SUCCEED REVIEW CENTER

PRACTICAL ACCOUNTING PROBLEMS 2

Final Pre Board Examination

Problem 1. On May 1, 2014, Cobb and Mott formed a partnership and agreed to share profits and losses in the ratio of 3:7,
respectively. Cobb contributed a parcel of land that cost him P10,000. Mott contributed P40,000 cash. The land was sold for
P18,000 on May 1, 2014, immediately after formation of the partnership. What amount should be recorded in Cobb’s capital
account on formation of the partnership?
A. 18,000 B. 17,400 C. 15,000 D. 10,000
Problem 2. Red and White formed a partnership in 2014. The partnership agreement provides for annual salary allowances of
P55,000 for Red and P45,000 for White. The partners share profits equally and losses in a 60/40 ratio. The partnership had
earnings of P80,000 for 2014 before any allowance to partners. What amount of these earnings should be credited to each
partner’s capital account?
Red White
A. 40,000 40,000
B. 43,000 37,000
C. 44,000 36,000
D. 45,000 35,000
Problem 3. CC and DD are partners who share profits and losses in the ratio of 7:3, respectively. On October 21, 2014, their
respective capital accounts were as follows:
CC P35,000
DD 30,000
P65000
On that date they agreed to admit EE as a partner with a one-third interest in the capital and profits and losses, and upon his
investment of P25,000. The new partnership will begin with a total capital of P90,000. Immediately after EE’s admission, what
are the capital balance of CC, DD and EE, respectively?
A. P30,000; P30,000; P30,000 C. P31,667; P28,333; P30,000
B. P31,500; P28,500; P30,000 D. P35,000; P30,000; P25,000
Problem 4. In May, 2014, Imelda a partner of an accounting firm, decided to withdraw when the partners’ capital balances
were: Mikee, P600,000; Raul, P600,000; and Imelda, P400,000. It was agreed that Imelda is to take a partnership’s fully
depreciated computer with a second hand value of P24,000 that cost the partnership P36,000. If profits and losses are shared
equally, what would be the capital balances of the remaining partners after the retirement of Imelda?
Mikee Raul
A. 600,000 600,000
B. 592,000 592,000
C. 608,000 608,000
D. 612,000 612,000
Problem 5. As of December 31, 2014, the books of Ton Partnership showed capital balances of: T, P40,000; O, P25,000; N,
P5000. The partner’s profit and loss ratio was 3:2:1, respectively. The partners decided to liquidate and the sold all non-cash
assets for P37,000. After settlement of all liabilities amounting to P12,000, they still have cash of P28,000 left for distribution.
Assuming that any capital debit balance is uncollectible, the share of T in the distribution of the P28,000 cash would be:
A. 17,800 B. 18,000 C. 19,000 D. 17,000
Problem 6. After all noncash assets have been converted into cash in the liquidation of the AA and JJ partnership, the ledge
contains the following account balances:
Debit Credit
Cash P34,000
Accounts payable P25,000
Loan payable to AA 9,000
AA, capital 8,000
JJ, capital 8,000
Available cash should be distributed: P25,000 to accounts payable and:
A. P9,000 loan payable to AA C. P1,000 to AA and P8,000 to JJ
B. P4,500 each to AA and JJ D. P8,000 to AA and P1,000 to JJ
Problem 7. The Central Plains Subdivision sells residential subdivision lots in installment. The following information was taken
from the accounting records of Central Plains Subdivision as of December 31, 2014:

Installment accounts receivable, 1/1/14 P755,000

Installment accounts receivable, 12/31/14 840,000
Unrealized gross profit, 1/1/14 339,750
Installment sales 950,000

How much is the realized gross profit in 2014?

A. 427,500 B. 339,750 C. 378,000 D. 389,250
Problem 8. Karr Co. began operations on January 1, 2014 and appropriately uses the installment method of accounting. The
following information pertains to Karr’s operations for 2014:
Installment sales P800,000
Cost of installment sales 480,000
General and administrative expenses 80,000
Collections on installment sales 300,000
The balance in the deferred gross profit account at December 31, 2014 should be
A. 120,000 B. 150,000 C. 200,000 D. 320,000
Problem 9. Ube Construction Company has consistently used the percentage-of-completion method. On January 10, 2013,
Ube began work on a P6,000,000 construction contract. At the inception date, the estimated cost of construction was
P4,500,000. The following data relate to the progress of the contract:
Income recognized at 12/31/2013 P600,000
Costs incurred 1/10/1013 through 12/31/2014 3,600,000
Estimated cost to complete at 12/31/2014 1,200,000
How much income should Ube recognize for the year ended December 31, 2014?
 A. P300,000 B. 525,000 C. 600,000 D. 900,000
Problem 10. During 2014, Rizza started work on a P3,000,000 fixed-price construction contract. Any costs incurred are
expected to be recoverable. The accounting records disclose the following data for the year ended December 31, 2014:

Costs incurred P930,000

Estimated cost to complete 2,170,000
Progress billings 1,100,000

How much loss should RIzza have recognized in 2014?

Perecentage-of-
Completion Zero-profit (Cost Recovery)
A. P100,000 P0
B. 0 0
C. 100,000 100,000
D. 30,000 0
Problem 11. On July 1, 2014 Hart Corp. signed an agreement to operate as a franchisee of Ace Printers for an initial franchise
fee of P1,200,000. On the same date, Hart paid P400,000 and agreed to pay the balance in four equal annual installments of
P200,000, beginning July 1, 2015.

The downpayment is nonrefundable and no future services are required of the franchisor. Hart can borrow at 14% for a loan of
this type. Present and future value factors are as follows:
Present value of P1 at 14% for 14 periods 0.59
Present value of an annuity of P1 at 14% for 4 periods 2.91
Future value of P1 at 14% for 4 periods 1.69
At what amount should Hart record the franchise at the date of acquisition?
A. 518,000 B. 738,000 C. 982,000 D. 1,200,000
Problem 12. Krebs Crabs, Inc. franchisor, entered into a franchise agreement with Liwayway Ligaya, franchisee, on July 1,
2014. The total franchise fees agreed upon is P1,100,000, of which P100,000 is payable upon signing and the balance payable
in four equal annual installments. It was agreed that the downpayment is not refundable, notwithstanding lack of substantial
performance of services by franchisor. When Krebs prepares its financial statements on July 31, 2014, the unearned franchisee
fees to be reported is:
A. P0 B. 100,000 C. 1,000,000 D. 1,100,000
Problem 13. Swift Corporation, operates a number of branches in Metro Manila. On June 30, 2014, its San Lorenzo branch
showed a Home Office Account balance of P27,350 and the Home Office books showed a San Lorenzo branch account
balances of P25,550. The following information may help in reconciling both accounts:
1. A P12,000 shipment, charged by Home Office to San Lorenzo branch, was actually sent to and retained by Sto. Tomas
branch
2. A P15,000 shipment, intended and charged to San Jose branch was shipped to San Lorenzo branch and retained by
the latter
3. A P2,000 emergency cash transfer from Sto. Tomas branch was not taken up in the Home Office books
4. Home office collects a San Lorenzo branch accounts receivable of P3,600 and fails to notify the branch
5. Home Office was charged for P1,200 for merchandise returned by San Lorenzo branch on June 28. The merchandise is
in transit.
Home office erroneously recorded San Lorenzo’s net income for May, 2014 at P16,275. The branch reported a net income of
P12,675.

What is the reconciled amount of the Home Office and San Lorenzo branch reciprocal accounts?
A. P21,750 B. 23,750 C. 27,350 D. 20,150
Problem 14. On December 31, the Investment in Branch account in the Home Office books shows a balance of P50,00. The
following facts are ascertained:
1. Merchandise billed at P12,500 is in transit on December 31 from the home office to the branch
2. The branch collected a home office accounts receivable for P3,500. The branch did not notify the home office of such
collection
3. On December 30, the home office sent cash of P7,500 to the branch, but this was charged to General expense; the
branch has not received the cash as of December 31
4. Branch profit for December was recorded by the home office at P2,400 instead of P2,040
5. The branch returned supplies of P1,500 to the home office but the home office has not yet recorded the receipt of the
supplies.
What is the unadjusted balance of the Home Office account on the branch books on December 31?
A. P64,140 B. 39,140 C. 14,000 D. 13,000
Problem 15. The Neneng Corp. established its San Pedro branch in March 2014. During the first year of operations, the home
office shipped to the branch merchandise which had cost of P120,000. Three-fourths of these merchandise was sold by the
branch for P141,000. Operating expenses of the branch amounted to P27,000. How much net income will the branch report if
merchandise is billed by the home office to the branch at 25% above cost?
A. P800 B. 1,200 C. 1,500 D. 8,000
Problem 16. The Robert Corporation established its Bulacan branch in January 2014. During its first year of oeprations, home
office shipped to its Bulacan branch merchandise worth P130,000 which included a markup of 15% on cost. Sales on account
totaled P250,000 while cash sales amounted to P80,000. Bulacan reported operating expenses of P38,000 and ending inventory
of P15,000, at billed price. In so far as the home office is concerned, the real net income of Bulacan is:
A. P177,000 B. 82,000 C. 147,000 D. 192,000
Problem 17. Zeta Corp. established an agency in Baguio City. For the first month of operatios, the agency transactions were
summarized as follows:

Receipts from sales 350,000

Disbursements for:
Purchases 400,000
Rent 20,000
Advertising supplies 10,000
Salaries and commissions 70,000
 Other expenses 5,000

At the end of that month, the agency had P100,000 of receivables and P50,000 of payables. Also, there were P90,000 of unsold
merchandise and P6,000 of unused advertising supplies on hand. What is the results of operations of the Baguio City agency?
A. No profit, no loss C. 9,000 loss
B. P25,000 profit D. 155,000 loss
Problem 18. Mama, Inc. opened a sales agency in San Pedro, Laguna in 2014. The following is a summary of the transactions
of the sales agency:

Sales order sent to home office P120,000

Sales order filled by home office in 2014 95,000
Freight on shipment of agency 2,000
Collections, net of 10% discount 81,000
Selling expenses paid from the agency working fund 5,500
Administrative expenses charged to agency 5% of gross sales
Samples shipped to agency:
Cost 8,200
Inventory, December 31, 2014 4,550

The company’s gross profit rate on agency sales is 30% excluding the freight cost on shipments to agency.

What is the total comprehensive income of the agency for 2014?

A. P3,600 B. 5,600 C. 1,600 D. 6,300
Problem 19. On May 31, 2014, Dear Company has assets and liabilities with the following fair values:
Current assets P180,000
Non-current assets 220,000
Liabilities 40,000
On June 1, 2014, Love Corporation purchased the net assets of Dear Company for P310,000 cash.

In the books of Love Corporation, the acquisition resulted in:

A. Negative goodwill of P50,000
B. Income from acquisition of P50,000
C. Reduction from current assets of P50,000
D. Deduction from non-current assets of P50,000
Problem 20. On April 1, 2014, Queen Corporation paid P800,000 for the assets and liabilities of Jack Company. The book
value of the assets and liabilities of Jack Company on April 1, 2014, follow:
Cash P80,000
Inventory 240,000
Plant and equipment (net of accumulated
depreciation of P320,000 480,000
Liabilities 180,000
On April 1, 2014, it was determined that the inventory of Jack had a fair value of P190,000 and the plant and equipment (net)
had a fair value of P560,000. What is the amount of goodwill resulting from the business combination?
A. P0 B. 50,000 C. 150,000 D. 180,000
Problem 21. Chapel Hill Company had common stock of P350,000 and retained earnings of P490,000. Blue Town Inc. had
common stock of P700,000 and retained earnings of P980,000. On January 1, 2014, Blue Town issued 34,000 shares of
common stock with a P12 par value and a P35 fair value for all of Chapel Hill Company’s outstanding common stock. This
combination was accounted for as an acquisition. Immediately after the combination, what was the consolidated net asset?
A. P2,870,000 B. 2,520,000 C. 1,680,000
D. 1,190,000
Problem 22. On November 30, 2014, Parlor Inc. purchased for cash at P15 per share all 250,000 shares of the outstanding
common stock of Shaw Co. At November 30, 2014, Shaw’s balance sheet showed a carrying amount of net assets of
P3,000,000. At that date, the fair value of Shaw’s property, plant and equipment exceeded it carrying amount by P400,000. In its
November 30, 2014 consolidated balance sheet, what amount should Parlor report as goodwill?
A. P750,000 B. 400,000 C. 350,000 D. 0
Problem 23. On January 1, 2014, Poe Corp. sold a machine for P900,000 to Saxe Corp., its wholly-owned subsidiary. Poe paid
P1,100,000 for this machine, which had accumulated depreciation of P250,000. Poe estimated a P100,000 salvage value and
depreciated the machine on the straight-line method over 20 years. In Poe’s December 31, 2014 consolidated balance sheet, this
machine should be included in cost and accumulated depreciation as:
Cost Accum. Depreciation

A. P1,100,000 P300,000
B. 1,100,000 290,000
C. 900,000 40,000
D. 850,000 42,500

Problem 24. Perez, Inc. owns 80% of Senior, Inc. During 2014, Perez sold goods with a 40% gross profit to Senior. Senior
sold all of these goods in 2014. For 2014 consolidated financial statements, how should the summation of Perez and Senior
income statement items be adjusted?
A. Sales and cost of goods sold should be reduced by the intercompany sales
B. Sales and cost of goods sold should be reduced by 80% of the intercompany sales
C. Net income should be reduced by 80% of the gross profit on intercompany sales
D. No adjustment is necessary
Problem 25. An entity purchased plant from a foreign supplier for 3 million baht on January 31, 2014, when the exchange rate
was 2 baht = P1. At the entity’s year-end of March 31, 2014, the amount has not been paid. The closing rate was 1.5 baht = P1.
The entity’s functional currency is the peso.

Which of the following statements is correct?

 A. Cost of plant P2 million, exchange loss of P.5 million, trade payable P1.5 million
B. Cost of plant 1.5 million, exchange loss of P.6 million, trade payable P2 million
C. Cost of plant 1.5 million, exchange loss of P.5 million, trade payable P2 million
D. Cost of plant P2 million, exchange loss of P.5 million, trade payable of P2 million
Problem 26. On November 15, 2014, Celt Inc., a Philippine Company, ordered merchandise FOB shipping point from Japanese
Company for 200,000 yens. The merchandise was shipped and invoiced to Celt on December 10, 2014. Celt paid the invoice on
January 10, 2015. The spot rates for yens on the respective dates are as follows:
November 15, 2014 P.4955
December 10, 2014 .4875
December 31, 2014 .4675
January 10, 2015 .4475
In Celt’s December 31, 2014 income statement, the foreign exchange gain is:

A. P9,600 B. 8,000 C. 4,000 D. 1,600

Problem 27. On June 18, Loma Corporation entered into a firm commitment to purchase specialized equipment from the
Okazaki Trading Company for Y80,000,000 on August 20. The exchange rate on June 18 is Y100 = P1. To reduce the
exchange rate risk that could increase the cost of the equipment in pesos, Loma pays P12,000 for a call option contract. This
contract gives Loma the option to purchase Y80,000,000 at an exchange rate of Y100 = P1 on August 20. On August 20, the
exchange rate if Y93 = P1. How much did Loma save by purchasing the call option?
A. P12,000
B. 48,215
C. 60,215
D. Loma would have been better off not to have purchase the call option
Problem 28. On December 12, 2014, Important Co. entered into a forward exchange contract to purchase 100,000 local
currency units (LCU) in ninety days to hedge a commitment to purchase equipment being manufactured to Important’s
specifications. The expected delivery date is March 12, 2015 at which time settlement is due to the manufacturer. The hedge
qualifies as a fair value hedge. The relevant exchange rates are as follows:
Spot rate Forward rate (for March 12, 2015)
November 30, 2014 P0.87 P0.89
December 12, 2014 0.88 0.90
December 31, 2014 0.92 0.93
At December 31, 2014, what amount of foreign currency transaction gain from this forward contract should Important include in
net income?

A. P0 B. 3,000 C. 5,000 D. 10,000

Problem 29. Certain balance sheet accounts of a foreign subsidiary of Rowan, Inc. at December 31, 2014, have been
translated into Philippine peso as follows:
Translated at
Current rate Historical rate
Note receivable, long-term P240,000 P200,000
Prepaid rent 85,000 80,000
Patent 150,000 170,000
P475,000 P450,000
What total amount should be included in Rowan’s December 31, 2014 consolidated balance sheet for the above accounts using
the translation method recognized under PAS 21?
A. P450,000 B. 455,000 C. 475,000 D. 495,000
Problem 30. Paris, a wholly-owned subsidiary of Filipino Corp. is located in France. In 2014, Filipino Corp. borrowed French
francs as a partial hedge of its investment in Paris Co. on December 31, 2014, in the preparation of consolidated financial
statements, Filipino Corp’s translation loss on its investment in the subsidiary amounted to P500,000, while its exchange gain on
the borrowing amounted to P300.000.

What amount of gain or loss should Filipino Corp. report in consolidated income statement and balance sheet?
Income Statement Balance Sheet
A. (P500,000) P300,000
B. 300,000 (500,000)
C. 0 (200,000)
D. (200,000) 0
Problem 31. On February 1, 2014, Agency GG signed a contract for the construction of a building. The contract price is
P50,000,000. The agency made a downpayment of 30% of the contract price. On May 1, 2014, Agency GG received the first
billing of 50% of the contract price. The agency paid the first billing less P100,000 withholding tax.
What is the entry to record the payment of the first billing?

A. Accounts payable 25,000,000

Due to BIR 100,000
Cash – National Treasury – MDS 24,900,000
B. Accounts payable 10,000,000
Cash – National Treasury – MDS 10,000,000
C. Accounts payable 10,000,000
Due to BIR 100,000
Cash – National Treasury – MDS 9,900,000
D. Accounts payable 10,000,000
Due to BIR 100,000
Cash – Disbursing Officer 9,900,000

Problem 32. Out of its total appropriation for 2014, Department EE received its allotments broken down as follows:
Capital Outlay (CO) P20,000,000
Maintenance and Other Operating Expenses (MOOE) 10,000,000
Personal Services (PS) 5,000,000
 Financial Expenses 1,000,000
Total P36,000,000
The Department of Budget and Management (DBM) issued Notice of Cash Allocation to Department EE in the amount of
P20,000,000. Department EE records the allotment by a:
A. Memo entry in the Registry of Allotments and Obligations
B. Memo entry in the general journal
C. Memo entry in the Registry of Appropriations and Allotment
D. National Clearing Account P36,000,000
Appropriation allotted P36,000,000

Problem 33. The following funds were among those held by State College at December 31, 2014:
Principal specified by the donor as nonexpendable P500,000
Principal expendable after the year 2018 300,000
Principal designated from current funds 100,000
What amount should State College classify as regular endowment funds?
A. P100,000 B. 300,000 C. 500,000 D. 900,000
Problem 34. The Baguio Foundation, a not-for-profit organization had the following contributions and expenditures for 2014:
 Unrestricted cash contributions of P500,000
 Cash contributions of P200,000 restricted by the donor to the acquisition of property
 Cash expenditures of P200,000 to acquire property with the donation in the above item
Baguio Foundation’s statement of cash flows should include which of the following amounts for operating, investing and
financing activities, respectively?
A. P500,000; (P200,000); P200,000 C. 700,000; (200,000); 0
B. 500,000; 0; 0 D. 0; 500,000; 200,000
Problem 35. The following selected information pertains to Ajax Processing Co.: direct materials, P62,500; indirect materials,
P12,500; factory payroll, P75,000 of direct labor and P11,250 of indirect labor, and other factory overhead incurred, P37,500.

The total conversion cost was:

A. P136,250 B. 137,500 C. 250,000 D. 273,750

Problem 36. Johnson uses a job order cost system and applies factory overhead to production orders on the basis of direct
labor cost. The overhead rates for 2014 are 200% for Department A and 50% for Department B. Job 123, started and completed
during 2014, was charged with the following costs:
Department
A B
Direct materials P25,000 P5,000
Direct labor ? 30,000
Factory overhead 40,000 ?
The total manufacturing cost associated with Job 123 should be
A. P135,000 B. 180,000 C. 195,000 D. 240,000
Problem 37. The following information pertains to Lap Co.’s Palo Division for the month of April:
Number of units Cost of materials
Beginning work in process 15,000 P5,500
Started in April 40,000 18,000
Units completed 42,500
Ending work in process 12,500
All materials are added at the beginning of the process. Using the weighted average method, the cost per equivalent unit for
materials is
A. 0.59 B. 0.55 C. 0.45 D. 0.43
Problem 38. For the month of May, the Cutting Department of Damit Co. had 80% complete as to the beginning work in
process and 50% complete as to the ending work in process. Related data follow:
Units Conversion cost
Work in process, May 1 50,000 P88,000
Units started and cost incurred in May 270,000 572,000
Units completed and transferred to
the next department in May 200,000
If the company uses the FIFO method, the conversion cost of the work in process in the Cutting Department at the end of May
would amount to
A. P156,000 B. 254,000 C. 132,000
D. 176,000
Problem 39. A company processes raw material into Products F1, F2 and F3. Each ton of raw materials produce five units of
F1, two units of F2, and three units of F3. Joint processing costs to the split-off point are P15 per ton. Further processing results
in the following per unit figures:
F1 F2 F3
Additional processing costs per unit P28 P30 P25
Selling price per unit 30 35 35
If joint costs are allocated by the net realizable value of finished product, what proportion of joint costs should be allocated to
F1?
A. 20% B. 30% C. 33 1/3% D. 50%
Problem 40. Mig Co., which began operations in 2014, produces gasoline and a gasoline by-product. The following information
is available pertaining to 2014 sales and production:

Total production costs to split-off point 120,000

Gasoline sales 270,000
By-product sales 30,000
Gasoline inventory, 12/31/2014 15,000
Additional by-product costs:
Marketing 10,000
Production 15,000
Mig accounts for the by-product at the time of production. What are Mig’s 2014 cost of sales for gasoline and the by-product?
Gasoline By-product
A. 105,000 25,000
B. 115,000 0
C. 108,000 37,000
D. 100,000 0
Problem 41. The Action Corporation manufactures electrical meters. For May, there were no beginning inventories of raw
materials and no beginning and ending work-in-process. Action uses a JIT manufacturing system and backflush costing with
three trigger points for making entries in the accounting system:
 Purchase of raw materials – debited to Raw and In Process account
 Completion of finished goods – debited to Finished Goods account
 Sale of finished goods
Action’s May standard cost per meter are direct materials, P25; and conversion costs, P20. The following data apply to May
manufacturing:

Raw materials and components purchases P550,000

Conversion costs incurred P440,000
Number of finished units manufactured 21,000
Number of finished units sold 20,000

The balances of Raw in Process and Finished Goods inventory accounts at the end of May are:
A. P25,000 and P945,000 respectively C. P25,000 and P45,000 respectively
B. P550,000 and P45,000 respectively D. P550,000 and P945,000 respectively
Problem 42. If EDSA Company has material cost of P10,000 in June 1 RIP inventory account, and P12,500 in the June 30 RIP
inventory account and the amount of raw materials used backflushed from RIP inventory account on June 30 is P202,500, what
is the amount of raw materials purchased on credit for the month of June?
A. P205,000 B. 200,000 C. 225,000 D. 200,000
Problem 43. Mactan Enterprises is a Philippine exporter of souvenir items manufactured in the capital city of Cebu. The
following overhead cost data have been accumulated:
Activity Center Cost Driver Amount of Activity Center Costs
Materials handling Kilos handled 100,000 grams P50,000
Painting Units painted 50,000 units 200,000
Assembly Labor hours 4,000 hours 120,000
Job RST contains 3,000 units. It weighs 10,000 kilos and uses 300 hours of labor

What is the total overhead cost assigned to Job RST?

A. P31,955 B. 27,750 C. 26,000 D. 32,000
Problem 44. Super Glass Co. is preparing its annual profit plan. As part of its analysis of the profitability of individual products,
the controller examines the amount of overhead that should be assigned to the individual product lines from the information
given as follows:
Ordinary glass Special glass
Units produced 25 25
Material moves per product line 5 15
Direct labor hours per unit 200 200

Budgeted materials handling costs, P50,000.

Under activity-based costing system, what is the material handling cost assigned to one unit of ordinary glass?
A. 1,000 B. 500 C. 1,500 D. 2,500
Problem 45. The direct labor standards for producing a unit of a product are two hours at P10 per hour. Budgeted production
was 1,000 units. Actual production was 900 units and direct labor cost was P19,200 for 2,000 direct labor hours. The direct labor
efficiency variance was
A. P1,000 favorable C. 2,000 favorable
B. 1,000 unfavorable
D. 2,000 unfavorable
Problem 46. Derf Company applies overhead on the basis of direct labor hours. Manufacturing overhead is budgeted at
P135,000 for the period, of which 20% of this cost is fixed. Two direct labor hours are required for each product unit. Planned
production for the period was set at 9,000 units. The 17,200 hours worked during the period resulted in production of 8,500
units. Variable manufacturing overhead cost incurred was P108,500 and fixed manufacturing overhead cost was P28,000. Derf
Company uses a four variance method for analyzing manufacturing overhead.

Compute the (1) variable overhead spending variance, and (2) variable overhead efficiency variance:
A. (1) P5,300 U; (2) P1,200 F C. (1) P5,300 F; (2) P1,200 F
B. (1) P5,300 U; (2) P1,200 U D. (1) P5,300 F; (2) P1,200 U

Problem 47. Zamora and Co. Inc purchased a Cadillac automobile with little cash down and signed a note, secured by the
Cadillac, for 48 easy monthly payments. When the company files for bankruptcy, the balance due on the Cadillac amount to
P6,000,000. The car has a book value of P8,000,000 and a net realizable value of P4,000,000. The unsecured creditors of
Zamora and Co. can expect to receive 50% of their claims. In the liquidation, the bank that holds the note on the Cadillac should
receive:
A. P6,000,000 B. 5,000,000 C. 4,000,000 D. 3,000,000
Problem 48. Zero Na Corp. has been undergoing liquidation since January 1. As of March 31, its condensed statement of
liquidation and realization is presented below:

Assets:
Assets to be realized P1,375,000
Assets acquired 750,000
Assets realized 1,200,000
Assets not realized 1,375,000
Liabilities:
Liabilities liquidated P1,875,000
Liabilities not liquidated 1,700,000
Liabilities to be liquidated 2,250,000
Liabilities assumed 1,625,000

Revenues and Expenses:

Supplementary charges P3,125,000
Supplementary credits 2,800,000

The net gain (loss) for the three-month period ending March 31 is:
A. P250,000 B. (325,000) C. 425,000 D. 750,000

Problem 49. Ramos, Silva and Torre formed a joint venture. Ramos is to act as manager and is designated to record the joint
venture accounts in his books. As manager, he is allowed a salary of P12,000. Remaining profit (loss) is to be divided equally.

The following balances appear at the end of 2014 before adjustments for venture inventory and profits

Debit Credit
Joint venture cash P48,000
Silva, capital 3,000
Torre, capital P27,000

The venture is to terminate on December 31, 2014 with unsold merchandise costing P10,400.

Assuming that the joint venture profit is P5,000, what is the balance of the Joint Venture account before the distribution of profit?
A. P6,400 (Credit) B. 5,400 (Debit) C. 19,000 (Debit) D. 15,400 (Debit)

Problem 50. On October 1, 2014, A,B, and C entered into a joint venture business. They were to market a special alarm device.
The venture profits and losses were to be shared into 5:3:2 ratio, respectively. On December 31, 2014, while the joint venture is
still uncompleted, the three participants decided to recognize the profits or losses for the three months period. The inventor is
listed at 25% above cost at P50,000. The joint venture account has a debit balance of P24,000. No separate books are
maintained for the joint venture.

What was the joint venture profits (losses) for the three months period?
A. P16,000 B. 26,000 C. (24,000) D. 13,500