Professional Documents
Culture Documents
P755,000
840,000
339,750
950,000
A. P300,000
B. 525,000
C. 600,000
D. 900,000
Problem 10. During 2014, Rizza started work on a P3,000,000 fixed-price construction contract. Any costs incurred are
expected to be recoverable. The accounting records disclose the following data for the year ended December 31, 2014:
Costs incurred
Estimated cost to complete
Progress billings
P930,000
2,170,000
1,100,000
350,000
400,000
20,000
10,000
70,000
5,000
At the end of that month, the agency had P100,000 of receivables and P50,000 of payables. Also, there were P90,000 of unsold
merchandise and P6,000 of unused advertising supplies on hand. What is the results of operations of the Baguio City agency?
A. No profit, no loss
C. 9,000 loss
B. P25,000 profit
D. 155,000 loss
Problem 18. Mama, Inc. opened a sales agency in San Pedro, Laguna in 2014. The following is a summary of the transactions
of the sales agency:
Sales order sent to home office
Sales order filled by home office in 2014
Freight on shipment of agency
Collections, net of 10% discount
Selling expenses paid from the agency working fund
Administrative expenses charged to agency
Samples shipped to agency:
Cost
Inventory, December 31, 2014
P120,000
95,000
2,000
81,000
5,500
5% of gross sales
8,200
4,550
The companys gross profit rate on agency sales is 30% excluding the freight cost on shipments to agency.
What is the total comprehensive income of the agency for 2014?
A. P3,600
B. 5,600
C. 1,600
Problem 19. On May 31, 2014, Dear Company has assets and liabilities with the following fair values:
Current assets
P180,000
Non-current assets
220,000
Liabilities
40,000
On June 1, 2014, Love Corporation purchased the net assets of Dear Company for P310,000 cash.
D. 6,300
P1,100,000
1,100,000
900,000
850,000
P300,000
290,000
40,000
42,500
Problem 24. Perez, Inc. owns 80% of Senior, Inc. During 2014, Perez sold goods with a 40% gross profit to Senior. Senior sold
all of these goods in 2014. For 2014 consolidated financial statements, how should the summation of Perez and Senior income
statement items be adjusted?
A. Sales and cost of goods sold should be reduced by the intercompany sales
B. Sales and cost of goods sold should be reduced by 80% of the intercompany sales
C. Net income should be reduced by 80% of the gross profit on intercompany sales
D. No adjustment is necessary
Problem 25. An entity purchased plant from a foreign supplier for 3 million baht on January 31, 2014, when the exchange rate
was 2 baht = P1. At the entitys year-end of March 31, 2014, the amount has not been paid. The closing rate was 1.5 baht = P1.
The entitys functional currency is the peso.
B. 8,000
C. 4,000
D. 1,600
Problem 27. On June 18, Loma Corporation entered into a firm commitment to purchase specialized equipment from the
Okazaki Trading Company for Y80,000,000 on August 20. The exchange rate on June 18 is Y100 = P1. To reduce the exchange
rate risk that could increase the cost of the equipment in pesos, Loma pays P12,000 for a call option contract. This contract
gives Loma the option to purchase Y80,000,000 at an exchange rate of Y100 = P1 on August 20. On August 20, the exchange
rate if Y93 = P1. How much did Loma save by purchasing the call option?
A. P12,000
B. 48,215
C. 60,215
D. Loma would have been better off not to have purchase the call option
Problem 28. On December 12, 2014, Important Co. entered into a forward exchange contract to purchase 100,000 local
currency units (LCU) in ninety days to hedge a commitment to purchase equipment being manufactured to Importants
specifications. The expected delivery date is March 12, 2015 at which time settlement is due to the manufacturer. The hedge
qualifies as a fair value hedge. The relevant exchange rates are as follows:
Spot rate
Forward rate (for March 12, 2015)
November 30, 2014
P0.87
P0.89
December 12, 2014
0.88
0.90
December 31, 2014
0.92
0.93
At December 31, 2014, what amount of foreign currency transaction gain from this forward contract should Important include in
net income?
A. P0
B. 3,000
C. 5,000
D. 10,000
Problem 29. Certain balance sheet accounts of a foreign subsidiary of Rowan, Inc. at December 31, 2014, have been
translated into Philippine peso as follows:
Translated at
Current rate
Historical rate
Note receivable, long-term
P240,000
P200,000
Prepaid rent
85,000
80,000
Patent
150,000
170,000
P475,000
P450,000
What total amount should be included in Rowans December 31, 2014 consolidated balance sheet for the above accounts using
the translation method recognized under PAS 21?
A. P450,000
B. 455,000
C. 475,000
D. 495,000
Problem 30. Paris, a wholly-owned subsidiary of Filipino Corp. is located in France. In 2014, Filipino Corp. borrowed French
francs as a partial hedge of its investment in Paris Co. on December 31, 2014, in the preparation of consolidated financial
statements, Filipino Corps translation loss on its investment in the subsidiary amounted to P500,000, while its exchange gain on
the borrowing amounted to P300.000.
What amount of gain or loss should Filipino Corp. report in consolidated income statement and balance sheet?
Income Statement
Balance Sheet
A. (P500,000)
P300,000
B. 300,000
(500,000)
C. 0
(200,000)
D. (200,000)
0
Problem 31. On February 1, 2014, Agency GG signed a contract for the construction of a building. The contract price is
P50,000,000. The agency made a downpayment of 30% of the contract price. On May 1, 2014, Agency GG received the first
billing of 50% of the contract price. The agency paid the first billing less P100,000 withholding tax.
What is the entry to record the payment of the first billing?
A. Accounts payable
Due to BIR
Cash National Treasury MDS
B. Accounts payable
Cash National Treasury MDS
C. Accounts payable
Due to BIR
Cash National Treasury MDS
D. Accounts payable
Due to BIR
Cash Disbursing Officer
25,000,000
100,000
24,900,000
10,000,000
10,000,000
10,000,000
100,000
9,900,000
10,000,000
100,000
9,900,000
Problem 32. Out of its total appropriation for 2014, Department EE received its allotments broken down as follows:
Capital Outlay (CO)
P20,000,000
Maintenance and Other Operating Expenses (MOOE)
10,000,000
B. 137,500
C. 250,000
D. 273,750
Problem 36. Johnson uses a job order cost system and applies factory overhead to production orders on the basis of direct
labor cost. The overhead rates for 2014 are 200% for Department A and 50% for Department B. Job 123, started and completed
during 2014, was charged with the following costs:
Department
A
B
Direct materials
P25,000
P5,000
Direct labor
?
30,000
Factory overhead
40,000
?
The total manufacturing cost associated with Job 123 should be
A. P135,000
B. 180,000
C. 195,000
D. 240,000
Problem 37. The following information pertains to Lap Co.s Palo Division for the month of April:
Number of units Cost of materials
Beginning work in process
15,000
P5,500
Started in April
40,000
18,000
Units completed
42,500
Ending work in process
12,500
All materials are added at the beginning of the process. Using the weighted average method, the cost per equivalent unit for
materials is
A. 0.59
B. 0.55
C. 0.45
D. 0.43
Problem 38. For the month of May, the Cutting Department of Damit Co. had 80% complete as to the beginning work in
process and 50% complete as to the ending work in process. Related data follow:
Units
Conversion cost
Work in process, May 1
50,000
P88,000
Units started and cost incurred in May
270,000
572,000
Units completed and transferred to
the next department in May
200,000
If the company uses the FIFO method, the conversion cost of the work in process in the Cutting Department at the end of May
would amount to
A. P156,000
B. 254,000
C. 132,000
D. 176,000
Problem 39. A company processes raw material into Products F1, F2 and F3. Each ton of raw materials produce five units of
F1, two units of F2, and three units of F3. Joint processing costs to the split-off point are P15 per ton. Further processing results
in the following per unit figures:
F1
F2
F3
Additional processing costs per unit
P28
P30
P25
Selling price per unit
30
35
35
If joint costs are allocated by the net realizable value of finished product, what proportion of joint costs should be allocated to
F1?
A. 20%
B. 30%
C. 33 1/3%
D. 50%
Problem 40. Mig Co., which began operations in 2014, produces gasoline and a gasoline by-product. The following information
is available pertaining to 2014 sales and production:
Total production costs to split-off point
Gasoline sales
By-product sales
Gasoline inventory, 12/31/2014
Additional by-product costs:
120,000
270,000
30,000
15,000
Marketing
10,000
Production
15,000
Mig accounts for the by-product at the time of production. What are Migs 2014 cost of sales for gasoline and the by-product?
Gasoline
By-product
A. 105,000
25,000
B. 115,000
0
C. 108,000
37,000
D. 100,000
0
Problem 41. The Action Corporation manufactures electrical meters. For May, there were no beginning inventories of raw
materials and no beginning and ending work-in-process. Action uses a JIT manufacturing system and backflush costing with
three trigger points for making entries in the accounting system:
Purchase of raw materials debited to Raw and In Process account
Completion of finished goods debited to Finished Goods account
Sale of finished goods
Actions May standard cost per meter are direct materials, P25; and conversion costs, P20. The following data apply to May
manufacturing:
Raw materials and components purchases
Conversion costs incurred
Number of finished units manufactured
Number of finished units sold
P550,000
P440,000
21,000
20,000
The balances of Raw in Process and Finished Goods inventory accounts at the end of May are:
A. P25,000 and P945,000 respectively
C. P25,000 and P45,000 respectively
B. P550,000 and P45,000 respectively
D. P550,000 and P945,000 respectively
Problem 42. If EDSA Company has material cost of P10,000 in June 1 RIP inventory account, and P12,500 in the June 30 RIP
inventory account and the amount of raw materials used backflushed from RIP inventory account on June 30 is P202,500, what
is the amount of raw materials purchased on credit for the month of June?
A. P205,000
B. 200,000
C. 225,000
D. 200,000
Problem 43. Mactan Enterprises is a Philippine exporter of souvenir items manufactured in the capital city of Cebu. The
following overhead cost data have been accumulated:
Activity Center
Cost Driver
Amount of Activity
Center Costs
Materials handling
Kilos handled
100,000 grams
P50,000
Painting
Units painted
50,000 units
200,000
Assembly
Labor hours
4,000 hours
120,000
Job RST contains 3,000 units. It weighs 10,000 kilos and uses 300 hours of labor
What is the total overhead cost assigned to Job RST?
A. P31,955
B. 27,750
C. 26,000
D. 32,000
Problem 44. Super Glass Co. is preparing its annual profit plan. As part of its analysis of the profitability of individual products,
the controller examines the amount of overhead that should be assigned to the individual product lines from the information
given as follows:
Ordinary glass
Special glass
Units produced
25
25
Material moves per product line
5
15
Direct labor hours per unit
200
200
Budgeted materials handling costs, P50,000.
Under activity-based costing system, what is the material handling cost assigned to one unit of ordinary glass?
A. 1,000
B. 500
C. 1,500
D. 2,500
Problem 45. The direct labor standards for producing a unit of a product are two hours at P10 per hour. Budgeted production
was 1,000 units. Actual production was 900 units and direct labor cost was P19,200 for 2,000 direct labor hours. The direct labor
efficiency variance was
A. P1,000 favorable
C. 2,000 favorable
B. 1,000 unfavorable
D. 2,000 unfavorable
Problem 46. Derf Company applies overhead on the basis of direct labor hours. Manufacturing overhead is budgeted at
P135,000 for the period, of which 20% of this cost is fixed. Two direct labor hours are required for each product unit. Planned
production for the period was set at 9,000 units. The 17,200 hours worked during the period resulted in production of 8,500
units. Variable manufacturing overhead cost incurred was P108,500 and fixed manufacturing overhead cost was P28,000. Derf
Company uses a four variance method for analyzing manufacturing overhead.
Compute the (1) variable overhead spending variance, and (2) variable overhead efficiency variance:
A. (1) P5,300 U; (2) P1,200 F
C. (1) P5,300 F; (2) P1,200 F
B. (1) P5,300 U; (2) P1,200 U
D. (1) P5,300 F; (2) P1,200 U
Problem 47. Zamora and Co. Inc purchased a Cadillac automobile with little cash down and signed a note, secured by the
Cadillac, for 48 easy monthly payments. When the company files for bankruptcy, the balance due on the Cadillac amount to
P6,000,000. The car has a book value of P8,000,000 and a net realizable value of P4,000,000. The unsecured creditors of
Zamora and Co. can expect to receive 50% of their claims. In the liquidation, the bank that holds the note on the Cadillac should
receive:
A. P6,000,000
B. 5,000,000
C. 4,000,000
D. 3,000,000
Problem 48. Zero Na Corp. has been undergoing liquidation since January 1. As of March 31, its condensed statement of
liquidation and realization is presented below:
Assets:
Assets to be realized
P1,375,000
Assets acquired
Assets realized
Assets not realized
750,000
1,200,000
1,375,000
Liabilities:
Liabilities liquidated
P1,875,000
Liabilities not liquidated
1,700,000
Liabilities to be liquidated 2,250,000
Liabilities assumed
1,625,000
Revenues and Expenses:
Supplementary charges
Supplementary credits
P3,125,000
2,800,000
The net gain (loss) for the three-month period ending March 31 is:
A. P250,000
B. (325,000)
C. 425,000
D. 750,000
Problem 49. Ramos, Silva and Torre formed a joint venture. Ramos is to act as manager and is designated to record the joint
venture accounts in his books. As manager, he is allowed a salary of P12,000. Remaining profit (loss) is to be divided equally.
The following balances appear at the end of 2014 before adjustments for venture inventory and profits
Joint venture cash
Silva, capital
Torre, capital
Debit
P48,000
3,000
Credit
P27,000
The venture is to terminate on December 31, 2014 with unsold merchandise costing P10,400.
Assuming that the joint venture profit is P5,000, what is the balance of the Joint Venture account before the distribution of profit?
A. P6,400 (Credit)
B. 5,400 (Debit)
C. 19,000 (Debit)
D. 15,400 (Debit)
Problem 50. On October 1, 2014, A,B, and C entered into a joint venture business. They were to market a special alarm device.
The venture profits and losses were to be shared into 5:3:2 ratio, respectively. On December 31, 2014, while the joint venture is
still uncompleted, the three participants decided to recognize the profits or losses for the three months period. The inventor is
listed at 25% above cost at P50,000. The joint venture account has a debit balance of P24,000. No separate books are
maintained for the joint venture.
What was the joint venture profits (losses) for the three months period?
A. P16,000
B. 26,000
C. (24,000)
D. 13,500