before
the fire was:
a.P1,512,000 b. P1,200,000 c. P1,000,000 d. P900,000

41. The Eastwood Sporting Goods uses the retail inventory method. Inventory relating to the
computations of the inventory at December 31, 2016 is as follows:
Cost Retail .
Inventory, January 1, 2016 P 32,000 P 80,0000
Sales - 580,000
Purchases 270,000 600,000
Freight-in 7,600 -
Net markups - 40,000
Net markdowns - 20,000

What is the ending inventory at cost at December 31, 2016, using the retail inventory method and
the lower of cost or market estimation?
a. P52,800 b. P51,600 c. P45,000 d. P43,000

42. Careh Company prepare monthly income statements. A physical inventory is taken only at year-
end; hence, month-end inventories must be estimated. All sales are made on account. The rate of
markup on sales is 50%. The following information related to the month of May:

Accounts receivable, May 1 P40,000

Accounts receivable, May 31 60,000
Collections of accounts receivables during May 100,000
Inventory, May 1 72,000
Purchases of inventory during May 64,000

The estimated cost of May 31, inventory is:

a. P48,000 b. P56,000 c. P76,000 d. P88,000

43. On October 31, a flood at Wayne Company’s only warehouse cause severe damage to its entire
inventory. Based on recent history, Wayne has a gross profit of 25% of net sales. The following
information is available from Wayne’s records for the ten month ended October 31:

Inventory, January 1 P 520,000

Purchases 4,120,000
Purchase returns 60,000
Sales 5,600,000
Sales returns 400,000

A physical inventory disclosed usable damage goods which Wayne estimates can be sold for P70,000.
Using the gross profit method, the estimated cost of goods sold for the ten months ended October
31, should be:
a. P680,000 b. P3,830,000 c.P3,900,000 d. P4,200,000

44. Commodity X sells for P24.00; selling expenses are P4.80; normal profit is P6.00. If the cost of
Commodity C is P15.60 and the replacement cost is P12.00, the lower of cost or NRV is:
a. P10.80 b. P12.00 c. P13.20 d. P15.60

45. The following items were included in Cave Company’s inventory account at December 31, 2016:
Merchandise out on consignment, at sales price,
Including 40% mark-up on selling price P80,000
Goods purchase in transit, shipped FOB Shipping pt 72,000
Goods held on consignment by Cave 54,000

By what amount should Cave’s inventory account at December 31, 2016, be reduced?
a. P206,000 b. P134,000 c. P102,000 d. P86,000

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46. Andrew Company is engaged in dairy livestock provided the following for current year:
Carrying amount of biological assets, January 1 P10,000,000
Increase to purchase 4,000,000
Gain attributable to price change 2,000,000
Gain attributable to physical change 1,200,000
Milk produced during the year but unsold at year end 200,000
What is the carrying amount of biological assets at year-end?
a. P16,000,000 b. P16,200,000 c. P17,200,000 d. P17,400,000-

47. A herd of ten 4 year old animals was held on January 1, 2016. On July 1, 2016 four 4-1/2 year old was
purchased. The fair value os less point of sale cost are as follows: 4 year old animal was at January 1,
2016,P15,000, 4-1/2 year old animal at July 1, 2016, P15,900, 5-year old animal at December 31, 2016,
P17,250. What amount should the company recognize in its December 31, 2016 statement of
comprehensive income related to the animals as a result of the change in their fair value?
a. P25,200 b. P27,900 c. P31,800 d. P57,000

48. Pharex Company purchased 100 beef cattle at an auction for P800,000 on July 1, 2015. Transportation
costs were P8,000. Pharex would have to incur the same transportation costs if it had sold its cattle
in the auction. In addition there would be 2% auctioneer’s fee on the market price of the cattle
payable by the seller. Pharex also incurred P4,000 veterinary expenses. On December 31, 2015, the
fair value of the cattle in the most relevant market increases to P880,000. On May 2, 2016, Pharex
sold18 cattle at auction for P160,000 and incurred transportation charges of P1,200.

On June 15, 2016, the fair value of the remaining cattle was P662,560 but on the same day, 42 cattle
were slaughtered with total costs of P33,600. The fair value of the cattle on that day was P386,400
and the estimated transportation costs to sell the cattle is P3,360. No other selling costs are expected.

On July 31, 2016, the fair value of the remaining 40 cattle was P358,400. The estimated transportation
cost is P3,200.

At what amount should the biological asset be initially recognized on July 1, 2015?
a. P776,000 b. P784,000 c. P792,000 d. P800,000

49. Using the information in no. 48, at what amount should the biological asset be reported on December
31, 2015?
a. P880,000 b. P872,000 c. P862,400 d. P854,400

50. Using the information in no, 48, what is the fair value of the inventory (cattle) on June 30, 2016?
a. P358,648 b. P376,992 c. P383,040 d. P336,400

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 SPECIFICATIONS FOR 1st EVALUATION EXAMINATION
2nd Semester, SY 2016-2017

TOPIC % Easy (35%)18 Moderate (50%)25 Difficult (15%)7

Cash 30 1 2 3 4 5 6 7 8 14 15
9 10 11 12 13
Accounts 30 16 17 23 27 29 18 19 20 21 22 25 26
Receivable
30 24 28
Inventory 30 31 32 33 40 42 34 35 36 37 38 39 41
45 43
Biological Asset 10 45 36 48 49 50 47

ACCO 4073-Practical Accounting P1

1. B 11. D 21. BONUS 31. A 41. C

2. B 12. B 22. B 32. C 42. C
3. B 13. C 23. A 33. D 43. C
4. D 14. B 24. C 34. C 44. D
5. C 15. B 25. A 35. B 45. D
6. D 16. C 26. A 36. D 46. C
7. B 17. C 27. B 37. B 47. B
8. A 18. A 28. C 38. B 48. A
9. D 19. B 29. A 39. C 49. D
10. C 20. D 30. D 40. A 50. C

No. of checks / .50 items x .714 + 28.6