Professional Documents
Culture Documents
In partnership with the Professional Review & Training Center, Inc. and Isla Lipana & Co.
PRACTICAL ACCOUNTING
1
1.
INSTRUCTIONS: Select the best answer for each of the following questions. Mark
only one answer for each item on the answer sheet provided.
AVOID ERASURES.
Answers with erasures may render your examination answer sheet INVALID.
Use
PENCIL NO.2 only. GOODLUCK!
c. Included in inventory is merchandise sold
The general ledger trial balance of Central
to Oval on December 30, f.o.b. destination.
Corporation includes the following statement
This merchandise was shipped after it was
of financial position accounts at December 31,
counted. The
invoice
was prepared and
2010:
recorded as a
Inventory (including inventory expected
in the ordinary course of operations to
be sold beyond 12 months amounting
to P70,000)
Trade receivables
Prepaid insurance
Listed investments held for trading
purposes at fair value
Available for sale investments
Cash and cash equivalents
Deferred tax asset
Bank overdraft
P110,000
120,000
8,000
20,000
80,000
30,000
15,000
25,000
The amount
that should be reported as
current assets on Central's statement of financial
position is
a. P218,000
c. P288,000
b. P368,000
d. P298,000
2.
3.
4.
d.
e.
f.
g.
h.
6.
P1,280,000
5,640,000
1,400,000
40,000
Page 1 of 7
received in 2010
Collections on accounts receivable,
2010
Accounts receivable, January 1, 2010
Accounts receivable, Dec. 31, 2010
Gross profit percentage on sales
80,000
7,200,000
1,000,000
1,200,000
40%
P7,100,000
100,000
500,000
200,000
100,000
2,900,000
250,000
100,000
600,000
100,000
100,000
4,500,000
240,000
350,000
440,000
800,000
to
Smile
Companys
P5,000
500
300
5,200
P3,200
4,500
3,600
5,000
3,000
4,000
be
P2,500,000
200,000
600,000
700,000
200,000
300,000
400,000
capitalized
in
c. P4,300,000
d. P3,600,000
10 percent,
five-year note to finance
construction
of
the
manufacturing
facility, dated January 1, 2010, P3,600,000.
12 percent, 20-year bonds issued at par on
April 30, 2006, P8,400,000.
8 percent, six-year note payable, dated March
1, 2009, P1,800,000.
Determine the amount of interest to be
capitalized by Grant Industries for 2010.
a. P360,000
c. P557,280
b. P563,220
d. P591,840
14. Bongabon Corporation acquired a machine in the
first week of July 2009 and paid the following bills:
Invoice price
P5,000,000
Freight in
50,000
Installation cost
150,000
Page 2 of 7
c. P39,200
d. P42,000
Land
Building
on
the
Fair value
P 80,000,000
350,000,000
P58,000
68,000
24,000
26,000
15,000
13,000
29,000
19,000
be
recognized
c.
d.
as
P11,295
P
0
Page 3 of 7
this
Use
the
following
two questions:
information
for
the
next
One of
the cash-generating units of
Tweak
Corporation is
that
associated
with
the
manufacture of wine barrels.
At 31 December
2009,
Tweak Corporation believed, based on an
analysis of economic indicators, that the assets of the
unit were impaired. The carrying amounts the assets
of the unit at 31 December 2009 were:
Buildings
Accumulated depreciation - buildings
(Depreciated at P60,000 per annum)
Factory machinery
Accumulated depreciation machinery
(Depreciated at P45,000 per annum)
Goodwill
Inventory
Receivables
Allowance for doubtful debts
Cash
P420,000
(180,000)
220,000
(40,000)
15,000
80,000
40,000
(5,000)
20,000
c. P131,322
d. P123,271
Debit
P
2,000
450,000
60,000
50,000
280,000
35,000
Credit
P290,000
50,000
430,000
80,000
1,500
60,000
130,000
200,000
450,000
430,000
90,000
Page 4 of 7
On
July
37. On January 1,
2005,
Ball,
Inc.
purchased
a
P1,000,000
ordinary
life
insurance policy
on its president.
The
policy year and
Balls accounting
year
coincide.
Additional
data
are available for
the year ended
December
31,
2010:
Annual premium
paid on 1/1/2010
P20,000
Dividend received
7/1/2010
3,000
Cash surrender
value, 1/1/2010
43,500
Cash surrender
value, 12/31/2010
54,000
Ball,
Inc.,
is
the
beneficiary
under
the life
insurance policy.
How
much
should
Ball
report
as life
insurance
expense
for
2010?
a. P6,500
c.
P17,000 b.
P9,500
d. P20,000
on sale
of
c. P35,387
d. P10,000
Page 5 of 7
38.
The
Premier
National
Bank
has
a
note
receivable
of
P200,000
from
the
Marvelous
Company that it
is carrying
at
face value and is
due
on
December 31,
2014. Interest
on
the
note
payable at 9%
each
December
31.
The
Marvelous
Company
paid
the interest due
on December 31,
2010,
but
informed
the
bank
that
it
would
probably
miss
the next
two
years'
interest
payments
because of
its
financial
difficulties.
After
that,
it
expected
to
resume
its
annual
interest
payments, but it
would make the
principal
payment
one
year late, with
interest paid for
that
additional
year at the time
of the principal
payments. How
much should be
recognized
as
loan impairment
loss
in 2010?
(Round
off
present
value
factors to four
decimal places.)
a. P12,752
c.
P19,965 b.
P31,669
d. P32,812
39. On January 1,
2009, Cyrus Company
purchased
20,000 ordinary
shares of
The
Great
Corporation
at
P100 per share.
The shares are
classified
as
available-forsale.
The
following
table
sets
out
the
changes in the
fair
value
of
the shares and
the nature of the
change
in each
year:
Fair value
In the December
31,
2010
statement
of
financial
position, the
semiannually on
February 28 and
August 31. The
bonds mature in
ten years. Pyne
Furniture Co. is a
calendar-year
corporation.
accounts
payable
Compute
the
interest expense
to be reported
in
2
0
1
0
.
a. P52,925
c.
P58,933 b.
P53,000
d. P58,333
should
be
reported in the
amount of
a. P5,000,000
c.
P6,050,000 b.
P5,400,000
d.
P7,100,000
41. House Publishers
offered
a
contest in which
the winner would
receive
P1
million
payable
over
20 years.
On
December
31, 2010, House
announced
the
winner of
the
contest
and
signed
a note
payable to the
winner
for
P1
million, payable
in
P50,000
installments
every
January
2.
Also
on
December
31,
2010,
House
purchased
an
annuity
for
P418,250
to
provide
the
P950,000
prize
monies remaining
after
the first
P50,000
installment,
which was paid
on January 2,
2011.
In its
2010 profit
or
loss, what should
House report as
contest
prize
expense?
a. P
0
c. P
468,250
b.
P418,250 d.
P1,000,000
42. On
March
1,
2010,
Pyne
Furniture
Co.
issued P700,000
of
10 percent
bonds to yield 8
percent. Interest
is
payable
Yea
r
change
(P20,000)
No objective
evidence of
impairment
43.
On
December
31,
2009,
Sawyer
Co.
leased
a
machine
from
Bass, Inc. for its
entire economic
life of five years.
Equal
annual
payments under
the lease
are
P525,000
(including
P25,000
annual
executory costs)
and are due on
December 31 of
each
year.
The
first
payment
was
made
on
December
31,
2009, and the
second payment
was made
on
December
31,
2010.
50,000
Objective
evidence of
reversal of
impairment
How much should
be recognized in
the 2011 profit or
loss as a result of
the fair value
changes?
a. P60,000
c. P10,000 b.
P40,000
d. P
0
40.
Case
Corporation
had
accounts
payable
of
P5,000,000
recorded
in the
general ledger as
of December 31,
2010
before
consideration
of
the
following
unrecorded
transactions:
Invo
ice
d at
e
D
Date
at
r e ce i v e
d
e
FOB
s
t e rm s
hi
Am
p
o un p
t
e
d
1-3-11 P400,000
12-22-10
12-24-10
Destination
650,000 12-2810
Shipping 1-2-11
point
1-2-11
1-3-11
Shipping
point
1-10-11 450,000
12-31-10 1-5-11
Destination
Page 6 of 7
P1,200,000
1,500,000
200,000
The company is
in the future.
c. P165,750
d. P135,250
P 1,000,000
5,000,000
6,000,000
P12,000,000
P 1,250,000
1,000,000
4,000,000
6,000,000
P12,250,000
End of Examination
Thank you for participating in the 2011 National Mock CPA Board Examinations!
Page 7 of 7