Elijah Joyce M.

Anilao October 10, 2021

ACCOUNTING REVIEW

SEMI-FINALS

FINANCIAL ACCOUNTING AND REPORTING

1. MAMSHY Company started business at the beginning of current year. The entity established
an allowance for doubtful accounts estimated at 5% of credit sales. During the year, the entity
wrote off P50,000 of uncollectible accounts.

Further analysis showed that merchandise purchased amounted to P11,000,000 and ending
merchandise inventory was P2,500,000. Goods were sold at 30% above cost.

The total sales comprised 70% sales on account and 30% cash sales. Total collections from
customers, excluding cash sales, amounted to P6,000,000.

What is the amount of sales on account?

A. 10,500,000
B. 18,750,000
C. 7,735,000
D. 8,400,000

Answer: C. 7,735,000

Goods Available for Sale P11,000,000

Ending Inventory (2,500,000)
Cost of Goods Sold 8, 500,000
Markup on cost (30% x 8,500,000) 2,550,000
 Total Sales 11,050,000
Cash Sales (30% x 11,050,000) (3,315, 000)
Sales on Account P7,735,000

2. LILIA Company prepared an aging of accounts receivable on December 31 and determined

that the net realizable value of the accounts receivable was P2,500,000.

Allowance for doubtful accounts on January 1 350,000

Accounts written off as uncollectible 250,000
Accounts receivable on December 31 2,800,000
Uncollectible accounts recovery 60,000

What amount should be recognized as doubtful accounts expense for the current year?

A. 300,000
B. 200,000
C. 150,000
D. 100,000

Answer: A. 300,000

Allowance for doubtful accounts - January 1 350,000

Recovery of accounts written off 60,000
Doubtful accounts expense (SQUEEZE) 140,000
Total 550,000
Accounts written off 250,000
Allowance for doubtful accounts - December 300,000
31
3. MADDY Company provided the following data for the current year:

Allowance for doubtful accounts - January 1 1,000,000

Sales 10, 000,000
Sales returns and allowances 850,000
Sales discounts 200,000
Accounts written off as uncollectible 200,000
The entity provided for doubtful accounts expense at the rate of 5% of net sales.
What amount should be reported as doubtful accounts expense?

A. 435,000
B. 425,000
C. 447,500
D. 415,000

Answer: C. 447,500

Sales 10, 000,000

Sales returns and allowances (850,000)
Sales discounts (200,000)
Net Sales 8, 950,000

Doubtful Accounts Expense (5% x 8, 447,500

950,000)

4. At year-end, LALA Company received two P2,000,000 notes receivable from customers in
exchange for services rendered. On both notes, interest is calculated on the outstanding
principal balance at the annual rate of 3% and payable at maturity.

The note from MIMI Company, made under customary trade terms, is due in nine months and
the note from NANA Company is due in five years.

The market interest rate for similar notes at year-end was 8%. The compound interest factors
to convert future value into present value at 8% follow:

Present value of I due in nine months .944

Present value of 1 due in five years .680

What is the total carrying amount of notes receivable at year-end?

A. 1,624,000
B. 2,747,200
C. 3,564, 000
 D. 1,782,000

Answer: C. 3,564, 000

Principal 2,000,000
Interest for 5 years (2,000,000 x 3% x 5) 300,000
Maturity value 2,300,000
Multiply by present value factor .680
Present Value of Note 1,564, 000
Add: Face amount of Note 2,000,000
Carrying Amount 3,564, 000

5. On January 1, 2020, MIRA Bank made a P1,000,000, 8% loan. The P80,000 interest is
receivable at the end of each year, with the principal amount to be received at the end of five
years. At the end of 2020, the first year's interest of P80,000 has not yet been received because
the borrower is experiencing financial difficulties. The borrower negotiated a restructuring of
the loan.

The payment of all of the interest for 5 years will be delayed until the end of the 5-year loan
term. In addition, the amount of principal repayment will be dropped from P1,500,000 to
P700,000.

The PV of 1 at 8% for 4 periods is .735. No interest revenue has been recognized in 2020 in
connection with the loan.

What amount should be reported as interest income for 2021?

A. 80,000
B. 52,920
C. 48,960
D. 64,680

Answer : D. 64,680

Present value of principal (700,000 x .735) 514,500

Present value of interest (80,000 x 5 = 294,000
 400,000 x.735)
Total present value of loan 808,500
Multiplied by: 8%
Interest Income for 2021 64,680

6. Motorola Company incurred the following costs:

Materials 900,000
Storage costs of finished goods 180,000
Delivery to customers 40,000
Irrecoverable purchase taxes 80,000

At what amount should the inventory be measured?

A. 880,000
B. 760,000
C. 980,000
D. 940,000

Answer: C. 980,000

Materials 900,000
Irrecoverable purchase taxes 80,000
Total cost of inventory 980,000

7.At year-end, Knorrr Company purchased goods costing P650,000 FOB destination. These
goods were received at year-end. The costs incurred in connection with the sale and delivery of
the goods were:

Packaging for shipment 10,000

Shipping 15,000
Special handling charges 25,000

What total cost should be included in inventory?

 A. 545,000
B. 535,000
C. 520,000
D. 650,000

Answer: D. 650,000

When goods are purchased FOB destination, the seller is responsible for costs incurred in
transporting the goods to the buyer.

ADVANCE FINANCIAL ACCOUNTING AND REPORTING

1.KEI Co. is constructing a tunnel for P800,000,000. Construction began in 2017 and is
estimated to be completed in 2021, On December 31, 2019. KEI has incurred costs totaling
P356,000,000 with P85,000,000 of that incurred in 2019. P143,000,000in 2018, and the
remainder during 2017. Belgium believes that it completed 30% of the tunnel during 2019,
although that may change based on future activity. KEI Co. uses PFRS 15 for its accounting and
regards its cost numbers as very uncertain (cost recovery method/zero-profit approach/point in
time).

What amount of revenue should KEI Co. recognize for the year ended December 31, 2019?

A. No revenue should be recognized until the contract is completed in 2021.

B. P356,000,000
C. P240,000,000
D. P85,000,000

P85,000,000 costs incurred in 2019 = revenue recognized in 2019.

Under the costs recovery (zero-profit approach/point in time) of construction accounting,
revenue is recognized up to the extent of costs incurred as long as it is probable will be
recoverable

2. MYVERN, Inc. has a contract to construct a large hotel for P12,000,000. The contract was
signed on January 2, 2014 and it was expected that the hotel would be complete on December
31, 2017. At the date the contract was signed, MYVERN, Inc. anticipated the costs of
construction would total P11,000,000. At the end of 2015 the total cost estimate rose to
P11,870,000 and at the end of 20x6 the total cost estimate rose to P12,400,000. Due to certain
circumstances, MYVERN, Inc. believes there are inherent hazards in the contract beyond the
normal, recurring business risks. MYVERN, Inc. expects to recover all its costs under the
contract.

Under these conditions, what amount of loss, if any, should MYVERN, Inc. recognize in each of
the following years?

2015 2016
A. P870,000 P400,000
B. 0 P400,000
C. P870,000 P530,000
D. 0 0

20x5: P12,000,000 > P11,870,000. No loss

20x6: P12,000,000 P12,400,000 = P400,000 loss.

3. The LEONA Company has entered into a 5-year fixed price construction contract to build a
factory. The contract value is P20,000,000 and the estimated costs are P16,000,000.

At the end of the first year, LEONA can estimate the outcome of the contract reliably. It has
received cash payments to the value of P8,600,000 and incurred costs of P6,000,000.

At the end of the first year, what amount should be recognized as revenue in the financial
statements, according to PFRS 15?
 A. P3,200,000
B. P7,500,000
C. P6,000,000
D. P8,600,000

Answer: 7,500,000

P20M x 6/16 = P7,500,000

4. MALAYA Corp. owns 100% of MABUHAY Corp.'s common stock. On January 2, 2021, MALAYA
TO MABUHAY for P40,000 machinery with a carrying amount of P30,000, MABUHAY is
depreciating the acquired machinery over a five-year life by the straight line method. The net
adjustments to compute 2021 and 2022 Profit Attributable to Equity Holders of Parent or CNI
Attributable to Controlling Interests before income tax would be an increase (decrease) of

2021 2022
A. P ( 8,000) P2,000
B. (8,000) 0
C. (10,000) P2,000
d. (10,000) 0

When computing Profit Attributable to Equity Holders of Parent, the objective is to restate the
accounts as if the intercompany transactions had not occurred in 2021 the gain on the sale of
the equipment (P40,000-P30,000= P10,000) must be eliminated since the consolidated entity
has not realized any gain. Also, in 2021 and 2022, some depreciation expense must be
eliminated because the subsidiary computed depreciation based on a cost of P40,000 rather
than on the original carrying amount of P30.000. Additional depreciation of P2,000 [(P40,000-
P30,000) /5] must be eliminated Therefore, the computation would be:

20x5 20x6
Unrealized gain on sale of (10,000)
machinery
Realized gain on sale of 2,000 P2,000
machinery
 Net adjustments P ( 8,000) P2,000

5. LALA Company owns 75% of YAYA Company. On December 31, 2021, the last day of the
accounting period, YAYA sold to LALA a noncurrent asset for P200,000. The asset's original cost
was P500,000 and on December 31, 2021 its carrying amount in YAYA's books was P160,000.
The group's consolidated statement of financial position has been drafted without any
adjustments in relation to this non-current asset.

What adjustments should be made to the consolidated statement of financial position figures
for retained earnings and non-controlling interest?

Non-Current Asset Retained earnings

A. Increase by P225,000 Increase by P75,000

B. Increase by P300,000 NO CHANGE
C. Reduce by P30,000 Reduce by P10,000
D. Reduce by P40,000 NO CHANGE

Upstream sales:

Selling price of non-current asset P200,000

Less: Book/carrying value, date of sale 160,000
Gain on intercompany sale 40,000

Incidentally, the eliminating entry (assuming books are already closed) would follows:

Retained earnings - Parent (75% x P40,000) 30,000

Non-controlling interest (25% x P40,000) 10,000

Non-current asset 40,000

PFRS 10 require the profit on intragroup assets to be eliminated in full. Only the group Share of
the profits of the subsidiary are taken to group retained earnings.
This is because the subsidiary sold the asset to the parent. This gain is not realized from a group
perspective per PFRS 10 and must be removed in full. It is then allocated between the
shareholders of the subsidiary, in the form of retained earnings (group share of the gain) and
the non-controlling interest.

6. MERCY Company owns 65% of FAITH Company. On December 31, 2021, the last day of the
accounting period, MERCY sold to FAITH noncurrent asset for P1,000. The asset's original cost
was P2,500 and on December 31, 2021, its carrying amount in MERCY's books was P800. The
group's consolidated statement of financial position has been drafted without any adjustments
in relation to this non-current asset.

What adjustments should be made to the consolidated statement of financial position figures
for non-current assets and non-controlling interest?

Non-current assets Non-controlling interest

A. INCREASE BY 1,500 INCREASE BY 525
B. Reduce by 200 No change
C. Reduce by 200 Reduce by 70
D. INCREASE BY 1,500 No change

Downstream sales:

Selling price of non-current asset P1,000

Less: Book/carrying value, date of sale 800
Gain on intercompany sale P200

Incidentally, the eliminating entry (assuming books are already closed) would be as follows:

Retained earnings - Parent (100 % x P200)/inv. in S 200

Non-current asset 200

PFRS 10 require the profit on intragroup assets to be eliminated in full. Only the group share of
the profits of the subsidiary are taken to group retained earnings.

This is because the parent sold the asset to the subsidiary. This gain is not realized from o group
perspective per PFRS 10 and must be removed in full. This profit would originally have been
recognized by the parent company, and so there is no impact on the non-controlling interest,
who only have a stake in the subsidiary.

7. On January 1, 2021, MIYA Corp. sold machine for P900,000 to LALA Corp., its wholly owned
subsidiary. MIYA paid P1,100,000 for this machine, which had accumulated depreciation of
P250,000. MIYA estimated a P100,000 salvage value and depreciated the machine on the
straight-line method over 20 years, a policy which LALA continued. In MIYA's December 31,
2021 consolidated balance sheet, this machine should be included in cost and accumulated
depreciation as:

Cost Accumulated depreciation

A. P1,100,000 P300,000
B. 1,100,000 290,000
C. 900,000 40,000
D. 850,000 42,500

When preparing consolidated financial statements, the objective is to restate the accounts as if
the intercompany transactions had not occurred. Therefore, the 2021 gain on sale of machine
of P50,000 [P900,000- (P1,100,000-P250,000)] must be eliminated. Since the consolidated
entity has not realized any gain. In effect, the machine must be reflected on the consolidated
balance sheet at 1/1/20x6 at MIYA's cost of P1,100,000, and accumulated depreciation of
P250,000, instead of at a new "cost" of P900.000. For consolidated statement purposes. 2021
depreciation is based on the original amounts [[P1,100,000 P100,000) x 1/20 =P50,000).

Therefore, in the 12/31/2021 consolidated balance sheet, the machine is shown at a cost of
P1,100,000 less accumulated depreciation of P300.000 (P250,000+ P50,000).
 AUDITING
1. Relationship between control risk and detection risk is ordinarily

A. Parallel
B. Direct
C. Inversed
D. Equal

Answer: Inversed

2. In developing the overall audit plan and audit program, the auditor should assess inherent
risk at the:

Audit plan Audit program

A. Financial statement level Accounting balance level
B. Account balance level Financial statement level
C. Account balance level Account balance level
D. Financial statement level Financial statement level
Answer: A.

3. This involves the application of the procedures to less than 100% of the items within an
account balance or class of transactions. This enables the auditor to obtain and evaluate audit
evidence about some characteristics of the selected items in order to form an opinion
about the characteristics of all items supporting an account balance or transaction class.

A. Audit techniques
B. Selective testing
C. Audit sampling
D. Specific identification

Answer : C. Audit Sampling

4. The following statements relate to the use of audit evidence when testing the operating
effectiveness of relevant controls. Which is false?

A. An auditor who obtains sufficient appropriate audit evidence about the operating
effectiveness of controls during the interim period should no longer obtain additional
evidence of operating effectiveness for the remaining period.
B. An auditor may plan to use audit evidence about the operating effectiveness of controls
obtained in prior audits.
C. If an auditor plans to rely on controls that have changed since they were last tested, the
auditor should test the operating effectiveness of such controls in the current audit.
D. Audit evidence pertaining only to a point in time may be sufficient for the auditor's
purpose, for example, when testing controls over an entity's physical count of
inventories at year-end.

5. NERO, INC. leases an old building which it intends to improve and use for administrative
purposes. The company pays a bonus of P100,000 to obtain the lease. Annual rental for the 10-
year lease period is P280,000. No option to renew the lease or right to purchase the property is
given by the lessor.

After obtaining the lease, improvements on the leased building are made costing P500,000. The
building has an estimated remaining useful life of 19 years.

What is the annual cost (excluding depreciation) of this lease to NERO, Inc.?

A. P210,000

B. P290,000

C. P160,000

D. P170,000

Answer: D. P290,000

Annual Rental P280,000

 Amortization of lease bonus 10,000
Annual cost of lease P290,000

6. What is the amount of annual depreciation (straight-line), if any, should Meru, Inc. record?

A. P40,000
B. P50,000
C. P30,000
D. PO

Annual depreciation on leasehold improvements

( P500,000 / 10 years) = P50,000

7.. What is the entry to record the lease bonus paid at the inception of the lease?

A. Rent expense 100,000

Cash 100,000

B. Prepaid rent 100,000

Cash 100,000

C. Prepaid rent 90,000

Rent expense 10,000

Cash 100,000

D. Rent expense 90,000

Prepaid rent 10,000

Cash 100,000
 TAX
1.The input value-added-tax on purchase of capital goods valued at P1,000,000 shall be spread
over 60 months if the life of property is equivalent to 5 years or more.

The input value-added tax on purchase of capital goods valued at P1,000,000 shall be spread
over the life of property if the life of property is less than 5 years.

A. True, false

B.False, true
C. False, false
D. True, true

2. Which of the following transactions is subject to zero-rated value-added-tax?

A. Generation, transmission and distribution of electricity.

B. Services rendered by banks, non-bank financial intermediaries.
C. Foreign currency denominated sales on direct exports
D. Services rendered by professionals such as CPAs, Physicians and Lawyers

3. S1: Non-resident persons who perform services in the Philippines are deemed to be making
sales in the course of trade or business, even if the performance of service is not regular.

S2: VAT is imposed and collected on every sale, barter, or exchange of taxable goods or
properties.

a. Statement 2 is correct.
b. Both are incorrect.
c. Both statements are correct.
d. Statement 1 is correct
4. Sasuke owns a forest logging concession. He harvested matured logs and sold them to
Sakura. Sakura sold the logs in their original state to Kakashi. For VAT purposes, the sale from
Sasuke to Sakura is:

a. Subject to VAT
b. Exempt
c. Exempt or Subject to VAT depending on the annual gross receipts of Sasuke
d. Subject to VAT if Sakura subsequently sold it

5. ZEKE, a VAT taxpayer, on January 1, 2021, made the following purchases from VAT sellers, for
use in his business. The amounts stated below are not inclusive of value-added taxes:

Machine 1, with a useful life of 20 years P 3 000 000

Machine 2, with a useful life of 3 years 1 800 000

Patent, with usefulness of 10 months 600 000

The input taxes from the purchases, available to Neji, for the month of January 2021:

a. 70,000
b. 79,500
c. 84,000
d. 19,200

Machine(P 3 000 000 X 12%)/60 6,000

Machine 2 (1 800 000 X 12%)/36 6,000
Patent (600, 000 X 12%) 72,000
Total Input Tax 84,000

6. MARE had the following data arising out of sales and purchases in January 2021:

Output taxes on sales P 240 000

Input taxes on purchases of goods sold 238 200

Input taxes on machine bought with a useful 180 000

Life of 12 years

The value-added tax payable for the month:

a) 72,000

b) 60,000

c) 1,800

d) 0

Output VAT 240,000

Input VAT
Goods (238,200)
Machine (3,000)
VAT Payable (1,200)

7. In January 2018, Reyes started a car repair business. He did not expect his gross receipts to
exceed P3 million a year, and thus did not register for purposes of the VAT. He also signified in
his first quarter ITR his intention to be taxed under the 8% income tax rate option. However, by
mid-June 2018, his receipts had already reached the amount of P3,000,050.00. When should
Reyes registers for VAT, and when will he start to become liable for VAT? Will he still pay OPT
under Section 116 of the Tax Code?

A. He should register within 10 days after the end of June or from July 1 to July 10, 2017.
He shall be liable for VAT on August 1, 2018. He will no longer be liable to OPT.
B. He should register within 10 days after the end of December (the last month of the 12-
month period) or from January 1 to 10, 2019. He shall be liable for VAT beginning on the
day of the month following his registration, or February 1, 2019. He will be liable for OPT
from January to December 2018.
 C. He should register in the month that the gross receipts exceeded P3,000,000. He will
become liable for VAT starting July 2018. He will be liable for OPT for the months
January to June 2018.
D. None of the above.

MANAGEMENT ADVISORY SERVICES

1. In the cost formula of the form Y = a +bX, bX" is the
A. Cost driver
B. Slope of the cost line
C. Intercept of the Y-axis
D. Variable component of the total costs

2. . Which of the following is a characteristic of a contribution income statement?

A. Fixed and variable expenses are combined as one line

B. Fixed expenses are listed separately from variable expenses
C. Fixed and variable manufacturing costs are combined as one line item, but fixed
operating expenses are shown separately from variable operating expenses
D. d Fixed and variable operating expenses are combined as one line item, but fixed
manufacturing expenses are shown separately from variable manufacturing expenses

3. Which of the following costs is treated differently under absorption costing and variable
costing?

A. Indirect labor costs

B. Straight-line depreciation of delivery vehicle
C. Annual rental of office building
D. Straight-line depreciation of assembly machine

4. All else constant, if the selling price increases,

 A. Total variable costs will be higher than expected
B. Total contribution margin will be lower than expected
C. Per-unit contribution margin will he higher than expected
D. Contribution margin percentage will be lower than expected

5. MAMAMIYA Company manufactures a single product uses a normal activity of 10,000 units
to set its standard costs. Variable production costs are P 10 and fixed production costs are P
75.000. For this year. MAMIYA produced 12,000 units and sold 10,500 units.

What is the ending inventory under the absorption costing?

A. P8,125
B. P24.375
C. P8,750
D. 26,250

Ending inventory: (12,000 units - 10,500 units) x (10 + (75,000 + 10,000)] = P 26,250

FFOH per unit is based on in order of priority): 1) Normal (Budgeted) production 2) Actual
production > Any difference between normal and actual production is explained by the
volume variance.

Volume variance is based on the formula: (AP - NP) x unit FFOH

6. LALA Company produces and sells only two products. Yang and Yin. 15 units of Yang are sold
for every 10 units of Yin. Variable costs as a percentage of sales in pesos are 60% for Yang and
85% for Yin. Total fixed cost is P 150,000. If the total fixed cost of LALA Company will increase
by 30% next period, what amount of sales would be necessary for Yin to break-even?

A. P111.429
B. P 390,000
C. P 260,000
D. P 650.000
Sales mix: Yang — 3 units (60%) vs. Yin → 2 units (40%)

Weighted average CM ratio: 40% (60%) + 15% (40%) = 30%

Over-all break-even sales: (150,000) 1.30 – 30% = P 650,000

Break-even sales (for product YIN only): P 650,000 x 40% = P 260,000

7. During 2020, SASA Co. supplied hospitals with a diagnostic kit for P 120. At a volume of
80,000 kits. Albay had fixed cost of P 1,000,000 and a pretax profit of P 290,000. Due to an
adverse legal decision. SASA's 2021 liability insurance increased by P 1.200.000 over 2018.

Assuming volume and all other costs remain unchanged, what should the 2021 selling price be
it SASA is to make the same 2020 pretax profit?

A. P 122.50
B. P 140.00
C. P 135.00
D. P 240.00

2020: sales = 9.6 M → CM = 1M + 200,000 = 1.2 M → VC = 8.4 M = 80,000 units x P 105

2021: FC = 1M + 1.2 M = 2.2 M → CM = 2.2 M + 200,000 - 2.4 M = 80,000 units x P 30

Since 2019 volume and all other costs remain unchanged: Selling price - 30 + 105 = P 135

LAW
1. AMY, a duly authorized agent of PETER, wrote a letter to Betty on August 1, 2021, offering to
sell Peter's only Mercedes Benz car for P2,000,000.00 cash. On August 3, 2021, Betty wrote a
letter to Amy stating that he was accepting all the terms of the offer, which letter was received
by Amy on August 5, 2021. Before Amy could relay such acceptance to Peter, he died in a
vehicular accident on August 6, 2021.

A. The contract was not perfected because Peter, the real party to the sale, died before the
acceptance came to his knowledge.
B. The contract was perfected on August 1, 2021.
C. The contract was perfected on August 3, 2021.
D. The contract was perfected on August 5, 2021.

Answer: D. The contract was perfected on August 5, 2021.

2. Which of the following contracts is rescissible?

A. Contracts entered during a hypnotic spell.

B. Contracts entered in a state of drunkenness.
C. C. Contracts entered to defraud creditors when the latter cannot collect the claims
due them.
D. Contracts where both parties are incapable of giving consent.

Answer: C. Contracts entered to defraud creditors when the latter cannot collect the claims
due them.

3. Angela, guardian of Eduardo, a minor, sold the “palay” harvested from the land belonging to
Eduardo for P52,000.00. The play had a value of P58,000.00. At the time of the sale seven
months ago, Eduardo was 17 years old. Eduardo wants to recover the damages he suffered
under the contract entered by his guardian. What is the remedy available to Eduardo?

A. Annulment because Eduardo was only 17 years old at the time the sale was made by
Angela.
B. Rescission because Eduardo suffered lesion of P6,000.00.
C. Both rescission and annulment.
D. Neither rescission nor annulment.
Answer: D. Neither rescission nor annulment.

4. On January 1, 2021, Derek and Cecil agreed that Derek would deliver a specific agricultural
land on July 1, 2021, to Cecil. From January 1 to June 30, 2021, Derek harvested “palay” from
the land worth P30,000.00. He actually delivered the land to Cecil on September 30, 2021. At
that time, crops valued at P25,000.00 that grew beginning on July 1, 2021, remained
unharvested. Cecil had a personal right against Derek for the delivery of the thing and its fruits
beginning on:

A. January 1, 2021.
B. June 30, 2021.
C. July 1, 2021.
D. September 30, 2021.

Answer: C July 1, 2021

5. Betty appointed Marry as his agent to purchase a parcel of land belonging to Ella. Betty
promised to give a commission of P10,000.00 to Marry if she can present the deed of absolute
sale signed by Ella in favor of Betty on or before December 31, 2021. The condition of the
obligation is:

A. Negative.
B. Positive.
C. Impossible.
D. No condition exists

Answer: B. Positive

6. Dany was obliged to deliver a specific car to Meriam on May 31, 2021. On such date,
however, Dany failed to deliver the car. Meriam also did not make any demand for the delivery
of the car.
 A. Dany was in delay when he failed to deliver the car on due date.
B. Dany was not in delay when he failed to deliver the car on due date.
C. Dany would be on delay only if Meriam made a demand for the delivery of the car on or
before due date.
D. Dany was in delay whether demand was made or not since time was of the essence of
the contract.

Answer: B. Dany was not in delay when he failed to deliver the car on due date.

7. Harry is obliged to deliver his only horse to Elsa on May 31, 2021. Elsa made a demand
against Harry for the delivery of the horse on May 31, 2021. However, Harry failed to deliver
the horse. In view thereof, Elsa consulted you and ask which of the following remedies are
available to him.

I. Compel D to deliver the horse to him.

II. IL Get a horse from another person at D's expense
III. Demand payment of damages from D.

Which of the foregoing remedies may be availed of by Elsa?

a. I and III.
b. II and III.
c. I only.
d. II only.

Answer: A. I and III.