The Professional CPA Review School

The Professional CPA Review School
Main: 3F C. Villaroman Bldg. 873 P. Campa St. corEspana, Sampaloc, Manila (02)
735 8901 / 735 9031
Branch: Rudel Bldg. V, Lower Mabinicor Diego Silang, Baguio City (074) 422-
1440
PRACTICAL3/F
ACCOUNTING
GCAM Bldg. 2 Monteverde St. Davao City (082) 285-8805/0925-7272223 MAY
2015 BATCH
PREWEEK QUIZZER
Questions 1 and 2 are based on the following information:

A, B, and C, a partnership formed on January 1, 2015 had the following initial investment:
A …………………………… P 100,000
B …………………………… 150,000
C …………………………… 225,000
The partnership agreement states that the profits and losses are to be shared equally by the
partners after consideration is made for the following:
- Salaries allowed to partners: P 60,000 for A, P 48,000 for B, and P 36,000 for C.
- Average partners’ capital balances during the year shall be allowed 10%.
Additional information:
- On June 30, 2015, A invested an additional P 60,000.
- C withdrew P 70,000 from the partnership on September 30, 2015.
- Share the remaining partnership profit was P 5,000 for each partner.
1. Interest on average capital balances of the partners totaled:
a. P 48,750 b. P 53,750 c. P 57,625 d. P 60,625
2. Partnership net profit at December 31, 2015 before salaries, interests and partners’ share on the
remainder was:
a. P 199,750 b. P 207,750 c. P 211,625 d. P 222,750
3. The partnership of Ian, Reese, Pia, and Andre is being liquidated over the first few months of 2015.
The trial balance at January 1, 2015 is as follows:
Debits Credits
Cash P 200,000
Accounts receivable 56,000
Inventory 142,000
Equipment – net 300,000
Land 150,000
Loan to Ian 20,000
Accounts payable P 400,000
Ian, capital – 20% 170,000
Reese, capital – 10% 80,000
Pia, capital – 50% 140,000
Andre, capital – 20% ________ 78,00
0
P 868,000 P 868,000
1. The partners agree to retain P 20,000 cash on hand for contingencies and distribute the rest of
the available cash at the end of each month.
2. In January, half of the receivables were collected. Inventory that cost P 75,000 was liquidated for
P 45,000. The land was sold for P 250,000.
3. The accounts payable was liquidated.
How much will each partner receive for the month of January 2015?
A. Ian, P 68,000; Reese, P 39,000; Pia, P 0; Andre, P 0
B. Ian, P 81,000; Reese, P 45,500; Pia P 0; Andre, P 9,000
C. Ian, P 65,333; Reese, P 37,667; Pia P 0; Andre, P 0
D. Ian, P 103,000; Reese, P 0 ; Pia P 0; Andre, P 0
4. A balance sheet for the partnership of Rachel, Arlene, and Cecil, who share profits 2:1:1, respectively,
shows the following balances just before liquidation.
Cash Other Assets Liabilities Rachel, Arlene, Cecil,

capital Capital Capital
P 48,000 P 238,000 P 80,000 P 88,000 P 62,000 P 56,000
In the first month of liquidation, P 128,000 was received on the sale of certain assets. Liquidation
expenses of P 4,000 were paid, and additional liquidation expenses of P 3,200 are anticipated
before liquidation completed. Creditors were paid P 22,400. Available cash distributed to the partners.
The cash to be received by each partner based on the above data:
Rachel Arlene Cecil
A. P 56,600 P 28,300 P 28,300
2 CRC-ACE/PA2: Preweek Quizzer (MAY 2015 batch)
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B. P 86,000 P 61,000 P 55,000
C. P 29,400 P 32,700 P 26,700
D. P 86,000 P 62,000 P 56,000
Questions 5 and 6 are based on the following:
Several years ago Joseph and Mar formed Loren Partnership. The partnership agreement states that
each partner is to receive a salary of P10,000 per month and 5% interest on beginning-of-the-year
capital balances; any remainder would be divided between Joseph and Mar in the ratio 2:3, respectively.
The unadjusted trial balance of Loren Partnership as of December 31, 2015, appears as follows:
Debits Credits
Cash P 500,000 Accounts payable P 350,000
Accounts receivable 300,000 Notes payable 200,000
Inventory, January 1, 2015 400,000 Joseph, capital 750,000
Furniture & fixtures, net 150,000 Mar, capital 620,000
Building, net 300,000 Sales 800,000
Joseph, drawing 100,000
Mar, drawing 120,000
Purchases 600,000
Operating expenses 250,000
Total P2,720,000 Total P2,720,000
1. December 31, 2015, inventory was P550,000. 2015 purchases of P600,000 were recorded using
the periodic inventory method.
2. Depreciation for 2015 on furniture and fixtures and building is determined to be 10% and 20%
respectively, of net valuation.
3. On July 1, 2015, the partnership recorded a P100,000 additional capital contribution by Mar.
Joseph made no additional capital contributions during the year.
5. Determine the share of partner Joseph on the net income of 2015.

a. P 46,100 b. (P21,100) c. (P19,100) d. P44,100
6. Determine the ending capital balance of partner Mar on December 31, 2015.
a. P480,100 b. P521,100 c. P478,900 d. P694,100

The balance sheet of the Rose and Patrick Partnership at December 31, 2014, appears below:
Assets: Liabilities and Capital:
Cash P 15,000 Accounts Payable P 35,000
Accounts Receivable (net) 45,000 Notes Payable
25,000
Inventories 75,000 Accrued Liabilities 40,000
Property, Plant, and Mortgage Payable 110,000
Equipment, (net) 225,000 Rose, Capital 60,000
Patrick, Capital 90,000
P360,000 P360,000
Determine the capital balances of partners immediately after the admission of ShaSha under the
following independent situations:
7. ShaSha acquired a 25 percent interest in partnership capital directly from Rose and Patrick for
P50,000. ShaSha paid P18,750 directly to Rose and P31,250 directly to Patrick. Total assets of the
partnership after the admission of ShaSha were P360,000. How much must be the capital credit to
ShaSha?
a. P45,000 b. P67,500 c. P37,500 d. P60,000
8. ShaSha acquired a 25 percent interest in capital by investing P50,000 of cash into the partnership.
Total capital of the Rose-Patrick-ShaSha Partnership on January 1, 2015, amounted to P240,000.
Determine the capital balance of ShaSha immediately after his admission.
a. P60,000 b. P90,000 c. P50,000 d. P37,500
Questions 9 through 12 are based on the following:

A, B and C have capital balances of P112,000, P130,000 and P58,000, respectively, and share profits in
the ratio 3:2:1. D invest cash in the partnership for a one-fourth interest.
9. Assume D receives a one-fourth interest in the assets of the partnership, which includes credit for
25,000 of goodwill that is recognized upon admission. How much cash D invest?
a. P100,000 b. P75,000 c. P125,000 d. P50,000
10. Assume D receives a one-fourth interest in the assets of the partnership and D is credited with
P20,000 of the bonus from the old partners that is recognized upon D’s admission. How much cash D
invest?
a. P73,333 b. P100,000 c. P93,333 d. P80,000
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11. Assume D receives a one-fourth interest in the assets of the partnership and B is credited with
P15,000 of the bonus from D, how much cash D invest?
a. P115,000 b. P105,000 c. P160,000 d. P120,000
12. Bong and Jinggoy are partners who share profits and losses in a 2:3 ratio. The partnership will be
liquidated in instalments. Some noncash assets have been sold, but other assets with a book value of
P63,000 remain. Liabilities are now P8,000, and liquidation expenses are expected to be P3,600. The
capital balances are P46,000 for Bong and P34,000 for Jinggoy.
Assuming the available cash is distributed, how much is the share of Bong?
a. P21,400 b. P13,400 c. P16,000 d. P4,000

Partners A, B, C, and D have been operating ABCD Partnership for ten years. Due to a significant
reduction in the demand for their product over recent years, the partners have agreed to liquidate the
partnership. At the time of liquidation, balance sheet accounts consisted of cash, P103,500; noncash
assets, P300,000; liabilities to outsiders, P60,000; capital credit balances for partners A, B, and C,
P90,000, P150,000, and P120,000, respectively; and a debit capital balance for partner D of P16,500.
Partners share equally in income and loss. It is estimated that the administrative cost of liquidation will
total P4,500. While preparing for liquidation, an unrecorded liability of P7,500 was discovered.
13. Assuming the available cash of P103,500 was distributed, how much must be the share of partner B?
a. P31,500 b. P30,750 c. P65,167 d. None
14. For how much must the noncash assets be sold for partner D to received at least P5,000?
a. P429,500 b. P501,500 c. P398,000 d. P386,000
15. The following balance sheet is for a local partnership in which the partners have become very unhappy
with each other. To avoid further conflict, they have decided to cease operations and sell all assets.
Cash P 40,000 Liabilities P 30,000
Land 130,000 Michael, capital 80,000
Building 120,000 Fernando, capital 30,000
Alvin, capital 60,000
JL, capital 90,000
P290,000 P290,000
Assume that profits and losses are allocated on a 1:3:4:2 basis, respectively. How much money must be
received from selling the land and building to assure that all partners receives cash?
a. More than P50,000 c. More than P100,000
b. More than P150,000 d. More than P250,000

The partnership of Rent-A-Pet find it financially infeasible to continue operations and have agreed to
liquidate the partnership. The balance sheet just prior to the start of liquidation appears as follows.
Partners Bryan, Donelle, and Christopher share income and loss in the ratio 5:3:2, respectively.
Assets Liabilities and Capital
Cash P 200,000 Accounts payable P 300,000
Noncash assets 1,300,000 Loan from Bryan 50,000
Bryan, capital 350,000
Donelle, capital 600,000
Christopher, capital 200,000
P1,500,000 P 1,500,000
16. If the first sale of noncash assets having a book value of P750,000 realizes P500,000 and all available
cash is distributed, determine the amount of cash distributed to Bryan.
a. P50,000 b. P360,000 c. P40,000 d. P0
17. If each partner properly received some cash in the distribution after the second sale, the cash to be
distributed amounts to P120,000 from the third sale, and unsold assets with an P80,000 book value
remain (ignore question 42), the share of Donelle must be:
a. P36,000 b. P60,000 c. P24,000 d. cannot be determined
18. REH, JGS, and MFT are partners in a business which manufactures garden tools. Their profit and loss
agreement has the following provisions:
a. Salaries of P40,000, P20,000, and P45,000 for REH, JGS, and MFT, respectively.
b. JGS will receive a bonus equal to 5% of sales in excess of P1,000,000.
c. All partners will receive a bonus of 10% of net income in excess of P150,000, after the total of
all such bonuses.
d. Partners will be allocated interest on their weighted-average capital balance. Drawings in excess
of annual salaries will be considered reduction in capital. Interest is computed at the rate of
10%.
Page 4
e. Remaining profits or losses will be allocated 35%, 25%, and 40% to REH, JGS, and MFT,
respectively.
f. Gains or losses from the sale of depreciable assets will be excluded from the above provisions
and will be equally allocated among the partners.
Activity in the partners’ capital and drawing accounts during the year was as follows:
REH REH JGS JGS MFT MFT
Capital Drawing Capital Drawing Capital Drawing
Beginning balance P75,000 P125,000 P40,000
February 1 P15,000 P25,000 30,000
March 31 10,000 5,000 P15,000
June 1 10,000
June 30 10,000 5,000 15,000
September 30 10,000 15,000
Ending balance P85,000 P45,000 P125,000 P35,000 P70,000 P45,000
Determine how much of the annual net income of P200,000 (including a gain on sale of equipment of
P15,000) should be allocated to JGS. Annual sales revenue was P1,100,000.
a. P69,930 b. P54,309 c. P75,762 d. P54,799

The partnership of Rose, Mercedes, and Rosanna has the following account balances:
Cash P 36,000 Liabilities P 17,000
Noncash assets 100,000 Rose, capital 69,000
Mercedes, capital ( 8,000) deficit
Rosanna, capital 58,000
P136,000 P136,000
This partnership is in the process of being liquidated. Rose and Mercedes are each entitled to 40
percent of all profits and losses with the remaining 20 percent to Rosanna.
19. What is the maximum amount that Mercedes might have to contribute to this partnership because of
the deficit capital balance?
a. P8,000 b. P48,000 c. P40,000 d. P0
20. How should the P19,000 cash that is presently available in excess of liabilities be distributed?
a. Rose – P0; Mercedes – P0; Rosanna – P19,000
b. Rose – P19,000; Mercedes – P0; Rosanna – P0
c. Rose – P9,500; Mercedes – P0; Rosanna – P9,500
d. Rose – P12,667; Mercedes – P0; Rosanna – P6,333
21. If the noncash assets are sold for a total of P41,000, what is the minimum amount of cash that could
be received by Rose?
a. P46,200 b. P35,667 c. P24,333 d. P0
22. The partnership of Mel, Art, and Lex have asked you to assist it in winding up the affairs of the
business. You compile the following information.
A. The trial balance of the partnership on June 30, 2015, is:
Debit Credit
Cash P 6,000
Accounts receivable (net) 22,000
Inventory 14,000
Plant and equipment (net) 99,000
Loan to Mel 12,000
Loan to Lex 7,500
Accounts payable P 17,000
Mel, capital 67,000
Art, capital 45,000
Lex, capital 31,500
Total P160,500 P 160,500
B. The partners share profits and losses as follows: Mel, 50%; Art, 30%, and Lex, 20%.
C. The partners decided to liquidate their partnership by instalments. Cash is distributed to the
partners at the end of each month. No interest on partners’ loans accrues during liquidation. A
summary of the July liquidation transactions follows:
P16,500 collected on accounts receivable; balance is uncollectible.
P10,000 received for the entire inventory.
P1,000 liquidation expense paid.
P17,000 paid to outside creditors.
P8,000 cash retained in the business at the end of the month.
Determine the share of Art on the July cash distribution.
a. P9,000 b. P4,000 c. P26,400 d. P0
Page 5

Black, Brown, and Green are partners in a business and share in its earnings at the respective rates of
50%, 30%, and 20%. At the beginning of the new fiscal year, they admit White, who is to invest in the
firm sufficient cash funds to give him a one-third interest in the capital and in the earnings. The
following closing trial balance is taken from the old firm’s books:
Cash P1,000,000 Accounts payable P 500,000

Marketable securities 750,000 Bank loan 300,000
Accounts receivable 2,250,000 Black, capital 1,750,000
Brown, capital 1,000,000
Green, capital 450,000
P4,000,000 P4,000,000
The securities have a market value of P500,000, and an allowance of P250,000 is required to cover
bad debts. No other adjustment of net assets is necessary, but the three old partners must among
themselves bring the balances in their capital accounts into agreement with their interests in the
earnings.
23. The amount that must be invested by White is

a. P1,350,000 b. P900,000 c. P1,600,000 d. 1,500,000
24. The entry to make adjustments on the old partners’ capital accounts
a. Black, capital P40,000 c. Brown, capital P150,000
Green, capital 150,000 Black, capital 40,000
Brown capital P190,000 Green, capital P190,000
b. Green, capital P190,000 d. Black, capital P150,000

Black, capital P 40,000 Brown, capital 40,000
Brown, capital 150,000 Green, capital P190,000
25. SM Appliances Corp., which began operations on January 1, 2014, appropriately uses the installment
method of accounting for revenues. The following information is available for the years ended
December 31, 2014 and 2015:
2014 2015
Cost of installment sales P1,500,000 P 3,000,000
Gross Profit realized on sales made in
2014 225,000 135,000
2015 - 300,000
Gross profit percentage based on cost 30% 40%
What is the ending balance of installment accounts receivable on December 31, 2015:
A. P 2,550,000 B. P 3,540,000 C. P 2,662,500 D. P 1,837,500
26. Rockwell Corporation, a capital goods manufacturing business that started on January 4, 2014, and
operates on a calendar-year basis. The following data were taken from the records of 2014 and 2015 :
2014 2015
Installment Sales P P 620,000
480,000
Gross profit as a percent of costs 25% 28%
Cash collections on sales of 2014 P P 240,000
140,000
Cash collections on sales of 2015 P 0 P 180,000
Compute the realized gross profit to be reported in the 2015 income statement:
Installment Sales Method Cost Recovery Method
A. P 87,375 P 0
B. P 87,375 P 180,000
C. P 39,375 P 0
D. P 48,000 P 240,000

Presented below is the unadjusted trial balance of Sunflower Corporation at December 31, 2015:
Debit Credit
Cash P 5,000
Installment accounts receivable, 2014 40,000
Installment accounts receivable, 2015 140,000
Inventory, December 31, 2015 200,000
Other assets 497,000
Accounts payable – trade P 50,000
Unrealized gross profit - 2013 10,000
Unrealized gross profit – 2014 86,000
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Unrealized gross profit – 2015 100,000
Capital stock 600,000
Retained earnings 80,000
Gain on repossession 6,000
Operating expenses 50,000 _______
Total P 932,000 P
932,000
Cost of goods sold had been uniform over the years at 60% of sales.
Sunflower Corporation adopts perpetual inventory procedures. On installment sales, the corporation
charges installment accounts receivable and credits inventory gross profit accounts.
Repossessions of merchandise have been made during 2015 due to some customers’ failure to pay
maturing installments. Analysis of these transactions were summarized as follows:
Inventory 7,500
Unrealized gross profit, 2013 800
Unrealized gross profit, 2014 2,400
Installment Accounts Receivable – 2013 2,000
Installment Accounts Receivable – 2014 6,000
Gain on repossession 2,700
The repossessed merchandise was unsold at December 31, 2015. It was ascertained that they were
booked upon repossession at original costs. A fair valuation of these items would be a sale price of
the repossessed merchandise at P 10,000 after incurring costs of reconditioning of P 5,000 and cost
to dispose them in the market at P 500.
27. Realized gross profit on 2015 sales was:

A. P 44,000 B. P 56,000 C. P 124,000 D. P 136,000
28. Gain/loss on repossession was:

A. P 200 loss B. P 200 gain C. P 300 loss D. P 300 gain
29. ACE Enterprises uses the installment method of accounting and has the following data at year-end
Gross margin on cost 40%
Unrealized gross profit P192,000
Cash collections including down payments 360,000
What was the total amount of sale on installment basis?

a. P840,000 b. P1,380,000 c. P772,800 d. P1,032,000
30. On January 1, 2013, DrNC sells 20 acres of farmland for P12,000,000 taking in exchange a 12%
interest-bearing note. DrNC purchased the farmland in 1988 at a cost of P8,000,000. The note will be
paid in three (3) equal annual payments inclusive of 12% interest each December 31, 2013, 2014 and
2015. How much must be the realized gross profit for the year 2013 under the instalment method of
recognizing revenue?
a. P3,556,253 b. P1,185,418 c. P1,333,333 d. P2,814,582
31. REH sells a new car for P560,000. Cash down payment of P100,000 was received together with an old
car with a trade-in value of P80,000. Cost of the new car sold is P322,800. It is estimated that the
reconditioning of the old car will cost P40,000 and may be sold at P140,000 which includes a 30%
gross profit. REH was able to collect 50% of the balance and the customer defaulted. The car was
repossessed and can still be sold at 90% of the uncollected balance after reconditioning cost of 20%.
How much is the gain or loss from repossession?

a. P22,800 gain b. P27,280 gain c. P31,015 gain d. P28,860 gain
32. The data below are taken from the records of Western Appliance Co. which sells appliances exclusively
on the installment basis:
2012 2013 2014
Installment sales P 365,500 P 417,800 P 610,750
Gross profit rate 36% 39% 40%
The balances on the Installment Accounts Receivable controlling accounts at the beginning and end
of 2014 were:
2 0 1 2
January 1 December 31
2012 P 17,400
2013 205,400 P 25,800
2014 305,520
There was a repossession recorded during 2014. It related to a 2013 sale. Thereafter, the
repossessed appliance having a fair market value of P 200 which equaled the uncollected balance in
the customer’s installment accounts receivable.
The realized gross profit in 2014 before gain/loss on repossession is:
a. P198,400 b. P198,328 c. P198,320 d. P198,322
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33. Stonerich Corporation contracted to build a building for Errol Company. The contract price was
P5,000,000 and Stonerich estimated that construction costs would total P4,200,000. The construction
period lasted until September 1, 2015. Costs during each period, estimated total cost of the product at
the end of the year, billings and cash collected during the year were as follows:
2013 2014 2015
Costs during period P1,050,000 P1,950,000 P1,250,000
Estimated or Actual Total Costs 4,200,000 4,250,000 4,250,000
Billings during the period 1,000,000 1,500,000 2,500,000
Cash collected during period 800,000 1,400,000 2,600,000
The amount of gross profit recognized in 2014 using the percentage of completion method must be:
a. P800,000 b. P200,000 c. P365,000 d. P329,412
34. The following information pertain to the building contract of Metropolis Construction Company,
wherein the fixed contract price is P80 million.
2013 2014 2015
Estimated costs P20.1 million P30.15 million P16.75 million
Progress billings 10 million 25 million 45 million
Cash collection 8 million 23 million 49 million
Assume that all costs are incurred, all billings to customers are made, and all collections from
customers are received within 30 days of billing, as planned. Under the percentage-of- completion
method of revenue recognition is used, how much is the income from construction for the year 2015?
a. P3,900,0000 b. P3,250,000 c. P9,750,000 d. P5,850,000
35. V Construction Company has used the cost-to-cost percentage of completion method of recognizing
profits. Michael V assumed leadership of the business after the recent death of his father, Rudy V. In
reviewing the records, Michael V finds the following information regarding a recently completed
building project for which the total contract price was P5,000,000.
Construction in progress account balance 2013 P1,000,000

Construction cost incurred during 2015 2,050,000
Gross profit (loss) recognized in 2013 100,000
Gross profit (loss) recognized in 2014 350,000
Gross profit (loss) recognized in 2015 ( 50,000)
How much cost was incurred in 2014?
a. P1,650,000 b. P2,550,000 c. P900,000 d. P4,600,000
36. Rich Construction Company commenced doing business on January 1, 2014. Construction activities for
the first year of operations are shown below:
All contract costs are with different customers, and any work remaining at December 31, 2014, is
expected to be completed in 2015.
Cash Contract Estimated
Total Billings Collection Costs Incurred Additional
Contract Through Through Through Costs to
Project Price 12/31/2014 12/31/2014 12/31/2014 Complete
A P 3,000,000 P 2,000,000 P 1,800,000 P 2,480,000 P 670,000
B 3,500,000 1,100,000 1,050,000 678,000 2,712,000
C 2,800,000 2,800,000 2,550,000 1,860,000 -0-
D 2,000,000 350,000 250,000 1,230,000 870,000
E 2,400,000 2,050,000 2,000,000 1,850,000 150,000
P 13,700,000 P 8,300,000 P 7,650,000 P 8,02014,000 P 4,402,000
Compute the income (before tax) on the five contracts recognized in 192014 using the cost-to-cost
percentage-of-completion method.
A. P 1,082,000 B. P 940,000 C. P 1,155,400 D. P 690,000
37. On July 1, 2013, Fisher Construction Company, Inc. contracted to build an office building for Norman
Diaz Corp. for a total contract price of P2,000,000. On July 1, Fisher estimated that it would take
between 2 and 3 years to complete the building. On December 31, 2015, the building was deemed
substantially completed. Following are contract costs incurred, estimated costs to complete the
contract, and accumulated billings to Kenneth for 2013, 2014, and 2015.
At 12/31/13 At 12/31/2014 At 12/31/2015
Contract costs incurred during the year P 150,000 P 1,050,000 P 1,050,000
Estimated costs to complete the contract 1,350,000 800,000 -0-
Billings to Norman Diaz 300,000 1,120,000 1,850,000
Using the percentage of completion method, the income or loss from construction to be recognized by
Fisher in 2014 would be:
a. P95,000 b. P50,000 c. P30,000 d. P75,000
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38. In 2014, DMCI Construction company was contracted to build Resort World’s multi-complex resort
facilities for P100 million. The project is estimated to be completed in two years and the contract
provided for:
(1) 5% mobilization fee (to be deducted from the last billing payable within 15 days after the
signing of the contract.
(2) 10% retention provision on all billings, and
(3) Payment of progress billings within 10 days from acceptance.
DMCI, which uses the percentage-of-completion method of accounting, estimated a 25% gross margin
on the project. By the end of 2014, DMCI has presented progress billings corresponding to 50%
completion. All of the progress billings presented in 2014 were accepted, except the last one for 10%
which was accepted on January 5, 2015. With the exception of one bill for 8% which was due on
January 7, 2015, all of the billings accepted in 2014 were settled. Payments made by Resort World in
2014 amounted to:
a. P 33,800,000 b. P 33,500,000 c. P 38,000,000 d. P 37,000,000
39. Crown Peak Inc. is constructing a skyway along España Ave. to alleviate perennial flood problems
experienced by motorists for a fixed price two-year contract for P 210 million with the local authorities.
It has incurred the following cost relating to the contract by the end of first year:
 Material cost = P 50 million
 Labor cost = P 20 million
 Construction overhead = P 20 million
 Marketing costs = P 5 million
 Depreciation of idle plant and equipment = P5 million
At the end of first year, it has estimated cost to complete the contract P 90 million.
What gross profit or loss from the contract should Crown Peak Inc. recognize at the end of the first
year?
a. P15 million b. P 10.5 million c. P10 million d. P 12.8 million
40. CRC has two construction jobs, which commenced during 2013:
Project 1 Project 2
Contract Price P 2,100,000 P 750,000
Cost incurred during 2013 600,000 700,000
Estimated cost to complete 300,000 175,000
Contract billings during 2013 625,000 725,000
Collections 600,000 700,000
Expenses 50,000 25,000
Compute the net income (loss) that CRC would report in its 2013 Statement of Comprehensive
Income.
Zero-Profit Percentage of Completion
A. P (150,000) P 750,000
B. P (150,000) P 600,000
C. P (100,000) P 675,000
D. P (200,000) P 600,000
41. Silver Chair, Inc. charges an initial franchise fee of P 75,000 for the right to operate as a franchisee of
Silver Chair. Of this amount, P 25,000 is collected immediately. The remainder is collected in four (4)
equal annual payments installments of P 12,500 each. These installments have a present value of P
39,623. There is reasonable expectation that the down payment may be refunded and substantial
future services performed by Silver Chair, Inc.
The journal entry to record the franchise fee would be:
A. Cash P 25,000
Notes Receivable 50,000
Unearned Interest Income 10,377
Franchise Revenue 64,623
B. Cash 25,000
Unearned Franchise Revenue 64,623
C. Cash 25,000
D. Cash 25,000
Page 9
42. McDonalds Inc. granted a franchise to Delicious for the Makati area. The franchisee was to pay a
franchisee of P 250,000, payable in five equal annual installments starting with the payment
upon signing of the agreement. The franchise was to pay monthly 3% of gross sales of the preceding
month. Should the operations of the outlet prove to be unprofitable, the franchise may be canceled
with whatever obligations owing McDonalds, Inc. in connection with the P 250,000 franchise fee
waived. The prevailing interest rate is 14%. The first year generated a gross sales of P
1,250,000.
What is the amount of unearned franchisee fee after the first year of operations?
A. P 287,500 B. P 145,700 C. P 195,700 D. 250,000
43. The ST Company sells a franchise that requires an initial franchise fee of P500,000. A P100,000 down
payment is required with the balance covered by the issuance of a 12% note, payable in 4 equal
installments. All material services have been substantially performed by ST Company, the refund
period has expired, and the collectibility of the note is reasonably assured. The journal entry recorded
by ST Company should be
a. Cash 100,000
Unearned Franchise Fees 400,000
b. Cash 100,000
c. Cash 100,000
Unearned Franchise Fees 500,000
d. Cash 100,000
Cash 100,000
NR 400,000
FR 500,000
44. Chow Foods Inc. sells franchises to independent operators throughout the northwestern part of the
United States and some other countries. The contract with three (3) franchisees includes the following
provisions:
1. The franchisee is charged an initial fee of P 800,000. Of this amount, P 300,000 is payable when
the agreement is signed, and a P 100,000 non-interest-bearing note at the end of each of five
subsequent years.
2. All of the initial franchise fee collected by Chow Foods Inc. is to be refunded and the remaining
obligation cancelled if, for any reason, the franchisee fails to open his or her franchise.
3. In return for the initial franchise fee, Chow Foods Inc. agrees to (a) assist the franchisee in
selecting the location for the business, (b) negotiate the lease for the land, (c) obtain financing
and assist with building design, (d) supervise construction, (e) establish accounting and tax
records, and (f) provide expert advice over a 5-year period relating to such matters as employee
and management training, quality control, and promotion.
4. In addition to the initial franchise fee, the franchisee is required to pay to Chow Foods Inc. a
monthly fee of 2% of sales for menu planning, recipe innovations, and the privilege of purchasing
ingredients from Chow Foods Inc. at or below prevailing market prices.
Management of Chow Foods Inc. estimates that the value of the services rendered to each franchisee
at the time the contract is signed amounts to at least P 300,000. All franchisees to date have opened
their locations at the scheduled time and none have defaulted on any of the notes receivable. The
credit ratings of all franchisees would entitle them to borrow at the current interest rate of 10%. The
franchise revenue earned during the year must be:
a. P 678,000 b. P 2,034,000 c. P 1,134,000 d. P 0
45. Ricbenson Company sells franchise that requires an initial franchise fee of P7,000,000. A down
payment of P2,000,000 cash is required with the balance covered by the issuance of a P5,000,000,
non-interest bearing note, payable by the franchisee in 5 equal annual installments. The market rate
for this type of note is 10%. How much must be the franchise revenue earned if all material services
have been substantially performed by the franchisor, the refund period has expired, and the
collectibility of the note is reasonably assured.
a. P7,000,000 b. P3,790,786 c. P2,000,000 d. P5,790,786
46. Pinkwich Pizza charges initial franchise fee of P500,000 for the right to operate as a franchisee of
Pinkwich Pizza. Of this amount, P100,000 is payable when the arrangement is signed and the balance
is payable in five annual payments of P80,000 each. In return for the initial franchise fee, the
franchisor will help locate the site, negotiate the lease or purchase of the site, supervise the
construction activity, and provide the bookkeeping services. The credit rating of the franchisee
indicates that money can be borrowed at 8%. The present value of an ordinary annuity of five annual
Page 10
receipts of P80,000 each discounted at 8% is P310,941.68. Assuming that there is reasonable
expectation that the down payment may be refunded and substantial future services remain to be
performed, how much is the unearned franchise revenue?
a. P0 b. P500,000 c. P310,941.68 d. P410,941.68
47. Shakeys Pizza charges initial franchise fee of P500,000 for the right to operate as a franchisee of
Shakeys Pizza. Of this amount, P100,000 is payable when the arrangement is signed and the balance
is payable in five annual payments of P80,000 each. In return for the initial franchise fee, the
franchisor will help locate the site, negotiate the lease or purchase of the site, supervise the
construction activity, and provide the bookkeeping services. The credit rating of the franchisee
indicates that money can be borrowed at 8%. The present value of an ordinary annuity of five annual
receipts of P80,000 each discounted at 8% is P310,941.68.
Assuming that there is reasonable expectation that the down payment may be refunded and
substantial future services remain to be performed, how much is the unearned franchise revenue?
a. P0 b. P500,000 c. P310,941.68 d. P410,941.68
48. On January 2, 2013, Inasal, Inc. signed an agreement to operate as franchisee of Jolly Foods for an
initial franchise fee of P1,171,875 for 10 years. Of this amount, P234,375 was paid when the
agreement was signed and the balance payable in three annual payments beginning on December 31,
2013. Inasal signed a non-interest bearing note for the balance. The implicit interest rate is 18%.
Assume that substantial services amounting to P365,000 had already been rendered by the franchisor
and indirect costs of P26,875 have also been incurred.
If collection of the note is not reasonably assured, calculate the net income. For the year ended December 31,
2013. Use PV factor 2.17.
a. P376,950 b. P254,888 c. P350,075 d. P228,013
49. Angels Pizza, Inc. charges an initial franchise fee of P 50,000 for the right to operate as a franchisee of
Angels Pizza. Of this amount, P 10,000 is payable when the agreement was signed and the balance is
payable in five annual payments of P 8,000 each. In return for the initial franchise fee, the franchiser
will help locate the site, negotiate with the lease or purchase of the site, supervise the construction
activity, and provide the bookkeeping services. The credit rating of the franchisee indicates that
money can be borrowed at 8%. The present value of an ordinary annuity of five receipts of P 8,000
each discounted at 8% is P 31,941.68.
If the initial downpayment is not refundable and no future services are required by the franchiser, but
collection of the note is so uncertain that recognition of the note as an asset is unwarranted, the
entry should be:
a. Cash 10,000
Discount on Notes Receivable 8,058.32
Unearned Franchise Fees 41,941.68
b. Cash 10,000
Discount on Notes Receivable 8,058.32
Revenue from Franchise Fees 41,941.68
c. Cash 10,000
Revenue from Franchise Fees 10,000.00
d. Cash 10,000
Unearned Franchise Fees 10,000,000
50. Savory charges an initial franchise fee of P 75,000 for the right to operate as a franchise of All’s
Restaurant. Of this amount, P 25,000 is collected immediately. The remainder is collected in four equal
annual installment payments of P 12,500 each. These installments have a present value of P
39,623. There is reasonable expectation that the down payment may be refunded and substantial
future services are yet to be performed by Savory.
The journal entry to record the franchise would be:

A. Cash 25,000
Unearned interest income 10,377
B. Cash 25,000
Unearned franchise revenue 64,623
C. Cash 25,000
Page 11
D. Cash 25,000
51. Racks sold fast food restaurant franchise to Mary Ann. The sale agreement, signed on January 1, 2014,
called for a P 30,000 down payment plus non-interest bearing note for the balance which is P 20,000
payable in two equal annual payments, representing the value of initial franchise services rendered by
Racks. In addition, the agreement required the franchisee to pay five percent of its gross revenues to
the franchisor, this was deemed sufficient to cover the cost and provide a reasonable profit margin on
continuing franchise services to be performed by Racks. Racks incurred direct cost of P 20,000 in
providing the initial services. The restaurant opened on the first month of the second quarter of 2014,
and its sales amounted to P 500,000 each year for the first two years.
Assuming a 10% interest rate is appropriate and the collectability of the note is not reasonably
assured. (the PV of annuity of P1 at 10% for 2 periods is 1.7355). Use two decimal places.
The total revenue in 2015 is
A. P 74,090 B. P 31,160 C. P 31,510 D. P 35,000
52. Good Shepherd operates a branch in Dagupan City. Selected accounts taken from December 31, 2015
financial statements of Good Shepherd and its branch follows.
Home Office Branch

Sales P 6,900,000 P 3,765,000
Shipments to Branch 1,750,000
Shipment from home office 2,187,500
Inventory, Jan 1 800,000 120,000
Inventory, December 31 640,000 250,000
Purchases 6,800,000 1,000,000
Allowance for overvaluation before adjustment 452,500
Expenses 356,000 250,000
The ending inventory of the branch includes P 120,000 purchased from outside suppliers. The
consolidated net income is:
A. P 1,791,500 B. P2,220,000 C. P 2,244,000 D. P2,218,000
53. Summary adjusted trial balance for the home office and branch of Diamond Corporation at December
31, 2011 are as follows:
Home office Branch

Debits:
Other assets P P
530,000 165,000
Inventories, January 1, 2011` 50,000 45,000
Branch 200,000 -
Purchases 500,000 -
Shipments from home office - 240,000
Expenses 120,0000 50,000
Dividends 100,000 _______
Total debits P 1,500,000 P 500,000
Credits:
Other liabilities P 90,000 P 25,000
Capital stock 500,000 -
Retained earnings 100,000 -
Home office - 175,000
Unrealized profit in branch 10,000 -
inventory/loading
Sales 537,500 300,000
Shipments to branch 200,000 -
Branch profit 62,500 ________
Total credits P 1,500,000 P 500,000
1. The home office ships merchandise to its branch at 120% of home office cost.
2. Inventories at December 31, 2011 are P 70,000 for the home office and P 60,000 for the
branch. The branch inventory is at transfer prices.
The combined net income of the home office and the branch amounted to:
A. P 370,000 B. P 200,000 C. P 132,500 D. P 170,000
Page 12
54. SR Corporation retails merchandise through its home office store and through a branch store in a
distant city. Separate ledgers are maintained by the home office and the branch. The branch store
purchases merchandise from the home office (at 120% of home office cost), as well as from outside
suppliers. Selected information from the December 31, 2012 trial balances of the home office and
branch is as follows:
Home Office Branch

Sales P 120,000 P 60,000
Shipments to branch 16,000 -
Purchases 70,000 11,000
Inventory, January 1, 2012 40,000 30,000
Shipments from home office - 19,200
Expenses 28,000 12,000
Branch inventory allowance 7,200 -
 The entire difference between the shipment account is due to the practice of billing the branch at
cost plus 20%.
 The December 31, 2012 inventories are P 40,000 and P 20,000 for the home office and the
branch, respectively. (The branch purchased 16% of its ending inventory from outside suppliers.)
 Branch beginning and ending inventories include merchandise acquired from the home office as
well as from outside suppliers. Merchandise acquired from home office is inventoried at 120% of
home office cost.
Compute the:
Overvaluation of Cost Goods Adjusted Branch Net
Sold Income
A. P 4,400 P 50,200
B. 2,800 10,600
C. 7,200 15,000
D. 4,400 12,200
55. Long Beach Corporation has two merchandise outlets, its main store and its Beckham branch. All
purchases are made by the main store and shipped to the branch at cost plus 10%. On January 1,
2012, the main store and Beckham inventories were P 17,000 and P 4,950, respectively. During 2012,
the main store purchased merchandise costing P 50,000 and shipped 40% of it to Beckham. At
December 31, 2012 Beckham made the following closing entry:
Sales 40,000
Inventory 6,050
Shipments from main store 22,000
Expenses 13,100
Inventory 4,950
Main store 6,000
Compute the (1) actual branch income for 2012 on a cost basis assuming generally accepted
accounting principles and (2) the combined cost of goods sold that should appear in Long Beach
Company’s income statement for 2012 if the main store inventory at December 31, 2012 is P 14,000.
A. (1) P 6,000; (2) P 74,000 C. (1) P 8,100; (2) P 54,000
B. (1) P 7,900; (2) P 52,000 D. (1) P 7,900; (2) P 53,900
56. The Ray Company was organized in 2011. Shortly after opening its doors to the public at the main
store, Ray Company established a branch in another city. At the end of the second year of operations,
the home office received the following condensed income statement from the branch:
Revenues P140,000
Cost of goods sold 110,000
Gross margin 30,000
Selling and administrative expenses 25,000
Net income P 5,000
The management at the home office questioned the accuracy of these figures and assigned you the
task of verifying the branch data. Your review of the records uncovered the following facts:
1. The beginning of year balance in Unrealized Profit to Branch was P6,000.
2. During the period, the home office shipped goods to the branch that had cost the main store
P75,000. However, your review of the branch receiving reports revealed that a number of
shipments from the home office had been recorded twice by the branch accountant.
3. The branch is billed a uniform 25% above cost and receives inventory only from the home office.
4. The branch ending inventory was correctly reported at a billed price of P21,750.
5. When reconciling reciprocal accounts, you found that the branch had not recorded P2,000 of
services performed by the home office and billed to the branch. All other selling and
administrative expenses were correctly reported by the branch.
Compute the correct net income of the branch.
a. P31,400 b. P33,400 c. P25,400 d. P11,000
Page 13
57. As you begin to audit the books of the Johnter Company, you notice a discrepancy between the
balance in the Investment in Branch (P136,020 Dr.) and the Home Office (P175,400 Cr.) accounts. The
following information is available:
1. The home office bills goods shipped to the branch at 150% of cost. At the beginning of the year,
branch inventory was stated at P75,000 after the annual physical count, and the home office
unrealized profit account had a credit balance of P5,000. You find that a shipment with a billed
value of P60,000 made toward the end of the prior year had not been recorded by the home
office.
2. On December 31 of the year under review, the branch mailed to the home office a check for
P25,000 and a notice that the branch had collected P4,380 on a home office account receivable.
These items had not been recorded by the home office.
3. The branch was opened during the preceding year and its operating loss of P42,800 for the year
was capitalized by the branch as a start-up costs by the following entry:
Start-up Cost (Intangible Asset) 42,800
Income Summary 42,800
The account is not being amortized by the branch, and no entry was made by the home office to record
the net loss.
How much must be the adjusted balance of reciprocal accounts?
a. P175,400 b. P192,600 c. P115,400 d. P132,600

The VITA Corporation operates a branch in a nearby city. The home office ships merchandise to the
branch at 125 percent of its cost. Selected information from the December 31, 2011, trial balances is
as follows:
Home Office Branch
Dr. (Cr.) Dr. (Cr.)
Sales P(1,000,000) P(800,000)
Shipments to branch (480,000)
Purchases 700,000
Shipments from home office 600,000
Inventory, January 1, 2011 160,000 60,000

Unrealized profit in branch inventory (132,000)
Expenses 320,000 120,000
Closing inventories at December 31, 2011, are:
Home office, P120,000 Branch, P100,000
58. Determine the adjustment to net income of the branch.

a. P120,000 b. P232,000 c. P112,000 d. P20,000
59. Determine the combined net income of the home office and branch.
a. PP652,000 b. P420,000 c. P232,000 d. P540,000
60. The E Co. bills its only branch for merchandise at 20% above cost. The branch sells the merchandise
at 30% above billed or purchase price. Shortly after the close of business on January 31, some of the
branch merchandise were destroyed by fire. The following information were available:
Inventory on January 1, which ¼ came from outsiders at selling price P260,000
Inventory on January 31 of merchandise not destroyed by fire, of which 1/5 89,700
came from outsiders (at selling price)
Shipments from home office on January 1 to January 31 (at billed price ) 720,000
Purchases from outsiders 120,000
Sales from January 1 to January 31 (came from outsiders) 130,000
Sales from January 1 to January 31 (came from home office) 550,120
Sales returns from January 1 to January 31, all came from home office 32,200
Sales allowances from January 1 to January 31 (from home office) 3,000
Sales discounts from January 1 to January 31 (from home office) 1,368
The estimated cost of the merchandise destroyed by fire is:
a. P455,700 b. P457,350 c. P430,500 d. P403,200
61. The following information came from the books and records of Martin Corporation and its branch. The
balances are as of December 31, 2010, the second year of the corporation’s existence.
Home office Branch
Dr. (Cr.) Dr. (Cr.)
Sales P(400,000)
Expenses 137,500
Shipments to branch P(150,000)
Unrealized profit in branch inventory ( 32,500)
Page 14
The branch purchases all of its merchandise from the home office. The home office ships this
merchandise at 120 percent of its cost. The ending inventory of the branch is P30,000 at the billed
price.
There are no shipments in transit between the home office and the branch.
The effect of the above information will be:
A. The total realized profit in branch inventory will be P32,500.
B. The net income reported by the branch is understated by P27,500.
C. The correct beginning inventory of the branch is P15,000.
D. The correct net income of the branch is P97,500.
62. Norway provided the following information for the transaction occurred during August. The production
plant uses the JIT costing system.
- Raw materials costing P 750,000 were purchased.

- All direct materials costing P 750,000 were requisitioned for production.
- Direct labor costs of P 500,000 were incurred.
- Actual factory overhead costs amounted to P 2,487,500.
- Applied conversion cost totalled P 3,250,000. This includes the direct labor cost.
- All units are completed and immediately sold.
The total RIP used to be backflushed to FG and the adjusted COGS, respectively.
A. 750,000; 4,262,500 C. 4,000,000; 4,262,500
B. 750,000; 3,737,500 D. 4,000,000; 3,737,500
63. Consider the following data:

Direct Direct
Materials Labor
Cost incurred: actual inputs x actual prices P200,000 P90,000
Actual inputs x standard prices 214,000 86,000
Standard inputs allowed for actual outputs
achieved x standard prices 225,000 80,000
The entry to record materials issued to production under standard cost system must be:
a. Work in process inventory 225,000
Material quantity variance 11,000
Materials inventory 214,000
b. Work in process inventory 214,000
c. Work in process inventory 225,000

d. Work in process inventory 214,000


The following information summarizes the standard cost for producing one metal tennis racket frame.
In addition, the variances for one month production are given. Assume that all inventory accounts
have zero balances at the beginning of the month.
Standard Cost Standard
Per Unit Monthly Costs
Materials P 4.00 P 8,400
Direct labor 2 hours @ P2.60 5.20 10,920
Factory overhead:
Variable 1.80 3,780
Fixed: 5.00 10,500
Variances:
Materials price, P 244.75 unfavorable
Materials quantity, P 500.00 unfavorable
Labor rate, P 520.000 unfavorable
Labor efficiency, P 2,080.00 unfavorable
64. What were the actual direct labor hours worked during the month?
A. 5,000 B. 4,800 C. 4,000 D. 3,400
65. Using the same information in No. 35, what were the actual quantities of materials used during the
month?
Page 15
A. 2,156 B. 2,100 C. 2,225 D. 1,975
66. UNTV Company has the following information available for October when 3,500 units were produced
(round answers to the nearest dollar).
Standards:
Material 3.5 pounds per unit @ P 4.50 per pound
Labor 5.0 hours per unit @ P 10.25 per hour
Actual:
Material purchased 12,300 pounds @ P 4.25
Material used 11,750 pounds
17,300 direct labor hours @ P 10.20 per hour
What is the labor rate variance?

A. 875 favorable C. 865 unfavorable
B. 865 favorable D. 875 unfavorable
67. The following July information is for MTV Company

Standards:
Material 3.0 feet per unit @ P 4.20 per foot
Labor 2.5 hours per unit @ P 7.50 per hour
Actual:
Production 2,750 units produced during the month
Material 8,700 feet used; 9,000 feet purchased @ P 4.50 per foot
Labor 7,000 direct labor hours @ P7.90 per hour
(Round all answers to the nearest dollar).

What is the material price variance (calculated at point of purchase)?
A. 2,700 unfavorable C. 2,610 favorable
B. 2,700 favorable D. 2,610 unfavorable
68. Jeline Glass Works production budget for the year ended November 30, 2013, was based on 200,000
units. Each, unit requires two standard hours of labor for completion. Total overhead was budgeted at
P 900,000 for the year, and the fixed overhead rate was estimated to be P 3.00 per unit. Both fixed
and variable overhead are assigned to the product on the basis of direct labor hours. The actual data
for the year ended November 30, 2013, are presented here.
Actual production in units 198,000
Actual direct labor hours 440,000
Actual variable overhead P 352,000
Actual fixed overhead P 575,000
Jeline’s variable overhead efficiency variance for the year ended November 30, 2013 is:
A. 33,000 unfavorable C. 33,000 favorable
B. 35,520 favorable D. 35,200 unfavorable

The Primrose Corporation manufactures a single product being used for heavy industrial
machineries. It operates on three shifts under two departments. Cutting Department and Soothing
Department. Materials are added to the product in each department; however, the number of units
produced is not increased in the process.
The following records for each department were obtained from the books of Primrose Corporation for
the month of January 2012:
Cutting Dept. Smoothing
Dept.
Units in process, January 1, 2012 - -
Units transferred from preceding - 80,000
department
Units started in production 100,000 -
Units completed and transferred out 80,000 60,000
Units in process, January 31, 2012 20,000 18,000
Units spoiled in production - 2,000
Spoiled units are 50% complete as to materials, labor and overhead. Its cost is treated as a separate
cost element (expense) in the department where the spoilage occurs. Spoiled units have no
recoverable value.
Percentage of completion of units in process on January 31, 2012 follows:

Dept.
Materials 100% 100%
Page 16
Labor 60% 80%
Overhead 20% 40%
The following charges were indicated in the cost records for the month of January 2012:
Dept.
Materials P 300,000 P 118,500
Labor 100,800 75,020
69. The total cost transferred to next department – Smoothing:

A. P 496,000 b. P 556,000 c. P 584,8000 d. P 690,000
70. The cost of work-in-process ending in Cutting Department:

A. P 88,800 B. P 84,000 C. P 60,000 D. P 4,800
71. The total cost transferred to finished goods:

A. P 496,000 B. P 556,000 C. P 584,800 D. P 690,000
72. The total cost transferred to factory overhead/abnormal spoilage:

A. P 17,700 B. P 11,500 C. P 6,200 D. P 0
73. The cost of work-in-process ending in Smoothing Department:

A. P 185,400 B. P 111,600 C. P 73,800 D. P 138,600
74. Caltex Company manufactures three products in a joint process which costs P 25,000. Each product can be
sold at split-off or processed further and then sold. 10,000 units of each product are manufactured. The
following information is available for three products.
Separable Sales Value
Product Sales Value at Split-offProcessing Costs at Completion
after Split-off
A P 12 P 9 P 21
B 10 4 17
C 15 6 19
To maximize profits, which products should Caltex process further?
A. Product A only C. Product C only
B. Product B only D. Products A, B, and C
75. At the end of last fiscal year, Belo Company had the following account balances:
Overapplied overhead P 6,000
Cost of Goods Sold P 980,000
Work in Process Inventory P 38,000
Finished Goods Inventory P 82,000
If the most common treatment of assigning overapplied overhead were used, the final balance in Cost
of Goods sold is:
A. 974,000 B. 974,655 C. 985,345 D. 986,000
76. The following information is available for GLOBE Company for the current year:
Beginning Work in Process Costs of Beginning Work in Process:

(75% complete) 14,500 units Material $ 25,100
Started 75,000 units Conversion 50,000
Ending Work in Process Current Costs:
(60% complete) 16,000 units Material $120,000
Abnormal spoilage 2,500 units Conversion 300,000
Normal spoilage 5,000 units
(continuous)
Transferred out 66,000 units
All materials are added at the start of production.

Using weighted average, what are equivalent units for material?
A. 82,000 B. 89,500 C. 84,500 D. 70,000
77. HELLIGERS Company has the following information for July:

Units started 100,000 units
Beginning Work in Process: (35% complete) 20,000 units
Normal spoilage (discrete) 3,500 units
Abnormal spoilage 5,000 units
Page 17
Ending Work in Process: (70% complete) 14,500 units
Transferred out 97,000 units
Beginning Work in Process Costs:
Material P 15,000
Conversion 10,000
All materials are added at the start of the production process. Helligers Company inspects goods at 75
percent completion as to conversion.
What are equivalent units of production for conversion costs, assuming FIFO?
A. 108,900 B. 103,900 C. 108,650 D. 106,525
78. Kenneth Company acquired the net assets of Love Corporation on January 1, 2012. Since the parties
cannot agree on the definite value of the company in terms of potential future earnings, they agreed
to include in the purchase agreement a provision for contingent consideration. Whereby the acquirer
will pay an additional cash payments on January 1, 2014 equal to twice the amount by which average
earnings of Love exceed P 250,000 per year, prior to January 1, 2014. Net income was P 500,000 in
2012 and P 600,000 in 2013. Assume that the liabilities recorded on January 1, 2012, include an
estimated contingent liability amounting to P 400,000.
What was the entry made by Kenneth in January 1, 2014?

A. Liability from contingent consideration 400,000
Cash 400,000
B. Goodwill 200,000
Liability from contingent consideration 400,000
Cash 600,000
C. Liability from contingent consideration 400,000
Loss on contingent consideration 200,000
Cash 600,000
D. Goodwill 600,000
Cash 600,000
79. On January 1, 2013, Ben Corporation issued 6,000 shares of its P10 par value common stock to
acquire the assets and liabilities of Booz Company. Ben Corporation shares were selling at P90 on that
date. Historical cost and fair value balance sheet data for Booz Company at the time of acquisition
were as follows:
Balance Sheet Item Historical Cost Fair Value

Cash and Receivables P 50,000 P 50,000
Inventory 120,000 200,000
Building and Equipment 400,000 300,000
Less: Accumulated Depreciation ( 150,000) .
Total Assets P420,000 P550,000
Accounts Payable P 50,000 P 50,000
Common Stock (P20 par value) 200,000
Retained Earnings 170,000
Total Liabilities and Equities P420,000
Ben Corporation incurred listing fees of P10,000 and audit fees of P5,000 in issuing its new shares and
paid a finder’s fee of P25,000 in locating the merger candidate. Under the purchase of interest
combination, how much goodwill must be recognized in the books?
a. P40,000 b. P55,000 c. P65,000 d. P80,000
80. On January 1, 2012, Peters, Inc., issued 200,000 additional shares of its voting common stock in
exchange for 100,000 shares of Smith Company’s outstanding voting common stock in a business
combination appropriately accounted for by the pooling of interests method wherein Smith Company
will be dissolved. The market value of Peters’ voting common stock was P40 per share on the date of
the business combination. The balance sheets of Peters and Smith immediately before the business
combination contained the following information:
Peters, Inc.:
Common stock, par value P5 per share; authorized,
1,000,000 shares; issued and outstanding, 600,000 shares P 3,000,000
Additional paid-in capital 6,000,000
Retained earnings 11,000,000
Total stockholders’ equity P20,000,000
Smith Company:
Common stock, par value P10 per share; authorized,
250,000 shares; issued and outstanding, 100,000 shares P 1,000,000
Additional paid-in capital 2,000,000
Retained earnings 4,000,000
Total stockholders’ equity P 7,000,000
Additional information is as follows:
1. The full amount of any differential at acquisition relates to land.
2. Smith owed P4,000 to Peters on account at the date of combination.
Page 18
How much is the total stockholders’ equity of Peters, Inc., immediately after the business combination?
a. P27,000,000 b. P20,000,000 c. P26,996,000 d. P28,000,000
81. The Nightshade Company acquired 80% of the Lotus Company for a consideration, transferred of P
100 million. The consideration was estimated to include a control premium of P 24 million. Lotus net
assets were P 85 million at the acquisition date. Are the following statements true or false, according
to IFRS 3 Business combinations?
(1) Goodwill should be measured at P 32 million if the non-controlling interest is measured at its
share of Lotus net assets.
(2) Goodwill should be measured at P 34 million if the non-controlling interest is measured at fair
value.
Statement 1 Statement 2 Statement 1 Statement 2
a. False False c. True False
b. False True d. True True
82. The Magnolia Company acquired a 70% interest in the Spider Company for P 1,420,000 when the fair
value of Spider’s identifiable assets and liabilities was P 1,200,000. Magnolia acquired a 65% interest
in the Honey Company for P 300,000 when the fair value of Honey’s identifiable assets and liabilities
was P 640,000. Magnolia measures non-controlling interests at the relevant share of the identifiable
net assets at the acquisition date. Neither Spider nor Honey had any contingent liabilities at the
acquisition date and the above fair values were the same as the carrying amounts in their financial
statements. Annual impairment reviews have not resulted in any impairment losses being recognized.
Under PFRS 3 Business combinations, what figures in respect of goodwill and of gains on bargain
purchases should be included in Magnolia’s consolidated statement of financial position?
a. Goodwill: P 580,000; Gains on the bargain purchases: P 116,000
b. Goodwill: Nil or zero; Gains on the bargain purchases: P 116,000
c. Goodwill: Nil or zero; Gains on the bargain purchases: Nil or zero
d. Goodwill: P580,000; Gains on the bargain purchases: Nil or zero
83. The Snapdragon Company owns 65% of the Gardenia Company. On the last day of the accounting
period Gardenia sold to Snapdragon a non-current asset for P 200,000. The asset originally cost P
500,000 and at the end of the reporting period its carrying amount in Gardenia’s books was P
160,000. The group’s consolidated statement of financial position has been drafted without any
adjustments in relation to this non-current asset.
Under PAS 27 Consolidated and separate financial statements, what adjustments should be made to
the consolidated statement of financial position figures for non-current assets and retained earnings?
Non-current assets Retained earnings
a. Increase by P 300,000 Increase by P 195,000
b. Reduce by P 40,000 Reduce by P 26,000
c. Reduce by P 40,000 Reduce by P 40,000
d. Increase by P 300,000 Increase by P 300,000
84. The Lemon Blossom owns 75% of the Violet Company. On December 31, 2013, the last of the
accounting period, Violet sold to Lemon Blossom a noncurrent asset for P 200,000. The asset’s original
cost was P 500,000 and on December 31, 2013 its carrying amount in Violet’s books was P 160,000.
The groups’ consolidated statement of financial position has been drafted without any adjustment in
relation to this non-current asset.
the consolidated statement of financial position figures for retained earnings and non-controlling
interest?
Retained Earnings Non-controlling interest
A. Increase by P 225,000 Increase by P 75,000
B. Increase by P 300,000 No change
C. Reduce by P 30,000 Reduce by P 10,000
D. Reduce by P 40,000 No change
85. The Venus Company owns 65% of the Mimosa Company. On December 31, 2013, the last day of the
accounting period, Venus sold to Mimosa a noncurrent asset for P1,000. The asset’s original cost was P
2,500 and on December 31, 2013 its carrying amount in Venus books was P 800. The group’s
consolidated statement of financial position has been drafted without any adjustments in relation to
this non-current asset.
Under PAS 27 consolidated and separate financial statements, what adjustments should be made to the
consolidated statement of financial position figures for non-current assets and non-controlling interest?
Non-current assets Non-controlling interest

A. Increase by P 1,500 Increase by P 525
B. Reduce by P 200 No change
C. Reduce by P 200 Reduce by P 70
Page 19
D. Increase by P 1,500 No change
86. The Snowdrop Company acquired equipment on January 1, 2011 at a cost of P 800,000, depreciating it
over 8 years with a nil residual value. On January 1, 2014 the Minch Company acquired 100% of
Snowdrop and estimated the fair value of the equipment at P 460,000, with a remaining life of 5 years.
This fair value was not incorporated into Snowdrop’s books and the depreciation expense continued to
be calculated by reference to original cost.
the depreciation expense for the year and the statement of financial position carrying amount in
preparing the consolidated financial statements for the year ended December 31, 2015?
Depreciation expense Carrying amount
A. Increase by P 8,000 Increase by P 24,000
B. Increase by P 8,000 Decrease by P 24,000
C. Decrease by P 8,000 Increase by P 24,000
D. Decrease by P 8,000 Decrease by P 24,000

Arbutus Company acquired 60 percent of Azalea Company for P 300,000 when Azalea’s book value
was P 400,000. The newly comprised 40 percent non-controlling interest had an assessed
fair value of P 180,000. Also at the date of acquisition, Azalea had a trademark (with a 10-year life)
that was undervalued in the financial records by P 60,000. Also, patented technology (with a 5-yr life)
was undervalued by P 40,000. Two years later, the following figures are reported by these two
companies (stockholders’ equity accounts have been omitted)
Arbutus Azalea Azalea

Company Company Company
Book value Book Value Fair Value
Current assets P 620,000 P 300,000 P 320,000
Trademarks 260,000 200,000 280,000
Patented Technology 410,000 150,000 150,000
Liabilities (390,000) (120,000) (120,000)
Revenues (900,000) (400,000)
Expenses 500,000 300,000
Investment income Not given
87. What is the consolidated net income prior to the reduction for the non-controlling interest’s share of
the subsidiary’s income?
a. P 400,000 b. P 486,000 c. P 491,600 d. P 500,000
88. Assuming that Azalea Company has paid no dividends, what is the non-controlling interest’s share of
the subsidiary’s income?
a. P 26,000 b. P 28,800 c. P 34,400 d. P 40,000
89. Property was purchased on December 31, 2011 for 20 million baht. The general price index in the
country was 60.1 on that date. On December 31, 2013, the general price index had risen to 240.4. If
the entity operates in a hyperinflationary economy, what would be the carrying amount in the
financial statements of the property after restatement?
a. 20 million baht c. 80 million baht
b. 1,200.2 million baht d. 4.808 million baht

REH Corp. (a Philippine-based company)sold parts to a foreign customer on December 1, 2014, with
payment of 10 million foreign currencies to be received on March 31, 2015. The following exchange
rates apply:
Forward rate
Dates Spot Rate (for March 31, 2015)
December 1, 2014 P .0035 P .0034 (4 months)
December 31, 2014 .0033 P .0032 (3 months)
March 31, 2014 .0038 N/A
REH’s incremental borrowing rate is 12 percent. The present value factor for three months at an
annual rate of interest of 12 percent (1 percent per month) is 0.9706.
90. Assuming that REH entered into no forward contract, how much foreign exchange gain or loss should it
report on its 2014 income statement with regard to this transaction?
A. P 5,000 gain b. P 3,000 gain c. P 2,000 loss d. P 1,000 loss
91. Assuming that REH entered into no forward contract to sell 10 million foreign currencies on December
1, 2014, as a fair value hedge of a foreign currency receivable, what is the net impact on its net
income in 2014 resulting from a fluctuation in the value of the foreign currencies?
A. No impact on net income c. P 2,000 decrease in net income
B. P 58.80 decrease in net income d. P 1,941.20 increase in net income
Page 20
92. Palm Corporation, operating as a Philippine Corporation, expects to order goods from a foreign
supplier at a price of 200,000 foreign currencies, with delivery and payment to be made on April 15.
On January 15, Palm purchased a three-month call option on 200,000 pounds and designated this
option as a cash flow hedge of a forecasted foreign currency transaction. The option has a strike price
of P 0.25 per foreign currency and costs P 2,000. The spot rate for pounds is P0.25 on January 15 and
P 0.22 on April 15.
What amount will Palm Corporation report as an option expense in net income during the period
January 15 to April 15?
A. P 600 B. P 1,000 C. P 2,000 D. P 4,400
93. Love Company ordered parts costing FC 100,000 from a foreign supplier on May 12 when the spot rate
was P.20 per FC. A one-month forward contract was signed on that date to purchase FC 100,000 at a
forward rate P0.21. The forward contract is properly designated as a fair value hedge of the FC
100,000 firm commitment. On June 12, when the company receives the parts, the spot rate is P 0.23.
At what amount should Love Company carry the parts inventory on its books assuming that the firm
commitment account be considered as an adjustment to net income account (or profit or loss
account)?
A. P 20,000 B. P 21,000 C. P 22,000 D. P 23,000
94. Philip, Inc. had a receivable from a foreign customer that is payable in the customer’s local currency.
On December 31, 2014, Philip correctly included this receivable for 200,000 local currency units (LCU)
in its balance sheet at P 110,000. When Philip collected the receivable on February 15, 2015,
the Philippine peso equivalent was P 95,000. In Philip’s 2015 consolidated income statement, how
much should it report as a foreign exchange loss?
a. P 0 b. P 10,000 c. P 15,000 d. P 29,000
95. Jolly Foods Company, a local company, bought furniture from Ailments Corporation, a US company, for
35,000 US Dollars in 2014. Pertinent exchange rates relating to this transaction are as follows:
Buying Rate Selling Rate
Receipt of order P 47.10 P 47.20
Date of shipment 47.25 47.45
Balance sheet date 49.50 49.60
Settlement date 49.45 49.50
What is the foreign exchange gain or loss of Jolly Foods Company for 2014?
A. P 78,750 loss C. P 78,750 gain
B. P 75,250 loss D. P 75,250 gain
96. Larsen Company acquired 65% of the share capital of a foreign entity on August 31, 2015. The fair
value of the net assets of the foreign entity at that date was 8.24 million yen. This value was 2.64
million higher than the carrying value of the net assets of the foreign entity. The excess was due to the
increase in value of non-depreciable land. The functional currency of the entity is Philippine peso. The
financial year-end of the company is December 31, 2015. The exchange rates at August 31, 2015 and
December 31, 2015 were Yen 2 = Php 1 and Yen 1.25 = Php 1, respectively.
What figure for the fair value adjustment should be included in the group financial statements for the
year ended December 31, 2015?
A. P 4,284,800 B. P 2,678,000 C. P 2,112,000 D. P 1,320,000
97. The accounts of Shell Corporation, a Filipino corporation, shows P81,300,000 accounts receivable and
P38,900,000 accounts payable at December 31, 2015, before adjusting entries are made. An analysis
of the balances reveals the following:
Accounts receivable
Receivable denominated in Philippine Pesos P28,500,000
Receivable denominated in 34,700,000 Japanese Yen 11,800,000
Receivable denominated in 804,000 U.S. Dollars 41,000,000
Accounts payable
Payable denominated in Philippine Pesos P 6,850,000
Payable denominated in 200,000 Canadian Dollars 7,600,000
Payable denominated in 72,000,000 Japanese Yen 24,450,000
Current exchange rates for Japanese Yen, U. S. Dollars, and Canadian Dollars at December 31, 2015 are
P0.3456, P51.39, and P38.55, respectively.
Determine the foreign currency exchange gain or loss that must appear on the income statement of
Shell Corporation for the year ended December 31, 2015.
a. P509,880 gain b. P543,200 loss c. P33,320 gain d. P33,320 loss
98. Globe Shipping is an importer and exporter. The following are some transactions with foreign
companies.
Page 21
a. Globe Shipping sold blue jeans to a French importer on January 15 for P1,296,000, when the
exchange rate was P6.33 per French franch. Collection, in pesos, was made on March 15, when
the exchange rate was P6.20.
b. On March 8, Globe Shipping purchased woolen goods from Great Britain for 7,000 pounds. The
exchange rate was P63.57 per pound on March 8, but the rate was P62.90 when payment was
made on May 1.
c. On May 12, Globe Shipping signed a contract to purchase toys made in Taiwan for 80,000 Taiwan
dollars. The toys were to be delivered 80 days later on August 1, and payment was due on
September 9, which was 40 days after delivery. Also, on May 12, Globe Shipping entered into a
120-day forward contract to buy Taiwan dollars at a forward rate of P1.26. The spot rates were as
follows: May 12, P1.36; August 1, P1.46; September 9, P1.40.
d. Globe Shipping sold microcomputers to a German enterprise on June 6 for 150,000 marks.
Payment was due in 90 days, on September 4. On July 6, Globe Shipping entered into a 60-day
forward contract to sell marks at a forward rate of P20.55. The spot rates were as follows: June 6,
P21.50; July 6, P21.00; and September 4, P20.80.
How much transaction gain or loss that should appear on the income statement of Globe Shipping for
the current year?
a. P4,690 b. P70,310. c. P142,500 d. P137,810
99. The Palmer Corporation operates as a Filipino corporation. Palmer recently entered into a forward
exchange contract. The company promised to pay 200,000 LCU in six months in exchange for
P31,000. This contract was entered into because the company has a firm commitment to sell
merchandise to a customer in six months for 200,000 LCU. At the date of acquiring the forward
contract, the exchange rate is P0.17 = 1 LCU. After two months, the spot rate is P0.18 = 1 LCU and
the rate on a forward contract maturing in four months is P0.172 = 1 LCU.
How does Palmer reflect the change in the value of the LCU at the end of two months?
a. Recognizes a P3,400 loss on forward contract only.
b. Recognizes a P3,400 gain on firm commitment only.
c. Recognizes a P3,400 loss on forward contract and a P3,400 gain on firm commitment.
d. Recognizes a P3,400 deferred foreign exchange loss.

Alaska, Inc. has several transactions with foreign entities. Each transaction is denominated in the local
currency unit (LCU) of the country in which the foreign entity is located.
Transaction 1 On November 12, 2015, Alaska, Inc. purchased goods from a foreign company at a
price of LCU 40,000 when the direct exchange rate was 1 LCU = P4.86. The account has not been
settled as of December 31, 2015, when the exchange rate has decreased to 1 LCU = P5.15
Transaction 2 On November 28, 2015, Alaska, Inc. sold goods to a foreign entity at a price of LCU
20,000 when the direct exchange rate was 1 LCU = P24.56. The account has not been settled as of
December 31, 2015, when the exchange rate has increased to 1 LCU = P23.48.
Transaction 3 On December 2, 2015, Alaska, Inc. purchased goods from a foreign company at a price
of LCU 30,000 when the direct exchange rate was 1 LCU = P4.81. The account has not been settled
as of December 31, 2015, when the exchange rate has increased to 1 LCU = P4.55.
Transaction 4 On December 12, 2015, Alaska, Inc. sold goods to a foreign entity at a price of LCU
2,500,000 when the direct exchange rate was 1 LCU = P1.15. The account has not been settled as
of December 31, 2015, when the exchange rate has decreased to 1 LCU = P1.24
100.Determine the December 31, 2015, year-end balance of accounts receivable.

a. P338,700 b. P342,500 c. P3,366,200 d. P3,569,600
101.Determine the December 31, 2015, year-end balance of accounts payable.
a. P338,700 b. P342,500 c. P3,366,200 d. P3,569,600
102.Determine the net gain or loss from foreign currency fluctuation to be reported in the income
statement of 2015.
a. P33,200 b. P232,800 c. P199,600 d. P266,000
103.On November 1, 2012, ACE Corporation’s trustee prepares a Statement of Affairs with the following
information:
- P340,000 cash will be received by the unsecured creditors whose claims totaled P 1,360,000.
- X received a 12% note of P 124,000 from ACE on March 1, 2012, secured with machinery with a
market value of P 115,000.
Page 22
- ACE issued to to Y a 12%, 1-year note of P 136,000 on January 1, 2012. Nothing has been
pledged to this note.
- Z holds a note of P 137,500 on which interest of P 7,452 is accrued, secured will equipment with
a book value of P 153,000. The fair value of the equipment is determined to be P 173,250.
- ACE stills owes W, its cashier, with her salary worth P 12,220.
Which of the following statements about the creditors of ACE is false?
A. The unsecured creditor without priority will receive P 37,400.
B. The unsecured creditor with priority will received P 3,055
C. The fully secured creditor will be paid an amount of P 144,952
D. The partially secured creditor will be paid an amount of P 119,730.
104.The following information were taken from the statement of realization and liquidation of Mark
Anthony Company in Receivership for the month ended December 31, 2011:
Assets Liabilities
Assets to be realized P950,000 Liabilities to be liquidated P650,000
Assets acquired 50,000 Liabilities assumed 15,000
Assets realized 300,000 Liabilities liquidated 350,000
Assets not realized 420,000 Liabilities not liquidated 318,500
Profit and Loss
Supplementary charges P 90,000 Supplementary credits 301,500
How much is the profit or loss for the month of December 2011.
a. P72,000 profit b. P72,000 loss c. P211,500 profit d. P211,500 loss
105.The following data were taken from the statement of affairs for Wallace Corp.
Assets Pledged for fully secured liabilities (fair value P 150,000) 180,000
Assets pledged for partially secured liabilities (fair values, P 104,000) 148,000
Free Assets (fair value, P80,000) 140,000
Unsecured liabilities with priority 14,000
Fully Secured liabilities 60,000
Partially secured liabilities 120,000
Unsecured liabilities without priority 230,000
The total estimated deficiency to unsecured creditors and the expected recovery per peso of
unsecured claims.
a. 76,000 and .69 c. 90,000 and .65
b. 90,000 and .63 d. 74,000 and .68
106.Mike and Roel formed a joint venture to purchase and sell a special type of merchandise. The
venturers agreed to contribute cash of P 270,000 each to be used in purchasing the merchandise, and
to share profits and losses equally. They also agreed that each shall record his purchases, sales, and
expenses in their own books.
Upon termination of the joint venture, the following data are made available:
Mike Roel
Joint venture P 234,000 Credit P 170,600 Debit
Inventory Taken 10,800 33,750
Expenses paid from Joint venture cash 5,400 9,900
How much cash is to be received by Roel in the final settlement?

A. P 267,950 B. P 290,225 C. P 323,975 D. P 280,325
107.Daniel and Paul join a venture for the sale of certain merchandise. The participants agree to the
following:
A) Daniel shall be allowed a commission of 10% on his net purchase.

B) The participants shall be allowed commissions of 25% n their respective sales.
C) Daniel and Paul shall divide the profit or loss 60% and 40%, respectively.
Joint Venture Transactions follows:

Dec. 1 Daniel makes cash purchase of P 57,000.
3 Paul pays venture expense of P 9,000
5 Sales are as follows: Daniel – P 48,000; Paul - P 36,000. The participants keep their own cash
receipts.
In the final settlement, what amount would Paul pay Daniel?

A. 14,100 B. 14,880 C. 14,890 D. 21,480
108.ACE and CRC formed a joint venture on January 1, 2013 to operate two stores to be managed by each
venturers/participants. They agreed to contribute cash as follows:
ACE P 30,000
CRC 20,000
Page 23
Profits and losses are to be divided in the capital ratio. All venture transactions are for cash. Cash
receipts and disbursements of the business during the 4-month period handled through the
participant’s/venturer’s bank accounts are as follows:
ACE CRC
Receipts P 78,920 P 65,425
Disbursements 62,275 70,695
On April 30, the remaining non-cash venture assets in the hands of the participants/venturers were
sold for P 60,000. The venture is terminated and settlement is made between ACE and CRC.
The P 60,000 is divided between the participants/venturers as follows:
a. ACE, P 16,180; CRC, P 43,820 c. ACE, P 26,180; CRC, P 33,820
b. ACE, P 21,905; CRC, P 38,095 d. ACE, P 48,095; CRC, P 11,905
109.A nonprofit organization had the following cash contributions and expenditures in 2012:
Unrestricted cash contributions P 500,000

Restricted cash contributions for the acquisition of property 200,000
Cash expenditures to acquire property 200,000
The statement of cash flows should include which of the following amount?
A. Operating P 700,000; Investing (P200,000), and Financing P0
B. Operating P 500,000; Investing P0, and Financing P0
C. Operating P 500,000; Investing (P200,000), and Financing P 200,000.
D. Operating P 0; Investing P 500,000, and Financing P 200,000.
110.The statement of financial position (balance sheet) Founders Library, a private not-for-profit
organization should report separate peso amounts for the library’s net assets according to which of the following
classifications?
A. Unrestricted and permanently restricted.
B. Temporarily restricted and permanently restricted.
C. Unrestricted and temporarily restricted.
D. Unrestricted, temporarily restricted, and permanently restricted.
111.The approved appropriations of Department ABC for 2011 was P50 million. Ninety (90%) percent of
this appropriations was released by DBM and accompanied by NCA. During the year, the amount of
obligations incurred was equivalent to 80% of the NCA. 75% of these obligations were paid by checks.
What will be the entry on the books of Department ABC to record the receipt of the NCA?
a. National Clearing Account 45,000,000
Appropriations Allotted/Expenditures 45,000,000
b. National Clearing Account 50,000,000
Appropriations Allotted/Expenditures 50,000,000
c. Cash – National Treasury, MDS 50,000,000
Subsidy Income from National Government 50,000,000
d. Cash – National Treasury, MDS 45,000,000
Subsidy Income from National Government 45,000,000
112.The annual appropriation (General Fund) of Sipag Government Agency for 2011 of P5,000,000 was
released by DBM minus the 5% reserve on allotments. Sipag Agency incurred total obligations during
the year of P4,000,000, of which P2,000,000 relates to procurement of equipment and the other
P2,000,000 to operating expenses. Records show that by year’s end, P1,250,000 of the total
obligations have been liquidated.
What is the appropriate entry in the books of Sipag Agency to record the incurrence of obligations?
a. Operating expenses P2,000,000 c. Operating expenses P 2,000,000
Equipment 2,000,000 Equipment 2,000,000
Cash-National Treasury, MDS P4,000,000 Obligations Incurred P4,000,00
b. Operating expenses P2,000,000 d. Obligations Incurred P 4,000,000
Equipment 2,000,000 Cash-National Treasury, MDS P4,000,000
Accounts Payable P4,000,000
113.Agency N have an obligation for the constructions of 10 storey building along J. P. Rizal upon signing
of contact amounting to P 100,000,000, the entry to record this transaction would be:
A. No entry
B. Building (DR)
Accounts Payable (CR)
Page 24
C. Building (DR)
Cash-NT, MDS (CR)
D. Memo entry – RAOCO
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Questions 1 and 2 are based on the following information:

Cash Other Assets Liabilities Rachel, Arlene, Cecil,

5. Determine the share of partner Joseph on the net income of 2015.

Questions 7 and 8 are based on the following:

Questions 9 through 12 are based on the following:

Questions 13 and 14 are based on the following:

Questions 16 and 17 are based on the following:

Questions 19 through 21 are based on the following:

Questions 23 and 24 are based on the following:

Cash P1,000,000 Accounts payable P 500,000

23. The amount that must be invested by White is

b. Green, capital P190,000 d. Black, capital P150,000

Questions 27 and 28 are based on the following information:

27. Realized gross profit on 2015 sales was:

28. Gain/loss on repossession was:

What was the total amount of sale on installment basis?

How much is the gain or loss from repossession?

Construction in progress account balance 2013 P1,000,000

The journal entry to record the franchise would be:

Home Office Branch

Home office Branch

Home Office Branch

Questions 58 and 59 are based on the following:

Inventory, January 1, 2011 160,000 60,000

58. Determine the adjustment to net income of the branch.

- Raw materials costing P 750,000 were purchased.

63. Consider the following data:

c. Work in process inventory 225,000

d. Work in process inventory 214,000

Questions 64 through 65 are based on the following:

What is the labor rate variance?

67. The following July information is for MTV Company

(Round all answers to the nearest dollar).

Questions 69 through 73 are based on the following:

Percentage of completion of units in process on January 31, 2012 follows:

69. The total cost transferred to next department – Smoothing:

70. The cost of work-in-process ending in Cutting Department:

71. The total cost transferred to finished goods:

72. The total cost transferred to factory overhead/abnormal spoilage:

73. The cost of work-in-process ending in Smoothing Department:

Beginning Work in Process Costs of Beginning Work in Process:

All materials are added at the start of production.

77. HELLIGERS Company has the following information for July:

What was the entry made by Kenneth in January 1, 2014?

Balance Sheet Item Historical Cost Fair Value

Non-current assets Non-controlling interest

Questions 87 and 88 are based on the following information:

Arbutus Azalea Azalea

Questions 90 and 91 are based on the following information:

Questions 100 through 102 are based on the following:

100.Determine the December 31, 2015, year-end balance of accounts receivable.

How much cash is to be received by Roel in the final settlement?

A) Daniel shall be allowed a commission of 10% on his net purchase.

Joint Venture Transactions follows:

In the final settlement, what amount would Paul pay Daniel?

Unrestricted cash contributions P 500,000

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