2013 Pre-Board P1-With Answer
February 16, 2017 | Author: Cris R. Hatter | Category: N/A
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PRACTICAL ACCOUNTING 1 FIRST PRE‐BOARD EXAMINATION Write your final answers in the answer sheet provided for. 1. On January 1, 2012, the balance of accounts receivable of Chans Company was P5,000,000 and the allowance for bad debts on same date was P800,000. The following data were gathered: Credit sales Write‐offs Recoveries 2009 10,000,000 250,000 20,000 2010 14,000,000 400,000 30,000 2011 16,000,000 650,000 50,000 2012 25,000,000 1,100,000 145,000 Bad debts are provided for as percentage of credit sales. The accountant calculates the percentage annually by using the experience of the three years prior to the current year. How much is the bad debts expense for 2012? 750,000 2. Chayze Company uses the balance sheet approach in estimating bad debts expense. The company prepares an adjusting entry to recognize this expense at the end of each month. During the month of July, the company wrote off a P1,000 receivable and recovered P200 of previous write‐offs. Following the adjusting entry for July, the credit balance in the allowance for bad debts account was P2,500 larger than it was on July 1. What amount of uncollectible accounts expense was recorded in July? 3,300 3. Chlenz Company has a note receivable of P200,000 from Hyuen Company that it is carrying at face value and is due on December 31, 2013. Interest on the note payable at 9% each December 31. Hyuen Company paid the interest due on December 31, 2009, but informed Chlenz that it would probably miss the next two years interest payments because of its financial difficulties. After that, it expected to resume its annual interest payments, but it would make the principal payment one year late, with interest paid for that additional year at the time of the principal payment. How much should be recognized as loss on impairment in 2009? (Round off present value factors to 4 decimal places) 31,671
4. Sydney Company reported the following balances (after adjustment) at the END of 2012 and 2011. 2012 2011 Total Accounts receivable 105,000 96,000 Net Accounts receivable 102,000 94,500 During 2012, Sydney wrote‐off P3,200 and recovered P800 on accounts previously written off in previous years. How much is the doubtful accounts expense for the year 2012? 3,900 5. Jaylen Company obtained a one year loan of P5,000,000 from a bank on April 1, 2012. The loan was discounted at 12%. The company signed a note and pledged its accounts receivable of P5,000,000 as collateral for the loan. In relation to the loan, what is the carrying value of the notes payable on December 31, 2012? (use straight line amortization). 4,850,000 6. On November 30, 2012, accounts receivable in the amount of P900,000 were assigned by Huie company to a Finance company as a security for a loan of P750,000. Finance company charged a 3% commission. The interest rate on the note is 12%. During December, Huie collected P350,000 on assigned accounts after deducting P560 of discounts. Huie wrote off P530 assigned accounts. On December 31, Huie remitted the amount collected to Finance company plus one month interest on the note. How much is Huie’s EQUITY in the assigned accounts receivable as of December 31, 2012? 149,470 7. Hyuan company factored P600,000 of accounts receivable to a financing company on October 1, 2012. The control of these receivables were surrendered to the finance company. Commission is 3% and hold back is 5% of the accounts receivable. In addition, the financing company charged 15% interest computed on a weighted average time to maturity of the receivables of 54 days. The fair value of the recourse obligation is P9,000. How much will Hyuan received (cash) from this factoring? 538,685
8. On May 17, Hyuen company accepted a P6,500, 8%, 90‐day note from a customer. On June 11, the not e was discounted at 10%. At maturity date, the note was dishonored and the bank charged a P25 protest fee. The amount the Hyuen company would debit to Notes receivable dishonored (accounts receivable) is? 6,655 9. On October 1, 2012, Cloyce company discounted with recourse at 12% a one year non‐interest bearing note of P5,000,000 maturing on January 1, 2013. What amount of contingent liability for this note must Cloyce disclose in its 2012 financial statement? 5,000,000 10. At December 31, 2012, the balance of the inventory account was P502,000, and the allowance for inventory writedown was P33,000. The inventory cost and other data at December 31, 2012 are as follows: (amounts in thousands). Item Cost Replace. Cost Sales P. NRV A 89 86 91 87 B 94 92 93 85 C 125 135 129 111 D 194 114 205 197 What is the gain on reversal of inventory writedown? 8,000 11 to 12 The following information for the month of August is given below: Date Units unit Cost 1 2,000 36 Beg. 7 3,000 37.2 Pur 12 3,600 Sale 21 4,800 38 Pur 22 3,800 Sale 29 1,600 38.60 Pur How much is the cost of ending inventory using: FIFO perpetual? 152,960 Weighted average periodic? 150,080 13 to 16 A physical inventory taken on December 31, 2012 resulted in an ending inventory of P1,440,000. The company suspects some inventory may have been taken by employees. To estimate the cost of
missing inventory, the following information were gathered: Inventory Dec 31, 2011 1,280,000 Purchases during 2012 5,640,000 Cash sales during 2012 1,400,000 Shipment received on 26 December 2012, included in inventory but not recorded as purchases 40,000 Deposits made with suppliers, entered as purchases. Goods were not received in 2012 80,000 Collections on accounts receivable in 2012 7,200,000 Accounts receivable Beg 2012 1,000,000 Accounts receivable End 2012 1,200,000 Gross profit percentage on sales 40% On December 31, 2012, what are: Total credit sales? 7,400,000 Total cost of goods available for sale? 6,880,000 Cost of goods sold? 5,280,000 Estimated cost of missing inventory? 160,000 17 to 19 Chans uses the retail inventory method. The following information is available for the current year: Cost Retail Beg. Inv. 1,300,000 2,600,000 Purchases 18,000,000 29,200,000 Freight in 400,000 Purchase returns 600,000 1,000,000 Purchase allowance 300,000 Departmental T. in 400,000 600,000 Net markups 600,000 Net markdowns 2,000,000 Sales 24,700,000 Sales returns 350,000 Sales discount 200,000 Employee discounts 600,000 Loss from breakage 50,000 What is the estimated cost of ending inventory: Conventional approach? 3,000,000 Average approach? 3,200,000 FIFO approach? 3,250,000 20. On January 1, Chayze’s assets totaled P210,000, and its liabilities amounted to P120,000. During the year, owner investments amounted to P72,000, and
owner withdrawals totaled P75,000. At year end, assets totaled P270,000, and liabilities amounted to P171,000. The amount of net income for the year was? 12,000 21. Chlenz Company sells goods with a cost of P100,000 for P140,000 and a credit period of 6 months. Chlenz normal cash price would have been P125,000 with a credit period of one month or with a P5,000 cash discount for cash on delivery. How much should Chlenz recognize as revenue? 120,000 22. The following data pertain to Sydney on December 31, 2012: Current account at Metro bank 1,800,000 Current account at Allied bank (100,000) Payroll account 500,000 Foreign bank acct. (in peso value) 800,000 Savings deposit in closed bank 150,000 Postage stamps 1,000 Employee’s post dated checks 4,000 IOU from employees 10,000 Credit memo from a vendor 20,000 Traveler’s check 50,000 Money order 30,000 Petty cash fund (P4,000 in currency and expense receipts for P6,000) 10,000 Pension fund 2,000,000 DAIF check of customer 15,000 Customer check dated 1/1/13 80,000 Time deposit‐30 days 200,000 Money market placements due 6/30/13 500,000 Treasury bill due 3/31/2013 (purchased on 12/31/2012) 200,000 Treasury bill due 1/31/2013 (purchased on 1/1/2012) 300,000 What is the amount to be recorded as cash and cash equivalents as of 31 December 2012? 3,584,000 23. Jaylen Company had the following account balances at 31 December 2012: Cash on hand and in bank P2,500,000 Cash restricted for bonds payable due on June 30, 2013 1,000,000 Time deposit 3,000,000 Saving deposit set aside for dividends payable on June 30, 2013 500,000
In the current section of Jaylen’s December 31, 2012 balance sheet, what is the total amount of cash and cash equivalents? 7,000,000 24. Huie company has the following data in its accounting records: 1/1 12/31 Cash 47,000 ? Inventory 101,000 93,000 Accounts receivable 82,000 116,000 Accounts payable 68,000 63,000 Sales 1,150,000 Cost of goods sold 900,000 Operating expenses 200,000 What is the expected cash balance on 12/31? 66,000 25. The information below is from the books of Hyuan company on June 30, 2012. Balance per bank statement 11,164 Receipts recorded but not yet deposited in the bank 1,340 Bank charges not recorded 16 Note collected by bank and not recorded on books 1,120 Outstanding checks 1,100 NSF checks not recorded on books 160 Assuming no errors were made, compute the cash balance per book on June 30 before any reconciliation adjustments. 10,460 26 to 29 The following bank reconciliation is presented for Hyuen company for the month of November 2012: Balance per bank statement (11/30) 3,600,000 Deposit in transit 800,000 4,400,000 Outstanding checks (1,200,000) Bank credit recorded in error (200,000) Balance per book, (11/30) 3,000,000 Data per bank statement for the month of December follow: December deposits (including note collected of P1,000,000 for Hyuen) 5,500,000 December disbursements (including NSF, P350,000, and service charge P50,000) 4,400,000
All items that were outstanding on November 30 cleared through the bank in December, including the bank credit. In addition, checks amounting to P500,000 were outstanding and deposits of P700,000 were in transit on December 31, 2012. What is the cash balance per book on December 31? 4,300,000 What is the cash balance per bank statement on December 31? 4,700,000 How much is the cash receipts per book in December? 4,400,000 How much is the cash disbursement per book in December? 3,100,000 30. The unadjusted trial balance of Cloyce Company as at December 31, 2012 showed Accounts receivable‐trade with a balance of P693,000. Investigation revealed that it included amounts due from officers P75,000; claim pending against freight company P9,000; and refund on insurance policy P4,500. According to the subsidiary ledger which have been thoroughly checked and rechecked, the trade accounts receivable totaled P600,000 (composed of current accounts P375,000; two months account P120,000; and three months or more P105,000). Responsible officials have acknowledged definite uncollectibility of three months account with balance totaling P22,500; they have expressed doubt with respect to an additional P24,000 worth of accounts in the same category, and they consider all other accounts collectible. At what net realizable value should the accounts receivable‐trade be carried in the balance sheet as of December 31, 2012? 553,500 31. On June 9, 2012, Trey Company sold merchandise with a list price of P5,000 to a customer. Trey allowed a trade discounts of 30% and 20%. Credit terms were 2/15, n/40 and the sale was made FOB shipping point. Trey prepaid P200 of delivery cost as an accommodation. On June 25, Trey received a remittance in full payment in the amount of? 3,000 32. Chans company purchased the following portfolio of trading securities during 2012 and reported the following balances at December 31, 2012. No sales occurred during 2012.
Security Cost FMV (12/31) A 240,000 255,000 B 420,000 390,000 C 296,000 290,000 On January 6, 2013, all the securities were sold at P1,100,000 net of P20,000 transaction cost. What is the amount of realized gain or loss on this sale? 185,000 33. On September 31, 2012, Chayze company exchanged its equipment for 2,500 shares of Hyuan ordinary shares. On that date, the equipment had a carrying value of P300,000 and its fair value was P260,000. The book value of Hyuan’s ordinary shares was P96 per share. On December 31, 2012, Hyuan had 25,000 number of ordinary shares outstanding but its market value was not clearly determinable. What amount should Chayze report as carrying value of the investment? 260,000 34. Chlenz company acquired 50,000 shares of Hyuen Company on September 30, 2012 for P8,250,000. On October 30, the share were split into a 2 for 1 basis. Then on November 30, 2012, received 10% share dividends. On December 31, 2012, Chlenz sold 10,000 shares for P1,200,000. Using the average method, how much is the gain to be recognized? 450,000 35. Sydney purchased 50,000 shares (5% ownership) of Cloyce company on January 15, 2012. Sydney received a share dividends of 15% on March 31, 2012. On November 30, Sydney paid P20 per share special assessment on the shares. On December 15, 2012, Sydney received a cash dividends of P8 per share. What amount should Sydney report as income in these transactions? 460,000 36. On July 1, 2012, Trey Company purchased as trading investment a P2,000,000 face value 10% bond for P2,100,000 plus accrued interest and transaction costs of P100,000. The bond pays interest annually on January 1. On December 31, 2012, the bond investment has a market value of P1,800,000. On February 15, 2013, Trey Company sold the bond investment for P1,900,000. In its 2012 income statement, what amount should Trey report as unrealized loss? 300,000
37. On January 1, 2012, Chans Company paid P8,640,000 for 10% bonds with a face amount of P8,000,000. Interest is paid on December 31 and the bond matures on January 1, 2017. The bonds were purchased to yield 8%. Chans uses the effective interest method to recognized interest income from this investment. What should be reported as the carrying amount of the bonds in the December 31, 2012 balance sheet? 8,531,200 38. On July 1, 2012, Chayze purchased as a long‐term investment P5,000,000 face value 8% bonds for P4,615,000 to yield 10% per year. The bonds pay inters semiannually on January 1, and July 1. In its December 31, 2012 balance sheet, Chayze Company should report accrued interest receivable at what amount? 200,000
39. On December 31, 2012, Chlenz Company purchased as a long‐term investment P10,000,000 face amount, 10% bonds of Hyuen Corporation to yield 8% per year. The bonds mature on December 31, 2013 and pay interest semiannually on June 30 and December 31. The relevant present value factors are as follows: Present value of 1 at 4% for 10 periods .6756 Present value of an ordinary annuity at 4% for 10 periods 8.11 Present value of 1 at 5% for 10 periods .6139 Present value of an ordinary annuity at 5% for 10 periods 7.72 What is the purchase price of the bonds on December 31, 2012? 10,811,000
40. On January 1, 2012, Chans Company purchased 20% of Huie Company’s ordinary shares outstanding for P6,000,000. The acquisition cost is equal to the book value of the net assets acquired. During 2012, Huie Company reported a net income of P7,000,000 and paid cash dividend of P4,000,000. What is the balance in the investment in Huie Company on December 31, 2012? 6,600,000 41. On January 1, 2012, Chlenz Company acquired 20% of the outstanding ordinary shares of Hyuen Company for P8,000,000. The book value of the acquired shares was P6,000,000. The excess of cost over book value was attributed to a depreciable asset which was undervalued on Hyuen’s statement of financial position and which had a remaining useful
life of ten years. For the year ended December 31, 2012, Hyuen reported net income of P1,800,000 and paid cash dividends of P400,000 and thereafter issued 5% stock dividend. What is the carrying amount of the investment in Hyuen Company on December 31, 2012? 8,080,000 42. On July 1, 2012, Sydney Company purchased 10% of Cloyce Company’s outstanding ordinary shares for P4,000,000. Sydney is the largest single shareholder in Cloyce and Sydney’s officers are a majority of Cloyce’s board of directors. Cloyce reported net income of P5,000,000 for 2012 and paid dividends of P1,500,000. On December 31, 2012, what is the amount to be reported as investment in Cloyce? 3,900,000 43. During 2011, Jaylen Company bought the shares of Trey Company as follows: June 1 20,000 shares @ P100 December 1 30,000 shares @ P120 The transactions for 2012 are: January 10 received cash dividends at P10 per share January 20 received 20% stock dividend December 10 sold 30,000 shares at P125 per share If the FIFO approach is used, what is the gain on the sale of the shares? 1,150,000 44. Information pertaining to dividends from Wray Company’s share investments for the year ended December 31, 2010 follows: On September 1, Wray received a P500,000 cash dividend from Seco Company in which Wray owns a 30% interest. A majority of Wray’s directors are also directors of Seco. On October 1, Wray received a P60,000 liquidating dividend from King Company. Wray owns 5% interest in King Company Wray owns a 2% interest in Bow Company, which declared a P2,000,000 cash dividend on November 15, 2010, to shareholders of record on December 15, 2010, payable on January 15, 2011 What amount should Wray report as dividend income in its income statement for the year ended December 31, 2010? 40,000
45. On March 1, 2012, Chlenz Company purchased 10,000 ordinary shares of Hyuen at P80 per share. On September 30, 2012, Chlenz received 10,000 stock rights to purchase additional 10,000 shares at P90 per share. The stock rights had an expiration date on February 1, 2013. On September 30, 2012, Hyuen’s share had a market value of P95 and the stock right had a market value of P5. What amount should Chlenz report in its September 30, 2012 statement of financial position for investment in stock rights? 50,000 46. Chans Company owns 30,000 ordinary share of Chayze Company acquired on July 31, 2010, at a total cost of P1,100,000. On December 1, 2010 Chans received 30,000 stock rights from Chayze. Each right entitles the holder to acquire one share at P45. The market price of Chayze’s share on this date was P50 and the market price of each right was P10. Chans sold its rights on December 31, 2010 for P450,000 less a P10,000 commission. What is the gain from the sale of stock rights? 150,000 47. The following information relates to a bond sinking fund that Chans Company placed in trust as required by the underwriter of its bonds: Additional investment in 2011 700,000 Dividends on investments 150,000 Interest income 300,000 Administration expenses 40,000 Carrying amount of bonds payable 7,000,000 Bond sinking fund, January 1, 2011 8,200,000 What is the carrying amount of the bond sinking fund on December 31, 2011? 9,310,000 48. Chayze Company adopted a plan to accumulate P14,000,000 after 4 years. Chayze plans to make four equal annual deposit to a fund that will earn interest at 10% compounded annually. Chayze made the first deposit at the beginning of the year. Future value factors are as follows: Future value of 1 at 10% for 4 periods 1.46 Future value of an ordinary annuity of 1 at 10% for 4 periods 4.64 Future value of an annuity of 1 in advance at 10% for 4 periods 5.11 What is the annual deposit to the fund? 2,739,726
49. Chlenz Company purchased an investment property on January 1, 2009 for P2,200,000. The property had a useful life of 40 years and on December 31, 2011 had a fair value of P3,000,000. On January 1, 2012, the property was sold for net proceeds of P2,900,000. Chlenz Company uses the cost model to account for the investment property. What is the gain or loss to be recognized for the year ended December 31, 2012 regarding the disposal of the property? 865,000 50. Trey Company acquired a machinery on August 1, 2012. The cost of the machinery is P1,200,000 with an estimated residual value of P120,000 and an estimated useful life of 8 years. Using the Sum of years’ digits method, what is the depreciation expense for the year ended 31 December 2013? 227,500. END
ANSWER SHEET FIRST PREBOARD EXAMINIATION PRACTICAL ACCOUNTING 1 NAME: DATE:
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