ey The Professional CPA Review School Main 3 roman Bi. 873 P campo Scr Epa, Sama, Mani Seo) Pin | FSBO oH aL OL ‘email add: crc_ace@yahoo.com Baguio Davao ‘udel Bidg.V, Lower Mabin or Diego Stang, Baguio Cty 3/F GCAM Bldg. Monteverde St. Davao City 'm (074) 442-1440 / 0922-8499196 (082) 285-8805 / 0625-7272223 ADVANCED FINANCIAL ACCOUNTING & REPORTING MAY 2018 BATCH JAN 30, 2018; 2:00PM — 4:30PM FIRST PRE-BOARD EXAMINATIONS gap pppeogre gp INSTRUCTIONS: Select the correct answer for each of the following questions. Mark only one answer for each item by writing a SHADING corresponding to the letter of your choice on the answer sheet, 1. The following selected accounts appeared in the trial balance of Melrose Sales as of December 31, 2018. Debit Credit Installment Accounts Receivable - 2017 P 145,000 Installment Accounts Receivable - 2018 200,000 Inventory, December 31, 2017 70,000 Purchases 555,000 Repossessions 3,000 Installment Sales P 425,000 Sales 385,000 Unrealized Gross Profit 2017 54,000~. ‘Additional information: as of December 31, 2017 ‘ Installment Accounts Receivable - 2016 as of December 31, 2017 P 136,000. Inventory of new and repossessed merchandise as of December 31, 2018 95,000 * 30% Gross profit percentage on regular sales during the year Repossession was made during the year. it was a 2017 sale, and the comesponding uncollected -zocount at the time of repossession was 7,800. The total realized gross profit in 2018, net of loss on repossession is A. P'130,380 B. 201,000 )_P 244,200 ©. 245,880 2. The following balance sheet was prepared for the X, Y and Z Partnership on March 31, 2018: Assets jablities and Capital Cash P 25,000 Liabilities P 52,000 Other Assets 180,000 X, capital (40%) 40,000 Y, capital (40%) 65,000 capital (20%) ——48,000 Total Assets P205,000 Total liabilities and capital 205,000 The partnership is being liquidated by the sale of assets in installments. The first sale of non-cash assets having a book value of P 90,000 realizes P 50,000, ‘Asgume that each partner properly received some cash after the second sale of assets. The cash to be distributed amount to P 14,000 from the third sale of assets, and unsold assets with a 6,000 book value remain. How should the P 14,000 be distributed to X, Y and Z respectively. A. P5,600; P 6,500; P2,800 Cc. PO ; P11,200; P 2,800 B. P5,000; P 5,000; P4,000 @®) P5800; P 5,600; P 2,800. Partners Joy and Rachel have a profit and joss agreement with the foliowirig provisions. Saialies of P 30,000 and P 45,000 for Joy and Rachel respectively; a bonus to Joy of 10% of net income after salaries and bonus; and interest of 10% on average capital balances of P 20,000 and P 35,000 for Joy and Rachel, respectively. One:third of any remaining profits are allocated to Joy and the balance to Rachel. Ifthe partnership had net income of P 102, much should be allocated to Partner Joy? A. P 44,250 B. P47,500 C. )P 41,000 | D. P41,167 a SETA-—" CRC-ACEIAFAR: First Pre-board Exams - May 2018 batch Page 2 4. On December 31, 2017, Joseph Inc. signed an agreement authorizing Bernard Company to operate as a franchisee for an inital franchisee fee of P 50,000. Of this amount, P 20,000 was received upon Signing of the agreement and the balance is due in three annual payments of P 10,000 each beginning December 2018. The agreement provides that the down payment (representing a fair measure of the services alteady performed by Nike, Inc) is not refundable and substantial services are required of ‘Joseph, Bemard Company's credit rating 's such that colection of the note is reasonably assured. The present value at December 31, 2017 of the three annual payments discounted at 14% (the implicit rate for a loan of this type) is P 23,220. (On December 31, 2017, Berard Company should record unea! foes of: A 80,000 ®@ B30,000 Cc R48.270— 823220 5. _ CRC-ACE Corporation transfers merchandise inventory from its home office to its branch at an amount ‘above cost. The average gross margin on the transfers is 40 percent. At the beginning ofthe year, the branch held merchandise purchased from the home office in the amount of P 38,000. During,the year, the home office made thee shipments of inventory to the branch at transfar prices of P 30,000, P BA,0N0, ee P ED,DOD. At the and of he yea, the braneh had on hand inventory purthated fem the ‘home office at an amount of P 40,000 \What entry should the home office make to record intracompany prof realized quring the year? A. Unrealized iniracompany proft 41,600 Branch Income Summary 41,600 © ssnveaizes iniacompany From 55,600 Branch Income Summary 55,600 C. Branch Income Summary 55,600 Unrealized Intracompany Profi 155,600 D. Investment in Branch 55,600, Branch Income Summary 85,600 Items 6 and 7 are based on the following information: Partial list of accounts from the trial balances of the ALIBABA Corporation, Branch A and Branch B at December 31, 2018 are as follows: Home Office Branch Branch B Inventory, Jan 2018 34,000 ¥ 5,500 * 8.800> "* Branch A 100,000 - Branch B 81,000 - - Purchases 500,000 Expenses 120,000 36,000" 38,000. ‘Shipments from home office : 68,200 41,800 Home office 94,000 75,000 Sales 500,000 180,000 120,000, ‘Shipments to Branch A 73,700. S ‘Shipments to Branch B 46,200 ~ LLoadings in Branch Inventory ~ Jan 1 1,300. ‘Additional information: Shipments to the branches are made at billed prices. Inventory on hand on December 31, 2018 ~ Home office ~ P 31,000; Branch A ~P 7,260; Branch B —P 8,250, 6. Combined cost of goods sold a : A. 801.200 B pasoen, €) paso — v. 7. The merchandise inventory et 1e combined balance sheet as of December 31, 2018, ‘A. P68,400 ~ P 65,000 Cc. P 46,500 D. P 45,100 8. On December 1, Philip Company opened a branch in Cebu to which merchandise billed at P 30,000 wae chipped. During the mo mente ‘2 biled prices of P 42.000. Deane December, Gebu branch returned merchandise that was detective and received credts of > 750 on ne raiane tA ond Of the month, the branch record its inventory at P 18,500, which is from the Merchandise acquired from home office at billed price “ ‘Merchandise acquired from outsiders i: * yb0 Total inventory p P 18,50010. 1. 12, CRC-ACE/AFAR: First Pre-board Exams - May 2018 batch Page 3 AA branch loss for December is calculated at P2,600. The home office has followed the practice of bilng the branch at 20% above merchandise cost Compute: 4) the balance of the allowance for overvaluation of branch inventory at December 31, before adjustments, and 2) the net income (loss) of the Branch in so far @& the home office is concerned: (1) P 4,125; (2) P (2,600) ©. (1) P 7,000; (2) P 1,525 (1) P 6875; @) P 1,525 - D. (1) P 6.875; (2) (P2,600) : (On March 1, 2016, Cameron Construction Company was contracted fo construct a townhouse for Will ‘Company for n total enntract prine of P 8,400,000 The building war rompiater! by Oninber 31, 2018 ‘The annual contract costs incurred, estimated costs to complete the contract, and bilings for 2016, 2017 and 2018 are giving below: : 2016 2017 2018 Contract cost incurred during the year 3,200,000" “2,600,000 4,450,000 Estimated cost at completion 8400.00 (> 7,250,000 <_ 7,260,000.« 38 during the year 3,200,000 3,500,000“) 1,700,000 entry to record the recognized proft in 2018 includes a credit to: Construction revenue P 1,680,000 'B. Construction in progress 230,000 1s C. Construction revenue 4,700,000 D.~Construction in Progress 1,450,000 Hilda, ima, and Jue were partners with capital balances on January 2, 2018 of P 560,000, 672,000, and P 496,000, respectively. Their proft and loss rato is 3:5:2. On August 1, 2018, Hide ‘retires from the partnership. On the dete of retirement, the partnership net loss from January 2 is P 384,000; and the partners agreed to revah wentories to P 296,000 (from the carrying amount of P 272,000), The payment to Hilda in settlement of her interest is tobe P 454,000, Upon the retirement of Hilda, which of the following will result? A tb lithe OF PD, B. Bonus to Julie of P 800 C. Goodwill to Julie of P 2,800 (2) Irma's capital is P 65,800 more then Julie's. i On September 2, 2018, Nino, Olan, and Pete formed a partnership investing cash of P 945,000, 'P B5D,500, and P'DBA.BNN., reepectively. The par ep id loses in the ratio of 8:2:2 and ‘on October 31, 2018 the firm has cash of P 63,000, other assets of P 2,992,500, and liabilities of P 1,612,800. On this date they decided to go out of business and sell all the assets for P 1,890,000. Pete has personal assets of P 94,500 that may, if necessary, be used to meet partnership obligations. Loss from operations was P 617,400. How much should be distributed to Cian upon iiquidation of the partnership? A. P 128,520 c Po ~ P 306,180 D. P 268,380 E, J, and N agree to liquidate their consulting practice as soon as possible after the close of bi on July 21, 2018. The tal balance an that date shaws the folawing account balances. “SESS Cash P 130,000 Accounts payable, P 60,000 Accounts receivable 120,000 Loan toE 40,000 Fumiture and fixtures’ 360,000, capital 200,000 J, capital 450,000 » NN, capital 150,000 aE, Bsop.0n0 The partners share profits and losses 50%, 20%, and 30% to E, speci allowed a monthly salary of P40,000.—— nn 1 ANG N FOspectively, after Nis August transactions and events are as follows: 1. "The accounts payable are paid. 2 Accounts recewabie of P 80,000 are colecied in ful: N accepts accounts receivabie with a iace ‘value and fair value of P 30,000 in partial satisfaction of his it temair accounts receivable are written off as uncollectible. in eee ie ae