INSTRUCTIONS: Select the correct answer for each of the following questions. Mark only one answer for each jem by shading the box corresponding to the letter of your choice on the sheet provided. STRICTLY NO ASURES ARE ALLOWED, Use pencil no, 2 only, ‘or items 1 (0 5: The following information pertains to Luz Un Machine Shop: 3 Accrued interest on a note receivable amounted to PI, 000. 'b, A one-year insurance policy was purchased for P20, 000. Three months passed sinee the purchase. ¢. Depreciation on building is at P50, 000. The company received a P36, 000 advance payment during the year on services still to be performed. By the end of the year, one-fourth of the services had been performed, c.°The company’s Supplies account showed a beginning debit balance of P2, 000 and supplies purchase of P&, 00; 23,000 of supplies were on hand a year-end. 4¥, The Adjusting entry for Supplies would ineludea pry a. credit {o Supplies for P3, 000, - MOR Dany b. credit to Supplies Expense for P8, 000. ~ c. debit to Supplies Expense for P7, 000. A. debit 10 Supplies Expense for P8, 000. 2 The adjust entry for depreciation on buildings would includea = a. credit (0 Accumulated Depreciation ~ Buildings for P50, 000, £ b. credit to Buildings for P50, 000, ~ _~€. credit to Depreciation Expense ~ Buildings for P50, 000. 4vcredit to Insurance Expense for P15, 000 —Sbreredit to Prepaid Insurance for PS, 000 € debit to Insurance Expense for P15, 000, ~YalAlebit to Prepaid Insurance for PS, 000. A. ‘The adjusting entry to record the accrued interest on the note would include a ogy credit to Interest Income for PI, 000. ‘brercdit to Interest Receivable for P1, 000, 4p: debit to Interest Expense for P1, 000. debit Interest Payable for P1, 000. 5. The adjusting entry to record the amount of service revenues eamed during the period would include a —2. credit (o Uneared Service Revenues for P9, 000, b, debit to Service Revenues for P27, 000. — c. debit to Uneamned Service Revenues for P9, 000. d. debit to Unearned Service Revenues for P27, 000,ts A store lease, effective December 16, 2018 calls for fixed tent of P12, 000 per month, payable one month from the effective date and monthly thereafter, In addition, rent equal to 5% of net sales over P3, 000,000 per calendar year is payable on January 31 of the following year. In its December 31, 2019 balance sheet, Edgar Detoya should report accrued liabilities of a. 125, 000 . b. 128, 750 . 131,000 4. 134,750 17. Atthe beginning of 2018, an entity purchased a fire insurance policy covering a property for a period of four years. The P5, 600 cost of the policy was paid in cash, At the end of 2018, the company will reduce prepaid insurance (638 oa /aeoy 1,400 , 800 4,200 0 ees 18, Suysan Real Estate owns an office building and leases the office under a variety of rental agreements involving rent paid in advance monthly or annually. Not all tenants make timely payments of their rent. Susyan’s balance sheets contained the Following data: 2018 2019 Rental Receivable P192, 000 P248, 000 Unearned Rentals P40, 000 480, 000 During 2019, Suysan received P1, 600,000 from tenants. What amount of rental reventies should Suysan record for 20197 ~ 816,000 708,000 + 440,000 332,000 all bd cl al ee 19. For the fiscal year ended March 31, 2019, a business that offers yoga lesson received P14, 000 in yoga fees, Which was recorded in the yoga fee revenue account. The amount included P3, S00-for pail 2019 lesson ‘Assuming there are no other transactions relating to yoga fee revenue during the financial year, how much is the yoga fee earned for the year ended March 31, 2019? a. P3, 500 b. PIO, 500 c. P14, 000 d, P17, 500 Fone, ur 20. An amount of 2235, 000. was received in 2019 and fecorded in the commission income account It was discovered that an additional commission income of P47,'000 was not received yet as of December 31, 2019 How much is the commission earned for the year ended December 31, 20197 a. PAT, 000 b. PI88, 000 . P235, 000 d. P282, 00011. The ending balance of the Accounts Receivable account was P120, 000. Services billed to customers for the period were P25, 000 and collections on account from customers were P236, 000. What was the beginning balance of Accounts Receivable? a. 335, 000 &: ARI, LOL b. 141, 000 zy ©, 99, 000 . 331, 000 beasek 12. On January 2019, a PL40 000 check was paid for rental expense of fourteen months. The amount was recorded in the rent expense account, How much is (Iie rent expense incurred for the year ended December 31, 20197 a, 10, 000 b, 20, 000 . 120, 000 . 140, 000 13. Lorelei Corpuz entered intoa one-year tenaney contract from Mar. 1, 2018 to February 28, 2019. The monthly rental was P90, 000. For the year ended December 31, 2018, Lorelei Corpuz paid P1, 080,000 for the contract and recorded it as rental expense. The profit for the year ended December 31, 2018 was a. overstated by P900, 000. b. overstated by P180, 000. ©. understated by P900, 000. d. understated by P180, 000. 14. An analysis of Angelina Tagay Antiques unadjusted prepaid expenses account at December 31, 2019 revealed the following: + An opening balance at P15, 000 for Angelina Tagay’s comprehensive insurance policy. Angelina Tagay paid an annual premium of P30, 000 on July 1, 2018, * A P32, 000 annual insurance premium payment made July 1, 2019. « AP20, 000 advance rental payment for a warehouse leased for one year beginning January 1, 2020. In its December 31, 2019 balance sheet, what amount should Angelina Tagay report as prepaid expenses? 193 dna 15. An entity pays employees every. two_weeks has paid workers P375, 000 in wages and salaries for work completed during 2018. [n addition, the employees cared one week’s salary Of P7, 200 at the end of December that will be paid as part of the P14, 400 payroll at the end of the first week of January in 2019. How much should the company report for salaries and wages expense for 2018? a. P367, 800 b, P375, 000 c. P389, 400 4d. P382, 200 16. Edgar Detoya Law must determine the December 31, 2019 year-end accruals for advertising and rent expense A PS, 000 advertising bill was received January 7, 2020. It related cost of P3, 750 for advertisements in December 2019 and P1, 250 in January 2020 issues of the newspaper.cence 6, An entily pays rént quarterly in arrears on January 1, April 1, July | and October 1 each year. The rent was increase from P9D0,000 per year to PI, 200,000 per year starting October 1, 2018, What rent expense and rent payable amounts stout be included in the entity's fnanefal statements for the fiscal year ended January 31,2019, respectively? a. PI, 000,000 and P200, 000 b. PL, 000,000 and P100, 000 cc, P97S, 000 and P100, 000 ad. P975, 000 and P200, 000 7 At Mareh 31, 2018, an entity had oif on hand to be used for heating costing P82, 000 and an un heating oil bill for.P36, 000. ALMareh 31, 2019, the heating oil on hand was P93, 000 and there was an outstanding heating ‘OH Dill of P82,000. Payments made for heating oil during the fiscal year ended March 31, 2019 totaled P346, 000. What is the amount of heating oi! that would appear on the entity's 2019 income statement? a. P239, 000 b. P361, 000 . PAS3, 000 4, P331, 000 8. A business compiling its financial statements for the year to July 31 each year pays rent quarterly in advance con January 1, Apri 1, July Land October { cach year. he annual rent was increased from P600, 000 per year to P720, 000 per year starting October 1, 2018, What figure should appear for rent expense in the entity’s income statement for the fiscal year ended July 31, 2019? a, P690, 000 b. P620, 000 . P700, 000 d. P630, 000 9. Diesel fuel inventory at November 1, 2018 was P12, 500, and there were invoices awaited for P1. 700, During the year to October 31, 2019, diesel fuel bills of P85, 400 were paid, and a delivery worth Pl, 300 had yet to be voiced. At October 31, 2019, the inventory of diesel fuel was valued at P9, 800, What is the value of diese! fue! to be charged to income statement for the fiscal year ended October 31, 2019? a, P87, 700 b. P89, 400 . P88, 500 d. P91, 100 10, The trainee accountant has forgotten to make an accrual for December rent in the financial statements for the year ended December 31, 2019. Rent is charged in arrears at the end of February, May, August and November each year. The bill payable in February 2020 is expected to be P300, 000, Draft income statement shows a profit ‘of P250, 000 and draft statement of financial position shows net assets of P2, 750,000, What i the profit or loss forthe year anc! what is net asset position after accrual has been included in the financial ments, respectively? a. P150, 000 and P2, 650,000 'b. P150, 000 and P2, 850,000 . P350, 000 and P2, 650,000 d. P350, 000 and P2, 850,00028. Failure to adjust for accrued salaries at year-end will result in an a. overstatement of liabilities se b. overstatement of profit cc. mderstatement of assets 4, understatement of owner's equity. 29. Which of the following accounts would probably need to be adjusted at year-end? a. Land 'b. Notes payable . Supplies d Withdrawals 30, Unearned Revenues was P6, 000 at the end of February and P7, 500 at the end of March. Service revenue was 42, 000 for the month of March, How much eash was received for services provided during March? a. PS5, 500 b. PaO, 500 c. P28, 500 d. P43, 500 31. Which of the following is a cash inflow from financing activities? a, Receipt from collections on notes receivable. b. Receipt from interest on notes receivable ~e. Receipt from issuance of notes payable. d. Receipt from sale of property and equipment 32. Which of the following is an example of an investing activity? < 63. Before any year-end adjustments were made, the net ingoine of Power Point Co. was P4,000,000. However, the following adjustments were necessary: office supplies used, P60,000; services performed for clients but not yet collected) P130,000; interest acciued on note payable, P30,000. After recording these adjustments, the net ‘income would be: v ‘ a =yytepe> > a, 3,780,000 vase 'b. P3,840,000 «Pa 040,000 . P4,100,000aE the journal entry made by Printshop to record receipt of the P120,000 on January 15 includes a, Actedit to Management Fees Eamed of P120,000 b. Acredit to Accounts Receivable of P30,000 ¢. Adebit to Management Fees Eamed of 230,000 dA credit to Management Fees Earned of P90,000 54, On December 31, Lotus made an adjusting entry to record PI 1,000 accrued interest payable on its note. This cntry was reversed on January 1, On January 1S, the note was paid, The payment included interest of P25,000. The entry to record the payment of January 15 shouted a. Debit Lnterest Expense of P25,000 b, Debit Accrued Interest Payable of P25,000 © Debit Interest Expense of P14,000 and accrued Interest Payable of P11,000 Debit Interest Expense of P14,000 and credit accrued Interest Payable of P1000. 35. Windows Company sublet a portion ofits office space for ten years at an annual rental of P360,000, beginning ‘on May 1, The tenant is required to pay oine year’s rent in advance, which Windows recorded as a credit to Rental Income. Windows reports on a calendar-year basis, The adjustment on December 31 of the first year should be = a Rental Income 120,000 ‘Uneamed Rental tneome 120,000 Rental Income 240,000 Uneared Rental Income 240,000 © Uneamed Rental Income 120,000 Rental Income 120,000 d.—_Uneamed Rental Income 240,000 Rental Income 240,000 56, Dubai Company paid P170,400 on June 1, 2022, for a two-year insurance policy and recorded the entire unt as Insurance Expense, The December 31, 2022, adjusting entry is a. debit Prepaid Insurance and eredit Insurance Expense, P49,700 — b. debit Insurance Expense and credit Prepaid Insurance, P49,700 c. debit Insuratice Expense and credit Prepaid Insuranee, P120,700 . debit Prepaid Insurance and credit Insurance Expense, P120,700 & % $7. The Supplies on Hand account balance atthe beginning of the period was P66,000. Supplies totaling P128,250 were purchased during the period and debited to Supplies on Hand, A physical count shows P38,250 of Supplies on Hand at the end of the period. The proper journal entry atthe end of the period. a. debits supplies on Hand and credits Supplies Expense for P90,000 b. debits supplies Expense and credits Supplies on Hand for P128,250. ¢. debits Supplies on Hand and credits Supplies Expense for Pl $6,000. 4. debits Supplies Expense and credits Supplies on Hand for P156,000. 58. Moon Company purchased equipment on November |, 2021, by giving their supplier a 12- month, 9 percent note with a face value of P480,000, The December 31, 2021, adjusting entry is a, debit Interest Expense and credit Cash, P7,200, hoe ars b. debit Interest Expense and credit Interest Payable, P7,200 ¢. debit Interest Expense and credit Interest Payable, P10,800. . debit Interest Expense and credit Interest Payable, P43,200. 3/20$< $ $c 3, Columbus Co.'s advertising expense account had a balance of P146,000 at December 31, 2023, before preparing the year-end adjusting entries relating to the following: ‘Included in the P146,000 is the P15,000 cost of printing catalogs for a sales promotional campaign in January 2024 + Radio advertisements broadcast during December 2023 were billed to Columbus on January 2, 2024 Columbus paid the P9,000 invoice on January 11, 2024. After posting the adjusting entries at December 31, 2023, Columbus adjusted advertising expense for year 2023 should be a. P155,000 b. P140,000 cc. P131,000 d. P122,000 74, The account balances for Villas Corp. as os Deseinlie 31, 2023 follow Accoulpts payable - P100,000; Accounts seoak abl 120,000; Building - P400,000; Capital stock - P760,000: Cash - P60,000; Equipment - P160,000; Land - P500,000; Notes payable - 280,000; Retained eamings - 100,000 Ina trial balance prepared on December 31, 2023, the sumn of the debit column is: a, P860,000 b. P1,440,000 ©. P790,000 ) — d.P1,240,000 e/y, 75. On November 1, 2023, Georgetown Co. paid P360,000 to renew its insurance policy for three years. At December 31, 2023, Georgetown’s unadjusted trial balance showed a balance of P9,000 for prepaid insurance and P44 1,000 for insurance expense. What amounts should be reported for prepaid insurance and insurance expense in Georgetown’s December 31 2023 financial statements? a, P349,000 and P101,000 . P340,000 and P120,000 ¢. P330,000 and P120,000 , P340,000 and P1 10,000 - END OF EXAMINATION -‘99, in November and December 2022, Bee Company, a newly organized newspaper publisher, rece! ved P720,000 for 1,000 three-year subscriptions at P240 per year, starting with the January 2, 2023, issue of the newspaper. How much should Bee report in its 2022 income statement for subscription revenue? a.PO vb. P120,000 cc. P240,000 7 d.P720,000 70. The following errors were made in preparing atrial balance: the P135,000 balance of Inventory was omitted, the P45,000 balance of Prepaid Insurance was listed asa cre and the P30,000 balance of Salaries Expense was listed as Utilities Expense, The debit and credit totals ofthe rial balance would differ by a, P135,000 { b. P180,000 ©. P210,000 a. P225,000 71. The trial balance prepared at December 31, did not balance. Debit total was P1,592,500 and credit total was 1,532,000. In determining the cause of the difference, you discovered the following errors: a credit to Cash of 6,500 was not posted; a P20,000 credit to be made to Sales account was credited to the Accounts Receivable nstead: the wages payable account balance of P93,000 was listed in the trial balance as P39,000. What is the correct trial balance total? 500 ogo a. PLS! b. P1,606,000 —e. P1,612,500 , PI,586,000 72. You are given the following closing entries of PASS NOW, INC. Entry | Interest Revenue 4,700 Accounts Payable 1,900 Capital Stock 10,000 Sales 45,000 Income Summary 61,600 Entry 2 Income Summary 48,700 Gain on Sale of Land 3,000 Cost of Goods Sold 32,000 Accounts Receivable 12,000 Operating Expense 4.200 Other Assets 3,500 Entry 3 Income Summary 12.900 Retained Eamings 12,900 The properly computed net income is — a. P11,800 b, P8800 ¢. PI2,900 “4. P16,500