CPA REVIEW SCI-iTJOL OF

THI PHILII

Manila

FiNES

AUDITING PROBLEMS
FINAL PREBOARD EXAMINATION
SET

SFFTFMBER 15, 2013

SUNDAY, B:00Al."1

11:00AM

INSTRUCTIONS:

CHOOSE THE BEST ANSWER FCR EACI-I OF TI.IE , FOLI-C\^IING. FULLY

SHADE ONLY ONE BOX FOR EACH ITEM. STRiCTLY NO ERASURES ALLOWED.

PROBLEM NO.1

The TGR Company commencecl operations on Janu,ary 1, 2009. -Ihe company's machinery
account is shown below.

Dare
Jan.

1,2009

pa:leulals

Deort
2n0

I r0 t)ri
a1
t -'l-

Sept. 30,

Balance

!J'-,:di-!

ilt57

Purchase

'r.'1
rl .:1.

?409,200

..'2,C,_)i.i

48L,200

2009 Purchase on installment

Payments from Sept. to Dec,

Oct 3, 2009 Freight and installation
Dec. 31, 2009 Depreciation
2010 Installment paymerrts foi- acgils;'ri:i,
June 30, 2010
Dec. 31, 2010
.rune 30, 2011
Dec. 31, 2011
lan. 1, 2012
Dec. 31, 2012
Oct. 1, 2013
Dec. 31, 2013

6,

i,0il

on Sept. 30, 2009

\,1,,a\

!::,\)

Purchase

.f iil,Jt-l'i

Depreciation
Acquisition - trade in of oid t'aCiiii-:; i
Depreciation

P'3t,4'li:
i.5-l

tt: i,i){j

,::j":'

i5-,iiii1
7",).!,1)
icii,7il L
z4,i.lt)0
8..,')_':,1'

Sale

Depreciailon
Sale

Depreciation

497,2A0
389,760

533,760
773,760
619,008
769,008
615,206
543,956
435,165

41i,165
328,932

The details of the ti-ansactions are as follours:

a)

On September 30,2009, a machine was i-1r.rir:lt:tsrtd,.\:r iil ,.1;lttir,rn' r'.,3:;ii, -l-he Iist prrce
was P180,0C0. but 12 pay.nents gf P1c1,rlf,)0 tlcir \,1/er"i .r,.tce hv I te r:itr.;any. Only the
monthly payments were recoi'ded ir'the m,icl:iner\: aLa(runt sirrii;'g ^.'ith:it:piember 30,
2009' Freigirt and instailation clrai-tc:; ol'i)i:.IC'.1 1^/ere lar(-r a,]r-i il,a;.1_lefl lc ihe machinery
account on October"3, 2009,

b)

On June 30, 2010, a machine was purclrasi:"*1 ici.

P240,000 when paid for on July 5, 20i0.

c)

Cn June 30,ZALL, ihe machine acquired far Pi57,ZAL.r lrras ira,ir{J i'cr a j.:ioer one having a
list price of P279,000. Ailowance of p129,00C r^,as recei;-ei on the tld rrai.tiine. r:l-re balance
of thc'lisi price being paid ln cash and,:hai-gc;r io ilre rra,.l'!lei;/ ijJ(.rLrr:1.

i,).'+:.';,r':')

t,

.':.,,1,J,

,-;,'j:, arrtj recorded at

d) On January 1, 2AL7, the machine acquireci on January i,

20U,1 rvirh cr:si o{' p132,000 was

sold fbr P75,000. The cost of removal ancl crating ictaierj t,3,75c.

e) On October 1,7A73, the machine

purchaserj nrr

ianriiri

1,

21,'{-19 !,,,1i1,

s:.)ic i'or p24,000 cash.

Assume a S-year useful life for TGR Company,s nrachrnerT.

1, lVhat is the total amount of gain ,::t the Sul;+',,ii ;:i.if -i:.r Oi tr-e l1lc(,it,:-r?y
January 1, 2009?

A. P50,400

B.

FtlA,zAC

(:. F'16,.15r.1

Peae 1 ct .l P).);?

D.

aCqUifed

r)86,850

On

2.
3.

What is the adjusted balance of the Machinery account on December 31, 20L3?

A.

P694,200

B. P705,000

7013?

5.

P700,200

D,

P703,950

What is the adjusted balance of the Accumulaied depreciation account on December 31,

A.

4.

C.

P465,600

B.

P457,L40

C.

P462,74A

D.

P397,740

What is the correct total depreciaticn provisior, it;* the years 2009-20732

A.

P737,40A

B.

P734,04A

L. P728,9/r0

D'

P669,540

The entry to correct the depreciaticn prr:vision for the years 2009-2013 should inciude
debit (credit) to
Depreciation
Bclained_Earntngs
P6L,215
?79,747
(P79,707)

Expense
P75,807
(P18,492)
P18,492

A,
B.
c.

--:]-tr-t:1-------,ocoooooool-]-?'-1::-----

PROBLEM NO.2
You have been engaged to audit the financial stater"nents of HABAGAT, INC. for the fiscal year
ended June 30, 20t3. The cost of gor,ds soicj sectjcn of the income statement prepared by
your client for the year ended June 30, 201-? anpetars as follows:

201,2
Purchases
Goods available for sale
inventory, June 30, 2013
Cost of goods sold

P 75,0C0

Inventory, July 1,

540.000
615,000
IO-L.QAQ

P51!*@

Although the books have been closed, your' \!r,ik,irE paper trial balance is prepared showing all
accounts with activity during the year. r-hr, -lr;lv' 1 and -lune 30 inventories appearing above
were deterr'nined through physical ccrnt anrl no reconciling items were considered, All
purchases are FOB shipping point. The company uses the periodic inventory system,

In the course of your examination of the lnvenii:ry r.utoff, both at the beglnning and end of the
year, you discovered the following facts:

illlt,"I-.J0,X2

a)

June inrroices total:ng I,19.500 were enlered in the voucher register in June, but the goods
were rict received until -lr.ril
,

b) Invoices totaling

P8,100 were enter-ed in the voucher register in July, but the goods were
received during June.

luns-S,e 20il:l

a)

Invoices totaling P27,900 were entered ;i-i llre ,;oucher register in July, and the goods were
received in July, but the invoices wer:: daieu iune,

b)

June invoices totaling P11,100 were er,terea'in the voucher register in June but the goods
were not received until July.

c)

Invoices totaling P16,200 (the corresponding qoods forwhich were received in June) were
entered in the voucher register, July.

d)

were made on account on Jr-rne 30 and the goods were delivered at that
time, but all entries relating to the sales were made in July.
Sales

6.

of

P26,4OO

What is the adjusted inventory on lL,lv L,2012?

A.

P86,400

B,

p94,500

c. p63,600

Page 2 of '14 Pages

D.

p102,600

AUpmNG

7.

8.

;r -'-"'-""''

pRoBLEMs

i.lIffiilfff,ilffiil

what is the correct arlount of ourchases fo;- rhe year eniJerl ,iuine 30,
,A. P584,100 , B. P592.2C0
i. i,sl;s-Brjc
What is the correct inventory on June 30,
g. P132,900
P744,000

A.

2013?1

i;

201-::?

c. Pti6.1C0

D.

i,576,000

D.

P135;900

The accounts payable balance on Jrrne 30, 2013,;shoulci lie increased

bv
A.
(.. P:i7,i0c
B. PZ7,}AA
D, P55,200

P44.10tj

10. The correct cost of goo<is sold far the year *n,lula june 30, 2013
p553,800 C, p526,50i)
A. P537,600 I

is

D.

P507,300

PROBLEM I\iO.3
I

In connection with your audit of tlre financial stai,:i-nents of TAi\DEi'4 CO, for
the year ended
December 31, 2013, you obtained the foilowing inforrrration
,:n rfre che:king acccunt of the
company.
r

'The

bank statenrent on Nover-ni:er 30, 2{11.3 si:ov.rec a Dsiar,c_:

of F3C5,itc:). Among the bank
credits in November was a ct-rstonrer's rirjtrJ {oi- P10c,t}r,!:
i,--riiectrcl fcr l,ie accolint of Tandern
Co' lvliich was recognized in Decentbei ,i irr-'ir{,r jt:;:'e:-.cipis.
Iniirrcleti ri-r the bank crebits were
cost of checkbooks amounting to p1,2,10 anc a p40,00.i
r_heck wri;cn was charqed L:y.ihe bank
in error against Tandem Co. accouni. y'rlso in No,rernber, you
ascert;;r:e;l ti,;i lhere were
depositsintr"ansitamountingtoFBr-1,i.l0-Ce,-r.ial,tsi.a;.o;,.,j.nn.ii.5ilr'3i,.]?ii,,a,6i;n,

The bank statenient on December 31, 201-J

r.[tat .re,-rit,- r-i i)zi]6,a){-)c ar:cj total chargls
siroinrea-tr.,.
of P204,000. 'ofirD,rr,y .),1r1(c rb,' Ds-,-e.,vlp
,f
i,,.; tutil et -, pr urf p735,600 and
disbursemens of P4a"/,ZOat 'l-he cash ;n hanl.;
n;,i;rc; il r l),-c,-,r-rrr i 3 : is t,/iB5,acp. Bank
debit memos for December r,yore: r,,Jo, 1i2 ir:r t".ri.n
:"r\r ''' and
- :'-'- c*.ir..rr.r
"":r'" . i:,i:{,-t,
customer's returned check fc:. F2.1,00c.
' * r,,lo, 113 on a
Tl're bank error of P40,000

ii

Novembei !va5 correiiec I)l irli, l:n;

ri<

:n )ri--i--r,;r1,r.

On December 29, 10^11 Tal,cetn Co. piaceJ ,otirir

i::-t baiii.. a Lii.,,::i-,,e,, :; [, _,.-rti:,liorv 6ote with a
face value of P120,000 fori collection. The colnr_.,:_,r.\. t-,i, *.1r,:
fi ri.) r:,_rre _is .,art: oi its receipts
aithough the bank was abrelt" i,r".tfr, r;;;;,-,..,,,1r,,''..
i-:,,. -. 2,,.,i.
A check for P3,960 was recorcled iri the c{)nrrpirn,.r,
reqh o:j /i,-:r-jilr:j ,).rgi{ iir [.:,r.-.-..ber a; p_]9,500.

11. Whal is the total outstand:nE iiecks on tl;uie,^itL.,er

-i1., .i,r:_i,l

A, P361,960

72.
13.

B, i43*t,:.+i

a.

t)

r136,360

What is the total deposits !n transit cir

A, P.339,600

[..,] . ,! . i[, .".,1"r

p17g,C00
U.
a . i,,:, ,,.. ,,,

What are the adjusted bank batani.c:;,i

;,r._ ,.r-,,1:1r1;

I'i,r-y_erbct-3-Q

P256,000
B.
C.

[\

P259,400
P256,000
Pi76,000

14. What is the adjurstecl Decenrbe;- boc,r

l-l i.:r
rertit:,l;A. P516,000
t3. P715,60il
15.

ir:i.t7.i)50

l,r;

;,;-,.;.

lJ"L,i, r,-.,
f .)/ .t +,1

,.,

l.:

1-.,ir

pl

19, 600

;:ii iei'i1?

l_

P3,1ii " 6:4tl

P3 i fi,,3.!r_'

i,.4)3,j4'

.:.

i-r, ir595,600

?:,

What is the adjusted Decemi-.e,- bank riisf,,.rsemerimJ

A. p395,960

B. p735,gt-0

c.

n4b7

,t,.l,.i

D.

1396.760

PROBLEM NO. 4

for P50,000,000. Mina Mining estimates

that the acquired property will yield 150,000 tons of ore with sufficient mineral content to make
mining and processing profitable. It further estimates that 7,500 tons of ore will be mined the
first and last year and 1"5,000 tons ever/ year in between, (Assurne 1L years of mining
operations,) The land will have a residual value of P1,550,000.
MINA MINING CO. has acquired a track of minei'al land

Mina Mining builds necessary structures and sheds on the site ai a total cost of P12,000,000'
The company estimates that these struc'ures can be used for 15 years but, because they must
be dismantled if they are to be movecl, they have nc residual value. Mina Mining does not
intend to use the buildings elsewhere.

at the mine was purchased secondhand at a total cost of

The
machinery
cost
the former ou;ner p9,000,000 and was 50o/o depreciated when
P3,600,000.
purchased. Mina Mining estimates that irirout half ol" this machineny' v^rill still be useful when the
present mineral resources have been exh;tuste;l b'rl tn,;L dismantiing and removal costs will just
ahout offset its value at that time. 1-hc ccmpany ooes not intend to use the machinery
elsewhere. The remaining machinery rvi I iasi i;ni:ii abouL one-half the present estimated
mineral ore has been removed and yvill tl:r:n be rrvorthless. Cost is to be allocated equally
between these two classes of machinery,
Mining machinery installed

charges for the 1't year?

Depreciation
P870,000
P780,000
P870,000
P780,000

16. What are the estimated depletion and depreciation

A.
B"

C.

e"

Depletion
P4,845,000
P4,845,000
P2,422,504
P2,422,544

17. What are the estimated depletion arid depreciation charges for the
A.
B,
C.

D,

18.

Depletion
P2,422,540
P2,422,500
P4,845,000
P4,845,000

5th

yearr

.D-egeelalra!
P1,740,000
P1,560,000
P1,560,000
P1,740,000

What are the estimated depletion and deprer-iaticn charges for the 6th year?
Depreciation
Depletion
P1,560,000
P2,422,500
A.
P1,740,000
B.
P2,422,500
[]1,560,000
P4,845,000
C,
P1,740,000
D.
P4,845,000

19, What are the estimated depletion and Ceprecietion charges for the 7'n year?
A.
B.

C,
U,

20.

Depletion
P2,422,50A
P2,472,500
P4,845,000
P4,845,000

Depreciation
P1,380,000
P1,560,000
P1,380,000
P1,560,000

What are the estimated depletior, and depreciation charges for the 1lth year?
Depreciation
Depletion
P1,380,000
P4,845,000
A.
P690,000
P4,845,000
B.
P1,380,000
C,
P2,427,500
P690,000
D.
P2,472,540

ooo000ooo-------PROBLEM NO.5
SANTOL CORP. invested its excess cash ia r,on-t.ading'equity securities during 2013. On initial
recognition, the entity rnade an irrevocabie erecr':ion to present its securities at fair value
Paqe 4 of '14 Paqes

- -* - -- '-

;'*;iiri'".i;;i*n .

_--_

sEpTEMBER 1s, 2013

/ suNpAy / 8:00AM

11:00AM

tlrrough other comprehensive incor"ne'

portfolio consisted of the following;

A.s

of December 3L, 2O!3, the company's

Investee Cdmpany
Kelly, Inc.
Eloy Corp.
Yogi Enterprises
Totais

securities

Shares

Cost

Fair Value

30,000
60,000
60,000

P 450,000

P 425,000

1,500,000
2.160.000
P4-UA.&La

1,610,00c
2.300,000
P4.335.000

purchased
r.fl, santor sord 60,c:0?jli:.^'?1.:]:y:.!,?:1^lrj:^,:1t:3t0 and
60,006 additional sh{res of Kelly, Inc. and 30,0Ct0 shai-es of Kongga Company'

On December

31,

2014, Santol's porffoiic cif tton-irading equiby securities comprised the

following:
Investee ComPanY
Kelly, Inc.
Kelly, Inc.
Kongga Company
Yogi Enterprises
Totals

30,000
60,000
30,000

Fair Value

Cost
450,00t)
P
1,3oo,ooo
520,000
2,160,00Q

Shares

6L),000

500,000
1,450,000
480,000

700p80
P3.130.000

P4 43_0-L00

and 15,000 shares of

During the year 2015, Santol sold ali the Keliy, ir;r:. si:ares for P2,3rJ0,000
porrfolio oi ironsantol's
Kongga Company at a loss of P90,00c on L,ecelrnber 31,2015,
trading equity securities consisted of the r>lii;winq:

Yogi Enterprises
Kongga Company
Totals

?t.

tau-Valrc

Cost

;t1:tles
sc,000
15,000

Investee ComPanY

P2,

P4,200,000
___ 130,000
P4.380.000

i60,000

_loQ.-0!!PL,i;ii,00g

What are tl-re balances of the iollc,ving a:ccuints as of December 31, 7013?
Ui"ire.llized
Non-tradirtg
Gairi on Ncn-trading
Equily
F-cruLly-$-sc-u-nllcs

SecuritieS

PO

P4,335,000
4,110,000
4,085,000
4,335,000

A.
B.
C.
D.

0
0
22-5,000

27. What are the balances of the following accrtlnts as of December 31, 20L4-)
lJi.i'eaiized
Non-trading
Equifry Gaii'r on Non-trading

^l
A,

B.

i
I

D.

Securitiqs
P3,130,000
3,13o,ooo
4,430,000
2,450,000

Eqirlg_SeeU![ies

F,0

1,300,0c0
0

1,980,000

23. What are the balances of the following accounts

as

of Decenrber 31, 2015?

Non-trading tlnreal,zed
Equity Gaiin c,r i'jon-trading

Securities
P4,380,000
7,470,400
4,380,000
2,340,000

A.
B.
C.

D.

EqurU-Seeunltes
F.l-,951J,000
0
0

2,090,0c0

74. What is the realized gain or loss on the

A.

P10,000 loss

B.

P120,000

saie ot Eloy Corp' shares in 2014?

losr

C.

Pi00,000

gain

D.

P90,000 gain

25.

What is the net realized gain r:n the saie cf secirriries in 2015?

A.

B.

P550,000

a.

P460,00{)

n1\[
I n,1/1
r-I )IJ,UJU

L'.

Pl-60,000
l

I
I

PROBLEM

NO.6

tl

janri;;i';'

".i{:iZ.

r Ie r-ompany s
Yl,-r rrave b9en

),
DONNA MANLIFACTURING COMPA|{Y \^/as incorporate:1 or
financial staterlents for its first year of cperalir-rns'/ie,r. irot;r;"ldrre( [,r u Ci]r\
engaged to auciit Donria': financrai l,;iai-e'ne',1: ict 'int: yuai- r:i]c: i ).lCf
Presented beiow is Donna's trial L,llance (part,ai) on Dlccen'her 31, 20i ,.
Qqbii
330,c00
', l-i: . rnrl
Lr*,
JrVU\,

Cash

Accounts receivable
Allowance for bad debts
Inventories
Machinery
Equipment
Accu m ulated depreciation
Patents (information 1)
Leasehold improvements llnforrnaiicn 5)
Prepayments
Crganization costs (lnformation 5)
Goodwill (Information 4)
Licensing Agreerneirt i (infirrmation 2 anrl 3)
Licensing Agreement 2 (informaticn 2)
Additional information

r:r:r 3i,2013.
,]

ers-ql:

15,LrCr0

i., :.55,Ci;,:
?, Z5i),;-1r.'!)

ij'j i.: ::;i.t

2

-,'. ,lr-.'r

1.

-i':li- 1i' ., ,l'.it ' at a cost

Patents ior Donna's man'lfa -turinE fro(ess .',f r ;: ; -i,r'!',r
P2,040,000. Donna spent an additional P-c1,j,JLii.in Dr:cci'1b,.'r l-,-)1i :o ii:rr.\io\/e ntachinery
-i-,e
covered by the patents arrn inclr-ided rn llre Pateni- Ji.,i-,r,r",i i.)ar-rrrft..
Uaterrts had a
remaining ieqal life of 17 ,7ea,i-s

2.

Donna purchased two licensing aqreeinents on -l{lriuili-r,,,<, r:i:i,r '. ir.-, ,.,,-- 3 lelierred at that
time to have unlimited useful lir.res, The baia;r:ce of l"i.r.r- -':i 'l Ji r,,, .l i,v;:i rerluced by
P30,000 for the advance collecticn qlf ;grTsndf) fr-or,: :i,i '.r,1:.:,r ri-r-i

3. In

December 2A12, an explosion causeC a fj0oz; t'r.rCLr:,io,- ,i, t-,e i.'xorcted revenueproducing value of Licensing Agr-i:erne nt .i . I .rr.,l : ,: r'r ,'-' 'cl \ e ;,r 1.,,- Lrt tif [-icensing
Agreement l was determinei trL he P(r{10,00i1 ilt [''rr-:.,"l.;l,:i' ,:, --'-. ],

4. The balance in the Goocjwill account inclucle; P7)-Oj:A1113,i6i l-re6grri,er ?'1, 2C72 for an
advertising program which it is estir'natecl rrvill arssist i,t !i',r-rra:r;r'ig litrrna's sales over a
period of four years followinq the dtsbursernenf

5.

The Leasehold Improvement accounl lnci'ides the fc:lir,r'r,r',c'

a. P450,000 cost of improvements 'r.rith a tcrtal C-(iiri,ri".iri. ,-.' ,: I ' _,i'iI'l,e,lrs, which
Donna, as tenant, made to leaseC fre-rt:se -"i.r -,1;,:.;r.i., ''i ' ,., : t.
b. nrovable assembly-line eq ripment ic.;t,i ,.r ,i l -..' -)l , i ri,F ' ,a lr il3ir id in the leased
premises in Decembcr 2{i1J,
Donna paid its rent in fuil cliriing ;1013, A lrl- .r;:r- ,,:':','i
3, 2017 for lhe leased building thal Donna iis,:r.i j'ir 1,. ;,i.; ii..
:

i -.. ia .r \,.i.-j ;;l(1ler-1 JanUafy

6. The balance in the Organization Cosis acccLinL inclur,J,,,l

the orqanizational period.

26.

What is the carrying amount of the Patenis l.rt Decen,b,ri :1- : r r :l;
A. P1,920,000 B. ir'2,4'J0,000 L, P.l. i l:il,l"ti '.

tr,

i 2,040,000

cPA REVIE\! SCHOOL OF THE pHILIpptNES (C9AR) - tlA\rLA

27.

28'
29.

FINAL PREBOAT?D EXAMINATION

I SUN[U]L'/ I s :-Q0A[1--1 ].QQM

What is the carrying aniount of Licensing

-----5EflEryl-EEts-$-?g.13
agreement L on December 31, 2013?
P1,500,000
B. P600,000
c. P900,000
D. P2,100,000

A.

What is the cdrrying amount of Licerrsinq agreenient 2 on December 31, 2013?

P2,100,000
B. P1,470,000
c. P60c,ilO0
D, P1,500,000

A.

What is the carrying amcunt cf the L"easehokl tffipirl'r3r,1cnts cit De..errlber

A.

ts.

P360,000

C.

P780,000

30. The net adjustment to

to

Retainec! earnings
information 1 to 7 wili amount to
A. P2,535,000 debit
B. P2,580,000 debit
C. P2,535,000 credit

D' P2'sB0'0o0-::::1"

D,

C00

P,:150,

i'r.fleci: ail

the

li,

2C13?

P624,000

necessa-rrv coi-rect.rr.;ns from

---r:orieoooo,,---.*--

PROBLEM NO. 7

You are examining the financial staternents of SALUYO-T COMPAXT'/ Fcr lhe
'7ear ended
December 3t,2A13. Your audit cf tire accounts receivanie ancl rlther relatecl accc-.unts cjisclosed
the foilowing information

1.

The December 31, 2013, balance ln the,Accounts [leceivanls corrtrci aci:,':r.]t-ti is P788,000,

2. The only enLrie:; in the L-laiJ Dei-ts ExJr:i;s: a:r")uitl t',3irt,

a. A credit for P1,296 on L)elr.--t!:er ,, ,.3.iJ. l-;e:c"tui.t: -r-,,t- "t -i r ll.,rit..tC
b.

account charged off Octobcr" Ji, Zt)t:,.

A debiton December 31 fo: ihi. 3nr:r., 1 -r1t i-ri1; .-:.;.,

3. The Allowance for Bad Debts accoun'- rs prg5sn1._,,1

Particulars

Jan
Oct.

t,c;e

ir, r'uil for

tl-re

v,,:

-r:q,l _ili;:,jt,,,.*

31

Balance
Uncollectible:

Customer

A Pl 290
i) I . )rj

Dec.

31
I

4.

An aging scheduie of the accounts receivabl.r

are as shown in the table belcw:
,jr;

Itlel Debit

pi.al_a:ce
E
mr:nth
P37Z,16A
months
307,ZBA
months
88,720
months 24,AAC

AG

0-1
1-3
3-6
Over 6

t'J

r-ri,

lO.i;

uf f):crjrrl),..i 'i r,

,il ri the decisions

i

rt lt;

wh i cl-: if : r)

r.iuv ;i

r.i

c{,:

i, it le a.llusleil a,'le :"t,Jjr;t;'.mttrrt.:;

,jr,; i,"'ii_. lji. l' r' 11,.1 I -:t,;i '', !i,:

1'./.'

2-:tt
3,)/o

Dgfi:tite,), u,l(,-,i1,;: i,;;r.1, '-'' , 1-'j;

f E. lCij ig i,911;,,i1r i'i.' :.r,, ;',,,. rl'.. '
r.tnfriie:-r;i:ie ; l.ii,,, , r.;11;,.1it6 f i ;.,
e:.I-i;rri,i";',-i

to bi '.

:': ., ;'

',,,",

1jr

?792,S6a_

5'

There is a credit balance in one a.c{:i.r"'}r, receivar-,iE (0-1 ;l:rrii:\

advance on a sales contract; also there is a crc*ril f.r,:,irri',tc
accoLints receivable of P2,00c ;or rryhich ,-nerrharici:,.r vriii l;. i,.

,_li

.r'il; ii represents an
re ,if :htt .t-l months
*i,,

,"'

b,i -n:: cds[0iner.

cpA REVIEW SCHOOL OF THE PHILIPPINES (CP,\qi -

auprrlNc PROBTEMS

6.

MAr(i:,A

FINAL PREBOARD EXAMINATION

_-----sr-]:TEpiarn is. zot: I s

The Accounts Receivable control account is not in agreement with the subsidiary ledger.
The differences cannot be located, and the company's accountant decides to adjust the
control to the sum of the subsidiaries after corrections are made'

31.

The adjustment to correct the entry rnade on Deccrnber 1, 20L3, is

1,296
A. Bad debts
Accounts
1,296
ts, Bad debts
Allowance for bad
L,296
C. Accounts
Ailowance for bad
D. No adjusting entry is necessary.

expense
receivable
expense
debts
receivable
debts

32. The required allowance balance (per:gi:lu) cn l-iecember 31,2013, is

A. P2g,354

33.

B.

A. P77g,gA2

35.

c. P19,858

L,296

I,296

D.

P3?-,858

The net r"ealizable value nf Saluyot's accr:unLs re.ei','at-rle on Decemher 31, 2013 amounts
LU

34.

P19,058

1,296

B. P774,!'.;:.

Saluyot should report bad debt expen$? ii-'i -{;

A. P13,344

B. ?27,34/,

c. P793,200
ii of
C P10,296

D.

P788,664

D'

P33,936

What entry is necessary to adjust i,,13 3ii;'-';-i-r,- icCouflt at December 31. 2013?
10,296
A, Bad debts expense
1'A,796
debts
Allowance for bad
13,8{i0
B. Bad debts expense
13,800
Allowance for bad debts
1A,796
C. Allowance for bad debts
10,796
Bad debts expense
13,800
D. Allowance for bad debts
Bad-debts

:ll-:::-----

PR.OBLEM

oo'Gooooo--------

-----11:!-oo

NO.8

sAN FELipE TRADING CCR.PCTIV\TIOr'] was incorporateci 3 years ago as a trading company
engaged in the sale and distribution oi i'rardrruare and electrical supplies. Its offlce and store is
located in Batangas City.
You were given by your client's contrcller a

cr,i,'/cf the unadjusted trial balance

as

of December

31,2013.

The company maintains its Lrank acccr-rnt

,,,vitl. Sr:cr;red

Bank. Your re'riew of the

bank

reconciliation statement disclosed the follr:wii-;i.r i.fi,rma ii.ln :

;

1.

On December 22,2013, the bank erronecusl'i credlted the account of San Felipe Trading for
P195,000 representing deposit for the acc,':t-r'ri :rf another company.

?-. Postdated checks tctaiing P40,000'"t,-re ir,:llidcd in the deposits in transit. These represent
collections of accounts receivable from c,J:i1.crli'irs. The checks were actually deposited on
January 5,2014.

3.

On December 28,2013, the company issueci <-hecks to creditors totaling

checks were released on January 5, 2014.

P1i5,0il0

Tirese

4. A chreck clate,l Decernber 12,2013 in p;yment of accounts payable was recorded as

P:l2,000. Upon examinatlon of the checks return3d by tire banli, tlre actual amount was
P21,000.

LPA RtVltW SLHUOL OF I HE PHiLiPPillES (CPA.R)

AUDITING

PROBLEMS

FINAL PREBCARD EXAMINATION

FlANILA

SEfltMsr:R t5.2!13.l5UlluAYf_8-Q0AM

i1:00AM

5. A check for F4,750 in payment of a n-rinr;r repair ol office eqir;pment was not recorded on
the compan'v books.

6. Transfer of fuhd of P59,300 to Secured Bank current account of DBS Securities was not
recorded. This pertains to p,:rchase of 5,000 s;hares of Wiiliarn Lines tr: be held .:s trading
securitles, Based,:n quoted prlce as of Decemb,3r:r, 2-013, the nrarket va!ue per share is
P1 5.

7.

interest earned arnounting ic P5,77-0 was not recorCed.

B.

Deposits in transit and outstanding checks at Decenrber-3i, 20i.3 amilnteC to P89,200 ancj
P132,000, respectively.

9. The cash in bank balance per book orr Decerlber

31, 23i3 is P68i,200.

The Petty cash fl;nri .:f P3-,,090 n-raiirtaineo crt dt ini::ell basis lras countert cn )arutary 2,
201"4. Unreplenished erpenses rr,cir,rcle petry, r-ash vr-:uchers i'or '.,arioL:s expenses totaling
P19,30C and entplo',,ees'ed'yances for P5,8Ci aii rlatec December 2013,
San Feiipe purchased sever;ri it't.trket(lbij :,ec,-.ri-i';r:s i1r-.iriirq -,:0i3. ,\t Decernper 3L,2013, the
compan,v had the investmeitts rn equii;r secur;li(:s iiste i b,,:lt',r . i.i.; re i,;:l: i";eid at the last
reporting dale, aild all secr-rrities are consicr:;-r I ; l:t I'i " 'r,:i;it,q, -i 1 ., co|- oair,y made an
'
ir;'evccabie election to present fa,r'.,alue chai-,g:]s in :,,, 'iar r-t -r't-'r :rt,e,r:., te r',rrr;i'1.:'..
San Pliguel "A"
Seniorify" Bank

Multivit
l-ofal

Na.,oI_9lurg
2,0c0
1,., ^.,\;r',t.':\

lYi,t,'i,c-;-,,;]-u

:ti-f,

:ia:

r,ci:u

. ir".

Your physical count of stock certificates disr..io:;ec1 1,",;i :,...' ,,, :,,.11r;,p;j
wei-e not yet i-ecoided,
issue
Np,gf-SiatrJ
Seniorit'i Bank
50c
i4ultir;it
rlii
"l

The unadlusted trial balance of the compan'/ at

DecerrLre

ar

1-1,'

')rll-.

accounts:
'rlr:r

l\.ccounts receivable

pr +l:,1i

:i,-i

ilrl

-";

Aliowance for doubifui accounts

Sales

i0,:,'00

1r,fr20,C1.)0

Your reriiew of the accounts receivable .<i:hedulo drscir::;::c l,' ,l ,u. I Oi : ,..',i,C:: .ti. l,'S tCtaling
P17,350 were not reccrded in the b:ck; bi.;i i-r:t-c:,rtt',, refti:1.:, . : r i.l,; :iU ... i,:ra;r' i*dgers, You
alsu noted the following inloi.i:raticii:

i.

A customer's deposit of P38.C{;L) 'i'or qoods

frorn accounts receivahie.

2.,

A,

3.

Goods scid cn account and ileiiriere(l o;_, [);:;r,rrbt:

not reci:rded,

4.

Collection of P15,275 on Ociobr:r 31, 21013 1.rcrn Cetl,e,y ':':rr.i,ilii was :r*ditecj lo rhe account
of Supreme Mercantile.

tr

;,e i-leii;,rr,,,J

cash advance to an officei- of P75,0C0 w i,.: rncluCerJ ori

,l

2 -)l

.i

was deducted

filrt of accc,ui ts i'eceivable.

?t-'i

3 anr':urr[ing rc P31,810 were

5, A promissory note

was issued by a customei' to San Felipe Trading for goods purchased

worth P168,000. The promissory note carries an interest of 12o/o per annum with a term of
60 days, value dated November 15, 2013. -ihis was reflected as part of accounts
receivable. No interest was accnled as of ),ear-enci.

6.

Bad debts are provided based on 2o/s oi' outstandinq accounts receivable at the end of the
year.

A physical count of merchandise on hand rryes rnade on December 30 and 31, 2013, which
ref

1.

2.

iected a balance of P3,873,000. Your re,/ieu/ of lhe inventory list disclosed the following:
Goods costing P148,000 sl-iiprpsd FOit shipping point c'n December 30, 2013 by a supplier to
San Felipe was received on January':,7C14, The purchase was recorded on December 30,
2013.
Goods costing P195,000, shipped FOB destinaticn by the supplrer on December 28, 2013,

were recorded and received on January 5,

?-A1.4.

3.

for P41,700 were returned to the supplier on December 22,2013.

These goods were still inc!uded in tht- ip'rqpl6r,, .crl"redule and the refund was received and
recorded on January 10, 2014.

4.

Goods consigned

5.

Included in the physical count were qood:; sorci to a customer on FOB shipping point on
December 27,2013. These goods witrr a sal!,ng price of P52,830 and a cost of P35,600
r,vere already recorded as sales on acc:rn!: i-:'-ri '3;3 shrpoed only on January 5,2AI4.

Goods purchased In cash

to San Felipe totaling P89,500',vere included in the physical count.

Prepayments consist of:

Prepaid advertising
Prepaid rent
Unusecj office and store supplies
Tolal

?'114,040
165,0110
_ 1e9-_Qgg

B3e-080

Prepaid advertising consists of paymeni 'rr :ir ;rir,,er-tisiflg agency for the design of newspaper
ad which will run for a period of one year f:onr .uit). 31, 2013.
San Felipe renewed its 5-year lease contract cn t:re office building which expired on October 31,
2013. Total advance rental for 3 months yuas rrade amounting to P165,000 was booked as

Prepaid rent.

The cornpany books purchaseo office supplies as irventory, The expense is normally taken up
after the physical count is made at year-end. Orr july 9, 7A13, a total of P38,450 worth of
suppiies was bought and included in the inv:niory. As of year-end, unused suppiies inventory
per physical count amounted to P53,200, l.lo eni:ry lo set up the expense was recorded,
San Felipe's propefty, plant and equipment consist

Furniture and equipment

Delivery equipment
Leasehold im provements
Total
Accu rn u lated depreciation
Net book value

cf lhe following:

Pi,045,000
1,637,000
__ lsJ-aQ0
P3,0.:i5,000

_ (916,s00)
P2J_Q&lgA

The building under lease was renovated .r a cos[ of P363,000 which was booked as leasehold
improvements on September 30, 2013. -i'hes: irrrprovements will be amortized over 5 years.
No amortizatlon was recorded as at December
2013.

ii,

On May 3L, 20L3, the company bought new corrii-.'uters totaling p325,000. In addition to the
cost, it paid additional charges which were taken Lip as Repairs expense. These are delivery
charges
P12,500; installation cost P11,300; ann testing cost P6,5?-0. The computers'

Paoe 10

o1'

'i.ri Paces

LyA Ktrvrtrw >LFIULTL

AUDffiNG

Ur I Ht pHtUpplllL5

PRoBLEMS

useful life is

4 years.

(CPAR) - I\iANI.A

FIN/,.1 PRE BOARD EXAMINATION

IEPIE!1!.E& j5*zll!3

llule4,y I B:00AM -

No ;deprecration was providecl or-i thr,: equiomeni as

11:00AM

of December

31,

20 13,

San Felipe tradin( opened additional stores in nearby localities. To service more deliveries,
additional 3 units of deliver:y equipment were bclught on instailment basis on December 29,
2013' The installment price was P1,200,000 i:r-rt the cash price was P1,000,000. The terms are
P200,000 down payment and the balance p*yable in four equal quarteriy installments, A noninterest bearing promissory note was issued for the unpaid portion on December 30, 2013. The
down payment of P200,000 was recorded as a debit t-o Deliverv equiprnent and a credit to Cash.

Included in the company's unacJjusted trial bralance on Lrecerrber:1,20i3 are Accounts

payable and Accrued expenses of P523,100 and P63,1.00, respectively. Upon verification, the
foliowinq information was discovei-ed:

1.

On December 26,201"3, the company puirchased on account qoccls wortl'l P215,000, but no
entry was r.nade in the books. The goods were ejlready inciurleo in the year-end physical
count,

2.

The following items were erronecuslr,r inciuded

.
n
.
3.

ii-r

accourts pa;,abre:

Accrued expenses totaling p37,4SA

A cash advance from lhe president crf San Felipt_. amouniing to p:15C,000 lc be used as
working capital. This will be repaici within 6 months',r.ithout interest.
A debit balance af PE7,250 represeniing adve nce pavment tbr goods ordered to be
shipped by the supplier on January lZ. ?.A1.4.

Your review of subsequent paynignts frorn Ja;ruar5r 2

was made on December 3l, 20i3 for the folioir,rirrc;:

.
.
.
c
o

15, 2014 revealed that no accrual

Light and ,vater for l.;ov. a'rr, Dec. 2J-3

Telepnone bills for Dec. 20.3
Representation expenses for Dec. ?01j
Minor repair of a deiivery car on Dec. 25,
Transportation expenses fc:r 2At4

i- 2i,:t(
L

!0
i,990

1c,

3.r30

2L)1.3

- 1..1[l

rotal

P-.5i1,|.)&:
i

san Felipe Trading was granted a credlt lrmit ci

end, availments are as follows:
t/alue Date
July 1, 2013
Sept, 1, 2013
Dec. 1, 2013

Date
July i, 2015
Sept. 1", 2016
Dec. 1, 2017
Due

ui tc i)5 r'r ilro

i-y liercur"t,ii Bank. As of year-

pfl-n_c_,ksl

p S00,fjrl0 _h+UeSl_E:r.tig
1jL,i,
2,3C0,0t10
_1,.!e_Ci$j$

Liro/c

iS%

P4.qAu]g!

The company issued P1,200,000 face vaiue cf 1lolo bonrjs.rr ,-)ili- orr.'r:l'i 1, ,i013 maturing on
July 1, 2018 and paying interest seini-ani:uatly or Jar:rijqi 1 find IL;iy 1.

36'
37.

38.
39.

The cash balance per bank staten"rent on Dorernber.iJ,

A. P984,020

B. ?g^6,i"?_0

i"

i(ri3 ';

),- n, ,-.ii

i;.

D748,32.0
i

The adjusted Cash in bank baiar"rce at Der_erni.rsr 3.;", jit.L.l

A, P746,22A

R, P7A(],?}"A

c.

:.-7ltr;,.i20

The adjusted Petty cash fund Lralance al [.,ecerrrcr 3.1,

A. P15,700

B. P?9,200

What is the carrying value of the investnrent

A, P75,000

B, p59,300

C.

li

rs

u].r..r._r

P35,00r1

D"

i!

ii

-P702,600

)9,900

\l/illiarn Lin..s oit iiec,':rrrbei 31, 2013?

,
{-. F. 0
D. pt56,372

_--

SEPTEMBER 15. 2013

SUNDAY

/ E:uuAM - 1r:uuAl"r

loss should be shr:wn in the 2013 statement of comprehensive

income as component of other comprehensive income?
D. P33,300
C. PO
B. P32,600
A, P17,600

40. What amount of unrealized

41. The Accounts receivable balance at tlecember'31, 2013 should be

A.

B,

P13,987

c.

P1,209,3i0

44.

B,

P3,979,300

31-, 2013?

c.

P3,854,200

P3,889,800

How much Sales should be reporte| in the 2-013 income statement?

c" P4,709,484
B. P4,798,984
A. P4,820,000
31., 201"3 shculd be
P247,200
P257.,2A4

45. The total Prepayments at December

A.

B.

P153,750

P1,354,990

L,:

43. What is the adjusted Inventory on December

A.

D.

PL,249,334

the A.litwancc ior doubtful accou nts?

D, P16,900
c. ?L4,027
PI4,7Bi

42. What is the year-errd acilustment

A.

B.

P1,211,330

c.

D.

P4,084,800

D.

P4,816,2L0

D.

P|9Z,2A0

46. The total cost of the company's Proper"ty, plant and equipment at December 31, 2"013 is
D' P3,875,320
C.
B.
A.

P4,238,320

P4,A7532A

P3,868,800

What is the net book value of the cornpeny's Fi'operty, plant and equipment at December
3t,201,3?
C. P3,23L,85?- D' P2,938,820
B.
A.

47.

P2,868,852

P2,862,332

48,

The adjusted balance of Accounts p;ryable at December 31, 2013 is

A.

c. P395,900

D.

P738,900

P155,070

D.

P57,080

oayable at December 31, 2013 sltould be

\-.
LJJtwww
rP193,000
/ ZTUVV
B. P72,A0A
P230,500

D,

LvJl
tP265,000

P437,900

B. P543,900

49. The adjusted balance of Accrued expenses c'n December 31, 2013

A.

P157,630

B.

c.

P54,52i:

50. The Interest

A.

is

c.

ooo0OGooo--------

FROBLEM NO.9
presented below are two independenr sicuar-;on:;. Answer the questions at the end of each
sltuation.

you have been assigned to audit the financial statenrents of ZAIDE

ended December 31, 2013. You discover the fbilr:wing situations.

COMPANY

1.

Interest income of P45,000 was not ar.i:ruerJ at the end of 201?-.

received in February 2013.

Z.

A computer costing P12,000 was expensecj v,rlten purchaseci on

It

for the year

was recorded when

juiy I, 2012. It is expected

resiC:,ai i';,.ltie. The company typicaliy uses straight-line

depreciation for all propefi, plant, aild rql;:1'L31i1.

to have a 4-year life with no

3,

of P99,000 were incurrt:ri early in 2072. They were capitalized and were to
be amortized over a 3-year periocl. F,nortization of P33,000 was recorded in 2012 and
Research costs

P33,000 for 2013,

4.

Cn January 4,2012, Zaide leased a Lrr:iiCing fcr 5 years at a nionthl), renLal of P24,000' On
that date, the company paid the fnllor,vinE ar-ncunts, which were expensed when paid,
P 60,000

Security deposit
First month's rent
lf-aa

24,000
l';

:,1

i,1

Dlcae

'" "'""''tt"t'^^'' k-2or:

-

ororrrnu o*orarr'J

Last month's

i
5,

g:ooeu

- ?:' !-i-ri:
,:LQ!.1":01

The company.received P108,000 from a custonrer aI the beginnii"rg of 2L:12 fcr services that

it is to

a 3-year period beqinniiig in 2012. rlcne of the amounf

as urrearned re';enue at il"r:: eild fi'?$:2.

perform evenly over

received was i'eporteo

6.

rent

r suruonv

Merchandise inventory costrng P54 600 was in il-re v,rarehouse art Dacember 31,2012 but
was incorrectly omitted fronr the phvsical count ;:t thai dete The cornpany uses the periodic
inventory rnethod

Assume all amounts are material and ignore iircorne tax effects

51.
52.

Zaide's net income in 201? is understatecl by

A. P56,100

B. P53,4riC

C P54,iC0

Zaide's net income in 20 j3 is cverstatcd by

A. P32,4Ci0

B. p]3.61,

p102,900

C"

D.

P89,400

D.

p30,900

53, The retaineo earnings reuorted on Zaide's statement ct financial position at December
201-?. is undersia,,:ad L,;'

A. P22,500

B. p28,500

C. p2-4,i100

D.

31,

p58,500

lhe dc,rrudl basis:rt acil'rr,tirq fcr se..,e:'al ycars, A i'eview of

the records, however, indicates that sorne experrses ani re'lt:niles haye been handled on a cash
basis because of errors made by an inexperienced bookkeep,er.. inccme statements prepared
by the bookkeeper reported P870,000 net income for Ztt? and P1,110,000 net income for
2013. Furlher examination of the records re\/eals tlrat tfte foiiowing items were handled
LOVEY CORPOMI-ION has used

improperly.

1. Rent was received

from a tenant iri Decenrber

2012

i'he anroil;.t, P30,000, was

as income at that time even though the rental pe:'tairi;:o

2.

recorded -..::

.2.11*,

Wages payable on December 31 ll.ive been c,';nsrstr-.r':tll ilr,iirtr,.i frcm tt:e "ecords of that
date and have been enterecj as exljenses i\i:ci: l:ii.j in :r] ,.j,ir,,/iit( ,cti -{-he amounts of
accruals recorded in thiis manner \rere:
December 31, 2rJ11
December 31, Z0IZ
December 31, 201-?

3.

lr:

Ll,."1,''r
3b, LlCi
28,2C4)

Invoices for office supplies pi;rchaseci lr;v,t ,,rtr,;-, i.",;.:,i 1,:r) '.'r :,. _ Lr-,ri., acccunts when
received. Inventories of supplies on hancj ai'.le 1::r f,i i',, r',1r-i1 f i:,:ir l,.i\r(,t reen ignored, and
no :ntry has Deen made ior rhe:lt
December 31, 2011
December 31,,201-2
December 31, 2013

54.

What is tne corrected net incorne ior the year

A,
55.

PB26,2AA B. PB{J6,200

P39, rj

ilr

28,,iltt,t
/").,64C
ZC1.Z)

C,

FB3_1,21(;

D.

p901,000

What is the corrected net inccme fcr 2013?

A Pr'162'2a0------:----B---ll:]-']:i!l-oooo**to"l]:-ll:t'l:l
--

"- ?--li:113'000i

PROBLEM NO. 10

The following are two (2) unrelated situatioirs. .{nswer :lre question:; at the end of each
situation,

.:

CPA REVIEW SCHOOL OF THE PHILIPPINES (CPAR)

AUDmNG pROBLEMS

- r,rAli1l-

FINAL PREBOARD EXAMINATION

__-SfptfNgER t5, 2013 /

SUNDAY

8:00AM

i1:00AM

containers. The customer is charged

for each container relurned within
refund
a
receives
anci
deliverecj
a deposit for each container
for
the containers not returned within the
two years after the year of delivery. Omega accounts
time iimit as being sold at the deposit amount. Information for 2013 is as follows:
OMEGA COMPANY sells its products in expensive, reusable

Containers held by customers at

December 3L,20L2,
from deliveries in:
Containers delivered in 2013
Containers returned in 2013
from deliveries in:

56"

2011

85,000

aAL? 240-!0Q

325,000
430,0C0

2Al7

57,500

2CL2 140,000
2013 152_aq0

3s4,soO

How much revenue frorn container sales shcitid be recognized ior 2013?

A. P127,500

B. P267,5A0

C. P27,500

D.

P85,000

57. What is the total amount of Omega Corrrpairy's liabiliby for retr,rnable containers at
Decenrl:er 31, 2C13?

A, P373,000

B, P400,500

c. P267,500

D,

P430,000

DP, iNC., a dealer of household appliances. seiis u,ashing machines at an average price of
P8,100" The company also offers to eaci-t custorrer a separate 3-year wart'anty contract for
PBl"0 that requires the company to provide pei'iodic maintenance services and to replace
defective parts. During 2013, DP sold 300 washing rnachines .rnd 270 warratrty contracts for
cash. The company estimates that the rrrarranl'/ r-..,:jts are P1B0 for pats and P360 for labor.
Assume sales occurred on December 31,2013. DP's policy is to recognize income from ine
warranties on a straight-line basrs. In 20.14, DP rncurred actual costs relative to 2013 warran0z
sales of PlB,000 for parts and P36,000 fcr labcr.

58. What liability relative to these tra:rsarcrion,; r./ould appear on

statemeni of financial position and

A,
B.
c.
D^

Current
P145,800
P72,900
P72,900
P0

l':otr,r

tl^,e December 31,2013,

vitould tt be classified?

NPfqU[si,l
P72,900
P72,900
P145,800
P218,700

59. What amount of warranty

expense lvuuld be shown on the incor;ie statenrent for the year

December
ended
3L, 20t4?
D. P54,000
A. P18,000
B. P 0
C. P 36,000

60. What liability relative to the 2013 r,varr';ini:i:,;

statement of financial position and

A.
B,
c.
D.

Current
P145,800
P72,gO0
P72,900
P145,800

''rov'.' r,'i-:,.rrr-1

rrvculd appear
il re ciassifir'd?

Noncurren i
P72,9AA
P7Z,9O}
P145,800
P0

---END CF TXAMINATION---

on the December 31,2014,

CPA REVIEW SCHOOL OF THE PHILIPPINES

Manila

AUDITING PROBTEMS
FINAL PRE- BOARD EXAI.{II{ATION
PROBLEI*I ,.

1. F

September 15,2013

TGR Company

- June 30. 2011

Cost
Accum. depreciation , L!1,1W
Carrying value
Trade-in value

Trade-in

PL57,2oO

- 681fi1(Pl57,200

x20o/o x 2.5 yrs.)

78.600

79,6W
129.000

P50,400

Sale-Jan.f,20i2
P132,000

Cost

,Lfil}g - UUl?

Accum depreciation

(P132,000

x?^Qa/o

J92W

x 3 yrs.)

52,800
7L.Z5A

Carryirig vaiue
Net proceecls

SE--Adahei

1.20,13

Cost

Accum del:reciation , ULl09

* rcfifi3

(P120,000 x20o/o x 4

9lt2)

Carrying value
Proceeds

P120,000
114.000
6,000
24.000

Total gain

2. C
3. C

18,450

18,000

e86.850

(Pi80,000 + P6,000) + (P2 ,0,0C0 x 98%) + P279,000

PZ0020a

(P186,000 x20o/ox43/L2) + (P235,200 x}Aa/ox36/t2) + (P279,000

x}Ctr./ax26/LZ) P462.24O

Date of

1,/U09

Cost
P157,200
120,300
132,000
186,0o0

2011
P15,720

24,000

24,000

24,ff)A

24,W0

26,400

26,400
37,200
23,524

26,400

37,200

37,200

47,M0

47,M0

27,9N
PL78,zffi
1s3i02
(P 24.4s8)

rzus24gJ

9,300
0

235,20fi

_0

6130/7i_

279,000
Correct depreciation
Depreciation per client

P97,L40

PL42,Sffi

97,440

Ls4.7tl
? 12.152

Over (under)statern:rnl

4.8
B
D
A
A
C

E5*04

PO

2013
PO
18,000
0

Totat
P 78,600

114,000

79,204
158,10O

55.800

37,200
47,444
__55940

P164,M0

P158,040

P734,A4O

108.791

82.233

597.018

L@,640
139.s00

GJLSOZ) {PJ3ZAZZ)

5.4

PROBLEM 2
6.
7.
8.
9.
10.

20t2

P3l,44A

20@

9l30lm
6l3O/tO

zzu

P3tr,440

AEgurg.!figl

- hlA$A{xAI;

IilC.
P94.500
Ps75.000
P1S1.000
P44.100

Inventory, Juiy 1, 20i.2 (1,75,000 + P1.9,500)

Purchases (P540,000 - P8,100 +P27,900 + P16,200)
Inventory,, June 3O 2013 (P105,000 + P27,9AA +P11,100)
Accounts payable, June 30, 2013 (P27,900 + P16,200)
P94,500

+ P576,000 =

P67C,500

P525-500

P144,000

PROBLEMS-TANDEMCO.

11.

Outstanding checks, Nov, 30

Add: Checks issued in December:
tsook disbursements
Cost of checkhook
Error in recording a disbursement (P39,600

P170,000
P4A7,240

P3,960)

(1,200)
(3s.640)

Total
Less: Checks paici

L"y

bank:

Bank ciisbursernents
Decerrrl.,er banx seruice charges
Custorner': rctt,r ned check
Ourtstandlng clr*cks, Dec. 31

12.

370.360
540,360

P204,000

(1,600)
(24.000)

178.400

P36i360
P 80,000

Deposit in tiafl$,t, Nov. 30

Add: Collecti+ns:
tio.lk receipts

P735,600

l'.icte coiiected by barrk in November

(100,000)

CPA REVIEW SCHOOL OFTHE PHIUPPINES (CPAR)

AUpmNG

PROBLEMS I

MANILA

"---__--IIUAL

gMeaABD 0(AUJMIISX

(12L000) 5ts-609

Note sent to tlrre bank for ctrtlection

Total

595,500

Les:

Deposits credited by bank:

Bank receipts
Correction of erroneous November charge
Deposit in transit, Dec. 31

P41S.CI00

Nov-30
tsook balances

P157,200
100,000

Note collected by bank in November

Cost of checkbook
Service charges
Customer's returned check
Note with bank recorded as receipt
Overstatement of d isbu rsement

30

13. A
PROBLEM

16.

74.

EeeejBS; -DS[ursements Dec-31

P735,600 P407,200
(1,200)

1,500
24,000
_135,$39)

__35"6t0

"B25S,gl0

P515,e00

e3S5"96!

.e375.64!

Uur-30

ik$e195

D;Strtillelnerils

4C,000

80,u00

,1204,00{)

P'+i5,000
i+i),irCIf)

Aee*

jl

P5i8,000

i8!,00u1)

:i19,fio0
:

(1,600)
{?-4,400)

(120,000)

(120,000i

F:i(]b,000

219,600

(i70,00(})

(r.7c il?())

E2:f;"ffiq ffl.I,k*"]

.(36L960)]
-i,:.l*li.gg
P3,?3300 Pl,-',s,ffo

15. A

4- MINA MINING CO.

Mineral property (P323 x 7,500)

Building (P80 x 7,50CI)
Machinery G/2) (PtZx 7,500)
Machinery Glz) (P24 x 7,500)

77. D
Mineral propety (P323 x 15,000)
Building (P80 x 15,000)
Machinery (112) (P12 x 15,000)
Machinery $12) tP24 x 15,000)

19.

P485,600

(i00,000)

___yeer_L-

Derlcilen

18.

376.000

P219-600

(1.200)

,Adjusted book balances

Bank balances
Erroneous bank charge
Deposits in transit
Novemhr 30
December 31.
Outstanding checks
November
December 31
Adjusted bank balances

($.e00)

-Deeresiatia!

P2"4:11.5U0

P600,000
9C,0fi0
_"r.80"900

,5l;ti?"519

P,SZSSS{}

Va:. g--_
E
-----l-se!:
Pepieaalim
Ile.ne&or
p4 s, 5 000

---

r-

Pi,200,000
180,000

__ie0$00

P3fi#i,t00

r,l*Z*0,400

-- - ".,-YeaL(- ----_-_--."Dspresratlon
[:r.:#etLr"U

Mineral property (P323 x 15,000)

Building (P80 x 15,000)
Machinery Glz) (P72 x 15,000)
Machinery {U2) (P24 x 7,500)

I:4,84ii,fr00
P.:,200,000
i.80,000

_.1mgr0
flf,5#.L.000

Yeer

pen;ri{bn
Mineral propeflry (P323 x 15,000)
Building (P80 x 15,000)
Machinery G/2) (P12 x 15,000)
Machinery (1/2)

24. D
Mineral property (P323 x 7,500)
Building (P80 x 7,5A0)
Machinery Ul?) (P12 x 7,500)
Machinery (112)

P*ks8.CI00
7

Deprexratiu

rr4,b45,0{)0
rr1,200,000
I 90,000

P.iJ$0s00
11*ii*i-{$O
-------""---Yea:JL-0egie-tr-rfi

.l=)epreciation

P7./t2"?.st-]CI

, i00,CI00

9i,e00

l;;i;,.xin

I rft!,'trr.,c6)H

.,'--

.::

r$D0,0gl

cPA REVIEW SCHOOL OFTHE PHILIPPINES (CPAR) - MANILA

AUDM-

5.sANTOL

PROBLEM

2t. D
24, A

FINAL PREBOARD EXAMINATION

CORP.

?3, A

22. A

P1,600,000
1.610.000

Proceeds from sale of Eloy

Carrying value
Loss on sale

25. D

27.
28.

29.
30.

P2,300,000
1.950.000

Proceeds from sale of Kelly

Carrying value (P1,450,000 + P500,000)
Loss on sale of Kongga
Net realized gain on sale

PROBLEM

26.

L10,0@

6-

(e0.000)
P260.000

DOFINA MANUFACTURIilG COMPAHY

A Patents (P2,550,000 - P510,000 - PX.20,000)

B Licensing agreement 1 (P1,500,000 - P900,000)
D Licensing agreement 2 (P1,470,A00 + P30,000)
A Leasehoid improvements (P780,000 * P330,000 - P90,000)
A Retained earnings - debit (n00,000 + P720,000'+ F45,000 + P870,000)

PROBLEM 7

12.

36. A
37. B

P380,960
309,280

7o/o
3o/o

8,000
12.000
P7q8.q60

59o/o

P19 058

a3.ifi

SAN FELIPE TRADING CORPORATIOil

P984.020

Cash balance per bank statement

tsoot
P681,200

(195,000)
115,000

(9,000)

P12,000)

(4,750)
(59,300)
5,720
(132,000)
49,200

- P40,000)

Adjusted peity cash funrl (P35,000

17.350
P706.224

P19,300

P5,800)

TradrnE securities at FV (William Lines) (P15 x 5,000)

Unre.liized ioss (P314,60C Cost

P7A6.220
P9 900

E25,000

817.600

P297,000 FV)

Pt,452,7ffi

Accounls receivable per books

Postdated check
Unrecorded collections
Customer's deposit
Cash advance to an officer
Unrecorded sale
Prornissory note received from custorner
Unshipped goods
Adjusted balance
Increase in allowance (P7,249,330 x2o/o

Bank
P984,020

(40,000)

Unrecorded cailecliens

2,662
4,000
2.400

P77q.9O2

Adjusted balances

42.

20o/o

P23,640 -'Pt,296 = ?22,34 + P1,295 * P10,296

Outstanding cnecks
Deposit in transit {Pi39,200

38. D
39. A
40. A
4L. C

2o/o

88,720

Allowance
P 3,810
6,186

Unadjusted balances
Erroneous bank credit
Postdated checks
Unreleased check
Understatement of baok disbursement (P21,000
U nrecorded disbu rsernent checks
Unrecorded transfer of fund
Interest earned

Eatilsc

Rate

(P798,960.- P19,058)

P360.00!
P2.s35.000

Required

Adjusted

Net Debit

Age
Ealance AdjustmenE
P372,960 P8,000
month
307,280 2,000
1-3 months
88,724
3-6 months
24,0A0 (4,000)
Over 5 months

PROBLEM 8

P1.q20.000
P500,000
P1.s00.000

SALIIYOT COMPANY

0-1

31. B
33. A
34. A
3s. c

P350,000

40,000

(17,350)
38,000

(75,000)
31,810

(168,000)
(s2.830)
P1.249.330

= ?24,987

P10,200)

P14.787

cpA REVTEW SCHOOL OFTHE PHIIiPPiNES (CPAR) - MANILA

AUDmNGPRoBLEMS ,
43. C
44. B
45. D

____L],NAL$,EE"EABDEXAUI$ATIQN

Adjusted inventory (P3,873,000 + P148,000- P41,700

Adjusted sales (P4,820,000 + P31,810

- Pltil.sCIO)

eL.s8g800
P,1,798-980

P52,ti30)

P438,000

Prepayments per books

Adveftising o(pense (P144,000 x SILZ)

(60,000)
(110,000)

Rent expense (P165,000 x2l3)

ffice supplies expense (P129,000 x P53,200)
Prepayments, as adjusted

46. D

47. B

(75.8m)
P192.200

Total cost of PPE per books

Additional charges to computers bought (P12,500 + Pi.i.,300 + P6,520i
Unrecorded cost of delivery equiprnent (Pl,0m,000 * P200,000)
Adjusted cost of PPE

P3,045,000
30,320
800.000
P3 875.320

Total cosr of

P3,875,320

PPE

books

Accumulated depreciaticn per

Depreciation - Leasehold improvements {P363,000/5 x
Depreciation - Computers t?355,320 4 ><7
Adjusted net book value

!i2)

48.

p93o,500

3,112)

18,150

_ttgg6,{68)

-s-t"&l$

PL85&.852

B Accounts payable per books

P523,100
1.15,m0

Unreleased checks
Understatement of book disbursemenls iP2L,0C0 - P1i,O(iC.l
Unrecorded purchase
Accrued expenses
Cash advance from the company presiCeni
Advance payment for goods ordered erroneoirsiy debiteri tc ntcoLl::fs payable
Accounts payable, as acijusted

49. C
50. D

Secured bank loans (P32,500

82250
Ps43-900

2012

P(45,000)

1.

2013
P45,000

(12,000)

2.

+ P13E,000 -i P22,500) +

t,uT
3,000

4.
5.
6.

Over

Gtdgrj

P (12,0C0)
1,500
3,000
99,000

(33,0m)

(33,000)

(84,000)
72,400
(s4.600)

(36,000)

saml

54.60q
P33-600

Pr22l0o)

Pf56,100)

Net incorrre, ;rs rr;raried

{3-

1.

leZ

:i.
Correct{rd "r'1: il'corilF:

30,000
7,800

_1-i-!L80i:) L4.400
i:hr5r$0 P1J5Z.200

(66,0to)

53" A

i",

"

55. A

A.

OMEGA COMPAT{Y/DR rNC.

Revenue from container sales (P85,000

P57

P27sW

ste)

P325,000

Liability for returnable containers, Dec. 31, 2012

Deliveries in 2013

1l!J00
755,000
P35.4.500

2013 container returns

2013 container sales
Liability for returnable containers

59. D
60, B

000)

(.{,1't0fi,\

Total

58. C

2013

p,6.r$,000 P1,110,000

(84,000)

52.

51. A
PROBLEM NO. 10

P2$5X40

i)7.:,(.rCS

RE, Dec, 31,2013

99,000

3,

P155.070

ZAIDE COMPANYILOVEY e(ftPCRATIOiU

Net income over (under)

C
A

{37,450)
(350,000)

Adjusted accrued expenses (P63,100 + ?37,15A + P5'1,520)

PROBLEM NO. 9

56.
57.

(9,000)
215,000

A\"58i

(382.000)
P_373-000

Unearned warranty revenue:

Current (P810 x 270 x U3)
Non-current (P810 x 274 x 43)

8145.S00

+ P36,000 labor)

P54.000

Unearned warranty revenue:

Current (P810 x27AxU3)
Non-current (P810 x 27C x Ll3)

?77500
PJEgIP

(P18,000 parts

P72-900

---END*-