ReSA The Review Schoo! of Accountancy ‘Tel. No. 735-9807 & 734-3989 Financial Accounting & Reporting Feb. 09, 2019 (Saturday) First Pre-board Examination aaeenee 8:00 a.m. to 11:00 am Muttiple Choice Znstraction: Select the correct answor for each of the following Mestions. Mark only one answer for each item by shading the box | Serresponding to your choice on the answer sheet provided. Strictly Pe crasures are allowed. ise pencil 0. 2. Computations are not necessary, 3. Velvet Corporation’s trial balance contained the following acfount balances at December 31, 2019: Investment to profit or loss securities 150,000, Prepaid insurance 30, 000 Cosh and cash equivalents 330,000 Inventory 900,000, Equipment and furniture, net 990,000, Patent, net 120,00, Recounts receivable 480,000, Land (held for capita? apprecistions 1,200, 000 Non-current Asset held. for sale (ait value Pag0, 000) 596, 00 How much is the total currant assets im Velwet's Wecember 31, 2019 Statement of financial position? 2. P1,890, 000 2,299,090 b. P2, 010, 000 0F, 008 2. On September 30, 2018, when the carrying amount of the net assets of Segment ¢ was P14,090,/000, X Conpany Signed a binding contract to sell egment C for P12,000,000. The sale is expected to be completed by January 31, 2019. The ‘company continued te operate segment C throughout 2018. Total Revenue of seqnen™ fcr the whole year was, P16,000, 000 (revenue from Janvary 1, 2018 to Soptorber 30, 2618 wan P10,000,000); operating costs from January i, 701% to Tcprember 30, 2018 was P6,000, 000, operating costs from October 1, 2018 to ever ar 18 was, P3,000,000. In addition, prior to sanuary #, 01), the fontract obliges x Company to terminate certain enployeer oF ueaite curring termination cost of P2,000,000 to be paid of itive 29, 2u19. As of December 31, 2018, the recoverable amount of the net asset uf cement C is P12, 000,000. of % Company, what amount should In the statement of comprehens be reported for its discontinue s. (P2,000, 000) b. P1,000, 000 3. On January 2, 2018, Chronic Company is oa plan to sell a manufacturing) facility and has ani ro locate a buyer. Chronic Company doos not intend r¢ r the Facility to a buyer until after it has completed the b: af uncompleted customer orders. The facility was constructed for a rotai of P6,300,000. Ite estimated useful life was for a period of 20 yeurs and with an estimated salvage value of P300, 000. i, the carrying value of ‘he facility is 4,300,000 P4,500,009. Aw nf Dorember 31, 2018, Chronic e Eacility has a ha of January 2 and a recoverable valve of Company has completed the custaners* sedi recoverable amount of P4, 77%, 00 On December 31, 2018, Chronic Company shouts! ciassity the facility as a. Property, plant equipment vatse4 at P4, 360, 300 Property, plant and equipment! er P4, 105, 0% Non-current asset held for gale ard valued at PA, 275,000 Non-current asset held for disyosal ind valuca at 4,100,000ReSAt The Review School of Accountancy % Page 2 of 12 When preparing a draft of ot. vsar 7018 statement of Cinancial position, Mawkeye Company, reported ass~tr totaling P1,750,000- Included in the n asset section were the toliowca ‘Treasury shares of Hawkeye, al cost 48,000 idle machinery 22,400 Cash surrender value of Life incurance on corporate Executives 27,400 Unrealized lose on Inveetment st tair value to other Comprehensive income 16,800 Deferred origination cost an financial Liability 50,000 Deferred origination cost on Finsncial asset 75,000 what amount should ankey=') issets be reported in the December 31, 2018 statement. of financial pesitva" ‘a. P1, 702,000 Pu, 635, 200 bP, 652,000 a. P1, 607,800 5. On December 16, 2018, Fair Company purchased goods costing P200,000. The terms of the purchase wre FOB shipping point. Costs incurred by Fair Company in connection with ihe purchase and delivery of the goods were 28 follows: Nornal. freight checges, P6,000; handling charges, P4, 0005 insurance on shipment, 1,000 =rd abnormal freight charges for express shipping, P2,400. The cade ware received on December 20, 2018, what amount should be aiied to of inventory? a. None c. 13,400 b. 11,000 3. P 215,400 6. The draft financial statements of Blemish Company, for the year ended Decenber 31, 2018 are currently under consideration by the directors. The Shareholders! equity for the yeac is shown as P2,600,000- Since December’ 31, 2018 the following event: nuve occurred, But have not been reflected in any way in the draft financial statements to that date. Teen A - Tt was discovered thir an error was made in arriving at the inventory figure at December 3°, 2018. Inventory which hed 2 cost of P500;D00 ith # net realizable value of P400,000 were omitted. item & - In December 7010 flans to merge with Sahara Company were announced and the company will he issuing ordinary shares with @ total value of P3, 000,000 he Board of directors declared a 2, 000,00 ef their outstanding shares. Par value ‘the rine of declaration the shares are tem € — On Cecember 31, 201 shares dividend represent ing of company shares was P1.00 tut Selling at! P1.50 per share af shareholders’ equity should Blemish Company What is the adjusted amou veport, in its December J], 239 statement of financial position? 2, 600,000 =. P6, 000,000 3,000, 000 4. P9,090,000 ). Martian Company had sales of F2,000,100 ducing the month of Pecember 2018 Tertilonce "has shown that merchandise equaling 7% of sales will be expeTned within 30 days and additional 3% will be returned within 90 days ceeeeeg “gerchandise 15 "cadily’ reszlable. | Tn addition, merchandise GSialing 154 of sales will be exchanged for merchantlize of equal or Greater value. What anounc shold Martian Company report for net sales in rer gent of conprehensive income Tor the month of December? 3. P1,800,000 + P21, 569,000 1,700, 000 gd. P1, 500, 000 009 shares of Fleet Company 40,000" shares of P100 8. Bench Company owns ty Cicipatina preference shares and 2,000 shates 6s cumulative, nonpar Bare ee Se grdinary sharcs. boring year 2018, Fleet Company declared 20 of FP Rgidends of P480,000 on preference share. Wo dividends were and peld sivianc’, Year 2017. Tm addition, Bench received 2 58 ordinary declared oF Pai¢ do Hct hori the quoted market price of Fleet's ordinary share dividend, Foor ignaresitist_anount ‘should ‘Bench “Company report as shares 08 cbge in ite 2018 statement of comprehensive income? 2 pe4, 000 ¢. FA 000 b. P25,000 ee _ sonnb EXAMINATE PRACTICAL ACCOUNTING 1 ~ FIRST PREBOARD EXAMINATION (Batch 37)fo KeSAr 2 KedA: Ine Keview Scnoo! ot Accountancy Page $ of 12 59. Seattie compan 4 Provides mem, ELS beat foe 4,000 each, Seattle” Company sho Enea ee MOOHIR fac: it 28 lor P4e.000 por anmn, Seattle Company sells nove g ets aed services “wpucetcly. If a purchaser of @ boat te buy Thue, eet aCEstive. fox 2 year there lo a 98 lacount on the whale package, Soa Ghe, "package" coats 7320, 000 Leas Pib, 00 (St discount). On July 1, 2018 Seattle Company has sold 2 bout for a package. On Decenber 1, 2018, Seghive Company has alse sold 2 teats for a eackage price, What enount of Reoring emvenie should Sest!te Company ceport in its Decenber 31, 2018 Bl P22, 66 reper R20, On december , 2018, sriecnt Company Mos started its operation retalts Store for electronic piri. it iz atteacting customer base by allowing he customer ta hove the cra pradict tree. The customer is under no obligation to take further products. As of December 31, 2018, Trident company has distriouted 7,090 electconse gaits for free and these parts Were plitchased at P25 coc. Also ax nf Nereaber 3, 2019 the company has Sold 200,000 parts fee "a0 Now should the 2,000 parts distributed be Shown in'the Beconber 3, 20:8 profst or loss of Trident. Company? {as marketing “ost (of £50,007 b. aS Gost of sales of P40, (09 ©) deterred cost of 10,0 G. only a diseicsite is teqcites in the notes to fiancial statement A LL. For More Company, che foilewing information fs available Cost of acods sold ® 600,000 Dividend revenie 25,000 Income tax expense 60,000 operating expenses 230,000 sales 1,090,000 Using the natural presents:tun of inuote statement, gross profit 3. shoals not be reporred Should Se reporred 31 P2495, 00. 3. should be reported a: 2400, 000, 3) Should be reporced at 7425, 90¢ t 12, Shelter Corporation's checkbook palance on Deconber 31, 2018 was £160,000, On the sate dare, Shelter held tie following items in ite sate: 3h 5,000 check paysbie te Shelter, Jéted January 2, 2018, was included tn the Decenber 31 chackbo3s balance a Avedis00 check payable te cheltcs which was deposited December 19 and treldded In tne decenbir 31 cheedbock balance, was returned by the MeL Ge December 20 mask d NSF. Tho check was re-deposited on January 2, 2019 and cleared on Junuery a A’ p25,000 check payable to « supplier and drawn on Shelter’s account, Was dated and recorded on Si, but’ was not mailed until Sanvary 29, 2018. In its december 31, 2018 statercat of financial position, how much should Shelter report a2 cach? a. F156, 600 ‘ Bl 161,500 8 13. Western Company reporced a total cash and cash equivalent of P6,000,000 on December 31, 2018, which includes the following information: semeto certificates of deposits, each totaling 500,000. These smarurivy of 30 days. certificates of deposit have is dated January 12, paper of 2,100,900 which is due in 120 days: cerns on hare amounced to P50, C00. b. A check that 2O1@ in che amount of P250,000. 6. A commercial 4. Currency and western Company has agreed to maintain a cash balance of P500,000 in one of its banks ate sis is not available for withdrawal and to ensure future credit (rpis amount was included in the above Seeereay How much is the vorrect emount of cash end cash equivalents pRae western Company shovld report La its December 31, 2018 statement of Financial position? 2. 4,100, 000 25, 250, 000, bir 3,150, 000 5, 00, 000 PRACTICAL ACCOUNTING | ~ FIRST PRE-BOARD EXAMINATION (Batch 37) asPage 4 of 12 its accounts receivables as collateral ‘the bank assesses a 3% finance fee and What would be the journal entry to ReSA: The Review School of Accountancy 14. Moon Inc assigns P1,500,009 of for a Pi milion loan with a bank. charges interest on the note at 6 record this transaction: a. Debit Cash for P970,006, debit 1, 900, 090 Finance Charge for P30,000, and ‘edit Notes payable for Debit Cash for 370,000, debit Finance Charge for 30,000, and eredit Accounts Receival:ie fur $1,000,000. tebit Finance Charge for P30,000, debit. ©. Debit Cash for £975, 550, Due from Bank for 500,900 P1, 500, 000. bebst Cash for P910,000, debit Finance charge credit Notes Payable for Pi,900, 000. and credit Accounts Receivable for for P90,000, and company consigned 50 sewing machines to 20,000 each and paid P40,000° in 2018, Matthew reported the sale of returned back to the (or the returned units. On October 1, 2018, Saint Matthew Company’ for ‘sale at transportation cost. On Decenter 31, 30 Sewing machines and 5 sewing machines were consignor. Saint Compary paid Pf,000 tre:ght cost The consignee is entitled to a olnmission of 158 commission on the selling price. The consignea remitted )4n5,000 after deducting a total commission of 135,000. If Sainc Company nas a net profit of 118,000 from the above transactions, what was the orig’nal unit price of the consigned units? ‘3. P10,000 cc. 11,500 b. 210,500 a. P12, 000 16. On October 1, 2018 Terrain Corp. sold merchandise with a list price of 400,000 to Radial on account. Terrain allowed trade discounts of 30%, 20% ‘and 10%. Credit. torms were 2/15, 9/40 and the sale was made FOB destination. Radial paid 4,000 of detivery costs for Radial. On October 4, 2018, Terrain received fro Radial returned merchandise with a list Brice of P100,000 due to minor defects, Radial settled its account in ful! to Terrain, On October 14, 2018, How much net cash Eemittance did Terrain receive? 3. P95, 648 - P144,176 bl P99, 568, al praa,256 17, “The closing raw materials inventory of Webster Manufacturing Company mber 31, 2018. This total includes an item of amounted to P345,000 at De: raw material (material 2ip) realizable value of P80,000: material 2ip was applied to wath @ cost of £100,000 wich an estimated net Innediately after the balance sheet date, Fraduction ard the cost of the finished [roduct where material Zip was applied revealed thar its cost exceeds net eelhing price of producing the fingsned goods. As of Deconber 31, 2014, Ghot amount of raw materiely invartory should Webster Company report? ‘2. P245,000 325,000 b. 265,000 2345, 000 Jed_on_the folloving information. information was avaliable from #mpire Items 18 to 20 are At December 31, 2018, the (o!Jowing Co.'s accounting records Retail Inventory, January 1, 2020 Y P "304, 500, Purchases 1, 193,425 1,732, 500 Additional markups -0- 63,000 366,575, £2,100, 990 Available for sale otaled 11,659,000, Markdown amounted to 21,000, 25,000. Abnormal loss, 70,000 sales for the year | bales retuene, P20,@00, normal css, (cost P45, 500) de. what is the cost of Empire's inventory at Oecember 31, 2018 under the average method? : a. 224,574 P228, 994 b. P24, 645 a. P34, 500 inventory at December 31, 2018 under the at is the cost of Enpicets D nethod? reas 74 c. £926,994 Bl ead, 638 Gi psas! S00 19. Se aMINATION Each PRACTICAL ACCOUNTING | ~ FIRST PRE- BOARD EXAMINATION (Batch 37)ra / RSA: The Revi Res 1 Review School of Accountancy Page 5 of 12 What is the tis the cost of Empires fi conventional we seat pire!s Saventory at Oecember 31, 2018 under the a. P2245 b peated ec. £226,994 8 P345,500, a Stall Com 1 Company sells werchandise with a term of 2/20, n/30 and uses the net On September 30, 2018, fe Servs a fire at Stell Company’s only warehouse caused : damage to its entire inventory. Based om recent history, Stall has gross profit of 30! uf pet sales. The following information is available from stall's records the nine months ended Septem sala 15 for th ded September 30, Inventory at 01/01/13 P 600,000 Total recorded purchase [ine'uding the total cost of nerchandise received from consignment) 7500,000 from January to date of tire 4,900, 090- Total freight cost of goods purchased and received 80, 000 Total creait meno received on goods purchased and received 250, 000 Total discounts taken on purchases 90, 000: Invoice received for goods purchased but still in transit shipped on September 30, 2018, FO = ‘ipping point (excluding the freight Cost of 5,000) 150,000, Invoice purchased but atill in Loansir, Free Alongside the Carrier, (excluding tne fraazit cn insurance cost of P15, 000) 250,000 Total sales delivered and recorded from January Lo sate of fire 3,724, 000 Unrecorded sales invoice for goods delivered 392, 000 Total sales returns accounted and recorded to date of fire 98, 000 Total sales return recorded bul the goods has yet to be received 78, 400 + total discounts net taken by customers 24,000 A physical inventory resuited into the recovery of inventory that can Still be sold for P70,000. What as th: destroyed by fire? 1, 400, 006 c+ 21,665,000 bi. PL, 635, 000, 3. 21,930, 000 ‘estimated cost of inventory alos, Inc. uses International Fiaancicl Reporting Standards (IFRS). Ta 2018, Rios, Inc. experienced a decline in the value of its inventory Zeeulting in a write-down of its inventory from P240,000 to 200,000. The Egapany used the loss method in 2012 tc record the necessary adjustment and uses an allowance account © ice inventory to NRV. In 2019, market ane gieions have improved dramatically and Rios, Inc.'s inventory i to an WRV of P250, 000, iinich of the following will Rios, Inc. cecord in 20197 ‘A debit to Recovery of tavent=ry Loss for P40,000. ER Cteait to Recovery of Inventory loss for P50,000. | A gebit to Allowance to Reduce Inventory to NRV of P40, 000. SR Steait co Allowance to Reduce Inventory to NAV of P50, 000 23. Chester Company, a grocery setailér operates | a customer Loyalty programe, Te grants programme senbers ioyalty points when they spend 2 Pree tted’ anount on geocecres, Programe wenbers can redeen he points seers ther groceries. The points have ao expiry date. During the year tee eereeneity grants 300,000 points, but managenent expects that only | 3o1000 ‘points will be redeemed. he management’ of Chester | Company | 20,000 pointe me value or each loyalty point to be Pl, and deters | ectinates ‘The amount of P100,000. During the year 2018, the company fad | revenue Torond points, but during the year 2019 the management revises redeened tration, it now expects to redeen 90,000 points. During 2018) | 50,000 points were redeemed imnae amount of revenue frou loyalty programme should Chester Company wea gnize for the year ended Decenber 2b, 20197 “a. 30,000 cP $0,000 b. P40,000 &. F100, 000 NATION 7) aw PRACTICAL ACCOUNTING I — FIRST PRE-BOARD EXAMINATION (Batch 37) Gass))ReSA: The Review School of Accountancy Page 6 of 12 Etems 24 and 25 are based on the following information: Gavin Company, a g¥ocery 1stailer operates a customer loyalty programme. Tt grants programme menbers loyalty points when they spend a specified amount on groceries. Pronrare memieze ean cedeon the points for further groceries. The points lave t. expivy date. During the year 2018, the entity grants 200,000 porns, but’ management expects that only 160,000 points will be redeemed, The management of Gavin Company estimates the Tair value of each ioyaity point to be Pl, and defers revenue in the amount of F200,000. During the yoa 2018, the company had redeemed 80,000 points. In 2019 additional 207,000 Loyalty points were issued but the Eonpany expects het to redecn 20%. The related liability on the 2039 loyalty points is P300,000. During 2019, 60,000 and 100,000 points from 2018 and 2019 wore redeemed What amount of revenue fron loyalty programme should Gavin Company recognize for the yeas end beurmber 31, 2019 P 75,000 ee 262,500 ®. pie7; soo 1 p30n, 000 2 it ig the balance of the deterred loyalty revenue as of December 31, 2. None cc. P137,500 b. P1212, 500 a. P300, 000 6. On December 31, 2014, Grand, Inc. sells production equipment to Crosse Gncludes 9 I-year warranty service Manufacturing for’ P4#0, 000. Gledaslt for’ the with the sale of all irs aquipment. The customer receives and pays Cauipment on December 31, 20%4, Grand estinates the prices to be P486,000 for the equipment and P12, Quy tor the warranty, ow mich revenue related to the warranty shovld Grand recognize for the ear 2014? a BAO- PLL, 803 BL Pit, 520 4. P12,000 27. On June 30, 2018, Sky Company, which uses PERS 9, sold an investment in other comprehensive income for ¥i,200,000. “This investment was originally purchased at a cost of P800,060. at the time of disposal, the carrying Bnount of the investment a! fair value was P900,000. The investment has a Felated fair value gain of P10U,000 that was recognized in the fair value reserve. What amount of unresiized gain or loss should be transferred to Fetained earnings immediately after the sale? 3. none fe. P300,000 5. 200,000 a. P400, 000 26 January 1, 2017, Spartan Company, met the criteria for discontinuance of a business seqmont. For the period January 1 through Sctober 15, 2017, the segmeat had revenues of P1,000,000 and expenses of P1,600,000, The assets of the scarent wore sold on October 15, 2017 at a loss for which no tax benefii is available. . In the statement of comprehensive incone for the yea: ended December 31, 2017, how should Sparean report the segment’ s uperations from January 1, 2017 to October 15, 2017? ‘9. P1,000,000 and P1,600,000 should be included with revenues and respectively, as part af the continuing operations. Teported as part of the loss on operations and expenses, b. 600,000’ should be disposal of a segment £600,000 should be reported as an extraordinary loss 71,000,000 should be reportes ag revenues from operations of a discontinued segment. jon sold for P750,000 an old machine 300 and @ book value of Pé00,000. The 29. On December 31, 2018, Foster Cu-vu having an original cost of #1, 35% terms of the sale were as reliouns 150,000 down payment 180,000 payable on Deconber !i each of the next four years the agreement of sale made no nention of interests however, 98 would be a The 2ateemfor this type of transaction. What i9 the amount of interest fear ig should be reported in the siatenent of comprehensive income for the year ended Decenber 31, 20217 ‘a. P12, 385 by 23,748 an a3, 736 IG 1 ~ FIRST PRE-BOARD EXAMINATION (Batch 37) \\ PRACTICAL ACCOUNTIN' \30. Or January 2, 9, OF Accountancy Page 7 of 12 note tron eraks e2, Sad exany receives an 1900,000, 88, 2-year Sun The ee COMMAt ION ua surtlement foe en ooteterding pan ae 88. The imereeevtiling marke" vate of intereat on sneer Sete oo 2018 were contecatg if, Pavabie every December SI and the InterGat due Io In 2019, stroke co: this eves orek®, C&tPEraticn vay tn financial ceisis, and as a reavit of 2oig evelopment, Ground Company expects: that the interest: acereie foe be clita still Be collected on Decenber 21, but a reduced principe! mili Jn “equal annua! anstaliment’ over” the nent tide “yeste frat amount. of : Bpuitnen 1eas/tad debts should Ground Company recognize on December 31, 2019 Vid to its notes receivable? — " a. None . 205,039 b. P140,611 a. 349,541 31, White Farm supply? Te clhite Farm Supply's records for the first 3 months of its existence shou purchases of Come ty Ras follows: No. of Units August . +580 September ‘000 416, 000 October 3.140 270, Total Wee. 09 ‘The inventory of Commodity A at tha end of October using FIFO is valued at P363, 900. Assuming that none of" commodity A was sold during August and September, what value would be shown at the end of October if average cost was assumed? 3. P351, 300 ws 358,662 bl P353, 300 a. P65, 700 32. As of December 31, 20 ‘cle Company has a note receivable from Graham Company, with’ face anount cf £200,009 that pays an annual interest Cf 20,000 every Decenber 7! af che year. The historical effective interest rate is 108. As cf Dezember 31, Graham Conpany is in financial difficulty and indicates it will Le unable to make all payments according to the contractual terms. Below shows the cash flow schedule involving the receivable from Grahan’ ' [Becenber Contractual “ash Expected cash Toss cash Lions lows Flows 7 16,000 4, 000, “TT, 000: “$000 p66, 600 34,000 What amount of impairment loss should Miracle Company recognized on the above receivable as of December 41, 2018? a. 246, 830 266,830 bl 47,513 4. 67,513 33. Assume that the prevailing marker cate of interest at the time the receivable was receive: LE, what amount cf impairment loss should Miracle Company recoquizea on December 31, 20187 . a. P42, 867 rae, 830 b. P46,296 40,000 i 34. Thermal Conpany provides bundled service offering to Moral Company. rt | cnarnee Hora) "conpany P140,000 for initial conection to its network and Sete ag setloeraccsas, to the sauce for Ea yehed wea on oak | TEiwlesfooring services for one you!. Moral Conpany pays. the 140,000 on | sree Sank. Thermal compors. Shormal Conpany determines that if it Ceteber Lnacge a separate fea fer cach vervice if sold separately the fee wea bel Sonneceion, #25000) acess fee, P48,000 and. troubleshooting Bee e000 What cous mout of revenue should Thermal” Company Gisdlose in its ‘December JL 2018 statement of comprehensive incore Felated to the above services? a. 17,500 268,250 Bl paalers 738,750 PRACTICAL ACCOUNTING 1 ~ FIRST PRE-SOARD EXAMINATION (Batch 37)ReSA: The Review School of Accountancy Page 8 of 12 35 and 36 are based on the following inforuntion: January 2, 2016, Ux Shupany receiver @ government loan of 4,006,000" paying a coun Jovoreat of 8 per ysar.” the loan 1a repayable December 31, 2020. sxpiese company's Borrowing cost is 10} per annum. The belowsnarket interest ss priavided by the government to enable Express Company to bear cost of 2% per shnun on the nominal valve of the loan. 35. that amount of deferred Licome should Express Company report in the statement of finane!al irion as of December 31, zon? y fee ” ‘a. none Pose, 372 bl F290, 909 ch pr9s, 793 25. that is the amount of rea?ized grant should the company report in its decenber 31, 2018 statement of ~imprehensive incone? 240/423 #990, 90% P64, 463 Si paatlene The Function Company purchased a jew) polishing machine for P720,000" on 1 April 2018 and received = qovernment grant of P100,000 towards tne capital cost, Conpany policy 1s ta treat the grant as a reduction in the Cost of the asset. The machine was to be depreciated on a straight-line basis over @ years and way « fed to have @ residual value of P&-000 (0,00 Government grants and government at the end of this peried. under IAS70 ation expense ia respect of the ‘sistance, what should Le the dep: machine for the year ended 31 Doveaber 20187 @. P152,500 1250 b. P 77,500 UL BOT, 188. nt goods and accepted the customer’ P50, 000 Resuming 10% approximates ‘the this journal entry to 38, Equestrain Roads sold P50,009 10: I-year note receivable in exchange. market rate of returns ‘what would be the debit in record the sa! No journal entry uetit Debit Notes Receivable for P50, 000 Debit Accounts Receivab! for °50,000 4. Debit Notes Receivanic rox 48,090 4s collected a a balance of e45,000 before reconciliation, The inclide a deposit of P2,300°made on the last day penne onth, The baak statenent shows a collection by the bank of Ps40 oe ne mertgmer's check for P3:0 was returned because it was NSF. A Shock for P45 was recorded on the books as P540, and a check The cash account sh bank statement does not 29, eeeeeT fon #79 was recorded 29 197, The correct balance in the cash 2. P45, 512 bag, 728 bl pas, 548 Pai, a 40. On the Decenber 31, 2010 statement ct tinancial position of Vanoy Cé., the current receivables consisted of the following: trade accounts receivable 75,000 12,000) ctible accounts wos lost in transit (Novenber 2018) 3,000 by Vanoy on consignment 2 vanoy ‘s ending inventory) 26,000 use used for storing Allowance for uncolle Claim against shipper for 90 Selling price of unsold goods sent Be 1308 OF cost (not incivded security deposit on lease of waren some inventories Total receivables ‘at December 31, 2016, the corraci igial of Vanoy’s current ‘a. P76, 000 b. P2102, 000 106, 000 132, 000 (ey company keeps its inventory records using ee coaber a1, 2018, the unadjusted balance in the ai. Mineral Makers ‘a physical count on December 31, perpetual system. faseetcey our, UBD" meronamiae ascentony at year oS Ae veaLe Dt goods sold is decreased by Pl, 500 {Ynereaced, and cost seereeced and cos. of goods soid is increased by Pl, 500. Gecvenged and cust of goods sold is increased by Pl, 500 Ancreaed and cost of goods sold is decreased by Pi,500. a7 FIRST PREBOARD EXAMINATION (Batch 37) & PRACTICAL ACCOUNTING es) 3. Inventory is bl Inventory 1s Inventory is Inventory 15Zs 100 ReSA: The Review School of Accountancy 42. a 43. 46. “7. 48. 4. PRACTICAL ACCOUNTING | — FIRST PRE-BOARD EXAMINATION (Batch 37) a Page 9 of 12 eckers uses 803 the periodic Beginning inventory ese, iMentOrY ayatem. ror the cureent month, the the month, cereeey, ef 1,200 units that cost P12 each. During Units at PIT Sy Pay Made lwo curchases? 500 nnits at PL3 each and 2,000 each. Checkers also sold 2,150 units during the month. Using the average cost for the monthe a2 COS! MeLhed, what ia the amount of cost of goods wold P27,845 ‘3 c. P26, 975 P28, 950 & weg Itens 43 to 45 are based on th ayag Farms is into cuitivauing agri 2aveg Taine is into cultivating agricyltival Tamdse As of January 1, 2018 em Located in the provines of Cagayan that consisting of two age group of bearer ‘trees, 3-year old and s-year old. The followin relevant infoi “ . sehowtng: iare sng information: pecs Si Fae] Jan 1, Fair] value Value P, 400, 000 835600; 000 Farm with 3-year O12 Farm with (year ord bearer Em with “oid Beare ‘year old trees started to hear fruit during the 3rd quarter of the year There was no chanze in the fair value cf the contributory asset (land) as Of Decenber 31, 2018. Estimated fair value of fruits ready to be harvested at as of December ‘1, 2078, P600,000. Total fair value of harvested fruits during the your," P750, 000. Tf the bearer plants are cone.dored to have duel purpare, by what, amount of the change in the fair value of the bearer plants that pertains £0 price uring the year? 8 600,000 fc. Pi, 600,000 2. P1,200, 000 3. 2; 800,000 If the bearer plants are considered to nave dual purpose, by what amount of the change in the fair value of the bearer plants that pertains to the physical transformation? ‘3. 600,000 P1, 600, 000 B. P1,200, 000 £21200, 000 Tf the bearer trees aro considered to have a singolar purpose, what is the total fair value of Lhe treex os of becomber 31, 2018? ‘5,200,000 3, ¢00,000, b. P5,800,000 4. P29,000, 000 Wnich of the following itens is matched correctly with its basis of valuation for purposes of reporting en the statement of financial position? 3. Long-term interest note where nominal rare is higher than effective rate > Face value b. Financial asset at tar valce chrough profit or loss > Fair value Less cost to sell . Inventories of Broker traders > Lower of Cost or NAV al Living. plant treated as bearer plant? Cost less accumulated depreciation less accumulated impairment loss Wnich of the following accounts would be included in a post-closing trial balance? 3. Gain on reversal of write-down of inventories 2) Gain on retirenent of treasury shares toss on factoring of receivables Bank service charyes Wich of the following adiusting entries does not require reversal at the beginning of the new accounting period? @, Debit salary expense and crodit salary payable Bl Debit unearned rent and crudit rent revenue ©. Debit prepaid rent and credit rent expense Debit interest zecesvabie end credit interest income Which of the following foims of receivable financing does not require osure in the notes to financial statements related journal entry or d to accounts receivablesrates x 4/19 = 633% ReSA: The Review School of Accountancy Page 10 of 12 >. Pledging c. Factoring b. Assignment a. Discounting 50, Which of these items would not accimpany 2 monthly bank statement? 2, Depositor's checks paid by the bank during the month ©. Copies of deposic in transit at the end of the month Ss Copies of bank desi wemus sasked during the month G. Copies of bank credit menor issued during the month Which of the following icems is not considered in the computation of tetal goods available for sale under the average retail inventory method? Employee discounts c. Mark-up cancellation Purchase discounts ) Departmental transfer-in! rediting cost of goods sald would be rn entry debiting invenrory and nade when + Merchandise is sold and the pezpetual inventory is used. b. Merchandise is Sold and the periodic inventory method is used. Mezchandise is raturned and the periodic inventory method is used. Mezchandice ind the perpetual inventory method is used, 53. Lf a dividend is declares aftex the balance sheet date but before the Financial statements are sothorized for issue the dividend is: a. Recognized as a Liab‘Jity at the balance sheet date Not recognized as a iabilaty at the balance sheet date Recorded as a direct reduction of equity at the balance sheet date ©. Recorded as a reduction against the asset ‘cash’ at balance sheet date 54. Shere premium could NOT arise from s. Tseuance of nion-conver: ole bonds Receipt of donated acuat /cm a shareholder Distribution of sali boaus issue Recognition of compensation expense under equity settled share= basec payment 55, Which of the following ite should be excluded from a company's reported inventory? Goods purchased subject to a buyback agr b) Goods still in transit sold vader FOR De: Goods still in transit purchased unger F08 Seller Goods out on consignmant ureold by the consignee at the balance sheet date $6. Which of the following is telse about the preparation of statement of comprehensive income? sonPincome from operation wxclides any items arising from incidental transactions b. Income rom continuing operation p: operation equals total profit or lo Income tax related to vuntiruing operation shall be disclosed on the face of income statement 1. Other comprehensive income statement after tax us income from discontinued shail be disclosed on the face of income 57. When the allowance method of ceceynizing baa debts expense is used, the Gntry to recerd collection of accounts previously written off would 3. Account receivable ce. Het income b. Allowance for bad debis 4. None of the choices 58. which Of the following 12 false about crroneous Book debit Cash balance per book is over’ Receipts per bank 1s overstated Te should be recorded s ¢ oredis co cash in bank account S. fe ghovld be deducted from balance per book in preparing bank reconciliation following are considered cash for financial reporting To Saving posit segregated for payrent of salaries PRACTICAL ACCOUNTING 1 ~ FIRST PRE-SOARD EXAMINATION (Batch 37) ee) seTIL. Q-month money market sav! Page 11 of 12 IV. Manager's and Traveler 2.1 TT and Iy 98 certificate s checks J ReSA: The Review School of Accountancy / f b. tang Iv 2d, Tn and 43,'r my Wy e 60. Which of the following i= ine wench She feltoning t= incorrect about beater plant? bee aariculceeal eeagteg gooriealtural, produce and expected to Remote Likelihood \of being sold as agriculture! produce unless incidental scrap sale: ©- Gain/Loss from changes in {air value less cost to sell is reported in profir er less Aaticultural’ produce not yet harvested from bearer plant is considered as 9 sepriace nit c 81. Won-adjusting events ater the reporting period include all of the following, except Av major business combinstion after the end of the reporting period b. Expropriation of wajor assets by government after the reporting person ©. Destruction of o major production plant by fire on or before the end of the report ina period. d. Announcing a pian to discontinue an operation after the reporting period. > 62. Which of tho following falis within the definition of related pactios as defined in PAS 247 a. Government dapartment ard agencies BIA supplier with whom tho seperting entity! has a one-year contract for the supply of raw materials ©. Providers of finn in the course of their normal dealings with an enterprise The husbund of @ chief iinancial officer who has the authority to plan, direst and control the antivities of the entity iG 63, The following statements refer to the use of special journals: Statement 1: transactions mat cannot be appropriately recorded in a Special journal are recorded in the general. journal Statenent it. Sales of merchandise on account are recorded in the sales journal while cash sacs are resordee in ehe cash receipts journal. Etatement T7T+ Porshages of any stems on account are recorded. in the purchase journal whale acquisition of any itens for cash is recorded in the cash disbursements joven! 20" omy stavenene Tis ceue aly statement III is false Bl only statement Tz is faise All of the statements are true 8 64. A 1eo-day, 108 interest-bearing note secesvable is disccunted toa bank be 120 after seing held for 30 sys. The proceeds received from the bank “pon discounting wotis br tre 2 "yaturity value Less ene disecuns at 10% Bl Maturity value less the disevunt at 128 C) Maturity value pius the disesunt at 108 Slo Maturity value plus the Aecoant ot 12 ° 65. Statement 1: The Conceptual Framework for Financial Reporting 2010 is asidered « Philippine Financial Reporting Standard. (PFRS) Qiutement| I: Incase of conflict, tne Conceptual Framework for Hinanciel Reporting 7010 prevasis over the Fequi cements of PFRS Statement 11: The Conceptuai Framework sets out the coneepta that Shdsrlie. the preperaticr tut not the presentation of the financial a. True, true, true &. False, false, true \ Bl true, false, true 1. False, false, false © 66. A company using a perpetual inventory system neglected to record a purchase of merchandise on account #t year end. This merchandise was Eritted from the year-end physical count. Wow will these errors attect Gusets, Liabilities, and stockheidors' equity at year end and net income for the year? hities Stockholders' Equity Net Income Assets a. No effect inderstave ‘Overstara: overstate. b. No effect Overstate Understate Understate. = PRACTICAL ACCOUNTING 1 — FIRST PRE-BOARD EXAMINATION (Batch 37)ReSA: The Review School of Accountancy Page 12 of 12 ©. Understate —Unsezstate No effect No effect. 4. Understate Ne effect Understate Understate. 67, The following statements are based on CERS 5 for Sale and Discontinued Operations]: Statement 1: An entity sha!l classify a non-current asset or disposal group as held for sain sf tx carrying amount will be recovered from continuing use rather chan tram a sale trangaction. © Statement II: An entity shai keasuce a non-current asset or disposal group classified as held for vale at the Lower of its carrying amount and valve in use. ‘a. Only statement 1 is false bl Oniy statement 11 is false ©. Roth statements are trie 6. Both statenents are false (Non-current Assets Held 68, The cost ratio computed under FIRS retail inventory method includes a, Net markups but no. markdowns bL Net markdowns but ot ma kis Net markups and markdowns “or purchases only 3. Net markups and sarxdowns tor both purchases and opening stock 69. Which of the following itens is NOT included in the total comprehensive 2. Distribution cost ang Administrative expenses {| UL changes in Revaluation surplus of PPE ¢. Changes in fair wale of Investment at FVOCL S. Cumulative effect of chan in accounting policy 70. On March 1, 2019, SESA Company decided to change from FIFO to Weighted Average periadie inventory system. Assuming the entity 1s using calendar year, the cumulative eifect of the change is determined As Of January 1, 2019 and given a prospective application. bs Of January t, 2019 and given 2 retrospective application. of March, 2019 sd given a prospective application. As of March 1, 2019 and given retrospective application. Sh —_ EX PRACTICAL ACCOUNTING 1 ~ FIRST PRE-BSARD EXAMINATION (Batch 37) (4sS)) eS)