MONDRIAAN AURA COLLEGE

Refresher I
Practical Accounting 1
PA 1 - 002
1.

On January 1, 2006, a group of stockholders set up Delta, Inc. They contributed cash of P 1,500,000 and
borrowed P 220,000. During the year, revenues from sales totaled P 164,000, while total cost and expenses
were P 128,000. Delta declared a cash dividend of P 6,000 on December 15 payable to the stockholders on
January 15, 2007. There were no additional activities affecting stockholders' equity. By December 31, 2006,
liabilities increased to P 240,000. Total assets should be reported on Delta's December 31, 2006 balance sheet
at:
a. P 1,750,000.00
b. P 1,764,000.00
c. P 1,770,000.00
d. P 1,756,000.00

2.

Mabuhay Corp. has current assets of P180,000 and current liabilities of P 360,000. Which of the following
transactions would improve Mabuhay's current ratio?
a. Refinancing a P60,000 long-term mortgage with a short-term note.
b. Collecting P 20,000 of short-term accounts receivable
c. Purchasing P100,000 of merchandise inventory with a short-term accounts payable
d. Paying P40,000 of short-term accounts payable.

3.

Shown below are selected data from the balance sheet of Holiday Corp., a grocery store:
Current liabilities
P
150,000,000.00
Non-current liabilities
120,000,000.00
Cash
20,000,000.00
Accounts receivable
100,000,000.00
Inventory
195,000,000.00
Total assets
450,000,000.00
The quick ratio is:
a. 0.8 to 1
b. 1.25 to 1
c. 2.1 to 1
d. 0.133 to 1

4.

The account balances of Viva Corp. as of December 31, 2006 follow:

Accounts payable
P
100,000.00
Accounts receivable
120,000.00
Building
400,000.00
Capital stock
760,000.00
Cash
60,000.00
Equipment
160,000.00
Land
50,000.00
Notes payable
280,000.00
Retained earnings
100,000.00
In trial balance prepared on December 31, 2006, the sum of the debit column is:
a. P 860.000.00
b. P 1,440,000.00
c. P 790,000.00
d. P 1,240,000.00

5.

The working capital of Regalado Company is P 600,000 and its current ratio is 3 to 1. The amount of current
assets is:

a. P 900,000.00

b. P 1,200,000.00

c. P 600,000.00

d. P 1,800,000.00

Nos 6 and 7 are based on the following information:

The accounts and balances shown below were gathered from Clown Company's trial balance on December 31,
2006. All adjusting entries have been made.
Wages payable, P250,000; Cash and cash equivalents, P175,000; Bonds payable,
P600,000; Dividends payable, P140,000; Prepaid insurance, P 136,000; Inventory,
P820,000; Sinking Fund Asset, P525,000; Trading securities, P153,000; Available
for sale securities, P300,000; Premiums on Bonds Payable, P48,000; Investments
in Subsidiary, P1,020,000; Taxes payable, P228,000; Accounts payable, P248,000;
Loans and Receivables, P366,000; PPE, P1,200,000; Patents-net, P150,000;
Accum. Dep'n-PPE, P400,000; Land held for future business site, P900,000; and
Goodwill, P450,000.
6.

How much should be the amount of current and non-current assets, respectively, on Clown's December 31,
2006 balance sheet?
a. P 1,650,000.00 and P 3,245,000.00
c. P 1,950,000.00 and P 3,245,000.00
b. P 1.650,000.00 and P 4,150,000.00
d. P 1,950,000.00 and P 4,150,000.00

7.

How much should be the amount of current and non-current liabilities, respectively, to be reported in the
December 31, 2006 balance sheet of Clown Company?
a. P 776,000.00 and P 552,000.00
c. P 916,000.00 and P 640,000.00
b. P 866,000.00 and P 648,000.00
d. P 916,000.00 and P 648,000.00

8.

Lever Co. prepared a draft of its 2006 balance sheet. The draft statement reported current liabilities totaling
P2,000,000. However, none of the following items were included in this preliminary total at December 31,
2006: Accounts payable, P300,000; bonds payable due in 2007, P500,000; discount on bonds payable,
P60,000; dividends payable due 2007, P160,000; notes payable due 2008, P400,000; bond issue costs,
P20,000; deferred tax liability, P60,000; and call option liability, P210,000.00. The deferred tax liability is
excess tax depreciation over financial that is expected to reverse in the next three years. Lever Co. entered
into a contract that gives the company to the right to deliver an item of commodity on March 30, 2007. At what
amount should Lever's current liabilities correctly reported in the December 31, 2006 balance sheet?
a. P2,880,000.00
b. P2,900,000.00
c. P3,090,000.00
d. P3,110,000.00

9.

On December 31, 2005, Star Co. showed the following information:

Ordinary share capital, no par, 50,000 shares issued at a price of P12 per share; Preference share capital, par
P5, 10,000 shares issued and outstanding, issued at P15 per share; Unrealized holding gain on available for sale
securities, P180,000; Accumulated profits and losses, P200,000; Preference share subscribed (4,000 shares
not yet issued). Subscriptio price P20 per share; Subscription receivable on preference share, P50,000 to be
collected on January 2006; Revaluation reserve, P250,000; Reserve for treasury share, P100,000 and
Treasury share, ordinary share, 10,000 shares, P100,000. Star Co. has a total shareholders' equity of:
a. P1,160,000.00
b. P1,210,000.00
c. P1,410,000.00
d. P1,460,000.00

10.

The cash account in Rose Company's ledger on December 31, 2007 showed a balance of P525,000 which
included the following:
Petty cash fund
P
Undeposited receipts, including a PDC check of P10,000

5,000.00
130,000.00

Cash in bank
Cash in sinking fund
Vouchers paid out of collections, not yet recorded
IOUs signed by employee
Total
P
At what amount should Rose Company report as "cash" on the December 31, 2007 balance sheet?
a. P375,000.00
b. P 585,000.00
c. P 475,000.00
d. P 350,000.00

250,000.00
100,000.00
25,000.00
15,000.00
525,000.00

er 31, 2006,
balance sheet

liability is

2007. At what

capital, par
vailable for sale

0,000 to be

5,000.00
130,000.00

250,000.00
100,000.00
25,000.00
15,000.00
525,000.00

MONDRIAAN AURA COLLEGE

Refresher 1
Practical Accounting I
PA I - 003
Income Statement
1.

Merit Corp. has an arrangement with its customers that, in any 12-month period ending march 31, if they
purchase goods for a value of at least P 2,000,000, they will receive a retrospective discount of 2%. At the end
of the year December 31, 2007,Merit Corp. has made sales to acustomer during the period April to December
31, 2007 of P1,800,000. What amount of revenue should Merit Corp. report in its December 31, 2007 income
statement related to the above arrangement?
a. P1,323,000.00
b. P1,764,000.00
c. P1,800,000.00
d. P1,960,000.00

2.

Collins Marketing Corp. sells merchandise with a cost of P300,000 to Smith Corp. for P420,000 and a credit
period of six months. Collins Marketing Corp. normal selling price would have been P375,000 with a credit
period of one month and with a discount of P15,000 for cash on delivery. What amount of revenue from sales
should Collins Marketing Corp. recognized?
a. P 360,000.00
b. P 375,000.00
c. P 405,000.00
d. P 420,000.00

3.

Clippers Service Co. sells some equipment, the cash price of the equipment is P400,000 but it was sold for
P560,000 but it was sold for P 560,000 with a commitment to service the equipment for a period of two years,
with no further charge. What amount of revenue should Clippers Service Co. recognize on the date of sale.
a. None
b. P 400,000.00
c. P 480,000.00
d. P 560,000.00

4.

Bulls Marketing Co. has manufactured a machine specifically to the design of its customer. Any other party
could not use the machine. Bulls Marketing Co. has never manufactured this type of machine before and
expects a number of faults to materialize in its operation during its first year of use, which Bulls Marketing
Co. is contractually bound to rectify at no further cost to the customer. The nature of these faults could well
be significant. As of December 31, 2007, the machine had been delivered and installed. The custome was
invoice for P500,000 (contract price), and the cost incurred up to the point of installation was P 325,000. What
amount of revenue from sales should Bulls Marketing Co. recognize on December 31, 2007?
a. None
b. P 175,000.00
c. P 325,000.00
d. P 500,000.00

5. The following information was taken from the accounting records of Freeman Co. for the year ended
December 31, 2005:
Raw materials purchased, P8,000,000; increase in raw materials inventory, P400,000; direct labor cost,
P5,000,000; factory overhead, P6,000,000; decrease in work in process inventory, P300,000; and increase in
finished goods inventory, P600,000. Cost of goods sold in 2005 should be:
a. P18,300,000
b. P18,500,000
c. P19,500,000
d. P20,300,000
6. The following information pertains to Surety Co.'s 2006 cost of sales:

Inventory, January
Inventory, December 31
Purchases
Purchases Returns
Purchase discounts
Freight In
Write-off of obsolete inventory
What amount should the company report as cost of sales?
a. P 10,240,000
b. P 10,740,000

c. P 11,200,000

4,000,000.00
3,000,000.00
10,000,000.00
100,000.00
180,000.00
20,000.00
500,000.00

d. P 12,800.000

7. The following information pertains to Star Enterprise capital and other related accounts:
Initial investment made by the owner on January 2, 2006:
Cash
P
200,000.00
Noncash (market, P600,000)
400,000.00
Add'l investment made during the accounting period
Total liabilities paid during the year (including P300,000
w/c was paid out of personal funds by the owner)
Merchandise taken by the owner at cost
Capital balance at year end
Based on the above limited information, how much did Star Enterprise earn during the year?
a. P 250,000.00
b. P 350,000.00
c. P 550,000.00
d. P 850,000.00
8.

9.

Presented below are year-end balances of the assets and liabilities pertaining to Good Merchandising:
2006
Cash
P
150,000.00
Current marketable securities
260,000.00
Accounts receivable, net
360,000.00
Inventories
705,000.00
Prepaid expenses
130,000.00
Accounts payable
182,000.00
Other current liabilities
141,000.00
Bonds payable
200,000.00
Additional investment made by O. Good, owner of Good Morning Mdsg., during 2006 was P 150,000 but a
P260,000 personal liabilitiy was paid out of company's funds. How much net income did the company realize
during 2006?
a. P 130,000.00
b. P 140,000.00
c. P 190,000.00
d. P 290,000.00
Monarch Company's account balances during 2005 showed the following changes:
Current assets
Noncurrent assets
Current liabilities
Noncurrent liabilities

3,000,000.00
2,500,000.00
1,000,000.00
1,600,000.00

2005
120,000.00
230,000.00
400,000.00
635,000.00
128,000.00
136,000.00
125,000.00
200,000.00

Share capital
1,200,000.00
Share premium capital
800,000.00
There was no changes in retained earnings for 2006 other than a P1,500,000 dividend payment and year-end
result of operations. How much is Monarch's net loss for 2006?
a. P 500,000.00
b. P 600,000.00
c. P 700,000.00
d. P 800,000.00
10. Presented below are year-end balances of the assets and liabilities pertaining to Tudor Corp. for the years 2005
and 2006:
2005
Current assets
P
3,000,000.00
Noncurrent assets
7,000,000.00
Current liabilities
2,800,000.00
Noncurrent liabilities
2,200,000.00
During 2006, Tudor Corp. issued additional shares for a total proceeds of P2,000,000 of which P800,000 was
used to pay dividends accruing to last year that has been declared previously and a P1,000,000 current year
dividend. It was also noted that a piece of land was received as donation with a fair market value of
P2,000,000, cost to process the donation was P 50,000. What amount of net income/loss the company earned/
incurred in 2006?
a. P 200,000.00 net loss
c. P 1,200,000.00 net loss
b. P 1,000,000.00 net loss
d. P 2,000,000.00 net loss

2006
5,500,000.00
5,500,000.00
2,000,000.00
2,000,000.00

4,000,000.00
3,000,000.00
10,000,000.00
100,000.00
180,000.00
20,000.00
500,000.00

600,000.00
400,000.00
1,200,000.00
120,000.00
1,630,000.00

2005
120,000.00
230,000.00
400,000.00
635,000.00
128,000.00
136,000.00
125,000.00
200,000.00

increase
decrease
decrease
increase

increase
increase

2006
5,500,000.00
5,500,000.00
2,000,000.00
2,000,000.00

MONDRIAAN AURA COLLEGE

Refresher 1
Practical Accounting I
PA I - 004
1.

Merlin Company's invetory at October 31, 2006 was P142,000 based on physical count of goods priced at cost
and before any necessary adjustments relating to the following:
a. An invoice for P10,000, terms FOB shipping point, was received and recorded November 5. The invoice
shows that the material was shipped October 31, but the receiving report indicates receipt of goods on
November 3.
b. An invoice for P5,000, terms FOB destination, was received and recorded November 2. The receiving
report indicates that the goods were received November 5.
c. An invoice for P8,000 was received and recorded October 27. The receiving report attached to the
invoice indicates that the shipment was received October 30 in satisfactory condition. Terms of the shipment: FOB shipping point on October 27.
d. An invoice for P15,000, terms FOB destination, was received and recorded November 5. The receiving
report indicates that the merchandising was received October 30.
What amount should Merlin report as inventory in its October 31, 2006 balance sheet?
a. P 152,000.00
b. P 157,000.00
c. P 165,000.00
d. P 180,000.00

2.

In an annual audit of Bowl Co. at December 31, 2006, you find the following transactions near the closing
date:
a. A P100,000 special machine, fabricated to order for a customer, was finished and specifically segregated
in the back part of the shipping room on December 31, 2006. The customer was billed on that date and the
machine was excluded from inventory although it was shipped on January 4, 2007.
b. Merchandise costing P28,000 was received on January 3, 2007, and the related purchase invoice was
recorded on January 5. The invoice showed the shipment was made on December 29, 2006, FOB
destination.
c. A packing case containing a product costing P 34,000 was standing in the shipping room when the physical
inventory was taken. It was not included in the inventory because it was marked "Held for shipping
instructions." Your investigation revealed that the customer's order was dated December 18, 2006, but
that the case was shipped and the customer was billed on January 10, 2007. The product was a stock
item of your client.
d. Merchandise received on January 6, 2007 costing P20,000, was entered in the purchase journal on January
31, it was not included in inventory. The invoice showed shipment was made FOB supplier's warehouse
on December 31, 2006.
e. Merchandise costing P10,000 was received on December 28, 2006, and the invoice was not recorded. You
located it in the hands of the purchasing agent; it was marked on consignment and it was included in the
inventory count.
As a result of the above transaction, by how much should inventory be adjusted by:
a. P 44,000.00
b. P 54,000.00
c. P 144,000.00
d. P 172,000.00

3.

On December 2, 2006, Holland Manufracturing Co. purchased goods with a cash price of P200,000. Some of
the costs incurred in connection with the acquisition of the goods were as follows: Import duties, P20,000;
transportation costs, P10,000; and handling costs, P5,000. These goods were received on December 31, 2006.
In Holland's December 31, 2006 balance sheet, at what amount should these goods be included in inventory?
a. P 200,000.00
b. P 210,000.00
c. P215,000.00
d. P 235,000.00

4.

Meadow Manufacturing Co. incurred the following costs related to its manufacture and distribution of its
inventory for the month of December 2006: Costs of materials used (including the total costs of indirect
material consumed in the production process of P20,000), P300,000; Costs of labor (including the total costs
indirect for laborers who were assigned in the production ares, )35,000), P400,000; Other indirect costs that
were allocated on a reasonable basis, P100,00; Costs of transport from factory to company's stockroom,
P20,000; Storage cost, P10,000; Administrative costs, P45,000 and delivery cost, P5,000. what amount should
Meadow assigned to its inventory prior to its distribution?
a. P 765,000.00
b. P 775,000.00
c. P 820,000.00
d. P 830,000.00

5.

Marker Co. has the following information pertaining to its merchandise inventory as of Dece. 31, 2006:
Inventory on hand (including merchandise received on consignment of
P20,000)
Inventory purchased with a buyback agreement
Merchandise in transit, FOB shipping point, excluding P5,000 freight cost
Merchandise in transit, Free Alongside, including delivery cost alongside the
Vessel of P6,000 but excluding the cost of shipment of P3,000
Merchandise in transit, CIF (excluding insurance costs and freight of P8,000)
What amount should Market Co. report as value ot its inventory in its 2006 balance sheet?
a. P 749,000.00
b. P 760,000.00
c. P 770,000.00
d. P 876,000.00

6.

On October 1, 2006, Act Co. consigned 50 freezers at a unit cost of P15,000 to King Co. for sale at P20,000
each and paid P20,000 in transportation cost. On December 31, 2006, King reported the sale of the 25 freezers
and returned 10 units. Cost paid by the consignor on the returned units was P4,000. Amount due to consignor
was remitted on the same date. Commission rate as agreed upon was 15%. What amount of inventory on
consignment and net income related to the sold units, respectively, should Act report on December 31, 2006?
a. P 225,000.00 and P 36,000.00
c. P 235,000.00 and P 40,000.00
b. P 231,000.00 and P 32,000.00
d. P 375,000.00 and P 44,000.00

7.

On December 1, 2006, Looney Store received 1,000 units of windbreakers on consignment from Tune Co.
Tune's cost for the windbreakers was P1,600 each, and they were priced to sell at P2,000. Transportation
cost of P2,000 was paid by Looney. As of December 31, 50 units were returned to the consignor and 200
units are still held by the consignee. Commission rate as agreed upon between contracting parties was 12%
on all sales to be made by Tune Co. In its December 31, 2006 balance sheet, what amount should Looney
report as payable for consigned goods?
a. P1,318,000.00
b. P1,320,000.00
c. P1,500,000.00
d. P2,000,000.00

8.

On June 1, 2006, Concept Corp. sold merchandise with a list price of P200,000 to Randall on account. Concept
allowed trade discounts of 30%, 20% and 10%. Credit terms were 2/15, n/40 and the sale was made FOB
shipping point. Concept prepaid P4,000 of delivery costs for Randall as an accomodation. On June 3, 2006,
Concept received from Randall returned merchandise with an invoice price of P50,000 due to minor defects.
On June 14, 2006, Randall settled its account in full to Concept. How much net cash remittance did Concept
received?
a. P 49,784.00
b. P 53,784.00
c. P 60,760.00
d. P 74,088.00

9.

Lexicon Co. specializes in the sale of IBM compatibles and software packages. It had the following
transactions with one of its suppliers.
Purchase of IBM compatibles
P
Purchases of commercial software packages
Purchase return and allowance
Purchase discount taken
Purchases were made throughout the year on terms 2/10, n/30. All returns and allowances took place w/in 5
days of purchase and prior to any payment on account. Purchase discount lost is:
a. P 23,800.00
b. P 56,000.00
c. P 57,400.00
d. P 79,800.00

10. F1 Company had 10,000 units of product A on hand at January 1, 2006, costing P40 each. Purchase of
product A during the month of January were as follows:
Date
Units
Unit Cost
January 10
12,000
42.00
January 18
15,000
43.00
January 22
22,000
44.00
January 27
5,000
45.00
January 31
8,000
46.00
A physical count on Januay 31, 2006 shows 16,000 units of Product A on hand. What is the cost of the
inventory at January 31, 2006 under FIFO?
a. P 683,500.00
b. P 698,000.00
c. P 725,000.00
d. P 736,000.00
11.

Rey Co. acquired a trademark for P 10,000,000 from San Jose Co. on January 2006. The trademark is
carried in the accounting records of San Jose at an unamortized cost of P 7,600,000. Rey's independent
consultant has estimated that the remaining life of te trademark is 50 years. The trademark is being amortized by Rey over the maximum period allowable. What amount should Rey report as accumulated
amortization in its December 21, 2006 balance sheet?
a. P 152,000.00
b. P 200,000.00
c. P 250,000.00
d. P 190,000.00

12.

Redford Co. had 300,000 shares of common stock outstanding at December 31, 2007. No common stock
issued during 2007. On January 1, 2008, Redford issued 200,000 shares of non-convertible preference stock.

2,380,0
1,680,0
70,0
23,8

Cost

504,0
645,0
440,0
225,0
368,0

During 2008, Redford declared and paid P 75,000 cash dividend on the common stock and P 60,000 on the
preferred stock. Net income for the year ended December 31, 2008 was P 330,000. What should Redfore's
2008 earnings per common share?
a. P 0.90
b. P 0.85
c. P 1.10
d. P 0.65

200,000.00
10,000.00
155,000.00
250,000.00
175,000.00

2,380,000.00
1,680,000.00
70,000.00
23,800.00

Cost
504,000.00
645,000.00
440,000.00
225,000.00
368,000.00