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for the year ended De cembe r 31, 2010 , you were able to obtain certain information during your exam ination of the accoun ts receivable and related accoun ts. • The De cembe r 31, 2010 balance in the Accoun ts Receivable control accoun ts is P837 ,900 .
5. The general ledg er trial balance of Central Corporation includes the following state ment financial position accoun ts at De cembe r 31, 2010 :
• An aging schedule of the accoun ts receivable as of De cembe r 31, 2010 is presented below: Net debit balance Percentage to be app lied after corrections have bee n m ad e 1 percent 2 percent 5 percent Definitely un collectible, P9,000 ; the remainder is estimated to be 25 % un collectible.
Age 60 days & un der 61 to 90 days 91 to 120 days Over 12 0 days
Inventory (including inventory expe cted in the ordinary course of operations to be sold beyond 12 months amoun ting to P70 ,000) P110 ,00 0 Trade receivables 120 ,000 Prepaid insurance 8,00 0 Listed investments held for trading purpo ses at fair value 20 ,00 0 Available for sale investments 80 ,00 0 Cash and ca sh equivalents 30 ,00 0 De ferred tax ass et 15 ,00 0 Bank overdraft 25 ,00 0 The amoun t that should be repo rted as current ass et s on Central's statement of financial position is a. P218 ,00 0 c. P288 ,00 0 b. P368 ,00 0 d. P298 ,00 0
P387 ,80 0 307 ,100 89 ,80 0 53 ,20 0 P837 ,90 0
Two entries ma de in the Doubtful Accoun ts Ex pe nse accoun t were: 1. A debit on De cember 31 for the amoun t of the credit to the Allowance for Doubtful Accoun ts. 2. A credit for P6,100 on Novembe r 30, 2010 , and a debit to Allowance for Doubtful Accoun ts be ca use of a bankruptcy. The related sales too k place on Oc tobe r 1, 2010 . The Allowance for Doubtful Accoun ts schedule is presented below: Deb it Janu ary 1, 201 0 November 30 , 201 0 December 31, 201 0 (P837 ,90 0 x 5%) P6,10 0 Credit Balance P19 ,70 0 13 ,60 0
P41 ,89 5
P55 ,49 5
On Janu ary 2, 2013, Hernand ez, Inc. sign ed a ten-year non-cancelable lease for a heavy du ty drill press. The lease stipu lated annua l pa yments of P70,000 starting at the end of the first year, with title passi ng to Hernand ez at the expiration of the lease. Hernand ez treated this transaction as a capital lease. The drill press has an estimated useful life of 15 years, with no salvage value. Hernand ez uses straigh t-line depreciation for all of its plant ass ets. Agg regate lease pa yments were determined to ha ve a present value of P420,000, based on imp licit interest of 10%. 6. In its 2013 income statement, wha t amoun t of interest expense should Hernand ez report from this lease transaction? a. P0. b. P26,250 c. P35,000 . d. P42,000 . 7. In its 2013 income statement, wha t amoun t of depreciation expense should Hernand ez report from this lease transaction? a. P70,000. b. P46,667. c. P42,000. d. P28,000 .
• There is a credit balance in one accoun t receivable (61 to 90 days) of P11 ,000 ; it represents an advance on a sales contract.
8. T he records of Binmaley’s Dep ar tment Store report the follo wing data for the month of January 2010 : Sales Sales allowance Sales ret urns Emplo yee discoun ts Theft and ot her loss es Initial m ku p on purchas es ar Add itional mark up Mark up cancellations Mark do wn Mark do wn cancellations Freight on purchas es Purchas es at cost Purchase ret urns at cost Purchase ret urns at sales price Begi nning inventory at cost Begi nning inventory at sales price P7,100 ,00 0 100 ,000 500 ,000 200 ,000 100 ,000 2,900 ,000 250 ,000 100 ,000 600 ,000 100 ,000 100 ,000 4,500 ,000 240 ,000 350 ,000 440 ,000 800 ,000
How much is the adjusted balance of Accoun ts Receivable as of De cember 31 , 2010 ? a. P837 ,90 0 c. P833 ,80 0 b. P839 ,90 0 d. P822 ,80 0
2. How much is the adjusted balance of the Allowance for Doubtful Accoun ts as of De cembe r 31 , 20 10? a. P25 ,47 5 c. P25 ,25 5 b. P25 ,78 0 d. P41 ,89 5 3. How much is the Doubtful Accoun ts expense for the year 2010 ? a. P21 ,18 0 c. P41 ,98 5 b. P20 ,65 5 d. P20 ,87 5 4. How much is the net adjustment to the Doubtful Accoun ts expe nse account? a. P14 ,92 0 credit c. P20 ,87 5 credit b. P14 ,61 5 credit d. P15 ,14 0 debit
Us ing the avera ge retail inventory method, Binmaley’s ending inventory is a. P360 ,00 0 c. P420 ,00 0 b. P384 ,00 0 d. P448 ,00 0
9. A publi c limited company , PAYATOT Dairy Pr od ucts, prod uces milk on its farms. As of Janu ary 1, 201 0 Cromwell has a stock of 1,050 cows (average age , 2 ye ars old) and 150 heifers (average age , 1 year old).PAYATOT purchased 375 heifers, average age 1 year old, on July 1, 2010 . No animals were bo rn or sold during the year. The unit values less estimated costs to sell were 1 - year old animal at De cembe r 31, 2010 2 - year old animal at De cembe r 31 , 2010 1.5 - year old animal at De cembe r 31 , 20 10 3 - year old animal at De cembe r 31 , 2010 1 - year old animal at Jan. 1, 201 0 and July 1, 2010 2 - year old animal at January 1, 201 0 P3,20 0 4,50 0 3,60 0 5,00 0 3,00 0 4,00 0
300 ,000,00 0
90 ,000 ,000 on the
The land and building were app raised sam e date and the revaluation revealed following: Fair value P 80 ,000 ,00 0 350 ,000,00 0
Land Buildi ng
The increase in value of biological ass ets in 2010 due to price change s is a. P1,500 ,00 0 c. P555 ,00 0 b. P 630 ,00 0 d. P460 ,00 0 10. ALLENDOG Company incurred during 2010 : the following costs
There were no add itions or disposals during 2010 . Depreciation is comput ed on the straight line. The estimated life of the building is 20 years. The depreciation of the building for the year ended De cembe r 31, 2010 should be a. P25 ,000 ,00 0 c. P10 ,000 ,00 0 b. P15 ,000 ,00 0 d. P17 ,500 ,00 0
Quality control during commercial production, including routine testing of prod ucts P58 ,00 0 Laboratory research aimed at discovery of new knowledg e 68 ,00 0 Testing for evaluation of new prod ucts 24 ,00 0 Modification of the formulation of a plastic prod uct 26 ,00 0 Enginee ring follow-through in an early phase of comm ercial production 15 ,00 0 Adaptation of an existing capability to a particular requirement or customer's nee d as a part of continu ing comm ercial activity 13 ,00 0 Trouble-shooting in conn ection with breakdo wn s during comm ercial production 29 ,00 0 Searching for app lications of new research findings 19 ,00 0 What is the total amoun t ALLENDOG should repo rt as research and development expense for 2010 ? a. P137 ,00 0 b. P198 ,00 0 c. P169 ,00 0 d. P213 ,00 0
13. I aac Co. assi gn ed P500,000 of acc oun ts s receivable to Dixon Finance Co. as security for a loan of P420,000. Dixon cha rged a 2% comm ission on the amoun t of the loan; the interest rate on the note was 10%. During the first month, Isaac collected P110,000 on assi gn ed acc oun ts after deducting P380 of disc oun ts. Isaac acc epted returns worth P1,350 and wrote off assi gn ed acc oun ts tot aling P3,700 . The amoun t of cash Isaac received from Dixon at the time of the transfer was a. P378,000. b. P410,000. c. P411,600. d. P420 ,000.
14. On January 01, 2006, Genius Company purchased a machine forP5,000,000 and depreciated it by the straight-line method using an estimated useful life of ten years with no residual value. On January 01, 2009, Genius determined that the machine had a useful life of 8 years from the date of acquisition and will have a residual value of P 500,000. An accounting change was made in 2009 to reflect these additional data. The accumulated depreciation for this machine on December 31, 2009 should be
c. 2,000,000 d. 1,875,000
11. I Janu ary 2011, Jenks Mining Corporation n pu rchased a mineral mine for P4,200,000 with removable ore estimated by geological surveys at 3,000,000 tons. The property has an estimated value of P400,000 after the ore ha s been extr act ed. Jenks incurred P1,150,000 of development costs preparing the pro perty for the extraction of ore. During 2008, 340,000 tons were removed and 300,000 tons were sold. For the year end ed December 31, 2011, Jenks should include wha t amoun t of depletion in its cost of goo ds sold? a. P430,667 b. P380,000 c. P495,000 d. P561 ,000
12. On January 1, 2010 , the historical balances of the land and building of Twang Company are: COST ccumulated A DEPRECIATION Land P 50 ,000 ,00 0 P 0
15. On January 1, 2007, UM Company purchased for P6,000,000 a machine with a useful life of 5 years and residual value of P600,000. The machine was depreciated by double declining balance method and the accumulated depreciation of the machine was P 3, 840,000 on December 31, 2008. UM changed to the straight line method on January 1, 2009 and the residual value did not change. In its 2009 income statement, what amount should morena report as depreciation for this machine? a. 720,000 b. 520,000 c. 432,000 d. 312,000
following trial balance of Mint Corporation at December 31, 2019, has been adjusted except for income tax expense: Cash 600,000 Accounts receivable, net 3,500,000
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Cost in excess of billings on long-term contracts Billings in excess of cost on long-term contract Prepaid taxes Property, plant and equipment, net Note payable (NP)– noncurrent ORDINARY SHARES Additional paid in capital Retained earnings unappropriated Retained earnings restricted for NP Earnings for long-term contracts Costs and expenses
1,600,000 700,000 480,000 1,480,000 1,620,000 750,000 2,030,000 900,000 160,000 6,680,000 5,180,000
How much will be reported as investment properties in Quirino, Inc. and its subsidiaries consolidated financial statements? a. P 75,000,000 b. P 25,000,000 c. P 95,000,000 d. P 45,000,000
19. Roxy Company had the following information relating to its account receivable: Accounts receivable at 12/31/2008 Credit sales for 2009 Collection from customers for 2009, excluding recovery Accounts written off 9/30/2009 Collection of accounts written off in prior year ( customer credit was not re established) Estimated uncollectible receivables per aging of receivables at 12/31/2009 P 1,300,000 5,400,000 4,750,000 125,000 25,000 165,000
- Mint uses the percentage of completion method to account for long-term construction contracts for financial statement and income tax purposes. All receivables on these contracts are considered to be collectible within 12 months. - During 2019, estimated tax payments of P480,000 were charged to prepaid taxes. Mint has not recorded income tax expense. There were no temporary or permanent differences. The tax rate is assumed at 30%. In Mint’s December 31, 2019 balance sheet, what amount should be reported as: Total current assets? (a) P5,000,000 (b) P5,450,000 (c) P5,700,000 (d) P6,150,000
On December 31, 2009 the amortized cost of accounts receivables is a. P 1,825,000 c. P 1,635,000 b. P 1,800,000 d. P 1,600,000 20. Colt Company has four manufacturing divisions, each
of which has been determined to be a reportable segment. Common operating costs are appropriately allocated on the basis of each division’s sales in relation to Colt’s aggregate sales. Colt’s Delta division accounted for 40% of Colt’s total sales in 2009. For the year ended December 31, 2009, Delta had sales of P2,000,000 and traceable operating costs of P1,200,000. In 2009, Colt incurred operating costs of P200,000 that were not directly traceable to any of the divisions. In addition, Colt incurred interest expense of P160,000 in 2009. In reporting supplementary segment information, how much should be shown as Delta’s operating profit for 2009? (a) P800,000 (b) P750,000 (c) P720,000 (d) P656,000
17. Magic Company had the following capital during the 2008 and 2009: Preference share capital, P 100 par, 10% cumulative, 100,000 shares P 10,000,000 Ordinary share capital, P 100 par, 400,000 shares 40,000,000 Magic reported profit of P 8,000,000 for the year ended December 31, 2009. Magic paid no preference share dividends during 2008 and paid P 1,500,000 preference share dividends during 2009. On January 31, 2010, prior to the date that financial statements are authorized for issue, Magic distributed 10% ordinary share dividend. In its 2009 income statement, what amount should Magic report as basic earnings per share? a. P 17.50 b. P16.25 c. P 15.91 d. P 14.77
18. Quitino, Inc. and its subsidiaries have provided you, their PFRS specialist, with a list of the properties they own: • Land held by Quirino, Inc. for undetermined future use, P 5,000,000. • A vacant building owned by Quirino, Inc. and to be leased out under an operating lease, P 20, 000, 000. • Property held by a subsidiary of Quirino, Inc., a real estate firm, in the ordinary course of its business, P 30, 000, 000. • Property held by Quirino, Inc. for use in production, P 1, 000, 000. • A hotel owned by Sugo Inc, a subsidiary of Quirino, Inc., and for which Sugo, Inc. provides security services for its guests belongings P 50,000,000. • A building owned by Quirino, Inc being leased out to Status Inc, a subsidiary of Quirino Inc., P 20,000,000.
the following data in connection with its defined benefit plan: Fair value of plan assets P6,500,000 Accrued benefit obligation 7,500,000 The accountant revealed the following information for the year 2013: Current service cost P1,600,000 Interest cost 10% Actual return on plan assets 600,000 Expected return on plan assets 8% Contribution to the plan 1,500,000 FERNANDO Company should report 2013 employee benefit expense at ___________. a. b. c. d. 1,830,000 1,800,000 1,600,000 1,630,000
21. On January 1, 2013, FERNANDO Company provided
22. ALBUS SEVERUS Company has a defined benefit plan with the following details on January 1, 2017: Actual P8,000,000 5,500,000
Expected Fair value of plan assets P6,000,000 Accrued benefit obligation 5,500,000
At the beginning of 2017, the enterprise has determined that its average remaining service period of active
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employees on such date is 10 years. What is the amortization of the actuarial gain or loss that will be included in the 2017 employee benefit expense? a. 120,000 b. 125,000 c. 130,000 d. 135,000
23. On January 1, 2009, Alex Corporation acquired as a long-term investment for P2,500,000, a 30% ordinary share interest in Paul Company. On that date, Paul had net assets with a book value and current market value of P8,000,000. During 2009, Paul reported net income of P900,000, declared and paid cash dividends of P200,000. At the end of 2009, Alex Corporation, made a test on impairment of the goodwill identified with its investment in Paul Company. The impairment test showed that the goodwill was impaired by 20%. What is the maximum amount of income that Paul should report from this investment in 2009? a. P60,000 b. P210,000 c. P250,000 d. P270,000 24. The accounting department supplied the following data in reconciling the September 30 bank statement for Reliable Auto Supply Company: Ending cash balance per bank P 154,969.10 Ending cash balance per books 146,927.10 Deposit in transit 26,152.30 Bank service charges 250.00 Outstanding checks 30,795.10 Note collected by bank including P450 interest (Reliable not yet notified) 10,450.00 Error by bank – check drawn by Amiable Corp. was charged to Reliable’s account 6,170.80 Sales and deposit of P17,290 was entered the sales journal and cash receipts journal as P17,920. What is Reliable Auto Supply Company’s correct cash balance at September 30? (a) P156,247.10 (c) P156,497.10 (b) P156,877.10 (d) P150,326.30
27. Compute for the cost of inventory lost in fire using the data below: Inventory, July 1, 2008 P51,600 Purchases, July 1, 2008 to Jan. 19, 2009 368,000 Sales, July 1, 2008 to Jan. 19, 2009 583,000 Purchase returns 11,200 Purchase discounts taken 5,800 Freight in 3,800 Sales returns 8,600 A fire destroyed the entire inventory except for purchases in transit, FOB shipping point, of P2,000 and goods having a selling price of P4,700 that were salvaged from the fire. The salvaged goods had an estimated value of P2,900. The average gross profit rate on net sales is 40%. (a) P59,760 (b) P56,940 (c) P62,660 (d) P56,860 28. The following transactions pertain to Coral Corporation for year ended December 31, 2009: 1. Coral Corporation is authorized to issue 5,000 shares of P100 par preference share and 20,000 shares of P50 par ordinary share. 2. Sold 10,000 shares of ordinary share at par for cash. 3. Issued 400 shares of preference share for P120 per share cash. 4. Reacquired 500 ordinary shares as treasury share for P90 per share. 5. Reissued 300 shares of treasury share for P100 per share. 6. Agreed to a subscription contract for 1,000 shares of ordinary share for P60 per share. The subscription requires a down payment of P20 per share. 7. Declared 30% share dividend on the ordinary share. The market value of the ordinary share at the time of declaration is P80 per share. 8. The revenue and expense summary account has a credit balance of P300,000. This is closed to accumulated profits. How much is the total shareholders’ equity at December 31, 2009? (a) 853,000 (b) 1,052,000 (c) 1,850,000 (d) 2,012,000 29. On January 1, 2017, granger Company sells its equipment with a carrying amount of P160,000. The company receives a non-interest bearing note due in 3 years with a face value of P200,000. There is no established market value for the equipment. The prevailing interest rate for a note of this type is 12%. The discount amortization at the end of the third year using the effective interest method is: (a) P13,333 (b) P19,215 (c) P21,428 (d) P 0 30. In 2014, dysas spent P68,000 on R & D costs for a new product. This product was patented on January 2, 2015 at a very small cost which was expensed in 2015. The patent has legal life of 17 years and an estimated useful life of 8 years. In 2019, dysas paid P8,000 for legal fee in successful defense of the patent. Amortization for 2019 should be: A. P13,000 B. P 0 C. P11,000
25. On January 1, 2007, Wild Company sells its equipment with a carrying amount of P160,000. The company receives a non-interest bearing note due in 3 years with a face value of P200,000. There is no established market value for the equipment. The prevailing interest rate for a note of this type is 12%. The discount amortization at the end of the third year using the effective interest method is: (a) P13,333 (b) P19,215 (c) P21,428 (d) P 0
26. On January 1, 2006, Excel Company purchased an
asset for P1,000,000 with an estimated useful life of 10 years. Straight line method of depreciation is to be used. On January 1, 2008, it was properly determined that the recoverable amount of the asset is P640,000. On January 1, 2009, it was properly computed that the recoverable amount of the asset is P740,000. Under the revaluation model for long-lived assets, what are the amounts to be reported in the income statement and shareholders’ equity on January 1, 2009?
(a) P140,000 and P40,000 (c) P180,000 and P 0
(b) P20,000 and P160,000 (d) P 0 and P180,000
CPAs ARE NOT BORN, THEY ARE MADE
CPAs ARE NOT BORN, THEY ARE MADE