PPL CUP PRTC - EASY

1. Aaron Company sells subscription to a specialize irectory t!at is publis!e semi

annually an s!ippe to subscribers on April 1" an #ctober 1". Subscriptions recei$e
a%ter &arc! '1 an September '( cuto%% ates are !el %or t!e ne)t publication. Cas!
%rom subscriber is recei$e e$enly urin* t!e year an is creite to e%erre re$enues
%rom subscriptions. +ata relatin* to ,((- are as %ollo.s/
+e%erre re$enues %rom subscriptions0
balance 1,1'11(2 P 10"((0(((
Cas! receipts %rom subscribers P 30,((0(((
4n its +ecember '1 ,((- balance s!eet0 Aaron s!oul report e%erre re$enues %rom
subscription o%
a. P 102((0((( c. P '05((0(((
b. P '0'((0((( . P "06((0(((
,. At 7anuary 10 a sole proprietors!ip8s asset totale P,1(0(((0 an its liabilities amounte
to P 1,(0(((. +urin* t!e year0 o.ner in$estments amounte to P 3,0(((0 An o.ners
.it!ra.al totale P3"0(((. At year en0 assets totale P ,3(0((( an liabilities
amounte to P 1310(((. T!e amount o% net income %or t!e year .as
a. P ( c. -0(((
b. P50((( . 1,0(((
'. T!e %ollo.in* pertains to 9ull Company8s biolo*ical assets/
Price o% t!e asset in t!e mar:et P "0(((
Estimate commission to bro:ers an ealers "((
Estimate transport cost an ot!er cost necessary to *et
asset to t!e mar:et '((
Sellin* price in a binin* contract to sell P "0,((
T!e entity8s biolo*ical assets s!oul be $alue at
a. P 603(( b.606(( c. 60"(( . 60,((
6. 9uyer Co. re*ularly buys s!irts %rom ;enor Company an is allo.e trae iscounts
o% ,(< an 1(< %rom t!e last price. 9uyer purc!ase s!irts %rom ;enor on &ay ,30
,((- an recei$e an in$oice .it! a list price o% P 1((0((( an payment terms ,11(0 n1'(.
4% buyer uses t!e net met!o o% recorin* purc!ases0 t!e =ournal entry to recor t!e
payment o% 7une 20 ,((- .ill inclue
a. A ebit to Accounts payable P 3,0(((
b. A ebit on purc!ase iscount lost o% P 106((
c. A creit to purc!ase iscount o% P 106((
. A creit to Cas! o% P 3(0"5(
". >!ite Airlines sol a use =et aircra%t to bro.n company %or P 2((0((( acceptin* a %i$e
year 5< note %or t!e entire amount. 9ro.ns incremental borro.in* rate .as 16<. T!e
annual payment o% principal an interest on note .as to be P12-0-'(. T!e aircra%t coul
!a$e been sol at an establis!e cas! price o% P 5"1065(. T!e present $alue o% an orinary
annuity o% P1 at 2< %or %i$e perios is '.--. T!e aircra%t s!oul be capitalize on 9ro.ns
boo: at
a. P -6-05"( c. P 3"302,(
b. P 2((0((( . P 5"1065(
5. #n #ctober 10 ,((- >A? ac@uire YA?A0 a small company t!at specializes in
p!armaceutical ru* researc! an e$elopment. T!e purc!ase consieration .as by .ay
a s!are e)c!an*e an $alue at P '" million. T!e %air $alue o% Yan*8s net asset .as P1"
million Be)cluin* any item re%erre to belo.C
Yan* o.ns a patent %or an establis!e success%ul ru* t!at !as a remainin* li%e o% 2 years.
A %irms o% specialist a$isors0 Tantsa!an0 !as estimate t!e current $alue o% t!is patent to
be P 1( millionD !o.e$er0 t!e company is a.aitin* %or outcome o% clinical trials .!ere
t!e ru* !as been teste to treat a i%%erent illness. 4% trials .ere success%ul0 t!e $alue o%
t!e ru* is t!en estimate to be 1" million. Also inclue in t!e company8s balance s!eet
is P , million %or meical researc! t!at !as been conucte on be!al% o% a client.
Compute t!e amount o% *oo.ill %or t!is ac@uisition.
a. P 20(((0((( c. P '0(((0(((
b. P "0(((0((( . P ,(0(((0(((
3. A %actory e@uipment .it! an estimate use%ul li%e o% 1( years .as purc!ase by
Carran*lan Co. on +ecember '(0 ,((". T!e e@uipment .as e)pecte to !a$e a resiual
$alue o% P "0((( at t!e en o% its ser$ice li%e. T!e sum o% t!e years8 i*it met!o .as use
in computin* epreciation. Eor t!e year ene +ecember '10 ,((- t!e epreciation
applicable to t!is e@uipment .as P 6,0(((. T!e cost o% t!e %actory e@uipment purc!ase
on +ecember '(0 ,((" .as
a. P ',"0((( c. P ''"0(((
b. P ,-'03"( . P ''(0(((
2. #n +ecember ,20 ,((-0 Fornets Company commits itsel% to purc!ase a %inancial asset
to be classi%ie as !el to maturity %or P 10(((0((( its %air $alue on commitment BtraeC
ate. T!is security !as a %air $alue o% P 10((,0((( an P 10(("0((( on +ecember '10 ,((-
BFornets8 Einancial Year EnC0 an 7anuary "0 ,(1( Bsettlement ateC0 respecti$ely. 4%
Fornets applies t!e settlement ate accountin* met!o to account %or re*ular .ay
purc!ases o% its securities0 t!e %inancial asset s!oul be reco*nize on 7anuary "0 ,(1( at
a. P 10(((0((( b. P 10(("0((( c. P 10((,0((( . P (
-. #n 7uly ,((-0 7enny Lt leases a mac!ine .it! a %air $alue o% P 1(-066" to Rose Lt
%or %i$e years at annual rental Bin a$anceC o% P ,"0((( an Rose Lt *uarantees in %ull
estimate resiual $alue o% P 1"0((( on return o% t!e asset. >!at .oul be t!e intestest
rate implicit in t!e leaseG
a. 16< c. 1(<
b. 1,< . -<
1(. + Company !a t!e %ollo.in* e%erre ta) balances at reportin* ate +e%erre ta)
assets0 P 10,((0(((D +e%erre ta) liabilities0 P '0(((0(((. E%%ecti$e %rom t!e %irst ay o%
%inancial perio0 t!e company rate o% income ta) .as reuce %rom 6(< to '(<. T!e
a=ustment to income ta) e)pense to reco*nize t!e impact o% t!e ta) rate c!an*e is/
a. +R P 5((0((( c. +R P 6"(0(((
b. CR P 5((0((( . CR P 6"(0(((
11. #n +ecember '10 ,((-0 Entity H ac@uire an in$estment %or P1((0((( plus a
purc!ase commission o% P ,0(((. T!e in$estment is classi%ie as a$ailable %or sale. #n
+ecember '10 ,((-0 @uote mar:et price o% t!e in$estment is P 1((0(((. 4% t!e
in$estment .ere sol0 a commission o% P '0((( .oul be pai. #n +ecember '10 ,((-0
t!e entity s!oul reco*nize unrealize loss irectly in e@uity o%
a. P ,0((( c. P "0(((
b. P '0((( . P (
1,. As o% 7une '(0 ,((-0 t!e ban: statement o% An* Po Train* !a an enin* balance o%
P '3'051,. T!e %ollo.in* ata .ere assemble in t!e course o% reconcilin* t!e ban:
balance/
T!e ban: erroneously creite An* Po Train* %or P ,01"( on 7une ,,.
+urin* t!e mont!0 t!e ban: c!ar*e bac: ?SE c!ec:s amountin* to P ,0'6( o%
.!ic! P 2(( !a been reeposite by t!e ,"
t!
o% 7une.
Collection %or 7une '( totalin* P 1(0 ''( .as eposite t!e %ollo.in* mont!.
C!ec:s outstanin* as o% 7une '( .ere P '(0,("
?otes collecte by t!e ban: %or An* Po Train* .ere P 201"( an t!e
corresponin* ban: c!ar*es .ere P "(.
T!e a=uste ban: balance on 7une '(0 ,((- is
a. P '"10 "23 c. P '"' -,3
b. P '"20 163 . P '"- 523
Su**este Ans.ers/
1. a
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6. b
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5. a
3. c
2. a
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11. a
1,. a