Professional Documents
Culture Documents
Pamantasan NG Cabuyao: Katapatan Subd., Banay Banay, City of Cabuyao
Pamantasan NG Cabuyao: Katapatan Subd., Banay Banay, City of Cabuyao
1. The partnership agreement of Peter and Simon provides that interest at 10% per year is to be credited to each partner on the
basis of weighted-average capital balances. A summary of Simon’s capital account for the year ended December 31, 2018, is
as follows:
What amount of interest should be credited to Simon’s capital account for 2018?
A. P15,250 C. P16,500
B. P15,375 D. P17,250
3. Assume D receives a one-fourth interest in the assets of the partnership and B is credited with P15,000 of the bonus from D,
how much cash D invest?
A. P115,000 C. P160,000
B. 105,000 D. 120,000
Partners A, B, C, and D have been operating ABCD Partnership for ten years. Due to a significant reduction in the demand for
their product over recent years, the partners have agreed to liquidate the partnership. At the time of liquidation, balance sheet
accounts consisted of cash, P103,500; noncash assets, P300,000; liabilities to outsiders, P60,000; capital credit balances for
partners A, B, and C, P90,000, P150,000, and P120,000, respectively; and a debit capital balance for partner D of P16,500.
Partners share equally in income and loss. It is estimated that the administrative cost of liquidation will total P4,500. While
preparing for liquidation, an unrecorded liability of P7,500 was discovered.
4. Assuming the available cash of P103,500 was distributed, how much must be the share of partner B?
A. P31,500 C. P65,167
B. 30,750 D. none
5. For how much must the noncash assets be sold for partner D to received at least P5,000?
A. P429,500 C. P398,000
B. 501,500 D. 386,000
6. Williams desires to purchase a one-fourth capital and profit and loss interest in the partnership of Eli, George and Dick. The
three partners agree to sell Williams one-fourth of their respective capital and profit and loss interests in exchange for a total
payment of P40,000. Immediately before the sale of their interests to Williams, the capital balances of the partners were as
follows:
All assets, except for a depreciable asset, and liabilities of the partnership are fairly valued. It was agreed to adjust the book
of the partnership with respect to the undervalued before the acquisition of Williams of the interest in the partnership.
Immediately after William’s acquisition, what should be the capital balances of Eli, George and Dick respectively?
A. P60,000; P30,000 and P15,000
B. P69,000; P34,500 and P16,500
C. P77,000; P38,500 and P19,500
D. P92,000; P46,000 and P22,000
7. A refrigerator was sold to Rana for P16,000, which included a 40% mark up on selling price. She made a down payment of
20%, paid four of the remaining sixteen equal payments, and then defaulted on further payments. The refrigerator was
repossessed, at which time the fair value was determined to be P6,800.
8. John Enterprises uses the installment method of accounting and it has the following data at year end:
9. Gee, Inc. began operations on January 1, 2010 and appropriately uses the installment method of accounting. The following
data are available for 2010:
Under the installment method, Gee’s deferred gross profit at December 31, 2010 would be
A. P360,000 C. P240,000
B. 270,000 D. 180,000
Kanlaon Corporation started operations on January 1, 2011 selling home appliances and furniture sets both for cash and on
installment basis. Data on the installment sales operations of the company gathered for the years ending December 31, 2017
and 2018 were as follows:
2017 2018
Installment sales P400,000 P500,000
Cost of installment sales 240,000 350,000
Cash collected on installment sales:
2017 installment sales 210,000 150,000
2018 installment sales 300,000
Additional information: On January 5, 2019, an installment sales on 2017 was defaulted and the merchandise with
appraised of P5,000 was repossessed. Related installment receivable balance on January 5, 2019 was P8,000.
10. The balance of Deferred Gross Profit on December 31, 2017 was
A. P64,000 C.. P160,000
B. 76,000 D. 190,000
11. The balance of the Deferred Gross Profit controlling account at December 31, 2018 was
A. P 76,000 C. P160,000
B. 130,000 D. 190,000
13. Assar Computer Company began operations at the beginning of 2018. During the year, it had cash sales of P6,875,000 and
sales on installment basis of P16,500,000. Assar adds a markup on cost of 25% on cash sales and 50% on installment sales.
Installment receivable at the end of 2018 is P6,600,000. Total realized gross profit for 2018 is:
A. P1,375,000 C. P4,675,000
B. 3,300,000 D. 3,575,000
14. The books of Harry Co., show the following balances on December 31, 2018:
Sales on installment basis in 2011 were made at 30% above cost; in 2018 at 33 1/3 above cost. Expenses paid was P1,500
relating to installment sales. How much is the net income on installment sales?
A. P11,000 C. P16,000
B. 11,500 D. 10,250
15. The Molinao Furniture Company appropriately used the installment sales method in accounting for the following installment
sale. During 2018, Molinao sold furniture to an individual for P12,000 at a gross profit of P4,800. On June 1, 2018, this
installment account receivable had a balance of P8,800 and it was determined that no further collections would be made.
Molinao, therefore, repossessed the merchandise. When reacquired, the merchandise was appraised as being worth only
P4,000. In order to improve its salability, Molinao incurred costs of P400 for reconditioning. Normal profit on resale is P800.
What should be the loss on repossession attributable to this merchandise?
A. P 880 C. P1,280
B. 2,480 D. 3,520
16. Since there is no reasonable basis for estimating the collectibility Plus Appliance Company uses the installment method of
recognizing revenue for the following sales:
2017 2018
Sales P225,000 P337,500
Collections from:
2017 sales 75,000 37,500
2018 sales 112,500
Defaults:
2017 sales 7,500 15,000
2018 sales 30,000
Accounts written-off:
2017 sales 18,750 56,250
2018 sales 18,750
Gross profit rate 30% 40%
What amount should Plus Appliance Company report as deferred gross profit in its December 31, 2018 balance sheet?
A. P123,750 C. P75,000
B. 93,750 D. 70,500
Octopus Retail Company sells goods for cash, on normal credit (2/10, n/30). However, on July 1, 2017, the company sold a
used computer for P22,000; the inventory carrying value was P4,400. The company collected P2,000 cash and agreed to let
the customer make payments on the P20,000 whenever possible during the next 12 months. The company management stated
that it had no reliable basis for estimating the probability of default. The following additional data are available: (a) collections
on the instalment receivable during 2014 were P3,000 and during 2018 were P2,000, and (b) on December 1, 2018, Octopus
Retail repossessed the computer (estimated net realizable value, P7,000).
17. Determine the realized gross profit on instalment sales for the year 2017.
A. P1,600 C. P2,400
B. 4,000 D. 5,600
V Construction Company has used the cost-to-cost percentage of completion method of recognizing profits. Michael V
assumed leadership of the business after the recent death of his father, Rudy V. In reviewing the records, Michael V finds the
following information regarding a recently completed building project for which the total contract price was P5,000,000.
Construction in progress account balance 2016 P1,000,000
Construction cost incurred during 2018 2,050,000
Gross profit (loss) recognized in 2016 100,000
Gross profit (loss) recognized in 2017 350,000
Gross profit (loss) recognized in 2018 ( 50,000)
19. How much cost was incurred in 2017?
A. P1,650,000 C. P. 900,000
B. P2,550,000 D. 4,600,000
20. How much must be the balance of Construction in Progress account at the end of 2017?
A. P1,550,000 C. P3,000,000
B. 2,650,000 D. 4,600,000
21. How much is the estimated cost to complete the project at the end of 2017?
A. P4,250,000 C. P1,550,000
B. 1,600,000 D. 1,700,000
AB Builders, Inc. a construction company, is using the cost-to-cost percentage of completion method of recognizing revenue.
Ambrosio assumed the leadership of the business after the recent death of Mr. Bruno, his father. In reviewing the records Ambrosio
finds the following information regarding a recently completed building projects for which the total contract was P2,000,000.
23. What percentage of the project was completed by the end of 2017?
A. 90% C. 51%
B. 40% D. 60%
24. What was the percentage of completion during the year 2017?
A. 20% C. 40%
B. 60% D. 100%
25. What was the estimated gross profit on the project by the end of 2017?
A. P140,000 C. P180,000
B. 160,000 D. 300,000
26. What was the estimated cost to complete the project at the end of 2017?
A. P1,700,000 C. P1,020,000
B. 660,000 D. 680,000
27. A company uses the percentage-of-completion method to account for a four-year construction contract. Which of the following
would be used in the calculation of the income to be recognized in the first year?
28. If the construction in progress account has a balance of P1,000,000 while the progress billings on contract account balance is
P800,000, how should these accounts be reflected on the balance sheet?
A. Construction in progress will be shown as a current asset.
B. Progress billings on contracts will be shown as current liability.
C. The difference between the two accounts will be shown as current asset.
D. The difference between the two accounts will be shown as current liability.
29. When should an anticipated loss on long term construction contract be recognized?