*=/ ReSA The Review School of Accountancy R. Papa Cor. S. H. Loyola Sts. , Sampaloc, Manila Wel Nos. 734-39-89 & 735-98-07 Advanced Financial Accounting & Reporting 37 Batch - Quiz No. (Gnstroction? Select the beat answer by writing the letter of your choice) Lon 4 sheet of yellow pad paper. Solutions are not required. Items 1 to 3 are based on the following information Arizona Desert Homes (ADH) constructed a new subdivision dui under contract with Cactus Development Co. Relevant data are summarized be. Contract amount P3,000, 000 e 2os 1,200,000 600,000 Grose profit: 800,000 400,000, Contcact billings: 1,500, 000 1,500, 000 ADH uses the percentage-of-completio What would be the journal entry made in A. Accounts receivable 1,500,000 Revenue for long-term contracts 1, 500, 000 B. Accounts receivable 2,300,000 Gross profit 800, 000, Revenue for long-term coi 1,500, 000 C. Construction-in-progress 800, 0 Costs of construction 1,200, 000 Revenue for long-term 2,000,000 D. Accounts receivable 1,500,000 Billings in excess of costs 300, 000 Revenue for long-term contracts 1,800, 000 its December 31, 2018 balance sheet, ADH would report? . The liability, billings in excess of cost and profits, of 300, 000. C. The asse D. The asset, deferred pro contract amount in excess of b , af R400, 000 3. What would be the journal entry to record revenue in 2019? A. Accounts receivable 1,500, 000 Revenue for long-term contracts 1,500, 000 B. Construction-in-progress 400, 000 Costs of construction 600,000 Revenue for long-term contracts 1,000, 000 C. Costs of construction 2,000,000 Gross profit 1,000, 000 Revenue for long-term contracts 3,000, 000 D. Accounts receivable 1,500,000 Costs of construction 600, 000 Gross profit 609, 000 Deferred revenue 300, 000 Items 4 to 6 are based on the following information: nod/over time to recognize rev J018 to record revenue? . The asset, cost and profits in excess of billings, ‘of P500, 000 ings, of P1,500,000. Sahara Desert Homes (SDH) constructed a new subdivision during 2018 and 2019 under contract with Cactus Development Co. Relevant data are summarized belo Contract amount P3, 000,000 cost: 2018 1,200, 000 2019 600,000 Gross profit: 2018 800, 000 400, 000 Contract billings: 1,500, 001 1,500, 000 SDH uses the cost recovery method/point in time to’ recognize revenue 4. What would be the journal entry made in 2019 to record revenue? A. Accounts receivable 1,500,000 Revenue for long-term contracts 500,000 B. Accounts receivable 2,300, 000 Gross profit 300,000 Revenue for long-term contracts 1,500, 000:ReSA: The Review School of Accountancy Page 2 of 6 . Construction-in-progress 00, 000 Costs of construction 1,200, 000 Revenue for long-term cont: |. Costs of construction 1,209, 00¢ Revenue for long-term contracts 1,200, 000 2,000,000 5. In its December 31, 2018 balance sheet, SDH would report: asset, cost and profits in excess of billings, of P500, liability, billings in excess of cost, of P300,000 35 of billings, of P1,500,000. 0, 000. asset, contract amount in # © asset, deferred profit, of Pdi + What would be the journal entry SDH would use to record revenue in 20. A. Accounts receivable 1,500,000 Revenue for long-term contracts 1,500, 000 B. Construction-in-progress 400, 000, ‘osts of construction 600,000 Revenue for long-term contracts 1,000, 000 ©. Costs of construction 2,000,000 Gross profit 2,000, 000 Revenue for long-term contracts 3,000, 000 D. Construction-in-progress 200,000 Costs of construction 600,000 Revenue for long-term contracts 1,800,000 Use the following information for questions 7 to 9: Philippine Overseas Corporation has operated a branch in Jordan for one ye: Shipments are billed to the branch at cost. The branch carries its own accounts receivable, makes its own collections, and pays its own expenses. The transactions for the year 20x5 are given effect to in the trial balance below "Debit Credit cash ie Eiimites P4200 | Home Office Current... e 17,500 | Shipments from Home Office ae 61,690 Accounts receivable . . : 12, 600 Expenses»... wireras 6.220 Sales 34,000 | Ear 500 F314 500 | The branch reported an Inventory on December 31, 20xs of P9,150. 7, The net profit of the Jordan Branch for 2025 wast a. & 8,680 c. BO7, 190 b. P9180 @. Some other answer On January 1, 20%6, the Branch current account in the Home Office books should have a balance of: a. 226,180 P67, 680 b. P26, 680 d. Some other answer. On January 1, 20x6, the Shipments to Branch account in the Home of should have an opening balance of a. Zero ©. 26,180 b, P17,500 d. Some other answer. Items 10 and 11 are based on the following information: ‘The income statement submitted by the Pampanga Branch to the Home Off the month of December, 2019 is shown below. After effecting the n adjustments the true net income of the Branch was ascertained to be £156,000 sales - P 600,000 Cost of sales: Inventory, December ba. P 80,000 Shipments from Home Office 350, 01 Local purchases __ 30,090 Total available for sale . Pa60, 000 Inventory, December 31 1 Gross margin Operating expenses Net income P- 60,000 ‘The branch inventories were: 12/01/2010 12/31/2010 Merchandise from hone office P70, P84, Local purchases 16,090 Total c P 9,000 — P100,.000 10, The billing price based on cost imposed by the home of! nd A. 140% B. 100) ce. 40+ B. 29> ‘Advanced FinarReSA: The Review School of Accountancy Page 3 of 6 1. The balance of allowance for overvaluation of branch December 31, 2008 after adsustin A. P10,00 B. P24, 900 ©. P16,000 D, None of the above © assets and equities of the QQ, BR, and $5 partnership at the end of its fiseal year on October 21, 2019 are as follows: (B23rd) P 15,000 | tiabilities 55,000] nee 20,000 | Loan from 38 70, 000, 40,0000, capital (305) 45,000, a 70,000 | RR, capital (50%) 30,000) 5,000 TSS, capital 15,000 Bi50, 000 150,000 The partners decide to liquidate the partnership. They estimate that the non- cash assets, other than the loan to RR, can be converted into P100,000 cash over the two-month period ending December 31, 2009. Cash is to be distributed to the appropriate parties as it becomes available during the 1i process. The partner most vulnerable to partnership losses on liquidation: A. 90 C. QQ and RR equally BL RR D. 85 13. Using the same information in No. 12 and a total amount of 7,500 is available at for distribution to partners after all non-partner liabilities are paid, should be paid as follows: 90 RR A. P7500 BD a. 3,750 €. P2,250 3,780 22,800 21500 ed into cash in the liquidation of account balances: 14. After all non-cash assets have been conv MOI and DD partnership, the ledger contains the followin: — Debita | Credits ar — 95000 1 Recounts payable 725, 000 Loan to = 3; 000, Wa, eapieal - F000 | DD, Gapital = 3,050 Available cash should be distributed: P25,000 to accounts payable and: A, P9,000 for loan payable to MM B. P4,500 each to MM and DD ¢. F1,000 to mf and P8,000 to DD D. P8,000 to MM and P1,000 to DD 15. The partnership of GG, BB, and SS is liquidating and the ledger shows the following: cash P 80,000 Inventories : 100, 000 Accounts payable --- 69,000 GG, capital 150°) 40,000 BB, capital (25%) 45,000 35, capital {25*) - 35,000 Tf ali available cash is distributed immediately: ‘A. 6G, BB, and SS should get P26, 667 each B. GG, BB, and SS should get 6,667 eaci C1 GG should get P10,000 and Ss, 5, 00) Dl BB should get P15,000 and Ss, P5,000. Use the following information for questions 16 and 17: Pasig Garment Company operates a branch in Cabanatuan City. At the end of the year, the Branch account in the books of the home office at Manila shows a balance Of P150,000, The following information are ascertained: © The home office has billed the branch the amount of P37,500 for the which was in transit on December 31. merchandise, + A home office accounts receivable for P10,500 was collected by the branch. Said collection was not reported to the hone office by the branch Supplies of P4,500 was returned by the branch to the home office but the home office has not yet reflected in its records the receipt of the supplies. @ The branch made profit of P10,100 for the month of December but office erroneously recorded it as P1i, 160. ¢ The branch has not received the cash in the amount of P25,000 sei office on December 31. This was charged to General Expense account All transactions are presumed to have been properly recorded. Ye home Advanced Financial Accounting and Reporting - QUIZ 1(37" BATCH)ReSA: The Review School of Accountancy Page 4 of 6 16.What is the balance of the Home Off December 31, before adjustments? A, 121,920 he books of the branch as of B. P123,000 D. P106,920 17, What is the adjusted balance of the reciprocal accounts? K.P 96,420 cc. P117,420 B. Plos,920 DB. -P179,920 Use the following information for questions 18 and 19: Pangasinan Branch of Malate Company, at the end of its first quarter operations, ng income statement: F300, 000 Shipments from Home of = 280, 000 | Local purchases... ...... . . 30,000 Total. x Fees i es 6310, 000 Inventory at end a suse + $0,000 _260,000 | Gross profit on sales . hain P 40,000 Expenses 000 Net income 22.000 Shipments to the branch were billed at 140% of cost. The branch inventory at September 30 amounted to P50,000 of which P6,600 was locally purchased. Mark-up on local purchases, 20% over cost. Branch expenses incurred by Head Office amounted to P2,500 not yet recorded by the branch. 48. Compute the branch ending inventory that should be presented in the combined income statement: A. P36,500—-B. P37,600 c. P43, 400 D. 250,000 | The true branch net income amounted to P70,100—-B. PS, 000 c. P2,500 D. None of the above 20. Don Doss and Kim Keys form a partnership. Doss contributes into the partnership personal equipment that he has used at home in business-related activities. He paid P10,000 for the equipment two years ago. Doss claimed P1,250 depreciation expense each year on his personal tax return. Ite replacement cost (and fair market value) is P9,000. The partners, after reviewing BIR rules, assigned the equipment a remaining life of six years. For financial reporting purposes, at what amount should the equipment be recorded in the partnership's general ledger? ‘A. P20,000 B. PS, 000 cc. P7, 500 b. 76,750 Contzera and Badgez heve just formed a partnership. Conteera contributed P50, 000 cash and some equipment that cost P&5,000. The equipment had been used in his sole proprietorship and had been depreciated P20, 000. The replacenent Gost of the equipment is 730,000. Contreca contributed a 10,000 note payable. Contrera is to receive 60+ of the profits and losses. Badges contributed only 750,000 cash. Determine the following items for Contrera’s capital account balance: A. P60,C00 —B. P71, 000 ©. 270,000 b. 269,000 22. Kelly, @ partner in the Kelly and Green partnership, is entitled to 40% of the profits and losses. During 2008, Kelly contributes land to the partnership that cost her P50,000 but has a current value of P60,000. Also during 2009, Kelly has drawings of P80,000. The balance in Kelly’s capital account was P120,000 at the beginning of the year and is P150,000 at the end of the year. What are the partnership's earnings for 2009? A. P( 75,000) c. £150,000 B. B( 50,000) De 23. The partnership of Monte and Carlo has the following provisions }. Monte, who is primarily responsible for obtaining new clients, is to receive a 30¢ bonus on revenues in excess of P200,000. 2. Carlo, who is primarily responsible for administration, is to receive a 30% bonus on profits in excess of 50° of revenues, as reflected in the general ledger. 3. All remaining profits or losses are to be divided equally. Revenues for the year 280,000 Operating expenses 120,000 ‘The share of partner Monte in the net income should b A. P92, 000 B. P85, 000 €. P7L,000 D. PS7,000 ‘Advanced Financial Accounting and Reporting - QUIZ 1 (37 BATCH)ReSA: The Review School of Accountancy Page 5 of 6 4 Picolo are partners with capital balances of P140,000 and P100,000, espectively. They share profits and losses in a 2:1 ratio, respectively. Sax is admitted into the partnership for a P60,000 cash contribution. Sax shares in 25: of the profits and losses and is to have a 25+ capital interest. How much should be credited to Sax’s capital account under the bonus methed? A. 60,000 —-B, 275,000 c. P 80,000 D. P100,000 25. Cord and Stringer are partners who share profits and losses in the ratio of 3:2, respectively. On August 21, 2009 their capital accounts are as follows: Cord P70, 900 Stringer 60,000 n that date, they agree to admit Twiner as a partner with a one-third interest in the capital and profits and ‘losses, for an investment of PS0,000. The new partnership will begin with a total capital of P190,000. The capital balance of Cord after the admission of Twiner should be: A. P56,000 B. P24,000 ¢. P70,000 D. P76, 000 on June 30, 2009, the balance sheet of the Oakley, Pine, and Woods partnership, together with their respective profits and loss ratios was as follow: Assets, at cost 180,000 Oakley, Loan 9,000 Capital, Oakley (20¢) 42,000 Capital, Pine (20%) 39,000 Capital, Woods (60+) 80,000 Oakley has decided to retize from the partnership. By mutual agreement, the assets are to be adjusted to their current value of P216,000 and the partnership is to pay Oakley P61,200 for her partnership interest, including her loan, which is to be repaid in full. Assuming that goodwill is not to be recorded on the paxtnership’s books, the capital balance of Pine after the retirement of Oakley should be: A. P36,750 B. P38,250 c. P45, 450 D, P49,200 27. Ann, Bee, and Kay are .in the process of liquidating their partnership. Kay has agreed to accept the inventories as part of her settlement. The inventories have a fair value of P60,000 and a book value of P80,000. Account balances and profit and loss sharing fatios are summarized as follows: Cash B 198, 000 | Accounts payable F193, 000} [Inventories 80,000 | Ann, capital (408) 78,000] a [230,000 | Bee, capital (40%) 740,060} — { Kay, capital (208) 140,000, Total Assets [Posie oo | Total Liab. & equity | P 508..00 Tf the partners agree to distribute the available cash: A. Kay will receive 223,000 of the cash distribution. B. Bee will receive P40,667 of the cash distribution Cl Immediately after the cash distribution of cash and inventory items, Kay’s capital account balance will be P59, 000. D. Immediately after the cash distribution of cash and inventory items, Kay's capital account baiance will be P30, 000. 28. Partners A and & have a profit and loss agreement with the following provisions: salaries of P30,000 and P45,000 for A and B, respectively; a bonus to & of 10% of net income after salaries and bonus; and interest of 10% on average capital balances of P20,000 and °35,000 for A and B, respectively. One-thizd of any remaining profits are allocated to A and the balance to B. If the partnership had net income of P53,000, how much should be allocated to Partner A? AL P22,833 B. P18, 250 c. P2i 3D, None of the above 29. A, B and C have the following profit and loss agreement: i) Partners A and B receive salaries of P40,000 each 2) Partner C gets a borus of 10 percent of net income after salaries and bonus (the bonus is zero if salaries exhaust net income) 3) Remaining profits are shared by A, B, and C in the following ratios respectively: 3:4:3. ‘The partnership had a net income of P91,00 How much should be allocated partner C? A. P9, 100 27,300 B. Pa, 070 BD. P4,000 ae ee ~ Financial Accounting and Reporting - QUIZ 1 (37 BATCH) &ReSA: The Review School of Accountancy Page 6 of 6 30. Crenshaw and Durkee formed a partnership on January 1, 2009. Crenshaw invested 60,000, Durkee P40,000. Each withdrew P5,000 on each of the following dates during 2009: March 1, July 1, and November 1. These capital withdrawals in total were equal to salaries for the year. Interest of 9 percent was to be paid Partners on the basis of their average capital balances excluding net income. Additionally Crenshaw was to get a 20 percent bonus based on partnership net income after the bonus, but before the salaries and interest. Any remaining Profit {or loss} was to be allocated equally among the partners. Tf partnership net income was P100,000, how was it to be allocated Crenshaw? A. P54, 900 B. P53, 400 ©. P36, 600 D. None of the above nabe formed a partnership on January 1, 19x1. Each Salaries were to be allocated as follows: Kim Singh Watanabe 30,000, °30, 000 P45, 000, Drawings were to equal salazies and be taken out evenly throughout the year. With sufficient partnership net income, Kim and Singh could split a bonus equal to 25 percent of partnership net income after salaries and bonus (in no event gould the bonus go below zero}. Renaining profits were to be split as follows: 308 for Kim, 308, for Singh, and 40+ for Watanabe. For the year, partnership net income was £120,000. The share of partner Singh in the net income amounted to: A. 33,600 B. 235,100 c. P45, £00 D. None of the above 32. A balance sheet for the partnership of KK, LL, and MM, who share profits 2 respectively, shows the following balances just before liquidation: Gash Other Assets Liabilities KK, Capital LL, Capital ws, Capital 48,000 P238,000 P80, 000, P88, 000, Pé2,000 P56, 000 Singh contributed P120, 0 wa In the first month of liquidation, 128,000 was received on the sale of certain assets. Liquidation expenses of P4,000 were paid, and additional liquidation expenses of P3,200 are anticipated before liquidation is completed. Creditors Were paid ?22,400. Available cash is distributed to the partners. The cash to be received by each partner based on the above data: Kk, PS6,600; LL, P28,300: MM, P28, 300 KK, P86,000; LL, P61,000; mM, 255,000 - KK, P29,400; LL, P32,700; mM, 26,700 KK, P88,000; LL, 262,000 MM, 56,000 33. Maxwell is trying to decide whether to accept a salery of P60,000 or a salary of 225,000 plus a bonus of 20+ of net income after the bonus as a means of allocating profit among the partners. What amount of income would be necessary so that Maxwell would consider the choices to be equal? ‘a. B35,000 b. P85, 00 c. P140,000 4. 2210, 000 poe 34. Maxwell is a partner and has an annual salary of P30,000 per year, but he actually draws P3,000 pez month. The other partner in the partnership has an annual salary of £40,000 and draws P4,000 per month. What is the total annual salary that should be used to allocate annual net income among the partners? a. P14,000 b. P50, 000 c. P70,000 a. P84, 000 ‘ounting amounts 35. A partnership has the following ac © sales = 270,000 © cost of Goods Sold = 740,000 * operating Expenses = 710,000 * Salary allocations to partners = P13,000 © Interest paid to banks = P2, 000 © Partners’ withdrawals = 26,000 Partnership net income (Loss) a. P10,000 ce. PF 5,000 bl ple,o00 a. (73,000 - End of examination- "** Ask not for a larger garden, but for a finer seeds"** “"" ask not for a lighter burden, but for a broader shoulder“** "There are divine things more beautiful than words can tell™** "The only thing that stands between a man and what he wants from life is often merely the will to ‘try it and the faith to believe that it is possibie™ “Never take direction from a crowd for your personal life. And never choose to quit just because somebody disagrees with you" - The secret of life is not just to live, but to have something worthwhile to live for. ~ Great achievements are not done by strength but by perseverance Advanced Financial Accounting and Reporting - QUIZ 1(37" BATCH)