1.
) Flexible Company has a business model of managing debt security investment
by trading on a regular basis. The company has reported the following fair value
of investments before the preparation of its December 31, 2014 statement of
financial position:
Equity investment to profit or loss, P1,500,000
Equity investment through other comprehensive income 2,000,000
Debt investment 4,000,000
Included in the equity investment to profit or loss is a P900,000 current fair value
of equity investment originally classified as investment to profit or loss acquired
three years ago. The company held the investment for three years due to a large
unexpected downturn in the stock market.
What amount of investment to profit or loss should Flexible Company report in its
December 31, 2014 statement of financial position?
a. P2,000,000
b. P3,100,000
c. P4,500,000
d. P5,500,000
2.) The accounts and balances shown below were taken from Basic Company's
trial balance on December 31, 2014. All adjusting entries have been made.
Wages Payable, P250,000; Cash, P175,000; Bonds Payable, P600,000; Dividends
Payable, P140,000; Prepaid Rent, P136,000; Inventory, P820,000; Investment in -
Sinking Fund Assets, P525,000; Investment to profit or loss securities, P153,000;
Premium on Bonds Payable, P48,000; Investment in Subsidiary, P1,020,000; Taxes
Payable, P228,000; Accounts Payable, P248,000; Accounts Receivable, P366,000;
Property, Plant, & Equipment, P1,200,000; Patents net, P150,000; Accumulated
Depreciation - PPE, P400,000; Land held for future business site, P900,000.
How much should be reported in Basic's December 31, 2014 statement of financial
position as current and non-current assets, respectively?
a. P1,650,000 and P2,375,000
b. P1,650,000 and P3,395,000
c. P1,800,000 and P2,225,000
d. P1,800,000 and P3,795,000
3.) The accounts and balances shown below were taken from Basic Company's
trial balance on December 31, 2014. All adjusting entries have been made.
Wages Payable, P250,000; Cash, P175,000; Bonds Payable, P600,000; Dividends
Payable, P140,000; Prepaid Rent, P136,000; Inventory, P820,000; Investment in -
Sinking Fund Assets, P525,000; Investment to profit or loss securities, P153,000;
Premium on Bonds Payable, P48,000; Investment in Subsidiary, P1,020,000; Taxes
Payable, P228,000; Accounts Payable, P248,000; Accounts Receivable, P366,000;
Property, Plant, & Equipment, P1,200,000; Patents net, P150,000; Accumulated
Depreciation - PPE, P400,000; Land held for future business site, P900,000.
How much should be reported in Basic's December 31, 2014 statement of financial
position as current and non-current liabilities, respectively?
a. P776,000 and P552,000
b. P866,000 and P648,000
c. P916,000 and P640,000
d. P916,000 and P648,000
4.) Bride Company began operations on January 1, 2014 with P1,000,000 from the
issuance of shares and borrowed funds of P450,000. Net income for 2014 was
P300,000 and Bride paid a P225,000 cash dividend on December 19, 2014. No
additional transactions affected owners' equity in 2014.
At December 31, 2014, liabilities of the company had increased to P597,000. In
Bride's December 31, 2014 statement of financial position, how much should be
reported as its total assets?
a. P1,525,000
b. P1,672,000
c. P1,750,000
d. P1,760,000
5.) Halo, Inc. reported the following items in its December 31, 2014 trial balance:
Accounts Payable P1,089,000
Advances to Employees 45,000
Unearned Rent Revenue 288,000
Estimated Liability Under Warranties 258,000
Cash Surrender Value of Officers' Life Insurance 75,000
Bonds Payable 5,000,000
Discounts on Bonds Payable 225,000
Trademark 390,000
How much should Halo report as total liabilities in its December 31, 2014
statement of financial position?
a. P6,410,000
b. P6,800,000
c. P6,845,000
d. P7,410,000
6.) Pilot Company had the following items at December 31, 2014:
Accounts payable P330,000
Unsecured notes, 9%, due July 1, 2015 800,000
Accrued expenses 210,000
Provision for litigation 2,700,000
Deferred income tax liability 150,000
Bonds payable, 5%, due March 31, 2015 6,000,000
The contingent liability is an accrual for probable losses on a P6,000,000 lawsuit
filed against Pilot Company. Pilot's legal counsel expects the suit to be settled in
2016. The counsel has estimated that Pilot will be liable for damages in the
amount of P2,700,000. The deferred income tax liability is not related to an asset
for financial reporting and is expected to reverse in 2016.
What is the amount of current liabilities that Pilot should report in its December
31,
2014 statement of financial position?
a. P6,690,000
b. P7,340,000
c. P 9,390,000
d. P11,960,000
7.) Lincoln Company provided the following account balances on December 31,
2014:
Accounts payable, P125,000; Accrued taxes, P50,000; Cash surrender value of life
insurance, P30,000; Ordinary share capital, P1,000,000; Dividends payable-
preference, P150,000; Mortgage payable (P200,000 due in six months),
P1,200,000; Notes payable-20%, due on January 2, 2015, P1,500,000; Shares
premium, P250,000; Preference share capital, P450,000; Accumulated
profitsDecember 31, 2014, P550,000; Unearned rent income, P25,000; Dividends
payable-ordinary, P100,000.
How much should Lincoln Company report as Shareholders' equity on December
31, 2014?
a. P1,450,000
b. P1,650,000
c. P2,250,000
d. P2,500,000
8.) Pristine Company reported the following information for 2014:
Sales revenue P500,000
Cost of goods sold 350,000Operating expenses 55,000
Unrealized translation gain 20,000
Cash dividends received on the securities 2,000
Ignore income tax, for 2014, Pristine Company would report comprehensive
income before tax of
a. P117,000
b. P115,000
c. P97,000
d. P20,000
9.) For the year ended December 31, 2014, Traffic Inc. reported the following:
Net income P180,000
Preference share dividends declared 30,000
Ordinary share dividend declared 6,000
Unrealized holding loss, net of tax 3,000
Retained earnings 240,000
Ordinary share capital 120,000
Accumulated Other Comprehensive Income
Beginning Balance, net of tax 15,000
What would Traffic report as its ending balance of Accumulated Other
Comprehensive Income?
a. P18,000
b. P15,000
c. P12,000
d. P 3,000
10.) Presented below is selected information pertaining to the Bone Company:
Cash balance, January 1, 2014 13,000
Accounts receivable, January 1, 2014 19,000
Collections from customers in 2014 210,000
Capital account balance, January 1, 2014 38,000
Total assets, January 1, 2014 75,000
Cash investment added, July 1, 2014 5,000
Total assets, December 31, 2014 101,000
Cash balance, December 31, 2014 20,000
Accounts receivable, December 31, 2014 36,000
Merchandise taken for personal use during 2014 11,000
Total liabilities, December 31, 2014 41,000
How much is the net income for 2014?
a. P22,000
b. P26,000
c. P28,000
d. P30,000
11.) The financial records of Food, Inc., were destroyed by fire at the end of 2014.
Fortunately, the controller had kept certain statistical data related to the income
statement as presented below:
The beginning merchandise inventory was P92,000 and decreased by 20% during
the current year.
Sales discounts amount of P17,000.
20,000 ordinary shares were outstanding for the entire year.
Interest expense was P20,000.
The income tax rate is 35%.
Cost of goods sold amounts to P500,000.
Administrative expenses are 20% of cost of goods sold but only 8% of gross sales.
Four-fifths (4/5) of the operating expenses relate to sales activities.
How much is the net profit in the year 2014?
a. P113,000
b. P132,400
c. P138,450
d. P213,000
12.) Banana Corporation's trial balance of income statement accounts for the year
ended December 31, 2014 included the following:
How much is the cost of goods manufactured?
a. P200,000
b. P212,000
c. P280,000
d. P292,000
13.) What is the cost of goods manufactured for the current year?
a. 6,900,000
b. 7,100,000
c. 7,200,000
d. 7,300,000
14.) Condo Company reported the following total debits and total credits in
selected accounts after closing entries were posted:
What is the cost of goods sold for the year?
a. 6,900,000
b. 7,000,000
c. 7,100,000
d. 7,400,000
15.) What is the income from continuing operations?
a. 7,000,000
b. 8,000,000
c. 9,000,000
d. 9,500,000
16.) Zeno Company maintains a markup of 60% based on cost. The entity's
distribution and administrative expenses average 30% of sales. Sales amounted to
P9,600,000 for current year.
What is the net income for the current year?
a. 720,000
b. 960,000
c. 2,880,000
d. 3,600,000
