On January 1, 2012, Tropical Hut signed an further provides that G.

Ramos must pay a 10%

agreement authorizing Ms. Alexx Motus to operate monthly continuing franchise fee. Franchise sales
as a franchisee for an initial franchise fee of reported from August 1 to December 31 amounted to
P5,000,000 .The down payment to be paid is P400, 000.
P2,000,000 and the balance is to be covered by an
18% promissory note due in three annual amount of 2. What is the net income from franchise fees
P1,000,000 beginning January 1, 2013. Ms. Motus to be reported by Mantequilla Ice Cream in
commenced operations on October 1, 2012. Tropical 2013?
Hut rendered initial franchise services at a total
cost of P500, 000. The collectability of the note a) P460,000
is not reasonably assured.
b) P435,000
1. What is the realized gross profit to be
recognized on December 31, 2012? c) P520,000

a) P1,500,000 d) P540,000

b) P1,800,000

c) P2,000,000
Ulysses Inc. and Grant Inc. agreed to enter into a
d) P5,000,000 combination which means all the qualifications of
purchase. Their condensed balance sheets before
the combination follows:

On January 23, 2013, Mantequilla Ice Cream signed Ulysses Gant

an agreement authorizing G. Ramos to operate as a Assets P6,675,000 P2,815,000
franchise for an initial franchise fee of Liabilities 2,600,000 165,000
P500,000, which was received upon signing of the Capital stock(par P100) 2,500,000 1,250,000
agreement. G. Ramos commenced operations on August Additional paid in capital 375,000 375,000
1, 2013, at which date all of the initial services Retained Earnings 1,200,000 1,025,000
required of Mantequilla Ice Cream had been
performed at a cost of P500,000. Indirect costs
were P30, 000 and P25, 000 for Mantequilla and G.
Ramos, respectively. The franchise agreement
Ulysses shall be the surviving entity and in
exchange for the net assets of Grant which had a
fair market value of P2, 933, 000. Ulysses shall Accounts payable P115,000 P 85,000
issue 7,500 shares of its common stocks. The total Bonds payable 170,000 150,000
Common stocks,P10 150,000 75,000
value of the issued shares equals the total value par
of the acquired net assets. APIC 200,000 40,000
Retained earnings 240,000 210,000
3. What will be he capital stock (CS), P875,000 P560,000
additional paid in capital (APIC) and
retained earnings (RE) of Ulysses after the
combination?

a) CS:P3,250,000 APIC:P2,558,000
RE:P1,2000,000
The appraised values of the Diamond Corporations
b) CS:P3,250,000 APIC:P1,250,000 land and buildings are P20,0000 and P258,000,
RE:2,225,000 respectively ,Gold issues 15,250 shares of common
stocks with a fair value of P12 each. Gold also
c) CS:P1,500,000 APIC:P 125,000 pays out of pocket costs for the following:
RE:1,025,000
Brokers fee P10,000
d) CS:P3,750,000 APIC:P 750,000 Professional fees to valuers 3,000
RE:P2,225,000 Legal fees 2,000
Indirect acquisition costs 5,000
Printing cost of stock certificates 3,000
Costs to issue and register the stocks 30,000

The following summarized balance sheets were

prepared for the Gold Company and Silver 4. The stockholders equity balances of Gold
Corporation. for Capital stock, APIC ,and Retained
Earnings, respectively, after the merger
Gold Diamond will be:
Current assets P350,000 P185,000
Land 80,000 25,000 a) P302,500; P273,500; P280,000
Buildings net 250,000 325,000
Goodwill 120,000 100,000 b) P377,500; P197,500; P280,000
P875,000 P560,000
 c) P302,500; P200,000; P262,000 combination P25,000,000
Cost of SEC registration 12,000,000
d) P302,500; P197,000; P265,000 Cost of printing and issuing new stock
certificates 3,000,000
Indirect cost of combination 20,000,000
Summary information is given for SBMA, Inc. and
Finders fees 35,000,000
PICB Company at July 1, 2013. The quoted market
price of SBMA and PICB shares are P36 and P40,
respectively, SBMA and PICB are both SMEs.

SBMA Inc. PCIB Company

Book Fair Book Fair 5. Calculate the goodwill from the business
Value Value Value value combination
Current P8,000,0 P9,000,0 P24,000, P24,000,
assets 00 00 000 000 a) P10,000,000
Plan 22,000,0 26,000,0 26,000,0 25,000,0
assets 00 00 00 00
Totals P30,000, P35,000, P50,000, P49,000,
b) P10,025,000
000 000 000 000
Liabilit 5,000,00 5,000,00 15,000,0 15,500,0 c) P10,040,000
ies 0 0 00 00
Common d) P10,060,000
Stocks,
P10p 10,000,0 20,000,0
00 00
APIC 1,000,00 3,000,00 6. The total Retained Earnings of the surviving
0 0 company after the combining is
Retained 14,000,0 12,000,0
Earnings 00 00 a) P13,920,000
Totals P30,000, P50,000,
000 000
b) P13,980,000

c) P11,920,000
PCIB Company acquires all the net assets of SBMA
by issuing 1,000,000 of its own shares. PCIB d) P11,980,000
Company incurred the following out of pocket costs
relating to the acquisition: SME RRR issued 120,000 shares of its P25 par
ordinary shares for all the net assets of CCC
Legal fees to arrange the business Company on July 1, 2012. RRRs ordinary shares
were selling at P30 per share at the acquisition stockholders equity section of each companys
date. In addition a cash payment of P200, 000 was balance sheet immediately before the combination
made plus an agreed deferred cash payment of P990, was
000 payable on July 1, 2013. The market rate of
interest at the time is 10%. Petttron Shell
Ordinary shares P3,000,000 P1,500,000
RRR also agreed to pay additional cash Additional paid-in 1,300,000 150,000
capital
consideration of P250,000 in the event RRRs net
Retained earnings 2,500,000 850,000
income falls below the current level within the P6,800,000 P2,500,000
next 2 years. RRRs financial officers were 99%
sure the current level of income will at least be
sustained during the prescribed period.
8. In the December 31, 2013 balance sheet,
The following out-of-pocket costs were paid in additional paid-in capital should be
cash by RRR: reported at

Legal and accounting fees paid to adviser 8,000 a) P 950,000 c) P 1,450,000

Brokers fees 4,000
Indirect acquisition costs 3,000 b) P1,300,000 d) P 2,900,000
Costs to issue and register the shares 10,400
Total 25,400 In 2011, good guys construct company agreed to
construct an apartment building at a price of
P2,500,000. The company uses the percentage of
7. Determine the costs of the investment for complexion method.
SME RRR
2011 2012 2013
Cost incurred to P700,000 P1,500,000 P1,500,000
a) P4,702,500 date
b) P4,147,500 Estimated costs
c) P4,174,500 1,300,000 500,000
yet to be
d) P4,714,50 incurred
Costumer billings 375,000 1,000,000 2,500,0000
to date
On December 31, 2013, Shell Corporation was merged Collection of 300,000 800,000 2,350,000

into Petttron Corporation. In the business billings date

combination, Pettron issued 200,000 shares of its
P10 par common stock, with a market price of P 18
a share, for all of shells net assets. The
 9. what is the balance of the construction in a) P212,000
progress, net of contract billings account
as of December 31,2012? b) P225,000

a) 1,875,000 c) 875,000 c) P247,000

b) 1,075,000 d) 500,000 d) P269,000
Profit and loss data for blue sales company and The following selected accounts are taken from the
its branch for 2013 follows: trial balance on December 31, 2013 of Mabini
Company.
H.O. Branch
Sales P1,060,000 P315,000 Debit Credit
Inventory, January 1 115,000 Accounts Receivable P 75,000
Inventory- from home office 50,000 Installment Receivable-2011 15,000
-From other vendors 35,000 Installment Receivable-2012 45,000
Purchase 820,000 120,000 Installment Receivable-2013 270,000
Shipment to branch 110,000 Merchandise Inventory 52,500
Shipment from home office 132,000 Purchases 390,000
Inventory, December 31 142,000 Freight-in 3,000
Repossessed Merchandise 15,000
Inventory,from home office 66,000
Repossession Loss 24,000
-from other vendors 70,000 Cash sales P 90,000
Operating expanses 200,000 100,000 Charge sales 180,000
Installment sales 446,400
Deferred gross profit-2011 22,200
Deferred gross profit-2012 39,360
Records shows that the branch was billed for
merchandise shipment as follows:

In 2012, cost + 25% Additional Information:

In 2013, cost + 20% a. Gross profit on 2012 installment sales was

30% and for 2012, the rate was 32%.

b. Installment sales prices exceed cash sales

10. The combined net income of the Home Office prices by 24%, while charge sales price
and the Branch on December 31,2013 is: exceed cash sales prices by 20%.
 c. The entry for repossessed goods was: installment for P27, 500 and initial down
payment of P6, 875.
Repossessed Merchandise 15,000
Repossession Loss 24,000 12. How much is the realized gross profit
Installment Receivable-2011 18,000 on the sale to Mr. Bobadilla?
Installment Receivable-2012 21,000
a) P3,850

b) P3,300
d. Merchandise on hand at the end of 2013 (new
and repossessed) was P70, 500.
c) P3,575

d) P3,025
11. The cash collections on installment
sales are:
On January 1, 2013, Kimchi Inc, signed an
2011 2012 2013
agreement authorizing Mr. Castro to operate as a
a.P89,000 P160,000 P176,400
franchise for an initial franchise fee of
b. 74,000 123,000 176,400
c. 41,000 57,000 176,400 P5,000,000. Of this amount ,P2,000,000 was
d.33,000 66,000 176,400 received upon signing of the agreement and the
balance evidenced by a 24% promissory note which
is due in three annual installments of P1,000,,000
each beginning December 31,2013. Mr. Castro
Pacific Inc., a dealer of Harley motorcycles, started franchise operations on September 1, 2013,
sells on installment basis. One of its after, P1,500,000. The first installment was
customers, a Mr. Cruz, brought a motorcycle for collected on due date. The collectibility of the
P45, 375. The cost to Pacific Inc. is P25, 410. note is not reasonably assured.
After making an initial payment of P6,050, Mr.
Cruz stopped paying and defaulted on all 13. What is the realized gross profit to be
subsequent payments. Pacific Inc. lost no time recognized on December 31, 2013?
in repossessing the motorcycle. By then it had
an appraised value of P12, 650 and Pacific had a) P2,100,000
to incur additional expenses of P1, 650 on
repairs and remodeling. Pacific was able to b) P2,700,000
sell the motorcycle to Mr. Bobadilla on
c) P4,500,000
 d) P5,000,000 paid four of the 16 equal installments for the
balance and defaulted on further payments. The
In 2012 SMDC Builders Inc, had a successful bid on power generator was repossessed at which time the
a fixed price contract to a factory building for fair value was determined to be P40, 800.
P78M. SMDC uses the percentage of completion
method and the following data are obtained on the 15. How much is the gain or loss on repossession
project: for income statement purposes?

2012 2013 a) P6,240 loss

Percentage of 20% 60%
completion as at b) P 0
December 31
Estimated total cost P58,500,000 P72,000,000
c) P16,800 gain
at completion as at
December 31
Profit recognized to 3,900,000 3,600,000 d) P 6,240 gain
date at December 31
Billings to date at 18,000,000 39,000,000 e) On March 1, 2011, Robotic construction
December 31 Company was contracted to construct a factory
building for Nikki Company for a total
contract price of P25, 200, 000. The building
was completed by October 31, 2013. The annual
14. The entry to record the actual cost incurred contract costs incurred, estimated costs to
in 2013 includes a debit to
complete the contract, and billings for 2011,
2012 and 2013 are given below:
a) Construction in Progress, P31,500,000
2011 2012 2013
b) Construction Cost, P31,500,000 Contract 9,600,000 7,800,000 4,350,000
cost
c) Construction in Progress, P43,200,000 incurred
during the
d) Construction Cost, P43,200,000 year
Est. costs 9,600,000 4,350,000 0
to complete
at 12/31
A heavy power generator was sold to Victor Percy Billings 9,600,000 10,500,000 5,100,000
for P96, 000 which included a 40% markup on during the
year
selling price. Alan made a down payment of 20% and
 installment
sales
16. The entry to record the 2013 225,000
recognized profit in 2013 includes a installment
credit to: sales
Gross profit 40% 30%
rate
a) Construction revenue 5,040,000
b) Construction in Progress 690,000
c) Construction Revenue 5,100,000 17. How much is the net realized gross profit
d) Construction in Progress 4,350,000 in 2013?

Since there is no reasonable basis for a. P 345.000 c. 450,000

estimating the degree of collectability. Candy b. P 540.000 d. 90,000
company uses the installment method of revenue
recognition for the following sales: On October 1, 2013, the Maxinne co. sold for
2013 2012 P1, 400, 000 an equipment which had a cost of
Installment P2,700,000 P1,800,000 P910, 000. A down payment of P400,000 was made
sales with the provision that additional payment of
Collection
P100,462.13 be made monthly thereafter for
from
2012 300,000 600,000 one(1) year. Interest was to be charged at a
installment monthly rate of 3 percent on the unpaid
sales principal balance; the monthly installment was
2013 900,000 to apply first to interest then to the balance
installment of the principal.
sales
Accounts
defaulted 18. The total collections applying to the
2012 300,000 150,000 interest after the 1st and 2nd installment
installment was:
sales a. P83, 595 c. P30,000
2013 450,000 b. P27, 886,14 d. P57,886.14
installment
sales
19. Assuming that a repossession was made after
Value assigned
to repossessed the 2nd installment, how much was the gain
items (loss) on repossession if the net realizable
2012 150,000 82,500 value of the equipment was P500, 000?
a. P108, 435, 60 gain c. P108, 435.60 loss a) Freight in P900
b.P57, 025.22 gain d. P57, 025.22 loss b) Investment in Naga Branch, 900
c) Home office, P900
Big brother, inc. operates a branch in
Naga City. At the close of business on d) Home Office, P11, 250
December 31, 2013. Naga branch account in the
home office books showed a debit balance of The following selected accounts appeared
P225, 770. The interoffice accounts were in in the trial balance of Ellery Sales as of
agreement at the beginning of the year. For December 31, 2013:
purposes of reconciling the interoffice Debit Credit
Installment P45,000
accounts following facts were ascertained:
Accounts
a) An office equipment costing the home Recievable-2012
office P35, 000 was taken up by the Installment
branch as P3, 500. Accounts 600,000
b) Insurance premium of P6, 750 charged Recievable-2013
Inventory, December 210,000
by the home office was taken up twice
31,2012
by the branch
Purchases 1,665,000
c) Freight charge on merchandise made by Repossessions 9,000
the home office amounting to P11, 250 Installment Sales P1,275,000
was recorded by the branch books as Sales 1,155,000
P12, 150 Deferred Gross 162,000
Profit-2012
d) Home office credit memo representing a
discount on merchandise for P8,000 was
not recorded by the branch
e) The branch failed to take up P7,000 Additional Information:
debit note from the home office a. Installment Accounts P405,000
representing the share of the branch Recievable-2012,as of
in advertising December 31, 2012
f) The home office inadvertently recorded b. Inventory of new and 285,000
a P30, 000 remittance from its Naga repossessed merchandise
branch as remittance from Quezon branch as of December 31, 2013
c. Gross profit percentage 30%
20. The entry to adjust the branch books on regular sales during
the year
for information in letter c includes a
debit to.
 office amount by the Maguindanao
Repossession was made during the year. branch.
It was a 2012 sale and the a) P540, 000
corresponding uncollected account at b) P561, 600
the time of repossession was P23,400.
c) P552, 000
21. How much is the 2013 total d) P462, 000
realized gross profit, net of loss on
repossession? On December 1, 2013, the
a) P603,000 Columbia established an
b) P391,000 agency in Laguna, sending its merchandise
c) P737,000 samples costing P47, 250 and a working fund of
P30, 000 to be maintained on the imprest
d) P732,000
basis. During the month of December, the
Davao Corporation has two branches to agency transmitted to the home office sales
which merchandise is transferred at orders which were billed at P210, 000 of which
cot plus 20% plus freight charges. On P75, 000 was collected. A home office
November30, 2013, Davao shipped disbursement chargeable to sales agency is the
merchandise that cost P450,000 to its acquisition of furniture and fixtures for
Maguindanao branch and the P12, 000 Laguna.P75, 000 to be depreciated at 12% per
shipping charges were paid by Davao. annum. The agency paid expenses of P11, 400
On December 15, 2013, the Zamboanga
and received replenishment thereof from the
branch encountered an inventory
home office. On December 31, 2013, the agency
shortage, and the Maguindanao branch
shipped the merchandise to the
samples were valued at P30,000.It was
Zamboanga branch at a freight cost of estimated that the gross profit on goods
P9,600 paid by Zamboanga. Shipping shipped to bill agency sales orders averages
charges from the home office to the 25% of cost.
Zamboanga branch would have been P18,
000. 23.How much is the net income (loss) of the
agency for the month ended December 31, 2013?
22.As a result of the inter-branch
inventory transfer, determine the a) P 4,350
total amount debited to the Home
b) P12,600
 c) P23,100 Home Office 354,400

d) P(12,600)

De Santos Co. opened its Alabang branch on Merchandise Inventory, December 31- P151,200
October 1. Shipments of merchandise to the Shipments to the branch are billed at 140% of
branch during the month, billed at 120% of cost
cost, amounted to P375, 000. The branch
25. The true net income of the Branch during
returned P46, 860 of defective merchandise to
2013 was:
the home office. On October 31, the branch
reported a net loss from its operation of P6, a) P 18,000
810 and an inventory of P252, 000.
b) P100,000
24. The realized profit to be taken up in the
home office books would be: c) P118,000

a) P(5,070) d) P162,000

b) P5,880 Trial balances for the home office and the

branch of Tripartite Company show the
c) P(6,810) following accounts before adjustments on
December 31, 2013. The home office policy of
d) P12,690
billing the branch for merchandise is 20%
The Pharma Branch of Driven Co. submitted the above cost.
following trial balance as of December 31,
Home Office Branch
2013 after its first year of operations:
Allowance for P180,000
overvaluation
Debit Credit
Shipments to branch 720,000
Cash 31,200 Purchases(outsiders) P225,000
Accounts Receivable 189,600 Shipments from the 864,000
Shipments from the 504,000 home office
Home Office Merchandise 300,000
Expenses 32,400 inventory, December
Sales P403,200 1, 2013
 Jose contracted to build a low rise building
for GSIS for P20M.The initial estimate of the
The branch Merchandise inventory on December project costs is P16M. In 2012, San Jose
31, 2013 of P150,000 includes purchases from incurred P4M and billed GSIS an amount
outsiders of P60,000. corresponding to the projects percentage of
completion.
26. The working paper entry to eliminate the
profit in beginning inventory include a debit In 2013, due to increasing prices of
to construction materials resulting to increase
in estimated costs to complete the project,
a) Allowance for overvaluation, P144,000
the parties agreed to increase the contract
b) Branch income,P15,000 price by P1M. San Jose incurred P10,250,000 in
2013 with estimated cost of P4,750,000 to
c) Merchandise inventory, December 1, P36, complete the project.
000
28. In 2013 the amount to be repeated as
d) Allowance for overvaluation,P36,000 Construction Revenue, Construction Costs and
Construction Profit, respectively are:
27. The entry on the books of the home office
to recognize mark-up includes a credit to: a.P15,750,000; P14,250,000; P1,500,000
b.P 5,000,000; P 4,000,000; P1,000,000
a) Allowance for overvaluation, P15,000 c.P10,750,000; P10,250,000; P 500,000
d.P10,000,000; P10,000,000; P( 250,000
b) Branch income,P165,000

c) Merchandise inventory, December 1, P15,

000 The NMC Partnerships trial balance on March
31, 2013 is:
d) Allowance for overvaluation,P15,000
Debit Credit
Cash P 30,000
Accounts 120,000
San Jose Builders, Inc uses the percentage of Receivable(net)
completion method of accounting for its long Inventory 135,000
term construction contracts.During 2012, San Plant Assets(net) 180,000
Accounts Payable P150,000 d) P15,000
Nikkie, Loan 15,000
Candle, Capital(30%) 105,000 W, X and Y, partners of the W, X & Y
Nikkie, Capital(20%) 50,000 Partnership, share net income and losses in a
Maxxie, Capital(50%) 145,000 5:3:2 ratio, respectively. The capital account
Total P465,000 P465.000 balances on April 1, 2013, were: W, Capital-
P37, 000; X, Capital-P65, 000; Y, Capital-P48,
000. The carrying amount of the assets and
The partnership is being liquidated. liabilities of the partnership were the same
Liquidation activities are: as their current fair values. Z is to be
admitted to the partnership with a 20% capital
April May June interest and a 20% share of net income and
Accounts 54,000 45,000 10,000 losses in exchange for a cash investment. No
receivable-
goodwill or bonus is to be recorded.
collected
Noncash assets 30.The amount that Partner Z should invest in
sold
the partnership is
Book value 75,000 60,000 180,000
Selling price 83,000 55,000 150,000
a) P30,000
Accounts payable 98,000 52,000
paid
b) P36,000

c) P37,000
The liquidation is completed by June 30. Cash
is distributed at the end of each month. d) P40,000

29.Cash distributed to Candle at the end of The balance sheet for Marco and Marvin
April is Partnership on June 1, 2013 before liquidation
is as follows:
a) P 0
Assets Liabilities &
Capital
b) P13,200
Cash P 5,000 Liabilities P20,000
Non Cash 55,000 Marco,Capital(60%) 22,000
c) P14,400 Assets
 Marvin; 17,000 amounts to P14, 000 from the third sale of
Capital(40%) assets, and unsold assets with a P6,000 book
Total P60,000 Total Liabilities P60,000
value remain.
Assets Capital

33. How should the P14, 000 be distributed to

The following balance sheet was prepared for the A, B and C respectively?
A, B, and C Partnership on July 1, 2013. A B C
Assets Liabilities & a) P5,600 P6,000 P2,800
Capital P5,500 P4,000
b) P5,000
Cash P 25,000 Accounts P 52,000
c) P5,500 P5,500 P3,000
payable
Non-cash 180,000 A, 40,000 d) P5,600 P5,600 P2,800
assets Capital(40%)
B, 65,000
Capital(40%) Marvin admits Ancho as a partner in the business.
C,Capital(20%) 48,000 Balance sheet accounts of Marvin on September 30,
Total P205,000 Total Liab & P205,000 just before admission of Ancho, show:
Assets Capital Cash P2,600
Accounts Receivable 12,000
Merchandise Inventory 18,000
The partnership is being liquidated on the Accounts Payable 6,200
installment basis. The first sale of non-cash Marvin, Capital 26,400
assets with book value of P90,000 realizes P50,000.

32.The amount of cash each partner should receive It is agreed that for the purpose of establishing
in the first installment is Marvins interest, the following adjustments shall
A B C be made:
a) P 0 P 5,000 P18,000 1. An allowance for doubtful accounts of 2% is to
b) P12,000 P13,000 P22,000 established
c) P27,000 P5,000 P18,000 2. Merchandise Inventory is to be valued at P20,
d) P 0 P 5,000 P22,000 200
3. Prepaid expenses of P350 and accrued
liabilities of P400 are to be recognized
Assume that each partner in Question 19
properly received some cash after the second Ancho is to invest sufficient cash to obtain 1/3
sale of assets. The cash to be distributed interest in the partnership.
34. The investment of Ancho should be in the Assets pledged with partially 12,500
amount of secured creditors
a)P14, 155 Free assets 11,000
b)P17, 600 Preferred creditors 3,000
c)P14, 305 Fully secured creditors 69,000
Partially secured creditors 20,000
d)P 7, 920
Unsecured creditors without 18,000
priority
On April 30, 2013, Atty. Manuel Malvar, trustee in
bankruptcy liquidation for BPA Company, paid
P12,140 in full settlement of a BPA liability 36. The estimated deficiency to unsecured
under product warranty, which had been carried in creditors is
Atty. Malvars accounting records at P10,000. a) P 5,000
b) P12,500
35.The appropriate journal entry in Atty. Malvars
c) P15,500
record is:
a. Liability under 12,140
d) P14,500
product warranty
Cash 12,140 Because of inability to pay its debts, the
b.Liability under product 10,000 insufficient manufacturing company has been
warranty forced into bankruptcy as of April 1,2013.
Estate Equity 2,140 The balance sheet on the date shows:
Cash 12,140
c.Liability under product 10,000 Assets Liabilities
warranty
cash P 2,700 Accounts P 52,500
Product warranty 2,140 payable
expense
Accounts 39,350 Notes 15,000
Cash 12,140 receivable payable-
d.Liability under product 10,000 bank
warranty notes 18,500 Notes 51,250
Retained 2,140 receivable payable-
Cash 12,140 suppliers
Merchandise Accued 1,850
wages
The following were taken from the statement of Inventory 87,850
affairs of Distressed Company. Prepaid 950 Accued 4,650
Assets pledged with fully secured P71,000 insurance taxes
creditors Land and 61,250 Mortgage 90,000
buildings bonds a. Depreciation expense 7,500
payable home office 7,500
Equipment 48,800 Common 75,000
stock-P100 b. Depreciation expense 7,500
par Accumulated depreciation 7,500
Retained (30,850) c. Depreciation expense 7,500
earnings Branch 7,500
total P259,400 total P259,400
d. Home office 7,500
Accumulated depreciation 7,500
Additional information:
a. Accounts receivable of P16,950 and notes
Partners C and D share profits in the
receivable of P12,500 are expected to be
ratio of 6:4 respectively. On December
collectible. The good notes are pledged to
31,2013, their respective accounts were C,
the bank.
P120,000 and D, P100,000. On that date,
b. Merchandise inventory are expected to bring
was admitted ass partner with 1/3 interest
in P45,100 when sold under bankruptcy
in capital and profits for an investment
conditions.
of P90,000. The new partnership began in
c. Land and buildings have an appraised value 2013 with total capital of P300,000.
of P95,000. They serve as security on the
bonds. 39. immediately after As admission, Cs
d. The current value of the equipment, net of capital should be.
disposal costs is P9,000 a. P 120,000 c. P 108,000
b. P 114,000 d. P 110,000
37. the estimated payment to partially
secured liabilities is: on January 1,2013, Antipolo inc. granted a
a. P 10,200 c. P 10,050 franchise to Ram de Leon to operate sales
b. P 14,175 d. P 14,200 outlet for an initial fee of P4,000,000 and
5% monthly continuing fee based on gross
The Canada home office allocates monthly sales. Ram paid a down payment of P
depreciation to the Kyle Branch of the 1,000,000 and iissued a promissory note for
branchs fixed assets kept on the home the balance payable in six (6) annual
office books. installment starting December 31, 2013.
38. the branch should record this allocation Prevailing costs of money is 12%.(PV of an
by the following entry: annuity of P1 for six periods at 12% is
4.1114)
Ram commenced operations on August 1,2013
and reported the following monthly sales:
August 200,000
September 320,000
October 605,000
November 712,500
December 865,000

40.Assuming Ram issued an 18% interest

bearing note, how much will be the amount of
franchise revenue to be recognized for the
year 2013?
a. 3,192,125 c. 4,000,000
b. 3,190,825 d. 4,135,125