Assement Exam-dysas 1st Quarter-p1

8/3/2019 Assement Exam-dysas 1st Quarter-p1

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In connection with your examination of the financial

statements of DYSAS Inc. for the year

ended De cember 31, 2010 , you were able to obtain

certain information during your examination ofthe accoun ts receivableandrelatedaccoun ts.

The De cember 31, 2010balance in the Accoun ts

Receivablecontrolaccoun ts isP837 ,900 .

An aging schedule of the accoun ts receivable asof

December 31, 2010 ispresentedbelow:

Percentage to be

Age

60 days &

Netdebit

balance

app liedafter

correctionshave bee nmade

un der P387 ,800 1percent

61 to 90

days 307 ,100 2percent

91 to 120

days 89 ,80 0 5percent

Over120

days 53,200

P837 ,900

Definitelyuncollectible,

P9,000 ;the remainder

isestimatedto be 25%uncollectible.

Two entries made in the Doubtful Accoun ts

Expense accoun twere:

1. A debit on December 31 for the amoun t of the

creditto the AllowanceforDoubtfulAccoun ts.2. A credit for P6,100 on November 30, 2010 ,

and a debit to Allowance forDoubtful Accoun tsbe cause of a bankruptcy. The related sales

too kplaceon Oc tobe r1,2010 .

The Allowance for Doubtful Accoun ts schedule

ispresentedbelow:

Deb it Credit Balance

January1, 201 0 P19 ,700

November30 ,

201 0

December31,

201 0(P837 ,90 0x

5%)

P6,10 0 13 ,600

P41 ,895 P55 ,495

There is a credit balance in one accoun t receivable(61 to 90 days) of P11 ,000 ; it represents an advance

on a salescontract.

1. How much is the adjusted balance of Accoun tsReceivableas of December 31, 2010 ?

a. P837 ,900

c. P833 ,800b.

P839 ,900 d. P822 ,80 0

2. How much is the adjusted balance of the Allowance for

DoubtfulAccoun tsas ofDecember 31, 2010?

a. P25 ,47 5 c. P25 ,25 5b.P25 ,780 d. P41 ,895

3. How much is the Doubtful Accoun ts expense for theyear 2010 ?a. P21 ,18 0 c. P41 ,985

b. P20 ,655 d

. P20 ,875

4. How much is the net adjustment to the Doubtful

Accoun tsexpense account?

a. P14 ,92 0cred

it c. P20 ,875creditb.

P14 ,615credit d. P15 ,14 0debit

5. The general ledger trial balance of CentralCorporation includes the following statement of

financialposition accoun ts atDecember 31, 2010 :

Inventory (including inventory expected inthe ordinarycourse ofoperationsto be sold

beyond 12months amoun ting

to P70 ,000) P110 ,000Tradereceivables 120 ,000

Prepaid insurance 8,000

Listed investments held fortrading

purposes at fairvalue 20 ,000

Availableforsale investments 80 ,000

Cash and cash equivalents 30 ,000

De ferred tax ass et 15 ,000

Bank overdraft 25 ,000

The amoun t that should be repo rted as currentass et s on Central's statement of financialposition is

a. P218 ,000 c. P288 ,000b. P368 ,000 d. P298 ,00 0

8. T he records of Binmaleys Dep artment Store report the

follo wing data for the month ofJanuary2010 :

Sales P7,100 ,000

Salesallowance 100 ,000Salesreturns 500 ,000

Employee discoun ts 200 ,000

Theft and other losses 100 ,000

Initial mar kup on purchases 2,900 ,000

Add itionalmark up 250 ,000

Markup cancellations 100 ,000

Markdown 600 ,000

Markdown cancellations 100 ,000

Freighton purchases 100 ,000Purchases at cost 4,500 ,000

Purchase returns at cost 240 ,000

Purchase returns at salesprice 350 ,000

Beginning inventoryat cost 440 ,000

Beginning inventoryat salesprice 800 ,000

Using the average retail inventory method,

Binmaleysending inventoryis

a. P360 ,000 c. P420 ,000b.P384 ,00 0 d. P448 ,00 0

On January 2, 2013, Hernandez, Inc.signeda ten-yearnon-cancelable lease for a heavy du ty drill press. Thelease stipu lated annua l payments of P70,000 startingat the end of the first year, with title passi ng toHernandez at the expiration of the lease. Hernandeztreated this transaction as a capital lease. The drill press has an estimated useful life of 15 years, withno salvage value. Hernandez uses straight-linedepreciation for all of its plant assets. Aggregate

lease pa yments were determined to have a presentvalue of P420,000, based on implicit interest of 10%.6. In its 2013 income statement, wha t amoun t of

interest expense should Hernandez report fromthis leasetransaction?

a. P0. b. P26,250

c. P35,000 . d. P42,000 .7. In its 2013 income statement, wha t amoun t of

depreciation expense should Hernandez reportfrom this lease transaction?

a. P70,000. b. P46,667.

c. P42,000. d. P28,000 .


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9. A publi c limited company , PAYATOT Dairy

Products, produces milk on its farms. As of

January 1, 201 0 Cromwell has a stock of 1,050 cows

(average age, 2 years old) and 150 heifers (average

age, 1 year old).PAYATOT purchased 375 heifers,

average age 1 year old, on July 1,2010 . No animalswere born or sold during the year. The unit values less

estimated costs to sell were

1 - year old animalat De cember 31, 2010 P3,200

2 - year old animalat December 31, 2010 4,500

1.5 - year old animalat December 31, 2010 3,600

3 - year old animalat December 31, 2010 5,000

1 - year old animalat Jan. 1, 2010 and July 1,

2010 3,00 0

2 - year old animalat January1, 201 0 4,000

The increase in value of biological ass ets in 2010 due topricechange s is

a. P1,500 ,000 c. P555 ,00 0 b.P 630 ,000 d. P460 ,00 0

10. ALLENDOG Company incurred the following costsduring2010 :

Qualitycontrolduringcommercialproduction,

includingroutinetestingofproducts P58 ,000

Laboratoryresearch aimedatdiscoveryof

new knowledge 68 ,000

Testingforevaluation of new products 24 ,000

Modification of the formulation of aplastic

product 26 ,000

Enginee ring follow-through in an earlyphase

of comm ercialproduction 15 ,000

Adaptation of an existingcapabilityto a

particularrequirementorcustomer'sneed asa part of continu ingcomm ercial

activity 13 ,000

Trouble-shooting in connectionwith

breakdown s duringcomm ercialproduction 29 ,000Searchingforapp lications of newresearch

findings 19 ,000

What is the total amoun t ALLENDOG should repo rt

as research and developmentexpensefor2010 ?

a. P137 ,000 b. P198 ,000c. P169 ,00 0 d. P213 ,00 0

11. In January 2011, Jenks Mining Corporationpu rchased a mineral mine for P4,200,000 withremovable ore estimated by geologicalsurveys at 3,000,000 tons. The property has anestimated value of P400,000 after the ore hasbeen extr acted. Jenks incurred P1,150,000 ofdevelopment costs preparing the propertyfor the extraction of ore. During 2008,340,000 tons were removed and 300,000 tonswere sold. For the yearendedDecember

31, 2011, Jenksshould include what amoun t ofdepletionin itscost of goods sold?

a. P430,667 b. P380,000

c. P495,000 d. P561 ,000

12. On January 1, 2010 , the historicalbalances of the

landand building of Twang Company are:

COST Accumulated

DEPRECIATION

Land P 50 ,000 ,000 P 0

Building 300 ,000,000 90 ,000 ,000

The land and building were app raised on

same date and the revaluation revealed the

following:

Fair value

Land P 80 ,000 ,000

Building 350 ,000,000

There were no add itions or disposals during 2010 .

Depreciation is computed on the straight line.The estimated life of the building is 20 years.

The

depreciation of the building for the year

ended December 31, 2010 shouldbe

a. P25 ,000 ,000 c. P10 ,000 ,000

b. P15 ,000 ,000 d. P17 ,500 ,00 0

1 3. Isaac Co. assi gned P500,000 of accoun tsreceivable to Dixon Finance Co. as security for aloan of P420,000. Dixon charged a 2%comm ission on the amoun t of the loan; theinterest rate on the note was 10%. During thefirst month, Isaac collected P110,000 on assi gnedaccoun ts after deducting P380 of discoun ts.Isaac accepted returns worth P1,350 and wroteoff assi gnedaccoun tstot aling P3,700 .

The amoun t of cash IsaacreceivedfromDixon at the time of the transferwas

a. P378,000. b. P410,000.

c. P411,600. d. P420 ,000.

14. On January 01, 2006, Genius Company purchased a

machine forP5,000,000 and depreciated it by the

straight-line method using an estimated useful life of

ten years with no residual value. On January 01,

2009, Genius determined that the machine had a

useful life of 8 years from the date of acquisition and

will have a residual value of P 500,000. An

accounting change was made in 2009 to reflect these

additional data. The accumulated depreciation for

this machine on December 31, 2009 should be

a. 2,100,000 c. 2,000,000 b. 2,200,000 d. 1,875,000

15. On January 1, 2007, UM Company purchased for

P6,000,000 a machine with a useful life of 5 years

and residual value of P600,000. The machine was

depreciated by double declining balance method and

the accumulated depreciation of the machine was P

3, 840,000 on December 31, 2008. UM changed to

the straight line method on January 1, 2009 and the

residual value did not change. In its 2009 income

statement, what amount should morena report as

depreciation for this machine?

a. 720,000 c. 432,000

b. 520,000 d. 312,000

16. The following trial balance of Mint Corporation atDecember 31, 2019, has been adjusted except forincome tax expense:

Cash 600,000Accounts receivable, net 3,500,000

CPAs ARE NOT BORN, THEY ARE MADE


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Cost in excess of billingson long-term contracts 1,600,000

Billings in excess of cost onlong-term contract 700,000

Prepaid taxes 480,000

Property, plant and equipment, net 1,480,000Note payable (NP) noncurrent 1,620,000ORDINARY SHARES 750,000Additional paid in capital 2,030,000Retained earnings unappropriated 900,000Retained earnings restricted for NP 160,000Earnings for long-term contracts 6,680,000Costs and expenses 5,180,000

- Mint uses the percentage of completion method toaccount for long-term construction contracts forfinancial statement and income tax purposes. Allreceivables on these contracts are considered to becollectible within 12 months.

- During 2019, estimated tax payments of P480,000were charged to prepaid taxes. Mint has notrecorded income tax expense. There were notemporary or permanent differences. The tax rateis assumed at 30%. In Mints December 31, 2019balance sheet, what amount should be reportedas:

Total current assets?(a) P5,000,000 (b) P5,450,000(c) P5,700,000 (d) P6,150,000

17. Magic Company had the following capital during the

2008 and 2009:

Preference share capital, P 100 par, 10% cumulative,

100,000 shares P 10,000,000

Ordinary share capital, P 100 par, 400,000 shares

40,000,000

Magic reported profit of P 8,000,000 for the year ended

December 31, 2009. Magic paid no preference share

dividends during 2008 and paid P 1,500,000 preferenceshare dividends during 2009. On January 31, 2010, prior

to the date that financial statements are authorized forissue, Magic distributed 10% ordinary share dividend.

In its 2009 income statement, what amount should Magic

report as basic earnings per share?

a. P 17.50 b. P16.25 c. P 15.91 d. P 14.77

18. Quitino, Inc. and its subsidiaries have provided you, theirPFRS specialist, with a list of the properties they own:

Land held by Quirino, Inc. for undetermined future use,

P 5,000,000.

A vacant building owned by Quirino, Inc. and to be

leased out under an operating lease, P 20, 000, 000.

Property held by a subsidiary of Quirino, Inc., a real

estate firm, in the ordinary course of its business, P 30,000, 000.

Property held by Quirino, Inc. for use in production, P

1, 000, 000.

A hotel owned by Sugo Inc, a subsidiary of Quirino,

Inc., and for which Sugo, Inc. provides security services

for its guests belongings P 50,000,000.

A building owned by Quirino, Inc being leased out to

Status Inc, a subsidiary of Quirino Inc., P 20,000,000.

How much will be reported as investment properties in Quirino,

Inc. and its subsidiaries consolidated financial statements?

a. P 75,000,000 c. P 95,000,000

b. P 25,000,000 d. P 45,000,000

19. Roxy Company had the following information relating to itsaccount receivable:

Accounts receivable at 12/31/2008 P 1,300,000

Credit sales for 2009 5,400,000

Collection from customers for

2009, excluding recovery 4,750,000

Accounts written off 9/30/2009 125,000

Collection of accounts written off inprior year ( customer credit was

not re established) 25,000

Estimated uncollectible receivables

per aging of receivables at12/31/2009 165,000

On December 31, 2009 the amortized cost of accounts

receivables isa. P 1,825,000 c. P 1,635,000

b. P 1,800,000 d. P 1,600,000

20. Colt Company has four manufacturing divisions, each

of which has been determined to be a reportablesegment. Common operating costs are appropriatelyallocated on the basis of each divisions sales in relationto Colts aggregate sales. Colts Delta divisionaccounted for 40% of Colts total sales in 2009. For the

year ended December 31, 2009, Delta had sales ofP2,000,000 and traceable operating costs of P1,200,000.In 2009, Colt incurred operating costs of P200,000 thatwere not directly traceable to any of the divisions. Inaddition, Colt incurred interest expense of P160,000 in2009. In reporting supplementary segment information,how much should be shown as Deltas operating profit

for 2009?(a) P800,000 (b) P750,000(c) P720,000 (d) P656,000

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2. 21. On January 1, 2013, FERNANDO Company providedthe following data in connection with its defined benefitplan:

Fair value of plan assets P6,500,000Accrued benefit obligation 7,500,000The accountant revealed the following information for the

year 2013:Current service cost P1,600,000Interest cost 10%Actual return on plan assets 600,000

Expected return on plan assets 8%Contribution to the plan 1,500,000

FERNANDO Company should report 2013 employee benefitexpense at ___________.

a. 1,830,000

b. 1,800,000c. 1,600,000d. 1,630,000

3. 22. ALBUS SEVERUS Company has a defined benefitplan with the following details on January 1, 2017:

Expected ActualFair value of plan assets P6,000,000 P8,000,000Accrued benefit obligation 5,500,000 5,500,000

At the beginning of 2017, the enterprise has determinedthat its average remaining service period of active



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employees on such date is 10 years. What is theamortization of the actuarial gain or loss that will beincluded in the 2017 employee benefit expense?a. 120,000

b. 125,000

c. 130,000d. 135,000

23. On January 1, 2009, Alex Corporation acquired as along-term investment for P2,500,000, a 30% ordinaryshare interest in Paul Company. On that date, Paul hadnet assets with a book value and current market value ofP8,000,000. During 2009, Paul reported net income ofP900,000, declared and paid cash dividends of P200,000.At the end of 2009, Alex Corporation, made a test onimpairment of the goodwill identified with its investment inPaul Company. The impairment test showed that thegoodwill was impaired by 20%. What is the maximumamount of income that Paul should report from thisinvestment in 2009?

a. P60,000 b. P210,000c. P250,000 d. P270,000

24. The accounting department supplied the following datain reconciling the September 30 bank statement forReliable Auto Supply Company:

Ending cash balance per bank P 154,969.10Ending cash balance per books 146,927.10Deposit in transit 26,152.30Bank service charges 250.00Outstanding checks 30,795.10Note collected by bank including P450

interest (Reliable not yet notified) 10,450.00Error by bank check drawn by Amiable

Corp. was charged to Reliablesaccount 6,170.80

Sales and deposit of P17,290 was enteredthe sales journal and cash receiptsjournal as P17,920.

What is Reliable Auto Supply Companys correct cashbalance at September 30?

(a) P156,247.10 (b) P156,877.10(c) P156,497.10 (d) P150,326.30

25. On January 1, 2007, Wild Company sells its

equipment with a carrying amount of P160,000. Thecompany receives a non-interest bearing note due in 3years with a face value of P200,000. There is noestablished market value for the equipment. Theprevailing interest rate for a note of this type is 12%.The discount amortization at the end of the third yearusing the effective interest method is:(a) P13,333 (b) P19,215(c) P21,428 (d) P 0

26. On January 1, 2006, Excel Company purchased anasset for P1,000,000 with an estimated useful life of 10years. Straight line method of depreciation is to be

used. On January 1, 2008, it was properly determinedthat the recoverable amount of the asset is P640,000.On January 1, 2009, it was properly computed that therecoverable amount of the asset is P740,000. Underthe revaluation model for long-lived assets, what arethe amounts to be reported in the income statementand shareholders equity on January 1, 2009?

(a) P140,000 and P40,000 (c) P180,000 and P 0(b) P20,000 and P160,000 (d) P 0 and P180,000

27. Compute for the cost of inventory lost in fire using thedata below:

Inventory, July 1, 2008 P51,600Purchases, July 1, 2008 to Jan. 19, 2009

368,000Sales, July 1, 2008 to Jan. 19, 2009 583,000Purchase returns 11,200Purchase discounts taken 5,800Freight in 3,800Sales returns 8,600

A fire destroyed the entire inventory except forpurchases in transit, FOB shipping point, of P2,000and goods having a selling price of P4,700 that weresalvaged from the fire. The salvaged goods had anestimated value of P2,900. The average gross profitrate on net sales is 40%.(a) P59,760 (b) P56,940

(c) P62,660 (d) P56,860

28. The following transactions pertain to Coral Corporationfor year ended December 31, 2009:1. Coral Corporation is authorized to issue 5,000

shares of P100 par preference share and 20,000shares of P50 par ordinary share.

2. Sold 10,000 shares of ordinary share at par forcash.

3. Issued 400 shares of preference share for P120per share cash.

4. Reacquired 500 ordinary shares as treasury sharefor P90 per share.

5. Reissued 300 shares of treasury share for P100per share.

6. Agreed to a subscription contract for 1,000 sharesof ordinary share for P60 per share. Thesubscription requires a down payment of P20 pershare.

7. Declared 30% share dividend on the ordinaryshare. The market value of the ordinary share atthe time of declaration is P80 per share.

8. The revenue and expense summary account hasa credit balance of P300,000. This is closed toaccumulated profits.

How much is the total shareholders equity at

December 31, 2009?(a) 853,000 (b) 1,052,000(c) 1,850,000 (d) 2,012,000

29. On January 1, 2017, granger Company sells itsequipment with a carrying amount of P160,000. Thecompany receives a non-interest bearing note due in 3years with a face value of P200,000. There is noestablished market value for the equipment. Theprevailing interest rate for a note of this type is 12%.The discount amortization at the end of the third yearusing the effective interest method is:(a) P13,333 (b) P19,215(c) P21,428 (d) P 0

30. In 2014, dysas spent P68,000 on R & D costs for anew product. This product was patented on January2, 2015 at a very small cost which was expensed in2015. The patent has legal life of 17 years and anestimated useful life of 8 years. In 2019, dysas paidP8,000 for legal fee in successful defense of thepatent. Amortization for 2019 should be:

A. P13,000

B. P 0C. P11,000



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D. P2,000


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Assement Exam-dysas 1st Quarter-p1