Quiz on Advac 2 Stmc 2018

ST. THOMAS MORE COLLEGE Villasol, Angeles City ADVANCED ACCOUNTING 2 QUIZ 1 CHAPTERS 12 TO 14 Name: __________________________________________Section: ___________ Score: __________ SHORT PROBLEMS: Provide solutions in good form. No erasures on the letter. No solution, no point. Five points each. Good luck! Problem A  ABC Company Com pany had a n agency in X YZ. During the t he 2010, the transactions tr ansactions of the agency are summarized summ arized below:

Sales

525,000

Cash – Cash – XYZ  XYZ Agency Purchases Salaries and commission Rent  Advertising supplies Working fund Other expense

500,000 110,000 50,000 30,000 15,000 5,000

The agency had P200,000 receivables and P100,000 accounts payables ( on purchases made) as made)  as of the end of the period. Also, they were inventories on hand of P70,000, unused advertising supplies of P2,500 and unpaid salaries and and commissions of P15,000. P15,000. The agency is holding a working fund accounted under imprest system in which includes unreplenished voucher of P8,750. 1.

Determine the net loss in the operation of XYZ Agency. a. P21,250 b. P12,500 c. P91,250

d. P82,500

Problem B The trial balance of the Home Office and Branch office of the Triple M. Co. as at December 31, 2012, appear below:

DEBITS: Cash Petty cash fund  Accounts receivable Property, Plant and Equipment Inventory, January 1, 2012 Investment in Branch Purchases Shipment from Home Office Freight-in from Home Office Expenses TOTAL CREDITS:  Accounts liabilities Home Office Equity Capital Stock Retained Earnings Sales Shipment to Branch  Allowance for overvaluation in Branch's Inventor y TOTAL

Home Office

Branch

920,000

30,000 10,000 212,000 484,500 165,500

250,000 2,000,000 326,000 600,000 1,900,000

420,000 6,416,000

350,000 2,000,000 1,060,000 1,896,000 1,100,000 10,000 6,416,000

120,000 1,138,000 52,500 243,000 2,455,500

290,500 515,000

1,650,000

2,455,500

The audit at December 31, 2012 disclosed the following: a.

The Branch Office deposits all cash receipts in a local bank for the account of the Home Office. The audit working papers for the cash cutoff revealed the following information: Page 1 of 4

Deposited by Branch December 27, 2012 December 30, 2012 December 31, 2012 January 2, 2013

Recorded by Home Office December 31, 2012 January 2, 2013 January 3, 2013 January 6, 2013

P

Amount 150,000 42,000 40,000 30,000

b.

Returned check by the Bank to Home Office marked NSF amounted to P13,900 was identified Branch’s customer checks included on deposits made December 27, 2012. The Home office made the necessary adjustment but failed to inform the Branch about it.

c.

The petty cash fund has an imprest amount of P10, 000 and is composed of the following: Currencies and coins Unreplenished vouchers Employee’s check dated Jan. 31, 2012 Currency in an envelope marked “collections for a wedding gift” Total

3,500 3,000 2,500 1,500 10,500

Note: Cash shortage is to be charged to the petty cashier while cash overage is to be credited to miscellaneous income. d.

The Home Office bills the goods at cost plus mark up of 10% of cost. At December 31, a shipment with a billing value of P50,000 was in transit to the Branch. Freight costs are typically 5% of billed values and the Home Office makes the payment.

e.

Purchases made by branch are free of freight charges.

f.

It was discovered that the total merchandise shipped by the Home Office during the year to the branch were all credited to Shipment to Branch except for P88,000 that was shipped month of October of the same year it was erroneously credited to Sales and freight paid was debited to expense.

g.

The inventories at December 31, excluding the shipment in transit, are: Home Office P300,000 Branch

P104,000 – from Home Office 30,000 - from Outsider

h.

Home Office collected a Branch’s accounts receivable of P80,000 less 2% discount. The Home Office failed to notify the branch.

i.

Branch paid advertising expense of P25,000, of this amount paid, 60% is for Home office the rest is for Branch. The Branch made the proper entry but failed to notify the Home Office.

Determine the following: 2.

Branch inventory acquired from outsider – January 1, 2012. a. P50,000 b. P55,500 c. P60,000

d. P65,500

3.

Reconciled balance of Home Office and Investment in Branch account. (before closing entries) a. P519,400 b. P589,400 c. P503,000 d. P507,400

4.

Branch net income or net loss from its own operation. a. P61,200 b. P65,600 c. P56,800

d. P62,100

Combined cost of goods sold a. P2,090,900 b. P2,390,900

c. P2,083,200

d. P2,093,200

Branch true net income. a. P162,500 b. P165,200

c. P156,200

d. P152,500

5.

6.

7.

Reconciled adjusted balance of Home Office and Investment in Branch account. ( after closing entries) a. P568,600 b. P566,800 c. P586,600 d. P568,800

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8.

Combined net income a. P693,900

b. P696,600

c. P687,600

d. P683,900

TEST II - SHORT PROBLEMS: Provide solutions in good form. No erasures on the letter. No solution, no point. Five points each. Good luck! Problem C HOMERS Co. operates a branch in Manila. The following are selected accounts taken from December 31, 2013 financial statements of HOMERS and its branch: HOME OFFICE Sales

P7,500,000

Shipments to branch

P1,250,000

Shipments from home office Inventory, Jan. 1, 2013 Inventory, Dec. 31, 2013 Purchases  Allowance for overvaluation before adjustm ent Operating expenses 1. 2.

P750,000 P630,000 P6,200,000 P337,500 P300,000

BRANCH P3,750,000 P1,562,500 P375,000 P270,000 P950,000 P270,000

The ending inventory of the branch includes P120,000 purchased from outside suppliers. What is the combined cost of ending inventory? The combined net income is:

Problem D The home office bills AX branch at a mark-up above cost. During the year 2013, goods costing P225,000 were shipped from the home office. The unrealized mark-up account has a balance of P78,750 before any adjustments. The net income of the branch is understated by P35,000. 3.

How much is the ending inventory of the branch to be reported in its separate books? AX gets its inventories exclusively from its home office.

Problem E  Artemus Co. operates a branch in Manila City. On December 31, 2013, the Manila branch inthe home office books showed a debit balance of P522,110. The interoffice accounts were in agreement at the beginning of the year. For purposes of reconciling the interoffice accounts, the following facts were given: • Shipments from home office to Manila branch costing P72,500 were in transit as of year-end. Manila recorded the said transfer twice at cost: one on December 31, 2013 and the other on January 1, 2014.

4.

•

The home office allocated to the Manila branch ¾ of the rent expenses it paid for the year ended 2013. The rent expense was P24,000. The home office sent a debit memo to Manila for the allocated amount, but the branch recorded the said debit memo by debiting the home office  – current account and crediting rent payable.

•

The branch wrote-off uncollectible accounts amounting to P10,120. The allowance for doubtful accounts is maintained in the books of the home office. The home office recorded the write-off as a write-off of its own accounts receivable.

•

The branch collected accounts receivable from home office’s customers amounting to P52,920, net of 2% cash discount. The branch treated the said transaction as if it was a collection from its own customers. The home office was not yet notified of the said collection.

It is the policy of the home office to bill its branches at 20% above cost. What is the unadjusted balance of the home office-current account in the books of Manila branch on December 31, 2013?

Problem F Condensed statements of financial position of Love Corp. and You Corp. as of December 31, 2013 are as follows:

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Love

You

Current assets Noncurrent assets

P 175,000 725,000

Total assets

P 900,000

Liabilities Common stocks, P20 par  Additional Paid-in capital Retained earnings

P

65,000 425,000

P 490,000

P 65,000 550,000

P

35,000 300,000

35,000

25,000

250,000

130,000

On January 1, 2014, Love Corp. issued 35,000 stocks with a market value of P25/share for the assets and liabilities of You Corp. The book value reflects the fair value of the assets and liabilities, except that the noncurrent assets of You have fair value of P630,000 and the noncurrent assets of Love are overstated by P30,000. Contingent consideration, which is determinable, is equal to P15,000. Love also paid for the stock issuance costs worth P34,000 and other acquisition costs amounting to P19,000. 5. How much is the combined total assets after the merger? Problem G On September 1, 2013, BETTER IN TIME Co. established two branches: Manila and Quezon City branches. The home office transferred P80,000 worth of cash and P350,000 worth of inventory to its Manila branch and instructed Manila to transfer Three-fourths of the goods and cash received to Quezon City. In addition, on November 1, 2013, shipments from home office were received by Manila amounting to P125,000 and the branch paid freight costs amounting to P6500. 3/5 of the said shipments were sold to outsiders. On December 1, 2013, Manila transferred half of the remaining November shipments from the home office to Quezon City, with Quezon City branch paying freight costs of P2,500. Had the merchandise been shipped from the home office to Quezon City branch, only P1,900 worth of freight would have been incurred. 6. How much is the balance of the Quezon City branch account in the home office books? Problem H The following are the condensed statement of financial position of Ayiziel and Vianney on January 1, 2013:  Ayiziel Total Assets Liabilities Common Stocks  Additional Paid-in Capital Retained Earnings

Vianney

P4,100,000

P 1,223,000

1,110,000 1,240,000

320,000 518,000

500,000

40,000

1,250,000

345,000

Cido Corp. acquired the net assets of both Ayiziel and Vianney by issuing 81,250 shares to Ayiziel and 22,550 shares to Vianney. The par value of these shares is P35/share and market value as of January 1, 2013 is P40/share. Cido also paid for the following expenses:  Ayiziel

Vianney

Indirect costs

P37,500

P 40,500

Finder’s fee

26,500

14,000

 Acctg. And legal fees for SEC registration

137,500

145,000

Printing costs of stock certificates

50,000

37,500

7. If Cido’s retained earnings has a balance of P4,300,000 on January 1, 2013, how much is the goodwill? 8. The adjusted retained earnings to be presented in the statement of financial position of Cido is?

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