CPA REVIEW SCHOOT OF THE PHILIPPINES

MANITA

FnRCTICII ACCOUNTING PROBLEMS

Sunday, September 15, 2013

Batch 74

II

FINAL PREBOARD EXAMINATION

Pxosrcm

on August 1,20!4,the business accounts cf chris a untr Pai,l

DJ

appear below:

IAr*tt I c,;h
Accounts Receivable
19?|E_s

La

_l|

60-r,000
20a3A5

nd

Build

428,267
I 384,789

23,60C

Other Assets
Liabilities and Ca
Accounts Payable

z+t.toz

P178,940

lr

Zaa,sso

Chris G., Capital

Pau!_!l!9p119!
liabitities
and paul DJ agreed to form a partnership cr:ntributing their respective assets and
subject to the following adjustments:

chris

.
r
"

Accounts Receivable

of F20,000 ancl

P:.5,CC0 are uncciiectible

in Chris G and Paul DJ's respective

books.

lnventories of p5,500 and P6,700 are wortl,less in Chris G and Paul DJ's respective books
Other assets of p2,2OO and P3,600 in Chris G arrri I'aul DJ's books are written off.

interest !n
Afterfive days Brian L was offered to join Chris G antJ Paul Di and will contribute for a 20%
on thqir
the firm. They also agreed to divide profit and loss lr the ratio of 40:40:20, same ratio based
transaction
personal
a
capital credit as agreed upon formation, As a res;l't of the said agreement, as
i

ir.
c.

P34,388

P32,930

D.

P37,272
i

z.

PnoarcNl
l
On May I,2AL4,the capital accounts of 5, T anrJ C are P1,260,000; P787,50A and P477,500 , resPertivelY,
At this time, I is admitted to the firm, he prrrchaseci a 1/6 interest in the firm for P288,750. The lld
partners equalized their capital investntenls. lrterwar"ds, ali the partners agree to divlde profits a$d
for trrfo
losr;es equally. The new partnership closes its bor:ks cn jur-r3 3A,2014 reporting profit of P44,1"O0
P3,5fO
l,
and
T
per
wirile
month
months. Each partner made the following vuithdrarvais:S and CP?,625
per month. On June 30,2OL4,l invest enough cash tc increase his capital to a 1/3 interest in tfe

partnership.

A. P211,165.50
B. P70,000

c.

D.

P632,642.50
P633,762.50

__i_l
I

Pnoagm

A business owned by C was shgrt of cash and C decided to form a pai"tnership with D and E, D was able
to contribute cash thrice the iAterest of C in the partnershlp v,rhile E lvas able to contribute cash twice

the interest of D in the parthership' The assets contributed by C were as fcllows: Cash P18'000;
Accounts receivable P378,000 with allowance for doubi:ul account of P12,C00, lrrverltory P840,000I i;t_
and store equipment of P300,000 with accumulated depreciatiorr of

P30,r-100

but with current worth ot

P250,000 and agreed value of P200,000.

I
I

C, D and E agreed that the alloWance for doubtfulaccounts rlvas inadeqr;ate and sircuid be l'2C,C00 They
also agreed tf,ut tf," fair value $f tf,u
]:

[-Th.

t"tri;tt"tr or tnu p.rtr"rll hip are:

A. P7,880,000
B. P7,092,000

c.

D.

P14,960,000
P15,460,000

q.

lnosrcrw

A and B agreed the lists of the followirrg assets

t*

be coniributeci in the partnership.

Cash
I

nve nto ry

Buildins
#-

___1*

Lrrr11tgt"_q!qji*tg$_

- ___ijilOjqu

__-i!illl0(.,,

Ihe building is subject to a mortgage loan, alreaciy pa:t due ; in thc anrount of P1C,CCO. A oaid this out of
his personal funds aside fronl his cash contriburion ii:rr-,o;L,ovo Fartners agrr:ecl that A should be
credited forthis. Pertnersiiip agreei',rent calls ft,- e'ien ci:v;s;o:-r oi proiit lnd icss.

iwlgluglt':lqylg_lgjlgqjgqta i fo ea
A.
B.

c.

Als

P35,000

P85,000

P45,000

P75,UOA

P45,000

P85,000.
P60,000

D. P60,000

Pnoarcwt

s.

Paul, lram, and lvonne are inlthe proce:s cf liq.rillaiing lheir par'n:rsnr;;. ivoni,,.. il;,s agreed to accept
the inventory, which has a fair value cf p60,0cr0, as p.*:t of h::i :,'.itleri'ierit. A:lr;tc;^rrent of Financial
Position and the residual profit and loss snaring psrc?ntagej wei. lr 1'ulir,,r':
Cash

198,000
80,000
230,Occ

lnventory
Plant assets

Total assets

508,000

,ti:ci:unts p;vi,i:!e
lrarn, calrta ; (jt(\%i

L49,000
79,000
140,000

lvonne, canitai

140,C00

t,a,Ji,

capital(40i:)
{107n)

Totalli;b.leqr;;tri,

lf the partners distribute the available cash, lvonrre vrill i eceive

A. P23,000
B P29,000
c, P30,000
D. P34,000

508,000

Pnoarcu

o.

initi:l franchise fee of

RAGE AGAINST THE MACHINE charges an

P75,000 for the right

to operate as a

franchise of Speed Racer. Of this amount, P25,000 is collected immediately. The remainder is collected
annual installment payments of pl-2,500 each. These installments have a present value of

in four equal

P3g,623. There is reasonable expectation that the dorvn payment may be refunded ancl substantial
future services are yet io be perforned by BAGi: AGAINST THE f\4ACHlNE.

[-rng-,:glgr"ntrv io iTgtq lh"-f*1.-Eg fu"*,:uiJ n;,

A.

25,000
50,000
Unearned lnterest lncome
Franchise Revenue

Cash

- - *-

-- - ---

-i

Notes Receivable

i0,377
64,623

Cash
Notes Receivable

25,000
50,000
Unearned lnterest lncome
Unearned Franchise Revenue

LA,377

64,623

C. Cash

25,000
50,000
Notes Receivable
Unearned lnterest lncome
Unea rned Franchise Revenue
Franchise Revenue

10,377

39,623
39,623

D. Cash

25,000
50,000
Ncles Receivable
Unearned lnterest lncome
Unearned Franchise Revenu :
Franchise Revettue

3.A,377

3!1,623

25,000

PAaercAZ

On.lanuary L,2A1J, Federrer lnc. signed ari agreement authorizing Sculptured Body works to operate as
a franchisee over ten years period for initial franchise fee of P100,00C plus P20,000 interest income
received annually when the agreement was:!gn;:r.1. Sculptured Body works commenced operations on
/l.ugt.rst t,2Ai3, at which date all the initiai :;e.rv!ces reouired of Federrer had been performed' The
agreement also provides that Sculptured Body works inust pay annually to Federrer a continuing
franchise fee equal to five percent of the rpverrrle irorn the franchise. Sculptured Body works sales
revenue for 2013 was P800,000.

f_-- . I l-or the year ended December 3!,7013, how much shouid Federrer record as revenue from franchi
t-

Lt-g'l

'.i

__l

A.
B.

c.

D,

P100,000
P160,000
Pi,40,000
P500,000

Pnoaffrvt a.
SugarFree has two construciiorr jobs, which .i)r',lnrerced ciuring 20L4:
--t'_,.l-

- -

"--'

_-- *

"1--

-__-'-

^__"--l

l{Ji i Project 202

--1i.,,_rl,irm - I-lqgqq ._.'l
a;;t;Tp'i.. " _
_l
T-zoopoO
700,000
Cost inculrqg_{grI:99_
incurred during iu
I -,:OC,i'1,
_
__l
-l r _ i:o_c_,-i;0
Estimated
sti nlgle c! ce:Llo
t0OJt)C
cgg!!o_c_omg!gtg_
qgl"n!lg!g__
l75r0g0_
625,L'00
lgLl ji _ f?s,cot
725,OOO _
uring 20L4_L
I _gs
_coftlgq biLlIEtaglA?o_ll
----l

, Proiect

_E

6ii".tions
Expelses

__-___

L 600,000 :

J-J

_.r:1,,I

i __

700,000

___4,090

____-,

lncome.

-*

D.
C.

D.

::i'

,,

t su,r.

".* "" ,-.-;;il*;l

__ tl

Zero-Profit
A.

-.:

;;l-";;

net rncome

P(150,000)
P(150,000)
P(100,000)
P(200,000)

Percentage of Completir"rn
P750,C00

P600,roc
P675,00U

P603.000

Pnoarcrq g,
Psalms sold fast food restaurant franchise to []eter. The lale aBreernent, sigrlsil cn January, 1,,2A13,
calied foi'a P30,000 down payntent plus r:,-ln-;nitrr:st i:errin;-l ircie fr:r the halance rryhich it P20,000
payable in tr,vt rr,u6l 1,1y-..-,rl pa',.,rr.e ,lrs, ;ri.rr;5-,.",' tq {l-ie: liue;f rnitial fr tr chise sE.-vi:es rendered by
Psalms. in atldttion, the agreslntenl i-equii"..d ii"e franclrs;- fo .:r;y fil,e c.i'a nr ,;f it grtir revenues to
Ihe franchisor, this was deemed sl'fficicnt to co\,er tl.t i:os:. '- rti ii..rr/:d.ii r-c:t;;r,-,.:,hle ;.ictrt rnargin on
coirtinuing franchise services lr i.re pe.tr::r^,;e,d b)r Fsairt.. [,:r'iits, ilcrt.i ej ::ir.l:i cr-,si ci P2f],C00 in
providing the initiai services. The restar-,i'.,nt coeija,i ln ihe lir:' nicnih cl th+ i.r,.toili"l {juartei'of 2013,
and its sales amounted to P500,000 each y;.,ar for \it iti.si i,,yr;'y'i..-r'r,
.

Assuming a 1O% interest rate is appropriats and the coi!ectai.'ilrii i,i'he rr;te i:
(the PV of annuity of P1 at 1,A%far 2 periods it I 7:155) t-tse tl,,-,o r-,e .',i.,ill , lrct:.

D,

r'e6sortably assured.

------t

l;h; totai :-errenue ri'r 201.4 is

A
3.
c.

rrlt

P7.+,09A

P31,161
P31,510
P35,000

PSpALEMJz.
TtviCSSIY lnc. opened an agency ir, Marikina. Tlre f;iilowir.rg are lr.1nsac,:ior":i fcl,-Jiir7 2013. Sanrples worth
P10,C100, advertising materials of P5,000 and ch,:cks for 75C,Lt0i \r/ere s(rnt tc the ag,enc\/, Agencr/ sales
amounted to P22-0,000 (cost P150.000). The colte,.t;a,t f;;,'a.4zn:...rrnouni3C t( i11,7b,10A net of 2%
discourit,-ih: agency's worl<rng fur,C v,ras repieiri:i.ac 1tc,r r.-; : fllio,t,i;.,-r pxp(.'tse) rrc, rr-erl; i"enr for two
months P10,000; delivery experises P2.,s00 anc nrislel:arreDu.; rrv.i)ensr j c,1'Fr,ili-,i-' Hcme office clrarges
the following to the agency, after .rnalysis of ar.coLrnts :'elcr{jr:.,,i ,tr; ii:e boiri<s ii,r the month of July;
salaries and wages P15,000 ancl conrrqi:;sir:n which is 5a/, ci' s,:ies. ilrE cqtn('/ sanple iriventr:ry at the
end of the month was 25% nf the quaniity shi;,pe,i The at:;':ci i131, 115gr! i.Ooto of tire aclvertising
rnaterials sent by the home office.

lhe agency
net incorne
It__..
_:-_- _- t_ .._=--*

1'or

the rnonth of Julv is.

A. P1"7,4AA
B. P22,40C
c. P23,650
D.

Pno\rcm

P28,650

tt

on instalnrent basis, On iiugust 15.,.-01!, a J1o,,.:/ j,,,L' ,^r;r.; soli.i to r'rlary Rose with a list
price P275,000. CTV gave its customers aZOg'c r',arjr- disccunt i..,s,;le:; Tne Lil,i.ic)t was P165,000. lt
granted Mary Rose an aiiowance of P85,000 for her olci D\rD;):j :ri.'i ir:, iire cL;t'rrrtl ,.,aiue of which was
estimated to be P81,7C0. The balance was pavabie rs fciic',vs'-',-:{.,,..,rr} payi-r-ir,-i . ci p35,000 and the
balance to be paicl in 20 monthly instalment stat'ti,rg !er:tr rl,e. 1 li.t1 ::. ON I'.:r"rl i,201,4, Mary Rose
defaulti:d paYmerit of I'vlar-cil L,2A''4 inslali'ncni,'I'ie r:*w t, r \,r<r., rr. l'i5,::d. ir,: v iirc to the seller is
P40,000 (use two decinralpiace:; for the gross trrr'fit 5ie.c1r -c,li:
CTV sells DVD

LG total realized gross profit on ir:sialmerri sales irr 2i,i1,4 i:,.

A. P 2,386
B. P32,617
c. PL3,123
D. P37,gg9

Pnoamu

p.

tram Co. uses a predetermined overhead rate based on direct labor-hours to apply manufacturijn8
overhead to jobs. For the month of October, lram's estimated manufacturing overhead cost v!as
P300,000 based on an estimated activity leveiof 100,000 direct labor-hours. Actualoverhead amount,ed
to P325,000 with actual direct labor-hours totaling, 11il,0UC for the month.
l
I

-n" PZSPOO ouerippr,uO

B. P25,000underapplied
C. P5,000 overapplied
D. P5,000 underapplied
PApELgtv'l_!_3,

At the beginning of June, Marie Manufactu"ing Company had a P320 balance in its Work in Process
inventory account. At the end of June, Marir.'s Wcrk in Pl'c;cess inventory account had a balance of P970.
During June, Marie made the following journal entries:
Flnished Goods

6,160
6,1 60

Work in Process
Cost of Goods Sold

5,830
s,83u

Finished Goods

, What is Marie's cost of goocis

A.
B.
c.
D.

rnanUfaCtUi-g6l

l;r

.'r1i-,,

-l

t;

P5,180
P5,510
P6,160
P6,480

Pnoercm tdURBANDLIB manufactures lifting equipment. One order from OX Co, for 3.000 lifting equipment shor,t'ed
the foliowing costs per urrit: Maierials P3.5; Lahor P2; and FOi-l applied at 150% of direct labor cost

ant defective unit costs are to be charged io specific orderor a25% allowance
for reworking defective units). Final ins;reiiicn shcil^;ecj that 250 units were not properly produced'
Correction of each defective unit requires i:r.35 flr r;';.rterials, P.40 for Labor and FOH at the appropriate
11.2r')t in cases in which

rate.
Assuming the defective units are the result
nranufactured?

of int.:rnal failure how much is the unit cost for each u,nit '
i
I

A. P8
B. P8.61
c. P8.10
D.

P8.50

PnaBrcut rc.
The following information is availabie for i l pd lll i'r'n;;c,r rrrn Corporatio n for the cu rrent mo nth:

Started this month

Beginning WIP

(3/5 incomplete)
Tr:tai spr",!age
Abriormal sooilage

Inding WIP
(30% to be donei
'l'ransferred
out

tc,000

units

7,5CC

units
u ir its

2.000
!lOtr

Material

5l

it s

units

77,300

units

Beginning Work in Process Costs;

Conversion

i.; i.:

l)

10,,i00
13,800

Current Costs:

Material
Conversion

P 1.20,000

350'ooo

All materials are added at the start of production and the inspection point is at the end of the process.
(use four decimal places)

I Uo* much is the total product cost as accounted using tlre rnore accurate method representing the
flow of units?
Ilt ohvsical
I
_-1___.._.
l

A. P488,942
B. P494,200

c.

P423,497

D.

P429,924

Pnosrcw rc,
Housemartins Corporation has the following inforrnaticn for the current month:
Units started
Beginning Work in Process: (65% to

Ie

Totalspoilage

done

Spoilage within tolerance level

Ending Work in Process: (30% incomplete)

Transferredout

:-0o,o0c
?C,ili-;0
8,-r.C0
3,500
14.500
?

'.Jniis
t"'nits
Linits

units
units
units

Beginning Work in Process Costs:

Material
Conversion

Pi5,O00
10,0C0

All materials are added at the start of the production prccess, Housemartins Corporation inspects goods
at 75 percent completion as to conversion.
I

of prcduction for conve;'siorr r-osi, ullng the rneiitod that does not comnringle
I tne beginning ancl current period produclicn activity,r
=--=---f
A. rtl6^srs

Wt'.rat are equivalent units

B.
c.
D.

96,s00
95,000
120,000

PnoatrM

fi.

The following information is available forJames Taylor Corporation for the current year:

Process
donei 14,500 units
Started
75,000 units
Ending Work in Process
(2/5 incomplete) L6 000 units
Spoilage beyond
expectation
tl3 units
Total
spoilage
(continuous)
? units
Transferred out
66,000 units
Beginning Work in

Cgsts of Beginnin3 Vy'ork in Process:

llaterial
Conrrersion

(1/4 to be

is

Material
Conversion
i
;

the cost assigned torrormal sp_oitugg u_11g_ylglFl qlryE:?

A. P31,000
B. P15,500
c. P30,850
D,

None of the responses are correct

5i,),0ti0

Currcni Costs:

All materials are added at the start of production

I What

P :5,L0cl

P1:10,000

3i;,),00{}

Pnoawtq

$.

The BRIANTOPOT Manufacturing company uses the N4lP (Llaterials and ln-Process) lnventory accountl

At the end of each month, all inventories are counted, their conversion costs components
estimated, and inventory account balances are adjusted accordingly. Raw materials is backflushed
MIP account to Finished goods account. The foliawing Cata is for the monthJANUARY:
MIP account, February

arq

fro(
I

?25,1.40

2,BBO

Ccnvelsion cost debited for rrariorrs accounts

Dei:iceC to MtP account this r;rontl-'

408,000
3.180

Conversii:n cost applied

23,220

MIP account, December 3L

,l

i Tho
rmnrrnt nf
:rrrl rnnrrerqlnn
be hacl
io he
backflushed
co:i: ta
materials arrd
conversion cn.-ii
The amount
of r{irort
direct m:fari:lc

lare, _
A. P409,920 and P2,880

--______.1

B. P406,080 and P3,180

C. P406,080 and P2,880
D. P409,920 and P3,180

FnaercM rc.
Script Company manufactures three products irr a joint process which costs P25,000. Each product can
be sold at split-off or processed further and then scld. 1.0,C00 units of each product are manufactured,
The following information is available fcr the three prorjucts:
Separable Processing,

-cs-g!:-oller-s-p!ii:x

Sales Value

::912
it_To maximize profits, which products

should

Scr

ipt nrr;cess further?

A. Product ABC only

3. Product NOP only
C. Froduct TUV only
D.

Ali Products
I

Pnoercrw zo.
Greyhoundz Company manufactures products XC and YE frorn a joint process that also yierAs ujproduct, ZU. Revenue from sales of ZU is ireated as a reCirctioircf joint costs. Additional informatioh
were as follows:

Products
XO

l-lrrits produced

Joint costs
5aies value at
split-rl f

YE

-ijt

Tota

90,000

90,000

4s.000

P1,,1,7 -a,oao

P57:,000

P45,1100

P2,070,000

F'..J50,0ci

7-25,OAO

loint costs were allocated using the sales vai:r at spiit-off approach

]T re joint

costs allocated

L.
c.

P453,600

D.

P756,000

P675,000

to product

YE

were

-l

Pnoeteu zt.
Moonpools Corporation's standard wage rate is P1,2.2a perldirect lahor-hour (Dt-H) and according ,o ,f u
standards, each unit of outpqt requires 3.9 DLHs. ln April,ils,ZOO rrnits were produced, the actual wafe
rate was P12.10 per DLH, and the actual hours were

24,150;DLHs

B.

tl.

D.

')l

credit of P2,41,5
debit oi P2,czg
debit of P2,41,5

Pnostrfi/t zz.
Warp Manufacturing Corporation uses a standard coe: system tr: collect ccsts reiated to the production
of its ski lift chairs. Warp uses machine hours as an overhead base. i-he variabie overhead standards for
each chair are 1'.2 machine hours at a standard cost of pLg per hor-rr.
During the month of September, Warp incurred 34,A{)0 r'tec.r;ne hours in the proCuction of 32,000 ski
lift chairs. The totalvariable overheacJ cost v,,,as ?ier,4{,A

ilVlglf:

Warp's variable overhead s6,en,jing ;ariance for the rnonth of September?

,C. P37,400 unfavorable
B, P41,800 favorable
C. P79,200 favorable
D. P84,04Afavorable

__.1

Pnosrcrw zE.
Parrish Company uses activity-basec costinE. The,:rrnpany proclr.ii:e:, tirc p1-11,.,.is: lpods and Mp3
players,-rhe artnual pro:luctrcrt alc sales vr.rlure c' Irlas:s B,iOL ii rts a,,r o|Mp: plaver,s is
6,000
units. There are three activi'iy,c,rst co;ls witl-; the f -llicy;ing e..[,,:c:ed criviti:s rntj estirnaterJ total costs:
i

Activity

Estimated

Cost Pool

Cost

Activity
Activity

P20,000
P37,000

activity

!xpected cciir,'ii).,

Irpe:ted /ti:iivity

lPods

MP3 players

pg1,,ZOO

i 0i)

400

B(10

2UO

E00

3,000

Ir;;il;.;i(1*"t per unrt of MP3 niayers E :!Sl91I!2:!-_-A.

B.
c.

P 3.90
P 6.60

D.

P10.59

P15.90

- _----__--l

Pnoarcrw za.
The Home office,shipped merchandise ccsting p47.ti)C ll Llriiririr r.\,_r,rit
,:ajd for" the freight charged of
P7,500' Branch A was subsequently inst;'ucted to tran;fci thc: nie;
-irar.rjise to Branch B wherein Branch
A paid P6,000 freight. lf the shirment was made rlii-eq.tlV fr,:ni i-.jsrpg rffi69
to i:]ranch B, the freight cost
woulci ha,ie be,:n p11,250.

Which of the following is incorrect?

bt

fr"rr-t B;*;rd[;;,i,ii;..;,;.,unri i,i p;r-,*i

Upon transfer of"*;ch;-rJir"

merchandise by A
P59,350

C.

Upon transfer of merchandise by home office ro A, h,jr,-..e fi',cr dehits in,restment in branch
A
account by P54,600
Upon transfer of rnerchandise by A to B, A Cehir.: hcmc ofi'it ,ai..r:oJnts by p5g,600

D.

8l

unon rec.ipt of

B'

to

B, home olfice

;j'i,ils
<

.:-;,.,,.,:;iirrell in Dranch A account by

Paoattrvt zs.

a branch in Pampanga. Selected account balances taken from thp

books of the Home office and its branch as of Decernber 31, 2014 were as follows:

SPIDERMAN Corporation maintains

Home Office
P1.Zfi{l,i:f :

Sales
lnventory, January

L,2015

Purchases
Shipments to branch
Shipments from Home Office
lnventory, December 31,,2A33
Expenses

8C,C00

branch
P540,000
L22,1AA

Pampanga

5C0,0C0

315.tj00
346,500
157,500

350,000
113,000

89,00C

ln 20L3, the Home office billed its branch.it 12C96 of ccst which was higher by 5% than the previous
year. All of the units in the beginning invent.:ry cri l ;e irranch were acquirec from the home office in
201,3.

tr:U-eltrerl.-,a]:!_letrreq:rryrs;elg!:lyAlle'erl{e!ryr=rf rf f r913gt]-_-]
A.

P732,793
P747,750
P743,750
P738,500

B.

. c.

D.

Pnoercnrt zo.
The following were founcl in your examination of the interpiant accounts between the Home Office and
the lronman Branch:

Transferof fixedassetsfromHomeOfficearnc'rnti,tgtoP53,960wasnotbookedbythelronman

'Pl0,000coveringmarketingexpenseof irrotherhr,ancnwaschargedbyHomeOfficetolronman.
, lronman recorded a debit note on inventory transfers fronn Home Office of P75,000 twice'
n Home Office recorded cash transfer of P6,5,7110 frir:n lrcnman Branch as coming from THOR Branch
. lronman reversed a previous de bit memo frorn l-li-rLK ii'anch arrounting to P10,500. Home Office

decided that this charge is appr"opriately THOR Branch's cost

. ironman recorded a debit memc from Ho.r:e Oifit': of P4,650 as P'1,560'

r-

adjustment in lronrnan
,L lfl.
'_l:ln*t
l:' ldebit)/credit
':-"1:/l:l:_"1: ""r"":l:'-'ll '1' l'" l:

A
d.

, bc,okt reiated tc tne Home Office account

is:

_j

P2-0,950 net irr.:..:as.

c.
D.

P31,450 net decrease

P(20,950)
P31,450 net credit
I

I
I

Utosteur zzi*-r_hg g.n1'v

rotg!lq*igl of_:l,aTp'-li.90,9irl

I!,r.1e11i1y,enl 9f

qg.!_g[y.3_!t,

l-r

]--]
I

A, Stamps
Cash- NT, MDS

B.

Stamps expense
Cash

C.

Memo entry

D.

Petty Cash fund

- NT. MDS

RAOMO

Cash

- NT, MDS

Pnoari/t

za,

't

Agency XOX issued a bill for rent of office space to VOP Holdings, Pzt0C,00C" Tlre agency is authorlzed .is
per special provision to use recleipts from rentals for their operation-c.
1:
I

] The entry on the Agency books to record the fci"egoing tran

A.

Memo entry

B.

400,000
Accounts Receivable
Subsidy lncome from Nationai Gov,.:rnment

C.

Accounts Receivable

4OL],GCC

400,000
4C0 C00

Rent income

D.

cticns,v,,cuici be:

Cash Collecting Officer

400,000
400.00c

Rent lncorne

Pnogrtvl zg.
i,625,(\00;f caf^terii i nd coffeq shop revenues
and spent P125,000 on medicai equi,lment Curing the i,ral eil('3d l.\ecerrtbei 3l, 20:3. The P125,000
spent on equipment was part of a F1.87,500 contribution recei',,t:r, clurinB Deceiriber at 2012 from a
doctor who stipulaieci that the donation be used for rredir:al equit-,nre,'.. {ssume none of the cafeteria
icARE Hospital, a private not-for prorit hospital, earn,:d

and coffee shop revenues were spent in 2013.

i --..---

I For the year ended December 31, 2013, what

I events occurring during 201"3?

'" ,,;."-r"t,,d ;;.t ;;;

it", th;l
:-l

A. P7s0,000
B. P500,000

c.

D.

P62s,000
P687,500

n.
l";;;"r,r

Pnoerca
I

h,

;;

;; iversity, the governmett grant firnci: 1o tne uni'versity clirectly intended for

students' activity fund is an example of

D, A restricted

contribution
l

PnoaffM Et.
MAX Company is in bankruptcy and is being liquidaied.-Ihc t:usiee ii::; converiecl ali assets into
P1.20,000 cash and has prepared the foJlowing list of approveci r.li:i,ns.

*
*
*
*
*

10

Customer deposits (P1,000 from each of trvo customers thnt

ordered products that were never delivered)
Property taxes payable
Accounts payable, unsecured
Trustee's fees and other costs of liquidation
Mortgage payable, secured by property that w'as sckj r'or ;80,11rJfu,
Note payable to bank, secured by all accou:-rtr: r:Leivalle ifa6,6;1,,91 cl'which
P30,000 were collected and P10,000 were
',ririiten off as u;'icolle c[ibre

I
I

A. A bequest
B. An agency transaction
C. Urrrestricted revenLle

P 2,000
4,000
30,000
16,000
60,000
40,000

-t

How much will the bank receive on the note payable?

rl

A. P30,000
B. P32,500

c.

P32,000

D.

P40,000

PnoaEM gz.
The following are the data before liquidating of XXX Corporation:

Cash

P 25,000

hort term investmen!

i Accounts Receivable

Accounts Payable

j
Capital stock

75,AOq

Deficit

150,000

P325,000

zso,ooo
{75,000)

lnventory

ro!ql*q:rq!:_

P500,00J

P500,000

i ]ptel

Transactions during liquidation that did not in',olve cash were as follows:
Sales of merchandise on account
P25,000
Purchase of merchandise on accouni
7,500
Cash receipts and disbursements
Cash Receipts:
Sale of merchandise

P125,000
57,500
92,500

Collections of accounts receivable

Sale of marketable securities

lnterest on short term investrnent

75t'

Cash disbursernent:

Payment of accounts payable

Payment of expenses of trustee

P175,000
37,500

At the end of the year, assets remaining to be :'ealized and liabilities to be liquidated were as follows:

Add: Sales on account

Less; Collection on account
Balance Cetermine to be uncollectible
Accounts Receivable end

s7,500
_

ii,.qg-

P110,000

Glo-,9c'g
7,500

$1E-qq

Ml end

l_aq!.?q!

Ag.gUts _layable beg

P-1?:r,o-oo

Add: Purchases on account

Less: Payment on account

_ J,!_!Q

Lfhu_19j

A.
B.

C.
D.

l,-Zffq

balance

Jg|n i1rrga I ization

P15,000 gain
P61,000 loss
P36,000loss
PL0,000 loss

lo::{

175,00C

_4q!qllrts!ryelgg1!
Accrued expenses ending

_ _i

nct Iiq u ictation

*__l

On .iulv 1,,2OL3,XtianV inc. acquired most of the cut;tarrdlng oi-clinai'y sl,ares of RnalclV Cornpany for
cash, The incomplete working paper elirnination eirtr;e, ,,nl tii., rJate for the con-soliCated starernent of
financial position of XtianV lnc. and its sribsiciiary are snown, belo,rr;
E(1) Stockholders' equity

ar/v,*7(vtvvvnnn

- nnaltAV Co.

lnvestment in RnaldV Co
Non-controlling interest
E(2)

Machinery
La

i
I
i

ll

i25,000
.,? ri or

nd

Copyright

l -- .' r,rt-r
1

Goodwill

3,168,750
1,,7'J5,25i

1f.}

.,
i

)).7 c,..

lnvestment in RnaldV Cc
Non-controlling intcrest

Assurning non-controlling interest is measurecl at f,r

i,.r;ue , ancJ ll^r* nrice oaid incluCes

l"

contral premium

of P137,500.
i'-'-'--..'

I ln the working paper prepared on the date of acquisiticn, what pcrtion cf the
l"'
L_!a

go,:r-rr,r,ii, is

ailribr-rtable

to

lejl :talglg!g!' eq ri ity?

A. P370,375
B.

c.
D.

P495,769
P643,945
P569,810

WoaLEMtg"

NOEL CABANGOI\ Corp owns 75% of the stock of x Cari ana 6'J% of v, Coro. During 2014, NOEL
CABANGON sold inventories purchased from outsi,ler all e-r:OO,OitO to .',. fcr p800,t100. X solcl the

inventcries to Y for P750,000. Prior tc.r Dec. 31, 2014. \'Cofp soid i'z15ur Cuc i;f 1l-,* rnr"ientories to a noh
affiiiate fc. P51,0,00C and held ine rerraining units at.)e:. ,{l t,-)lr,

i,l

-. ------.-wt*t.r.*t
--.-------i- in thu;-*rber
rLr"i,fier,:p";!E
A. pioofioo

J1,

---- ----------,,11+llr*-rcrr*
1,,.,-""",-,r"r.,,1

',

B P300,000 i
c. P200,000 I
D.

__---l
' '
.l

tl

P150,000

Pnosrcffi gs.
Boy macho will issue 50,000 of its P5 par value cornrnon siiares for ihe r,.t asscts of Boy boclyfit.
bodyfit's triai balance at the date of acquisitiorr shows rle foilo'.r;r",r,

i-!_gr-191!agsets
iI PPt
|,PL

jLiabilities
r-- - -i rQmmon stoc!, p5 par

rAPtc
itet_ained Earnings_

i pqzo,coc

Boy

qn,r--*.-.f----gg0,0i0
ri.ro
_--1

--- r

i
I

-"_,.+.-

111!!t!,0itc

I
|

t-Bl,,,,tl}
121.C(]1

l_ 11o,qor

Boy bodyfit's current assets are i:ppraiscd at p:j50,0r;i,;;i)r^ trie {,ri: V.,,t:, .ti:r'-,, .-l.rF., ii.-L'A al F'1,8CC,0C0.
{tS
liabilities are fairly vaiued. Accorriingly, Br:y rnacho issueii crrmriiLrn sha,'es'xiih totai irrarket value
equal
to Boy bodyfit's net assets including gcoclwill r:f p200,i0li,

What is the market value per share c,f :3,ry mar:ho t, icr-iri,lcr
combination?

A. P37
B, P22
C. P41
D.

P51

iiol"r x

,-1,"

,lrt"

"f brri**

-l

Pnoenfil,

Ea.

ofthe outstanding stock of B52's for P155,000 cash. The book value of B52's net assets
p200,000.
852's only over or undervalued assets was land that has a book value of P100,000 andr
is
current value of P170,000.
U2 acquired 60%

m* ,"fi1, th" goodwill (income from acqui.itioni to he reported in the consolidated statement o
LIyg.,.t qgISIl
A. P(6,000)
B, P10,000

c.

D.

P60,000
P(36,000)

P_roatrasz

TOM lnc., pAUL lnc. and CHRIS lnc. ai-e

r.,.) r^r|erB.

STATEMENT OF FINANCIAL POSITION immediately rrrior

Ordinary shares
Share premium
Retained earnings

rirr: stockholders'equity on their

respective

to combination show:

lnc.
300,000
70,000
4t,t,t0

lnc.
280,000

TGM

PAUL

CHRIS lnc.
P 580,000

14A,00C

{6c,000)

(90,rJ00i

As per appraisal, book values of PAUL's assets and liabilities approxirnal.e their fair iralues except for the

Land and Non-current liabilities, which is undervalued bv ?5C,000 and P10,000, respectively. CHRIS's
Equipment and Long-term debt is overvaluerl by i',i0,010 anC F130,00C, respectively. All other CHRIS's
assets and liabilities equal to their fair values.

was agreed that TOM shall issue its own shares of :,,tocks to PAUL and CHRIS. % of the total stocks
issued shall be ieceived by PAUL and the remaining, r,vill be given to CHRIS. TOM incurred P2,000 and
P8,000 related costs with PAUL's and CHRIS's brrsiness: respectively. lmnrediateiy after the combination,
TOM has ordinary shares balance of P1,100,00'1. l-O\4'i P1013 par ordinary shares has a market value of

it

150.

l=Ho* n, .n ;.o..,ut.io*.t*r"i", retainecl :arnings must be reporied in the separate hooks

I acquirer company?
A. P1,30,000

"*l

__J

B. P90,000

c.

P(20,000)

D. P(60,000)

Pnosatv,

gs.

On January 1", 2A13, RODFER Company pt-rrchased BA% of REDFORD Corporation's P10 pat commonl
stock for P2,437,5AA, On this date, the carrying value cf REDFORD's net assets was P2,500,000. The fairl
value of REDFORD's identifiabie assets and liabiliiies vrere the same as their book values except for plan!
assets (12 years original useful life), purchased on December 31, 2010, which were P250,000 in excess ol
the carrying amount. For the year ended Decernber 3L,2A13, REDFORD's net income amount t9
P475,000 and paid cash dividends to RCDFER in the amount of P250,000

ln the December 31, 2013 consolidated statement of financial position, non-cont

be reported at:
A.
Ei,

C.

D,

P704,375
P699,375
F636,87s
P64L,875

*rT::gl

Pnoertvt Eg.
GMAN ov,tns 70%

turn, owns
DJSUS Cornpany's oulstanding o.dinF|Y shai'es' DISUS, in
5010 ii-otn its own
investment in SyLIM Corporation. During 201-3, GMAN urtned a nct ii'lcorne of P320
of affiliates, if any'
operations while DJSUS suffered.la loss of P60,000 excluding itl share in the earning:;
20%

of

its accumulated
syLlM reported a net incom. of p+3,s00. DJSUS cleclarerj citvirlencs cf Pi5,l00 iionr
profits in previous years.
_------

--*-L---

protit for tne year 20L3

col)solidated :IL Tne -._._
A.

P284,690

B,

P267,1.90

C.

P'251,140

D.

P269,300

PnostrM

____l

is:

ao.

2014, when
COLDpLAy Corporation acquireci a 7C% irter"est in ,lhrstlerj Clrpora;.io r on J'rnuary i,
j-DPLAY :olu merchandiss that cost
Whistle's hook values were equal tc their fair values. Dr"rring ::01,1, aO
P75,000 lo \/Vhistle for P110,(i00' Oe Decembei- 31, 2CLd', scvenirr five percent of the merclrandise

(investment income not

acquii.ed from COLDpLAy remained in Whistle's inventory. Separate inlt:ines
included) of COLDPLAY and \.Vhistie are as follours:
\\'hist

COIDPLAY

1s0,000
90,0c1

Sales Revenue
Cost of Goods Sold
Operating Expenses

li)c.:iri
/C ,lfll

-_
I ilr,Cra,0
P -.i:.-qoi

12,?0'J_*
48,000

Separate incomes

je

;Y il;'';i*l*-';''r
I Decembe;

31,20L4 wili show consoliiat:d cost of sales

B.

D.

P133,7s0
P160,000

c.

lfl

i,t,'''di*\' i"; ;h"

--

76,250

Pnosrcrfl +t.

tltrare vrri5 0Il r-lpstreaitt Sale

prn,:ni
is P1,260,000 and has a
lil;.. rr,1J

Guerrero Corp. owns 65% of Peoro Corpr ordinary sirares t): Jr-rlr:

of an equipment for

P1",080,000. The carryirtg a;:rcrrrt'1 r)i

L )-i:,

remaining life of 8 years.

How much

is

th"

*t.ff".t * th" p;tirffii|"

-..ir;.i.,:,'-,

, ,'t,. t"ibutaLle to non-controlling

inte rest?

I
I

A. P156,875 increase
B. P108,468.75decrease
C. P108,468.75increase
D.

P58,406.25 increase

Pnoatrrw qz.
The SG Company owns 95% of ihe outstandlng she ;'es of GX t,crirr-,1t, 0rr December 3l-, 2013, there
-l-''
I isler eriginally cost P2,880,000
was an upstream sale of a depreciable fixed asset fol'Pi,,i3i] Cii-.
i.t
;ks ;f tl..: :eliing affiliate was
ti.'l
per-iod
ainolint'rr
its ca:'ryinE
and at the end of the reporting
P1,050,000. The gi'oup's consolidated statement of fina:rcial i:ositicti nas been drafted without anY
adjustments in relation to this non-current assel,
l--'*---

I Wf1at adju:tmenis shguici be rr;,Ce

i
L

^,,..^,.n
ql
f:.1

A.
B.
C.
D.

-..^+.
f :se-t

.^r.;^^.t
.,..1
r1{ieigl1.e

_a

nrrai,rnr-)
e r
?

_s

tcr

tite cons..,ricrale'l si:itei.r nt

;f

:,'a

ini

Non-current assets

Retai ;reri

lncrease by P1,500,000
Reduce by P330,000
Reduce by P330,000
lncrease by P1,500,000

lncrea:;e by P1,42'i,0ilC
Reciuce !:v l"il30,0Ct
Reduce by P31.1,5CCt
lncrease gr,r pl lf,Q iji :.r

e,a

rrg-c

iil-r' rl.1r' prs:tion r;gures

for non-

Paosteii

az.

On March i,201.3 entities A and B each acqu,red 30 percent of the ordinary shares that carry voting
rights at a general meeting of shareholders of entity Zfor P575,000. Entities A and B immediately agreedl
to share control o',rer entity Z. An December 31, 2013 entity Z declared a dividend of P175,000 for the
year 2012. Entity Z repcrrted a profit of P140,000 for the year ended December 31, 201"3, On Decembe(
3L, 2A13 the recoverable amount of investrnent is P507,500, Costs to sell is P5,250. There is no
published price quotation for entity Z,

ylglg lt SlgllgyIqJt.t"Igu:'' lqlil_ __

A.

The effect in income

to be reported in profit and

ioss by entity B using the equity model

is

P35,000
The effect in income

B.
to be reported in profit and loss [:r,,entity B using the cost modelis P35,000
C. The investment in entity Z at the end of 20.l"3 is P507,500 using the cost and the fair value model
D. The effect in income to be reported in profit and loss by entity B using the fair value modei is
P40,250

PnoarcM aq.
On January L,2013 entities X and Y each acquired 25 percent of the ordinary shares that carry voting
rights at a general meetin! of shareholders of entity C for P5,250,000. Entities X and Y immediately
agreed to share control over entity C. For the !ear L"nded December 3L, 2013 entity C recognized a
profit of P7,000,000. On December 30,2013 entity C cleciared and paid a dividend of ?2,625,0A0 for the
year 2012. On December" 31, 2013 the fair value of each venturers' investment in entity C is P7 ,437 ,5OO'
However, there is a published price quotation ior entity C.
Assuming Entity X uses the cost model
I investment in December 31, 2013?

to "icccunt for its investment in entity C, how much

is

rr"l

A. P5,250,000
B. P7,350,000
c. P7 ,437,500
D.

P6,562,500

Pnoaurvt qs.
On October 1-, ?A\3, Davao Philippines ti;cx cJelivei"y +rom Ohio, USA firm of inventory costing
S1,425,000. Payment is due on January 30,2A1.4. Concurrently, Davao Philippines paid an amount of
cash to acquire an at-the-nroney calloption for tlre $-1,i2; t00.
. The option premium paid is P19,625
' The spot price at the inception date is ?44.40
. The spot price at the balance sheet date is P44.423
. The effective portion of the option contract on January 3A,2A14 amount to P38,475
' The gain on the derivative instrument on January 30, 20L4 using non-split accounting amount to
P3,225.

;l

The foreign exchange gainl(loss) on hedging instrument due to change in the ,"ff".W" p"ttb"
December Jl,, 2013 ; The foreign exchange gain/(loss) on hedging instrument due to change in the

| gfg.l,u"

A.
B.

C.
D.

porirg-1_91p_9c9mbe-r

31,l0

a1

r__l

P17,150; P5,700
P17,150; P(5,700)
P(17,150); P5,700
P(17,150) : P3,225

Pnoattrq

aa..

On August 1, Cebu Company forecasted the purchase of 20,000 units of Inventory from Arkansas, US,t\
Company. The purchase would probablyoccui on November2 anri requirethe payment of 5780,000. I't
is anticipated that the inventory could be further processed and delivered to customers by early
December. On August 1, the company purchased a call option to buy $780,000 at a strike price P40.9$.
An option premium of P2,950 was paid. Changes in the value of the option will be exclucJed from thp
assessment of hedge effectiveness. Spot rate at the inception date is P40.93; on August 31, P40.9521;
September 30, P40.963 and on November 2,P4a.97. The fairvalue of the option contract on August 3["
amount to P5,230 arrd on September 3A,P1.1",470
I

lq

On November 2, Cebu Company purchased 20,000 units cf

was settled/sold on November 2 at its fair value' After !nc
inventory was sold for P32.66 M on December 7'

entory at a ccst of 5792,000. The oPt

{u;iher processing costs of P80,000,

i
l

The foreign

exchange

gain/loss

on oPtion

contratt

1on

(increase/decrease) other comprehensive income; Wnalii!s

September 30

the net

income

that

wouldr affe

effect of the

transactions?

A. P10,140 ; PL44,414
B. P8,580 ', P1.47,360
C.
D.

P10,140 ; Pt47 ,364

P8,580 : PL44,41A

Pnoanrw qt,

i
I
I

in New Zealand
The following are taken frorn the recor:ls of Eiite lmports Co:'nran" , a ;creigr-risu)si'."liary
l';Z dio!iar

Total Assets
Total Liabilities

14o;000
45;000
50,000
29,000

12131,113

Lu31./t:3
1.213L/1.3

Cornmon Stock
Retained Earnings
Net lncome
Dividends Declared

01/a1./1.3
2013

I5,0C0
3,000

t2/3111.3

Exchange rates:

Current rate
Historical rate
Weighted Average

P10

11.
lZ

Rate

i
I

The peso balance of retained earnings cn Decembe r

3t,7Orl

is P325,00c.

rl

lWnutamountof CumuiativeTiansiationA.itrrstmcnlisili:qireportedinrlieCons'rlicJatedStatement
on Decemb4r 31, 291:1
] rygl
?_1tron
- r,r-

A. pizz,ooo oeuit
B. P1"19,000 credit
C, P125,000 debit
D.

- -

P1"25,000 credit

Pnoatrrw ea.
Uragon Company sold warehouse facilities for $8.340,0C0 to a customer in Oregcin, USA on November
A2,20L3.Collection in US dollars was Jue on janr..rary 31",2074. On ttre sarne date, to hedge this foreign
currency exposure, Uragon Company erriered into a futu,'es t:ori,-:,i r , seil $8,340,000 to Export bank
for delivery on January 3L,2A1,4.lnciii'ect exchange raies oridifferen; iaie: ''"'ere as follo'rvs:
Nov. 2
.02387

Spot rate
30-day futures
60-day futures
90-day futures

.42354
.02392
.c?-463

11
i)?41,-;

Dec.

.0'2415
.02^81.

.a2403

Jan.31
.a2494
.a2278
.a?437
.c23C4

on u.rningr Jru to hecr;eri lt.:rrr irr the necernber 31-, 2013 profit and loss
statement?; How rnuch is the effect on earnings iue io neCging insr.runierit inr tlre 2014 profit and loss

Ho* *uir.r ii ir.,"

.it".i

state ment?

A. P(10,008,000) ; P2,502,000
B. P(5,838) ; P1,585
C, P10,008,000; P(2,502,000)
D.

Ps,838; P(1,s8s)

Pnoeterfi

dg.

Barako Company acquired a heavy equipment for $14,iurtt from a suppiier in Detroit, USA on Decembrer
1, 2013. Payment in US dollars was due on Marcn 31", ZO+4. On the same date, to hedge this foreiln
l

currency exposure, Barako entered into a futures contllct to purchase S14,100 from Citibank {or
delivery on March 3t,201-4. pirect exchange rates for dolll'rs on different dates were as follows:
Spot

Bid
4L.6
/i2.\
43.4

December t,20L3
December 3L,2013

Rates

March 3L,2AL4

Offer
4!,.4
421:.1

ll

tl,l
l
.

i:orwarci Rates

31,
-11.8
42.2
42.5
42.3

1
42.3
4L.8
40.6
42.2

Dec.

Dec.

30-day futures
60-day futures
90-day futures
120-day futures

whrt ir th"

*prrt"d;lr.

Marcn 31
43.2
42.6
43.4

42

a;;it..i..- z;t:,t' , !^;t.t

th. li;u-i[tv t" ir,.
"";;;t
"f
i:e'J5i r5l aliir ity:'
resuit
of
this
incorne in 201-] as a

lvvlldl'I)tlltrltrPL,lttruvclluctJ,LllElloUll!tyLUL!:UvglluL.}c]|L'!.:i-'!i

rmpact in Barako Company's

** *;Jl
I

A. P595,430 ; P8,460 net gain

B. P599,250 ; P8,46O net loss
C. P595,430 ; P8,46O net loss
D, P599,250 ; P8,460 net gain

Pnoaarvt

so.

BanksJ and K (the parties) agreed to combine their corporate, investrnent banking, asset managemenl
and service activities by establislring a separate v,,.hi:ie (Bar k Q) [3oth parties expect the ai'rangemenlt
to benefit them in different rlvays. (IFRS 11)
I

I
I

The assets and liabilities helb in Bank Q are th. as:Llrs and liabiiiries cf 3:rnk Q and not the assets qnd
liabllities of the parties. Sbnks J and K each have a 4O?, cr.vnership interest ln Bank Q, with the
remaining 2A%beinglisted Jnrl wi,jely hejci. T re'locl(ho'rtrrs'at-e.:nert b.etrnreen iank J and Bank K
establishes a joint controlof
actr;ities of Bank Q.
I

lthe

Transactions for year 2013:

lnvestments: Bank

Bank

Revenues
Cost and Expenses
Dividends paid * Bank Q

P6,250,000
P6,250,000
Pl-,250,000
P 750,000

P-

t What is the interest of Bank J in the joint arrangemer;i at DecentLre, :

l,

?C1,3?

A" P6,250,000

B
c.

D.

P6,450,000
P6,050,000
P5,000,000
-End of Examination-

CHRISTOPHER

GERMAN

*J

TOMAS SIY X RODIEL

Goodluck ond Godbless Batch 74

lll

PAUi. AN lr-iONY l)E

FERRER

jEStrS *

and Prr:nu P. Surnnrno

BRIAN LtM

Manila
PRACTICAL .qCCOU NTI NG II

1.

FINAL PREBOARD SOLUTION

Chris

?aul

728,352

641,97 5

AR
Mr
oA
Total

(20,000)

(35 C0l.))

(5lr00)

lii

700)

Paul

O14.lr

(2,2q0)

i3

6Cui;

chris

hF,

0td

083,(j52

614,2'i5

IAL

TCT-

a,

I"

^','

',i2g
,21,7

bria:r

Brian

,{ il0/
.t\/
/0

648 664

34.388

A t\ol
+u
/o

648,664

(34,388)

80%

1,297 ,328

204/o

tctai

r,621,600

1,621,660

1/6 interest .}10,0C0 = 2,100,000 + ul share % 33, 075 - 7000

drawing-10,500SandCdrawing=?.,115,i75/Zll=TPC3,173,362.5x713=1",057,787.5capof

Capital o{ olr:j 2,52O,AAA

I cap: 420,C00 +

i share L1,42\'- 7,000 d;'atui;tg

424,O25 -- 1,A57 ,787.5 = additionaI investment

6J3,762.s0

3,

Answer C 1,496 C00 + (1-496,C;Ot,r'3)

(1.,496 0C0x3x2)= 14,960,000

';

4.8
5,A

Eq u

ities

Distribute

inveni.,-'ti',7

'.,

20%

lram

lvonne

79,0C0

8,(100

rn l lanl

Subtotal

P(

Eliminate PAul's cit.;ri

balance to lram &i'.'r;i-loC
Ba la

40%

Paul

140,000

L40,000
60,000
4,000
46,000

1.,,,trn and

recognize P20,0ii;l ilss

Possible losses

40%

92,900.
21,000

2i.001

nce

)(
)(
)P

8,000
92,000
40,000
(

14,000

26,0C0

)(

30,000
7,000
23,000

6,8
7C
Initial fte i00,00rJ + (600,000)5% = 140,000. lnterest iricorne is not included

LD
D,,I

2,10C,Ofrer

900,000

!2,qqr0q0_

6656665

750,000
% = 750,000 +

(150,ir]!) -600,000

Cost recoverY = P2 i', ::J,000) + expenses 50,00CP1'200,000 k:ss

150,000)

9,8

47,355

Adjusted lnst Sales (P\ of note 17,355 + 30,000)

20,000

Direct Cost

2],355

Gross Profit
GPR (27,355147 ,355) = 57.76%

Secondyear lnstallment payment

lnterest income

principal (9,090'50 x 57

76%J

909.0s
as-aaa
3L,159.72

Continuing revenue (500,000 x 5%)

Total
10.

s,2s0. 67

220,000

Sales

3,600

Sales Disc

1L76,400198% = 18O,AOA x2?6)

1s0ro99

COGS

65,400

GP
Expe nses

s,000

Rent

Delivery

?,

s00

Misc

2,OOA

Sala ries

15,000

Commission

1,000

7,500

Samples

Advertising

_L_O_c!_ _

(220,000 x 5%)
i75% x 10,000)
l7-Oa/o x 5,000)

22,404

NI

L1. A - Answer compute the collection ot 2011" and not 2010

12. C
Actual manufacturing overheaC. ...... .'. .'. . '
Applied manufacturing overhead (P3 per DLH* x l-10,000 DLHs)

P32 5,000

'

330,00!

'

Manufacturing overhead overapplied

*predeterrnined overhead rate = P300,000 + 100,000 direct labor-hours
= P3 per direct labor-hour

5.000

manufactur-ing
Since applied manufacturing overhead exceeds actual i"'ranufacturing overhead,

overhead is overa pplied.

13.

1.4. D

Answer Mat 3'5 labor 2 oH (150% x 2 Dt) = 8'5 it will not change
15.

Total cost 4g4,2OO- abnormal lost 5,2.56 = 498,944 due tc rounding off

16. A
B IFT

I zoaoo

I !.P iT

tlINL
I

IAL

f-

ai;r,

-'---r- i:,ooo
.-----,---l

zz'ooo

i 14,s00
i 3,s00
I s,ooo

EI

F-

i
i.

t1n

l':^

7,525

|
r3'7sp

---"1
r_l
tlt- .
5EUP I

.-l

17 n

units produ]ced.
o C unit
ntinuous spoilage. l-iigher costs are assigned to good
c
No costs are asslgned to normal, CO

18.

Answer: 23,220t'4A8,000-25,140 = 406,080 and 3180

CC aPPlied allocated

Page

--lGpa't-,bd;.*-*hA
Cq

st s

af

tncrementa

t_ejLplt!:9_ti

TUV

2A A
JC 262,00t1
11
LI,

"' tsy orr:duct 10,000 = P?.52,000 x150/450 = 84.,000

La[:or rate variance = Actual houi's x (Actual rate

= 24,150 x (P12.10 - ?i2.7*)

Siarroard raie)

= P),11"5 favorable
')1

Variable overheaC splnciing vanarrce

=.

{Actuai hcurs x Actual rate)

- (Actual

hours x Standard

rate)
= P649,400 - (32i,0J0 x P18)
= P37 ,4A0 unfa vc,r,,rr,,le

23. A

a:Hi
1
2

Csst per Unit

P:10,0c0 '" 1+00/5d0

'

;CO1L,OOC = P7,4AC

"li:hri {.ost per Unit

24.

L2

P72,OO'3 7'6,000

15.9

freig'rt 2,250

investment

B 58,35(l

ln',,,estmeni

60.600

B
C

53,qt)rl

2t-.

28.

75,000 + !0 = (10,950)

29C

1 11

/ 6OAC

Excess

25.
26.

2.61

t, 16,000 i' b,00u

-s::!l*3tligt
Pgi,20{t '" Z.rCO,i3,8AA =
P37,0{10

Only the inccr''re

offset

lruri

r,::feteria

will he unrestricted

krecause reclassification

30. B - l-he Unir,,eisii,, i,cir,.:iriy as irustee or agertt of funcl

31. C

Cash
Mortgage payahie, ;:,:i,1 ,ir

120,C00

i'irii

60,000
60,000

Ncte payabl to b.:iri, secured portion

30,000

3C,000

Priority claims (P16,000 of administrntlve r:o:ts-r

P2,000 of cl.rstomer deposits + P4,000 propertv 'iaxl
Ava iia ble fr.r r Lt n5eg t red n1,n crl,: ritv cia i,ns

22,000
8,000

of fund will be

Page
32.

Gain Loss
Assets to be realized

Assets Realized

Short.term investment

75,000

92 500

Accounts Receivable

150,000

57 5C0

MI

250,000

Assets Acquired

Short term investment

AR

Assets not realized

AR

25,000

1C,000 AR

100,000
Liabilities Liquidated

Mr

Liabilities to be liquidated

/rP

325

175,000

000

Liabilities Liquidated

AP

Liabilities Assumed

AP

7,5C0

157,500

AP

1 750

Accrued expense

Supplementary charges

Supplementary credits
7,500

25,00C

37,500

/50

Purchases
Payment of expenses

125,000

879,25A

Sales on account
lnterest on short term investment
Sales for cash

A+S,ZSO

36,000

??
34.

450,0001750,000 x 500,000 original cc,st = 300,000 sold to outsider less 500,000 total cost prior
to intercompany sale = 200,000 El at cost
3s. c
2,050,000/50,000 sh =.41

FMV

1,850,000
200,000

GW

36 A

cash
NCt

AC

156,000
108,000

Total

264,OAO

BV

?0q.a!a

Est FV 156,000 160% = 260,000 x 40% = 104,000

NCI Pr"op share BV 200,000+70,000= FV 250,000 x 40%=108,000

64,000

xcess

Allocation

irc-qaal
(6,000 )

gain

37. S
38. C
NC

l,

ry

t, 2Ot3

2,437,500 I AAV"1 x 2 Cgdl

NCI in subsidiary dividends (P312,50O x20%)
NCI in adjusted net of subsidiary {Pa-/5,OOO -- P25,000)

anua

l(P

NCl, December

37,2073

P609,375

x20%

(62,500)
90,000
p6g6,B7S

Page5

I
I

39,D

Net income of Parent --lown operations

Net loss of subsidiary (60,000 - 8,700)
Consolidated net incom e

40.

P
(

sales
Less: lntercompany sales revenue

Combined cost of

Plus: Unrealized profit taken out of inventory

(7s%)x(3s,000)

Consolidated cost of
41.

-t5i-lAA)
Y,4EqA

160,000
110,000

201le_-*
P

sales

SP 1,080,000

P320,600

76,250

CA 1,260,000 = unrealized loss 180,000 -'realized loss (180,000/8 x711"2)

(166,875x )5%o = 58,406.25)

42. C'NCA 1,380,000 - L,050,000 = 330,000 RE 330,000 x959/o = 313,500

Cost 502,250 reduced by impairrnent FV 507,500
44, C - Use the fair value because there is publish price quotatiorr

213. C

45.
46.
47.

D
C

TotalAssets
Total Liabilities
Common Stock

-l

t'

i46,000 x 10 = i.46O0,001
45,000x10=450,000
60,000x11 =660,C00

1.2131/13

7213U13
L2/3L11.3

RE (beg 325,000 + (15,0C0

x l2)

47 5,O00

3,000 x 10)

{L25'000)

Translation adjustment
Total

{ebit

1,460,000

48. A
(1.1

(1,/

49,

.02387
.02475

.02457) x 8,340,000 = 10,008,000 loss

U .02494) x 8,340,000 = 2,502,000 gain
1./

i4JOAx 42.3 off er rate dec. -11 = 596,43C

Hedge item 42.3 -41.4 = loss.9 and hedge insti"urnertt 4).2 "42,5,,.3 gain = .6 net loss x 14,100
= 8,460 loss

50.

lornt venture

equity method 6,250,000 + (Rev 1,250,000

6,450,000

END

cost 750,000= 500,000 x 40%)