TAKE THIS EXAM AT YOUR SCHEDULED TIME ONLY. TAKE ONCE ONLY.

THE EXAM WILL BE STRICTLY MONITORED AND

MODERATED:

MIDTERM EXAMINATION

1) Emerald Company’s trial balance reflected the following account balances on December 31, 2021:
Cash in bank – Dog Bank 200,000
Accounts receivable 750,000
Inventory 600,000
Prepaid insurance 120,000
Prepaid rent (P120,000 per year for the next 3 years) 360,000
Financial assets at fair value through profit or loss 150,000
Financial assets at fair value through other comprehensive income 300,000
Financial assets at amortized cost 500,000
Deferred tax asset 75,000
Bank overdraft – Dog Bank 125,000
Machinery 400,000
Accumulated depreciation 100,000
Noncurrent assets held for sale – land 325,000
Building used as a plant site 460,000
How much is the total current assets and total non current asset for the year ended December 31, 2021?
Current Asset Non Current Asset
A.2,505,000 2,200,000
B.2,430,000 1,635,000
C.2,140,000 1,875,000
D.1,815,000 1,575,000

2) Flo-Rida Company’s trial balance reflected the following account balances on December 31, 2019:

Cash P 1,000,000
Accounts payable, net of debit balance in suppliers’ accounts amounting to P25,000 1,000,000
Bonds payable 3,400,000
Premium on bonds payable 200,000
Deferred tax liability 400,000
Property dividends payable 400,000
Income tax payable 300,000
Note payable, due January 31, 2020 500,000
Contingent liability 150,000
Share dividends payable 320,000
Cash dividends payable 210,000
Reserve for contingencies 430,000
Estimated expense of meeting warranties 335,000
Estimated damages as a result of unsatisfactory performance on a contract 268,000
Mortgage payable 1,000,000
Loans payable (payable in five equal annual installments) 500,000

The P1,000,000 Cash account is net of bank overdraft of P300,000 and unreleased check of P100,000 and
including customer’s posted check of P50,000 and sinking fund amounting to P280,000

How much is the total current liabilities for the year ended December 31, 2019?
Current Liability Non Current Liability
A. 3,538,000 5,400,000
B. 3,238,000 5,500,000
C. 3,688,000 6,103,000
D. 3,388,000 6,003,000

Numbers 03, 04, 05, 06 and 07

Dr. Strangest Company provided the following account balances on December 31, 2022:

Accounts payable 1,000,000

UPDATES MIDTERM by: John Bo S. Cayetano, CPA, MBA

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 Accounts receivable, net of allowance for doubtful accounts P50,000 600,000
Accrued taxes 50,000
Accrue interest receivable 30,000
Authorized share capital, 50,000 shares, P100 par 5,000,000
Building, net of accumulated depreciation of P2,500,000 3,000,000
Cash on hand 50,000
Cash in bank 650,000
Bond sinking fund 2,000,000
Furniture and equipment, net of accumulated depreciation of P900,000 1,500,000
Inventory 1,200,000
Investment property 700,000
Land 1,000,000
Deferred tax liability 650,000
Bonds payable due June 30, 2023 2,000,000
Note payable 850,000
Notes receivable 200,000
Patent 370,000
Other accrued liabilities 150,000
Prepaid expenses 100,000
Share premium 300,000
Retained earnings appropriated for contingencies 200,000
Retained earnings 2,700,000
Share subscription receivable 500,000
Subscribed share capital, 2,000 shares 1,000,000
Unissued share capital 2,000,000

3) On December 31, 2022, what total amount should be reported as current assets?
A.4,830,000
B.2,830,000
C.2,380,000
D.2,870,000

4) On December 31, 2022, what total amount should be reported as non-current assets?
A.7,870,000
B.8,570,000
C.6,570,000
D.5,870,000

5) On December 31, 2022, what total amount should be reported as current liabilities?
A.4,050,000
B.2,050,000
C.2,700,000
D.3,900,000

6) On December 31, 2022, what total amount should be reported as non-current liabilities?
A.2,650,000
B. 650,000
C.1,500,000
D. 0

7) On December 31, 2022, what is the total shareholder’s equity?

A.6,700,000
B.7,700,000
C.7,200,000
D.8,700,000

8) Brock Corporation reports operating expenses in two categories: (1) selling and (2) general and administrative. The adjusted
trial balance at December 31, 2021, included the following expense and loss accounts:
Accounting and legal fees 120,000
Advertising 150,000
Freight out 80,000
Interest 70,000
Loss on sale of long term investment 30,000
Officers’ salaries 225,000
UPDATES MIDTERM EXAM by: John Bo S. Cayetano, CPA, MBA
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 Rent for office space 220,000
Sales salaries and commissions 140,000
One-half of the rented premises is occupied by the sales department. Brock’s total selling expenses for 2021 are
A. 480,000
B. 400,000
C. 370,000
D. 360,000

9) The following costs were incurred by Griff Co., a manufacturer, during 2021:
Accounting and legal fees 25,000
Freight in 175,000
Freight out 160,000
Officers’ salaries 150,000
Insurance 85,000
Sales salaries and commissions 215,000
What amount of these costs should be reported as general and administrative expense for 2021?
A. 260,000
B. 550,000
C. 635,000
D. 810,000

10) Trunks Company decided to discontinue its Electronics Division, a separately identifiable component of business. On December
31, 2023, the division has not been completely sold. However, negotiations for the final and complete sale are progressing in a
year. Analysis of the records for the year disclosed the following relative to the Electronics Division:
Operating loss for the year 8,000,000
Loss on disposal of some Electronics Division assets during 2023 500,000
Expected operating loss in 2024 preceding final disposal 1,000,000
Expected gain in 2024 on disposal of division 2,000,000
What amount should be reported as pretax loss from discontinued operation in 2023?
A. 9,500,000
B. 8,500,000
C. 8,000,000
D. 7,500,000

11) On May 1, 2022 Topak Company approved a plan to disclose of a business segment. It is expected that the sale will occur on
March 1, 2023. On December 31, 2022, the carrying amount of the net assets of the segment was P2,000,000 and the fair value
was P1,800,000. During 2022, the company paid employee severance and relocation costs of P100,000 as a direct result of
discontinued operation. Income tax rate is 30%. The revenues and expenses of the discontinued segment during 2022 were:
Revenue Expenses
January 1 to April 30 1,500,000 2,000,000
May 1 to December 31 700,000 900,000

How much will be reported as discontinued operation for the year 2022?
A. 700,000
B. 560,000
C. 350,000
D. 210,000

Spades Company provided the following information for the year ended December 31, 2022:

Sales 8,000,000
Sales salaries 520,000
Advertising 120,000
Indirect labor 600,000
Delivery expense 160,000
Freight in 80,000
Depreciation – machinery 50,000
Factory taxes 130,000
Purchases 1,600,000
Direct labor 1,480,000
Factory supplies expense 120,000
Office supplies expense 30,000
Office salaries 800,000

UPDATES MIDTERM EXAM by: John Bo S. Cayetano, CPA, MBA

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 Factory superintendence 480,000
Doubtful accounts 100,000
Factory maintenance 150,000
Factory heat, light and power 220,000
Income tax expense 170,000

Inventory balances at the end of the fiscal period as compared with balances at the beginning of the fiscal period were as follows:

Finished goods 200,000 decrease

Goods in process 90,000 decrease
Raw materials 100,000 increase

12) What is the amount of cost of goods sold for the current period?
A. 4,800,000
B. 4,720,000
C. 5,020,000
D. 5,100,000

13) What is the amount of general and administrative expense for the current period?
A. 930,000
B. 800,000
C. 880,000
D. 830,000

14) What is the amount of selling and distribution expense for the current period?
A. 900,000
B. 880,000
C. 960,000
D. 800,000

15) What is the amount of net profit for the current period?
A. 1,170,000
B. 1,380,000
C. 1,300,000
D. 1,000,000

PROBLEM 16 -20

You were able to gather the following in connection with your audit of the Bukidnon Company for the year ended
December 31, 2020:

1/1/2020 12/31/2020
Accounts receivable P6,400,000 P4,000,000
Unpaid merchandise invoices ? 2,621,000
Accrued wages 85,000 125,000
Advertising supplies inventory 35,000 75,000
Accrued advertising 14,250 40,000
Prepaid insurance 25,000 -
Unexpired insurance - 41,000

During the year:

Amount collected from customers P10,000,000

Total payments to suppliers of merchandise 13,618,000
Total payments to suppliers of merchandise of
prior years 4,632,000
Wages paid 3,050,000
Advertising paid which includes P40,000
applicable in 2020 300,000
Insurance premium paid 125,000

QUESTIONS:

Based on the above and the result of your audit, determine the following:

16. Net sales for 2020

a. P 6,400,000 c. P 7,600,000
b. P12,400,000 d. P14,000,000

17. Net purchases for 2020

a. P11,607,000 c. P13,618,000
UPDATES MIDTERM EXAM by: John Bo S. Cayetano, CPA, MBA
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 b. P15,629,000 d. P16,239,000

18. Wages expense for 2020

a. P3,010,000 c. P3,050,000
b. P3,090,000 d. P3,100,000

19. Advertising expense for 2020

a. P245,750 c. P260,000
b. P285,750 d. P300,000

20. Insurance expense for 2020

a. P 84,000 c. P100,000
b. P109,000 d. P141,000

Your audit of Camiguin Company disclosed that your client kept very limited records. Purchases of merchandise
were paid for by check, but most other items were out of cash receipts. The company’s collections were
deposited weekly. No record was kept of cash in the bank, nor was a record kept of sales. Accounts receivable
were recorded only by keeping a copy of the ticket, and this copy was given to the customer when he paid his
account.

On January 2, 2006 started business and issued common stock, 108,000 shares with P100 par, for the following
considerations:
Cash P 900,000
Building (useful life, 15 years) 8,100,000
Land 2,700,000
P11,700,000

An analysis of the bank statements showed total deposits, including the original cash investment, of P6,300,000.
The balance in the bank statement on December 31, 2006, was P450,000, but there were checks amounting to
P90,000 dated in December but not paid by the bank until January 2007. Cash on hand on December 31, 2006
was P225,000 including customers’ deposit of P135,000.

During the year, Camiguin Company borrowed P900,000 from the bank and repaid P225,000 and P45,000
interest.

Disbursements paid in cash during the year were as follows:

Utilities P180,000
Salaries 180,000
Supplies 360,000
Dividends 270,000
P990,000

An inventory of merchandise taken on December 31, 2006 showed P1,359,000 of merchandise.

Tickets for accounts receivable totaled P1,620,000 but P90,000 of that amount may prove uncollectible.

Unpaid suppliers invoices for merchandise amounted to P630,000.

Equipment with a cash price of P720,000 was purchased in early January on a one-year installment basis.
During the year, checks for the down payment and all maturing installments totaled P801,000. The equipment
has a useful life of 5 years.

QUESTIONS:

Based on the above and the result of your audit, determine the following: (Disregard income taxes)

21. Payments for merchandise purchases in 2006

a. P4,869,000 c. P3,654,000
b. P3,879,000 d. P3,969,000

22 Collections from sales in 2006

a. P6,480,000 c. P5,580,000
b. P7,380,000 d. P4,500,000

23. Net income for the year ended December 31, 2006

UPDATES MIDTERM EXAM by: John Bo S. Cayetano, CPA, MBA

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 a. P2,430,000 c. P2,655,000
b. P1,440,000 d. P2,340,000

24. Stockholders’ equity as of December 31, 2006

a. P13,860,000 c. P14,085,000
b. P12,870,000 d. P13,770,000

25. Total assets as of December 31, 2006

a. P14,175,000 c. P14,374,800
b. P14,085,000 d. P14,310,000

UPDATES MIDTERM EXAM by: John Bo S. Cayetano, CPA, MBA

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