Pamantasan ng Cabuyao

Katapatan Subd., Banay Banay, Cabuyao, Laguna

QUIZ NO. 1
Name: _________________________________ Score:___________
Advance Financial Accounting & Reporting Mr. D.R. Magalang

1. The following information are obtained from the books of accounts of E Inc. on June 2020: deferred gross
profit balance of Php 202,000 and total collections on installment sales of Php 440,000. Gross profit rate is cost
plus 25%. E uses the installment method of accounting. What is E’s total installment sales for 2020?
a. Php 1,450,000
b. Php 1,010,000
c. Php 1,440,000
d. Php 1,560,000

2. The B Computer Store started its operations in January 1, 2020. During the year, it had cash sales of Php
6,875,000 and installment sales of Php 16,500,000. B imposes a mark up on cost of 25% for cash sales and 50%
for installment sales. During 2020, installment receivable balance amounted to Php 6,600,000. How much is the
realized gross profit for 2020?
a. Php 2,200,000
b. Php 3,575,000
c. Php 3,300,000
d. Php 4,657,000

3. On January 1, 2020, Tom Bravo sells 20 acres of farmland for Php 6,000,000 taking in exchange a 10%
interest- bearing note. Tom Bravo purchased the farmland in 2005 at a cost of Php 5,000,000. The note will be
paid in three installments of Php 2,412,690 each December 31, 2020, 2021, and 2022. How much must be the
deferred gross profit at the end of 2020 under the installment method for revenue recognition?
a. Php 1,000,000
b. Php 697,885
c. Php 637,462
d. Php 597,885

4. Estrada, a customer of De Venecia Trading, had an account balance of Php 82,500 when the generator set he
purchased from the latter was repossessed. The generator was previously sold to him by De Venecia for Php
137,500 on installment at a gross profit of 40%. Assuming the repossessed generator had an appraised value of
Php 44,550, what will be the gain (loss) to be recognized by De Venecia upon repossession?
a. (Php 22,770)
b. Php 11,550
c. (Php 4,950)
d. (Php 37,950)

5. Dianne Company sells goods on the installment plan uses the installment sales method. On June 1, 2020,
Dianne sold a machine which cost Php 75,000 to Bert Corporation for Php 100,000. Bert Corp. made two
payments of Php 20,000 each during 2020, before defaulting on the contract in 2022. Dianne repossessed the
machine which had a fair market value of Php 52,500 when Dianne reacquired it. The gain (loss) on
repossession is:
a. Php 7,500 loss
b. Php 7,500 gain
c. Php 17,500 loss
d. Php 17,500 gain

Burgos and Casino are participants in a joint venture for the purchase through bidding and sales of surplus auto
spare parts from CAB. The winning bid price of Php 400,000 was paid equally by Burgos and Casino,
constituting their investments in the joint venture. They agreed that each record has purchases, sales, and
expenses in his own books and share profits and losses equally.

After seven (7) months, the joint venture was terminated and the following data relate to the joint venture:

Burgos Casino
Joint Venture Account Php 155,000 Cr. Php 175,000 Cr.
Expenses paid from JV cash Php 7,500 Php 15,000
Cost of auto parts taken Php 5,500 Php 18,000

6. How much is the joint venture’s sales?

a. Php 752,500
b. Php 330,000
c. Php 776,000
d. Php 730,000
7. In the final settlement, how much will Burgos receive?
a. Php 378,750
b. Php 384, 250
c. Php 371,250
d. Php 176,750

8. Oviedo, Prieto, and Quicho formed a joint venture to bankroll a series of cultural shows for the Philippine
Centennial celebration. Oviedo and Prieto agreed to contribute cash and Quicho was to manage the affairs of
the joint venture. Quicho was to receive a bonus of 25% of the net income after bonus, Oviedo and Prieto were
to be allowed interest on their capital contributions at 6% per annum, and any remainder was to be divided
equally among the three partners. After a year, the joint venture was terminated and the following information
was provided: original capital contributions were Php 1,815,000 and Php 2,475,000 respectively, from Oviedo
and Prieto: Quicho sold tickets worth a total of Php 6,600,000; and Quicho paid expenses of Php 1,899,150 out
of the joint venture funds. How much was the joint venture’s net income after the bonus to Quicho?
a. Php 257,400
b. Php 328,680
c. Php 410,850
d. Php 4,700,850

9. Renato and Samboy are asked by the ABC to handle the marketing of a benefit basketball game. Being avid
fans, they readily accepted the offer and formed a joint venture. To achieve an equitable distribution of
earnings, they agreed that the partner who finances the purchase of the tickets shall be entitled to a 20%
commission, the partner who makes ticket sales shall be entitled to a 25% commission, and any remainder was
to be divided equally. After the game was over, the following information was obtained: Renato purchased
tickets worth Php 26,125; Samboy advanced Php 4,125 for expenses, and ticket sales made by Renato and
Samboy, respectively were Php 22,000 and Php 16,500. How much was Samboy’s share in the net income
(loss) of the joint venture?
a. Php 825
b. Php 4,125
c. (Php 3,300)
d. (Php 7,425)

10. The following information are related to Stank Corporation which is undergoing liquidation:

A. A bank loan amounting to Php 455,000 is secured by inventories with book value of Php 525,000 and net
realizable value of Php 350,000.
B. Of the Php 1,120,000 accounts payable, Php 343,000 is secured by accounts receivable amounting to Php
413,000 which is 10% uncollectible.
C. Property and Equipment costing Php 875,000 and which is depreciated by 20% has a net realizable value of
Php 588,000.
D. Other unrecorded liabilities are accrued interest payable on bank loan, Php 45,500; salaries payable, Php
112,000; taxes payable, Php 63,000 and trustee’s fees, Php 52,500.
E. Cash available before liquidation amounts to Php 87,500.

Compute for the estimated deficiency to unsecured creditors.

a. Php 450,800
b. Php 882,000
c. Php 927,500
d. Php 980,000

Finished Co. is undergoing liquidation. The statement of affairs shows the following information:

Assets Carrying Amount Realizable Value

Assets pledged with fully secured creditors Php 160,000 Php 190,000
Assets pledged with partially secured creditors Php 90,000 Php 60,000
Free Assets Php 200,000 Php 140,000
Total Php 450,000 Php 390,000

Liabilities

Liabilities with priority Php 20,000 Php 20,000

Fully secured creditors Php 130,000 Php 130,000
Partially secured creditors Php 100,000 Php 100,000
Unsecured creditors Php 260,000 Php 260,000
Total Php 510,000 Php 510,000

11. If all the assets were sold at their realizable values and all the liabilities were settled at their expected
settlement amounts, how much will the partially secured creditors receive?
a. Php 76,000
 b. Php 84,000

c. Php 96,000
d. Php 104,000

12. If all the assets were sold at their realizable values and all the liabilities were settled at their expected
settlement amounts, how much will the unsecured creditors receive?
a. Php 84,000
b. Php 96,000
c. Php 124,000
d. Php 156,000

Wild Corporation is undergoing liquidation. The financial position as of January 1, 2020 is shown below:

Assets Carrying Amounts Net Realizable Values

Cash Php 100,000 Php 100,000
Accounts Receivable Php 600,000 Php 500,000
Inventories Php 900,000 Php 500,000
Machinery- Net Php 600,000 Php 300,000
Building- Net Php 800,000 Php 1,000,000
Total Assets Php 3,000,000 Php 2,400,000

Liabilities
Accrued Payables Php 300,000 Php 300,000
Accounts Payable Php 700,00 Php 700,000
Income Tax Payable Php 1,000,000 Php 1,000,000
Short- term bank loan Php 500,000 Php 500,000
Mortgage Payable Php 700,000 Php 700,000
Total Liabilities Php 3,200,000 Php 3,200,000

Equity
Share Capital Php 1,200,000
Deficit (Php 1,400,000)
Capital Deficiency (Php 200,000)

Total Liabilities and Equity Php 3,000,000

Additional Information:
A. Legal and other fees expected to be incurred during the liquidation process is Php 60,000.
B. The machinery is pledged as collateral security for the short- term bank loan.
C. The building is pledged as collateral security for the mortgage payable.

Requirements:

13. Compute the Net Free Assets.

14. Compute the Estimated Recovery Percentage.
15. Compute the expected amount to be realized by the partially secured creditors.

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