ncr cup jr basic accounting final

8/10/2019 Ncr Cup Jr Basic Accounting Final

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BASIC ACCOUNTING - FINAL ROUND

EASY

1. Easy Inc. received a 3-year, non-interest bearing trade note for P50,000 on January 1, 2012. The current

interest rate at that time was 15% for similar notes. The Company recorded the receipt of the note as

follows:

Notes Receivables 50,000

Sales 50,000

What is the effect of this accounting for the notes receivable on the Companys profit for years 2012,

2013, and 2014 and the carrying value of the said receivables at the end of 2014, respectively? (Indicatethe effect only) (10 secs)

Answer: overstate, understate, understate, no effect

2. Leviticus Company had the following transactions all throughout the year 2012, companys start of

operations:

Sales (90% collected in first year) 1,500,000

Bad debt written-off 60,000

Disbursements for cost of sales and operating expenses 1,200,000

Disbursements for income taxes 90,000

Purchase of fixed assets 400,000Depreciation on fixed assets 80,000

Proceeds from issuance of ordinary shares 500,000

Proceeds from short term borrowing 100,000

Payments on short term borrowing 50,000

How much is cash as of December 31, 2012?

Answer: P210,000

3. On December 31, Ruth Company has the following data:

Trade receivables 232,500

Allowance for uncollectible accounts (5,000)

Claim against shipper for goods lost in transit, FOB shipping point 7,500Selling price of unsold consigned goods 65,000

Security deposit 75,000

How much is the total current receivables?

Answer: P235,000

4. Buyer Co. regularly buys shirts from Vendor Company and is allowed trade discounts of 20% and 10%

from the list price. Buyer purchased shirts from Vendor on May 27 and received an invoice with list price

of P100,000 and payment terms 2/10, n/30. If Buyer uses the net method of recording purchases, the

journal entry to record the payment on June 8 is

( provide the complete journal entry )

Answer: Dr: Accounts Payable

P70,560

Dr: Purchase discount lostP1,440

Cr: CashP72,000

5.

X Factor Corporation is installing a new plant at its production facility. It has incurred the following costs:

Purchase price of plantP2,500,000; Initial delivery and handling costsP200,000; Cost of site

preparationP600,000; Consultants used for advice on the acquisition of the plantP700,000; Estimated

dismantling costs to be incurred after 7 years P300,000; Operating losses before commercial production

P400,000.

The total costs that can be capitalized as PPE is

Answer: P4,000,000


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6. Which of the following statements is false?

a.

A certified check is a liability of the bank certifying it.

b. A certified check will be accepted by many persons who would not otherwise accept a personal check

c. A certified check is one drawn by a bank upon itself

d. A certified check should not be included in the outstanding checks

Answer: C

7. A used delivery truck was traded in for a new truck. Information relating to the trucks were as follows:

Used truck: CostP1.6M; Accumulated depreciationP1.2M; Estimated fair valueP320,000

New truck: List priceP2M; Cash price without trade-inP1.9M; Cash price with trade-inP1.56MThe amount that should be capitalized as the cost of the new truck is ______________________________

Answer: P1,880,000

8. A check register may be used in lieu of what special journal?

Answer: Cash disbursement journal

9. Accounting for the interest in a non interest bearing note receivable is an example of what aspect of

accounting theory?

Answer: Substance over form

AVERAGE

1. Bank overdrafts generally should be

a.

reported as a deduction from current asset section.

b. reported as a deduction from cash.

c. netted against cash and net cash amount reported.

d. reported as a current liability

e. C or D, based on the companys policy

Answer: D

2.

On December 1, 2013, Adelina invited Elvira to join him in his business. Elvira agreed, provided thatAdelina will adjust the accumulated depreciation of his equipment to ascertain amount and will recognize

unrecorded liabilities of P50,000. On the other hand, Elvira is to invest additional pieces of equipment to

make his interest equal to 45%. If the capital balance of Adelina before and after adjustment were

P695,000 and P605,000, respectively, what is the effect in the carrying value of the equipment as a result

of Elviras joiningAdelina?

Answer: P455,000

3.

Which of the following statements is/are true in relation to issue of shares?

I. If the equity instruments are issued before the entity receives cash, the entity shall present the

amount receivable as an asset.

II.

If the entity receives cash before the equity instruments are issued and the entity cannot be required

to repay the cash, the entity shall recognize an increase in equity to the extent of the cash received.

III. To the extent that the equity instruments have been subscribed but not issued and the entity has not

yet received the cash, the entity has not yet received the cash; the entity shall not recognize an

increase in equity.

Answer: II and III only

4. As suggested by Article 1787 of the Philippine Civil Code and relevant PFRSs, the net contributions (assets

and related liabilities assumed by the partnership) of the partners to the partnership are measured at

a.

fair value c.

discretionary amount determined by partners

b. cost d. any of theses

Answer: A. Fair Value


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5. During its second year of operations, Shark Company found itself in financial difficulties. Shark decided to

use its accounts receivable as a means of obtaining cash to continue operations. On July 1, 2011, Shark

sold P1,500,000 of accounts receivable for cash proceeds of P1,390,000. No bad debt allowance was

associated with these accounts. On December 15, 2011, Shark assigned the remainder of its accounts

receivable, P5,000,000 as of the date, as collateral on a P2,500,000, 12% annual interest rate loan from

Finance Company. Shark received P2,500,000 less a 2% finance charge. None of the assigned accounts had

been collected by the end of the year.

Additional information is as follows:

Allowance for bad debts before adjustment, 12/31/2011 85,000

Estimated uncollectible, 12/31/2011 3% of A/R

Accounts receivable excluding factored and

assigned accounts, 12/13/11 1,000,000

What amount should be recognized by Shark Company as bad debt expense for 2011?

Answer: P95,000

6. On December 1, 2013, Carissa and Marietta agreed to invest equal amounts and share profits and losses

equally in a partnership. Carissa invested P3,120,000 cash and a piece of equipment. Marietta invested

some assets which are shown below:

Receivables P 400,000

Inventories 1,120,000

Equipmentsnet 2,240,000

Intangiblesnet 920,000

The assets invested by Marietta are not properly valued. P32,000 of the receivables are worthless; and

Inventories are to be written down to P1,040,000. Included in the equipments is an obsolete apparatus

acquired for P384,000 with an accumulated depreciation P336,000. Part of the intangible assets is a

patent with a carrying value of P56,000 which was under litigation. Marietta unsuccessfully defended the

case and the final decision of the court was released on November 29, 2013.

What is the fair value of the equipment invested by Carissa?

Answer: P1,344,000

7. Candice Company reported net income of P34,000 for the year ended December 31, 2013 which included

depreciation expense of P8,400 and a gain on sale of equipment of P1,700. The equipment had an

historical cost of P40,000 and accumulated depreciation of P24,000.

Each of the following accounts increased during 2013:

Patent 9,800

Prepaid rent 4,500

Available for sale investment 8,000

Bonds payable 5,000

What amount should be reported as net cash provided (used) by investing activities for the year ended

December 31, 2013? (30 secs)

Answer: (P100)

8. Storm Company made the following expenditures:

Continuing and frequent repairs P350,000

Repainted the building 120,000

Major improvement to wiring 450,000

Partial replacement of tiles 180,000

What total amount should be expensed immediately? (30 secs)

Answer: P650,000


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DIFFICULT

1. Lechon Company is negotiating a loan with EastNorth Bank needs P7.2 million. As part of the loan

agreement, EastNorth Bank will require Lechon Company to maintain a compensating balance of 15% of

the loan amount on deposit in a checking account at the bank. Lechon Company currently maintains a

balance of P0.40 million in the checking account. The interest rate Lechon Company is required to pay on

the loan is 12%. EastNorth pays 15% on checking accounts. Determine the amount of the loan and its

related effective interest rate.

(round off effective interest rate in 2 decimal %)

Answer: P8 million and 11.67%

2. Kim, Gerald and Maja were partners with capital balances on January 2, 2013 of P350,000, P420,000 and

P280,000, respectively. Said capital balances were in the same ratio as their original net investments.

Their loss sharing ratio is 3:5:2. On May 1, 2011, Kim retires from the partnership because she is irritated

with Maja. On the date of retirement, the partnerships net profit from operations is P240,000. The

partners agreed further to pay Kim P382,800 in settlement of her interest. How much will be the capital of

Gerald after the retirement of Kim?

Answer: P544,320

3.

Lito Company reported the following changes during the current year: Increase (decrease)

Cash P400,000; Accounts Receivable P300,000; Allowance for bad debts P50,000; Inventory

(P150,000); Prepaid Rent (P50,000); Plant and Equipment P1,000,000; Accumulated Depreciation

P100,000; Accounts Payable P80,000; Bonds Payable (P100,000); Discount on bonds payable

(P10,000); Ordinary Share capital P120,000; Share Premium P60,000; Treasury Shares at cost

P30,000.

There were no other entries in the Accumulated profit or loss account except for the dividend declaration

of P50,000, which was paid in the current year. Determine the net income for the year.

Answer: P1,260,000

4.

The January 1, 2012 balance sheet of Go Company shows:

2012

Accounts receivable P2,000,000

Allowance for doubtful accounts 100,000

Additional information for 2012:

a.

Cash sales of the Company amount to P800,000 and represent 10% of gross sales.

b. 90% of the credit sales customers did not take advantage of the 5/10, n/30 terms.

c.

Customer who did not take advantage of the discount paid P5,940,000.

d.

It is expected that cash discounts of P10,000 will be taken on accounts receivable outstanding at

12/31/12.e. Sales returns in 2012 amounted to P80,000. All returns were from charge sales.

f. During 2012, accounts totaling P60, 000 were written-off as uncollectible. Recoveries during the year

amounted to P10,000. This amount is not included in the foregoing collections.

g. The allowance for doubtful accounts is adjusted so that it represents a certain percentage of the

outstanding accounts receivable at year-end.

On December 31, 2012, how much should be reported in the statement of financial position for the NRV

of Receivables? (60 secs)

Answer: P2,270,000


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5. The accounts shown below (with normal balances) appear in the trial balance of Blue Eagles, Inc. on

September 30, 2011, end of the accounting year.

Preference shares authorized. P100 par P 5,000,000

Ordinary shares authorized. P10 par 2,000,000

Unissued Preference shares 1,800,000

Unissued Ordinary shares 1,000,000

Subscription receivable, Ordinary share 180,000

Subscription receivable, Preference share 190,000

Notes receivable 224,650

Accumulated depreciationProperty, Plant and Equipment 1,234,550Preference shares subscribed 100,000

Ordinary shares subscribed 200,000

Mortgage payable 980,230

Share premiumOrdinary 600,000

Share premiumPreference 200,000

Share premiumTreasury 50,000

Accumulated profits and losses 2,000,000

Treasury sharesOrdinary (10,000 shares at cost) 680,000

Revaluation Surplus 371,000

The share subscriptions are scheduled to be collected on the following dates:

P 100,000 P 60,000

50,000 130,000

30,000

P 180,000 P 190,000

Due DatePreference

Proportion

Due DateOrdinary

Proportion

Nov. 27, 2011

Aug. 21, 2012

Oct. 11,20112

Oct. 8, 2012

Sept. 20, 2012

Based on the above information, determine the total Reserves as of September 30, 2011.

Answer: P1,901,000

6. On June 1, 2012, after more than ten years of profitable business of ABC Merchandising, partners Jaja,

Jeje, Jiji and Jojo decided to dissolve the partnership business and to liquidate its affairs for good. Duringthe first five months of operations for the calendar year ending December 31, 2012, the partnership has

earned a total net income of Php1,000,000. The Articles of Partnership provides for the following

profit/loss sharing agreements.

Jaja and Jojo is to receive Php30,000 and Php20,000 monthly salary, respectively;

Jeje, Jiji and Jojo shall receive interests for their beginning capital balances amounting to 3%, 2% and

10%, respectively. The total capital balance of the partnership as of the beginning of the year is

Php2,500,000 of which Jiji and Jojo owns Php500,000 and Php1,000,000, respectively. Jaja owns of

the remaining capital balance.

Any remaining profit or loss is apportioned to Jaja, Jeje, Jiji and Jojo, respectively, using 1:2:3:4 ratio.

On July 2, 2012, the partnership sold Php1,000,000 of its assets for Php800,000. Total available cash wasused to pay all outstanding liabilities amounting to Php900,000 and liquidation expenses amounting to

Php10,000. Also, in July 2, 2012, remaining available cash of Php500,000 was paid to the partners as

partial payment of their respective shares in the partnership liquidation.

On July 15, 2012, the remaining assets were sold. After paying for expenses amounting to Php15,000, all

available cash was distributed to the partners. Jojo received Php698,000 as his share for the final

installment of his share in the partnership.

Based on the foregoing, how much was received by Jeje as his share in the installment payment to the

partners in July 2, 2012?

Answer: P P321,428.57


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7.

On November 30, 2012, a big flood caused severe damage to the warehouse on Tribecca Company. The

company suffered a big loss on its merchandise inventory. The following information was available from

the accounting records of Tribecca.

1/1/2012 to date of flood 2011

Merchandise Inventory, beginning P200,000 -0-

Purchases 1,190,000 P1,120,000

Purchase returns 30,000 20,000

Sales 1,560,000 1,200,000

At the beginning of 2012, the company changed its policy on selling prices of the merchandise in order to

produce a gross profit rate of 5% higher than the gross profit rate in 2011. Undamaged merchandise

marked to sell at P50,000 and damaged merchandise marked to sell at P15,000 were salvaged. The

damaged merchandise slightly damaged and had an estimated realizable value of P12,000. What is the

estimated cost of inventory lost from the flood?

Answer: P222,500

8. CORONA and TUPAS establish a partnership to operate a used furniture business under the name C&T

Furniture. CORONA contributes furniture that cost P 60,000 and has a fair value of P 90,000. TUPAS

contributes P 30,000 cash and delivery equipment that cost P 40,000 and has a fair value of P 30,000. The

partners agree to share profits and losses 60% to CORONA and 40% to TUPAS.

Calculate the peso amount of inequity that will result if the initial non-cash contributions of the partners

are recorded at cost rather than fair market value.

Answer: P18,000

ncr cup jr basic accounting final

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