Uploaded by Joycee Pascual

ADVANCED ACCOUNTING1

advertisement
ADVANCED ACCOUNTING
Problem 1. The ELI Corporation is undergoing liquidation and its statement of financial position as of
January 2, 2013 is as follows:
ELI Corporation
Statement of Financial Position
As of January 2, 2013
Assets
Cash
Receivables, net
Inventory
Prepaid Expenses
Building, net
Goodwill
P 124,200
340,800
70,000
22,500
360,000
82,000
Total Assets
P 999,500
Liabilities and Equity
Accounts Payable
Salaries Payable
Bank Loan Payable
Note Payable
Bonds Payable
Ordinary Shares
Capital Deficit
Total Liabilities and Equity
P 118,500
50,000
222,000
80,000
450,000
120,000
(41,000)
P 999,500
The inventory has a realizable value of P53,000. Of the accounts payable, P60,000 is secured by 1/4 of the
receivable which is 30% not collectible. The balance in the book value of the receivables which has a
realizable value of P235,000 is used to secure the bank loan payable. The bonds payable is secured by the
building having a book value of P360,000 and a realizable value of P375,000.
Unrecognized liabilities as of Jan. 2, 2013 are as follows: accrued interest on bonds payable and taxes
amounting to P4,000 each, and trustee’s salary amounting to P9,500. (Use two decimal places for the
recovery percentage)
How much will be paid to the partially secured creditors of ELI corporation?
A.
B.
C.
D.
P477,595
P479,102
P478,349
P480,669
Problem 2. On November 1, 2013, Goodbye To You (GTY) Inc.’s trustee prepares a Statement of Affairs
with the following information:

P340,000 cash will be received by the unsecured creditors whose claims totaled P1360000

A received a 12% note of P124,000 from GTY on March 1, 2013, secured with machinery with a
market value of P115,000

GTY issued to B a 12%, 1-year note of P136,000 on January 1, 2013. Nothing has been pledged to
this note.

C holds a note of P137,500 on which interest of P7,452 is accrued, secured with equipment with a
book value of P153,000. The fair value of the equipment is determined to be P173,250

GTY still owes D, its cashier, with her salary worth P12,220
Which of the following statements about the creditors of Goodbye To You is false?
A.
B.
C.
D.
The unsecured creditor without priority will receive P37,400
The unsecured creditor with priority will receive P3,055
The fully secured creditor will be paid an amount of P144,952
The partially secured creditor will be paid an amount of P119,730
Page 2
Problem 3. Agency AA’s allotment and Notice of Cash Allocation (NCA) for the year were P5,000,000 and
P3,000,000, respectively. Checks issued amounted to P1,500,000. What closing entry should be made for
the unused NCA as of year-end?
A. Cash – National Treasury, MDS
Subsidy income from National Government
B. Subsidy income from National Government
Cash – National Treasury, MDS
C. Subsidy income from National Government
Cash – National Treasury, MDS
D. Memorandum entry
P (1,000,000)
P (1,000,000)
P 1,500,000
P 1,500,000
P 3,500,000
P 3,500,000
Problem 4. CC Corp. owns a subsidiary in Japan whose balance sheet in Japanese Yen for the last years
follow:
December 31, 2012
Assets
Cash and Cash equivalents
Receivables
Inventory
Property and Equipment, net
Total Assets
Liabilities and Equity
Accounts Payable
Long-term debt
Common stock
Retained earnings
Total Liabilities and Equity
December 31, 2013
¥ 30,000
122,500
160,000
255,000
¥ 567,500
¥ 25,000
147,500
170,000
230,000
¥ 572,500
¥ 55,000
322,500
115,000
75,000
¥ 567,500
¥ 75,000
285,000
115,000
97,500
¥ 572,500
Relevant exchange rates are:
January 1, 2012
December 31, 2012
December 31, 2013
September 12, 2012
¥ 1 = P 45
¥ 1 = P 42.50
¥ 1 = P 47.50
¥ 1 = P 40
CC formed the subsidiary on January 1, 2012. Income of the subsidiary was earned evenly throughout the
years and the subsidiary declared dividends worth ¥15,000 on September 12, 2012 and none were
declared during 2011. How much is the cumulative translation adjustment for 2013?
A.
B.
C.
D.
P568,750
P875,000
P625,000
P1,006,250
Page 3
Problem 5. On October 31, 2013, Pyramid Philippines took delivery from a British firm of inventory costing
£725,000. Payment is due on January 31, 2014. At the same time, Pyramid paid P8,250 cash to acquire a
90-day call option for £725,000.
Strike Price
Spot Rate
Forward Rate
Fair Value of Call Option
October 31, 2013
P 3.60
3.61
3.72
P 8,250
December 31, 2013
P 3.60
3.62
3.77
P 17,000
January 31, 2014
P 3.60
3.64
3.78
?
Given the information above, compute for the following:
Foreign exchange gain or loss on option contract due to change in time value on December 31, 2013 if
changes in the time value will be excluded from the assessment of hedge effectiveness, and foreign
exchange gain or loss due to change in intrinsic value on January 31, 2014 if changes in the time value will
be excluded from the assessment of hedge effectiveness.
A.
B.
C.
D.
P1,500 gain ; P7,250 gain
P1,500 gain ; P14,500 gain
P5,250 loss ; P7,250 gain
P5,250 loss ; P14,500 gain
Problem 6. On May 1, 2013, PERFECT Co. anticipated the purchase of 85,000 units of merchandise from
a foreign vendor. The purchase would probably occur on October 28, 2013 and require the payment of
1,250,000 foreign currencies (FC). On May 1, 2013, the company purchased a call option to buy
1,250,000FC at a strike price of 1FC = P0.27. An option premium of P14000 was paid. Changes in the
value of the option will be excluded from the assessment of hedge effectiveness. For the year 2013, the
following rates are as follows:
Spot Rate
Strike Price
FV of call option
May 1
P 0.25
0.27
P14,000
May 31
P 0.28
0.27
P17,500
June 30
P 0.30
0.27
P39,000
October 28
P 0.32
0.27
?
The foreign exchange gain (loss) on option contract to be recognized in (1) equity and (2) earnings on June
30:
A.
B.
C.
D.
P(25,000) ; P3,500
P(37,500) ; P21,500
P25,000 ; P(21,500)
P37,500 ; P(3,500)
Problem 7. USX Company bought merchandise for €125,000 from a French company on December 1,
2013. Payment in Euros was due on February 28, 2014. On the same date, USX entered into a 90-day
futures contract to buy €125,000 from a bank. Exchange rates for Euros on different dates are as follows:
Spot Rate
30-day futures
60-day futures
90-day futures
December 1, 2013
P 91.40
92.30
91.80
90.60
December 31, 2013
P 92.70
92.50
92.20
92.60
How much is the forex gain/loss on the forward contract on February 28, 2014?
A.
B.
C.
D.
P1,000,000 loss
P100,000 gain
P37,500 gain
P37,500 loss
February 28, 2014
P 91.90
93.20
92.60
93.40
Page 4
Problem 8. Given the following information (For ¥1):
Transaction Date
Balance Sheet Date
Settlement Date
Transaction Date
Balance Sheet Date
Settlement Date
120-day futures
P 43
42
45
SPOT RATES
Bid Rate
Offer Rate
P 43
P 45
48
49
49
55
FORWARD RATES
90-day futures
60-day futures
P 45
P 44
46
47
48
49
30-day futures
P 46
49
52
On October 1, 2013, KEL Co. sold merchandise worth ¥2,750 to a Japanese company, payable on January
31, 2014. To hedge this foreign currency exposure, KEL contracted to sell ¥2,750 on October 1, 2013 to be
delivered on January 31, 2014. On balance sheet date, how much is the net forex gain/loss from this
hedging activity?
A.
B.
C.
D.
P2,750 loss
P2,750 gain
P30,250 loss
P30,250 gain
Problem 9. Condensed statements of financial position of Love Corp. and You Corp. as of December 31,
2013 are as follows:
Current assets
Noncurrent assets
Total assets
Love
P 175,000
725,000
P 900,000
You
P 65,000
425,000
P 490,000
Liabilities
Common stocks, P20 par
Additional Paid-in capital
Retained earnings
P 65,000
550,000
35,000
250,000
P 35,000
300,000
25,000
130,000
On January 1, 2014, Love Corp. issued 35,000 stocks with a market value of P25/share for the assets and
liabilities of You Corp. The book value reflects the fair value of the assets and liabilities, except that the
noncurrent assets of You have fair value of P630,000 and the noncurrent assets of Love are overstated by
P30,000. Contingent consideration, which is determinable, is equal to P15,000. Love also paid for the stock
issuance costs worth P34,000 and other acquisition costs amounting to P19,000. How much is the
combined total assets after the merger?
A.
B.
C.
D.
P1,825,000
P1,742,000
P1,772,000
P1,567,000
Page 5
Problem 10. The following are the condensed statement of financial position of Ayiziel and Vianney on
January 1, 2013:
Total Assets
Liabilities
Common Stocks
Additional Paid-in Capital
Retained Earnings
Ayiziel
P4,100,000
Vianney
P 1,223,000
1,110,000
1,240,000
500,000
1,250,000
320,000
518,000
40,000
345,000
Cido Corp. acquired the net assets of both Ayiziel and Vianney by issuing 81,250 shares to Ayiziel and
22,550 shares to Vianney. The par value of these shares is P35/share and market value as of January 1,
2013 is P40/share. Cido also paid for the following expenses:
Indirect costs
Finder’s fee
Acctg. And legal fees for SEC registration
Printing costs of stock certificates
Ayiziel
P37,500
26,500
137,500
50,000
Vianney
P 40,500
14,000
145,000
37,500
If Cido’s retained earnings has a balance of P4,300,000 on January 1, 2013, how much is the (1) goodwill
and (2) adjusted retained earnings to be presented in the statement of financial position of Cido?
A.
B.
C.
D.
P259,000 ; P4,118,500
P260,000 ; P4,112,750
P 0
; P4,112,750
P260,000 ; P4,182,500
Problem 11. Agency X have an obligation for equipment per purchase order amounting to P800,000.
Subsequently, the agency liquidates the equipment acquired in full. The entry to record this transaction
would be (ignore tax implication)
A. Memorandum entry in RAOCO
B. Accounts Payable
Cash – National Treasury, MDS
C. Subsidy Income from National Government
Cash – National Treasury, MDS
D. Obligation Liquidated
Cash – National Treasury, MDS
800,000
800,000
800,000
800,000
800,000
800,000
Problem 12. Gion Corporation has identified activity centers to which overhead costs are assigned. The
cost pool amounts for these centers and their selected activity drivers for 2013 follow:
Activity Centers
Set-ups
Utilities
No. of parts
Costs
P620,000
P950,000
P320,000
Activity Drivers
24,800 set-ups
125,000 machine hours
16,000 parts
Direct costs of producing product GG amounted to P75,000. The said product took 17,000 direct labor
hours and 15,000 machine hours to finish. Also, the product needed 7,500 set-ups and 550 parts to
complete. 25,000 units of product GG were produced during 2013. How much was the full cost per unit of
product GG using ABC?
A.
B.
C.
D.
P19.07
P16.07
P15.50
P12.50
Page 6
Problem 13. During April 2013, Faithfully Inc. incurred the following costs for Job 522 (450 drum sets):
Direct materials
Direct labor
Factory overhead
P42,500
P65,250
P78,300
45 units of drum sets were found to be defective and Faithfully Inc. had to incur the following to remedy the
said defects:
Direct materials
Direct Labor
P13,550
P15,250
If the rework cost is normal but specific to Job 522, the cost per finished unit is:
A.
B.
C.
D.
P575.68
P497.75
P484.22
P518.11
Problem 14. Superhuman Co. provided the following data:
Direct materials
Direct labor
Overhead rate without spoilage
Overhead rate with spoilage
Units produced
P450,000
P520,000
P5.50 per unit
P7.50 per unit
120,000
Superhuman do not typically expect spoilage in its production process. On Job 912, the cost of the spoiled
units is P52,200, but the disposal value of these units were determined to be P24,000 and P17,000 were
found to be abnormal costs of spoilage. How much is the total cost of good units?
A.
B.
C.
D.
P1,577,800
P1,817,800
P1,606,000
P1,846,000
Problem 15. Analog Heart Inc. makes three products from mangoes it harvests:
Units of output
Mango shake
Dried mangoes
Ice candy
5,250
2,000
750
Selling price
split-off
P3
P1.50
P2.50
at Incremental
processing costs
P2
P2.50
P0.50
Final selling price
P7.50
P3
P3
Which of the following is false regarding processing the three products beyond split-off point?
A. The company can either sell the ice candy at split-off or process it further and sell it at P3 because
the incremental profit is zero
B. If the dried mangoes are processed beyond split-off, the company will have an incremental profit of
P1
C. The company should process the mango shake further because an incremental profit of P2.50
would be realized
D. None of the statements is false
Page 7
Problem 16. GBX Inc.’s capacity for a month is 40,000 machine hours. Overhead is 40% variable and
60% fixed. During June 2011, GBX produced 3,500 units of its product and incurred 38,000 machine hours.
Each unit of a product requires 12 machine hours. Unfavorable non-controllable variance for the month of
June is P28,500. What is the company’s variable overhead rate?
A.
B.
C.
D.
P23.75
P19.75
P14.25
P 9.50
Problem 17. The following data were taken from the records of Sweet Serendipity Co. before the accounts
are closed for the year ended December 31, 2013. The company uses the installment method of
recognizing revenue and it sells goods exclusively on installment basis.
December 31, 2011
?
300000
Installment Sales
Cost of Goods Sold
December 31, 2011
P350,000
Installment AR, 2011
Installment AR, 2012
Installment AR, 2013
DGP, 2011
DGP, 2012
DGP, 2013
P122,500
For the year ended:
December 31, 2012
P500,000
?
Balances as of:
December 31, 2012
P125,000
P307,500
P43,750
P123,000
December 31, 2013
P600,000
?
December 31, 2013
P35,000
P140,000
P490,000
P43,750
P120,000
P210,000
On January 2013, a customer defaulted and Sweet Serendipity repossessed the merchandise. The
merchandise was assessed to have a cost of P4,200 after costs of reconditioning amounting to P800. The
repossessed merchandise was purchased by the customer in 2012 and the said customer still owed the
company a certain amount at the date of repossession.
How much was the realized gross profit and loss on repossession in 2013?
A.
B.
C.
D.
P134,000 ; P 300
P134,000 ; P1,100
P137,000 ; P3,300
P137,000 ; P4,100
Problem 18. Mabi Corp. was contracted by Mr. Tristan P. to construct 35 condominium units. The
estimated total cost of construction was P28,000,000. Mabi bills its clients at 120% of total costs estimated
to complete a project. Details regarding the contract are given below:
Units finished
10
18
7
2011
2012
2013
Costs incurred to date
P8,412,500
P20,735,000
P31,500,000
What is the RGP during 2012 using the output measures?
A.
B.
C.
D.
P1,105,000
P1,700,000
P1,360,000
P1,410,000
Estimated cost at completion
P33,650,000
P31,900,000
?
Page 8
Problem 19. On December 1, 2013, Dewyze Inc. authorized Cook to operate as a franchise for an initial
franchise fee of P3,400,000. P900,000 was received upon signing the contract, and the balance is to be
paid by a non-interest bearing note, due in five equal annual installments beginning December 31, 2014.
Prevailing market rate is 12%. PV factor is 3.60478. The down payment is nonrefundable and it represents
a fair measure of the services already performed by Dewyze, however, with regards to the balance,
substantial future services are still required. How much is the deferred franchise revenue to be recognized
as of December 31, 2013?
A.
B.
C.
D.
P1,802,390
P2,702,390
P2,500,000
P1,518,677
Problem 20. Artemus Co. operates a branch in Manila City. On December 31, 2013, the Manila branch in
the home office books showed a debit balance of P522,110. The interoffice accounts were in agreement at
the beginning of the year. For purposes of reconciling the interoffice accounts, the following facts were
given:




Shipments from home office to Manila branch costing P72,500 were in transit as of year-end.
Manila recorded the said transfer twice at cost: one on December 31, 2013 and the other on
January 1, 2014.
The home office allocated to the Manila branch ¾ of the rent expenses it paid for the year ended
2013. The rent expense was P24,000. The home office sent a debit memo to Manila for the
allocated amount, but the branch recorded the said debit memo by debiting the home office –
current account and crediting rent payable.
The branch wrote-off uncollectible accounts amounting to P10,120. The allowance for doubtful
accounts is maintained in the books of the home office. The home office recorded the write-off as a
write-off of its own accounts receivable.
The branch collected accounts receivable from home office’s customers amounting to P52,920, net
of 2% cash discount. The branch treated the said transaction as if it was a collection from its own
customers. The home office was not yet notified of the said collection.
It is the policy of the home office to bill its branches at 20% above cost. What is the unadjusted balance of
the home office-current account in the books of Manila branch on December 31, 2013?
A.
B.
C.
D.
P475,990
P461,490
P459,070
P463,650
-end of examination-
Download