7/15/2021 ACCO 30013: Accounting for Special Transactions Final Departmental Examination

On March 01, 2021, AshLloyd entered into a franchise contract with AshRald.
The franchise agreement required the franchisee, AshRald, to pay a
nonrefundable upfront fee in the amount of P1,440,000 and on-going payment of royalties equivalent to
5% of the sales of the franchisee. AshRald paid the
non-refundable upfront fee on March 01, 2021. In relation to the nonrefundable upfront fee, the franchise
agreement required AshLloyd to render the following performance obligations:
• To construct the franchisee’s stall with stand-alone selling price of P300,000.
• To supply cooking equipment and cash registers. Price of competitors for the similar items (cooking
equipment and cash registers) is valued at P240,000 while the forecast of the expected cost of AshLloyd
for the performance obligation is P200,000 plus an appropriate margin above cost of 25%.
• To deliver 10,000 units of raw materials to AshRald with stand-alone selling price of P460,000.
• To allow AshRald to use the entity’s tradename for a period of 10 years starting on the inception
of the contract with stand-alone selling price of P600,000.
During the year 2021, AshLloyd satisfied its performance obligations to supply cooking equipment and
install cash registers, constructed the franchisee’s stall and was able to deliver 6,000 units of raw
materials to AshRald. For the year
ended December 31, 2021, the franchisee reported sales revenue amounting to P720,000. The entity had
determined that the performance obligations are
separate and distinct from one another and accounted under PFRS 15.

What is the amount of the nonrefundable upfront fee to be allocated to the supply of cooking equipment
and cash registers? *
(2 Points)

a. 144,000
b. 230,400
c. 216,000
d. -0-

Using the same information in No. 5, how much total revenue shall be recognized by AshLloyd for the year ended
December 31, 2021? *
(2 Points)
a. 793,800
b. 829,800
c. 779,400
d. 815,400

For external reporting, the individual financial statements of the home office and branch are combined: *
a. By recognizing the home office’s own assets, liabilities, income and expenses plus its share in the
branch’s assets, liabilities, income and expenses.
b. By adding together similar items of assets, liabilities, income and expenses.
c. By using complex consolidated procedures.
d. By adding together similar items of assets, liabilities, income and expenses and eliminating reciprocal
accounts

On January 1, 2021 a contractor enters into a construction contract which includes a fixed contract price of P12,000 to
build a bridge. The contractor's initial estimate of contract costs is P8,000 over a three-year construction period. The
contractor has a December 31 year-end.

https://forms.office.com/Pages/ResponsePage.aspx?id=cYWpTercOUiPsQvdXclp-eJiVPfhKiVModyLjGzWc5lUNlc4TDNaQTBFUUcxSzRNRVJEMVZ… 1 /36

0 0
7/15/2021 ACCO 30013: Accounting for Special Transactions Final Departmental Examination

On December 31, 2021 the contractor's estimate of total contract costs is still P8,000. However, by the end
of 2022 the contractor's estimate of contract costs increased to P10,000, excluding the variation below.

In 2022 the customer and the contractor agree to a variation resulting in an increase in contract revenue of
P200 and estimated additional contract costs of P150.

Actual cumulative costs incurred to the end of 2021, 2022 and 2023 (the end of the contract) including the
costs of the variation are P3,000, P7,105 and P10,050 respectively.

At the end of 2021, 2022 and 2023 the customer paid the contractor progress billings of P5,000, P3,000
and P4,200 respectively. The contractor determines the stage of completion of the contract by calculating
the proportion that
contract costs incurred for work performed to date bear to the latest estimated total contract costs.

How much is the profit (loss) for the year 2021, 2022 & 2023, respectively? * (2 Points)
a. P1,500; P1,435; P2,150
b. P1,500; (P205); P855
c. P1,500; (P65); P715
d. P1,575; (P140); P715

The following certain attributes present into a contract to determine whether the arrangements with customer
are contracts within the scope of IFRS 15:
I. The parties have approved the contract and are committed to perform their respective
obligations.
II. Each party’s rights regarding the goods or services to be transferred can be identified.
III. Payment terms can be identified.
IV. The contract has commercial substance.
V. It is probable that the entity will collect the consideration to which it will be entitled in exchange for
goods or services that will be transferred to the customer. *
(1 Point)

a. I, II, and IV only

b. I, II, IV, and V only
c. I only
d. All of the above

How much is the total free assets? * (2 Points)

a. 992,250
b. 953,575
c. 1,114,750
d. 1,059,625

https://forms.office.com/Pages/ResponsePage.aspx?id=cYWpTercOUiPsQvdXclp-eJiVPfhKiVModyLjGzWc5lUNlc4TDNaQTBFUUcxSzRNRVJEMVZ… 2 /36

0 0
7/15/2021 ACCO 30013: Accounting for Special Transactions Final Departmental Examination

On May 31, 2020, Win grants Bright the right to operate as a franchisee of "2gether Spa" for a nonrefundable upfront
fee of P2,400,000 and 3% royalty fee based on Bright's annual sales. Win in return will (1) assist Bright in locating the
site, (2) provide supplies and equipment, and (3) allow Bright to use the
tradename for 10 years. Bright's income for the year totaled P1,000,000. Win has no performance
obligation (PO) remaining as of year-end and was able to recognize income of P28,000 from PO#3. Win
determined that each PO is
separate and distinct from one another and follows PFRS 15, accordingly.

How much is the stand-alone selling price of PO#3 if total stand-alone selling price of the three-performance
obligation is P3,000,000? *
(2 Points)

a. 600,000
b. 480,000
c. 60,000
d. 48,000

Statement I. Excess freight on inter-branch transfers is charged as expense in the books of the recipient branch.
Statement II. True Income of the Branch is equal to the net income reported by the branch minus any
realized mark-up on branch inventory from home office. *

a. Only Statement 2 is correct

b. Both statements are correct
c. Both statements are incorrect
d. Statement 1 is correct

On July 1, 2021, Emerald Corporation sold a set of washing machine and a dryer for a total contract price of P200,000.
The stand alone selling prices of the washing machine and the dryer if sold separately are: 150,000 and 70,000,
respectively. A 20% down payment was made and the balance is payable in six
(6) equal installment payments of P28,564, inclusive of 2% interest, payable quarterly starting September
30 and December 31, 2021.

How much is the revenue to be recognized on this contract on July 1, 2021? * (2 Points)

a. 211,384
b. 189,362
c. 200,000
d. 220,000

In 2021, Freeshop Wholesalers transferred goods to a retailer on consignment. The goods cost P450,000 and
normally are sold at a 40% markup on cost.
Freeshop paid P5,000 for the cost of the shipment while the retailer paid P3,800 for advertising and P2,800
for the cost of freight out. The parties agreed that Freeshop would reimburse the cost of advertising and
freight paid by the retailer. In 2021, the retailer at the normal markup, sold 80% of the merchandise and the
balance of the merchandise was returned to Freeshop. The retailer withheld 15% commission from
payment plus the amount reimbursable by the consignor. Determine the net income earned by the
consignor. *
(2 Points)

a. 62,650
b. 56,800
c. 421,800
d. 405,000

https://forms.office.com/Pages/ResponsePage.aspx?id=cYWpTercOUiPsQvdXclp-eJiVPfhKiVModyLjGzWc5lUNlc4TDNaQTBFUUcxSzRNRVJEMVZ… 3 /36

0 0
7/15/2021 ACCO 30013: Accounting for Special Transactions Final Departmental Examination

How much is the Consolidated Inventory at December 31, 2020? * (2 Points)

a. 860,000
b. 1,108,750
c. 866,000
d. 1,041,000

On August 05, 2021, Famous Furniture shipped 20 dining sets on consignment to Furniture Outlet Inc. The cost
of each dining set was P350. The cost of
shipping the dining sets amounted to P1,800 and was paid for by Famous Furniture. On December 31,
2021, the consignee reported the sale of 15 dining sets at P850 each. The consignee remitted payment for
the amount due after deducting a 6% commission, advertising expense of P300 and installation &
set-up costs of P390. The amount of cash received by Famous Furniture is * (2 Points)

a. 11,295
b. 12,750
c. 11,985
d. 11,685

On July 1, 2021, Emerald Corporation sold a set of washing machine and a dryer for a total contract price of
P200,000. The stand alone selling prices of the washing machine and the dryer if sold separately are: 150,000
and 70,000, respectively. A 20% down payment was made and the balance is payable in six
(6) equal installment payments of P28,564, inclusive of 2% interest, payable quarterly starting September
30 and December 31, 2021.

How much is the total amount of interest earned in 2021? * (2 Points)

 5,892.72
 -0-
 3,200
 3,794.67

The pro-rata payment to stockholders on the peso is: * (2 Points)

a. 0.03
b. 0.14
c. 0.04
d. 0.13

What is the capital balance of B after the retirement of A? * (2 Points)

https://forms.office.com/Pages/ResponsePage.aspx?id=cYWpTercOUiPsQvdXclp-eJiVPfhKiVModyLjGzWc5lUNlc4TDNaQTBFUUcxSzRNRVJEMV… 4 /36

0 0
7/15/2021 ACCO 30013: Accounting for Special Transactions Final Departmental Examination

a. 18,875
b. 21,875
c. 23,000
d. 21,000

In accounting for sales on consignment, sales revenue and the related cost of goods sold should be recognized
by the *

a. Consignor when the goods are shipped to the consignee

b. Consignee when the goods are shipped to the third party
c. Consignee when cash is received from the customer.
d. Consignor when notification is received from the consignee that the merchandise have been sold to the
third party.

Which of the following will be presented in the Statement of Financial Position for the year ended
December 31, 2022 related to the contract? *

a. 316,000 – contract asset

b. 545,350 – contract asset
c. 545,350 – contract liability
d. 316,000 – contract liability

On January 2, 2021, Sinovac Co. sold merchandise to Astra, Inc. for P1,200,000. The cost of items to
Sinovac was P900,000. A 20% down payment was made and the balance in 5 annual installments of
P192,000 plus 10% interest. Astra made the 1st principal and interest payment on December 31, 2021.
Selling
Expenses related with the installment sale is P50,000.

How much is the net income related with the sale on installment in 2021? * (2 Points)

2
On March 1, 2021, AST Corporation contracted to build two buildings for a total contract price of P27M. The contract
specifies that payment will only occur after both buildings have been completed and transferred to the client. The stand-

https://forms.office.com/Pages/ResponsePage.aspx?id=cYWpTercOUiPsQvdXclp-eJiVPfhKiVModyLjGzWc5lUNlc4TDNaQTBFUUcxSzRNRVJEMV… 5 /36

0 0
7/15/2021 ACCO 30013: Accounting for Special Transactions Final Departmental Examination

alone selling price of the Building No. 1 is 20M and Building No. 2 is P10M. On December 1, 2022, Building No. 1 was
completed and transferred, the journal
entry to record this transaction include a debit to: * (1 Point)

a. Contract asset, P18M

b. Contract asset, P20M
c. Cost of construction, P18M
d. Account receivable, P20M

On January 1, 2021, A, B, C and D formed ABCD Trading Co., a partnership, with capital contributions as
follow: A, P50,000; B, P25,000; C, 25,000; and D, P20,000. The partnership contract provided that each
partner shall receive a 5% interest on contributed capital, and that A and B shall receive salaries of P5,000
and P3,000, respectively. The contract also provided that C shall receive a minimum of P2,500 per annum,
and D a minimum of P6,000 per annum, which is inclusive of amounts representing interest and share of
remaining profits. The balance of the profits shall be distributed to A, B, C and D in a 3:3:2:2 ratio.

What amount must be earned by the partnership, before any charge for interest and salaries, so that A may
receive an aggregate of P12,500 including interest,
salary and share of profits? * (2 Points)

a. 16,667
b. 30,667
c. 30,000
d. 32,333

A, B, and C are partners of ABC Partnership. They decided to liquidate on March 31, of the current year. On this
date, they have non-cash assets of 530,000 and liabilities of 250,000, including loan from C of 50,000. A, B, and
C have capital
balances of 80,000, 130,000, and 90,000, respectively. Profits and losses are 3:3:4 for A, B, and C. All
partners are solvent.

Determine the total loss on realization if C received 25,000 in the final settlement. *
(2 Points)

How much is the Consolidated Net Income? * (2 Points)

a. 300,000
b. 350,000
c. 495,000
d. 240,000

Under PFRS 15, how shall revenue from contracts with customers such as revenue from initial franchise
fee be recognized by the franchisor? *

https://forms.office.com/Pages/ResponsePage.aspx?id=cYWpTercOUiPsQvdXclp-eJiVPfhKiVModyLjGzWc5lUNlc4TDNaQTBFUUcxSzRNRVJEMV… 6 /36

0 0
7/15/2021 ACCO 30013: Accounting for Special Transactions Final Departmental Examination

(1 Point)

a. Applying the legality over the substance of the transaction.

b. Upon signing of the franchise agreement.
c. When the franchisor satisfies the performance obligation under the franchise agreement.
d. Upon receipt of the initial franchise fee by the franchisor.

Continuing franchise fees should be recorded by the franchisor * (1 Point)

a. As revenue only after the balance of the initial franchise fee has been collected.
b. As revenue when received.
c. As revenue when earned and receivable from the franchisee.
d. In accordance with the accounting procedures specified in the franchise agreement.

PFRS 15 provides that initial franchise fee shall be recognized as revenue over time if any one of the
following criteria provided below is met. Which of the following indicator shows that the initial franchise fee
shall be recognized as revenue at a point in time instead over time? *
(1 Point)

a. When the franchisee simultaneously receives and consumes the benefits provided by the franchisor's
performance as the franchisor performs.
b. When the franchisor's performance does not create an asset with alternative use to the franchisor
and the franchisor has an enforceable right to payment for performance completed to date.
c. When the franchisor's performance creates or enhances an asset that the franchisee controls as the
asset is created or enhanced.
d. When the franchisee has a legal title and has the significant risks and rewards of ownership of the
franchise.

The partnership of A and B was formed on March 31, 2021. On this date, A invested P50,000 cash and office equipment
valued at P30,000. B invested P70,000 cash, merchandise valued at P100,000, and furniture valued at P100,000
subject to a notes payable of P50,000 which the partnership did not assume.
The partnership provides that A and B shares profits and losses 25:75 respectively. The agreement further
provides that the partners should initially have an equal interest in the partnership capital.

The total capital of the partnership after the formation is: * (2 Points)

IFRS 15 – Revenue from Contacts with Customers: An entity should disclose qualitative and quantitative
information about all of the following:
i. Contract with customers
ii. Major events affecting the contract with customers
iii. Significant judgements made in applying guidance to contracts
iv. Asset recognized to fulfill contract with customer * (1 Point)
a. All statements are true
b. Two statements are true
c. One statement is false
d. One statement is true

Moral Company ships inventory to its branch at a mark-up of 125% of cost. The required balance of the
allowance for overvaluation account is P1,425,000.
During the year, the home office sent merchandise to the branch costing P9,000,000. At the start of the year,
the branch's Statement of Financial Position shows P1,800,000 of inventory on hand that was acquired from
the home office.

https://forms.office.com/Pages/ResponsePage.aspx?id=cYWpTercOUiPsQvdXclp-eJiVPfhKiVModyLjGzWc5lUNlc4TDNaQTBFUUcxSzRNRVJEMV… 7 /36

0 0
7/15/2021 ACCO 30013: Accounting for Special Transactions Final Departmental Examination

How much is the amount to be debited to the allowance for overvaluation in branch inventory at the end of
the year? *
(2 Points)

a. 1,225,000
b. 2,610,000
c. 1,185,000
d. 1,425,000

C are partners with capital balances of 784,000, 2,730,000, and 1,190,000, respectively, sharing profits
and losses in the ratio of 3:2:1. D is admitted as a new partner bringing with him expertise and is to invest
cash for a 25% interest in the partnership which includes a credit of 735,000 for bonus upon his
admission. How much cash should D contribute? *
(2 Points)

a. 588,000
b. 1,323,000
c. 1,575,000
d. 2,100,000

On January 1, 2021, AST Company sold an inventory costing P110,000 for P150,000. A 10% down
payment was made and the balance payable in 4 equal installments of P33,750, payable semi-annually
starting June 30 and December 31, 2021. The market rate of interest is 12%. (Round off present value
factor to three decimal places). Selling expenses related with the installment sale is P5,000.

How much is the significant financing component in the contract? * (2 Points)

a. 40,000
b. 18,056.25
c. 16,943.75
d. 21,943.75

How much are the net free assets? * (2 Points)

a. 37,400
b. 31,000
c. 46,000
d. 52,400

How much is the beginning inventory of the branch from the home office? * (2 Points

https://forms.office.com/Pages/ResponsePage.aspx?id=cYWpTercOUiPsQvdXclp-eJiVPfhKiVModyLjGzWc5lUNlc4TDNaQTBFUUcxSzRNRVJEMV… 8 /36

0 0
7/15/2021 ACCO 30013: Accounting for Special Transactions Final Departmental Examination

How much is the transaction price when the contract was entered into on July 1, 2021? *
(2 Points)

a. 20,825,000
b. 20,705,000
c. 20,780,000
d. 20,390,000

JPIA Company began operations on January 2, 2021. During the year, the company entered into a
contract with PUP Company to construct a
manufacturing facility. At that time JPIA estimated that it would take five years to complete the facility at a
cost of P4,812,500. The total contract price for the construction of the facility is P5,468,750. During the
year, the company incurred P962,500 in construction costs related to the construction project. At year end,
the total estimated cost to complete the contract is P4,375,000. PUP was billed and paid 30% of the
contract price subject to a 10% retention.

Using the percentage of completion method, how much is Contract Liability to be presented in the
Statement of Financial Position for the year just ended? * (2 Points)

Statement 1: A commission payable to the consignee by the consignor is for loyalty payment.
Statement 2: The commission of the consignee is based on credit sales only. * (1 Point)

a. Both statements are correct

b. Both statements are incorrect
c. Only Statement 1 is correct
d. Only Statement 2 is correct

https://forms.office.com/Pages/ResponsePage.aspx?id=cYWpTercOUiPsQvdXclp-eJiVPfhKiVModyLjGzWc5lUNlc4TDNaQTBFUUcxSzRNRVJEMV… 9 /36

0 0
 Amianan Company consigned five calculators, with cost of P800 each, to the Bisdak Company which was
to sell these goods for the account and ink of the former for a commission of 15% of selling price. Amianan
Company paid
shipping costs of P200 on the shipment. Correspondingly, Bisdak Company paid P320 on the freight of the
shipment. On the last day of the year, Bisdak
Company reported that it had sold three of the calculators, two for cash at P1,500 each and one on
credit at P1,800, of which 25% was collected as down payment. Bisdak Company remitted all the cash
due. How much is the consignment profit? *

The total effects of the errors in the capital of the firm (ignore income tax effect): *
(2 Points)

a. Overstated by P4,000
b. Overstated by P9,000
c. Understated by P1,000
d. Understated by P1,000

On August 05, 2021, Famous Furniture shipped 20 dining sets on consignment to Furniture Outlet Inc. The cost
of each dining set was P350. The cost of
shipping the dining sets amounted to P1,800 and was paid for by Famous Furniture. On December 31,
2021, the consignee reported the sale of 15 dining sets at P850 each. The consignee remitted payment for
the amount due after deducting a 6% commission, advertising expense of P300 and installation &
set-up costs of P390. The total profit on units sold for the consignor is * (2 Points)

Which of the following is the reason why a home office cannot report inventory shipments to a branch as sales *
(1 Point)

a. The inventory transfer is a transaction with a related party

b. Only inventory transactions between the company and outside third parties can be considered sales
c. There is no practical means of determining whether the transfer prices approximate those that would
occur in arms-length transactions between independent parties
d. The principle of conservatism

0 0
7/15/2021 ACCO 30013: Accounting for Special Transactions Final Departmental Examination

APEC Company consigned 2,000 units of digital camera, costing P800 each to ASEAN Company to be sold
at P1,500 per unit. The agreement calls for 15% commission on units sold and any expenses paid by the
consignee is reimbursable by the consignor. APEC paid P40,000 freight and insurance of P20,000 for the
shipment. At the end of the month, ASEAN remitted the amount due to the consignor after deducting
commission of P360,000 and advertising costs of P50,000. Record shows that 250 units were left to the
consignee and
some units were returned to the consignor. APEC paid the cost of shipment of the returned units
amounting to P20,000. What is the proper amount of net income reported by the consignor? *
(2 Points)

a. 662,000
b. 625,500
c. 637,500
d. 690,000

Ethics Company operates a branch in Makati City. On October 31, 2020, the
Branch Current account had a balance of P350,000. In the process of reconciling the reciprocal accounts,
the following items were noted:
• The home office had billed the branch P75,000 for merchandise shipment still in transit as of
October 31.
• A home office customer's account for P21,000 collected by the branch on October 26 has not been
reported to the home office.
• The branch has failed to recognize its P5,000 share of advertising expense paid for by the home
office.
• The branch reported a net income of P43,500 during the fiscal period then ended; this was
erroneously taken up as P45,500 by the home office.

How much is the unadjusted balance of the Home Office account at October 31, 2020? *
(2 Points)
a. 291,000
b. 293,000
c. 289,000
d. 350,000

Revenue recognition under IFRS 15 is based on * (1 Point)

a. Payment of consideration
b. Transfer of risk and rewards of ownership
c. Transfer of title
d. Transfer of control

How much is the balance of the Branch account in the Home Office books? * (2 Points)

a. 157,500

0 0
7/15/2021 ACCO 30013: Accounting for Special Transactions Final Departmental Examination

b. 145,200
c. 225,200
d. 132,900

Determine the profit from construction recognized in 2022. * (2 Points)

a. 30,000
b. 45,000
c. 75,000
d. 35,000

Partner A, B, C, and D, who share profits 5:3:1:1 respectively, decided to liquidate their partnership.
Capital balances at this time were 160,000, 140,000, 130,000, and 70,000 respectively. Additional
information:
• Cash on hand at the beginning is 25,000
• Partnership furniture with a book value of 25,000 is to be taken over by Partner A at a price of
10,000 in full settlement of a loan payable to A.
• Partnership creditors’ claims of 120,000 and liquidation expenses of 3,000 were paid off. The
remaining non-cash assets were sold at 75% of their carrying values.

How much did A, B, C, and D receive in the final settlement? * (2 Points)

a. A – 78,500, B – 91,100, C – 113,700, and D – 53,700

b. A – 88,500, B – 91,100, C – 113,700, and D – 53,700
c. A – 91,250, B – 92,750, C – 114,250, and D – 54,250
d. A – 83,500, B – 94,100, C – 114,700, and D – 54,700

What is the ending balance of cash account assuming that Ordinary Share, beginning is P1,500,000 and deficit,
ending is P400,000? *
(2 Points)

a. 1,300,000
b. 1,600,000
c. 1,800,000
d. 1,400,000

How much is the True Income of the Branch? * (2 Points)

0 0
7/15/2021 ACCO 30013: Accounting for Special Transactions Final Departmental Examination

a. 1,334,000
b. 676,250
c. 886,000
d. 1,061,000

On May 31, 2020, Win grants Bright the right to operate as a franchisee of "2gether Spa" for a
nonrefundable upfront fee of P2,400,000 and 3% royalty fee based on Bright's annual sales. Win in return
will (1) assist Bright in locating the site, (2) provide supplies and equipment, and (3) allow Bright to use the
tradename for 10 years. Bright's income for the year totaled P1,000,000. Win has no performance
obligation (PO) remaining as of year-end and was able to recognize income of P28,000 from PO#3. Win
determined that each PO is
separate and distinct from one another and follows PFRS 15, accordingly.

How much is the total revenue recognized by Win for the year ended 2020? * (2 Points)

What capital adjustments should be made between A and B? * (2 Points)

a. B must invest cash of 17,785

b. B must pay A, 17,785
c. A must pay B, 17,785
d. A must invest cash of 17,785

On January 1, 2021, AST Company sold an inventory costing P110,000 for P150,000. A 10% down
payment was made and the balance payable in 4 equal installments of P33,750, payable semi-annually
starting June 30 and December 31, 2021. The market rate of interest is 12%. (Round off present value
factor to three decimal places). Selling expenses related with the installment sale is P5,000.

How much is the net income related with the installment sale for the year ended 2021? *
(2 Points)
a. 29,373.00
b. 47,429.25

0 0
 c. 21,943.75
d. 16,943.75

When the company changes its percentage of completion of the construction project every year, how shall the
accounting change be treated? *
(1 Point)

a. Treated as an equity adjustment in the retained earnings.

b. As a change in accounting policy treated by retrospective application.
c. As a change in accounting estimates applied prospectively, from date of change and future profit or
loss.
d. Treated as an equity adjustment in the other comprehensive income.

Accounted for as a prior period correction treated by retrospective restatement of the beginning
balances at the date of error discovery.

What is the amount received by A on January 31, 2021? * (2 Points)

Objective Company bills its Palawan branch at 140% of cost during 2020. Goods billed at P866,250 were
shipped to Palawan branch. The account allowance for overvaluation has a balance of P306,000 before
adjustment. The beginning inventory of the branch from the home office at cost is P234,000; the beginning
inventory of the branch from outsiders is P38,000. Purchases from outsiders is P326,250.

How much is the cost of goods available for sale of the branch? * (2 Points)

Statement I. If the fixed asset records are maintained by the Home Office, an
equipment purchased by the branch will be recorded by the branch as debit to Equipment account.
Statement II. The “Allowance for Overvaluation of Branch Inventory” account represents the mark-up on
shipments from the home office. *
(1 Point)

a. Only Statement 2 is correct

b. Only Statement 1 is correct
c. Both statements are incorrect
d. Both statements are correct

0 0
Honesty Company established an agency in Cebu City sending its merchandise samples costing P90,000
and a working fund of P50,000 to be maintained on an imprest balance on April 15, 2020. During the month
of April, the agency
transmitted to the home office sales orders costing P468,750. However, the
home office was able to fill-up only 80% of the orders. Total cash of P250,000 was collected from the
customers. A home office disbursement chargeable to the sales agency includes the acquisition of
equipment for Cebu agency, P180,000 to be depreciated at 10% per annum. The agency paid expenses of
P43,700 and received replenishment thereof from the home office. The agency samples are good for one
year only. It was estimated that the gross profit on goods shipped to agency averages 25%. How much is
the net income (loss) of the agency? *
(2 Points)

a. 76,800
b. 44,800
c. 45,550
d. 80,550

Which of the following set of accounts must always be kept in agreement? * (1 Point)

a. None of these
b. Investment in Branch and Home Office Account
c. Branch income and equity in Branch Income
d. Shipment to Branch and Shipment from Home Office

What is the cost of construction to be recognized in the Statement of Comprehensive Income for the year
ended December 31, 2023? *

a. 5,400,000
b. 5,500,000
c. 4,800,000
d. 4,600,000

In consignment sales, what is the proper treatment of the consignment-related transportation cost paid by
the consignor (1) upon shipment and (2) upon return of the consigned goods to the consignor? *
(1 Point)

a. inventory ; (2) expense

b. expense ; (2) expense
c. inventory ; (2) expense
d. expense ; (2) inventory

0 0
ANSWERS:

1. 216,000

2. 815,400

3. D

4. P1,500;(P65);P715

5. D

6. 1,059,625

7. 600,000

8. C

9. 200,000

10. 56,800

11. 866,000

12. 11,295

13. 5,892.72

14. 0.13

15. 21,875

16. D

17. 316,000-contract liability

18. P322,783

19. Contract asset, P18M

20. 30,667

21. P287,500

22. 300,000

23. C

24. C

25. C

26. P350,000

27. A

28. 1,185,000

29. 588,000

30. 16,943.75

0 0
31. 37,400

32. P495,000

33. 20,705,000

34. P437,500

35. B

36. P1,240

37. A (OVERSTATED BY 4,000)

38. P4,245

39. B

40. 637,500

41. 289,000

42. D

43. 145,200

44. 35,000

45. A-88,500, B-91,100,C-113,700, D-53,700

46. 1,800,000

47. 1,061,000

48. P1,978,000

49. A must pay B, 17, 785

50. 29,373.00

51. C

52. P9,000

53. P704,250

54. B

55. 76,800

56. D

57. 4,800,000

58. D

0 0