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ReSA

The Review School of Accountancy


tTel. No. 735-9807 & 734-3989
AT'DITING 15 ,fu].y 2OL7 (Saturday)
First Pre-Board Examination 11: 45 A.M. 2:45 P.M.
7wbva- nn
MUI,EIPIJE CHOICE
INSTRUS:TIONS: Select the correct answer for each of the folTowing
quest-rons. I4ark only one answer f or each item by shading ti:e box
corresponC.ing to the l-.etter of your choice on the sheet provided.
STRICTLY rv"O ERASURES ARE ALLOWED. Use pencil no. 2 only

PROBLEM 1:
The following lead schedule of the Demi Corporation's current
lj abi'1 itie.s was made avaif able to you in line with your audit of
t-he company's financial- statements as of and for the period ended
December 31, 2A16:
Accounts payable P974,500
Warranties pavable 489,500
Premiums payable 53, 2oo
Income tax payable 581,269
10% Notes payable, bank 500,000
Inte.rest payable 4 ,767

Audi.,* notes:
a. The acccunts oa1'ab1e balance is net of P56, 800 supplier
accounts debi'- balances due to gdv_4nc-e-- _p.alEte:1-ts fcr
ciei-veri-es to be accepteci the f of lowing year.
The balance of the warranties payable account r^/as the
1 i ,.- :...'-:' , -l : l.'... ':-r a:-a.:' ','eal: iCf
-:-
ja::1:---- es 3:- saie< Iriace !i 2a-a. l::iS iS ii ccn:eCtio::
;- --:. ::,e cne-!'ear 'rarrantv program adoc-ued by the conpany
..a:.-in9 2C15. flg company estimates, as per industry
e;.:per.t-ence that 60 z of the products sc-Ld wilt be returned
for _r__epAi€ anC that the eg+a_n-r-et-eg _ qS.L!.- to repair the
returned units shall be !1-80 in parts and labor. The
fol-lowing information were dbemed relevant:
20\5 2076
Sales (in number of units) 8, 510 9,680
Selling price.per unit P1, 250 P1 , 310
Actual repairs on units reLurned I p429,580 P987,"720
./{x.:'i'j
Actua.l- repairs cc,st incurred were apprcpriately charged to
the warranties expense. You further ascertained that from
.h: repairl cost paiO in 2ot6q I1]::-00j_, relaies ro rhe
units so.Ld iq
,,\
20111.

The premiums payable per books is the balance of the


tiability accrued in Lhe previous year rel-ated to a
premiums promotional program that the company has als<:
started in 2015. The program allows customer to receive a
specially de-p1g-95:d wristwatch for, submitting proof of
purchasing flujfltp of the qompany's product. The premiums
are redeemable within, 1 yea$ from thre, date of purchase of
the rel-ated merchandidei-
The €g_r! of e4.ch wristwatch j.s at P80. The company incurs
addiflorial '-?,1-,3,, irr shipping and handiing charges upon the
premiums redemption. The following' information were deemed
relevant in reIatIon tc your audj-t of ihe premiums payable
ac:o,,:nt:

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