RAMON MAGSAYSAY TECHNOLOGICAL UNIVERSITY

College of Accountancy and Business Administration

FINAL EXAMINATION PART 2

Acctg 21 –Fundamentals of Accounting Part 2

DIRECTION: On the answer sheet provided, draw a THICK VERTICAL LINE over the letter of the
BEST ANSWER. Choose one answer per item only. Strictly, ERASURES are NOT ALLOWED. Any
form of ERASURES shall invalidate this examination and shall mean a score of ZERO.

Part I. Theory of Accounts (40%)

1. What is the accounting treatment for a corporate organization cost?

A. Outright expense C. Other asset
B. Intangible asset D. Deferred expense

2. Which of the following statements is FALSE?

A. A statement of cash flows summarizes information about the cash inflows (receipts)
and outflows (payments) for a specific period of time.
B. A balance sheet reports the assets, liabilities, and owner’s equity at a specific
date.
C. An income statement presents the revenues, expenses, changes in owner’s equity, and
resulting net income or net loss for a specific period of time.
D. An owner’s equity statement summarizes the changes in owner’s equity for a specific
period of time.

3. Which of the following statements is/are FALSE?

I. A partnership may be formed through verbal agreement, but for a corporation to
exist, it requires special authority or grant by the State.
II. A corporation can continue to exist despite the death, withdrawal, insolvency,
or incapacity of the shareholders composing it
A. Neither B. I and II C. I only D. II only

4. Which of the following statements is/are true?

I. A corporation could not practically perform business functions as a natural
person
II. The liabilities of a corporation, like those of a partnership, are also the
liabilities of the owners
A. I only C. Both I and II
B. II only D. Neither I nor II

5. Which of the following statements is/are not true?

I. In a corporation, a co-owner (shareholder) can transfer or sell his ownership
even without the knowledge or consent of the other shareholders.
II. The minimum number of incorporators is 15.
A. I and II B. I only C. II only D. Neither

6. Net income will result during a time period when

A. assets exceed liabilities C. expenses exceed revenues
B. assets exceed revenues D. revenues exceed expenses

7. The three types of business entities are

A. proprietorships, small businesses, and partnerships
B. proprietorships, partnerships, and corporations
C. proprietorships, partnerships, and large businesses
D. financial, manufacturing, and service companies

8. Persons who compose the corporation whether as stockholders or members

A. incorporators C. corporators
B. promoters D. subscribers

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9. Which of the following dates pertaining to dividend will not require any journal entry?
A. date of declaration C. Date of payment
B. date of record D. Both (a) and (b)

10. Which of the following will result in a deficit?

A. The income summary has a net credit balance
B. The revenue is more than the expenses
C. The appropriation reserve is more than the income earned for the year
D. The beginning credit balance of accumulated profits is less than the debit balance
of income summary account for the year

11. Which of the following could be declared as share capital dividend?

A. issued and outstanding C. subscribed but not fully paid shares
B. treasury shares D. retired shares

12. Which of the following may be classified as an asset account?

A. Share capital distributable C. Treasury share
B. Property dividend payable D. Subscription receivable

13. This is the right of the corporation to continue as juridical entity for the period
stated in the Articles of Incorporation despite the death of any stockholder
A. Right of succession C. Right to existence
B. Right of pre-emption D. Right to dissolution

14. The partner who has priority to first receive cash distribution under an advance
cash distribution plan is the partner who
A. can absorb the largest liquidation loss
B. has the largest capital balance
C. has the smallest profit and loss percentage
D. has either the largest capital balance or the smallest profit and loss percentage

15. The process of terminating the business, selling the assets, paying the liabilities
and disbursing the remaining cash to the partners is called
A. dissolution C. withdrawal
B. partnership formation D. liquidation

16. Which of the following is a disadvantage of the corporate form of business?

A. Corporation lacks mutual agency
B. Ownership shares can be easily transferred
C. Ownership is separated from control of operations
D. Owners’ liability is limited

17. In which of the following arrangements does the freight become the expense of the
buyer?
A. FOB destination, collect C. FOB destination, prepaid
B. FOB shipping point, collect D. Answer Not Given
18. Which of the following is to be included in the inventory of the seller?
I. Goods in transit sold under FOB destination
II. Goods in transit sold under FOB shipping point
A. I only B. II only C. Both I and II D. Neither

19. An adjusting entry cannot include a debit to a(n):

A. expense and a credit to an asset
B. asset and a credit to a revenue
C. liability and a credit to a revenue
D. asset and a credit to a liability
20. Which of the following statements is/are false?

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I. The outside creditors have priority of claims over the assets of the
partnership
II. Personal creditors of the partner have the priority over the assets of the
partner
A. I only B. II only C. I and II D. Neither

21. Which of the following is NOT part of the recording process?

A. Analyzing transactions C. Entering transactions in a journal
B. Preparing a trial balance D. Posting transactions

22. Treasury shares plus outstanding shares equal

A. authorized shares C. subscribed shares
B. unissued shares D. issued shares

23. If a significant amount of capital is needed to start a business, how should the
business is organized?
A. Corporation C. Limited liability partnership
B. General partnership D. Sole proprietorship

24. When ordinary shares is sold on a subscription basis and the entire subscription
price has been collected, the issuance of the share is recorded by
A. a debit to Cash and a credit to Ordinary Shares
B. a debit to Subscription Receivable and a credit to Subscribed Ordinary Shares
C. a debit to Ordinary shares and a credit to Subscription receivable
D. a debit to Subscribed Ordinary Shares and a credit to Ordinary shares

25. When preference shareholders have the right to receive a specified dividend and to
receive more after a matching dividend percentage is given to ordinary shareholders,
the preference shares are said to be
A. callable B. cumulative C. participating D. convertible

26. The journal entry to record the declaration of a large share dividend includes
A. a debit to Retained Earnings for the market value of the shares to be distributed
B. a credit to Shares Distributable for the fair value of the shares to be distributed
C. a credit to Share Premium for the difference between the fair market value and the
par value of the shares to be distributed
D. a debit to Retained Earnings for the par value of the shares to be distributed

27. How would a share split in which the par value per share decreases in proportion to
the number of additional shares issued affect each of the following?
Share premium Retained Earnings
A. Increase No effect
B. No effect No effect
C. No effect Decrease
D. Increase Decrease

28. A restriction on retained earnings

A. reduces retained earnings available for the declaration of dividends
B. can be reported by an entry appropriating retained earnings
C. has no effect on total retained earnings
D. all of the above

29. He believed that the Chart of Accounts contains relevant dynamic information
affecting the economic flight of an enterprise
A. Luca Pacioli C. Eugene Schmalenbach
B. Jacques Savary D. Emperor Wang Mang

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30. A corporation declared a cash dividend on its ordinary shares on December 15, 2009,
payable on January 12, 2010. How would this dividend affect shareholders’ equity on the
following dates?
12/15/2009 12/31/2009 1/12/2010
A. Decrease No effect Decrease
B. Decrease No effect No effect
C. No effect Decrease No effect
D. No effect No effect Decrease

31. Which of the following would result in an increase in the Retained Earnings account?
A. positive prior period adjustments C. cash dividends declared
B. share dividends declared D. loss for the period

32. The proper order of the following steps in the accounting cycle is
A. prepared unadjusted trial balance, journalize transactions, post to ledger accounts,
journalize and post adjusting entries
B. journalize transactions prepared unadjusted trial balance, post to ledger accounts,
journalize and post adjusting entries
C. journalize transactions, post to ledger accounts, prepare unadjusted trial balance,
journalize and post adjusting entries
D. prepared unadjusted trial balance, journalize and post adjusting entries, journalize
transactions, post to ledger accounts

33. The present law governing the practice of accountancy in the Philippines is
A. RA 9298 B. RA 8424 C. RA 9892 D. PD 692

34. The sales account that normally have a debit balance are
I. Sales Discounts
II. Sales Returns and Allowances
A. I only B. II only C. Both I and II D. Neither

35. The advantages of a partnership do NOT include

A. ease of formation
B. unlimited liability
C. freedom from government regulation
D. ease of decision making

36. In the liquidation of a partnership it is necessary to:

(1) Distribute cash to the partners
(2) Sell non-cash assets
(3) Allocate any gain or loss on realization to the partners
(4) Pay liabilities
These steps should be performed in the following order:
A. (2), (3), (4), (1) C. (3), (2), (1), (4)
B. (2), (3), (1), (4) D. (3), (2), (4), (1)

37. One of the following accounts is not included as part of the manufacturing costs
A. Indirect materials C. Direct raw materials
B. Indirect labor D. Freight out

38. Which of the following statements is/are not false?

I. A change in the agreement of the partner dissolves the partnership
II. Partnership dissolution is always followed by its liquidation

A. Both I and II C. II only

B. I only D. Neither I nor II
39. The periodicity concept

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A. requires that all companies prepare monthly, quarterly, and annual financial
statements
B. results from the Bureau of Internal Revenue requirement that taxable income be
reported on an annual basis
C. requires all companies to use a fiscal year ending December 31
D. involves dividing the life of a business entity into accounting periods of equal
length thus enabling the financial users to periodically evaluate the results of
business operations

40. The excess of net sales over the cost of goods sold is called
A. gross profit C. profit
B. operating profit D. merchandising income

41. What particular financial statement element is determined when the cost of sales is
divided by percent of cost of sale over sales?
A. Sales B. Cost of Sales C. Expenses D. Profit

42. Which of the following statements is true?

I. An oral agreement is sufficient to effect partnership formation of a
professional partnership
II. A written partnership agreement is usually made to avoid potential problems
during the operation of a partnership business
III. Every partner is assumed as an agent of partnership
A. I and II C. I and III
B. II and III D. I, II, and III

43. Which of the following statements is false?

I. An industrial partner is a limited partner
II. A silent partner is not known as partner and does not take active part in the
partnership business
III. A secret partner is known as a partner in the partnership, but does not take
active participation in running the affairs of the partnership
A. I and II C. I and III
B. II and III D. I, II, and III

44. An advantage of the partnership as a form of business organization is that

A. partners do not pay income taxes for their share in partnership income
B. a partnership is bound by the act of the partners
C. a partnership is created by mere agreements of the partners
D. a partnership may be terminated by death or withdrawal of a partner

45. All of the following are true for both general and limited partnerships, EXCEPT
A. both have at least one general partner
B. all partners have the right to participate in the profits of the business
C. all partners are liable for all the debts of the firm
D. both are easily dissolved

46. At what value will cash contributions of a partner be recorded in the partnership
books?
A. Future value of cash C. Actual amount of cash
B. Purchasing value of cash D. Past value of cash

47. This average capital method should be used in the absence of an agreement to the
contrary
A. simple average C. weighted average
B. complex average D. basic capital average

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48. The partner’s capital account increases in the following cases except when a
partner’s transaction in the partnership involves
A. his initial investment in the partnership
B. personal drawings
C. share in the net income
D. additional investment in the partnership

49. The drawing account is debited, except for

A. withdrawal of partnership’s assets by the partner
B. partnership obligations assumed or paid by the partner
C. partner’s personal indebtedness paid or assumed by the partnership
D. funds or claims of partnership collected and retained by the partner

50. This allowance for profit distribution is granted only if there is profit
A. salary B. interest C. bonus D. allowance

51. In the absence of any agreement, profits and losses are divided
A. equally
B. based on contributed capital
C. based on ending capital
D. no distribution of profit and loss is to be made

52. The accounting method used for partnership operation is

A. cash method C. cost method
B. fair market value method D. accrual method

53. Which of the following statements are true?

I. As a rule, a partner’s salary and interest on capital are treated as ordinary
operating expenses
II. Interest on capital balances is part of the profit and loss distribution plan,
but interest charges on loans provided by partners to the partnership are
treated as interest expense reportable in the partnership income statement
III. A professional partnership would be entitled to tax exemption only if it
engages purely in the practice of a profession
A. I and II C. II and III
B. I and III D. I, II, and III

54. Interest on the money borrowed by the partner from the partnership shall be treated
as
A. profit sharing device C. operating expense
B. financing cost D. revenue

55. Working capital is calculated as

A. current assets minus current liabilities
B. total assets minus total liabilities
C. long term liabilities minus current liabilities
D. long term liabilities minus plant assets

56. A debit balance of accumulated profit means

A. net income C. appropriation reserve
B. net loss D. declaration of dividend

57. This is the process of formally organizing a corporation

A. Organization C. Articulation
B. Promotion D. Incorporation

58. The current ratio is computed as

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A. total assets divided by total liabilities

B. total assets divided by current liabilities
C. current assets divided by total liabilities
D. current assets divided by current liabilities

59. The time period assumption states that

A. revenue should be recognized in the accounting period in which it is earned
B. expenses should be matched with revenues
C. the economic life of business can be divided into artificial time periods
D. the fiscal year should correspond with the calendar year

60. Acquisition of treasury share will

A. increase the shareholders’ equity
B. decrease the assets of the corporation
C. increase the liability of the corporation
D. have no effect on the assets and equity of the corporation

Part II. Practical Accounting Problems (60%)

61. In 200A, Pa, Ma, and Tay are partners with average capital balances of P120,000,
P60,000, and P40,000 respectively. The partners receive 10% interest on their average
capital balances. After deducting salaries of P30,000 to Pa and P20,000 Ma, the
residual profit or loss is divided equally. During the year, the partnership sustained
a loss of P33,000, before interest and salaries to the partners. By what amount should
Pa’s capital account change?
A. P42,000 B. P23,000 C. P 11,000 D. P7,000 increase
increase decrease decrease

Question Nos. 62-69 are based on the following information:

X, Y, and Z are partners dividing profit and losses of the partnership in the agreed ratio
of 1:2:3. The following are the ledger balances at the start of liquidation:
Cash 50,000 Accounts payable 120,000
Non-cash assets 670,000 Y, loan 10,000
X, loan 30,000 Z, loan 20,000
X, capital 150,000
Y, capital 200,000
Z, capital 250,000
750,000 750,000

62. The cash priority of X over Y is

A. P10,000 B. P15,000 C. P25,000 D. P46,920

63. If Y received P20,000 in the first cash distribution, how much cash did X receive?
A. P15,000 B. P17,659 C. P25,000 D. P30,000

64. If X received P18,000 in the first cash distribution, how much cash did Y receive?
A. P2,061 B. P6,000 C. P48,000 D. P80,000

65. If Z received P25,000 in the first cash distribution, how much cash did X receive?
A. P30,000 B. P38,333 C. P80,000 D. P88,500

66. If Z received P30,000 in the first cash distribution, what is the total cash
available for distribution to partners?
A. P140,000 B. P120,000 C. P290,000 D. P240,000
67. If the first noncash assets with book value of P300,000 was sold for P250,000, what
is the amount of cash that should be distributed to the partners?
A. P250,000 B. P180,000 C. P30,000 D. P-0-

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68. If the first noncash assets with book value of P250,000 was sold for P225,000, how
much is the amount of cash to be received by the partner with first cash priority?
A. P159,000 B. P45,833 C. P45,333 D. P50,833

69. If the first noncash assets with book value of P250,000 was sold for P230,000, how
much is the payment available to outside creditors?
A. P120,000 B. P250,000 C. P280,000 D. P290,000

70. Eleazar, CPA is trying to decide whether to accept a salary of P40,000 or a salary
of P25,000 plus a bonus of 10% of net income after salaries and bonus as a means of
allocating profit among partners. Salaries traceable to the other partners (Raffy and
Reejie, CPAs) are estimated to be P100,000. What amount of income would be necessary so
that Eleazar would consider the choices to be equal?
A. P 165,000.00 C. P 265,000.00
B. P 290,000.00 D. P 305,000.00

71. The following is the equity section of the statement of financial position of
Jalandoni Inc. as of December 31, 2009:
Authorized ordinary share, 1,000,000 shares at P10 par P 10,000,000.00
Less: Unissued, 200,000 shares 2,000,000.00
Issued, 800,000 shares P 8,000,000.00
Share premium –ordinary share 1,600,000.00
Less: Treasury, 200,000 ordinary shares at P15 per share 3,000,000.00
P 6,600,000.00

Authorized 10% Preference share, 500,000 at P20 par P 10,000,000.00

Less: Unissued, 200,000 shares 4,000,000.00
Issued, 300,000 shares P 6,000,000.00
Share premium –preference share 600,000.00
Less: Treasury, 100,000 preference shares at P25/share 2,500,000.00
P 4,100,000.00

Appropriation reserve P 1,300,000.00

Retained earnings 2,000,000.00
P 3,300,000.00
Total shareholders’ equity P 14,000,000.00

Assume that 75% of retained earnings are declared as cash dividend, and dividends
unpaid are for two years, including the current year.

What is the number of shares entitled to dividend?

Ordinary share Preference share
A. 600,000 shares 200,000 shares
B. 200,000 shares 600,000 shares
C. 800,000 shares 300,000 shares
D. 400,000 shares 200,000 shares

72. (Refer to Question No. 71) What is the balance of the shareholders’ equity after the
dividend declaration and distribution?
A. P11,500,000 B. P12,000,000 C. P12,500,000 D. P14,000,000

73. (Refer to Question No. 71) What is the appropriate journal entry to record the
declaration of dividend?
A. Debit Retained Earnings, P2,000,000
B. Debit Retained Earnings, P2,475,000

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C. Credit total dividends payable of P1,500,000

D. Credit total dividends payable of P975,000

74. (Refer to Question No. 71) If the preference share is noncumulative and non-
participating, how much is the cash dividend payable to preference shareholders?
A. P183,000 B. P200,000 C. P400,000 D. Not given

75. (Refer to Question No. 71) If the preference share is noncumulative and non-
participating, what is the amount of the cash dividend payable to treasury share?
A. P100,000 B. P600,000 C. P1,200,000 D. Not given

76. (Refer to Question No. 71) If the preference share is noncumulative and non-
participating, what is the amount payable to a shareholder who has a shareholding of
1,000 preferred shares and 2,500 ordinary shares?
A. P2,000 B. P6,525 C. P6,583 D. P6,825

77. (Refer to Question No. 71) If the preference share is cumulative and non-
participating, how much is the total cash payable to ordinary shareholders?
A. P660,000 B. P700,000 C. P800,000 D. P1,200,000

78. (Refer to Question No. 71) If the preference share is cumulative and non-
participating, how much is the dividend per share of preference shareholders?
A. P2.20 B. P4.00 C. P4.20 D. P6.00

79. (Refer to Question No. 71) If the preference share is cumulative and participating,
how much is the total cash payable to ordinary shareholders?
A. P660,000 B. P700,000 C. P800,000 D. P1,200,000

80. (Refer to Question No. 71) If the preference share is cumulative and participating,
how much is the dividend per share of preference shareholders?
A. P2.20 B. P4.00 C. P4.20 D. P6.00

81. Bloodseeker Corporation’s shareholders’ equity shows the following:

Share capital, par P10 P 10,000,000.00
Share premium 1,000,000.00
Subscribed share capital, 200,000 shares 4,000,000.00
Subscription receivable 2,000,000.00
Treasury, 300,000 shares 7,200,000.00

How much would be the new total amount of shareholders’ equity if the share split up of
5 is declared?
A. P 11,560,000.00 C. P 5,800,000.00
B. P 9,800,000.00 D. P 2,312,000.00

82. Wacky and Chichay formed a partnership. Wacky contributed P8,000 cash and a used
truck that originally cost P35,000 and had accumulated depreciation of P15,000. The
truck’s market value was P16,000. Chichay, a builder, contributed a new storage garage.
Her cost of construction was P40,000. The garage has a market value of P55,000. What is
the combined total capital that would be recorded on the partnership books for the two
partners?
A. P 79,000.00 B. P 60,000.00 C. P 75,000.00 D. P 90,000.00

Question Nos. 83-92 are based on the following information:

The unadjusted trial balance of TODAY MY LIFE BEGINS INC. as of December 31, 20x1 shows
the following:
DEBITS CREDITS

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Cash P 153,350.00
Accounts Receivable 148,000.00
Raw Materials Inventory, January 1 60,000.00
Work in Process Inventory, January 1 70,000.00
Finished Goods Inventory, January 1 50,000.00
Prepaid Insurance 60,000.00
Production Machinery and Equipment 400,000.00
Accum. Depn –Production Machinery & Equipment P 20,000.00
Delivery Equipment 170,000.00
Accum. Depn –Delivery Equipment 8,000.00
Patents 100,000.00
Accounts Payable 80,000.00
Ordinary Shares, P1 par 300,000.00
6% Preference Shares, P10 par 200,000.00
Share premium –ordinary shares 50,000.00
Share premium –preference shares 250,000.00
Retained Earnings 72,000.00
Sales 2,564,500.00
Sales returns and allowances 26,000.00
Purchases –Raw Materials 1,110,000.00
Freight-in 30,000.00
Purchase returns and allowances 10,000.00
Purchase discount 20,000.00
Factory Rent 70,000.00
Heat, Light, and Power (40% Factory) 50,000.00
Direct Labor 480,000.00
Indirect Labor 86,950.00
Repairs and Maintenance –Prod’n Machinery & Equip. 3,200.00
Factory supplies used 40,000.00
Advertising Expense 6,000.00
Sales Salaries 280,000.00
Sales Supplies Expense 6,000.00
Miscellaneous Selling Expenses 10,000.00
Office Salaries 150,000.00
Office Supplies Expense 6,000.00
Miscellaneous General Expenses 9,000.00
TOTALS P 3,574,500.00 P 3,574,500.00

The following data must be considered for adjustments:

a. Depreciation charges for Production Machinery and Equipment at the rate of 5% per
year; and Delivery Equipment at the rate of 6% per year
b. The prepaid insurance was bought on August 16, 20x1 to protect the company’s
production machineries for a period of four years beginning September 1, 20x1.
c. Amortization of patents, P10,000 (100% factory)
d. The following expenses has accrued: Direct Labor, P10,000; Indirect Labor,
P5,000; Heat, Light & Power, P3,000
e. Ending inventories: Raw Materials, P80,000; Work in Process, P100,000; Finished
Goods, P90,000.
f. Purchases in transit, amounting to P500,000 was not recorded at year-end. Terms:
FOB Destination, collect, 2/15, n/30, freight cost, P30,000. These were received
by the company on January 3, 20x2.
g. On December 31, 20x1, 40% of the company’s Net Profit was declared as Cash
Dividends payable on January 15, 20x2, to shareholders on record as of January 2,
20x2

83. For the year ended December 31, 20x1, the raw materials used was:
A. P 1,090,000.00 C. P 1,620,000.00

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B. P 1,610,000.00 D. Answer Not Given

84. For the year ended December 31, 20x1, the manufacturing overhead was:
A. P256,350.00 B. P261,350.00 C. P261,975.00 D. P280,050.00

85. For the year ended December 31, 20x1, the total manufacturing cost was:
A. P2,361,350.00 B. P1,841,350.00 C. P1,841,975.00 D. P2,371,975.00

86. For the year ended December 31, 20x1, the total goods placed into process was:
A. P1,911,350.00 B. P2,441,975.00 C. P2,431,350.00 D. P1,911,975.00

87. For the year ended December 31, 20x1, the total cost of goods manufactured was:
A. P1,811,350.00 B. P2,341,975.00 C. P2,331,350.00 D. P1,811,975.00

88. For the year ended December 31, 20x1, the total cost of goods sold was:
A. P2,291,350.00 B. P1,771,975.00 C. P1,771,350.00 D. P2,301,975.00

89. For the year ended December 31, 20x1, the gross profit was:
A. P247,150.00 B. P766,525.00 C. P767,150.00 D. P236,525.00

90. For the year ended December 31, 20x1, the net profit(loss) was:
A. P257,525.00 B. P 258,150.00 C. P(272,475.00) D. P(261,850.00)

91. How much was the cash dividends payable to stockholders?

A. P-0- B. P103,010.00 C. P108,990.00 D. P103,260.00

92. What amount should a stockholder, holding 3,000 ordinary shares and 2,000 preference
shares shall receive, assuming the preference shares are non-cumulative and
participating?
A. P4,738.56 B. P5,013.54 C. P4,749.96 D. P5,348.17

93. The following are the ledger balances of Kris, Ai-ai, and Freddie partnership:
Debit Credit
Cash P 31,500.00
Non-cash assets 262,500.00
Accounts payable P 147,000.00
Kris, capital 78,750.00
Ai-ai, capital 36,750.00
Freddie, capital 31,500.00
Totals P 294,000.00 P 294,000.00

The partners’ profit and loss distribution agreement is 40%, 35%, and 25% to Kris, Ai-
ai, and Freddie respectively. The partners agreed to liquidate the partnership by
instalments. If the 1st noncash assets with book value of P131,250.00 was sold for
P118,125.00, how much cash will the partner with 1st cash priority receive?
A. P 83,475.00 C. P 2,625.00
B. P 28,350.00 D. P 1,050.00

94. The ABS Company reports net income of P60,000. If partners A, B, and S have an
income ratio of 50%, 30%, and 20%, respectively, what is B’s share of net income if the
percentages are applicable after each partner receives a P10,000 salary allowance?
A. P 12,000.00 B. P 20,000.00 C. P 19,000.00 D. P 31,000.00

95. Atropos Merchandising has total proceeds from Sales of P4,515. If the proceeds
include sales taxes of 5%, the amount to be credited to Sales is
A. P4,000.00 B. P4,300.00 C. P4,289.25 D. P4,515.00

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FINAL EXAMINATION PART 2 October 12, 2013
Acctg 12 –Fundamentals of Accounting Part 1

96. As a result of thorough physical inventory, Terrorblade Company determined that it

had inventory worth P180,000 at December 31, 2010. This count did not take into
consideration the following facts: Oblivion Consignment store currently has goods worth
P35,000 on its sales floor that belong to Terrorblade but are being sold on consignment
by Oblivion. The selling price of these goods is P50,000. Terrorblade purchased P13,000
of goods that were shipped on December 27, FOB destination, that will be received by
Terrorblade on January 3. Determine the correct amount of inventory that Terrorblade
should report
A. P 230,000.00 B. P 215,000.00 C. P 228,000.00 D. P 193,000.00

Use the following information to answer Question Nos. 97 and 98:

Creekville Partnership is owned by Harriet, Mike, and Elly. On December 31, 20x3, the
partners decided to liquidate the partnership. On that date, the balance sheet of the
company is as follows:
ASSETS LIABILITIES AND OWNER’S EQUITY
Cash P 9,000.00 Accounts payable P 21,000.00
Accounts receivable 22,000.00 Harriet, capital (20%) 23,000.00
Inventory 73,000.00 Mike, capital (40%) 8,000.00
P 104,000.00 Elly, capital (40%) 52,000.00
P 104,000.00
97. Assume that as part of liquidation proceedings, Creekville sells its noncash assets
for P85,000. The amount of cash that would ultimately be distributed to Elly would be
A. P 52,000.00 B. P 48,000.00 C. P 34,000.00 D. P 86,000.00

98. Assume that as part of liquidation proceedings, Creekville sells its noncash assets
for P60,000. As a result, one of the partners has a capital deficiency which that
partner decides not to repay. The amount of cash that would ultimately be distributed
to Elly would be
A. P 52,000.00 B. P 38,000.00 C. P 24,000.00 D. P 34,000.00

99. Wala Akong Kinabukasan sa Accountancy was authorized to issue 100,000 shares at P50
par. If its shareholders subscribed 25% of its authorized share capital at a premium of
20% above par, how much is the amount of prescribed paid-up share subscriptions?
A. P 1,500,000.00 B. P 1,250,000.00 C. P 375,000.00 D. P 312,500.00

100. Capital balances in the MEM partnership are Mary, Capital, P60,000; Ellen, Capital,
P50,000; and Mills, Capital, P40,000; and income ratios are 5:3:2, respectively. The
MEMO partnership is formed by admitting Oleg to the firm with a cash investment of
P60,000 for a 25% capital interest. The bonus to be credited to Mills, Capital in
admitting Oleg is:
A. P 10,000.00 B. P 7,500.00 C. P 3,750.00 D. P 1,500.00
---END OF EXAMINATION---

Always remember that you are one of the best students I ever had. Sorry for all the things that I have done against you. All of those are intentionally executed to prepare
you not only mentally, but also, emotionally. You have left a BIG PART in my heart.

I WILL MISS YOU GUYS. ‘till we meet again

\jrvcollado\cpa0120456\

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