Mock CPA Board Examinations

PRACTICAL ACCOUNTING 2 February 21-22, 2009

INSTRUCTIONS: Select the best answer for each of the following questions. Mark only one answer for each item on
the answer sheet provided. Strictly NO ERASURES ALLOWED. Erasures will render your examination answer sheet
INVALID. Use PENCIL NO. 2 only. GOODLUCK!

in cooperation with
 The following are the capital balances and the profit
and loss ratio of the partners in the FASTFOOD 4. Wapakels and Wakulets have capital balances of
Company on December 31, 2007: P65,000 and P35,000 and share profits 3:2. SS is
On January 1, 2008, STARBOX is admitted to the admitted as a partner and is given a 25% interest in
partnership under the following agreement: the firm upon investing P40,000 cash. Profits are to
STARBOX is to share 1/3 in the profit and loss be shared 5:3:2 by Wapakels, Wakulets and SS, D
while the other partners continue to participate in subsequently enters the partnership by investing
the profits and loss in their original ratio. P25,000 for a 20% interest in assets and a 20%
STARBOX is to pay MCDO P48,000 for 1/ 4 of the share of the firm's profits. Former partners share the
latters equity in the partnership net assets and is balance of profits in their original ratio. Wapakels has
to invest P280,000 cash in the partnership. difficulty getting along with D and withdraws from the
The total capital after STARBOXs admission is partnership. The partnership pays P73,000 cash for
P1,040,000, of which STARBOXs capital account Wapakels's interest. How much are the capital
is to show P300,000. balances of Wakulets, SS and D, respectively after
Wapakels's withdrawal under the bonus method?
Capital Account Profit and Loss a. P31,000; P31,000; P30,000
Balances Ratio b. P34,600; P33,400; P33,000
Partner JOLI P120,000 25% c. P40,600; P38,400; P38,000
Partner MCDO 160,000 50% d. P43,000; P40,000; P40,000
Partner WENDI 400,000 25%
Total assets P680,000 100% 5. In relation to no. 4, how much are the capital
balances of Wakulets, SS and D after Wapakels's
1. The capital account balances of the partners after withdrawal under the goodwill method?
STARBOXS admission are. a. P31,000; P31,000; P30,000
a. JOLI, P147,000; MCDO, P166,000; WENDI, b. P34,600; P33,400; P33,000
P427,000; STARBOX, P300,000 c. P40,600; P38,400; P38,000
b. JOLI, P145,000; MCDO, P170,000; WENDI, d. P43,000; P40,000; P40,000
P425,000; STARBOX, P300,000
c. JOLI, P138,336; MCDO, P156,774; WENDI, Browny Corp., is undergoing liquidation since August 1,
P418,336; STARBOX, P300,000 2008. Five months later, on December 31, 2008, its
d. JOLI, P145,000; MCDO, P166,000; WENDI, condensed realization and liquidation statement shows
P427,000; STARBOX, P300,000 the following:
Assets:
2. What is the new profit and loss ratio of all partners To be realized 1,375,000
after STARBOXs admission? Acquired 750,000
a. JOLI, 25.00%; MCDO, 50.00%; WENDI, 25.00%; Realized 1,200,000
STARBOX, 33.33% Not realized 1,375,000
b. JOLI, 18.75%; MCDO, 37.50%; WENDI, 18.75%; Liabilities:
STARBOX, 25.00% Liquidated 1,875,000
c. JOLI, 25.99%; MCDO, 25.00%; WENDI, 25.00%; Not liquidated 1,700,000
STARBOX, 25.00% To be liquidated 2,250,000
d. JOLI, 16.67%; MCDO, 33.33%; WENDI, Assumed 1,625,000
16.67%; STARBOX, 33.33% Supplementary:
Charges 3,125,000
3. Following is the balance sheet of the ABCD Credits 2,925,000
Partnership at March 31, 2008, when the partnership
is to be liquidated: 6. The net gain (loss) for the five-month period is:
Assets Liabilities and Capital a. P (325,000) c. P425,000
Cash P 6,000 Liabilities P 12,400 b. P250,000 d. P550,000
Other A, Loan 12,000
assets 126,000 Because of inability to pay its debts, the Bakit_kaya
B, Loan 14,400 Manufacturing Company has been forced into
D, Loan 9,600
A, Capital (25%) 16,200 bankruptcy as of April 30, 2008. The balance sheet on
B, Capital (25%) 12,000 that date shows:
C, Capital (25%) 37,700 ASSETS
________ D, Capital (25%) 17,700 Cash P 2,700
P 132,000 P132,000 Accounts Receivable 39,350
Notes Receivable 18,500
Inventories 87,850
Prepaid expenses 950
Land and building 61,250
During the month of April 2008, assets having a book Equipment 48,800
value of P18,000 are sold at a loss of P2,400. P 259,400
Liquidation expenses of P600 are paid as well as LIABILITIES
P7,200 of the liabilities. Of the liabilities shown in the Accounts payable P52,500
balance sheet, P240 represents salary payable to D Notes payable PNB 15,000
and P160 represents salary payable to C. Note payable suppliers 51,250
On April 30, 2008, cash is to be distributed to A, B, C Accrued wages 1,850
and D as follows: Accrued taxes 4,650
A B C D Mortgage bond payable 90,000
a. P - P - P - P 9,000 Common stock P10 par 75,000
b. 1,950 1,950 1,950 1,950 Retained earnings (30,850)
c. - - - 1,950 P259,400
d. - - 9,000 - Additional information:
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NATIONAL FEDERATION OF JUNIOR PHILIPPINE INSTITUTE OF ACCOUNTANTS

a. Accounts receivable of P16,950 and notes Cost of installment

receivable of P12,500 are expected to be collectible. sales 237,900 243,600 288,000
The good notes are pledged to Phil. National Bank.
b. Inventories are expected to bring in P45,100 From Sales made during
when sold under bankruptcy condition. 2006 2007 2008
c. Land and buildings have an appraised value of Installment Accounts
P95,000. They serve as security on the bonds. Receivable at
d. The current value of the equipment, net of January 1, 2008 P 24,000 P300,000 P 0
disposal cost is P9,000. Dec. 31, 2008 P 0 60,000 P320,000
Repossessions on defaulted accounts were made during
7. The estimated loss on asset sold at less than book
2008, as follows:
value is:
From Sales made during
a. P82,550 c. P111,900
2006 2007 2008
b. P29,240 d. P112,740
Account balance 0 P10,000 P5,000
Net resale value of rep.
8. The estimated gain on asset sold at more than book
Merchandise 4,500 3,500
value is:
a. P45,100 c. P0 15. The total realized gross profit from installment sales
b. P33,750 d. none of these during 2008 is:
a. P 9,360 c. P 96,600
9. What is the estimated payment to all creditors? b. P63,000 d. P167,960
a. P102,500 c. P118,750
b. P215,250 d. P181,250 Marvin Construction Company uses the percentage of
completion method of accounting. The company started
10. The expected recovery percentage is: work on two job sites during the 2008. Data relating to
a. 47% c. 48% the two jobs are given below:
b. 50% d. 68% Contract Actual cost Est. cost to
Price Dec. 31, 2008 complete
The following data pertain to installment sales of Contract 1 P600,000 P150,000 P150,000
Macaria's Store. Contract 2 450,000 87,500 162,500
Down payment, 20% In 2009, Contract 3 was started for a contract price of
Installment sales, P545,000 in Year 1, P785,000 in P900,000. As of December 31, 2009, the following data
Year 2, and P968,000 in Year 3. are given.
Mark-up on cost, 35% Actual cost1/1/08 to Est. cost to
Collections after down payment are: 40% during year 12/31/09 complete
of sale, 35% during the year after and 25% on the Contract 1 P280,000 P70,000
third year. Contract 2 180.000 120,000
Contract 3 180,000 320,000
11. The realized gross profit for Year 1 is:
a. P109,387 c. P148,112 16. What are the percentages of completion for the three
b. P 73,474 d. P114,825 contracts as of December 31, 2009?
Contract 1 Contract 2 Contract 3
12. The Unrealized Gross Profit for the installment sales a. 50% 35% 36%
made during Year 2 at the end of Year 2 is: b. 65% 44% 36%
a. P 97,689 c. P141,112 c. 65% 60% 50%
b. P131,880 d. P114,063 d. 80% 60% 36%

13. The Installment Accounts Receivable at the end of 17. Using the percentage of completion method of
Year 3 is: recognizing income, how much income should be
a. P652,722 c. P 602,991 reported for the year 2009?
b. P621,640 d. P 685,368 a. P 90,000 c. P 214,000
b. P 144,000 d. P 434,000
The Brownout, Inc. began operating at the beginning of
the calendar year 2008 and, using the installment
method of accounting, presented the following data for The Candy Construction Co. started work on three job
the first year: sites during the current year. Data relating to the three
Installment sales P400,000 jobs are given below:
Gross margin based on cost 66-2/3% Est. cost Collections
Inventory, December 31, 2008 P 80,000 Contract Costs to Billings on on contract
General and administrative expenses 40,000 Site Price Incurred complete contract
Batangas 500,000 375,000 - P500,000 400,000
Accounts receivable, December 31, 320,000 Laguna 700,000 100,000 400,000 100,000 50,000
2008 Pampanga 250,000 100,000 100,000 - -

14. The balance of the deferred gross profit account 18. What amount of income should be reported for the
should be current year if the zero profit method is used for all
a. P192,000 c. P128,000 contracts?
b. P96,000 d. P80,000 a. P 100,000 c. P 240,000
b. P 125,000 d. P 375,000
The following data pertain to Maganda Company which
sells appliances on the installment basis: 19. What amount of income should be reported for the
2006 2007 2008 current year if the percentage of completion method
Installment sales P390,000 P420,000 P480,000 is used for all contracts?

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NATIONAL FEDERATION OF JUNIOR PHILIPPINE INSTITUTE OF ACCOUNTANTS

a. P 65,000 c. P 215,000 a. P364,545 c. P319,545

b. P 190,000 d. P 240,000 b. P307,515 d. P366,545

20. What would be the amount of construction is 23. The following were found in your examination of the
progress to be reported on the year-end balance interplant accounts between the Home Office and the
sheet if the percentage of completion method is Butuan Branch.
used? a. Transfer of fixed assets from Home Office
a. P 165,000 c. P 575,000 amounting to P53,960 was not booked by the
b. P 265,000 d. P 785,000 branch.
b. P10,000 covering marketing expense of another
21. The ANGELA Company bills the branch for branch was charged by Home Office to Butuan.
merchandise at 135% of cost. On December 31 the c. Butuan recorded a debit note on inventory
following information were reported by the branch: transfers from Home Office of P75,000 twice.
Merchandise Merchandise d. Home Office recorded cash transfer of P65,700
from Home Purchased from Butuan Branch as coming from Davao
Office (at from Outsiders Branch.
Billed priced) (at cost) e. Butuan reversed a previous debit memo from
Merchandise inventory, Cagayan de Oro Branch amounting to P10,500.
December 1 P16,200 P 4,000 Home Office decided that this charge is
Merchandise into stock, appropriately Davao Branch's cost.
December 1-31 20,250 12,000 f. Butuan recorded a debit memo from Home Office
Merchandise inventory, of P4,650 as P4,560.
December 31 18,900 5,000
The net adjustment in the Home Office books related
Assuming that the branch has a net income of to the Butuan Branch Current account
P20,000 and had returned to the home office a. P 75,700 c. P 86,200
merchandise originally acquired at a billed price of b. P 65,700 d. P 94,820
P540. The true branch profit as far as the home office
is concerned is: The following information are taken from the books and
a. P24,690 c. P20,000 records of Pacific Company and its branch. The balances
b. P24,130 d. P24, 410 are at December 31, 2008, the second year of the
company's operations.
22. The AB Trading Co. operates a branch in Iloilo. At Home Office Branch Office
close of business on December 31, 2008, Home Books Books
Office account in the branch books showed a credit Sales P400,000
balance of P372,900. The interoffice accounts were in Expenses 100,000
agreement at the beginning of the year. For purpose Shipment to Branch P200,000
of reconciling the interoffice accounts, the following Branch inventory allow. 57,500
facts were ascertained;
a. A furniture costing the home office P4,600 was The branch obtains all its merchandise from the home
picked up by the branch as P460. The branch will office. The home office ships the merchandise at 125% of
maintain and use the asset. its cost. The ending inventory of the branch is P40,000 at
b. The branch writes-off uncollectible, accounts of the billed price.
P1,260. The allowance for doubtful accounts is 24. The true income of the branch is:
maintained on the books of the home office. The a. P 54,625 c. P102,000
home office was not yet notified. b. P112,000 d. P 52,500
c. Freight charge on merchandise made by the The San Miguel Branch of Taiwan Products, Inc. buys
home office for P2,715 was recorded in the merchandise from outsiders and receive merchandise
branch books as P7,215. from the home office for which it is billed at 20% above
d. Home office credit memo for P9,710 was cost. Below are excerpts from the trial balances and data
recorded by the branch at P7,91 0. on the home office and San Miguel Branch for the month
e. Iloilo branch failed to take up a P2,450 debit of April, 2008:
memo from the home office. HOME OFFICE:
f The home office inadvertently recorded a Cr. Allowance for overvaluation of 370,000
remittance for P3,730 from its Ilocos branch as branch merchandise
remittance from its Iloilo branch. Cr. Shipment to Branch 850,000
g. Insurance premium of P1,675 charged by the BRANCH:
home office was taken up twice by the branch. Dr. Beginning inventory 1,440,00
h. A P14,500 branch remittance to the home office 0
initiated on December 28, 2008, was recorded on Shipments from home office 1,020,00
the home office books on January 2, 2009. 0
i. A home office inventory shipment to Ilocos Purchases 410,000
branch on December 29, 2008, was recorded by Month-end additional data:
the branch on January 3, 2009; the billing of Ending inventory of branch 1,460,00
P47,000 was at cost, 0
j. A branch customer remitted a P19,000 to the From Home Office, billed price of 1,170,00
home office, The home office recorded this cash 0
collection on December 22, 2008. Meanwhile, From outsiders, at cost 290,000
back at the branch, no entry has been made yet.
25. The total cost of goods sold of the San Miguel Branch
Determine the balance of the Investment in Branch at cost (net of overvaluation) for the month just
account before adjustments: ended amounted to:

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NATIONAL FEDERATION OF JUNIOR PHILIPPINE INSTITUTE OF ACCOUNTANTS

a. P1,410,000 c. P1,235,000 29. To have an income from acquisition of P150,000, the

b. P1,385,000 d. P1,850,000 number of shares to be issued by Carl Company
should be
Summary information is given for P Company and S a. 37,500 shares c. 36,250 shares
Company at July 1, 2008. The quoted market price of P b. 38,000 shares d. 43,750 shares
Co.s stock on July 1, 2008 is P 40 per share.
P Company S Company S Company 30. Same data as in No. 29, to have a goodwill of P
Per books Per books Fair values 150,000, the number of shares to be issued by Carl
Current assets P24,000,00 P8,000,000 P9,000,000 Company should be
0 a. 37,500 shares c. 36,250 shares
Plant assets 26,000,000 22,000,000 26,000,000 b. 38,000 shares d. 43,750 shares
Liabilities 15,000,000 5,000,000
Common Stain Corporation is an 80%-owned subsidiary of Paint
stock, P 10 par 20,000,000 10,000,000 Corporation. During 2008 Stain sold merchandise that
Additional cost P120,000 to Paint for P160,000. Paint's ending
paid-in capital 1,000,000 1,000,000 inventory at December 31, 2008 contained unrealized
Retained profit of P8,000 from the intercompany sales. During
earnings 14,000,000 14,000,000 2009 Stain sold merchandise that cost P140,000 to Paint
for P190,000. One-half of this remained unsold by Paint
Assume that P Company issues 1,000,000 shares of its at December 31, 2009 For 2009 Paint's separate income
own stock for the net assets of S Company on July 1, was P250,000 and Stain's reported net income was
2008, in a purchase business combination in which S P190,000.
company is dissolved. 31. The consolidated net income for 2009 will be:
a. P377,500 c. P388,400
P Company incurred the following costs: b. P423,000 d. P342,500
Legal fees to arrange the business combination 25,000
Cost of SEC registration 12,000 P Company acquired a 90% interest in S Company in
Cost of printing and issuing new stock 3,000 2001 at a time when S Company's book values and fair
certificates values were equal to one another. On January 1, 2008, S
Indirect costs of combining 20,000 sold a machine with a P30,000 book value to P Company
for P60,000. P depreciates the machine over 10 years
26. The goodwill from the business combination is using the straight line method. Separate incomes for P
a. P10,000,000 c. P10,040,000 and S for 2008 are as follows:
b. P10,025,000 d. P10,060,000 P Co. S. Co.
Sales P1,200,000 P700,000
27. The total RE of P Company on the combined balance Gain on sale of machinery 30,000
sheet immediately after the business combination Cost of goods sold (500,000) (190,000)
a. P13,980,000 c. P27,980,000 Depreciation expense (300, 000) (90,000)
b. P14,000,000 d. P28,000,000 Other expenses (120,000) (300,000)
Separate incomes P280,000 P150,000
Quad Corporation purchases all of the net assets of
Chrome, Inc., for P400,000. Immediately prior to the 32. The consolidated net income for 2008 is:
combination, Chromes net assets were carried on the a. P430,000 c. P388,000
books at P225,000, and Chrome had retained earnings of b. P403,000 d. P390,700
P30,000. The fair value of Chromes net assets at the
date of combination is P310,000. Quad Corporation had
retained earnings of P50,000 and no goodwill
immediately prior to the combination

28. Immediately after the combination, the combined

company reports goodwill and retained earnings of:
Goodwill Retained Earnings On January 1, 2007, Subsidiary Company purchased a
a. P 0 P 50,000 delivery truck with an expected useful life of 5 years and
b. P 0 P 80,000 scrap value of P8,000. On January 1, 2009, Subsidiary
c. P 90,000 P 50,000 Company sold the truck to Parent Company and recorded
d. P 90,000 P 80,000 the following entry:
Debit Credit
The Carl Company will issue P10 par value common stock Cash 50,000
for the net assets of PBA Company. The fair market value Accumulated depreciation 18,000
per share of Carls common stock is P40. The following is Truck 53,000
the list of accounts of PBA Company on the date of the Gain on sale of truck 15,000
acquisition.
Book Value Fair Market Value Parent holds 60% of Subsidiary's voting shares.
Current assets P 350,000 P 400,000 Subsidiary reported net income of P55,000, and Parent
Plant assets (net) 850,000 1,600,000 reported separate net income of P98,000 for 2009.
Liabilities 400,000 33. In preparing the consolidated financial statements for
Common stock 80,000 2009, depreciation expense will be:
Additional paid-in capital 320,000 a. debited for P15,000 in the elimination entries
Retained earnings 400,000 b. credited for P15,000 in the elimination entries
c. debited for P5,000 in the elimination entries
d. credited for P5,000 in the elimination
entries.
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NATIONAL FEDERATION OF JUNIOR PHILIPPINE INSTITUTE OF ACCOUNTANTS

2008. The functional currency and reporting, and parents

34. The consolidated net income for 2009 will be: books are kept in Philippine pesos. Information relating to
a. P153,000 c. P125,000 these accounts in Phil. Pesos is as follows:
b. P143,000 d. P117,800 Translated at
Current Historical
P Corporation acquired 70% of the voting common stock rate rate
of S Company at a time when S Companys book values Accounts receivable P75,000 P85,000
and fair values were equal. Separate incomes of P Inventories (carried at
Corporation and S Company for 2008 are as follows: average cost) 600,000 700,000
P Corporation S Company Prepaid Insurance 25,000 30,000
Sales 792,000 438,000 Land 55,000 70,000
Cost of Goods Sold 480,000 240,000
Operating expenses 144,000 120,000 38. What amount should be included as total assets on
Separate income from Satellites balance sheet on December 31, 2008 as
own operations 168,000 78,000 the result of above information?
a. P770,000 c. P780,000
Intercompany sales from P to S for 2007 and 2008 are b. P755,000 d. P875,000
summarized as follows:
Selling Unsold at The Subic Company owns a foreign subsidiary that had
Cost Price year-end net income for the year ended December 31, 2008 of
Intercompany 4,800,000 LCU, which was approximately translated into
sales 2007 300,000 468,000 30% P800,000.
Intercompany On December 15, 2008, when the rate of exchange was
sales 2008 210,000 330,000 40% 5.7 LCU to P1.00, the foreign subsidiary paid a dividend
to subic of 2,400,000 LCU. The dividend represented the
35. The 2008 consolidated income statement will show net income of the foreign subsidiary for the six months
cost of goods sold of ended June 30, 2008, during which time the weighted
a. P 387,600 c. P 480,000 average exchange rate was 5.81 LCU to P1.00. the
b. P 720,000 d. P 240,000 exchange rate in effect at December 31, 2008 was 5.9
LCU to P1.00.
On March 1, 2008, Samar Corporation (a Philippine 39. What rate of exchange should be used to translate
Company) contemplates on an anticipated cash the dividend for the December 31, 2008 financial
transaction in foreign currency for the purchase of statements?
inventory in three months for 500,000 fc. To hedge a. 5.7 LCU to P1.00 c. 5.9 LCU to P1.00
against the probability of the peso weakening against the b. 5.8 LCU to P1.00 d. 6.00 LCU to P1.00
foreign currency before the transaction occurs, Samar
enters into a forward contract to buy 500,000 fc. At Inflation date of a foreign country for three years are as
March 1, 2008, the difference between the spot exchange follows:
rate and the forward rate (for a 90-day forward) is P0.02. Index Change Annual rate of
The spot exchange rate on May 30, 2008 is P0.115, in Index Inflation
which is P.015 bigger than the spot exchange rate on Jan. 1, 2007 150
March 1, 2008. Jan. 1, 2008 200 50 50/150 = 33%
36. Determine the amount that Samar will report in net Jan. 1, 2009 250 50 50/200 = 25%
income in 2008 as a result of this cash flow hedge of Jan. 1, 2010 330 80 80/250 = 32%
a forecasted transaction.
a. P10,000 premium expense 40. The cumulative three-year inflation rate is
b. P10,000 discount expense a. 45% c. 120%
c. P2,500 premium expense b. 90% d. 180%
d. P2,500 discount expense
Alecks Corporation had the following foreign currency
transactions during 2008
On December1, 2008, Aklan Corporation received an a. Merchandise was purchased from foreign supplier on
order for equipment FOB shipping point from a Swiss January 20, 2008 for the Peso equivalent of P90,000.
Company. The order is billed for 86,000 Swiss Francs, The invoice was paid on March 20, 2008 at the Phil.
payable on January 31, 2009. The equipment was Peso equivalent of P96,000.
shipped and invoiced to the Swiss Company on December b. On July 1, 2008, Alecks borrowed the Philippine peso
12, 2008. equivalent of P500,000 evidence by a note that was
payable in the lenders local currency on July 1, 2008.
Relevant spot exchange rates for Swiss Francs on various
On December 31, 2008, the Phil. Peso equivalent of
dates follow:
the principal amount and accrued interest were
Buying Spot Rate Selling Spot Rate
P520,000 and P26,000 respectively. Interest on the
December 1, 2008 P51.45 P51.60
note is 10% per annum.
December 12, 2008 51.58 51.84
December 31, 2008 51.72 51.96
41. In Alecks income statement, the amount that should
January 31, 2009 51.68 51.89
be included as a foreign exchange loss
37. On the December 31, 2008 income statement of
a. P 0 c. P 6,000
Aklan Corporation, how much is the FOREX gain or
b. P21,000 d. P27,000
(loss) to be reported on this transaction?
a. P12,040 c. P(14,280)
A, B, and formed a joint venture to sell food items during
b. P14,280 d. P(10,320)
the holiday season. The following joint venture account
reflects the transactions of the venture in the books of
A foreign subsidiary of Satellite Corp. (a Philippine firm)
the manager, A
has certain balance sheet accounts on December 31,
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 NATIONAL FEDERATION OF JUNIOR PHILIPPINE INSTITUTE OF ACCOUNTANTS

Joint Venture
including P4,500 conversion cost 32,000
Debits: Credits: Ending finished goods inventory per count,
Nov 6 Merchandise Nov 19 Cash sales including P 8,750 conversion cost 26,250
C P51,000 A P122,400
18 Merchandise Dec 14 Cash sales
B 42,000 A 25,200 47. The material cost of (1) the units completed and (2)
23 Expenses A 4,500 29 Merchandise the units sold are:
-B 7,260 a. (1) P 561,250 (2) P 563,750
Dec. 4 Purchases - A 21,000
b. (1) P 562,500 (2) P 565,000
c. (1) P 588,750 (2) P 581,250
The contractual arrangements include distribution of
d. (1) P 563,750 (2) P 561,250
gains and losses as follows: A, 50%; B, 30%, and C,
20%. The venture is connected and terminated on
A company has identified the following overhead costs
December 31, 2008.
and cost drivers for the coming year.
42. How much is the joint venture gain or (loss):
a. P 76,630 c. P29,100 Budgeted Budgeted
b. P103,920 d. P36,360 Overhead Item Cost driver Activity overhead
Machine set-up Number of set-
43. In the final settlement to the venturers, how much up 200 P20,000
would each receive? Inspection Number of
a. A P18,180; B P45,648; C P58,272 inspection 6,500 130,000
b. A P 0; B P45,648; C P58,272 Material Number of
c. A P 0; B P45,648; C P58,272 handling material moves 8,000 80,000
d. A P20,280; B - P45,648; C P43,728 Engineering Number of
engineering
J,K, and L formed a joint venture. The contractual hours 1,000 50,000
arrangements provides that J is to manage the venture Total P280,000
and is to receive a fee of 15% of the profit after
deduction of the fee as an expense of the venture. The The following information was collected on three jobs
net profit after the fee, is to be divided: J, 25%; K 40%; that were completed during the year:
and L, 35%. After 5 months the joint venture is
Job 101 Job 102 Job 103
terminated.
Direct materials P5,000 P12,000 P8,000
Debit Credit Direct labor 2,000 2,000 4,000
Joint venture P36,000 Units completed 100 50 200
K, capital P2,000 Number of setups 1 2 4
L, capital 8,000 Number of
inspections 20 10 30
The venture has still some unsold merchandise worth Number of material
P10,000. J agreed to purchase such at cost. The fee of J moves 30 10 50
has not yet been taken up. Number of
44. What is the profit of the venture after the fee to J? engineering hours 10 50 10
a. P40,000 c. P36,000
b. P31,204 d. P28,000 Budgeted direct labor cost was P100,000 and budgeted
direct material cost was P280,000.
45. How much is the total income earned by J?
48. If the company uses activity-based-costing, how
a. P10,000 c. P14,400
much overhead cost should be assigned to Job 103?
b. P16,000 d. P18,000
a P1,300 c. P 5,000
b P 2,000 d. P5,600
46. Before the cash settlement is made, what are the
balances of the Investment in JV account in the books
Materials are added at the start of the process in Cedar
of K and L.
Companys blending department, the first stage of the
a. K, P16,000 and L, P14,000
production cycle. The following information is available
b. K, P14,000 and L, P22,000
for the July
c. K, P16,000 and L, P26,000
Work in process, July 1 (60% converted) 60,000 units
d. K, P12,000 and L, P22,000
Started in July 150,000
Transferred to next department 110,000
Lara Company has a cycle time of 3 days, uses a raw and
Lost at the end 30,000
in process (RIP) account, and charges all conversion cost
Work in process, July 31 (50% 70,000
to Cost of Goods Sold. At the end of each month, all
converted)
inventories are counted, their conversion cost
components are estimated, and inventory account
Under Cedar Companys cost accounting system, the
balances are adjusted. Raw material cost is backflushed
costs incurred on the lost units are absorbed by the
from RIP to Finished Goods.
completed units only.

The following information is for June. 49. Using the weighted average method, what are the
Beginning balance of RIP account, including equivalent units for the materials?
P3,000 of conversion cost P 29,250 a. 120,000 c. 145,000
Beginning balance of finished goods account, b. 180,000 d. 210,000
including P10,000 of conversion cost 30,000
Raw materials received on credit 562,500 On April 1, the Collins Co. had 6,000 units of work in
Direct labor cost, P375,000, factory overhead Dept. B, the second and last stage of their production
applied, P450,000 cycle. The costs attached to these 6,000 units were
Ending RIP inventory per physical count, P12,000 of costs transferred in from Dept. A, P2,500 of

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NATIONAL FEDERATION OF JUNIOR PHILIPPINE INSTITUTE OF ACCOUNTANTS

material cost added in Dept. B and P2,000 of conversion material costs added in Dept. B and P800 of conversion
cost added in Dept. B. Materials are added in the costs added in Dept. B.
beginning of the process in Dept. B. Conversion was 50%
50. Using the weighted average method, the equivalent
complete on April 1. During April, 14,000 units were
units for the month of April were:
transferred in from Dept. A at a cost of P27,000 and
Transf.-in from
materials costs of P3,500 and conversion costs of P3,000
were added in Dept. B. On April 30, Dept. B had 5,000 Dept. A Materials Conversion
units in work in process 60% complete as to conversion a. 15,000 15,000 15,000
costs. The costs attached to these 5,000 units were b. 19,000 19,000 20,000
P10,500 of costs transferred in from Dept. A, P1,800 of c. 20,000 20,000 18,000
d. 25,000 25,000 20,000

end of examination

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