Advance accounting 1 Final examination

UNIVERSITY OF MAKATI ADVANCE ACCOUNTING 1 FINAL EXAMINATION Ulysses Valladolid

October 7-13, 2013

Instruction: Choose the best answer. For true or false questions, shade “A” for true and “B” for False True or false. 1. Delayed recognition of revenue is appropriate if the sale does not represent substantial completion of the earnings process. 2. Companies must use the percentage-of-completion method progress toward completion are reasonably dependable.

when

estimates

of

3. The Construction in Process account includes only construction costs under the percentage-of-completion method. 4. Under the completed-contract method, companies recognize revenue and costs only when the contract is completed. 5. Under the installment-sales method, companies recognition until the period of cash collection. 6. Deferred gross profit is generally classified as a current liability.

treated

as

defer an

revenue unearned

and

income

revenue

and

Multiple Choice 7. On January 2, 2014 ABSA company signed an agreement to operate as a franchisee of BMA products, inc, for an initial franchise fee of P937,500 for 7 years. of this amount P175,000 was paid in the agreement was signed and the balance payable in four annual payments beginning on December 31, 2014 ABSA signed a non-interest bearing note for the balance. ABSA’s rating indicates that he can borrow money at 16% for the loan for this type. assume that substantial services amounting to P283,500 had already been rendered by BMA products and that additional indirect franchise cost of P25,500 was also incurred. PV factor is 2.80 If the collection of the note is not for the year ended December 31, 2014 a. P313,435 b. P228,035

reasonably assured, the realized profit is? c. P168,135 d. P253,535

Number 8-9 On January 1, 2012 Master CPA entered into a franchise agreement with Fanatic to sell their products. The agreement provides for an initial franchise of P500,000, payable as follows; P140,000 cash to be paid upon singing of the contract, and the balance in five equal annual payments every DEC. 31, starting DEC. 31, 2012. Master CPA signs 15% interest bearing note for the balance. The agreement further provides that the franchise must pay a continuing franchise fee equal to 5% of its monthly gross sale. On Oct. 29, the franchisor completed the initial services required in the contract at a cost of P315,000, and incurred indirect cost of P24,000. The franchisee commenced business operations on Nov. 2, 2012. The gross sale reported to the franchisor are Nov. sales, P60,000 and DEC. sales, P80,000. The franchisor also incurred direct cost of P22,000 related to continuing services in November and indirect cost of P4,000 related to continuing services at the end of the year. The first installment payment was made in due date. Required: compute for the following 8. Assuming the collectability of the note is certain, in its income statement for the year ended Dec. 31, 2012, how much is the realized revenue? a. P 173,500 c. P543,200 b. P 204,200 d. P500,000 9. Assuming the collectability of the note is not likely, in its income statement for the year ended DEC. 31, 2012, how much is the net income? a. P 78,440 c. P 88,440 b. P 173,500 d. P 59,440

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ADVANCE ACCOUNTING 1

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10. On Aug. 1, 2012, Idos Inc. entered into a franchise agreement with intense franchisee. The initial franchisee fees agreed upon is P246,900, of which 46,900 is payable upon signing and the balance to be recovered by a noninterest bearing note payable in four equal annual installment. The down payment is refundable within 75 days. Intense Inc. has a high credit rating, thus, collection of the note is reasonably assured. Out-of-pocket costs of P125,331 and P12,345 were incurred for direct expenses and indirect expenses respectively. Prevailing market rate is 9%. PV factor is 3.2397. On the fiscal year ended Nov. 30, 2012, how much revenue from the franchise fee will the franchisor recognize? A. P 0 B. P208,885 C. P246,900 D. P83,554 Number 11-12 Ajoy Contributed P100,000 and Jose contributed P150,000 to form a partnership, and they agreed to share profits in the ratio of their original capital contributions. The first year of operations resulted in the loss P59,000; Ajoy made an additional investment of P24,000 while Jose made a withdrawal of P14,000. At the start of the following year, they agreed to admit Abby into the Partnership. He was to receive a one-third interest in the capital and profits upon payment of P48,000 to Ajoy and Jose, whose capital accounts were to be reduced by transfers of Abby’s capital account of amounts sufficient to bring them back to their original capital ratio. 11. The balanced of the capital account Jose will be A. 71,800 B. 53,600 C. P80,400 D. cannot be determined 12. The amount of cash paid by Abby to Jose is a. 20,200 b. 14,471.64 c. 46,800 d. cannot be determined with the information provided 13. At December 31, 2013, Seasons Construction estimates that it is 75% complete with the building; however, the estimate of total costs to be incurred has risen to $10,800,000 due to unanticipated price increases. What is the total amount of Construction Expenses that Seasons will recognize for the year ended December 31, 2013? a. $8,100,000 b. $4,725,000 c. $4,792,500 d. $4,905,000 14. At December 31, 2013, Seasons Construction estimates that it is 75% complete with the building; however, the estimate of total costs to be incurred has risen to $10,800,000 due to unanticipated price increases. What is reported in the balance sheet at December 31, 2013 for Seasons as the difference between the Construction in Process and the Billings on Construction in Process accounts, and is it a debit or a credit? Difference between the accounts Debit/Credit a. $2,535,000 Credit b. $930,000 Debit c. $660,000 Debit d. $930,000 Credit 15. Rose and Raul agreed on a joint venture to purchase and sell custom-made items. They agreed to contribute P250,000 each to be used in purchasing the merchandise, share equally in any gain or loss, and record their venture transactions in their individual books. Upon termination of the venture, the following information were available: · Joint venture account credit balances: Rose, P180,000: Raul, P202,000 · Cost of costume-made items taken: by Rose, P15,000; Raul, 29,000 · Expenses paid: by Rose, P18,500; Raul, P23,000

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Compute for the joint venture sales. A. P882,000 B. P838,000 C. P923,500 D. P879,500 16. Frustration, Depression and Tension are partners dividing profits and losses in the ratio of 2:3:1 respectively. Their capital balance on Dec. 31, 2010, were P214,000, P328,000 and P194,000 respectively. Tension is retiring from the partnership as of April 30, 2011, assume net income is considered as having been realized evenly throughout the year during the year of the partner’s retirement. After retirement of a partner, remaining partner would divide profits and losses in the remaining original ratio. The partnership reported the net income of P270,000 for the year of 2011. Tension is to be paid an amount which is 130% of his adjusted equity as of the date of his retirement. Which of the following statements is false? A. Upon retirement Tension, The balance of the capital amount of Frustration amount to P218,920 B. At the end of 2011 the balance of the capital amount of Depression is P152,460 higher than the capital account balance of Frustration. C. The capital account of Frustration has net increase of P76,920 from beginning to the end of 2011. D. Upon retirement of Tension, The capital account of Depression will have a net increase of P7,380 as a result of the transfer of capital account change. 17. On Dec. 1, 2012, Vien and Kokort are form a partnership. Cash and noncash noncash assets to be contributed and follows: Vien Book value Accounts receivable P 250,000 Inventory 400,000 PPE 1,000,000 Accounts Payable 150,000

combining their separate business to assets are to be contributed. The the liabilities to be assume are as Vien Fair Value P 262,500 450,000 912,500 150,000

Kokort Book value P 200,000 200,000 862,500 112,500

Kokort Fair value P 195,000 207,500 822,500 112,500

Vien and Kokort are to invest equal amounts of cash such that the contribution of Vien would be 10% more than the investment of Kokort. What is the amount of cash presented on the partnership’s statement of the financial position on Dec. 1, 2012? A. P5,025,000 B. P5,525,000 C. P2,512,500 D. P2,762,500 18. Cabang, Castro and Asakil formed a joint venture to sell customized bracelets for the Jpia week-CBA week-Foundation day week. Their transactions during the two-long-month-weekly-celebration are summarized below in the books of Asakil, the manager of the joint venture. July 15 investment of bracelet by Cabang 123 15 investment of bracelet by Cabang 44 15 investment of cash by Castro 37 16 investment of cash by Asakil 48 20 investment of bracelet by Castro 106 20 foreight- in (Collect) Service charge of a friend 6 named Terrado 20 cash sales 369 20 cash sales 90 29 withdrawal of bracelet by Castro 34 August 5 purchases 69 10 withdrawal of cash by Cabang 19 14 withdrawal of cash by Asakil 10 21 selling expenses 14 28 unsold bracelet charged to Cabang 7 28 unsold bracelet charge to Castro 4

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The contractual arrangements include distribution of gains and losses as follows: Cabang 80%; Castro 15%; and Asakil 5%. The venture is completed and terminated on August 31, 2013. In the final settlement, how much would each venturer receive? A. B. C. D. E.

Cabang; 301 Cabang; 309.8 Cabang; 309.8 Cabang; 241 Answer not in

Castro; 135 Asakil 48 Castro; 139.65 Asakil 48.55 Castro; 136.65 Asakil 48.55 Castro; 123.9 Asakil 44.3 the choices above

19. Roman, Pablo, and Jose formed a joint venture during 2013 to sell WallyJacket. Roman is assigned to manage the venture. The three of them agreed to divide profits and losses equally. After two months, the joint venture was terminated and there were unsold merchandise. Roman’s trial balance contains the following: Dr (Cr) Joint Venture Cash P23,800 Joint Venture 10,500 Pablo, Capital 6,300 Jose, Capital (14,700) Jose received P15,540 as settlement for her interest in the Venture while Roman agreed nto be charge for the unsold products. What is the cost of the unsold merchandise at the termination of the venture? A. P7,980 B. P2,520 C. P8,400 D. P13,020 20. Roco Corp. which began business on January 1, 2011, appropriately uses the installment sales method of accounting for income tax reporting purposes. The following data are available for 2011: Installment accounts receivable, 12/31/011 Installment sales for 2011 Gross profit on sales

P200,000 P350,000 40%

Under the installment method, what would be Roco’s deferred gross profit at December 31, 2011? a. P20,000 b. P90,000 c. P80,000 d. P60,000 21. Tayag Corp., which began operations in 2011, accounts for revenues using the installment method. Tayag’s sales and collection for the year were P60,000 and P35,000, respectively. Uncollectible accounts receivable of P5,000 were written off during 2008. Tayag’s gross profit rate is 30%. On December 31, 2011, what amount should Tayag report as deferred revenue? a. P10,500 b. P 9,000 c. P 7,500 d. P 6,000 22. Action Inc. sold a fitness equipment on installment basis on October 31, 2008. The unit cost to the company was P60,000 but the installment selling price was set at P85,000. Terms of payment included the acceptance of a used equipment with a trade in value of P30,000. Cash of P5,000 was paid in addition to the trade in equipment with the balance to be paid in ten monthly installment due at the end of each month commencing the month of sale. It would require P1,250 to recondition the use equipment so that it could be resold for P25,000. A 15% gross profit was usual from sale of used equipment. The realized gross profit from the 2011 amounted to a. P 4,000 b. P34,000 c. P10,000 d. P 8,000

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23. The company uses the installment method of accounting to recognize income Pertinent data are as follows: Installment sales Cost of sales Balance of deferred gross profit at year ended 2009 2010 2011

2009 P300,000.00 225,000.00

2010 P375,000.00 285,000.00

P52,500.00 -

P15,000.00 54,000.00

2011 P360,000.00 252,000.00

P -

9,000.00 72,000.00

The total balance of the installment Accounts Receivable on December 31, 2011 is: a. P270,000 b. P277,500 c. P279,000 d. P300,000 24. The Bengal Furniture Company appropriately used the installment sales method in accounting for the following installment sales. During 2011 Bengal sold furniture to an individual for P3,000 at a gross profit of P1,200. On June 1, 2011 this installment account receivable had a balance of P2,000 and it was determined that no further collections would be made. Bengal therefore repossessed the merchandise. When reacquired, the merchandise was appraised as being worth only P1,000. In order to improve its salability, Bengal incurred costs of P100 for reconditioning. What should be the loss on repossessions attribute to this merchandise? a. P 300 b. P 320 c. P 900 d. P1,000 25. Carlos Labung Appliances Co., sold a stove, costing P1,000 for P1,600 on September 2010. The down payment was P160, and the same amount was to be paid at the end of each succeeding month. Interest was charged on the unpaid balance of the contract at 1/2 of 1% a month, payments being considered as applying first to accrued interest and the balance to principal. After paying a total of P640, the costumer defaulted. The stove was repossessed in February 2011. It was estimated that the stove had a value of P560 on a depreciated cost basis. The realized gross profit and the gain (loss) on repossession on December 31, 2011 are: a. P232.76 and (52.07) b. P240.00 and (52.07) c. P232.76 and (40.00) d. P240.00 and (40.00) 26. Napoles Corporation started operation on January 1, 2010, selling home appliances and furniture set both under cash and other installment basis. Data on the installment sales operations for two years ended December 31, 2010 and 2011 are as follows: 2010 2011 Installment sales P400,000 P500,000 Cost of installment sales 240,000 350,000 Cash collection on: 2010 installment 210,000 150,000 contracts 2011 installment 300,000 contracts The balance on deferred gross profit account on December 31, 2011 is: a. P130,000 b. P160,000 c. P190,000 d. P 76,000

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Number 27 Jym-P, Mejia and Eliang from a joint arrangement for the sale of merchandise. Mejia and Eliang are to contribute the merchandise, Jym-P is to act as the manager and is to be allowed a bonus of 25% of the profit before deduction of the bonus as expense. Mejia and Eliang are to be allowed 6% interest a year on their original investment. The balance of any profit on the arrangement is to be divided equally among the three parties. On July 1, 2012 Mejia and Eliang contributed merchandise of P66,000 and P90,000, respectively. For the period between July 1 and October 1, Jym-P sold arrangement merchandise on account for P240,000, of this amount P229,500 was collected. allowed sales discount of P4,050, and wrote off P6,450 as uncollectible. Jym-P paid joint arrangement expenses of P58,650 from the joint arrangement cash. On October 1,, the arrangement was terminated unsold merchandise was returned at the following value : to Mejia, P15,000 and to Eliang, P11,400. Cash settlement was completed by Jym-P on the same day. 27. The cash settlement received by Mejia and the total interest of Eliang is Mejia Eliang a. P62,210.00 P90,170.000 b. P62,152.66 P102,592.66 c. P77,152.66 P91,192.66 d. P73,468.00 P101,788.00 Number 28-30 Esa and Jeffren in a joint arrangement, contributed P450,000 each in order to purchased canned goods which were sold by lots at a closing-out sale .They agreed to divide their profit equally and each shall record his purchase, sales and expenses in his own books. After selling almost all the canned goods, they wind up their arrangement. Joint arrangement credit balances are as follows: Jeffren - P360,000, Esa - P315,000. Expenses paid from joint arrangement cash were P45,000 by Jeffren and P58,500 by Esa. Cost of unsold canned goods which Jeffren and Esa agreed to assume were P13,500 and P21,000 respectively. 28. The total sales of the joint arrangement were a. P1,575,000 c. P1,650,000 b. P1,609,500 d. P1,678,500 29. Using the information above, the share of Esa on the arrangement profit was a. P337,500 c. P354,750 b. P709,500 d. P791,250 30. Using the information above, the final settlement due to Jeffren including his investment was a. P768,150 c. P780,000 b. P774,000 d. P791,250 Number 31-32 WHooops and Kiri join in a arrangement. WHooops invest P30,000 and Kiri contributes P6,000; profits are to be shared equally. The arrangement failed and upon its conclusion, only cash of P7,500 remains for distribution. 31. The arrangement profit or loss is a. Profit of P36,000 b. Loss of P28,500

c. Profit of P43,500 d. Loss of P36,000

32. Using the information above, the one who gets the available cash is a. Kiri c. WHooops and Kiri b. WHooops d. Neither WHooops and Kiri 33. On April 1, 2013 Weston, Inc. entered into a franchise agreement with a local business-man. The franchisee paid $300,000 and gave a $200,000, 8%, 3-year note payable with interest due annually on March 31. Weston recorded the $500,000 initial franchise fee as revenue on April 1, 2013. On December 30, 2013, the franchisee decided not to open an outlet under Weston's name. Weston canceled the franchisee's note and refunded $160,000, less accrued interest on the note, of the $300,000 paid on April 1. What entry should Weston make on December 30, 2013?

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ADVANCE ACCOUNTING 1 a. Loss on Repossessed Franchise......................... Cash .......................................... b. Loss on Repossessed Franchise......................... Cash .......................................... c. Loss on Repossessed Franchise......................... Cash .......................................... Notes Receivable ................................. d. Revenue from Franchise Fees........................... Interest Income .................................. Cash .......................................... Notes Receivable ................................. Revenue from Repossessed Franchise ...............

FINAL EXAM 160,000 160,000 148,000 148,000 348,000 148,000 200,000 500,000 12,000 148,000 200,000 140,000

34. On January 1, 2013 Dairy Treats, Inc. entered into a franchise agreement with a company allowing the company to do business under Dairy Treats's name. Dairy Treats had performed substantially all required services by January 1, 2013, and the franchisee paid the initial franchise fee of $700,000 in full on that date. The franchise agreement specifies that the franchisee must pay a continuing franchise fee of $60,000 annually, of which 20% must be spent on advertising by Dairy Treats. What entry should Dairy Treats make on January 1, 2013 to record receipt of the initial franchise fee and the continuing franchise fee for 2013? a. Cash .........................................760,000 Franchise Fee Revenue........................... 700,000 Revenue from Franchise Fees..................... 60,000 b. Cash .........................................760,000 Unearned Franchise Fees......................... 760,000 c. Cash .........................................760,000 Franchise Fee Revenue........................... 700,000 Revenue from Franchise Fees..................... 48,000 Unearned Franchise Fees......................... 12,000 d. Prepaid Advertising .................................. 12,000 Cash .........................................760,000 Franchise Fee Revenue........................... 700,000 Revenue from Franchise Fees..................... 60,000 Unearned Franchise Fees......................... 12,000 35. Wynne Inc. charges an initial franchise fee of $1,380,000, with $300,000 paid when the agreement is signed and the balance in five annual payments. The present value of the future payments, discounted at 10%, is $818,808. The franchisee has the option to purchase $180,000 of equipment for $144,000. Wynne has substantially provided all initial services required and collectibility of the payments is reasonably assured. The amount of revenue from franchise fees is a. $ 300,000. b. $1,082,808. c. $1,118,808. d. $1,380,000. During 2012, Martin Corporation sold merchandise costing $2,800,000 on an installment basis for $4,000,000. The cash receipts related to these sales were collected as follows: 2012, $1,600,000; 2013, $1,400,000; 2014, $1,000,000. 36. If expenses, other than the cost of the merchandise sold, related to the 2012 installment sales amounted to $160,000, by what amount would Martin’s net income for 2012 increase as a result of installment sales? a. $1,440,000 b. $ 480,000 c. $ 360,000 d. $ 320,000 37. On January 1, 2013, Shaw Co. sold land that cost $420,000 for $560,000, receiving a note bearing interest at 10%. The note will be paid in three annual installments of $225,190 starting on December 31, 2013. Because collection of the note is very uncertain, Shaw will use the cost-recovery method. How much revenue from this sale should Shaw recognize in 2013? a. $0 b. $42,000 c. $56,000 d. $140,000

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38. In 2007, Crane Corporation began construction work under a three-year contract. The contract price is $2,400,000. Crane uses the percentage-ofcompletion method for financial accounting purposes. The income to be recognized each year is based on the proportion of costs incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2007, follow: Balance Sheet Accounts receivable—construction contract billings $100,000 Construction in progress $300,000 Less contract billings 240,000 Costs and recognized profit in excess of billings 60,000 Income Statement Income (before tax) on the contract recognized in 2007 $60,000 How much cash was collected in 2007 on this contract? a. $100,000 b. $140,000 c. $20,000 d. $240,000 Carter Construction Company had a contract starting April 2008, to construct a $15,000,000 building that is expected to be completed in September 2009, at an estimated cost of $13,750,000. At the end of 2008, the costs to date were $6,325,000 and the estimated total costs to complete had not changed. The progress billings during 2008 were $3,000,000 and the cash collected during 2008 was $2,000,000. Carter uses the percentage-of-completion method. 39. At December 31, 2008, Carter would report Construction in Process in the amount of a. $6,900,000. b. $6,325,000. c. $5,900,000. d. $575,000. Melton Construction Co. began operations in 2007. Construction activity for 2007 is shown below. Melton uses the completed-contract method. Billings Collections Estimated Contract Through Through Costs to Costs to Contract Price 12/31/07 12/31/07 12/31/07 Complete 1 $3,200,000 $3,150,000 $2,600,000 $2,150,000 — 2 3,600,000 1,500,000 1,000,000 820,000 $1,880,000 3 3,300,000 1,900,000 1,800,000 2,250,000 1,200,000 40. Which of the following should be shown on the balance sheet at December 31, 2007 related to Contract 2? a. Inventory, $680,000 b. Inventory, $820,000 c. Current liability, $680,000 d. Current liability, $1,500,000 41. Flynn Construction Co. has consistently used the percentage-of-completion method of recognizing revenue. During 2007, Flynn entered into a fixed-price contract to construct an office building for $12,000,000. Information relating to the contract is as follows: At December 31 2007 2008 Percentage of completion 15% 45% Estimated total cost at completion $9,000,000 $9,600,000 Gross profit recognized (cumulative) 600,000 1,440,000 Contract costs incurred during 2008 were a. $2,880,000. b. $2,970,000. c. $3,150,000. d. $4,320,000. 42. Noland Constructors, Inc. has consistently used the percentage-of-completion method of recognizing income. In 2007, Noland started work on a $35,000,000 construction contract that was completed in 2008. The following information was taken from Noland's 2007 accounting records: Progress billings $11,000,000 Costs incurred 10,500,000 Collections 7,000,000

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Estimated costs to complete 21,000,000 What amount of gross profit should Noland have recognized in 2007 on this contract? a. $3,500,000 b. $2,333,334 c. $1,750,000 d. $1,166,667 43. In selecting an accounting method for a newly contracted long-term construction project, the principal factor to be considered should be a. the terms of payment in the contract. b. the degree to which a reliable estimate of the costs to complete and extent of progress toward completion is practicable. c. the method commonly used by the contractor to account for other long-term construc-tion contracts. d. the inherent nature of the contractor's technical facilities used in construction. 44. The percentage-of-completion method must be used when certain conditions exist. Which of the following is not one of those necessary conditions? a. Estimates of progress toward completion, revenues, and costs are reasonably dependable. b. The contractor can be expected to perform the contractual obligation. c. The buyer can be expected to satisfy some of the obligations under the contract. d. The contract clearly specifies the enforceable rights of the parties, the consideration to be exchanged, and the manner and terms of settlement. 45. When work to be done and costs to be incurred on a long-term contract can be estimated dependably, which of the following methods of revenue recognition is preferable? a. Installment-sales method b. Percentage-of-completion method c. Completed-contract method d. None of these 46. How should the balances of progress billings and construction in process be shown at reporting dates prior to the completion of a long-term contract? a. Progress billings as deferred income, construction in progress as a deferred expense. b. Progress billings as income, construction in process as inventory. c. Net, as a current asset if debit balance, and current liability if credit balance. d. Net, as income from construction if credit balance, and loss from construction if debit balance. 47. How should earned but unbilled revenues at the balance sheet date on a longterm construction contract be disclosed if the percentage-of-completion method of revenue recognition is used? a. As construction in process in the current asset section of the balance sheet. b. As construction in process in the noncurrent asset section of the balance sheet. c. As a receivable in the noncurrent asset section of the balance sheet. d. In a note to the financial statements until the customer is formally billed for the portion of work completed. 48. The method most commonly used to report defaults and repossessions is a. provide no basis for the repossessed asset thereby recognizing a loss. b. record the repossessed merchandise at fair value, recording a gain or loss if appropriate. c. record the repossessed merchandise at book value, recording no gain or loss. d. none of these.

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49. A seller is properly using the cost-recovery method for a sale. Interest will be earned on the future payments. Which of the following statements is not correct? a. After all costs have been recovered, any additional cash collections are included in income. b. Interest revenue may be recognized before all costs have been recovered. c. The deferred gross profit is offset against the related receivable on the balance sheet. d. Subsequent income statements report the gross profit as a separate item of revenue when it is recognized as earned. 50. Some of the initial franchise fee may be allocated to a. continuing franchise fees. b. interest revenue on the future installments. c. options to purchase the franchisee's business. d. All of these may reduce the amount of the initial franchise fee that is recognized as revenue.

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ADVANCE ACCOUNTING 1 advac 1 finals Answer Section TRUE/FALSE 1. T 2. F 3. F 4. F 5. F 6. T PROBLEM 7. b 8. D 9. c 10. b 11. c 12. D 13. d 14. b 15. c 16. d 17. a 18. C 19. d 20. C 21. D 22. D 23. B 24. a 25. A 26. D 27. b 28. D 29.

c

30. D 31. b 32. B

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FINAL EXAM

ADVANCE ACCOUNTING 1 33. d 34. c 35. b 36. d 37. a 38. b $240,000 – $100,000 = $140,000. 39. A ($6,325,000 ÷ $13,750,000) × $1,250,000 = $575,000. $6,325,000 + $575,000 = $6,900.000. 40. C $1,500,000 – $820,000 = $680,000 41. CPA. B ($9,600,000 ׃n45%) – ($9,000,000 ׃n15%) = $2,970,000. 42. CPA. D $10,500,000 —————— ׃n($35,000,000 – $31,500,000) = $1,166,667. $31,500,000 43. B 44. C 45. B 46. C 47. A 48. B 49. B 50. D

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