1. On December 31, 2014, the bookkeeper of Grand Company provided the following 4.

4. Agik-ehk Company includes in packages of tits products, coupon that may be presented
information (in million): to retail stocks to obtain discounts on other Agik-ehk Company products. Retailers are
reimbursed for the face amount of coupons redeemed plus 10% of that amount for
A/P, including deposits and advances from customers of P500,00 2.5 handling costs. The company honors request for coupon redemption by retailers up to
N/P, including N/P to bank due on December 31, 2016 for P1M 3 three months after the coupon expiration date. The company estimates that 70% of all
Serial bonds, payable in semiannual installments P1,000,000 10 coupons issued will ultimately be redeemed. Information relating to coupons issued by the
credit balance in customers' accounts 0.4 company during 2014 is as follows:
Accrued interest on bonds payable 0.3 Consumer expiration date Dec. 31, 2014
Share dividends payable 0.8 Total face amount of coupons issued P600,000
Unearned rent income 0.1 Total payments to retailers as of December 31, 2014 P220,000
On December 31, the Grand Company was a defendant in pending lawsuit arise the alleged What amount should Agik-ehk Company report as a liability for unredeemed
defect of a product that Grand sold in 2010. In the opinion of Grand's coupons at December 31, 2014?
attorney, it is probable that home will have to pay P500,000 and it is reasonably
possible that Grand will have to pay P600,000 as a result of this lawsuit. The a. P422,000 b. P200,000 c. P242,000 d. P308,000 e. none of the choices
settlement is expected next year if Grand Company loss. In the December 31, 2014
statement of financial position, how much current liabilities should be reported? 5. During 2014, Gihotoy Company sold 500,000 boxes of hotcakes under a new sales
promotional program. Each box contains one coupon, which when submitted with P16.
a P7.3000,000 b. P7,800,000 c. P7,500,000 d. P8,700,000 e. none of the choices Entitles the customer to a baking pan. Gihotoy pays P20 per pan and P2 for handling and
shipping. Gihotoy estimates that 80% of the coupons will be redeemed, even though only
2. Lubak Company requires refundable advance payments with special orders for 300,000 coupons had been processed during 2014. What amount should Gihotoy report
machinery constructed to customer's specifications. Information for 2014 is as as a liability for unredeemed coupons at December 31, 2014?
follows:
Customers advances-balance, December 31, 2013 P885,000 a. P300,000 b. P400,000 c. P1,000,000 d. P600,000 e. none of the choices
Advances applicable to orders cancelled in 2014 375,000
Advances applied to orders shipped in 2014 1,230,000 6. The selling price of Appliances Company's units is P80,000 each. The buyers are provided
Advances received with orders in 2014 1,380,000 with a 2-year warranty that is expected to cost the company P2,000 per unit in the year of
What amount should Lubak Company report as current liability for customer's sale and P6,000 per unit in the year following the sale. The company sold 80 units in 2014
deposits in its December 31, 2014 statement of financial position? and 100 units in 2015. Actual payments for warranty claims were P80,000 and P520,000 in
2014 and 2015 respectively. How much would be the warranty expenses for 2014 and
a. P735,000 b. P660,000 c. P1,035,000 d. P1,110,000 e. none of the choices 2015, respectively?

3. Kagalkal Company inaugurated a sales promotion campaign on May 31, 2014, a. P200,000 and P600,000 c. P680,000 and P280,000 e. none of the choice
whereby Kagalkal placed a coupon in each package of chocolate sold, the coupons b P640,000 and P800,000 d. P800,000 and P840,000
being redeemable for a premium. Each premium costs Kagalkal P50 and a customer to
receive a coupon must present five coupons. Kagalkal estimated that only 60% of the 7. On October 1, 2014, Panohoot Corporation issued, at 99 excluding accrued interest,
coupon issued would be redeemed. For the seven months ended December 31, 2014, the 2,000 of its 8% P1,000 bonds. The bonds are dated January 1, 2014, mature on January 1,
following information is available: 2024, and pay interest on July 1 and January 1. Panohoot paid transaction costs of P70,
Packages of chocolates sold 400,000 000. From the bond issuance, Panohoot received net cash of
Premiums purchased 30,000
Coupons redeemed 100,000 a. P1,950,000 b. P1,910,000 C. P1,980,000 d. P2,020,000 e. none of the choices
How much is the estimated liability for premium claims outstanding at December 8. On January 2, 2014, East Co. issued 9% bonds in the amount of P1,000,000, which
31, 2014? mature on January 2, 2024. The bonds were issued for P939,000 to yield 10%. Interest is
a. P100,000 b. P140,000 c. P180,000 d. P240,000 e. none of the choices payable annually on December 31. East uses the interest method of amortizing bond
discount. In its December 31, 2014 statement of financial position, what amount should
East report as bonds payable?

a. P939,000 b. P947,000 c. P942,900 c. P947,000 d. P1,000,000 e. none of the choices

9. On May 1, 2014, Jet Company issued P2,000,000, 5-year, 10% bonds for P2,300,000. Each 14. The accounts shown below appear in the December 31, 2014 trial balance of Tagiptip
P1,000 bonds had two detachable warrant eligible for the purchase of one share of Jet's Corporation: (in million)
P100 par ordinary share for P120. Without the warrant the bonds are selling at a prevailing Preference share, authorized, P50 par 10M Subscribe ordinary share 0.44K
9% rate of interest. The present value factors are the following: Accumulated profits and losses 2M Unissued ordinary share 2M
PV of 9% for an ordinary annuity of P1 after 5 periods 3.89 Ordinary share, authorized, P20 par 4M Subscribed preference share 0.6K
PV of 9% after 5 interest period .65 Unissued preference share 3.6M Treasury share, pref., at cost 1.36M
What amount should Jet Company recognized as value of the equity instrument? Subscription receive., Pref share 0.380k Subscript rec., ordinary share 0.36 k
Share premium 1.7M
a. P222,000 b. P78,000 c. P230,000 d. P300,000 e. none of the choices Subscription receivable, ordinary are due in year 2015 and subscription receivable,
Preference are due in 2016. How much is the total shareholders' equity of Tagiptip
10. On January 1, 2014, Bagulbagol Company issued its 8%, 5-year convertible debt Corporation?
instrument with a face amount of P6,000,000 for P5,900,000. Interest is payable every a. P11,400,000 b. P11,780,000 c. P12,400,000 d. P11,420,000 e. none of the choices
December 31 of each year. The debt instrument is convertible into 50,000 ordinary shares
with a par value of P100. When the debt instruments were issued, the prevailing market 15. The Logik Lamp Corporation was incorporated on January 1, 2014, with following
rate of interest for similar debt without conversation option is 10% authorized capitalization:
PV of 10% for an ordinary annuity of P1 after 5 periods 3.791 •40,000 ordinary shares, no par value, stated value P40 per share
PV of 10% after 5 interest periods .621 •10,000 shares of 58 cumulative preference share, par value P10 per share
How much of the proceeds represent the equity component? During 2014, Logik Lamp issued 24,000 ordinary shares for a total of P1,200,000 and 6,000
preferences share at P16 per share. In addition, on December 19, 2014, subscriptions for
a. P546,748 b. P100,000 c. P354,320 d. P454,800 e. none of the choices 2,000 preferences shares were taken at a purchase price of P17. These subscribed shares
were paid for January 2, 201shares were taken at a purchase price of P17. These subscribed
11. On January 1, 2014, Wisdomtooth Company issued its 10%, 6-year convertible debt
shares were paid for January 2, 2015. What should Logik Lamp report as total contributed
instrument with a face amount of P3,000,000 for P3,500,000. Interest is payable every
capital in its December 31, 2014 balance sheet?
December 31 of each year. The debt instrument is convertible into 30,000 ordinary shares
with a par value of P100. The debt instrument is convertible into equity from the time of
a. P1,040,000 b. P1,262,000 c. P1,294,000 d. P1, 330,000 e. none of the choices
issue until maturity. Without the conversion feature, the debt instrument would have sold
at 106. On December 31, 2015, Wisdomtooth Company converted 1,000,000 debt 16. The following capital account are shown in the balance sheet of Kurismaot Corporation:
instruments by issuing 10,000 ordinary shares. As of December 31, 2015, the unamortized Ordinary share, 10,000 shares, par value P100 P1,000,000
premium on the debt instrument is P135,000. What amount should be credited to the Premium on ordinary share 20,000
share premium account as a result of the conversion? Share premium - treasury share 30,000
Accumulated profits and losses 750,000
a. P106, 667 b. P135,000 c. P151,667 d. P320,000 e. none of the choices Treasury share, 2,000 shares at cost 250,000
The entire 2,000 treasury shares were sold for P200,000. What would be the balance of
12. On January 2, 201, Agop-op Company acquired a machinery at a cost of P2,000,000. the Accumulated Profits and losses account after this sale?
The machinery has an estimated life of 20 years. It is the company's policy to depreciate a P250,000 b. P730,000 c. P700,000 d. P750,000 e. none of the choices
the asset on a straight- line basis for financial purposes. Tax legislation authority allows
depreciation to be deducted on a double declining balance method. On December 31, 17. The analysis of shareholders' equity of Law-oie Company at January 1, 2014 showed
2014, Agop-op Company recognized an impairment loss of P400,000 on the machinery. If the following:
the current and future tax rates are 34% and 35% respectively, what amount of deferred Ordinary share, par value P20, authorized 200,000 shares, issued and outstanding,
tax asset should the company recognized? 120,000 shares P2,400,000
Share premium 480,000
a. P276,000 b. P40,000 c. P68,000 d. P105,000 e. none of the choices Accumulated profits and losses 1,540,000
The company uses the cost method of accounting for treasury share and the following
13. On its December 31, 2014 balance sheet, Kughan Company had income tax payable of transactions took place:
P520,000 and a current deferred tax asset of P800,000. Kughan had reported current Acquired 2,000 shares of its shares for P70,000. Sold 1,200 treasury shares at P40
deferred tax assets of P600,000 at December 31, 2013. No estimated tax payments were per share. Retired the remaining treasury shares. What is the amount of the Share
made during 2014, in its 2014 profit or loss of Kughan Company, what amount should be Premium at the end of the accounting period?
reported as total income tax expense? a. P476,800 b. 462,000 c. P474,000 d. P480,000 e. none of the choices
a. P320,000 b. P340,000 c. P400,000 d. P520,000 e. none of the choices
18. On September 1, 2020, Bagood Company issued a note payable to National Pautang
Bank in the amount of P1,800,000, bearing interest at 12%, and payable in three equal
annual principal payment of P600,000. The first interest and principal payment was made
on September 1, 2021. On December 31, 2021, what should be reported as interest
expense?
a. P144,000 b. P216,000 c. P192,000 d. P168,000 e. none of the choices

19. Included in Lingolingo Company's liability account balances on December 31, 2021
were the following:
Accounts payable and accrued interest P1,000,000
6% note payable issued October 1, 2020 maturing September 30, 2022 500,000
8% note payable issued April 1, 2020 maturing April 1, 2022 800,000
12% note payable issued November 1, 2020 maturing July 1, 2022 2,000,000
10% debenture payable, next annual principal installment
of P500,000 due February 1, 2022 7,000,000
Lingolingo's December 31, 2021 financial statement were issued on March 31, 2022. on
January 15, 2022, the entire P800,000 balance of 8% note was refinance by issuance of a
long-term obligation payable in a lumpsum. In addition, on March 15, 2022, Lingolingo
consummated a noncancelable agreement with the lender to refinance the 6% P500,000
note on a long-term basis. On December 31, 2021, Lingolingo consummated also a
noncancelable agreement with the lender to refinance the 128 note payable on a long-
term basis. On December 31, 2021 statement of financial position, what total amount
should be reported as current liabilities?

a. P4,000,000 b. P3,500,000 c. P3,300,000 d. P2,800,000 e. none of the choices

20. In order to finance Pitokpitok Company's planned expansion, a 10% P5,000,000 face
value bonds were issued for P5,350,000, plus accrued interest on December 1, 2013. Upon
issuance, Pitokpitok paid issue cost of P50,000. Interest is payable November 1 and May 1.
On August 31, 2014, P2,500,000 face value of bonds was retired at 1038 plus accrued
interest. By the end of year 2015, the book value of the bonds was reported at P2,575,000.
The straight-line amortization method is used. On September 1, 2016, Pitokpitok decided
to reacquire the remaining bonds at 1% lower than original issue price plus accrued
interest. What is the carrying amount of bonds payable as of December 31,2013?
a. P5,284,000 b. P5,296,000 c. P5, 300,000 d. P5,275,000 e. none of the choices

21. The following information pertains to Lisngag Company for the year 2021:
Cash sales P64,000 Cash paid on accounts payable 368,500
Cash collected on A/R 440,000 Bad debts written off 6,500
Accounts receivable, end. 95,000 Purchases ?
Accounts receivable, beg. 110,000 Inventory, end 84,000
Accounts payable, beg 100,000 Inventory, beginning 80,650
Gross profit on sales 30%
The company's account payable on December 31, 2021
a. P90, 700 b. P112,700 c. 94,700 d. P81, 700 e. none of the choices