COLLEGE OF THE IMMACULATE CONCEPTION, CABANATUAN CITY ADVANCED FINANCIAL ACCOUNTING AND REPORTING PART I MIDTERM EXAMINATIONS Dela

Paz, Factor and Lamson, partners are in textile distribution business sharing profits and losses equally. On December 31, 2012, the partnership capital balances and drawings were as follows: Dela Paz Factor Lamson Total Capital 100,000 80,000 300,000 480,000 Drawing 60,000 40,000 20,000 120,000

The partnership was unable to collect on trade receivables and was forced to liquidate. Operating profit for the year amounted to 72,000 which was all exhausted including the partnership assets. Unsettled creditors claims at December 31, 2012 was 84,000. 1. Loss on realization of assets a. 360,000 c. 480,000 b. 432,000 d. 516,000 2. Assuming Factor and Lamson have substantial private properties and Dela Paz has not, the final cash distribution to Lamson was a. 78,000 c. 108,000 b. 84,000 d. 162,000 Magno, Sauco, Tan and Tiglao are partners sharing earnings in the ratio of 3:4:6:8. The balances of their capital accounts on December 31, 2012 are as follows:Magno 1,000; Sauco 25,000; Tan 25,000; Tiglao 9,000. The partners decided to liquidate and they accordingly converted the noncash assets into 23,200 of cash. After paying the liabilities of 3,000 they still have 22,200 to divide. Assume a debit balance of partners capital is uncollectible. 3. Book value of noncash assets amounted to a. 25,200 c. 61,000 b. 45,400 d. 63,000 4. Share of Magno in the loss of realization of noncash assets a. 4,792 c. 5,400 b. 5,257 d. 1,000 5. Tans share in the cash distribution a. 6,342 c. 10,800 b. 8,320 d. 14,200 On September 30, 2011, Ramos, Sanchez and Santiago agreed on a joint venture to sell their common stocks of the Golden Copper Mines. Gains and losses are to be based in proportion to the contributed shares. Ramos contributes 6,000 shares which had cost him P 42 a share; Sanchez gave 10,000 shares which had cost P 58 each and Santiago 4,000 shares with cost of P 62 per share. Santiago was to manage the venture for a flat fee of P 3,000 plus expenses. The par value of the shares was P50 and the fair value when the venture began was P40 per share. On October 20, he sold 4,500 sold for P 44 a share and P 3,000 expense were incurred. On November 01, Golden Copper distributed a stock dividend of 20%. Santiago sold 5,000 shares, ex-stock dividend, on November 5 for P 25 a share. On November 15, Golden Copper paid a cash dividend of P 1 per share. On November 22, he sold 6,000 shares for P 28. On December 20, the remaining shares were sold for 35. Santiagos expenses related to the last sale of stocks were P 4,700. 6. Santiagos loss on the disposition of his shares in the Golden Copper mines is a. P 95,420 c. P 105,420 b. 98,140 d. 120,140

7. Assuming the venture was terminated on December 31, 2011, the share of Ramos in the loss of the venture would be: a. P 10,130 c. P 13,130 b. 11,130 d. 12,130 8. If a distribution of proceeds is made on December 31, the share of Sanchez would amount to: a. P 374,650 c. P 381,450 b. 378,500 d. 385,300

Sauco Company, a closely held corporation was undergoing liquidation. The total cash value of Darts bankruptcy estate after all the sale of all assets and payment of administrative expense is P 150,000. Sauco has the following creditors: Sanqui Bank is owed P 75,000 on a mortgage loan secured by Saucos real property. The real property was valued and sold in bankruptcy for P 70,000. The BIR has a P 12,000 recorded judgment for unpaid corporate income tax. Guevara Company has an unsecured claim of P 3,000 which was timely filed. Garcia Electric Company has an unsecured claim of P 10,000 which was timely filed. Talplacido Company is owed P 50,000 in a loan contract by Saucos Note Receivable which was realized P 60,000. Tan Bank is owed P 16,000 which was secured by Saucos inventory. The inventory was valued and sold in bankruptcy for P 2,000. 9. Total amount recoverable by fully secured creditors a. P 50,000 c. P 81,500 b. 6,500 d. 12,000 10. Total amount recoverable by partially secured creditors a. P 50,000 c. P 81,500 b. 6,500 d. 12,000 11. Total amount recoverable by unsecured secured creditors with priority a. P 50,000 c. P 81,500 b. 6,500 d. 12,000 12. Total amount recoverable by unsecured secured creditors c. P 50,000 c. P 81,500 d. 6,500 d. 12,000 13. Alamon Company was indebted to De Leon Company on a P 2,000,000, 10% note. Only interest had been paid to date. Due to its financial difficulty, Alamon Company has negotiated a restructuring of notes payable. P 1,000,000 of its notes payable would be settled by transferring land with a fair value of P900,000 and a carrying value of P 800,000. Settle P 500,000 by transferring 200,000 shares of P 1 par ordinary share with fair value of P 15 per share Modify the terms for the remaining P 500,000 by reducing the rate to 5%, extend the due date three years from the date of restructuring and reducing the principal to P 300,000. PV factor of 10% at three periods, 0.7513; OA Factor of 10% at three periods, 2.4869 What is the gain on extinguishment on P 1,000,000 note? a. 300,000 c. 100,000 b. 200,000 d. 0 14. Gain on Debt Extinguishment on the P 500,000 note. a. 0 c. 2,500,000 loss b. 2,300,000 loss d. 300,000 15. Gain Debt Extinguishment on Modification of Term on the P 500,000 note a. 437,306 c. 237,206 b. 337,306 d. 550,506 Use the following information for numbers 11 to 13: The following selected accounts appeared in the trial balance of Herrera Company as of December 31, 2008.

Installment Receivable 2007 sales Installment Receivable 2008 sales Inventory, December 31, 2007 Purchases Repossessions Installment Sales Sales (Regular) Unrealized Gross Profit 2007 Other Information: Installment Receivable 2007 Sales, 2007

Repossessed Merchandise, December 31, 2008 Gross Profit on Sales Repossession was made during the year. It was a 2007 sales and the corresponding uncollected account at the time of the repossession was P 7,750. 16. Gross profit realized on collections for installment sales in 2007 was a. P 47,250 c. P 43,762 b. 50,537 d. 7,750 17. Gross profit realized on collections for installment sales in 2008 was a. P 87,075 c. P 85,500 b. 88,672.5 d. 88,000 18. Loss on Repossession a. P 1,262.5 b. 487.50 c. P 1,805 d. 7,750

Use the following information for numbers 19 to 20. 19. Materials are added at the start of the process in Cedar Companys blending department, the first stage of the production cycle. The following information is available for July. Work in Process , beginning (60% complete as to conversion cost) Started in July Transferred to the next department Lost in Production Work in Process, end (50% complete as to conversion costs) Units 60,000 150,000 110,000 30,000 70,000

Under Cedars cost accounting system, the costs incurred on the lost units are absorbed by the remaining good units. What are the equivalent units for the material unit cost allocation for FIFO and Average, respectively? a. 180,000; 120,000 b. 120,000;180,000 c. 180,000; 210,000 d. 210,000; 140,000

20. What are the equivalent units for the conversion cost for FIFO and Average respectively? a. 145,000; 109,000 c. 139,000;175,000 b. 109,000; 145,000 d. 109,000;175,000 21. The company employs a process cost system using the weighted average method to determine unit costs. Cost per unit data has been completed for through the molding department. Annual cost and production figures for the Assembly Department were as follows: Beginning inventory (100% as to transferred in: 100% as to materials: 80% as to conversion) Transferred in Transferred to Finishing Department Ending Inventory (100% transferred in: 50% as to materials: 20% as to cost) Cost Data Transferred in Direct Materials Cost Beginning Inventory 82,200 6,660 11,930 Current Period 1,237,800 96,480 236,590 Damaged products were identified on inspection when the assembly process is 70% complete; all assembly materials were added at this point. The normal rejection rate for damaged units is 5% of the units reaching the inspection point. All damaged bikes are removed from the production process and destroyed. 22. Amount of the total production cost of P 1,672,020 that will be associated with the normal damaged units a. 69,167 b. 65,793 c. 59,500 d. 74,228 23. Cost associated with abnormal damaged units a. 69,167 b. 65,793 c. 59,500 d. 74,228

24. On January 01, 2012 Park Company acquired 90% of Strand Company in exchange for 5,400 shares of P 10 par common stock having a market value of P 120,600. Parent and Subsidiary condensed balance sheets were as follows:

Cash Accounts Receivables Inventories Equipment Patents Accounts Payable Bonds Payable Ordinary Shares Share Premium Retained Earnings

Park 30,900 34,200 22,900 179,000 4,000 100,000 100,000 15,000 48,000

Strand 37,400 9,100 16,100 40,000 10,000 6,600 50,000 15,000 41,000

At the date of the acquisition, all assets and liabilities of Subsidiary Company have book value approximately equal to their respective market values except the following: Inventories Equipment Patents 17,100 48,000 13,000

Compute for the partial goodwill a. P 2,600 b. 3,800 c. 14,400 d. 25,200

25. Non controlling interest on January 01, 2012 a. 10,600 b. 11,200 c. 11,800 d. 13,090

26. Consolidated Retained Earnings Attributable to Parent a. 48,000 b. 52,000 c. 84,900 d. 89,000

27. Simplicity Company is a 90% owned subsidiary of Prudence Company acquired several years ago at book value equal to fair value. For the years 2011 and 2012, the companies report the following: S, Company Net Income P, Company Net Income 2011 300,000; 2012 400,000 2011 - 80,000; 2012 60,000

The only intercompany transaction between the two was the sale of land having a book value of 20,000 and sales prices of 30,000. If the land was sold downstream on January 01, 2011 and was still not sold on December 31, 2012, compute for the Profit Attributable to Equity holders of Parent for 2011 and 2012 respectively. a. 363,000; 454,000 b. 362,000; 454,000 c. 372,000; 460,000 d. 362,000; 460,000

28. Consolidated net Income for 2011 and 2012 respectively a. 362,000; 454,000 c. 370,000; 460,000 b. 380,000; 460,000 d. 372,000; 460,000 29. In the Faye Company, the cost of goods sold for November was P 156,000, finished goods inventory decreased by 13,000 and work in process inventory increased by 9,000. Find the total manufacturing cost for November. a. 143,000 b. 134,000 c. 152,000 d. 160,000 30. Cost incurred during the November were 15,000 for materials purchased, 40,000 for direct labor and 50,000 for overhead. Materials inventory decreased by 4,000. If cost of goods manufactured in November was 99,000 and beginning work in process inventory was 28,000, find ending work in process inventory. a. 38,000 b. 34,000 c. 30,000 d. 18,000 31. Rural bank has two service departments, the Personnel and the Computing Department. The usage of two service departments output in 2011 is as follows: Provider of Service Personnel Computing Personnel 15% Computing 10% Deposit 60% 50% Loan 30% 35% Budgeted cost: Personnel, P 153,000; Computing P 229,500

Allocated cost to Deposit Department under the direct Method

a. P 237,000

b. 238,431

c. 235,800

d. 191,250

32. Allocated cost to Loan Department under the Step Method, assuming Personnel Department was allotted first a. 237,000 b. 146,700 c. 144,069 d. 191, 250 Total direct labor payroll Direct Labor Efficiency Variance Actual Direct Labor Hours Actual Hours Standard Hours P 193,200 (P2,560) 27,600 400

33. Direct Labor rate Variance a. P 16,800 unfavorable c. P 16,560 unfavorable b. 16,800 favorable d. 13,800 favorable 34. Standard Rate Used a. 6.4 b. 6.5 c. 7.5 d. 7.0

35. Total Direct Labor Variance a. 14,000 unfavorable c. 16,560 unfavorable b. 2,560 favorable d. 400 unfavorable 36. Almazan Corporations standard cost system contains the following costs, computed based on a monthly normal volume of 25,000 units or 50,000 direct labor hours Variable OH Fixed OH Total P 12 8 20

The following pertains to the month of April 2012 Actual FOH Variable Fixed P 316,680 225,000

Actual Production 26,000 units Actual Direct Labor Hours Worked 54,600 hours Total FOH cost variance is a. 25,000 unfavorable b. 17,000 favorable 37. Volume Variance a. 8,000 favorable b. 8,000 unfavorable 38. Spending Variance a. 4,680 unfavorable b. 14,080 unfavorable c. 21,680 unfavorable d. 4,680 unfavorable c. 25,000 favorable d. 25,000 unfavorable c. 25,000 unfavorable d. 13,680 unfavorable

39. Variable Overhead Spending Variance a. 16,680 unfavorable c. 10,920 favorable b. 4,680 favorable d. 12,000 unfavorable Lasco Company has two products: A and B. The annual production and sales of Product A is 800 units and Product B is 500 units. The company has traditionally used direct labor hours as the basis for applying all manufacturing overhead to products. Product A requires .3 DL hours per unit and Product B requires 0.2 DL hours per unit. The total estimated overhead for the next period is P 92,023. The company is considering switching to an activity based costing system for the purpose of computing unit product costs for external reports. The new activity based system would have three activity cost pools, Activity 1, Activity 2 and General Factory with estimated overhead costs and expected activity as follows Cost Pool Overhead Cost Product A 500 2,500 240 Expected Activity Product B 600 500 100 Total 1,100 3,000 340

Activity 1 P 14, 487 Activity 2 64,800 General Factory 12,376 Total 92,023 40. The overhead cost per unit for Activity 1 under the activity based costing is closest to:

a. 28.97 b. 83.86

c. 13.17 d. 24.15