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PRACTICAL ACOUNTING 1
L. R. CABARLES
PROBLEMS
INVENTORIES
1. The physical inventory of Pangasinan Company on
December 31, 2012, showed merchandise with a cost
of P4,000,000 was on hand at that date. You also
discovered the following items were all excluded from
the count:
a.
Merchandise costing P160,000, which was
held by Pangasinan on consignment.
The
consignor is a subsidiary.
b.
A special machine, fabricated to order for a
customer costing P400,000, was finished and
specifically segregated in the back part of the
shipping room on December 31, 2012.
The
customer was billed on that date and the machine
excluded from inventory although it was shipped
on January 4, 2013.
c.
Merchandise costing P80,000, which was
shipped by Pangasinan f.o.b. destination to a
customer on December 31, 2012. The customer
expects to receive the merchandise on January 3,
2013.
d.
Merchandise costing P120,000 which was
shipped by Pangasinan f.o.b. shipping point to a
customer on December 29, 2012.
e.
Merchandise costing P50,000 shipped by a
vendor f.o.b. seller on December 28, 2012 and
received by Pangasinan on January 10, 2013.
The corrected balance of Pangasinans inventory should
be
a. P4,530,000
c. P4,480,000
b. P4,130,000
d. P4,690,000
2. On December 15, 2012, Boston purchased goods
costing P100,000. The terms were FOB shipping point.
Costs incurred by Boston in connection with the
purchase and delivery of the goods were as follows:
Normal freight charges
Handling costs
Insurance on shipment
Abnormal freight charges for express
shipping
P3,000
2,000
500
1,200
June
2
6
9
10
18
25
Sales
300 @ P5.50
800
500
200
700
150
@
@
@
@
@
5.50
5.50
6.00
6.00
6.00
Page 1 of 16
Item
A
B
C
D
Total
Cost
P 89
94
125
194
P502
Replace
ment
Cost
P 86
92
135
114
P427
Sales
Price
P 91
93
129
205
P518
Normal
Profit
P 5
7
10
20
P32
NRV
P 87
85
111
197
P480
P1,280,000
5,640,000
1,400,000
40,000
80,000
7,200,000
1,000,000
1,200,000
40%
www.prtc.com.ph
Cost
P 1,300,000
18,000,000
400,000
600,000
300,000
400,000
Retail
P 2,600,000
29,200,000
1,000,000
600,000
600,000
2,000,000
24,700,000
350,000
200,000
600,000
50,000
of
biological
100
70
108
72
80
105
111
120
assets
as
of
c. P1,338
d. P1,320
Page 2 of 16
P2,000
1,200
10,000
20,000
4,000
1,800
5,000
3,000
6,000
12,000
1,500
P9,000,000
300,000
50,000
400,000
www.prtc.com.ph
P1-203
600,000
600,000
500,000
700,000
400,000
500,000
P3,300,000
P1,000,000
500,000
P1,000,000
14%
Outer casings
Other
components
Cost
P170,000,000
510,000,000
255,000,000
P765,000,000
Depreciation
basis
Useful life of
40,000 hours
25 years
straight line
12 years
straight line
Page 3 of 16
Component
Engine
WASTING ASSETS
20. In 2010, Lepanto Mining Company purchased property
with natural resources for P28,000,000. The property
had a residual value of P5,000,000. However, the
company is required to restore the property to its
original condition for P2,000,000.
2010
2011
2012
Tons extracted
0
3,000,000
3,500,000
Tons remaining
10,000,000
7,000,000
2,000,000
P80,000,000
20,000,000
10,000,000
15,000,000
5,000,000
2,000,000
P3,000,000
(1,000,000)
1,200,000
(400,000)
P2,000,000
800,000
www.prtc.com.ph
P1-203
P1,820,000
171,000
236,000
127,000
25,000
47,000
Page 4 of 16
P235,000
78,400
49,500
26,750
56,300
P515,000
142,000
60%
www.prtc.com.ph
P240,000
180,000
15,000
80,000
35,000
20,000
P570,000
P1-203
Page 5 of 16
P262,460
21,000
( 38,000)
P245,460
2,500
10,000
25,000
(15,000)
10,000
50,000
55,000
15,000
22,000
1,500
5,000
P181,000
www.prtc.com.ph
P480,000
19,200
P1-203
2,400,000
2,560,000
17,600
P4,000,000
61,520
26,400
350,000
of
the
loan
receivable
on
c. P3,756,902
d. P3,711,520
RECEIVABLE FINANCING
Use the following information for the next two questions.
Seller Corp. factored P400,000 of accounts receivable with
Buyer, Inc., on a without-recourse basis. The factor charge
was 1.75% of the amount of receivables, and an additional
4% was retained to cover probable adjustments.
In
addition to the factor charge, a finance charge was
withheld equal to 12% annually for any amounts advanced
prior to the due dates of the receivables. This charge was
based on 100% of the face value. The average credit term
was 30 days from the date of transfer. According to the
terms of the factoring agreement, Seller was to handle
returned goods, allowances, and shipping disputes. Buyer
was to collect the cash and acknowledge sales discounts,
but such discounts were to be charged to Seller. Credit
losses were to be absorbed by Buyer. Seller has not
recorded any bad debt expense related to the factored
receivables.
The following transactions pertain to this
factoring arrangement:
Aug.
1
31
Sept. 20
Page 6 of 16
30
Oct. 10
www.prtc.com.ph
P1-203
Page 7 of 16
2011
2012
Nacons Profit
P2,000,000
5,000,000
Dividends Declared
by Nacon
P1,000,000
1,500,000
www.prtc.com.ph
P1-203
P20,000
3,000
43,500
54,000
Page 8 of 16
of
650,000 12-28-12
12-26-12 600,000
1-10-13
1-2-13
450,000 12-31-12
Date
received
12-24-12
1-2-13
1-3-13
1-5-13
FOB terms
Destination
Shipping
point
Shipping
point
Destination
www.prtc.com.ph
P1-203
P2,000,000
5 years
P5,000,000
P1,000,000
10%
3.79
0.62
Page 9 of 16
www.prtc.com.ph
Plane #1
P600,000
Plane #2
P1,000,000
P1-203
P17,700,000
14,500,000
880,000
200,000
1,100,000
1,500,000
2,000,000
900,000
Page 10 of 16
be
recognized
as
c. P19,334
d. P19,200
P4,500,000
3,000,000
450,000
250,000
100,000
Additional information:
www.prtc.com.ph
P1-203
P10,000,00
0
5,000,000
4,000,000
3,000,000
6,000,000
2,000,000
P1,000,000
5,000,000
50,000
200,000
100,000
Page 11 of 16
Net income
P 80,000
250,000
300,000
Dividends declared
P
0
100,000
100,000
P480,000
40,000
70,000
200,000
35%
P 550,000
1,350,000
200,00
0
P2,100,000
P 600,000
1,600,000
300,000
(400,000)
P2,100,000
www.prtc.com.ph
P1-203
P 1,000,000
5,000,000
6,000,000
P12,000,000
P 1,250,000
1,000,000
4,000,000
6,000,000
P12,250,000
An increase of P100,000
An increase of P150,000
An increase of P200,000
Page 12 of 16
b.
P150,000
d.
P 50,000
P350,000
800,000
240,000
270,000
Additional information:
(a) Cash of P38,000 has been placed in a fund for the
retirement of long-term debt. The cash and longterm debt have been offset and are not reflected in
the financial statements.
(b) Long-term assets include P50,000 in treasury shares.
(c) Cash of P14,000 has been set aside to pay taxes
due. The cash and taxes payable have been offset
and do not appear in the financial statements.
(d) Advances on salespersons' commissions in the
amount of P21,000 have been made. Also, sales
commissions payable total P24,000. The net liability
of P3,000 is included in Current Liabilities.
After making any necessary changes, compute for the
totals of Streamer's:
92. Current assets
a. P385,000
b. P423,000
c. P350,000
d. P364,000
c. P278,000
d. P275,000
www.prtc.com.ph
P10,000,000
200,000
P1-203
350,000
500,000
2,100,000
1,000,000
800,000
300,000
900,000
1,600,000
Cash
Accounts receivable, net
Inventory
Buildings and Equipment (net)
Patents
Accounts payable
Bonds payable
Share capital
Share premium
P 500,000
1,500,00
0
2,000,00
0
3,500,00
0
4,500,00
0
1,000,00
0
Increase
(Decrease)
P95,500
92,000
(30,000)
190,000
(5,000)
(75,000)
150,000
100,000
50,000
i)
j)
Page 13 of 16
f)
www.prtc.com.ph
c. P13,400
d. P 9,600
P1-203
c. P 700
d. P6,900
HYPERINFLATIONARY ECONOMY
105. Entity Q operates in hyperinflationary economy. Its
balance sheet on December 31, 2012, follows:
Cash
Inventory
Property, plant and equipment
Current liabilities
Noncurrent liabilities
Share capital
Retained earnings
P 3,500,000
27,000,000
9,000,000
7,000,000
5,000,000
4,000,000
23,500,000
pertains
Monetary assets:
January 1
December 31
Monetary liabilities:
January 1
December 31
Increase in net monetary items as
restated to constant peso
Decrease in net monetary items as
restated to constant peso
General price index:
January 1
December 31
to
Inflation
P250,000
700,000
100,000
300,000
2,000,000
1,500,000
125
150
Page 14 of 16
ACCOUNTING PROCESS
108.
The account balances
December 31, 2012 follow:
of
Seiko
Accounts payable
Accounts receivable
Building
Share capital
Cash
Equipment
Land
Notes payable
Retained earnings
Corp.
as
of
P100,000
120,000
400,000
760,000
60,000
160,000
50,000
280,000
100,000
Sales
Cost of goods sold
Depreciation - building
Depreciation - equipment
All other expenses
P5,600
6,400
900
900
www.prtc.com.ph
P1-203
1
2
3
4
5
6
Total revenue
P13,000,000
10,000,000
8,000,000
3,000,000
3,500,000
2,500,000
P40,000,000
Operating
profit
P4,000,000
2,000,000
1,500,000
1,000,000
800,000
700,000
P10,000,000
Identifiable
assets
P25,000,000
20,000,000
15,000,000
7,000,000
7,500,000
5,500,000
P80,000,000
d.
116.
In 2012, Roy Industries decided to discontinue its
Laminating
Division,
a
separately
identifiable
component of Roys business. At December 31, 2012,
the division has not been completely sold. However,
negotiations for the final and complete sale are
progressing in a positive manner, and it is probable
that the disposal will be completed within a year.
Analysis of the records for the year disclosed the
following relative to the Laminating Division:
Operating loss for the year
Loss on disposal of some Laminating
Division assets during 2012
Expected
operating
loss
in
2013
preceding final disposal
Expected gain in 2013 on disposal of
division
Page 15 of 16
P899,000
50,000
450,000
200,000
www.prtc.com.ph
P1-203
- End -
Page 16 of 16
www.prtc.com.ph
P1-203