HRSA) INE MEVIEW SCIOU! Ol ALCOUTIIUNICY 2527 _Final Pre-Board Examination 15 Apeil 2018 (08:00 PM - 6:00 PM Occonmting Financial Dccourding & Repocting INSTRUCTIONS: Select the correct answer for each of the following questions. Mark only ‘one answer for each item by shading the box corresponding to the letter of your choice on the answer sheet provided. STRICTLY NO ERASURES ALLOWED. Use pencil no. 2 only. SetA tome 1 to 4 are based on the following inforaation: on Becenber 12, 2x6," Imp Company entered into three forward exchange contract fo purchase 100,000 FC (foreign currency) in 90 days. The relevant exchange rates are as follows: Forvord Rate Spot! (for Naren 12, 20%7) November 30, 20K6-cncesnnnen PB -87 P88 December 12, 20K6. wm 288 190 December 31, 20x6——— 92 193 1. Imp entered into the first forward contract to hedge a purchase of inventory in Noverber 20x6, payable in March 20x7. Mt December 31, 20x6, what amount of foreign curzency transaction gain fron this forward contract should Imp include in net income? APO c.-P 5,000 B. P 3,000 B. P10, 000 2. Rt December 31, 20x6, what anount of foreign currency transaction Téss should Inp include in’ income from the revaluation uf the Accounts Payable of 100,000 foreign currencies incurred a2 a result of the purchase of inventory at Novenber 30, 20x6 payable in March 20x7? RPO c. P 4,000 B. P 3,000 BL P.5,900 3. Imp entered inte the second forward contract to. hedge a commitment to purchase equipment being manufactured to Inp’s specifications. The expected Selivery date is March 20x? at which time settlement is due to" the manufacturer. The hedge qualifies as a fair valuo hedge. At Decenber 31, 20x6, what amount of foreign currency transaction gain from this forward contract should Imp include in net income? a. PO ‘CP 5,000 BL P 3,000 DB. Pue,¢000 Imp, entered into the third forward contrac: for speculation. At Decenber 31, 20x6) what amount of foreign currency transaction gain fron this forward conttact should Imp include in net incone? a. PO cB 5,000 B. P 3,000 . 10,000 5, Consolidated financial statements are designed to provide: A. informative information to ail shareholders. B, the results of operations, cads foe, and tho balance sheet in an understandable and infornative manner for creditors. c. the results of operations, cash Flo«, and the balance sheet as if the parent and subsidiary were @ single entity. b. Subsidiary informacion for the subeidlary charcholders. 6. Before prorating the manufacturing overhead costs at the end of 2008, the Cost of Goods Sold and Finished Goods Inventory hed applied overhead costs of 57,500 end 20,000 in them, respectively. There was no work in process at the beginning of end of 2008. During the year, manufacturing overhead costs of 74,000 were actually incurred. The balance in the Applied Manufacturing Overhead was P77,500 at the end of 2003. Ié the under- or overapplicd overhead {9 prorated betweon Cost of Goods Sold and the inventory accounts, how mich will be the Cost of Goods Sold after the protation? A. P54, 903 c. P58, 403 B. P56, 597 BL P60, 197 7. The Work-in-Process Inventory account of a manufacturing firm has a balance of 2,400 at the end of an accounting period. The job cost sheets of two Uncompleted jobs show charges of P400 and £200 for materials used, and Charges of 300 and 2500 for direct labor used. Fron this information, it* Connie had an P8,000 loss resulting from the translation of the accounts of its wholly-owned foreign subsidiary for the year dnded December 31, 2014. Connie had an account payabie to an unrelated foreign supplier payable in the supplier’s toca currency. The Philippine peso equivalent af the: Payable was P64,000 on the October 31, 2014 invoice date, and it was 60,000 on Decenoer 31, 2014. The invoice is payable on January 30, 2015. In Connie's 2014 conselidated income statement, what amount should be included as foreign exchange 109s? A. P11, 000, c. P23, 000 8B. 15,000 B. 23,000 15. Cebu Enterprises is @ Philippine exporter of souvenir items manufactured in the capital city ef Cagayan. The following overhead cost data have been accumulated: Betiwiey Cost Touat of Center Center Driver Activity Costs _ Wateriais Handling Grans handled | 160,000 grana | P50, 00 Painting Units painted | 50,000 unite 200,000 aesombl = Tabor hours 00 hours 420,000} ob 1234 contains 3,000 unite, Tt weighs 10,000 grams and uses 300 hours of Labor, Compute the total overhead costs that should be assigned to Job 1234. A. P31, 985, c. P26,000, 8. 27,750 D. 32,000 A chemical company manufactures joint products Pep and Vim, and a by- product. Zest. Costs are assigned to the joint producte by the mmrket value method, which considers further processing coste in subsequent operations For ailccating joint costs to the by-product, the market value or reversal cost method is used. The total manufacturing costa fer 10/000 unite were P172,000 during the quarter. Production and cost data follow: Pep Vim Zest Units produced 5,000 4,000 1,000 Sales price per unit 500 POPS Further processing cost per unit 10 5 : Selling and aduinistra'ive expense per’ unit a Operating profit per unit 2 ‘The value of Zest to be deducted from the joint costs is: AL P5,000 c. 22,000 B. P3,000 0. Zero 17. Using the same information in No.16, compute the gross profit for Pep: ae oO &. 80,000 B. P70, 000 . P100,000 18. A local partnership was considering the possibility of Liquidation since one of the partners is solvent (til:man) and the othere are snsolvent. capital balances at that time were as follows. Profits and lossis were divided on 3 4:2:2:2 basis, respectively. Ding, COpLtAL cinta nennnennnen P 6,000 Laurel, capical, 67, 000 Bezard, capital 17,000 Tillman, capitals 36,000 Ding's creditors filed a 725,000 claim against the partnership's assets. At Chat time, the partnership held ossets reported at P360, 000 and liabilities of P120,000. IE the assets could be sold for P228,000, what is the minimum amount that Ding's craditors would have received? APO 5. P 2,500 cc. P36,000" b. P38, 720 19. The Keaton, Lewis and Meador partnership had the following balance sheet jus¢ before entering Liguidacion: 10,009 300,000 cash. ml Non-cash assets... Liabilities... Keaton, capital Lewis, ‘capital Meador, capital 130,000, 0, 000KeDA: The Review School of Accountancy Page 5 of 12 25. 26. a 28. 29. 30. 2. A home office accounts receivable for P10,500 was collected by the branch. Said collection was not reported to the home office by the branch. 3. Supplies of P4,500 wax returned by the branch to the home office but the hone office has not yet reflected in its records the receipt of the supplies. 4. The Branch made profit of 710,100 for the month of Decenber but the: hone office erronewusly recorded it as P11, 180, ‘The branch has not rervived the cash in the. amount of P25,000 sent by home office on Decenber 31. This was charged to General Expense account « ALL transactions are presumed fo have been properly recorded. hat is the balance of the ome Office account on the books of the branch ae Of Oacember 31, bofore adjustments? ‘A. P121,920 ©. P1a7, 420 BL 123, 000 D. P10, 920 Using ‘the same information in No. 24, what is the adjusted balance of the reciprocal accounts? A. P 96,420 . Pt17,420 B. P106,320 b! p179,920 ‘The Carly Company owns 75% of The Halley Company. ‘the following figures are from their separate financial statements: Carly: Trade receivables P1, 040,000, including P30,000 due from Halley. Halley: Trade receivables £215,000, including P40, 000 due from Carly. What figure shovld appear for trade receivables in Carly's consolidated statement of financial position? A. 1,215,000 c. P2,255,000 B. 1,225,000, D. PL,185,000, Which of the following statements is correct regarding a partner's debit capital balances? A. The partner should make contributions to reduce the debit balance to whatever extent povsibie. 8, I£ contributions ace not porsible, the other partners with credit capital balances will be al:ocated ot portion of the debit balance based on their proportionate profitrand-loss-sharing percentages: ©. Partners who absorb another's debit capital balance have a legal clain against the deficient partner. D. All of these statonents are correct. The White Company acquired an 80% interest in The Pulley Company when Pulley's equity conprized share capital of £100,000 and retained earnings of 500,000. Fulley's current statement of financial position shows shere capital of P100,000, a revoluaticn reserve of P400,000 and retained earnings of P21, 400,000. What figure in respect of Pulley's retained earnings should be included in the consolidated statenent of financial position? ALP 720,000 €. P1,040, 000 BL P1,480,.000 Dy P1,$20,000, ‘The Snipes Company owns 658 of The Genie Company. Oh the last day of the accounting period Genie sold to Snipes a non-current asset for P200/000. The asset originally cost P5U0,000 and at the end of the reporting period Its carrying amount in Genie's books was P160,000, The group's consolidated statement of financial position has been drafted without any adjustments. i relation to this non-curren. asset. hat adjustments should be made to the consolidated statement of fifancial position figures for non-current assets and ret Non-current assets Retained o A. Increase by P300,000 Increase by P195, 000 BL Reduce by P40, 000 Reduce by £26, 000 Ci Reduce by P40, 000 Reduce by P40, 000 Di Increase by P300, 000 Increase by P300, 000 Bonifacio contractors had a 3-year construction contract in 2012 for 900,000. The company uses the percentage-of-conpletion method for tinencia! statement purposes. Incone to be recognized each year is based on the ratio of cost incurred to total evtimated cost to complete the contract. Data on this contract follows: