Questions 1 through 3 are based on the following:

Sophia and Anna are partners operating a chain of retail stores. The
partnership agreement provides for the following:

Annual salaries to Sophia of P40,000 and P30,000 to Anna.

12% interest on average capital balances.
Bonus to Sophia of 20% of net income before salaries and bonus but after
interest on capital.
Residual income in the ratio 25% to Sophia and 75% to Anna.

The Income Summary account for year 2011 shows a credit balance of P244,000
before any allocations.
Average capital balances for Sophia and Anna are P100,000 and P150,000,
respectively.
1. How much must be the share of Sophia on the partnership net income?
A. P120,000
B. P123,900
C. P124,600
D. P119,400
2. Assuming that the bonus to Sophia of 20% of net income is after allowance
for interest, salaries and bonus, how much must be the share of Sophia on
the partnership net income?
A. P106,000
B. P138,000
C. P109,600
D. 134,400
3. Assume that the Income summary for year 2011 shows a debit balance of
P40,000 before any allocations. The partnership agreement is silent about the
earnings of salaries, how much must be the share of Anna on the partnership
loss?
A. P17,000
B. P57,000
C. P10,000
D. P30,000
4. Samuels and Bryan are partners operating an automobile repair shop. For
year x4, the Income Summary account has a debit balance of P40,000.
Samuels and Bryan withdrew their salary allowances of P40,000 and P60,000,
respectively, and profits and losses are shared 6:4.
The partnership agreement specifies that salaries are allowed only to the
extent earned. How much must be thee share of Samuels?
A. P24,000
B. P16,000
C. P44,000
D. P4,000
Questions 5 through 9 are based on the following:
Red, White, and Blue are partners with a profit and loss ratio of 2:4:4 and
credit capital balances of P60,000, P80,000, and P60,000 respectively. Green is to
be admitted into the partnership with an investment of P75,000 for a 25 percent
interest in the capital and 30 percent interest in the profits and losses of the firm.
5. Assuming goodwill is to be recorded in the books, how much capital must be
credited to Green?
A. P68,750
B. P75,000
C. P85,715
D. P82,500
6. Assuming goodwill is not to be recorded in the books, how much capital must
be credited to Green?
A. P68,750
B. P75,000
C. P85,715
D. P82,500

7. Which method is advantageous to Green and how much is the advantage?

A. Bonus method, P536.25 advantage
C. Bonus method,
P1,250 advantage.
B. Goodwill method, P536.25 advantage
D. Goodwill method,
P1,250 advantage.
8. Assume that Green is to be admitted into the partnership by purchasing his
interest from the partners for P75,000 for a 25 percent interest in the capital
30 percent interest in the profits and losses of the firm. The implied goodwill
as a result of the interest purchased is to be recorded prior to Greens
admission. How much capital must credited to Green?
A. P50,000
B. P75,000
C. P60,000
D. P82,500
9. Assume that Green is to be admitted into the partnership by purchasing his
interest from the partners for P75,000 for a 25 percent interest in the capital
30 percent interest in the profits and losses of the firm. How much capital
must credited to Green?
A. P50,000
B. P75,000
C. P60,000
D. P68,750
10.A partnership has the following capital balances:
Lea, Capital

P60,000

Marlyn, Capital

30,000

Sherilyn, Capital

90,000

Profits and losses are split as follows: Lea (20%), Marlyn (30%), and Sherily
(50%). Sherilyn wants to leave the partnership and is paid P100,000 from the
business based on provisions in Articles of Partnership. If the partnership uses the
bonus method, what is the balance of Marilyns Capital account after Sherilyn
withdraws?
A. P24,000
B. P27,000
C. P33,000
D. P36,000
11.As of December 31, 2011, the Sexy partnership has the following capital
balances:
Amy, Capital

P130,000

Rosel, Capital

110,000

Chari, Capital

80,000

Shee, Capital

70,000

Profits and losses are split on a 3:3:2:2 basis, respectively. Chari decides to
leave the partnership and is paid P90,000 from the business based on the original
contractual agreement. If the goodwill method is to be applied, what is the balance
of Amys Capital account after Chari withdraws?
A. P133,000
B. P137,500
D. P145,000
Question 12 through 14 are based on the following:

C. P140,000

Edgar, Fiel, and Garry are partners with a profit and loss ratio of 2:3:5. The
partnership are retiring and plan to liquidate the partnership. On January 1, 2012,
the trial balance of the partnership shows the following:

Cash
Other Assets
Edgar, Capital

40,000
700,000
20,000
-------------P760,000

Liabilities
P160,000
Edagr, loan
60,000
Fiel, Capital
100,000
Garry, Capital
440,000
------------P760,000

12.In preparing an advance cash distribution plan, how much Garry will receive
under priority 2?
A. P273,333
B. P40,000
C. P66,667
D. P16,667
13.If P440,000 cash is available for distribution, how much Garry receives?
A. P277,500
B. P370,000
C. P2,500
D.
P58,000
14.After distributing P440,000, who will get the next P120,000?
A. Garry, P120,000
B. Fiel, P45,000; Garry, P75,000
C. Edgar, P24,000; Fiel, P36,000; Garr, P60,000
D. Edgar, P4,000; Fiel, P43,500; Garry, P72,500
Questions 15 and 16 are based on the following:
X, Y, and Z are partners sharing profits in the ratio of 4, 3, and 2, respectively.
The partnership and two of the partners are currently unable to pay their creditors.
The firms balance sheet and personal status of the partners are as follows:
Cash
P 2,000
Other Assets 242,000

Accounts and bills payable

X, Capital
Y, Capital
Z, Capital

P148,000
40,000
24,000
32,000
------------P244,000

-----------P244,000
Personal Status of Partners
(Excluding Partnership Interests)
Cash and Cash Value
Partner
of Personal Assets
X
P124,000
P80,000
Y
37,800
47,600
Z
16,000
20,000

Liabilities

15.Assuming that the other assets are sold for P134,000, how much of the
Zs capital appear to be recoverable?
A. P8,000
B. P4,000
C. P2,000
D.
none
16.Determine the minimum amount that must be realized from the sale of the
partnership assets other than cash so that the personal creditors of Y will
receive full settlement of their claims.

A. P53,400
B. P199,400
C. P51,400
D.
P201,400
17.The following accounts are presently being reported by the Fred, Jayson, and
Lawrence partnership:
Cash
P300,000
Liabilities
220,000
Jayson, loan
100.000
Fred, Captal (40%)
160,000
Jayson, Capital (20%)
( 60,000)
Lawrence, capital (40%)
( 120,000)
Lawrence is personally insolvent and can contribute only an additional
P30,000 to the partnership. Fred is also insolvent and has no available funds. How
much Jayson can still recover?
A. P100,000

B. P10,000

C. P40,000

D. P0

Questions 18 and 19 are based on the following:

Albert, Ralph, and Christopher operate a local accounting firm as a
partnership. After working together for several years, they have decided to liquidate
the partnerships property. The partners have presented the following balance
sheet:
Cash
P 200,000
Liabilities
P 400,000
Albert, loan
80,000
Ralph, loan
100,000
Noncash assets
1,620,000
Albert, capital (50%)
900,000
Ralph, capital (40%)
300,000
Christopher, capital (10%)
200,000
---------------------------Total
P1,900,000
Total
P1,900,000
The noncash assets are sold for P800,000, with P210,000 of his amount being used
to pay liquidation expenses. All three of these partners are personally insolvent.
18.How much of the cash must Albert receive?
A. P140,000
B. P300,000
C. P295,000
D. P900,000
19.Assuming that the noncash assets are sold for P800,000, with P60,000 of this
amount being used to pay liquidation expenses. All three of these partners
personally insolvent and the profits and losses are split 2:4:4 to Albert, Ralph,
and Christopher, respectively. How much must Ralph receive?
A. P48,000
B P540,000
C. P100,000
D.
P0
20.Following the liquidation of all noncash assets, the partnership of Aaron,
Aries, Tommy, and Cornelio has the following account balances:
Liabilities
P280,000
Aaron, loan
50,000
Aaron, capital (20%)
( 210,000)
Aries, capital (10%)
( 300,000)
Tommy, capital (30%)
30,000

Cornelio, capital (40%)

150,000

Aaron is personally insolvent. How much Cornelio can still recover?

A. P70,000
B. P150,000
C. P40,000
P0

D.

Questions 21 through 24 are based on the following:

The partnership of Mamerto, Michael, Morga, and Montano was formed
several years ago as a local accounting firm. Several of the partners have recently
undergone personal financial problems and decided to terminate operations and
liquidate the business the following balance sheet is drawn up as a guideline for this
process:
Cash
P 150,000 Liabilities
P 740,000
Accounts Receivable
820,000 Morgan, loan
350,000
Inventory
1,010,000 Mamerto, capital (30%)
1,200,000
Land
850,000 Michael, capital (10%)
880,000
Building and equipment, net
1,680,000 Morga, capital (20%)
740,000
Montano, capital (40%)
600,000
-----------------------------Total
P4,510,000 Total
P4,510,000
At the time the liquidation commences, expenses of P160,000 are anticipated as
being necessary to dispose of all property.
Part A
21.How much must be the total selling price of other assets of Mamerto to
receive P750,000?
A. P2,270,000
B. P2,576,000
C. P2,860,000
D. P3,020,000
Part B
The following transactions transpire during the liquidation of the Mamerto,
Michael, Morga, and Monatno partnership:
Of the total accounts receivable, 80 percent are collected with the rest
judged as uncollectible.
He land, building and equipment are sold for P1,500,000.
Safe capital distributions are made.
Montano becomes personally insolvent. No further contribution will be
forthcoming from this partner.
All liabilities are paid.
All inventory is sold for P710,000
Liquidation expenses of P110,000 are paid.
Safe capital distributions are again maid.

22.How much Michael received from the first safe payment distribution?
A. P612,600
B. P480,000
C. P543,600
D. P586,000
23.How much Mamerto received from the second safe payment distribution?
A. P355,000
B. P432,000
C. P300,000
D. P380,000
24.How much of the total cash distributed Morga received?
A. P755,300
B. P790,000
C. P290,000
D. P555,300
25.Aries, Ryan, Dante and Joffrey re partners who share profits and losses on a
4:3:2:1 basis, respectively. They are presently beginning to liquidate the
business. He the start of this process, capital balances are as follows:
Aries, capital
P60,000
Ryan, capital
27,000
Dante, capital
43,000
Joffrey, capital
20,000
Which of the following statement is true?
A. The first available P2,000 will go to Joffrey.
B. Aries, will be the last partners to receive any available cash.
C. The first available P3,000 will go to Dante.
D. Aries will collect a portion of any available cash prior to Joffrey
receiving money.
26.The partnership of Eric, Jayson and William has elected to cease all
operations and liquidate its business property. A balance sheet drawn up at
this time shows the following account balances:
Cash
P 48,000
Liabilities
P 35,000
Noncash Assets
177,000
Eric capital (60%)
101,000
Jayson, Capital (20%)
28,000
William, capital (20%)
61,000
--------------------------Total
P225,000
Total
P225,000
The following transactions occur in liquidating this business:
Safe capital balances are immediately distributed to the partners.
Liquidation expenses of P9,000 are estimated as a basis for this
computation.
Noncash assets with a book value of P80,000 are sold for P48,000.
All liabilities are paid
Safe capital balances are again distributed
Remaining noncash assets are sold for P44,000.
Liquidation expenses of P7,000 are paid.
Remaining cash is distributed to the partners and the financial records
of the business permanently closed.
How much did Eric recover from this business liquidation?
A. P45,800
B. P40,400
C. P50,000
D. P41,600

27.Troy Corporations home office ships merchandise to its Visayan branch at a

billing price of 120% of cost. During 2011, the home office makes the
following entry.
Visayan Branch
P60,000
Shipments to Visayan branch
P60,000
At year-end 2011, P12,000 of this merchandise remains to the Visayan branch
inventory.
The entry necessary on Troys home office books at year-end 2011 to adjust
the branch inventory and branch profit to a cost basis must be:
A. Shipments to Visayan branch60,000
Visayan branch
60,000
B. Shipments to Visayan branch10,000
Visayan branch
10,000
C. Shipments to Visayan branch10,000
Unrealized profit in branch inventory
10,000
D. Shipments to Visayan branch10,000
Unrealized profit in branch inventory
2,000
Branch Profit
8,000
28.On December 1,W Company opened a branch in San Fernando, Pampanga.
The following information appear on the books of the home office and branch:
Home Office
Branch
Shipments from home office, net of
P7500 returned to home office
P412,500
Merchandise inventory, December 31, of which
P20000 came from outsiders
185,000
Branch loss from own operators
P26,000
The home office followed the practice of billing the branch at 20% above
merchandise cost.
The correct result of branch operations must be:
A. Net loss of 26000
C.net income of P41,250
B. Net income of P15,250
D.net income of P35,875
Questions 29 and 30 are based on the following:
The following appears on the books of both home office and branch:
Home office
Branch
Sales
P600,000
Shipments from home office
350,000
Purchases
30,000
Operating expenses
180,000
Branch profit
P156,000
The branch inventories consisted of:
Dec.1 2011 Dec.31,2011

Merchandise from home office

P70,000
P 84,000
Local purchases
10,000
16,000
Total
80,000
100,000
29.
How much is the total realized mark up on branch inventory?
A. P156,000
B. P60,000
C. P96,000
D.
P116,000
30.
The unrealized profit in branch inventory account balance that must appear
on the books of the home office on December 31 2011 must be:
A. P24,000
B. P40,000
C. P33,600
D.
P20,000
31.On January 1, 2011, Renan Company established a branch in a nearby city. At
the close of the fiscal year ended December 31, 2011, the investment in branch
account on the books of the home office had a balance of P66,000. The branch
books reflected another amount thus the difference in the reciprocal accounts is
due to the following data:
Cash of P10,000 forwarded to the home office by the branch is in transit
and has not been recorded on the home office books.
Merchandise costing the home office P8,000 was transferred to the branch
at a billing price of P9,000. The merchandise is in transit and has not been
recorded on the branch books.
Notification sent by the home office to the branch, informing the branch of
P5,000 of operating expenses that the home office paid on behalf of the
branch, has not been received by the branch and thus has not been
recorded by the branch.
Cash of 2000 received by the branch from the home office was
erroneously recorded by the branch as 20000.
The branch purchased for cash 15000 of equipment for its use; fixed
asset accounts of the branch are maintained the home office. Notification
sent to the home office by the branch, informing the home office of the
branchs action has not been received by the home office and thus has
not been recorded by the home office.
The unadjusted Balance of home office account on branchs book must be:
A. P41000

B. P45000

C. P62000

D. P87000

32.Edwards company opened a Guagua branch on January 2011,Edwards recorded

merchandise transfer to the branch and merchandise returns from the branch
with the following entries:
Branch current
156,000
Sales
156,000
Sales return
3,900
Branch current
3,900
Transfer to and the branch were recorded by Edwards at 130 percent of Edwards
cost.
The Guagua branch reported to the home office a net loss P12,000 for 2011 . In
addition, the branch reported a closing inventory of P65,000, all of which was
acquired from the home office.
As a result of the above information:

A. The combined net income will be over stated by P39,000

B. The correct result of the operation of the branch will be a net income of
P8,100
C. The balanced of the unrealized profit on branch inventory account on the
home office books must be P19,500.
D. The correcting entry will reduce branch current account by P152,100.
33. The following data summarizes in part the results of operations for 2011 of Bert
company.
Of the total cost of goods manufactured for 2011, 38% was for materials
used, 30% for direct labor, and 32% for manufacturing overhead.
During 2011, the company paid for 90% of the materials purchased, leaving
P293,000 of unpaid invoices for materials at year end. The Company
commenced 2011 operations with a material inventory of P421,000. All
materials were purchased f.o.b companys plant.
The company disbursed 2101500 direct labor during 2011 .as Dec. 31, 2011,
accrued liability for direct labor amounted of P144,000 which was twice as
much as last years accrual.
The inventory finished goods on December 31, 2011, was 10% of the cost of
the unit finished during the year, and goods in process on that date were onehalf the finished goods inventory. This years finished goods inventory was
150% of last years. There are no goods process last year.
The manufacturing overhead, expect for depreciation of factory buildings and
equipment, is detailed below:
Indirect labor
P 672,000
Heat, light, and power
226,200
Maintenance and repairs
488,300
Insurance-factory
18,100
Property Taxes
64,400
Factory payroll taxes
97,000
Miscellaneous factory costs
276,400
P1,842,400
How much is the cost of sales during 2011?
A. P7,245,000
B. P6,900,000
C. P6,670,000
D. P5,757,500
Questions 34 and 35 are based on the following:
The controller for Blessa Photographic Supply Company has established the
following activity cost pools and cost drivers.

Activity Cost Pool

Machine Setups

Budget
ed
Overhe
ad
Cost
Cost Driver
P200,0 Number of setups

Budgeted
Level for
Cost
Driver
100

Pool Rate
P2,000/setup

Material Handling
Hazardous waste
control
Quality Control
Other overhead
costs
Total

00
100,00 Weight of Raw
0 materials
50,000 Weight of
Hazardous
chemical used
75,000 Number of
Inspections
200,0 Machine hours
00
P625,0
00

50,000
pounds
10,000
pounds

P2/pound

1,000

P75/inspectio
n
P10/machine
hr.

20,000

P5/pound

An order for 2,000 boxes of film development chemicals has the following
production requirements:
Machine setups
4 setups
Raw materials
10,000 pounds
Hazardous materials
2,000 pounds
Inspections
10 inspections
Machine Hours
500 machine hours
34.Under the activity based cost system, how much is the overhead cost per box of
chemicals?
a. P21.875
B. P43.75
C. P15.625
D. P7.8125
35.Using a single predetermined overhead rate based on machine hours, compute
the rate per box of chemicals.
a. P21.875
B. P43.75
C. P15.625
D. P7.8125
36.Mac Commercial, manufacturer of washer uses JIT production system and
backflush costing. The company has no beginning raw material and no beginning
or ending work in process.
The cost per unit:
Direct materials P52
Conversion costs P30
Data in manufacturing:
Raw materials the company purchases
P21,200,000
Conversion cost incurred
12,300,000
Number of units manufactured
400,000
Number of finished goods sold
384,000
Assume: 1) no material price variance;
2) one trigger point completion of
finished goods; 3) only one inventory Finished Goods Account.
What is the summary journal entry for January?
A. Finished Goods Control
32,800,000
Inventory: Raw and In-Process
20,800,000
Conversion Costs Allocated
12,000,000
B. Cost of Sales
31,488,000
Inventory Control
19,968,000
Conversion Costs Allocated
11,520,000
C. Finished Goods Control
32,800,000
Accounts Payable
20,800,000
Conversion Costs Allocated
12,000,000
D. Cost of Sales
31,488,000

Finished Goods Control

1,312,000
Inventory: Raw and In-Process
20,800,000
Conversion Costs Allocated
12,000,000
37.Evelyn Corp. manufacturers rafts for use in swimming pools. The standard cost
for materials and labor is P892 per raft. This includes 8 kilograms of direct
material at a standard cost of P50 per kilogram, and 6 hours of direct labor at
P82 per hour. The following data pertain to November.
a. Work in process inventory on November 1: none
b. Work in process inventory on November 30: 800 units (75 percent
complete as to labor; material is issued at the beginning of
processing).
c. Units completed: 5,600 units.
d. Purchase of materials;50,000 kilograms for P2,492,500.
e. Total actual labor costs: P3,007,600.
f. Actual hours of labor: 36,000 hours.
g. Direct-material quantity variance: P15,000 unfavorable.
The entry to record direct labor cost charged to production must be:
A. Work in process inventory
3,007,600
Payroll
3,007,600
B. Work in process inventory
2,755,200
Labor Cost Variance
252,400
Payroll
3,007,600
C. Work in process inventory
3,050,400
Labor efficiency variance
13,100
Payroll
3,007,600
D. Work in process inventory
3,050,400
Labor rate variance
14,600
Labor efficiency variance
57,400
Payroll
3,007,600
Questions 38 and 39 are based on the following:
Arlene Chemical Company manufactures two industrial chemical products in
a joint process. In May, 10,000 gallons of input costing P60,000 were processed at a
cost of P150,000. The joint process resulted in 8,000 pounds of Resoline and P2,000
pounds of Krypto. Resoline sells at P25 per pound and Krypto sells for P50 per
pound. Management generally processes each of these chemicals further in
seperable processes to produce more refined chemical products. Resoline is
processed separately at a cost of P5 per pound. The resulting product, Reoslite, sells
for P35 per pound. Krypto is processed separately at a cost pf P15 per pound. The
resulting product, Kryptite, sells for P95 per pound.
38.The joint cost share of product Kryptite using the net realizable value method
must be:
a. P126,000
B. P84,000
C. P140,000
D.
P70,000
39.Assuming that Arlene Chemical Companys management is considering an
opportunity to process Kryptite further into a new product called Omega. The
seperable processing will cost P40 per pound. Packaging costs for Omega are
projected to be P6 per pound, and the anticipated slaes is P130 per pound.
Should Kryptite be processed further into Omega?
A. Yes, because of an advantage of P22,000.

B. No, because of disadvantage of P22,000.

C. No, because of disadvantage of P10,000.
D. Yes, because of an advantage of P10,000.
40.Rochelle Block CO. produces cement blocks used in the foundation for buildings.
The process takes place in two sequential departments. The following data
pertain to the month of October.
Pouring Dept.
Finishing Dept.
P 70,000

Direct Materials entered into production

P
25,000
Direct Labor
340,000
280,000
Applied manufacturing overhead
680,000
420,000
Cost of goods completed and transferred out
900,000
400,000 +
cost of goods transferred to the Finishing Department.
+ cost of goods transferred to finished goods.
The amount of work in process inventory of Rochelle Block at the end of
October must be:
A. P1,415,000
B. P515,000
C. P190,000
D. P1,225,000
41.On August 1, 2012, the Tesla Motors Corp. sold an inventory to Tempur Corp. for
P2,200,000. Terms of the sale called for down payment of P550,000 and four annual
installment of P412,500 due on August 1, 2013. The inventory of cost is 825,000.
The company uses the perpetual inventory system.
Compute the amount of realized gross profit to be recognized in 2013.
Installment Method
Profit Realization
Accrual Method
A.
P
343,750
P 412,500
0
B.
343,750
550,000
1,375,000
C.
601,562
962,500
1,375,000
D.
257,812
412,500
0
42.Proctor and Gamble uses the installment method in accounting for its sales
under the installment plan. On January 1, 2013, Proctor and Gamble had an
installment accounts receivable from Pfizer with a balance of P90,000. During
2013, P20,000 was collected from Proctor and Gamble. When no further
collection could be made the merchandise sold to Pfizer was repossessed. The
merchandise had a fair market value of P32,500 after the company spent for
P3,000 for reconditioning of the merchandise, the normal profit rate of used
merchandise is 10%. The merchandise was originally sold with gross profit rate
of 40%.
How much is the loss on repossession?
A. P10,500 loss
B. P12,750 loss
P15,750 loss

C. P12,500 loss

D.

43.On December 30, 2013, Cebuchon signed a franchise agreement for the
operation of an outlet in Baguio. The franchising agreement required the
franchisee to make an initial payment of P700,000 upon signing of the contract
and three payments each of P350,000 beginning one year from the agreement
date and yearly thereafter. The franchisor agrees to make market studies, find a
suitable location, train employees and perform the related services next year.
The initial down payment is refundable until substantial performance is affected.
At the end of 2013, Cebuchon should report unearned franchise revenue of
A. P0
B. P1,750,000
C. P1,225,000
D.
P700,000
44.On January 2, 2013, 7-Eleven Company signed an agreement to operate as a
franchise of ELY Products, Inc., for an initial franchisee of P468,750 for 7 years.
Of this amount, P87,500 was paid when the agreement was signed and the
balance payable in four annual payments beginning on December 31, 2013. 7Eleven signed a non-interest bearing note for the balance. 7-Eleven rating
indicates that he can borrow money at 16% for the loan of this type. Assume
that substantial services amounting to P141,750 had already been rendered by
ELY Products and that additional indirect franchise cost of P12,750 was also
incurred. PV factor is 2.80.
If the collection of note is not reasonably assured, the net income for the year
ended December 31, 2013 is
A. P156,717.50
B. P126,767.50
C. P84,067.50
D.
P114,017.50
45.GAP Construction Corp. recently acquired the Price Corp. Price has incomplete
accounting records. On one particular project, only the information below is
available:
2012
Cost incurred during the year
?
Estimated cost to complete
Recognized Revenue
?
Realized gross profit on contract
Contract Price

1,000,000

2013

2014
1,250,000

2,250,000

950,000

1,100,000
?
3,500,000

?
50,000

(50,000)

Price Corp. uses the percentage of completion method and percentage of work
completed is determined through surveys of work performed (engineers
estimated).
The cost incurred in 2014 is
A. P2,250,000
B. P1,100,00
P3,400,000

C. P1,150,000

D.

46.In 2012, LED entered into an agreement to construct a Building at a contract of

50,000,000. Construction data were as follows:
2012
2013
2014
Construction cost incurred
P 7,500,000
P27,000,000
P
6,300,000
Estimated cost complete
30,000,000
8,625,000
0
Progress Billings
8,000,000
?
6,000,000
Collection from client
?
?
11,500,000
How much is the construction profit for the year 2012?
A. P33,000,000
B. P5,500,000
C. P36,000,000
D. P2,500,000
47.LCD Corp. was the lowest bidder on an office building construction contract. The
contract price was P14,000,000 with an estimated cost to complete the project
of P12,000,000. The contract period was 34 months starting January 1, 2012.
The company uses the cost to cost method of estimating earnings. Because of
the changes requested by the customer, the contract price was adjusted
downward to P13,000,000 on January 1, 2014.
A record of construction activities for the years 2012-2015 follows:
Year
Actual Cost Current Year Progress Billings
Cash Receipts
2012
P 5,000,000
P 4,200,000
P 3,600,000
2013
6,475,000
6,200,000
6,000,000
2014
820,000
2,600,000
2,000,000
2015
1,400,000
The estimated cost to complete the contract as of the end of each period follows:
2012
P 7,500,000
2013
1,275,000
2014
0
How much is the total construction in progress net billings in 2013?
A. P2,200,000
B. P1,300,000
C. P1,600,000
P1,100,000

D.

48.The following data were taken from the records of Home Depot and its Baguio
branch for 2013:
Home office
Baguio branch
Sales
P1,590,000
P 472,500
Inventory, January 1
172,500
66,750
Purchases
1,230,000
Shipment to branch
315,000
Shipments from the home office
378,000
Inventory, December 31
213,750
87,750
Expenses
573,000
152,250

In 2013, Home Office billed Baguio branch at 120% of cost which was lower
by 5% than last years.
By what amount will the retained earnings of the home office increase in its
separate books?
A. P144,975
B. P148,950
C. P143,250
D. P168,225
49.A home office ships inventory to its branch at 125% of cost. The required
balance of the unrealized intercompany profit account is P263,250. During the
year, the home office sent merchandise to the branch costing P2,352,000. At the
start of the year, the branchs balance sheet shows P945,000 of inventory on
hand that was acquired from the home office.
In the separate books of the home office, by what amount will the contract
investment in branch account be decreased by?
A. P236,250
B. P513,750
C. P396,150
D. P540,750
50.On December 31, 2013, the home office current account on the books of Quezon
branch has a balance of 2,275,000. In analyzing the activity in each of these
accounts for December, you find the following differences.
A.) An P84,000 branch remittance to the home office initiated on December 21,
2013 was recorded twice by the home office on December 26 and 28 of the
same year.
B.) The home office incurred P126,000 of advertising expenses and allocated 1/3
of this amount to the branch on December 20. The branch recorded this
transaction December 22 amounting to P4,200.
C.) Inventory costing P853,300 was sent to the branch by the home office on
December 15. The billing was at cost, but the branch recorded the
transaction at P835,300.
D.) The home office erroneously recorded the branch net income at P243,075.
The branch reported net income of 234,705.
The investment in branch account adjusted balance as of December 31, 2013?
A. P2,255,170
B. P2,254,000
C. P2,330,800
D. P2,406,430