1. Presented below are data for KAYA-RA-NI Corp.

(In Thousands of Philippine Peso)

2011
Assets, January 1
5,400
Liabilities, January 1
3240
Shareholders Equity, Jan. 1
?
Dividends paid
1,080
Increase in Share Capital-ordinary
972
Shareholders Equity, Dec.31
?
Net Income
1,080
How much is the net income for December 31, 2013?
a. P 920,000
b. P 974,000
c. P 970,000
d. P 808,000

2012
6,480
?
3,132
810
864
?
864

2013
?
3,888
?
918
920
3,078
?

2. Stine Corp.'s trial balance reflected the following account balances at December 31, 2014:
Accounts receivable (net)
P24,000
Trading securities
6,000
Accumulated depreciation on equipment and furniture
15,000
Cash
11,000
Inventory
30,000
Equipment
25,000
Patent
4,000
Prepaid expenses
2,000
Land held for future business site
18,000
In Stine's December 31, 2011 statement of financial position, the current assets total is
a. P90,000.
c. P77,000.
b. P82,000.
d. P73,000.
e.
f.
3. Familiar Co. had the following information for 2014:
g.
Accounts receivable turnover
10:1
h.
Total assets turnover
2:1
i.
Average receivables during the year
800,000
j.
Total assets, January 1, 2014
1,600,000
k.
How much is the total assets as of December 31, 2014?
a. 6,480,000
c. 6,240,000
b. 6,380,000
d. 6,400,000
e.
4. Cara Company provided the following information for 2013:
f.
g.
h. D
J
e
c
e
m
b
e
r
3
1
i. Current Assets
j.
k. ?
2
l.

Property, Plant
and Equipment

m.
1,

n. 1
,
7

I.

o. Current
Liabilities

p.
?

r.

s.
5

Noncurrent
Liabilities

0
0
,
0
0
0
q. 1
3
0
,
0
0
0
t. ?

u.
Working capital of P92,000 remained unchanged from January 1 to December 31, 2013.
Net income in 2013 was P64,000. No dividends were declared during 2013 and there were no
other changes in owners equity. What is the amount of noncurrent liability on December 31,
2013?
v.
5. Hayag-pa-gamay-ang-pagpasar Company showed a net income of P 400,000 on December 31,
2013. The ending inventory is thrice the amount of the beginning inventory and of which it is thirty
percent of the total cost of goods sold. The operating expenses is composed of administrative
expenses and selling expenses. Administrative expense is equal to the twice the amount of
selling expenses. Net income is one-fourth of operating expenses. The gross profit based on
sales is forty percent. How much is the beginning inventory presented in the income statement?
a. P 720,000
b. P 500,000
c. P 300,000
d. P 120,000
w.
PRTC Corporation, a nonpublic entity, was incorporated on December 1, 2013, and began operations
one week late closing the books for the fiscal year ended November 30, 2014, the controller prepared
the following financial statements:
x.
y. PRTC Corporation
z. Statement of Financial Position
aa. November 30, 2014
ab.
ac.
ad. Assets
ae. Current Assets
af.
ag. Cash
ah. P

ai. Marketable
at cost

securities,

1
5
0
,
0
0
0
aj. 6
0
,

ak. Accounts receivable

al.

am. Allowance for doubtful

accounts

an.

ao. Inventories

ap.

aq. Prepaid insurances

ar.

as. Total Current Assets

at.

au. Property,plant
equipment

and

av.

aw. Less:
Accumulated
deepreciation

ax.

ay. Property,

az.

plant

and

0
0
0
4
5
0
,
0
0
0
(
5
9
,
0
0
0
)
4
3
0
,
0
0
0
1
5
,
0
0
0
1
,
0
4
6
,
0
0
0
4
2
6
,
0
0
0
(
4
0
,
0
0
0
)
3

equipment

ba. Research
and
Development Costs

bc. Total Assets

8
6
,
0
0
0
bb. 1
2
0
,
0
0
0
bd. P
1
,
5
5
2
,
0
0
0

be.
bf.
bg.
bh.
bi.
bj.
bk. Liabilities and Shareholders Equity
bl. Current Liabilities
bm.
bn. Accounts payable and
bo. P
accrued expenses
5
9
2
,
0
0
0
bp. Income Taxes Payable
bq. 2
2
4
,
0
0
0
br. Total Current Liabilities
bs. 8
1
6
,
0
0
0
bt. Shareholders Equity
bu.
bv. Shares Capital, P10 par
bw. 4
value
0

bx. Retained earnings

bz. Total
Equity

Shareholders

cb. Total Liabilities and

Shareholders Equity

0
,
0
0
0
by. 3
3
6
,
0
0
0
ca. 7
3
6
,
0
0
0
cc. P
1
,
5
5
2
,
0
0
0

a.
b.
c.
d.
e.

f.

g.

h.

i.

6.
7.
8.
9.
10.
11.

cd.
ce. PRTC is in the process of negotiating a loan for expansion purposes, and the bank has
requested audited financial statements. During the course of the audit, the following
additional information was obtained:
The investment portfolio consists of short-term investments in marketable equity securities with a
total market valuation of P55,000 as of November 30, 2014.
Based on an aging of the accounts receivable as of November 30, 2014, it was estimated that
P36,000 of the receivables will be uncollectible.
Inventories at November 30, 2014 did not include work in process inventory costing P12,000,
sent to an outside processor on November 29, 2014.
A P3,000 insurance premium paid on November 30, 2014 on a policy expiring one year later was
charged to insurance expense.
PRTC adopted a pension plan on June 1, 2014 for eligible employees to be administered by a
trustee. Based upon actuarial computations, the first twelve months' normal pension was
estimated at P45,000.
On June 1, 2014, a production machine purchased for P24,000 was charged to repairs and
maintenance. PRTC depreciates machines of this type on the straight-line method over a fiveyear life with no salvage value, for financial and tax purposes.
Research and development costs of P150,000 were incurred the development of a patent, which
PRTC expects to be granted during the fiscal year ending November 30, 2015. PRTC initiated a
five-year amortization of the P150,000 total cost during the fiscal year ended November 30, 2014.
During December 2012, a competitor company filed suit against PRTC for patent infringement
claiming P200,000 damages. PRTC's legal counsel believes that an unfavorable outcome is
probable. A reasonable estimate of the court's award to the plaintiff is P50,000.
The 40% effective tax rate was determined to be appropriate for calculating the provision for
income taxes for the fiscal year ended November 30, 2012. Ignore computation of the deferred
portion of income taxes.
cf.
cg. QUESTIONS:
ch. Based on the above and the result of your audit, determine the following as of and for the
fiscal period ended November 30, 2014:
Net Income.
Current assets.
Total assets.
Total liabilities.
Total equity.
ci.
The records of Best Grades Co. showed the following information:
cj.
Increase in accounts receivable
200,000
ck.
Collections on accounts
1,600,000
cl.
Cash sales
240,000
cm.
Increase in inventory
80,000
cn.
Freight-in
28,000
co.
Freight-out
26,000
cp.
Decrease in accounts payable
120,000
cq.
Disbursements for purchases
960,000
cr.
Purchase discounts
8,000
cs.
Provision for uncollectible accounts
150,000
ct.
Increase in allowance for uncollectible accounts
25,000
cu.
Expenses other than Uncollectible account expense
1,000,000
cv.
How much is the profit for the year?
cw.

12. Bahala-ka-sir Mopasar-lageh-ko Company, the following information is available (in thousands of
pesos):
cx.
Cost of goods sold
P 60,000
cy.
Sales discounts
2,000
cz.
Income tax expense
6,000
da.
Operating expenses
23,000
db.
Sales
100,000
dc. In Bahala-ka-sir income statement, how much is the net income?
a. Should not be reported.
b. Should be reported at 9,000,000.
c. Should be reported at 38,000,000.
d. Should be reported at 40,000,000.
dd.
13. A company reported net income of P9,000,000 in 2013. The audit of the records revealed that
ending inventory of 2012 was understated by P500,000. Insurance payment of P900,000 in 2011
was charged to expense. The insurance coverage related equally to 2011, 2012 and 2013.
Revenue received in advance of P1,000,000 in 2013 was treated as earned in 2013 but it will
actually be earned in 2014. Interest payable of P2,000,000 at the end of 2013 was not recorded.
What is the corrected net income for 2013?
a. 5,200,000
b. 6,700,000
c. 6,000,000
d. 7,200,000
de.
14. Di-ko-mawadan ug-Paglaum Inc. provided the following account balance and related information
on December 31, 2013
df. Cash and cash equivalents
P 3,700,000
dg. Accounts Receivable
1,500,000
dh. Allowance for Doubtful Accounts
(200,000)
di. Inventories
2,000,000
dj. Prepaid Insurance
300,000
dk.
P 7,300,000
The cash and cash equivalents include the following:
dl. Cash in Bank, net of bank overdraft of P300,000 in account 2
dm.
maintained in the same bank
P 1,000,000
dn. Cash set aside by the Board of Directors for the
do.
purchase of an inventories
2,000,000
dp. Petty Cash
10,000
dq. Cash withheld from wages for income tax
dr.
of employees
190,000
ds. General Cash
500,000
The accounts receivable balance includes past due accounts for 2 years in the amount of
P 100,000.
The merchandise inventory includes goods held on consignment amounting to P 150,000
which were not included in the year-end inventory and goods of P 200,000 purchased
and received on December 31, 2013.
The company has non-current assets amounting to P 15,000,000.
dt. How much is the liabilities & equity of Di-ko-mawadan ug-Paglaum Inc. as of December 31,
2013?
a. P O
b. P 22,300,000
c. P 20,300,000
d. Cannot be determined with the given data
du.

15. Easy Company has the following items: share capitalordinary, P720,000; treasury shares,
P85,000; deferred taxes, P100,000 and retained earnings, P313,000. What total amount should
Houghton Company report as shareholders equity?
a. P 848,000
b. P 948,000
c. P 1,048,000
d. P 1,118,000
dv.
16. LAST TWO Corp. had the following infrequent transactions during 2013:
dw.
A P 150,000 gain from selling its automotive division.
dx.
A P 210,000 gain on the sale of investments.
dy.
A P 70,000 loss on the write-down of inventories.
dz. In its 2013 income statement, what amount should Chase report as other income and
expense?
a. P80,000
b. P140,000
c. P290,000
d. P360,000
ea.
17. On January 1, 2009, LAST NA JUD NI Co. purchased a patent for P595,000. The patent is being
amortized over its remaining legal life of 15 years expiring on January 1, 2024. During 2012,
LAST determined that the economic benefits of the patent would not last longer than ten years
from the date of acquisition. What amount should be reported in the statement of financial
position for the patent, net of accumulated amortization, at December 31, 2012?
a. P357,000
b. P408,000
c. P420,000
d. P436,375
eb.
18. Familiarity Co. had the following transactions during the year:
Billed Customer W 40,000 for goods sold. However, delivery has been postponed. The
goods have already been segregated from other inventories on hand and will be delivered
after further instruction.
Billed Customer X 80,000 for goods yet to be manufactured. The goods will be delivered
immediately after production is completed.
Billed Customer Y 100,000 for goods sold. Delivery will be made when the billed price is
fully collected. Customer Y made a down payment of 1,000.
Billed Customer Z 120,000 for goods sold. Delivery will be made when the billed price is
fully collected. Customer Z made total payments of 119,600 during the year.
ec. How much is the total sales revenue from the transactions above to be included in Familiarity
Co.s. Statement of profit or loss and other comprehensive income for the year?
a. 40,000
b. 120,000
c. 160,000
d. 260,000
e. 0
ed.
19. Third Year Co. sells 12-month mail order subscriptions for its magazine. Subscriptions are
received in advance and credited to sales. Subscriptions received during the month will
immediately receive the months issue. The magazines are of similar value. Third received
4,800,000 subscriptions evenly during the last quarter of the year. How much revenue from the
subscriptions received during the quarter shall be included in Third Year Co.s year-end statement
of profit or loss and other comprehensive income?
a. 400,000
b. 800,000

c. 1,200,000
d. 2,400,000
e. 3,200,000
ee.
20. Similar Co. offers repair services for manufacturing equipment and also sells machinery parts.
During the year, Similar had the following transactions.
In January 2014, SIMILAR Co. signed a repair service contract with a customer for
4,000,000. The contract price is due on March 31, 2014. By the end of the year, the repair
service has long been completed. However, the contract price has not yet been collected.
SIMILAR has assessed that the receivable should be written-off. SIMILAR has no balance in
its allowance for uncollectible service contract receivables.
In July 2014, SIMILAR Co. sold various parts to a customer on account for 2,000,000. By
the end of the year, only half of the receivable from the customer has been collected.
SIMILAR assessed that 5% of the outstanding balance as of December 31, 2014 is doubtful
of collection.
ef.
How much revenue from the transactions described above shall be included in SIMILARs
statement of profit or loss and other comprehensive income for 2014?
a. 6,000,000
b. 1,900,000
c. 1,100,000
d. 0
eg.
21. RAGING GRIFFINS Co. is a systems developer. During the year, RAGING was engaged to
develop an automated system for the billing and collection of an electric cooperative for a total
contract price of 24,000,000. As of December 31, 2014, the system is only 70% complete.
However, RAGING Co. had already billed the client for 90% of the contract price or 21,600,000
and collected 19,440,000 therefrom, after 10% retention by the client to be reverted to RAGING
at the close-out date of the contract. How much revenue shall RAGING recognize during the
year?
a. 16,000,000
b. 19,440,000
c. 16,800,000
d. 19,980,000
eh.
22. On January 1, 2012, Revenue Company sold specialized computers costing P760,000 to Income,
Inc. for P990,000. Revenue Companys trainers present numerous training sessions for Incomes
employee during the installation period. Income made a 50% down payment, with the balance
due upon completion of installation. How much revenue should Revenue Company recognize on
its books on January 1, 2012?
a. P990,000
b. P760,000
c. P495,000
d. P-0ei.
23. SAMpple Company is an experienced home appliance dealer. SAMpple Company also offers a
number of services together with the home appliances that it sells (installation and maintenance).
SAMpple Company sells dishwashers on a standalone basis, it also sells installation and
maintenance service or dishwashers. Pricing for dishwashers is as follows:
ej.
Dishwasher only
P16,000
ek.
Dishwasher with installation services
1,700
el.
Dishwasher with maintenance services
1,950
em.
Dishwasher with installation and maintenance services
2,000

en. In cases where maintenance services are provided, the maintenance service is separately
prices within the arrangement at P350. Dishwashers are sold subject to a general right return.
If a customer purchases a dishwashers with installation and/or maintenance services, in the
event SAMpple Company does not complete the service satisfactorily, the customer is only
entitled to a refund of the portion of the fee that exceeds P1,600. On January 1, 2012,
SAMpple Company sells 100 dishwashers to BB Complex, Inc. a developer of high-rise
condos. The dishwashers are installed and BB Complex Inc. purchases the dishwashers with
the installation and maintenance services. The total price for the 100 dishwashers is
P190,000. How much revenue should SAMpple Company allocate to the dishwashers?
a. P150,000
b. P152,000
c. P160,000
d. P190,000
eo.

II.

Appliance Center is an experienced home appliance dealer. Appliance Center

also offers a number of services together with the home appliances that it sells.
Assume that Appliance Center sells refrigerators on a standalone basis.
Appliance Center also sells delivery services and maintenance services for
refrigerators. Pricing for refrigerators is as follows.
ep.
Refrigerator only
P1,200
eq.
Refrigerator with delivery service
1,275
er.
Refrigerator with maintenance services
1,450
es.
Refrigerator with delivery and maintenance services
1,500
et. In each instance in which maintenance services are provided, the
maintenance service is separately priced within the arrangement at P250.
Refrigerators are sold subject to a general right of return. If a customer
purchases refrigerator with delivery and/or maintenance services, in the
event Appliance Center does not complete the service satisfactorily, the
customer is only entitled to refund of the portion of the fee that exceeds
P1,200. On December 1, 2011 a customer purchases a refrigerator with
both installation and maintenance services for P1,500. Based on its
experience, Appliance Center believes that it is probable that the delivery
of the refrigerator will be performed satisfactorily to the customer. Assume
that the maintenance services are priced separately.
24.Compute the amount of revenue that should be allocated to the refrigerator.
25.Compute the amount of revenue that should be allocated to the delivery.
eu.
ev.

ew.