E x c e l P ro fe ssio n a l S e rv ic e s , Inc.

iPjj
Management Firm of Professional Review and Training Center (PRTC) m f
(Luzon) Manila 733-9344/734-7903 * Calamba, Laguna (049) 5453807
(Visayas) Bacolod City (034) 434-6214 * Cebu City (032) 253-7900 Loc. 218
(Mindanao) Cagayan de Oro City (088) 309-3073 * Davao City (082) 225-0049
[Link]

CPA REVIEW

OPEN
1st PRE-BOARD EXAMINATIONS
PRACTICAL ACCOUNTING 1
Exam Coverage Elements of financial
statements, Inventories,
Biological assets, Property,
plant and equipment,
Investment property,
Intangible assets, Cash and
cash equivalents,
Receivables, Investments and
Other topics
Exam Code P1.0pen1stPB.1012
Date August 5, 2012
Time 12:00 NN to 3:00 PM
No. of Questions 50
SET A
Practical Accounting 1 SETA

INSTRUCTIONS: Se le ct the best answ er for each o f the

follow ing questions. M ark only one answ er fo r each item on the
answ er sheet provided. S tric tly NO ERASURES ALLOW ED.
Erasures will render you r exam ination answ er sheet INVALID.
Use PENCIL NO. 2 only. GOODLUCK!©

1. Angel C o .'s professional fees expense account had a balance

of P92,000 at D ecem ber 31, 2012, before considering year-
end adjustm ents relating to the follow ing:
• C onsultants were hired fo r a special project at a total fee
not to exceed P65,000, Angel has recorded P55,000 of this
fee based on billings for w ork perform ed in 2012.
• The attorney's letter requested by the auditors, dated
January 28, 2013, indicated th at legal fees of P6,000 were
billed on January 15, 2013 for work perform ed in
N ovem ber 2012 and th at unbilled fees for D ecem ber 2012
w ere P9,000.
W hat am ount should Angel report for professional fees
expense for the year ended D ecem ber 31, 2012?
a. P107,000 c. P92,000
b. P117,000 d. P52,000

2. Kristine Co. owns a royalty interest in an oil well. The

contract stipulates th at K ristine will receive royalty paym ents
sem iannually on January 31 and July 31. The January 31,
paym ents will be for 20% o f the oil sold to jobbers between
the previous June 1 and N ovem ber 30, and the July 31,
paym ent will be for oil sold betw een the previous Decem ber 1
and May 31. Royalty receipts for 2012 am ounted to P80,000
and P100,000 on January 31 and July 31, respectively. On
Decem ber 31, 2011, accrued royalty incom e receivable'
am ounted to P15,000. Production reports show the following
oil sales:
June 1, 2011 - N ovem ber 30, 2011 P400,000
D ecem ber 1, 2011 - May 31, 2012 500,000
June 1, 2012 - N ovem ber 30, 2012 425,000
D ecem ber 1, 2012, D ecem ber 31, 2012 70,000

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W hat am ou nt should K ristin e report as royalty incom e for

2012 ?
a.. P179,000 c. P184,000
b. P18 0,000 d. P194,000

3. A t D ecem ber 31, 2012, S a rah B eauticians had 1,000 gift

ce rtifica te s outstanding th a t had been sold to custom ers
during 2012 fo r P75 each. Sa rah operates on a gross m argin
of 60% . How much revenue pertaining to the 1,000
o utstan din g gift certificates should be deferred at D ecem ber
31, 20 12?
a. P 0 c. P45,000
b. P30 ,0 00 d. P75,000

4. On Ja n u a ry 1, 2012, K ayce e Com pany sold specialized

co m p u te rs costing P76 0,000 to Crater, Inc. fo r P990,000.
K aycee C om pany's te ch n icia n s m u st com plete the installation,
and K aycee Com pany's tra in e rs present num erous training
se ssio n s fo r C rater's e m p lo y e es during the installation period.
C a rte r m ade a 50% dow n paym ent, with the balance due
upon com pletion of in sta llation . How much revenue should
Kaycee Com pany recognize on its books on January 1, 2012?
a. P0 c. P495,000
b. P76 0,000 d. P990,000

5. Anne Publishing Co. pu blishes textbooks fo r colleges and

un iversities. Bookstores purchase books with term s f.o.b.
shipping po in t and paym ent is due 60 days after shipm ent.
The bookstore m ay return 40% of each order (at the
bo o ksto re's expense). A n n e 's experience indicates th at the
norm al return rate is 10% , and the average collection period
is 72 days. Anne shipped and invoiced P300,000 of books
during A ug ust 2012. The books were recorded on A nn e's
books fo r P120,000. W hat am ou nt of net sales revenue will
Anne record for the A ug ust 2 0 12 sales?
a. P18 0,000 c. P120,000
b. P300,000 d. P270,000

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6. Shaina S kies Travel sells airplane tickets for Global Airw ays,
Inc. Shaina S kies collects the full airfare from the client and
rem its th is am ount, less a com m ission, to Global Airw ays,
Inc. Shaina S kies receives a com m ission of 6% of the total
price. During June, 2012, Shaina Skies sold ticke ts worth
P640,000 and rem its P601,600 to Global Airw ays, Inc. For
June 2012, w hat am ount of revenue should Shaina Skies
Travel record?
a. P640,000 c. P38,400
b. P601,600 d. P36,096

7. Bea Com pany is an experienced home appliance dealer. Bea

Com pany also offers a' num ber of services togeth er w ith the
home appliances th at it sells (installation and m aintenance).
Bea Com pany se lls dishw ashers on a standalone basis, it also
sells installation and m aintenance service for the
dishw ashers.
Pricing for dishw ashers is as follows;
D ishw asher only P I , 600
D ishw asher with installation service 1,700
D ishw asher with m aintenance services 1,950
D ishw asher with installation and
m aintenance services 2,000
In cases where m aintenance services are provided, the
m aintenance service is separately priced w ithin the
arrangem ent at P350. Dishw ashers are sold subject to a
general right of return. If a custom er purchases a dishw asher
with installation and/or m aintenance services, in the event
Bea Com pany does not com plete the service satisfactorily, the
custom er is only entitled to a refund of the portion o f the fee
that exceeds P I ,600. On January 1, 2012, Bea Com pany
sells 100 dishw ashers to Condo Com plex, Inc. a developer of
high-rise condos. The dishw ashers are installed and Condo
Com plex, Inc. purchases the dishw ashers with the installation
and m aintenance services. The total price for the 100
dishw ashers is P190,000. How much revenue should Bea
Com pany allocate to the dishw ashers?

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a. P150,000 c. P152,000
b. P190,000 d. P160,000

8. Presented below are changes in all the account b a la n ce s of

Angelica C om pany fo r 2012, e x ce p t fo r retained e arnings:
Increase
(Decrease)
Cash P 790,000
Accounts receivable (net) 240,000
Inventory 1,270,000
In vestm ents ( 470,000)
Accounts payable ( 380,000)
Bonds payable 820,000
Share capital 1,250,000
Share prem iu m 130,000
W hat am ount should net in com e fo r 2012 be, assu m in g that
there were no e ntries in the re tain e d earnings acco u n t except
for net incom e and a dividend declaration of P190,000 which
w as paid in the current year?
a. P 10,000 c. P 200,000
b. P I, 140,000 d. P I,080,000

9. The inventory on hand at D ecem ber 31, 2012 fo r Heart

Com pany valued at a cost of P947,800. The follow ing item s
were not included in th is in ve n to ry amount:
a) Purchased goods, in tra n sit, shipped FOB destination
invoice price P32,000 w hich included freight ch a rg e s of
P I ,600.
b) G oods held on consignm ent by Heart Com pany a t a sales
price of P28,000, including sa le s com m ission o f 20% of
the sales price.
c) Goods sold to Lungs Com p any, under te rm s FOB
destination, invoiced fo r P1 8 ,5 0 0 which in clud es P I , 000
freight charges to de live r th e goods. Goods are in transit.
d) Purchased goods in tra n sit, term s FOB sh ipp ing point,
invoice price P48,000, fre ig h t cost, P3,000.

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e) Goods out on consignm en t to Liver Com pany, sales price

P36,400, shipping cost of P2,000.
Assum ing th at the co m pany's selling price is 140% o f
inventory cost, the adjusted cost of Heart C o m p any's
inventory at D ecem ber 31, 2012 should be
a. P I ,039,300 c. P I ,055,700
b. P I ,039,500 d. P I ,037,300

10. On Decem ber 3, Jenny Com pany purchased inventory listed

at P8,600 from Lyn Corp.. Term s of the purchase w ere 3/10,
n/20. Jenny Com pany also purchased inventory from Duck
Com pany on D ecem ber 10 for a list price of P7,500. Term s of
the purchase were 3/10, n/30. On Decem ber 16, Jenny paid
both suppliers for these purchases. If Jenny uses the net
method o f recording purchases, the journal entry to record
the paym ent on D ecem ber 16 w ill include
a. A debit to Accounts payable o f P15,875.
b. A debit to Purchase D iscounts Lost of P258.
c. A credit to Purchase D iscounts of P258.
d. A credit to Cash of P 1 5 ,617.

11. The trial balance o f C in dy Com pany showed inventories of

P164,000. The inventories include som e goods th at have a
production cost of P18,000. These goods have a
m anufacturing defect th a t will cost P6,000 to correct. The
normal selling price for these goods would be P25,000, but
after the rem edial w ork they will be sold through an agent as
refurbished goods at a discount of 20% on the norm al selling
price. The agent w ill receive a com m ission of 10% o f the
reduced selling price. In relation to the defective goods, the
com pany will recognize a loss on inventory write down of
a. P6,000 c. P I ,000
b. P4,000 d. P 0

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12. A physical inventory ta ke n on D ecem ber 31, 2012 resulted in

an ending inventory o f P I , 440,000. K im C om pany suspects
so m e inventory m ay have been taken b y em ployees. To
e stim a te the cost o f m issing inventory, th e following w ere
gathered:
Inventory, Dec. 31, 2011 P I ,280,000
Purchases during 2 0 1 2 5,640,000
C a sh sales during 2 0 12 1,400,000
Sh ipm en t received on D ecem ber 26, 20 12,
included in physical inventory, but not
recorded as pu rch a se s 40,000
D eposits made w ith su ppliers, entered as
purchases. G oods w ere not received in
2012 80,000
C ollections on accou n ts receivable, 2012 7,200,000
A ccounts receivable, January 1, 2012 1,000,000
Accounts receivable, Dec. 31, 2012 1,200,000
G ro ss profit percentage on sales 40%
A t D ecem ber 31, 2 0 12 w hat is the e stim ate d cost of m issing
inventory?
a. P200,000 c. P240,000
b. P160,000 d. P320,000

13. K atrin a Company provided the follow ing data:

C o st Retail
Beginning inventory P 1 6 0 ,0 0 0 P 40 0,0 00
Purchases 2 ,8 0 0 ,0 0 0 3,200,000
Freight in 4 0 ,0 0 0
M arkup 30 0,0 00
M arkup cancellation 30,000
Markdown 160,000
M arkdown cancellation 4 0 ,00 0
S a le s 3,000,000
Physical inventory a t y e a r end 500,000
Estim ated norm al sh rinkag e is
4% of sales

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Assum ing the com pany uses th e average retail inventory

m ethod, the estim ated inventory shortage is
a. P104,000 c. P200,000
b. P130,000 d. P 4,000

14. The follow ing pertains to C laudine C o m p any's biological

assets:
Fair value of the assets P500,000
Estim ated com m issions to brokers and dealers 50.000
Estim ated transport and other costs necessary
to get assets to the m arket 30.000
Selling price in a binding contract to sell 400,000
The e ntity's biological assets should be valued a
a. P450,000 c. P350,0<
b. P420,000 d. P320,0i

15. Precious Com pany purchased land for a m anufacturing facility

for P I, 100,000. The com pany paid P70,000 to te ar down a
building on the land. Salvag e w as sold for P10,500. Legal fees
of P6,500 were paid for title investigation and m aking the
purchase. A rchitect's fees were P40,500. Title insurance cost
P4,500, and liability insurance during construction cost
P13,500. Excavation cost P12,000. The contractor w as paid
P I ,357,000. A one -tim e assessm en t made by the city for
sidew alks was P7,500. Precious installed lighting and signage
at a cost of P11,000.
The cost of the building that should be recorded by Precious is
a. P I , 505,500 c. P I ,423,000
b. P I ,432,000 d. P I , 357,500

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Use the fo llo w ing inform ation fo r th e next two questions.

Elyrei Inc. and Jazm yne Co. have an exchang e with no
com m ercial substance. The a s se t given up by E lyrei Inc. has a
book va lu e o f P12,000 and a fa ir value o f P I 5,000. The asset
given up by Jazm yn e Co. has a book value of P20,000 and a fair
value of P19,000. Boot of P4,000 is received by Jazm yn e Co.

16. W hat a m o u n t should Elyrei Inc. record for the a sse t received?
a. P15,000 c. P19,000
b. P16 ,0 00 d. P20,000

17. W hat a m o u n t should Jazm yn e Co. record forr the

fo asset
received?
a. P15,000 c. P19,000
b. P16,000 d. P20,000

Use the follow ing inform ation fo r th e next two questions.

Nadine C o m p an y received an P I ,800,000 su bsidy from the
governm ent to purchase m anufacturing equipm ent on January, 2,
2012. The equipm ent has a co st o f P3,000,000, a useful life a six
years, and no salvage value. N adine depreciates th e equipm ent
on a stra ig h t-lin e basis.

18. If N adine chooses to accou n t for the g ra n t as deferred

revenue, th e grant revenue to be recognized in 20 12 is
a. Nil c. P 5 0 0,0 00
b. P 3 0 0,000 d. P I ,8 0 0 ,0 0 0

19. If N adine chooses to account fo r the grant as an adjustm ent

to the asset, the carrying am ount of th e asse t on the
D ecem ber 31, 2012 state m e n t o f financial position is
a. P I , 2 0 0 ,0 0 0 c. P 2,20 0,0 00
b. P I , 0 0 0 ,0 0 0 d. P2,5 0 0 ,0 0 0

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Use the following inform ation fo r the next tw o questions.

On January 2, 2011, Rica G roves began construction of a new
processing plant. The autom ated plant w as finished and ready
for use on Septem ber 30, 2012. Expenditures for the
construction were as follow s:

January 2, 2011 P200,000

Septem ber 1, 2011 600,000
Decem ber 31, 2011 600,000
March 31, 2012 600,000
Septem ber 30, 2012 400,000

Rica G roves borrowed P I, 100,000 on a construction loan a t 12%

in terest on January 2, 2011. This, loan was outstanding during
the construction period. The com pany also had P4,00 0,0 00 in
9% bonds outstanding in 2011 and 2012.

20. The interest capitalized for 2011 was:

a. P180,000 c. P192,000
b. P 48,000 d. P 60,000

21. The interest capitalized for 2012 was:

a. P124,740 c. P25,740
b. PI 18,305 d. P99,000

22. Nikki Com pany takes a full year's depreciation in the year of
an assets acquisition, and no depreciation in th e y e a r of
disposition. Data relating to one depreciable asset acquired in
2010, with residual valu e of P400,000 and estim ated useful
life of 8 years, at D ecem ber 31, 2011 are:
Cost P5,400,000
Accum ulated depreciation 2,362,500
Using the sam e depreciation m ethod in 2010 and 2011, how
much depreciation should Nikki record in 2012 for th is asset?
a. P625,000 c. P659,375
b. P703,125 d. P759,375

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23. Roxanne Co. purchased e q u ip m e n t for P500,000. The

equipm ent had an estim ated 1 0 -y e a r service life. R oxanne's
policy fo r 10 -yea r assets is to use th e 150% declining balance
depreciation m ethod for the firs t fiv e years o f the a sse t's life
and then sw itch to the stra ig h t-lin e depreciation m ethod.
W hat am ou nt should R oxann e report as accum ulated
depreciation fo r equipm ent at th e end of the sixth year?
a. P300,000 c. P278,147
b. P322,518 d. P311,425

24. Judy, Incorporated em barked on a new venture in Northern

Luzon in 2012. It expects to glean 2,000,000 ounces o f a
precious ore from its holdings there, over several years.
R elevant data follow:
Cost o f the M ineral Rights P 50 0,0 00
Exploration Cost, 2012 (1/3 su ccessful) 1,500,000
Extraction Cost, 2012 2 ,000 ,00 0
Ore extracted, 2012 500,000 oz.
Ore sold, 2012 300,000 oz.
W hat is the depletion for 2012, using the successful efforts
m ethod of accounting for exp lo ra tio n costs?
a. P350,000 c. P250,000
b. P300,000 d. P150,000

25. Diana M ining Com pany constructed a building costing

P2,80 0,0 00 on the mine property. Its estim ated residual
value w ill not benefit the co m p a n y and w ill be ignored fo r
purposes o f com puting dep reciation. The building ha s an
estim ated life o f 10 years. T he total estim ated recoverable
units from the m ine is 5 0 0 ,0 0 0 tons. The co m pa ny's
production o f the first four y e a rs of operations was:
First year 10 0,0 00 tons
Second yea r 100,0 00 tons
Third yea r S h u t down, no output
Fourth yea r 100,0 00 tons

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W hat is the depreciation fo r the fourth yea r?

a. P490,000 c. P210,000
b. P560,000 d. P33 6,000

26. In th e 30 June 2012 an nu al report of Iza Ltd, the equipm ent

w as reported as follow s:
Equipm ent (at cost) P5,0 0 0 ,0 0 0
A ccum ulated depreciation 1 .500 .00 0
P 3 .5 0 0 .0 0 0

The equipm ent consisted of two m achin es, m achine A and

m achine B. M achine A had cost P3,0 0 0 ,0 0 0 and had a
ca rryin g am ount o f P I , 800,000 at 30 June 2012, w hile
m achine B had co st P2,000,000 and w as carried at
P I , 700,000. Both m achines are m easured using the cost
m odel, and depreciated on a straig ht-line b a sis over a ten-
y e a r period.
On 31 D e ce m b e r-2012, the directors o f Iza Ltd decided to
change the basis of m easuring the e q u ip m e n t from the cost
m odel to the revaluation model. M achine A w as revalued to
P I ,8 0 0 ,0 0 0 with an expected useful life o f six years, and
m achine B was revalued to P I ,550,000 w ith an expected
useful life of five years.
W hat is the revaluation surplus on D ecem ber 31, 2012?
a. P150,000 c. P200,000
b. P100,000 d. P 0

27. The Rachelle Com pany purchased an in vestm en t property on 1

January 2009 for a co st of P220,000. The property had a
useful life o f 40 yea rs and at 31 D ecem ber 2011 had a fair
value o f P300,000. On 1 January 2012 th e property was sold
for net proceeds of P290,000. Rachelle uses the fair value
model to account for investm ent properties.
W hat is the gain or loss to be recognized in profit or loss for
the ye a r ended 31 D ecem ber 2012 regarding the disposal of
the property?

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a. P86,500 gain c. P10,000 loss

b. P81,000 gain d. P92,000 gain

28. C a m ille Corporation incurred the follow ing costs in 2012:

A cquisition o f R&D equipm ent w ith a
useful life o f 4 years in R8iD pro jects P600,000
S ta rt-u p co sts incurred when opening a
new plant 140,000
A dve rtisin g expense to introduce a new
product 7 0 0,0 00
Engineering costs incurred to ad vance a
product to full production stage
(econom ic viab ility not achieved ) 4 0 0 ,0 0 0
W hat am ount should C am ille record as research &
d e velo pm ent expense in 2012?
a. P 550,000 c. P I ,000,000
b. P 740,000 d. P I , 140,000

29. Mini Corp. acquires a patent from Maxi Co. in exchange fo r

2,500 shares o f Mini Corp.'s P5 par value ordinary sh a re s and
P75,000 cash. W hen the patent w as initially issued to M axi
Co., Mini C o rp.'s shares w ere sellin g at P7.50 per sh are.
W hen Mini Corp. acquired the patent, its shares w ere se llin g
fo r P9 a share. Mini Corp. should record the patent a t w hat
am ount?
a. P87,500 c. P97,500
b. P93,750 d. P75,000

30. Toni Com pany purchases Pauleen Com pany for P 1 3 ,9 8 5 ,0 0 0

cash on Jan uary 1, 2012. The book value of Pauleen
Co m p an y's net assets reported on its Decem ber 31, 2011
statem ent o f financial position w as P12,620,000. T o n i's
D ecem ber 31, 2011 an alysis indicated th at the fa ir v a lu e of
Pauleen's tang ible assets exceeded the book va lu e by
P560,000, and the fa ir value o f identifiable intangible a sse ts
exceeded book value by P245,000. How much goodw ill

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should be recog nized by Toni C om pany w hen recording the

purchase o f Pauleen?
a. P 0 c. P 805,000
b. P560,000 d. P I ,365,000

31. On Jan uary 1, 2 0 1 1 , Bianca Inc. purchased a patent w ith a

co st P I , 160,000, a useful life of 5 years. The com pany uses
stra ig h t-lin e dep reciatio n. A t D ecem ber 31, 2012, the
com pany d e te rm in es th a t im pairm ent indicators are present.
The fa ir value less co st to sell the patent is estim ated to be
P540,000. The p a te n t's valu e-in-use is estim ated to be
P565,000. The a s s e t's rem aining useful life is estim ated to be
2 years.

B ia n ca 's 2012 in com e statem ent w ill report Loss on

Im p airm en t of
a. P 15,000 c. P156,000
b. P131,000 d. P363,000

32. On January 2, 2 0 1 1 , Isabel Inc. purchased a patent w ith a

co st P940,000 a useful life o f 4 years. A t D ecem ber 31,
2011, and D ecem ber 31, 2012, the com pany d eterm in es th at
im p airm en t in dicato rs are present. The follow ing inform ation
is availab le for im p a irm e n t testing at each yea r end:
12/31/2011 12/31/2012
F air value less co sts to sell P715,000 P420,000
V alue-in-u se P750,000 P445,000
No changes w ere m ade in the asset's estim ated useful life.

The co m pany’s 20 12 incom e statem ent will report

a. A m ortization E xp en se of P235,000.
b. Am ortization Exp en se of P250,000 and Loss on
Im p airm en t o f P55,000.
c. A m ortization Exp en se of P235,000 and a Loss of
Im p airm en t o f P25,000.
d. Loss on im p a irm e n t o f P70,000.

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33. The cash account o f Francine Corp. on D ecem ber 31; 2012
has a balance of P127,600 and it consists o f the following:
B ills and coins on hand P52,780
Petty cash including petty cash vouchers of P650 1,000
Balance in savings account w ith a bank closed by
the BSP 36,000
C usto m er's check dated January 15, 2013 8,000
C redit memo from suppliers for purchases returns 6,500
Postage stam ps 120
M oney order 800
IOU o f an em ployee 400
Checking account balance in Bank o f P.I. 22,000

The correct cash balance on D ecem ber 31, 2012 of Francine

Corp. is
a. P76,580 c. P75,130
b. P76,330 d. P75,930

34. The following inform ation w as included in the bank

reconciliation for Regine, Inc. for June. Assum e all other
reconciling item s are listed.
Checks and charges recorded by bank in June,
including a June service charge o f P600 P344,200
Service charge made by bank in M ay and
recorded in the books in June 400
Total of credits to Cash in all jou rn a ls during June 396,040
Custom er's NSF check returned as a bank charge
in June (no entry made on books) 2,000
C ustom er's NSF check returned in May and
redeposited in June (no entry made on books
in either May or June) 5,000
O utstanding checks at June 30 265,200
D eposits in transit at June 30 12,000
W hat w as the total of outstanding checks at the beginning of
June?
a. P 3 19,240 c. P219,360
b. P211,160 d. P213,160

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Practical Accounting 1 SETA

35. T anya, Inc had net sales in 2012 o f P700,000. A t D ecem ber
31, 2011, before adjusting entries, th e balances in selected
accounts were: accounts receivable P125,000 deb it, and
allow ance for doubtful accounts P I , 200 debit. Tanya
estim ate s th at 2% o f its accounts receivable will prove to be
uncollectable. W hat is the cash realizable va lu e of the
receivables reported on the sta te m e n t o f financial position at
D ecem ber 31, 2012?
a. P112,200 c. P i l l , 000
b. P122,500 d. P109,800

36. The balance sheet o f Rhian Products Co, show s th e accounts

receivable balance a t D ecem ber 31, 2011 as follow s:
Accounts receivable - trade P45,000
Less allow ance for doubtful acco u n ts 900
P44.100
D uring 2012, transactio ns relating to the accounts w ere as
follow s:
• S ales on account, P480,000.
• Cash received from co llectio ns of current receivables
totaled P392,000, after d isco u n ts of P8,000 w ere allow ed
fo r prom pt paym ent.
• Custo m er's accounts of P2,000 w ere ascertained to be
w orthless and w ere w ritten off.
• Bad accounts previously w ritten o ff prior to 2012
am ounting to P500 were recovered.
• The com pany provided P2,300 fo r doubtful accou n ts by a
jo u rn a l entry a t the end o f th e year.
• Accounts receivable o f P70,000 have been pledged to a
local bank on a loan of P40,000. Collections o f P15,000
were m ade on these re ce iva b le s (not included in the
collections previously given) and applied as partial
paym ent to the loan.
The am ortized co st of accounts receivable at D e ce m be r 31,
2012 is
a. P106,800 c. P106,300
b. P105,800 d. P 81,300

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Practical Accounting 1 SETA

37. On January 1, 2007, Sunshine C om pany sold a m achine with

a carrying am ount of P300,000 and accepted in exchange a
prom issory note with a face value o f P500,000, a due date of
D ecem ber 31, 2016, and a stated rate o f 4%, with in terest
receivable at the end o f each year. The fa ir value of the
m achine is not readily determ inable and the note is not
readily m arketable. U nder the circum stances, the note is
considered to have an appropriate imputed rate of interest of
8 %.
The interest incom e to be recognized in 2012 is
a. P20,000 c. P32,604
b. P29,264 d. P33,612

38. On January 1, 2009, K aye Com pany sold equipm ent w ith a
carrying am ount of P700,000 to Kyla Com pany. As paym ent,
Kyla gave Kaye Com pany a P I ,000,0 00 note. The note bears
an interest rate of 5% and is to be repaid in five annual
installm ents of P200,000 (plus interest on the outstanding
balance). The first paym ent was received on D ecem ber 31,
2009. The m arket price of the equipm ent is not reliably
determ inable. The prevailing rate of interest for notes of th is
type is 10%.
The interest incom e to be recognized in 2012 is
a. P20,000 c. P37,355
b. P19,088 d. P54,866

39. An entity often factors its accounts receivable. The finance

com pany requires an 8% reserve and charges a 1.5%
com m ission on the am ount of the receivable. The rem aining
am ount to be advanced is fu rther reduced by an annual
interest charge of 16%. W hat proceeds (rounded to the
nearest peso) w ill the enterprise receive from the finance
com pany at the tim e a 110,000 account that is due in 60 days
is turned over to the finance com pany?
a. P83,630 c. P99,550
b. P81,950 d. P96,895

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Practical Accounting 1 SETA

Use the fo llo w ing inform ation fo r the next tw o questions.

On Jan uary 1, 2012, N ancy Corporation purchased P I ,000,000

10% bonds fo r P I ,05 1,5 10 (including broker's com m ission of
P20,000). In tere st is payable an n u ally every D ecem ber 31. The
bonds m a tu re on D ecem ber 31, 2014. The bonds are classified
as a v a ilab le -fo r-sale . The p re vailin g m arket rate fo r the bonds is
9% at D e ce m b e r 31, 2012. (Round off present value factors to
four decim al places)

40. If th e bon ds are cla ssifie d as he ld-to-m atu rity (HTM), the
am ou nt to be reported on the entity's D ecem ber 31, 2012
sta te m e n t o f financial position is
a. P I , 0 3 4 ,3 4 0 c. P I ,025,330
b. P I , 0 3 5 ,6 3 1 d. P I ,017,6 10

41. If th e b o n d s are classified a s held for trading, the am ount to

be recog nized as fa ir valu e adjustm ent loss in its 2012 profit
or loss?
a. P 3 3 ,9 0 0 c. P13,900
b. P2 6 ,1 8 0 d. P 6,180

42. On D e ce m b e r 28, 2012, C h yn a Com pany co m m its itself to

purchase a financial asse t to be classified as held for trading
for P5 0 0 ,0 0 0 , its fair valu e on com m itm ent (trade) date. This
se cu rity has a fair va lu e of P505,000 and P510,000 on
D ecem ber 31, 2012 (C h y n a ’s financial year-end), and January
5, 2013 (se ttlem e n t date), respectively.

If C h yn a ap plies the se ttle m e n t date accounting m ethod to

account fo r regular-w ay pu rchases of its securities, how much
should be recognized as fa ir valu e adjustm ent gain in its 2012
profit o r loss?
a. P 1 5 ,0 0 0 c. P5,000
b. P 1 0 ,0 0 0 d. Nil

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Practical Accounting 1 SETA

43. On January 1, 2012, Pol Corporation acquired 25% of the

sh ares of Pot, Inc. for P425,000. A t this date all the
identifiable assets and liabilitie s of Pot, Inc. were recorded at
am ounts equal to fa ir value, and the equity of Pot consisted of
the following:
Share capital P I ,000,000
G eneral reserve 300.000
A sset revaluation surplus 200.000
Retained earnings 200,000

In 2012, Pot reported profit of P250,000. P50,000 of the

asset revaluation surplus was realized in 2012. Pot paid a
P40,000 dividend and transferred P30,000 to general reserve.
W hat is the carrying am ount o f the investm ent in Pot, Inc. as
of D ecem ber 31, 2012?
a. P477,500 c. P465,000
b. P490,000 d. P482,500

44. The 10% bonds payable of Valerie Com pany had a net
carrying am ount of P570,000 on D ecem ber 31, 2011. The
bonds, which had a face value o f P600,000, were issued at a
discount to yield 12%. The am ortization of the bond discount
was recorded under the effective-interest method. Interest
w as paid on January 1 and July 1 of each year. On July 2,
2012, several years before th eir m aturity, Valerie retired the
bonds at 102. The interest paym ent on July 1, 2012 was
made as scheduled. W hat is the loss that Valerie should
record on the early retirem ent of the bonds on July 2, 2012?
a. P12,000 c. P33,600
b. P37,800 d. P42,000

45. Julia C orp.'s equity as o f D ecem ber 31, 2011 is P534,000.

The Julia's shares have a par value of P10 per share. The
follow ing transactions occurred in 2012: February 15:
D ividends of P10,000 are paid; March 14: 10,000 shares are
sold fo r P14 per share; June 6: 2,000 shares are repurchased
for P16 per share; O ctober 8: 2,000 shares previously
repurchased are resold fo r P18 per share. Profit for 2012 is

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Practical Accounting 1 SETA

P 10 3,000. On D ecem ber 31, 2012, Ju lia should report e q u ity

of
a. P771,000 c. P664,000
b. P781,000 d. P767,000

46. On D ecem ber 31, Jackie C o m p an y noted the follow ing

tra n sa c tio n s th a t occurred during 2 0 1 2 , som e or all o f w hich
m ig h t require ad justm ent to the books. x
a. Paym en t of P2,900 to suppliers w a s m ade for pu rch a se s
on account during the yea r and w a s not recorded.
b. Building and land were purchased on January 2 fo r
P 175,000. The building's fa ir m a rk e t value was P 1 2 0 ,0 0 0
a t the tim e o f purchase. The b u ild ing is being depreciated
o ve r a 20 -yea r life using th e stra ig ht-line m ethod,
assum ing no salvag e value.
c. O f the P34,000 in Accounts R eceivable, 2.5% is e stim ate d
to be uncollectible. Currently, A llo w an ce for Bad D ebts
show s a debit balance of P460.
d. On A ug ust 1, P40,000 was loaned to a custom er on a 6-
m onth note w ith interest at an a n n u al rate of 12%.
e. D uring 2012, Jackie received P 8 ,5 0 0 in advance for
services, 80% of which will be perform ed in 2013. The
P8,500 w as credited to sales revenue.
f. The interest expense account w as debited for all in te re st
ch a rg e s incurred during the y e a r an d show s a balance of
P I, 100. However, of this a m ou n t, P600 represents a
disco unt on a 60 -day note payab le, due Jan uary 30,
2013.

T he net reduction in reported net in co m e as a result o f the

required adjustm ents is
a. P14,710 c. P ll, 8 1 0
b. P10,890 d. P 9,810

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Practical Accounting 1 SETA

N et incom e for A ubrey C o m p any for the calendar year 2011

and 2012 is shown below. A review of the accounts disclosed
the following errors:
2011 2012
Net income per books P75,600 P96,900
Errors disclosed:
Equipm ent purchased at year-end
charged to expense (with
estim ated 10-year life) 10,000
Increase of Reserve for
Contingencies charged to 12,000
operations
O verstatem ent of inventory at
year-end 3,000
Goods purchased not recorded as
liability and not included in
inventory 4,000
Rent received in advance 1,500
Unpaid salaries not taken up in the
books 900
Insurance prem ium on one-year
fire policy taken and paid on
May 1, 2012, all charged to
expense 1,200

The correct net incom e for 2012 is

a. P114,700 c. P108,300
b. P113,700 d. P114,200

. Maui Corp. had the follow ing lia bilitie s at D ecem ber 31, 2012:
Accounts payable P 55,000
Unsecured notes, 8%, due 7/1/13 400,000
Accrued expenses 35,000
Contingent liability 450,000
Deferred incom e tax liability 25,000
Senior bonds, 7%, due 3/31/13 1,000,000

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Practical Accounting 1 SETA

The co n tin g e n t lia b ility is an a c cru a l for possible lo sses on a

P I ,0 0 0,0 00 law su it filed a g a in st M aui. M aui's legal counsel
expects th e su it to be settled in 20 14, and has estim ated th at
Maui w ill be liable for dam ages in th e range of P450,000 to
P750,000.

The deferred incom e ta x lia b ility is not related to an asse t for

financial reporting and is expected to reverse in 2013.

W hat am ou nt should Maui re po rt in its Decem ber 31, 2012

statem ent o f fin an cial position fo r current liabilities?
a. P 4 9 0 ,0 0 0 c. P I,490,000
b. P I ,0 9 0 ,0 0 0 d. P2,090,000

49. The general ledg er trial balance o f M aja Limited includes the
following acco u n ts at D ecem ber 31, 2012:
Sales re ve nu e P975,000
Interest incom e 20,000
Share of pro fit o f associates 15,000
Other in com e 8,000
D ecrease in inventories of fin ish ed goods 25,000
Raw m a te ria ls and consu m ables used 350,000
Em ployee benefit expenses 150,000
Loss on tra n sla tio n of foreign o peration s 30,000
D epreciation o f property and equ ipm en t 45,000
Im p airm en t o f property 80,000
Finance co sts 35,000
Other e xp e n se s 45 ,00 0
Incom e ta x expense 75,000

How m uch sh ou ld be reported as profit for the y e a r ended

D ecem ber 31, 2012?
a. P288,000 c. P263,000
b. P213,000 d. P183,000

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Practical Accounting 1 SETA

50. The Lucy Com pany uses cash-basis accounting for th e ir

records. During 2012, Lucy collected P500,000 from its
custom ers, made paym ents o f P200,000 to its suppliers for
inventory, and paid P140,000 fo r operating costs. Lucy w ants
to prepare accru al-basis statem ents. In gathering
inform ation fo r the a c cru al-b a sis financial statem ents, Lucy
discovered the following:
a. Custom ers owed Lucy P50,000 at the beginning and
P35,000 at the end o f the year.
b. Lucy owed suppliers P20,000 at the beginning and
P27,000 at the end of the year.
c. Lucy's beginning in ventory w as P42,000, and its ending
inventory was P44,000.
d. Lucy had prepaid expenses of P5,000 at the beginning
and P7,400 at the end of th e year.
e. Lucy had accrued expenses of P12,000 at the beginning
and P19,000 at the end o f the year.
f. Depreciation for the y e a r w as P51,000.
Determ ine the accrual basis net income of Lucy Com pany for
the year ended Decem ber 31, 2012.
a. P84,400 c. P91,400
b. P79,600 d. P98,400

- end of exam ination -

Please subm it y o u r answ er sheet
Keep the questionnaire.

Thank you
for taking the PRTC Open Pre-Board Exam inations! ©

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 PRACTICAL ACCOUNTING 1
Nos. ...... a B
1 .... A B ■
..ve :.. .
3"....; D ■. : c •
4 A . a ..;..
5'"' ..D
6..:.. .r. ""r~ ~A ..... 1
..
7 T T c ...... '“ t :" ..
8...:: . '..B ."v r '
■- c :
9..... A
10 ... B B
11 A A ' '~
12... ~ 'r.:.B . ... Tr A ......
13 f.1..A.. :.. ' C
14 A ... "r-Qr-:::r
15 C A
16 B 0
17 A .... ■.....c.. .....
18 .... B ... .........c.... .. .

19... B . c
20 .... B .... A
......... Jv"
21 B . aB .
22 D
23 i .:..B B
24.." c A
25 A ’■ .■... a
26 ...~.A ... : .:A1.
27 B

28 . A -
29 '■;c; .• B
30 ..
31 8 .:..B........
32.7 . c ..... B.. "■
33 D ...7:.. d ......
34 B B
35 B C
36 C ;.
37 . D
38 ^ C .J E
39 D A
40 B c
41 c - B
42 £ ...J.\.b ,;.-d:
43 .. A. ■. c ■■
44.7 ... B ..... d..;....
45 ....:..A ..: ' -.. B :
46 ..... C...... : b
47 "B c
48 ’ c : ' D
4?.^ - 8 -i C
50 ^ A j D ..... ;
 (Note; Set B start with problem no. 12)

Question No. 1 - A
Unadjusted professional fees expense 92,000
Unrecorded legal fees for Nov. and Dec. 2012 (P6,000+P9,000) _______ 15,000
Adjusted professional fees expense 107,000

Question No. 2 - C
/, Sales, 12/1/11 to 12/31/12 ’ 995,000
x Royalty percentage 20%/
. Rqyalty income, 12/1/11 to 12/31/12 199,000

I Accrued royalty income, 12/31/1.1

Royalty incom e-2012 '

(15,000)

184,000
Question No. 3 - D
Deferred revenue (1,000 x P75) 75,000

Question No. 4 - A
Revenue not recognized until installation is completed.

Question No. $ - D
Net sales revenue (P300.000 x .9) , 270,000

Question No. 6 - C
Commission revenue (P640.000 x .06) 38,400

Question No. 7 - C
Revenue aftocatedio dishwashers (P1,90,000 x1,660/2f000)

Question No 8 - C
Net increase in equity* ' ' ' 1,390,000
Contributions from owners (P1,250,000 + P130,000) (1,380,000)
Distributions to owners (Dividends) 190,000
Net income for 2012 v 200,000
* AdsI increase in assets and decrease in liabilities; Deduct decrease in assets and increase In liabilities

Question No. 9 - A . - '

Inventory on hand, 12/31/12 J 947,800

Add items erroneously excluded:
(c) Goods sold iff transit- FOB destination [(P18.500 - P1,000)/1.4] 12,500
(d) Goods purchased in transit - FOB shipping point (P48,000+P3,000 51,000
(e) Goods out pn consignment {(P36,400/1.4) + P2,000] 2,8,000
Inventory, 12/31/12 as adjusted : 1 t0 i^ 3 0 0 ~

Question No. 10 ~B
Journal entry, 12/16
Accounts payable {(P8,600+P7,500)x,97] 15,6.17
Purchase dlscm W tk>st(P8,600 x .03) 258
Cash (P8.600 + (f»7,$00 x 97)] 15,875

Question No. 1 1 - A
‘ - ' ‘

N *t realizable value ,-fr

Estimated selling price (P25.000 x- 8)'
Cost to correct defect {@,000) ; ’ .
Commission (P20T x 1) ’ f2,000) ; IS,000
■ ‘ Loss oh write down 6,000

P$ge l of 6 w w w .p r tc .c o m .p h P I. OpenlstPB. 1012

 Purchases (P5t640,0O0+P4O,G00-P8b,000) 5.600.000
Cost of sales (see computation below) (5.280.000)
Estimated fnverrtQfijR 12/31/12 1.600.000
Inventory bgfflWron physical count (1.440.000)-
Estimated cost of misssing inventory 160,00Q

Compilation o f cost of sales: ’

AccOTts receivable, 12/31/12, 1 . 200.000
;Co|ections 7.200.000
A<^unts receivabfe, 1/1/12. ( 1 , 000 , 000 )

Sales on account 7.400.000

Gash sales' / 1,400 000 .
Totaliales :'Y .' - - 8 800,000
x COS ratio (1 - .4) Q.60
. 5,280.000

Question No. 13 - A
Goods available for sale at retail 3,753,000.
Sales . ■ ; (3,000,Q®J'
Normal shrinkage (120,000)
Estimated ending inventory at retail 630.000
x Co$t ratio (P3,000,000/P3750.000) 0 80
Estimated ending inventory at cost 504.000
Physical inventory at cost (P500,OQO x .8) 400.000
Estimated inventory shortage 104.000

Question No. 1 4 - A
Fair value . . ' 500,000
Costs to sell (50,000)
: Carrying amount of biological assets 450,000

Question No. 15 - C
Architect's fees. ,r 40.500
Wafeility insurance during construction 13.500
Excavation cost 12,000
Payment to contractor 1,357,000
Total cost of building 1,423,000
=¥=

Question No. 16- B

Journal entry:
, Asset received (P12,000+ P4,000) 16,000
Asset given up i2 ,o o o :
Cash ' r' - , ' ■ 4,000'

Question No. 1 7 - A
Journal entries:
Impairment loss (P20.000 - P19,000) i,odo
Asset given up . : ■ 1,000

Asset receive^ (P I9,000 - P4,000j 15,000

Cash 4,000
, Asset given up 19,000

Question No. 18 ~B
Income from-govemment grant (P1,800,000/6) 300,000

Question No. ^ ^ ^ f ;
CA of asset, 12/31/12 [(P3M V f ? } ^ ) ^ 5 / 6 ]

Question No 20 - B
1/1/11 (P200,000x 12/12) 200,000
9/1/11 (P600,000x4/12) 200,000
■12/31/11 (P600,000x0/12)
Weighted average expenditures - 400,000
K Capitalization rate (Specific borrowing) 0.12
Capitalized interest - 2011 48,000
Question No. 21 -B
1/1/12 (P1.448.000 x 9/12) 1,086,000
3/31/12 (P600(000 x 6/12) 300,000
9/30/12 (P400.000 X 0/12)
Weighted average expenditures 1,386,000’

Capitalized interest -Specific (P1.1M x .12x9/12) 99,000

Capitalized interest - General [(P1.386M -P1.1M ) x .09 x 9/12] 19,305
Capitalized interest - 2012 118,305

Question No. 22-D

Depreciation - 2012 (P5.4M x .75 x .75 x .25) 789,375

Question No. 23-B

Cost 500,000
C A end of 5th year (P50Q.000 x .85 x .85 x .85 x .85 x .85) (221.853)
Accumulated deprection end of 5th year 278,147
Depreciation - 6th year (P221,853/5) 44,371
Accumulated deprection end of 6th year 322,S18

Question No. 24 - C
Acquisition cost 500.000
Successful exploration costs (P1.5M x 1/3) 500.000
Total cost/Amount subject to depletion 1,000,000
I Estimated reserves 2,000,000
Depletion rate 0.50

Depletion - 2012 (500,000 x P.5) 250,000

Question No. 25-A

Co3t/Depretiable amount 2,800,000
Accumulated depreciation, beg. of 3rd year (200,000 x P5.6) (i,p ,QQQ?.
CA/Remaining depreciable amount beg. of 3rd year 1,680,000
Depreciation - 3rd year (P1,680,000/8) (210,000)
CA/Remaining depreciable amount beg. of 4th year 1,470,000
/Remaining remaining reserves beg. of4th year , 300.000
Depreciation rate - 4th year 4.90

Depreciation - 4th year (100,000 x P4.9) 490,000

Question No. 26-A

Machine A Machine B
Fair value 1,800,000 1,550,000
Carrying amount, 12/31/12 1,650.000 1,600,000
Increase (Decrease) 150,000 (50,000)
OCI (RS) P/L (RL)

Computation of carrying amount, 12/31/12

Machine A: Machine B:
Carrying amount, 6/30/T2 1,800,000 Carrying amount, 6/30/12 1.700,000
Depreciation (P3M/10 x 6/12) (150,000) Depreciation (P2M/10 x 6/12) (100,000)
1,650,000 . 1,600,000

Question No. 27 - C
\ Sales proceeds 290.000
Carrying amount (FV) 300.000
Gain (Loss) on disposal ( 10, 000)

Question No. 28 - A
Depreciation of R&D equipment (P600,000/4) 150.000
Engineering costs 400.000
Total R&D expense 550,000

Question No. 2 9 -C
F V of shares issued (2,500 x P9) 22,500
Cash paid 75,000
Cost of patent 97,500
duestion No 30 - B
Purchase price 13 985,000
F V of net assets acquired (P12,620,O0O-i:P56O,O0O+P245,OQO) ,(13,425,000)
Goodwill ’ 560,000

Questidn N o .31 - 8
Carrying amount, 12/31/12 (P1,160s000 x 3/5) 696,000
Recoverable amount (vatue-m-use) (565 000)
Impairment toss 131,000
- .i ■
.. ■ • v• . '■
) •;
Question No 3 2 - C
Carrying amount, 12/31/11 (P940.000 x 3/4) 705,000
Recoverable am ount (valuewn-use) 750 000
Impairment loss - 2011

Carrying amount, “12/31/11 (P940.000 x 3/4) 705.000

Am ortization- 2012 (P940,000/4) (235,000)
Carrying amount, 12/31/12 470,000
Recoverable amount (value-in-use) (445,000)
Impairment loss - 2012 25,000

Question No: 33 - D
Correct csish balance (P52.780 ¥ P350 + P800 + P22.000) 75,930

Question No. 3 4 - 8 ri , >

Outstanding checks, 6/3Q 265,200
Checks-paid by. bank - Ju n e \P 3 4 4 ,2 0 0 • P600 - P2, 341,600
C hecks issued by entity - Jun e (P396.040 - P400) (395,640)
Outstanding checks, 6/1 211,160

Question No, 35 - B
Net realizable value (P125,'000 x .98) 122,500

Question Wo. .36 - C • ,

[Link], 1.2/3,1711 . 45,000
Sales on account . 480,000
[Link] A R (P392,000+ P8,000) ' (400,000)
A R writeoff \ 1 (2,000V
Recovery of accounts previously written off
Collections on A R pledged (15,000)
Accounts receivable, 12/31/12 108,000
Less allowance for DA, 12./31/12 (P9OO-P2,OOO+P5OO+P2,30O) 1,700
Amortized cost of AR , 12/31/12 106,300

Question No 37 - £
P V F at 8 %,
C a s h flows ■ 5 periods A C 12/31/11
Principal ■ 500,000 0.6806 340,350
Interest 20,000 3.9927 79.654
420,154

Interest income - '2012 (P420.154 x 08) 33,612

Question No. 39 - A ' : i ''‘:

Year, PrinciDal [Link]©5% Total PVF(5)'i0% . py.j/1/pp

2009 200,000 50.000 250,000 0.9091 2 2 7 ,275
2010 200,000 40,000 240,000 0.8264 198,336
2011 200,000 3Q..Q03 230,000'. 0.7513 172,799
2012 200 ,609 ' ; /"■' ■ 20 .W 0 : 220.006 0 ^d30 150,260'
2013 200,000 10.000 21/0.000 0.6209 130,389
1 ,000,000 ,059
.. , -5
CA, 12/31/11 {(P220,000 X 0.9091)+(P210.00J x 0 6209)] 373,546
Interest incom e - 2012 (P37?,»,546x . 1) 37,355'
\. ^
 AR factored 110,000
Factor's holdback (P110,000 x .08) (8,800)
Commission (P110,000 x .015) (1,650)
Net 99,550
Interest charge (P99.550 x .16 x 60/360) ,^ 6 55j
Proceeds from factoring 96,895

Question No. 40 - B
PVF at 8%,
Cash flows 2 periods AC. 12/31/12
Principal 1,000,000 0.8573 857,300
Interest 100,000 1.7833 178,330
1,035,630
Note: 8% is the effective interest rate.

Question No. 41 - C
PVF at 9%,
Cash flows 2 periods FV. 12/31/12
Principal 1,000,000 0 8417 841,700
Interest 100,000 1.7591 175,910
1.017.610

Fair value, 12/31/12 1.017.610

Carrying amount (P1,051,510 - P20.000) (1,031,510)
Fair value adjustment gain (loss) (13,900)

Question No. 42 - C
Fair value, 12/31/12 505,000
Fair value, 12/28/12 (500,OOP)
Fair value adjustment gain (loss) 5,000

Question No. 43 - A
Acquisition cost 425,000
Share of profit (P250.000 x .25) 62,500
Dividends (P40.000 x .25) (10,000)
Carryfng amount, 12/31/12 477,500

Question No. 44 - B
Carrying amount, 12/31/11 570,000
Amortization of discount, 1/1 to 7/1
B (P570,000 x . 12 x 6/12) 34,200
Nl (P600.000 x .1 x 6/12) 30,000 4,200
Carrying amount, 7/1/12 574,200
Retirement price (P600.000 x 1.02) 612,000
Gain (loss) on bond retirement (37,800)

Question No. 45 - B
Equity, 12/31/11 534.000
2/15 - Dividends paid ( 10,000)
3/14 - Issuance of shares (10,000 x P14) 140.000
6/6 - Repurchase of shares (2,000 x P16) (32,000)
10/8 - Reissuance of TS (2,000 x P18) 36,000
Profit for 2012 103.000
Equity, 12/31/12 771,000

Question No. 46 - C •
Depreciation expense on building (P120,000/20) (6,000)
Doubtful accounts expense [(P34,000x2.5%) + P460] (1,310)
. Accrued interest income (P40.000 x 12% x 5/12) 2y000
Unearned revenue (P8.500 x 80%) (6,800)
Unamortized discount (P600 x 30/60) 300
Net reduction in reported net income (11,810)
 Question Nb: '4? i?& ■- •" ,*t
Unadjusted net incom e for 2012 , 96,,900
yActd (deduct), adjustments: ■
: Equipment charged to expense in 2 0 1 1 (P 1 0:000/10) (1,000)
Increase in R eserve for C ontingencies charged to operations 12.0Q0
Overstatement of 2011 ending inventory 3,000’
; G oods purchased not recorded a s liability and not included in inventor
Rent received in advanfce in 2011 1,500
Unpaid salaries not taken up in the books in 2011 900
' Prepaid insurance charged to expense in 2012,(P1,200 x 4/12) .......... 400
Adjusted net income for 2012 . 113,700

Question No. 4Q-.C

' A ccoi jnts payable - 55.000
Unsecured notes. 8%. due 7/1/13 400.000 . 1 -
A ccru e d expenses 35.000
Senior b onds, 7%, due 3/31/13 1,000,000 -
1,490,000

Question No. 49 - 8
Sales reveni/e 975,000
Interest incom e . 20,000 ,
Share of profit o f associates 15,000
Other income 8,000
Decrease in inventories of finished gpods : (25,000)
Raw materials ana consum ables used ' ~: (350,000)
Employee benefit e x p e n se s (150,000)
Depreciation of property and equipment (45,000)
Impairment of property (80,000) c
’ . Finance costs (35,000)
Other expenses (45,000)
Income tax expense ________(75,000)
i°rofit 213,000
- ^ TT171”
Q uestion N o ' 50 - A
Saiert (P500.000 + P35.000 - P50.000) 485,000
Less cost of goods sold:
Inventory, beginning 42.000
P u rch ases (P200.000 + P27.000 - P20.000) ^ 207,000.
Inventory, ending - , (44,000) 205,000
, G ro s s profit 280,000
O perating expenses (P140.000 - P7,400 + P5.000 + P19.000 - P-12,000) ' (144,600)
Depreciation (61,600)'
Net income' 84,400