CPA REVIEW SCHOOL OF THE PHILIPPINES

Manila

ADVANCED FINANCIAL ACCOUNTING AND REPORTING Sunday, February 18, 2024

FIRST PREBOARD EXAMINATION 1:00 p.m to 4:00 p.m.

Number 1

On January 1, 2024, Entity A signed an agreement to operate as a franchisee of Entity B, for an initial
franchise fee of P468,750 for 7 years. Of this amount, P87,500 was paid when the agreement was
signed and the balance payable in four annual payments beginning on December 31, 2024. Entity A
signed a non-interest bearing note for the balance. Entity A’s rating indicates that he can borrow money
at 16% for the loan of this type. The direct cost of the initial services amounted to P141,750 and the
obligation pertaining to the initial services was already satisfied by Entity B on August 31, 2024.
Additional indirect franchise cost of P12,750 was also incurred. (PV factor 2.80)
Under IFRS 15, what is the realized gross profit of Entity B for the year ended December 31,
2024?
A. 327,000
B. 212,625
C. 314,250
D. 199,875

Numbers 2 and 3

On January 1, 2024, a franchisor entered into a franchise agreement with a franchisee. The contract
requires the franchisee to pay a non-refundable down payment of P100,000 at the date of contract
signing and four annual payment of P175,000 every December 31. They also agreed to a 15%
continuing fee based on sales. The balance was shouldered by an interest bearing note of 12%.
The franchise agreement requires the franchisor to render the following separate and distinct
performance obligations:
 Construction of franchisee's stall with stand alone selling price of P500,000.
 Delivery of 8,000 units of raw materials to the franchisee with an estimated cost of P150,000 and a
25% margin on sales.
 The franchisee also has a right to access the franchisor's trade-name and trademark for a maximum
period of 5 years counted from the date of signing of contract, however the franchisor has not yet
established a stand-alone selling price because it is the first time that this service will be sold to
customers.
As of December 31, 2024, the franchisor already completed 90% for the construction of the franchisee's
stall which allowed the franchisee to start its operation. As of December 31, 2024, the undelivered units
was 2,000 units of raw materials. For the year ended December 31, 2024, the franchisee reported
sales revenue of P500,000.

2. Under IFRS 15, what is the total revenue from initial franchise fees to be reported by the
franchisor for the year ended December 31, 2024?
A. 620,000
B. 695,000
C. 779,000
D. 520,000

3. Under IFRS 15, what is the unearned revenue to be reported by the franchisor on December
31, 2024?
A. 280,000
B. 180,000
C. 200,000
D. 255,000
 Page 2
Numbers 4, 5 and 6

Entity A, consigned 12 units of his product to Entity B and the cost of each product was P1,920. Entity
B paid the freight of P480 for the delivery of the 12 units of product to him. By the end of the month,
Entity B sold 8 units to customers, 6 on cash basis for P3,600 each and 2 on credit for P4,320 each (only
20% was collected from the credit sales). Entity B also paid the freight of P500 for the delivery of the
sold units to customers. It was agreed by both that all payments made by Entity B will be reimbursed by
Entity A and also a 15% commission will be granted based on the sales.

4. What is the net income of Entity A from the consignment sales?

A. 9,524
B. 14,060
C. 9,364
D. 9,691

5. What is the cost of the inventory still on-hand in Entity B?

A. 7,840
B. 7,680
C. 8,007
D. 9,600

6. What is the amount remitted to Entity A?

A. 18,292
B. 24,724
C. 16,084
D. 17,812

Numbers 7 and 8

Manila Co. has a branch in Quezon City. On December 31, 2024, Quezon City Branch showed a Home
Office Current balance of P450,000. The interoffice accounts were the same at the beginning of the year.
For purposes of reconciling the reciprocal accounts, the following facts were ascertained:
a. The home office erroneously recorded a remittance for P4,800 from its Bacolod branch as a
remittance from its Quezon City branch.
b. The branch failed to take up a P850 debit memo from the home office representing the share of the
branch in marketing expense.
c. Home office credit memo representing a discount on merchandise for P1,200 was not recorded by
the branch.
d. Advertising expense of P1,225 charged by the home office was taken up twice by the branch.
e. Freight charge on merchandise made by the home office for P1,125 was recorded in the branch
books as P1,215.
f. An asset transfer of equipment costing the home office P2,500 was picked up by the branch as P250.

7. What is the adjusted balance of the reciprocal accounts on December 31, 2024?
A. 449,235
B. 451,285
C. 450,585
D. 453,035

8. What is the unadjusted balance of the Investment in Branch account in the books of the Home
Office on December 31, 2024?
A. 448,235
B. 445,785
C. 444,435
D. 446,485
 Page 3

Numbers 9, 10, 11, and 12

During 2024, goods were shipped to the branch with a markup of 120% of cost. The Shipments-to-
branch account in the home office amounted to P237,500. The balance of the unrealized branch
inventory account reports a balance of P375,000 before adjustment. The beginning inventory of the
branch from the home office at cost is P360,000 and from outsiders, P93,000. The branch purchased
goods from outsiders during the year amounting to P125,200. The ending inventory of the branch is
reported in the combined statement of financial position at P345,000, 20% of which is purchased from
outside suppliers.

9. What is the cost of goods available for sale reported in the branch’s income statement for the
year ended December 31, 2024?
A. 522,500
B. 972,500
C. 1,190,700
D. 218,200

10. What is the cost of goods sold to be reported in the branch’s income statement for the year
ended December 31, 2024?
A. 551,075
B. 514,500
C. 790,500
D. 470,700

11. What is the cost of goods available for sale reported in the combined income statement for the
year ended December 31, 2024?
A. 597,500
B. 815,700
C. 914,700
D. 905,700

12. What is the cost of goods sold reported in the combined income statement for the year ended
December 31, 2024?
A. 470,700
B. 755,700
C. 560,700
D. 461,075

Number 13

Under IFRS 15, when the stand-alone selling prices are not directly observable, the entity may use the
following methods, except
A. Adjusted market assessment approach
B. Estimated realizable value approach
C. Estimated cost plus margin approach
D. Residual approach

Number 14

What is the accounting treatment of the transaction price when a contract with a customer has multiple
performance obligations?
A. The transaction price shall be recognized as revenue of the most important performance obligation.
B. The transaction price shall be allocated equally to the different performance obligations.
C. The transaction price shall be allocated to the different performance obligations by reference to their
relative standalone selling prices.
D. The transaction price shall be recognized as revenue only at the end of completion of all
performance obligations.
 Page 4

Number 15

On June 1, 2024, the Bacolod Main Office established a sales agency in Talisay. The main office sent
samples of its merchandise amounting to P8,400 and a working fund amounting to P72,000 to be
maintained on the imprest basis. The samples sent were intended to last until January 1, 2025. The
agency transmitted to the home office P364,500 worth of sales orders which have a cost of P291,600 but
the home office was not able to invoice 35% of the said transmitted sales orders.

Collections from customers amounted to P82,175, net of 5% sales discount. Payments made by the
agency were annual rent P70,200, advertising expense for 3 months P4,650 and utilities also for 3
months P6,300. The agency also purchased an equipment on July 1, 2024 worth P11,000 which will be
depreciated at 15% per annum.

What is the net income of the agency for the three months ended August 31, 2024?
A. 18,610
B. 14,285
C. 14,147.50
D. 10,685

Number 16

Which of the following transactions will increase the branch account in the home office’s separate
statement of financial position?
A. Return of inventory from branch to home office
B. Payment by the branch of home office’s liability
C. Receipt by the home office of credit memo from the branch
D. Collection by the home office of branch’s receivable

Number 17

It is a costing system that values manufactured products with the actual material costs, actual direct labor
costs and manufacturing overhead based on a predetermined manufacturing overhead rate.
A. Actual costing system
B. Normal costing system
C. Standard costing system
D. Budgeted costing system

Number 18

The net cost of normal spoilage or loss, when it is attributable to exacting specifications will be
A. Charged to manufacturing overhead control and will be an additional actual overhead
B. Included in the cost transferred to finished goods
C. Written-off
D. Will be deducted from the initial cost in the work-in-process

Number 19

In a process costing system using the FIFO method, the basis of the cost in the computation of the cost
per equivalent unit is
A. Beginning inventory cost only
B. Current period cost only
C. Beginning inventory cost plus current period cost
D. Current period cost less beginning inventory cost
 Page 5

Numbers 20, 21 and 22

Ravenol Corp. uses job order costing system to produce its products. Its uses a single factory overhead
rate that is based on machine hours. Its manager believes that the company's cost would be more
accurate if it will use two overhead rates, one based on material handling costs and the other one is
based machine hours. The following data is for year 2024:

Budgeted
Materials handling related Factory Overhead 3,840,000
Machine related Factory Overhead 10,400,000
Total Budgeted Factory Overhead 14,240,000

Budgeted
Costs of materials handling used on jobs 12,800,000
Total Machine hours 1,600,000

Data related to three jobs worked on in December follow:

Job # 1 Job # 2 Job # 3
Material handling Costs 168,000 656,000 312,000
Direct Labor Costs 128,000 104,000 144,000
Machine Hours used 68,000 36,000 23,200

Actual factory overhead related to materials was P318,400 and actual factory overhead related to
machine hours was P846,400.

20. Assuming Ravenol Corp uses predetermine factory overhead based on machine hours. What
is the predetermine rate of factory overhead?
A. 9.00
B. 6.50
C. 6.00
D. 8.90

21. Assuming Ravenol Corp uses predetermine factory overhead based on machine hours. What
is the factory overhead applied to job # 1?
A. 320,400
B. 605,200
C. 442,000
D. 50,400

22. Assuming Ravenol Corp uses the two overhead rates suggested by the manager to determine
factory overhead rates. What is the total cost of job #3?
A. 662,480
B. 901,200
C. 1,190,800
D. 700,400

Number 23

When the consignor sends the consigned goods to the consignee, in the books of the consignor, to record
the transaction it will involve a
A. Debit to Consignee Receivable account
B. Credit to Consignee Payable account
C. Credit to Merchandise inventory account
D. Memo entry
 Page 6

Number 24

What is the main reason for the difference between the reported net income by the branch and the true
net income of the branch computed by the home office?
A. Because of overstatement of branch’s cost of sales for goods coming from outsiders
B. Because of overstatement of branch’s cost of sales for goods coming from home office
C. Because of overstatement of total goods available for sale coming from home office
D. Because of overstatement of branch’s ending inventory coming from home office

Numbers 25 and 26

Lexus Corp. manufactures brake rotors to the exacting specification of customers. During August 2024,
Job 800 for the production of 40,500 units were completed at the following costs per unit:
Direct Materials P120
Direct Labor 40
Factory Overhead applied 160

Final inspection of Job 800 disclosed 900 defective units and 450 spoiled units. The defective units were
reworked at a total cost of P108,000, and the spoiled units were sold for P27,000.

25. What is the unit cost of the good units produced for Job 800?
A. 320.00
B. 326.29
C. 325.62
D. 322.67

26. What is the amount of cost transferred to finished goods for Job 800?
A. 13,041,000
B. 12,960,000
C. 12,816,000
D. 12,924,000

Number 27

Disposal
Sales price cost per Further Final sale
per yard at yard at processing price per
Yards split-off split-off per yard yard
X 1,500 P60.00 P35.00 P10.00 P 75.00
Z 2,200 80.00 50.00 30.00 112.50

The management decided that both products will be processed further and the disposal cost at split-off
will also be incurred when processed further. The joint processing cost was P80,000 and the
approximated NRV method will be used to allocate the joint cost.

What is the net income generated from the sale of Product Z?

A. 132,401
B. 129,457
C. 22,401
D. 19,457
 Page 7

Number 28

Project MU Corporation has three production departments A, B, and C. Project MU Corporation also
has two service departments, Administration and Personnel. Administration costs are allocated based on
value of assets employed, and Personnel costs are allocated based on number of employees. Assume that
Administration provides more service to the other departments than does the Personnel Department.

Dept. Direct Costs Employees Asset Value

Admin. P450,000 25 P225,000
Personnel 175,000 10 300,000
A 350,000 15 150,000
B 100,000 5 75,000
C 125,000 10 400,000

Under the step method, what is the total overhead cost allocated to Department C?
A. 301,577
B. 252,928
C. 426,577
D. 377,928

Number 29

Cindy Corp. used backflush costing in accounting its cost and used also the Raw-in-Process account
mainly to account its materials. The following data were made available:
Raw materials purchase 2,550,000
Conversion cost incurred 18,000
Applied conversion cost 19,875
Increase in RIP account 12,000

What is the amount of materials backflushed from Raw-in-Process account to Finished goods
inventory account?
A. 2,550,000
B. 2,562,000
C. 2,538,000
D. 2,557,875

Number 30

If the net realizable value of the by-product of a joint production process is significant, how shall it be
accounted for?
A. The net realizable value of the by-product shall be recorded as deduction from the total joint
manufacturing cost thereby reducing the cost of the main products also known as replacement cost
method.
B. The net realizable value of the by-product shall be recorded as deduction from the net sales of the
main product.
C. The net realizable value of the by-product shall be recorded as deduction from the cost of sales of
the main product.
D. The net realizable value of the by-product shall be recorded as other income.
 Page 8

Numbers 31, 32, 33, 34, and 35

Wald Manufacturing Corp. has 2 departments the Assembly and Finishing Departments. It uses FIFO in
the Assembly department and Weighted Average in the Finishing department. All materials were added
at the beginning of the process in the Assembly department and all materials were added at the end of
the process in the Finishing department. The following data were made available for the Finishing
Department:

Units
Beginning inventory (60% to complete as to CC) 5,000
Ending inventory (30% to complete as to CC) 2,000

Costs
Beginning inventory:
Transferred-in 10,000
Direct materials 15,000
Conversion 8,000

Costs
Current period:
Direct materials 51,250
Conversion 87,200

The transferred-out cost and units from the Assembly department were P127,500 and 50,000 units
respectively.

31. What is the Cost per EUP of the Conversion?

A. 1.75
B. 1.78
C. 1.60
D. 1.63

32. What is the cost transferred to Finish goods inventory?

A. 290,440
B. 259,170
C. 293,090
D. 291,500

33. What is the cost of the ending inventory?

A. 8,468
B. 9,850
C. 7,450
D. 6,068

34. Assume FIFO method, what is the EUP of the Conversion?

A. 50,600
B. 52,400
C. 50,000
D. 31,600

35. Assume FIFO method, what is the Cost per EUP of the Direct Materials?
A. 1.025
B. 1.07
C. 1.00
D. 0.97
 Page 9

Number 36

Statement (1) All partners shall receive a distribution of cash upon liquidation of a partnership.
Statement (2) An insolvent partner will not receive any distribution from the partnership.
A. Only the first statement is true
B. Only the second statement is true
C. Both statements are true
D. Both statements are false

Number 37

Statement (1) The gain or loss on realization of non-cash assets is distributed to all partners.
Statement (2) As a general rule, outside creditors must be paid first before distribution to partners are
made.
A. Only the first statement is true
B. Only the second statement is true
C. Both statements are true
D. Both statements are false

Number 38

Statement (1) Partially secured creditors will always receive a settlement less than the amount due to
them.
Statement (2) An asset pledged to fully secured liabilities may have a free portion.
A. Only the first statement is true
B. Only the second statement is true
C. Both statements are true
D. Both statements are false

Number 39

Statement (1) Unsecured liabilities with priority are not secured by any asset but are mandated by law to
be paid first before any other unsecured liabilities.
Statement (2) The total free assets in the statement of financial affairs are available to fully secured
creditors.
A. Only the first statement is true
B. Only the second statement is true
C. Both statements are true
D. Both statements are false

Number 40

Statement (1) Claims and incentives decrease the total construction cost of the project.
Statement (2) Construction in Progress is an inventory account that increases the current assets in the
statement of financial position of the contractor.
A. Only the first statement is true
B. Only the second statement is true
C. Both statements are true
D. Both statements are false
 Page 10
Number 41
Statement (1) The mobilization fee shall be included in the total contract liability presented in the
statement of financial position at the end of the first year of the project.
Statement (2) Contract variation and delay may increase or decrease the contract price.
A. Only the first statement is true
B. Only the second statement is true
C. Both statements are true
D. Both statements are false

Number 42
If the partnership assumes a liability of a partner, the journal entry upon formation in the partnership
books involves a
A. Credit to Loan to partner account
B. Credit to Capital account of that partner
C. Debit to Due to account of that partner
D. Debit Capital account of that partner

Number 43
If the partners agree to adjust their initial capital contribution to conform with their profit/loss ratio, the
total capital balance of the partnership before and after adjustment is the same under:
A. Bonus Method
B. Revaluation Upward Method
C. Additional Investment/Withdrawal Method
D. Revaluation Downward Method

Number 44
Which of the following will decrease the capital balance of a partner?
A. Share in partnership profit
B. Withdrawal made by a partner
C. Advances made by a partner to the partnership
D. Share in the revaluation upward of a partnership property, plant and equipment

Number 45
Which of the following transactions shall not affect the capital balance of a partner?
A. Share of a partner in the partnership’s net loss.
B. Receipt of bonus by a partner from another partner based on the agreement.
C. Loans extended by the partnership to a partner.
D. Additional investment by a partner to the partnership.

Number 46
Which of the following statements is true?
A. Withdrawal in anticipation of his share in the net income made by a partner during the year is
treated as a permanent withdrawal.
B. All partners shall be given a salary to ensure a just and equitable distribution of net income or net
loss.
C. Only the managing partner shall be entitled to an interest based on his capital contribution in the
distribution of net income or net loss.
D. In the division of profit or loss, bonus may still be provided even if the total salary and interest
given to the partners already exceeded the amount of net income.
 Page 11

Numbers 47 and 48

The accounts of the partnership of E, R and M at the end of its fiscal year on September 30, 2024 are as
follows:

Cash P 360,000 Loan from M P 240,000

Other assets 3,120,000 E, capital (50%) 1,080,000
Loan to R 120,000 R, capital (30%) 720,000
Liabilities 1,200,000 M, capital (20%) 360,000

Partner M received P216,000 on the distribution of cash and liquidation expenses of P48,000 were
incurred and paid.

47. How much is the proceeds from the sale of other assets?
A. 1,200,000
B. 1,920,000
C. 1,248,000
D. 1,152,000

48. What is the amount of cash distribution to R?

A. 38,400
B. 24,000
C. 144,000
D. 158,400

Numbers 49, 50 and 51

RB and RL, partners sharing profits and losses at 30% and 70% have capital balances of P315,000 each.
RZ is admitted as a new partner, making a cash investment of P420,000, for a one-third interest in both
capital and earnings.

The following are independent cases:

49. Assuming RZ is credited in full for the amount of her investment. What is the new capital of
RL?
A. 462,000
B. 315,000
C. 420,000
D. 525,000

50. Assuming the agreed capitalization of the partnership amounts to P990,000. What is the new
capital of RB?
A. 297,000
B. 342,000
C. 324,000
D. 306,000

51. Assuming the agreed capitalization of the partnership amounts to P1,500,000. What is the
new capital of RL?
A. 630,000
B. 574,000
C. 686,000
D. 426,000
 Page 12

Numbers 52 and 53

LF, VR, and HQ, with capital balances of P668,000; P416,250; and P329,500 respectively, decided to
dissolve the partnership 6 months prior to year-end. Their profit and loss ratio is 45:25:30. Net income
for the 6 months period is P360,000. Prior to liquidation the Statement of Financial Position shows cash
at P633,500 and liabilities at P874,800. HQ received P493,750 after payment of P698,550 to outside
creditors.

52. How much is the amount of cash distribution to LF?

A. 745,625
B. 914,375
C. 752,375
D. 583,625

53. How much is the amount of cash distribution to VR?

A. 553,125
B. 463,125
C. 459,375
D. 369,375

Number 54

JJ, a partner in the JM partnership is entitled to 40% of the profits and losses. During 2024, JJ
contributed land to the partnership that cost him P15,000,000, but had a current value of P18,000,000.
Also, during 2024, JJ had drawings of P24,000,000. The balance of JJ’s capital accounts was
P36,000,000 at the beginning of the year and P45,000,000 at the end of the year.

Compute the partnership’s earnings (loss) for 2024:

A. (22,500,000)
B. (15,000,000)
C. 45,000,000
D. 37,500,000

Numbers 55 and 56

TD decided to withdraw from his partnership with SM and MR. Before his withdrawal, TD’s capital
balance was P406,000, while SM’s was P448,000 and MR’s was P539,000. Also, the partnership’s total
assets amounted to P3,150,000, but the partners agreed that a fixed asset was under depreciated by
P105,000. TD, SM and MR share profits and losses in the ratio of 2:4:4, respectively. TD was paid
P372,400 upon his retirement.

55. How much is the capital balance of SM after TD’s withdrawal?

A. 454,300
B. 412,300
C. 441,700
D. 496,300

56. How much is the capital balance of MR after TD’s withdrawal?

A. 587,300
B. 497,000
C. 503,300
D. 490,700
 Page 13

Number 57

OO and PP formed a new partnership. OO invests P45,000,000 in cash for his 60% interest in the
capital and profits of the business. PP contributes land that has an original cost of P6,000,000 and a fair
market value of P10,500,000, and a building that has a tax basis of P7,500,000 and a fair value of
P13,500,000. The building is subject to a P6,000,000 mortgage that the partnership will not assume.

What amount of cash should PP contribute?

A. 6,000,000
B. 12,000,000
C. 16,500,000
D. 22,500,000

Number 58

The statement of financial position of K and L Partnership on August 1, 2024 before liquidation is as
follows:

Assets Liabilities and Capital

Cash P 364,000 Liabilities P 910,000
Other assets 1,846,000 K, capital (70%) 728,000
L, capital (30%) 572,000
Total P2,210,00 Total P2,210,000

In August, assets with a book value of P884,000 were sold for P754,000. Creditors were paid in full.
Liquidation expenses of P26,000 was paid, and P78,000 was paid to partners.

In August, how much did L receive?

A. 54,600
B. 78,000
C. 23,400
D. 0

Number 59

L, B, and C formed a partnership on January 1, 2024 with the following assets contributed by each
partner at their fair values.
L B C
Cash P 525,000 P 118,125 P 294,875
Merchandise inventory - 34,300 28,875
Machinery and 875,000 275,625 -
equipment
Furniture and fixtures 87,500 49,000 -
Total P 1,487,500 P 477,050 P 323,750

P80,000 of the cash contribution of C came from a personal loan. The machinery and equipment
contributed by L has a mortgage of P200,000 which L decided to settle using his personal assets. It
was also agreed that L’s depreciable assets will be adjusted due to under depreciation by P15,000
each. The partners further agree to equalize their interest. Cash settlement among the partners are to
be made outside the partnership.

How much will be credited to the capital account of L?

A. 757,767
B. 752,767
C. 659,433
D. 726,100
 Page 14
Numbers 60 and 61

On April 1, 2024, K, L and M formed a partnership with respective capital contribution of P2,000,000,
P5,000,000 and P3,000,000. The Articles of Co-Partnership provides that profit or loss shall be
distributed accordingly:
⮚ 20% interest on original capital contribution.
⮚ P120,000 quarterly salary for K and P30,000 monthly salary for M.
⮚ The remainder shall be distributed on the basis of original capital contribution ratio.
On December 31, 2024, K, L and M made withdrawals of P500,000, P1,000,000, and P200,000,
respectively. The statement of financial position of the partnership shows that L’s capital on December
31, 2024 is P6,500,000.

60. What is the capital balance of K on December 31, 2024?

A. 1,360,000
B. 3,360,000
C. 2,860,000
D. 2,960,000

61. What is the capital balance of M on December 31, 2024?

A. 4,970,000
B. 4,770,000
C. 4,570,000
D. 4,920,000

Numbers 62 and 63

The following data were provided by the Ultimate Company which is under bankruptcy in the
preparation of the planning report. The court has appointed a trustee to liquidate the company.
Assets at book value P3,300,000
Assets at estimated realizable value 2,400,000
Liabilities at book value:
Fully secured mortgage 1,200,000
Unsecured accounts and notes payable 1,400,000
Wages and taxes 450,000
Unrecorded liabilities:
Interest on bank notes 10,000
Estimated cost of administering the estate 120,000
Interest on mortgage 6,000
Unrecorded asset at estimated resale value:
Delivery van 180,000
Compute for the following:

62. How much is the total free assets?

A. 2,400,000
B. 1,200,000
C. 1,194,000
D. 1,374,000

63. What is the expected recovery percentage settlement to unsecured non-priority claims?
A. 57.02%
B. 57.43%
C. 60.39%
D. 56.78%
 Page 15

Numbers 64 and 65

The following data were ascertained for the month of October in the Statement of Realization and
Liquidation of Finale Corporation: Estate equity at the end of September was P18,500. Liabilities not
paid at the end of September were P310,000. Liabilities assumed were P15,800. Assets sold and
collected during the month were P235,000. Increase in assets was P23,500. Assets to be realized in
November were P36,500. Liabilities to be paid in November were P60,800. Supplementary charges
and credit were P100,800 and P28,750 respectively. Estate deficiency at the end of the month was
P12,450.

Compute the following for the month of October:

64. How much is the assets to be realized at the beginning of the month?
A. 121,600
B. 206,900
C. 145,000
D. 175,950

65. What is the net increase or net decrease in cash?

A. 47,850 net decrease
B. 47,850 net increase
C. 109,750 net increase
D. 109,750 net decrease

Numbers 66, 67, 68, 69 and 70

On January 1, 2024, Prime Design Construction Inc. entered into a long-term construction contract to
build an expressway. The P180,000,000 fixed-price construction project is expected to be completed by
2028.

Additional Information:
The cost incurred each year:
2024 P58,800,000
2025 24,360,000
2026 48,840,000
2027 9,960,000
2028 29,040,000

Estimated remaining cost at the end of the year:

2024 151,200,000
2025 114,840,000
2026 68,000,000
2027 27,040,000
2028 -0-

Billings each year:

2024 25,000,000
2025 50,000,000
2026 60,000,000
2027 15,000,000
2028 30,000,000
 Page 16

66. How much is the realized gross profit (loss) in 2024? (indicate whether profit or loss)
A. 30,000,000 loss
B. 30,000,000 profit
C. 8,400,000 loss
D. 8,400,000 profit

67. What is the excess of Construction in Progress over Progress Billings or Progress Billings over
Construction in Progress in 2025? (indicate whether contract asset or contract liability)
A. 13,240,000 contract asset
B. 13,240,000 contract liability
C. 9,840,000 contract asset
D. 9,840,000 contract liability

68. How much is the revenue recognized in the Statement of Comprehensive Income in 2026?
A. 43,200,000
B. 45,200,000
C. 50,400,000
D. 46,800,000

69. How much is the cost of goods sold in 2027?

A. 9,960,000
B. 3,160,000
C. 13,200,000
D. 13,520,000

70. How much is the realized gross profit (loss) in 2028? (indicate whether profit or loss)
A. 9,000,000 loss
B. 240,000 profit
C. 9,000,000 profit
D. 240,000 loss

END