2nd Year Reviewer Midterms (Compatibility)

1. You You are are give given n the the foll follow owin ing g info inform rmat atio ion n whic which h may may be rele releva vant nt to the the computation of the cash balance of Bella Corporation on December 31, 2009; •

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 Two checks for P125000 were received in December from a customer for payment of its returned in January A check was received and deposited for P175555 in December. The check was returned by the bank in January marked NSF A check from a customer for P87000 was received and deposited in December. In January it was discovered that it was in payment of an invoice in the amount of P78000. A check for P9000 was issued and mailed by the company to the customer.

Using the above data, what is the total amount to be included in the cash balance for purpose of the December 31, 2009 balance sheet? a. P20,3000 b. P21,2000 c. P38,7000 d. P37,8000

2. The The foll follow owin ing g pert pertai ains ns to Malp Malpig ighi hi,, Inc. Inc. On Ap Apri rill 30 30,, 20 2009 09:: Corr Correc ectt cash cash balance in a general checking account with PCI Bank – P32000; overdraft in a special checking checking account with Family Family Bank (Malpighi does not not have another account with Family Bank ) – P2000; Cash accumulated in a special fund that will be used for plant expansion in five years – P15000; cash surrendered value value of life life policy policy – P3200; P3200; cash travel travel advanc advances es in the hands hands of sales sales personnel – P1200; currency and coins in petty cash fund (the company has not replenish the fund to the imprest amount of P2000) – P58. How much cash should Malpighi report as cash on the balance sheet? a. P33,258 b. P32,058 c. P32,200 d. P30,200

3. Cook Cookie ie Comp Compan any y is nego negoti tiat atin ing g a loan loan with with Exce Excell Bank Bank.. Cook Cookie ies s need needed ed P3600000. As a part of the loan agreement, Excel Bank will require Cookie to

maintain a compensating balance of 15% of the loan amount on deposit in checki checking ng account account at the bank. bank. Cookie Cookie curren currently tly maintai maintains ns a balanc balance e of  P200000 in the checking account. The interest rate Cookie is required to pay on the loan is 21%. Excel pays 1% interest on checking accounts. accounts. The amount of the loan is a. P4,0 4,000 00,0 ,00 00 b. P3,8 3,800 00,0 ,00 00 c. P3,6 3,600 00,0 ,00 00 d. P3,4 3,400 00,0 ,00 00

4. If a petty cash cash fund is is establish established ed in the amount amount of P250, P250, and contains contains P200 P200 in cash and P45 in receipts for disbursement when it is replenished, the  journal entry entry to record replenishment replenishment include include credit to the following following accounts. accounts. a. Pett Petty y Cas Cash, h, P4 P45 5 b. Pett Petty y Cash Cash,, P50 P50 c. Cash, Cash, P45; P45; Cash Cash over over and and Shor Short, t, P5 d. Cash, P5 P50

5. The cash cash account account show a balance balance of P38,000 P38,000 before before reconcilia reconciliation tion.. The bank statement does not include a deposit of P2,300 made on the last day of the month. month. The ban ban state statemen mentt shows shows a collec collectio tion n by the bank of P940 P940 and customer’s check for P220 was returned because it was NSF. A customer’s check for P450 was recorded on the books as P540, and a check written for P79 was recorded as P97. The correct balance in the cash account was a. P38,612 b. P38,828 c. P38,648 d. P40,048

6. You You obta obtain ined ed the the bank bank stat statem emen ent, t, paid paid chec checks ks,, and and othe otherr memo memora rand nda a rela relati ting ng to Emer Emerso son n Comp Compan any’ y’s s Bank Bank acco accoun untt for for Dece Decemb mber er,, 20 2009 09.. In

recon reconcil ciling ing the bank bank balanc balance e at Decemb December er 31, 2009, 2009, you observ observed ed the following facts:

Balance per bank statement, 12/31/09 P1,465,800 Outstanding check, 12/31/09 624,750 Receipt of 12/31/09, deposited 1/2/10 95,550 Proceeds of bank loan, 12/15.09, discounted for 90 days at 10% per year , omitted from records 195,000 Deposit of 12/23/09/ omitted from bank statement 53,000 Check 733 of Ralph Waldo, charged by the bank in error to Emerson Co. 82,100 Proceeds to note receivable of Emerson CO. collected by the bank 12/10/09, not entered in cash records (Principal, P40,000; Interest, P400l Collection Charge, P100) 40,300 Erroneous debit memo of 12/31/09, to charge company’s account with settlement of bank loan, paid by check no. 9344 on same date 100,000 Deposit of Ralph Waldo of 12/6/09 credited in error to Emerson Co. 25,000  The cash balance balance per books of of Emerson Co. on December 31, 2009 is a. P1,4 1,491 91,0 ,00 00 b. P1,1 1,146 46,7 ,70 00 c. P961,800 d. P911,400

7. The following following date were were taken from from the records records of Aii Corporation Corporation for the year ended December 31, 2009:

Sales on Account

P3,600,000

Notes Receivable to settle accounts 400,000 Provision for doubtful accounts 90,000 Accounts Receivable determined to be worthless 25,000 Purchases on account 3,900,000 Payment to creditors 3,200,000 Discounts allowed by creditors 260,000 Merchandise returned by customer 15,000 Collection received to settle accounts 2,450,000 Notes given to creditors in settlement of accounts 250,000 Merchandise returned to suppliers 70,000 Payment on notes payable 100,000 Discount taken by customers 40,000 Collection received in settlement of notes 180,000

What is the amortized cost of accounts receivable on December 31, 2009? a. P605,000 b. P890,000

c. P825,000 d. P670,000

8. Based Based on infor informat mation ion::

Credit Sales

P1,720,000

Collection on accounts receivable during the year 1,700,000 Cash Sales

8,100,000

Unadjusted balance in allowance for doubtful accounts 500 debit Sales returns and allowanced for credit sales 40,000 Accounts receivable, beginning of the year 140,000 If bad debt are estimated to be 1 ½% of ending accounts receivable, in the adjusting entry to recognize bad debt, you would debit bad debt expenses for a. P2,300 b. P1,900 c. P1,300 d. P1,800 9.

On Januar January y 1, 2009, 2009, Sosimo Sosimo Compan Company y provi provided ded intere interestst-fre free e loans loans to ten employees for a five-year term, payable at the end of five years. The total loan amount is P2,000,000. A market rate of interest for a similar five-year loan is 5%. The net amount to be recognized in 2009 profit or loss related to these interest-free loans is a. P354,650 b. P78,350 c. P433,000 d. P 0

10.On January 1, 2009, Santayana Santayana Company Company sold a special special machine that had a list price of P900,000. The buyer paid P100,000 cash and signed an P800,000 note note.. The The note note spec specif ifie ied d that that it woul would d be paid paid off off in four four equa equall annu annual al

payments of P274,565 each starting on December 31, 2009. The carrying amount of the receivable of December 31, 2009 is a. P525,435 b. P637,435 c. P701,435 d. P725,435 11.During your review of the records of Yoko Corporation for the year 2009, you noted that Yoko sold a machine with a carrying amount of P640,000 (cost is P1,600 P1, 600,00 ,000) 0) on June June 20, 2009. 2009. Yoko Yoko receiv received ed an P800,0 P800,000 00 non-in non-inter terest est nearing nearing note due in 3 years. years. There is no establish established ed market value value for the machine. The prevailing interest rate for a note of this type is receivable for P800,000 and crediting Machinery for P640,000 and Gain on sale of Machine for the difference. Because of this, Yoko’s profit for the year ended December 31, 2009 had been overstated by a. P196,394 b. P162,227 c. P125,834 d. P55,274 12.On January 1, 2009, the lending company made a P200,000, 8% loan. The interest is receivable at the end of each year, with the principal amount to be received at the end of 5 years. As of December 31, 2009, the interest for the current year has not been received nor recorded because the borrower is expe experi rien enci cing ng fina financ ncia iall diff diffic icul ulti ties es.. The The lend lendin ing g comp compan any y nego negoti tiat ated ed a reconstructing of the loan. The principal will be delayed until the end the 5year loan term. In addition, the amount of the principal repayment prevailing interest rate for similar type of loan as of December 31, 2009 is 10%  The loan impairment impairment loss to be recognized recognized in 2009 2009 profit or loss loss is a. b. c. d.

P67,700 P73,506 P77,492 P 0

13.An 13.An enterp enterpri rise se often often factor factors s its accoun accountt receiv receivabl able. e. The The financ finance e compa company ny requires an 8% reserve and charges 1.5% commission on the amount of the receivable. The remaining amount to be advanced is further reduced by an annual interest charge of 16%. What proceeds (rounded to the nearest peso) will the enterprise receive from the finance company at the time a 110,000 account that is due in 60 days is turned over to the finance company? a. P83,630 b. P81,950

c. P99,550 d. P96,895 14.On 14 .On July July 1, 20 2008 08,, Joll Jolly y Corp Corpor orat atio ion n sold sold equi equipm pmen entt to Vee Vee Comp Compan any y for for P1,000,000. Jolly accepted a 10% note receivable for the entire sales price.  This note is payable in two equal installment of P500,000 plus accrued interest on December 31, 2008 and December 31, 2009. On July 1, 2009, Jolly discounted the note at the bank at an interest rate of 12%. Jolly proceeds from the discounted note were a. P484,000 b. P503,500 c. P493,500 d. P517,000 15.The inventory on hand at December 31, 2009 for Fair Company valued at a cost of P947,800. The following items were not included in this inventory amount: a. Pu Purc rcha hase sed d good goods, s, in tran transi sit, t, sh ship ippe ped d FOB FOB dest destin inat atio ion n invo invoic ice e pric price e P32,000 which included freight charges of P1,600 b. Goods Goods held on consign consignmen mentt by Fair Fair Company Company at a sale price price of P28,00 P28,000 0 including sales commission commission of 20% of the sales price. c. Goods Goods sold to Gartci Gartcia a Company, Company, under under terms FOB FOB destinati destination on invoiced invoiced for for P18,50 P18,500 0 which which includ includes es P1, P1,000 000 freig freight ht charge charges s to deliv deliver er the goods goods.. Goods are in transit. d. Pu Purc rcha hase sed d good goods s in tran transi sit, t, term terms s FOB FOB ship shippi ping ng poin point, t, invo invoic ice e pric price e P48,000, freight cost, P3,000. e. Good Goods s out out on cons consig ignm nmen entt to Mani Manill Comp Compan any, y, sale sales s pric price e P3 P36, 6,20 200, 0, shipping cost of P2,000. Assuming that the company’s selling price is 140% of inventory cost, the adjusted cost of Fair Company’s inventory at December 31, 2009 should be a. P1,0 1,039 39,3 ,30 00 b. P1,0 1,039 39,5 ,50 00 c. P1,0 1,055 55,7 ,70 00 d. P1,0 1,037 37,3 ,30 00 16.The Tiger Corporation included the following in its unadjusted trial balance as of December 31, 2009: Inventory, 12/31/08 P 19,450,000 Purchases P127,850,000 Additional Information:

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 The inventory at December 31, 2009 was counted at a cost of  P8.5million. This include P500,000 of slow moving inventory that is expected to be sold for a net amount of P300,000. Sales include P8million goods sold in December 2009 for cash to Beer Finance Company. The cost of these goods was P6million. Beer Finance Company has the option to require Tiger to repurchase these goods within within one month month of year-e year-end nd at their their origi original nal selling selling price price plus plus a facilitating fee of P250,000

 The cost of this sales for the year year ended December 31, 2009 is a. P1 P138 38,8 ,800 00,0 ,000 00 b. P1 P133 33,0 ,000 00,0 ,000 00 c. P1 P132 32,8 ,800 00,0 ,000 00 d. P1 P139 39,0 ,000 00,0 ,000 00 Use the following information for the next two questions Maximilian uses a perpetual inventory system. Maximilian’s inventory transactions for August 2009 were as follows: No Unit Cost. Total Cost 01 Aug. Beg. Inventory 20 P4.00 P80.00 07 Aug. Purchases 10 4.20 42.00 10 Aug. Purchases 20 4.30 86.00 12 Aug. Sales 15 ? ? 16 Aug. Purchases 20 4.60 92 20 Aug. Sales 40 ? ? 28 Aug. Sales Returns 3 ? ? 17.Usin 17.Using g the infor informat mation ion,, assum assume e that that the Maximi Maximilia lian n uses uses FIFO FIFO cost cost flow flow method and that the sales returns related to the 20 August sales. The sales return should be costed back into inventory at what unit cost? a. P4.00 b. P4.30 c. P4.07 d. P4.60 18.Assuming that Maximilian uses the weighted average cost flow method, the 12 August Sales should be costed at what unit cost? a. P4.16 b. P4.30 c. P4.07 d. P4.60

19.On January 1, 2009, Horse Corp. signed a three year non cancelable purchase contract, which allows Horse to purchase up to 500,000 units of a computer part part annu annual ally ly from from Dark Dark Supp Supply ly Co. Co. at P1 P10 0 per per unit unit and and guar guaran ante tees es a mini minimu mum m annu annual al purc purcha hase se of 10 100, 0,00 000 0 unit units. s. Duri During ng 20 2009 09,, the the part part unexpectedly became obsolete. Horse had 250,000 units of this inventory at December 31, 2009, and he believes these parts can be sold as scrap for P2 per unit. unit. What What amount amount of probab probable le loss loss from from the purcha purchase se commit commitmen mentt should Horse report in its 2009 profit or loss? a. P2,4 2,400 00,0 ,00 00 b. P2,0 2,000 00,0 ,00 00 c. P1,6 1,600 00,0 ,00 00 d. P 80 800,000 20.On May 6, 2009, a flash flood caused damage to the merchandise stored in the warehouse warehouse of Cabanatu Cabanatuan an Co. You were asked to submit submit an estimate estimate of  the mercha merchandi ndise se destr destroye oyed d in the wareho warehouse use.. The follow following ing data data were were established.: a. Net sales sales for 2008 2008 were P800,000, P800,000, matche matched d against against cost of P560,00 P560,000 0 b. Merchand Merchandise ise Inventory Inventory,, Jan. 1, 2009 was P200,000 P200,000,, 90% of which was was in the warehouse and 10% in downtown showrooms. c. For For Jan. Jan. 1, 20 2009 09 to date date of floo flood, d, you you asce ascert rtai aine ned d invo invoic ice e valu value e of  purchases (all stored in the warehouse), P100,000; freight inward, P4,000; purchases returned, P6,000. d. Cost of merchand merchandise ise transferr transferred ed from the warehou warehouse se to show-rooms show-rooms was P8,000 P8, 000 and net sales sales from from Januar January y 1, to May 6, 2009 2009 (all (all wareh warehous ouse e stocks) were P320,000. Assuming gross profit rate in 2009 to be same as in the previous year, the estimated merchandise destroyed by the flood was a. P80,000 b. P66,000 c. P50,000 d. P46,000

 Yumil Company provided provided the following following data: Cost Beginning inventory P 160,000 400,000

Retail P

Purchases 2,800,000 Freight in 40,000 Markup 300,000 Markup Cancellation 30,000 Markdown Markdown Cancellation 40,000 Sales 3,000,000 Physical Inventory at year end 500,000 Estimated normal shrinkage is 4% of sales

3,200,000

160,000

21.Ass 21.Assumi uming ng the compa company ny uses uses the avera average ge retail retail invent inventory ory method method,, the the estimated inventory shortage is a. P104,000 b. P130,000 c. P200,000 d. 4,000 Use the following information for next three questions. A herd of 10 2 year old animals was held at 1 January 2009. One animal aged 2.5 years was purchased on 1 July, 2009 for 108m and one animal was born on 1 July, 2009. No animals were sold or disposed of during the period. Per-unit fair values less estimated point-of-sale costs were as follows: 2 – year old animal on January 1, 2009 Newborn Animal at July 1, 2009 2.5 – year old animal on July 1, 2009 Newborn animal on December 31, 2009 72 0.5 – year old animal on December 31, 2009 2 – year old animal on December 31, 2009 2.5 – year old animal on December 31, 2009 3 – year old animal on December 31, 2009

100 70 108

80 105 111 120

22.The increase in fair value of biological assets in 2009 due to price change is a. P 55 b. P 222 c. P 53 d. P212

23.The increase in fair value of biological assets in 2009 due to physical change is a. P 70 b. P229 c. P237 d. P167 24.The carrying amount of biological assets as of December 31, 2009 is a. P1,292 b. P1,400 c. P1,338 d. P1,320