Professional Documents
Culture Documents
PRACTICAL ACCOUNTING-1
MULTIPLE CHOICE; MARK FULLY with PENCIL NO. 2 the letter of your choice on
the answer sheet provided. Make the mark DARK but do not use to much pressure.
ERASURES ARE STRICTLY NOT ALLOWED.
1. The statement of financial position of East company on December 31, 2011
reported the following current assets:
Cash including sinking fund of P300,000 with s trustee
2,000,000
Trade and other receivables
3,500,000
Inventory including P400,000 cost of goods in transit purchased
free alongside .The goods are received on January 3, 2012
2,800,000
Total
8,300,000
The trade and other receivables included the following:
Trade accounts ( of which 10% is considered doubtful in collection)
1,500,000
Advances to affiliated entities
1,000,000
Dividends receivable
600,000
Claims to shipper
400,000
Total
3,500,000
What amount should be reported as total current assets on December 31,
2011?
a. 7,000,000
b. 6,850,000
c. 6,450,000
d. 6,050,000
2. The trial balance of West Company showed the following liability account
balances on December 31,2011;
Accounts payable
( including a debit balance of P350,000 due to overpayment)
4,500,000
Bonds payable, due March 31,2012
Premium on bonds payable
Deferred tax liability
6,000,000
200,000
3,500,000
5,500,000
2,000,000
The bank loan matures on July 31, 2012. On December 31, 2011, the entire
balance of the note was refinanced on a long-term basis. The 2011 financial
statements were authorized for issue on March 1, 2012. What amount should
be reported as total current liabilities on December 31, 2011?
a. 16,550,000
b. 16,200,000
c. 18,550,000
d. 18,200,000
3. On December 1, 2011, Helen Company gave Marie Company a P2,000,000,
12% loan. Marie received proceeds of P1,940,000 after the deduction of a
p60,000 loan origination fee. Principal and interest are due on sixty monthly
installments of P44,500 beginning January 1, 2012. The repayments yield an
effective interest rate of 12% at the present value of P2,000,000 and 13.4%
at a present value of P1,940,000. What amount of interest income should
Helen report for the year ended December 31, 2011?
a. 20,000
b. 21,663
c. 22,333
d. 19,400
4. Zoe Companys year-end December 31,2011 and the 2011 financial
statements were authorized for issue on March 31, 2012. Zoe had the
following events after reporting period:
On February 1, 2012, Zoe determined that the total cost of the
equipment purchased is P3,300,000. The asset was purchased on
November 12, 2011 and recorded at P2,000,000.
On March 15, 2012, Zoe discovered that its 2011 salary expense was
understatement by p150,000.
On March 20,2012, Zoe issued 100,000 ordinary shares at par P10 per
share.
How much should be reported as adjusting events on December 31, 2011?
a. 1,300,000
b. 1,450,000
c. 2,300,000
d. 2.450,000
5. On February 1, 2011, Sean company purchased machinery for P2,400,000
with a 10-year useful life and no residual value. On March 20, 2011, Sean
incurred repairs and maintenance cost to this equipment for P150,000. What
amount should be included in Seans quarterly income statement ending
March 31,2011?
a. 150,000
b. 190,000
c. 210,000
d. 390,000
6. Nonoy company reported the following data at the end of the current year :
Accounts receivable
Credit sales
Doubtful accounts expense(2% of credit sales)
240,000
Allowance for doubtful accounts January 1
6,000,000
12,000,000
50,000
There were no write offs nor recoveries during the year. What amount should
be reported as doubtful accounts expense in the current year of this change?
a. 240,000
b. 360,000
c. 480,000
d. 310,000
7. On January 1, 2009 Mara Company purchased equipment for P3,000,000 with
a 5-year useful life and no residual value. On January 1, 2010, Mara incurred
repairs for P500,000 and inappropriately capitalized the entire amount. The
error was discovered on January 1, 2011 and the assets residual value was
estimated to be P400,000 also on the date. What amount should be
recognized as a prior error in the opening balance of retained earnings on
January 1, 2011?
a. 500,000
b. 375,000
c. 125,000
d.
0
8. Corazon Company accounts for noncurrent assets using the cost model. On
July 31, 2011, the entity classified a noncurrent asset as held for sale. At that
date, the assets carrying amount was P 1, 450, 000; its fair value was
estimated at P2, 500, 000 and the cost to sell at P150, 000. The asset was
sold on January 31, 2012 for P2, 120,000. At what amount should the asset
be measured in the statement of financial position on December 31, 2012?
a.
b.
c.
d.
2,000,000
2,150,000
2,120,000
1,450,000
9. Guns Company has two divisions, Smith and Wesson. Both qualify as business
components. In 2011, Guns decided to dispose of the Wesson division since it
does not meet the long term goal of Guns. In 2012, the Wesson division had
revenues of P5, 000,000 and expenses of P4, 500,000. Guns also disposed
some of the divisions asset and incurred a loss of P1, 500,000. In 2011, the
Wesson division had revenues of P4, 500,000 and expenses of P5, 700,000. If
the income tax rate is 30%, how much should be reported as loss from
discontinued operations in the 2012 comparative financial statements?
a.
b.
c.
d.
2012
700,000
1,000,000
1,000,000
700,000
2011
0
1,200,000
0
840,000
10.The records of Shoe Department Store report the following data for the month
of July 2011:
Sales
13,500,000
Mark down
1,200,000
Sales allowance
250,000 Mark down cancelations
200,000
Sales return
500,000 Freight on purchases
200,000
Employee discounts
200,000 Purchases at cost
9,400,000
Theft and other losses
300,000 Purchase return at cost
480,000
Initial markup on purchases
5,400,000 Purchase return at sales price
700,000
Additional markup
500,000 Beginning inventory at cost
880,000
Mark up cancelations
200,000 Beginning inventory at sales
price 1, 600,000
Using the average retail inventory method, what is the estimated ending
inventory?
a. 937,500
b. 1,000,000
c. 1,093,750
d. 1,125,000
11.On January 1, 201, Brood Company disposed its land having a carrying
amount of P2, 500,000. The buyer gave a Brood a 5 year noninterest bearing
note requiring equal annual installments of P600, 000. The first installment is
due January 1, 2012. The market rate for this type of note is 10%. The PV of
1, 10%, 5 periods is 0.62 and the PV of an ordinary annuity, 10%, 5 periods is
3.79. In the December 31, 2011 statement of financial position, what portion
of the note should be included in noncurrent assets?
a.
b.
c.
d.
1,901,400
2,400,000
2,627,400
2,501,000
12.Gilas Company provided the following items at the end of the current year:
Cash on hand (including the bank draft of P100, 000 and postdated check of P50,
000)
2,350,000
Cash in bank per bank statement
1,500,000
Treasury Bonds
1,700,000
6,400,000
4,700,000
5,000,000
4,600,000
13.For the month of July, Cassandra Company had the following information:
bank service charge for July, P16, 500, NSF check, P40, 000. Upon review of
its records, Cassandra determined the following: deposit in transit P143, 000,
outstanding checks of P110, 000 and an unrecorded customer check of P38,
500. If the cash in bank balance per ledger is P920, 000, how much is the
adjusted balance?
a. 863,000
b. 935,000
c. 896,000
d. 90
14.Maple Company provides for doubtful accounts expense at the rate of 3% of
net credit sales. Maples credit terms are 2/10, n/30. The following data are
available for the current year:
Accounts written off as uncollectible during the year
60,000
Collection from customers beyond discount period
(Including recovered accounts of P15, 000)
1,500,000
Credit sales, year-ended December 31
3,300,000
Sales return and allowance
200,000
Collection from customers within discount period
882,000
1,800,000
60,000
280,000
320,000
220,000
263,000
280,000
203,000
90
114
126
132
a.
b.
c.
d.
4,020,000
3,920,000
4,000,000
3,980,000
21.Saplot Company regularly hedges its purchase requirements and the sale of
its finished products in the future market. On November 1, 2011, Saplot
entered into the following three contracts designated as cash flow hedge:
Type of Contract
price 12/31/11
Quantity
Purchase cotton
75
Purchase wool
109
Sell shirts
400
100,000
Market
85
150,000
90,000
90
350
650,000
1,200,000
c. 2,200,000
d. 2,360,000
25.Punk Company acquired an existing building in exchange for 50, 000 ordinary
shares. The list price of the building id P8, 000, 000 and the shares have a
fair value of P120 per share. Punk also incurred the following costs:
Payment
65,000
Unpaid
78,000
Assessment
7,000
Driveways
550,000
Cost
45,000
Cost
of
750,000
Cost
300, 000
Remodeling
200,000
to
tenants
property
to
vacate
taxes
by
assumed
city
for
and
of
wing
of
by
sewerage
parking
grading
new
the
attached
new
costs
project
leveling
the
ventilation
prior
Punk
bays
and
to
building
to
building
system
occupancy
b. 1,580,000
c. 1,600,000
d. 1,676,000
27.Hoyt Company started construction on a building on January 1, 2011 and
completed construction on December 31, 2011. Hoyt had only two interest
notes outstanding during the year and both of these notes were outstanding
for all 12months of 2011. The following information is available:
Average accumulated expenditures
4,500,000
Ending balance in construction in progress before capitalization of interest
5,400,000
7% note incurred specifically for the project
2,400,000
12% long term note
6,000,000
What is the cost of the building on December 31, 2011?
a. 5,715,000
b. 5,400,000
c. 5,820,000
d. 4,815,000
28.Kirkland Company acquired a tract of land containing an extractable natural
resource. Kirkland is required by the purchase contract to restore the land to
a condition suitable for recreational use after it has extracted the natural
resource. Geological survey indicated that the recoverable reserves will be
2,500,000 tons and the extraction will be completed in 5 years. Relevant cost
information follows;
Land
9,000,000
Exploration cost
1,000,000
Restoration cost
1,500,000
Credit-adjusted risk free interest rate
10%
What is the depletion charge per ton? (Round PV factor to two decimals.)
a.
b.
c.
d.
4.00
4.37
3.97
3.60
29.On June 31, 2011, the statement of financial position of Lourdes Company
reported the following balances:
Machinery at cost
5,000,000
Accumulated depreciation
1,500,000
The equipment was measured using the cost model and depreciated on a
straight-line basis over a 10-year period. On December 31, 2011, the
directors of Lourdes decided to change the basis of measuring the machinery
from the cost model to the revaluation model. The machinery was revalued to
its fair value of P4, 550, 000 with an expected remaining life of 5 years. The
entry to record the revaluation using the proportional method will include
30.Karla Company acquired a machine for P3, 200,000 on August 31, 2008. The
machine has a 5-year life, a P500, 000 residual values, and was depreciated
using the straight-line method. On May 31, 2011, a test for recoverability
reveals that the expected net future undiscounted cash inflows related to the
continued use and eventual disposal of the machine total P1, 500, 000. The
machines fair value on the same date is P1, 350,000 with no residual value.
What is the impairment loss to be recognized in 2011?
a. 365, 000
b. 215, 000
c. 90,000
d.
0
31.Jimboree Company offers three payment plans on its twelve-month
contracts. Information on the three plans and the number of children enrolled
in each plan for the September 1, 2011 to August 31, 2011 contract year
follows:
Initial payment per child
Number of children
Plan A
50,000
15
Plan B
20,000
12
Plan C
9
The total award credits expected to be redeemed are 90% in 2011 and 95%
in 2012. The award credits actually redeemed are 15, 000 and 8, 750 in 2011
and 2012 respectively. What is the revenue earned from the award credits I
2012?
a. 525, 000
b. 500, 000
c. 1,500,000
d. 1,000,000
33.Yehey Company includes one coupon in each package it sells. A towel is
offered as a premium to customers who send in 10 coupons:
2011
2012
Packages of cereals sold
500,000
800,000
Number of towels acquired at P40 per towel
60, 000
Number of towels distributed as premium
50, 000
Number of towels to be distributed as premium next period
3, 000
30, 000
20, 000
5, 000
250, 000
1, 750, 000
1, 600, 000
1, 500, 000
850, 000
2, 150, 000
1, 000, 000
150, 000
350, 000
4, 300, 000
2, 000, 000
3, 000, 000
450, 000
There was no work in process inventory at the beginning or end of the year,
what is the cost of goods sold for the current year?
a. 9, 500, 000
b. 9, 650, 000
c. 9, 750, 000
d. 9, 950, 000
36.Vanessa Company incurred the following costs during the current year
Routine ongoing efforts to refine, enrich or otherwise improve
000
An existing product
Design, construction and testing of reproduction models
000
Quality control during commercial production including routine
Testing of products
150, 000
Laboratory research for discovery of new knowledge
000
125,
110,
180,