5 Items Financial Accounting And Reporting Problems

5 Questions | Total Attempts: 174

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5 Items Financial Accounting And Reporting Problems

Get your calculators out! Allow yourself for 2. 57 minutes only per item or a total of 25 minutes for the whole quiz (Certified Public Accountant Licensure Exam patterned). You also agree to be congratulated should you score the highest! (That is, we will disclose your name. . . Wag naman yung jejename. Your real name!) Ganbatte!


Questions and Answers
  • 1. 
    Presented below are changes in all the account balances of Basic Company for 2018, except for Retained Earnings: Increase (Decrease) Cash P      790,000 Accounts receivable (net) 240,000 Inventory 1,270,000 Investments    (470,000) Accounts payable        (380,000) Bonds payable                              820,000 Share capital                              1,250,000 Share premium                            130,000 What amount should net income for 2018 be, assuming that there were no entries in the Retained Earnings account except for net income and a dividend declaration of P190,000 which was paid in the current year?
    • A. 

      P1, 140, 000

    • B. 

      P1, 080, 000

    • C. 

      P200, 000

    • D. 

      P10, 000

  • 2. 
    On December 3 of the previous year 2018, Oliver Company purchased inventory listed at P8,600 from Laurel Corp. Terms of the purchase were 3/10, n/20. Oliver Company also purchased inventory from Tommy Company on December 10 for a list price of P7,500. Terms of the purchase were 3/10, n/30. On December 16, Oliver paid both suppliers for these purchases. If Oliver uses the net method of recording purchases, the journal entry to record the payment on December 16 will include
    • A. 

      A debit to Accounts payable of P15,875.

    • B. 

      A debit to Purchase Discounts Lost of P258.

    • C. 

      A credit to Purchase Discounts of P258.

    • D. 

      A credit to cash of P15,617.

  • 3. 
    A physical inventory taken on December 31, 2012 resulted in an ending inventory of P1,440,000. Thea Company suspects some inventory may have been taken by employees. To estimate the cost of missing inventory the following were gathered: Inventory, Dec. 31, 2018 P   1,280,000 Purchased during 2018 5,640,000 Cash sales during 2018 1,400,000 Shipment received on December 26, 2018 included in physical inventory, but not recorded as purchases                40,000 Deposits made with suppliers, entered as Purchases. Goods were not received in 2018                                              80,000 Collections on accounts receivable, 2018  7,200,000 Accounts receivable, January 1, 2018 1,000,000 Accounts receivable, Dec. 31, 2018 1,200,000 Gross profit percentage on sales is 40%. At December 31, 2018 what is the estimated cost of missing inventory?
    • A. 

      P 160,000

    • B. 

      P 200,000

    • C. 

      P 240,000

    • D. 

      P 320,000

  • 4. 
    Estimated normal shrinkage is 4% of sales. How much is the estimated inventory shortage assuming the company uses the average retail inventory method?
    • A. 

      P 4,000

    • B. 

      P 104,000

    • C. 

      P 130,000

    • D. 

      P 200,000

  • 5. 
    During your review of the records of X Factor Corporation for the year 2016, you noted that X Factor sold a machine with carrying amount of P640,000 (cost is P1.6M) on June 30, 2016. X Factor received an P800,000 noninterest bearing note due in 3 years. There is no established market value for the machine. The yield rate for this type of note is 12%. X Factor recorded the transaction by debiting Note receivable for P800,000 and crediting Machinery for P640,000 and Gain on sale for the difference. Because of this, X Factor’s Profit for the year ended December 31, 2018 had been overstated by
    • A. 

      P 230,576

    • B. 

      P 196,410

    • C. 

      P 81,125

    • D. 

      P -0-

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