Practical Accounting 2 - RMYC
Practical Accounting 2 - RMYC
Practical Accounting 2 - RMYC
Easy
1. On April 30, 2014, Algee, Belger, and Ceda formed a partnership by combining their
separate business proprietorships. Algee contributed cash of P50,000, Belger
contributed property with a P36,000 carrying amount, a P40,000 original cost, and
P80,000 fair value. The partnership accepted responsibility for the P35,000 mortgage
attached to the property. Ceda contributed equipment with a P30,000 carrying
amount, a P75,000 original cost, and P55,000 fair value. The partnership agreement
specifies that profits and losses are to be shared equally but is silent regarding capital
contributions. Which partner has the largest April 30, 2014, capital account balance?
a. Algee b. Belger
c. Ceda d. All capital account balance are equal
Answer: C
Capital contribution:
Algee P50,000
Belger (80,000 35,000) 45,000
Ceda 55,000
Answer: A
The transaction is between the existing partner and the new partner only and not
between the new partner and the partnership.
3. During 2014, Young and Zinc maintained average capital balances in their partnership
of
P160,000 and P100,000 respectively. The partners receive 10% interest on average
capital balances, and residual profit or loss is divided equally. Partnership profit
before interest was
P4,000. By what amount should Zincs capital account change for the year?
a. P1,000 decrease b. P11,000 decrease
c. P2,000 increase d. P12,000 increase
Answer: A
Young Zinc Total
Average capital balances P16,000 P10,000 P26,000
Residual (4,000 26,000) (11,000) (11,000) (22,000)
Total P5,000 (P1,000) P4,000
4. The capital account of Anne has a credit of P40,000, while her drawing account has a credit
balance of P60,000. The partners equity of Anne is
a. P20,000 credit b. P100,000 credit
c. P20,000 debit d. P40,000 credit
Answer: B
Credit balance of equity account P40,000
Credit balance of drawing account 60,000
Total partners equity of Anne P100,000
How much is the total realized gross profit for calendar year 2015?
a. P2,185,026 b. P1,012,000
c. P6,993,250 d. P3,044,250
Answer: D
From 2015 [(8,765,625/68%)-9,728,125]*32% P1,012,000
From 2014 (8,387,500-3,025,000)*30% 1,608,750
From 2013 (1,512,500*28%) 423,500
Total P3,044,250
Average
1. The partnership of Y. Linsao and S. Mison provides for equal sharing of profits and losses.
Prior to the admission of a third partner (C. Zamora), the capital accounts are Linsao, P75,000
and Mison, P105,000. Zamora invests P90,000 for a P75,000 interest and partners agreed that
the net assets of the new partnership would be P270,000.
Answer: A
Y. Linsao S. Mison C. Total
Zamora
Capital P75,000 P105,000 P P180,000
Investment of C. Zamora 90,000 90,000
Total 75,000 105,000 90,000 270,000
Bonus to old partners(90,000- 7,500 7,500 (15,000)
75,0000)
New capital P82,500 P112,500 P75,000 P270,000
2. R. Volante and F. Asuncion are partners having capital balances of P150,000 and
P180,000, respectively, and sharing profits and losses equally. They admit J. De Leos to a
one-third interest in partnership capital and profits for an investment of P195,000.
If the goodwill procedure is used in recording the admission of J. De Leos to the partnership
a. J. De Leos capital will be P175,000
b. Total capital will be P525,000
c. F. Asuncion capital will be P210,000
d. Goodwill will be recorded at P45,000
Answer: C
Goodwill [195,000/(1/3)]-(150,000+180,000+195,000) P60,000
3. The following amounts were taken from the statement of affairs for Bagsak Company
Unsecured liabilities without priority 90,000
Stockholders' equity 36,000
Loss on realization of assets 45,000
Estimated administrative expenses that have not been 4,500
entered in the accounting records
Unsecured liabilities with priority 10,000
The estimated payment for the unsecured liabilities without priority will be
a. P76,500 b. P81,000
c. P77,850 d. P90,000
Answer: A
Total liabilities (90,000+10,000) P100,000
Stockholders equity 36,000
Total assets 126,000
Loss on realization of assets (45,000)
Administrative expenses (4,500)
Payment to unsecured liabilities with priority (10,000)
New capital P76,500
4. Rose Company which began operations on January 2, 2015, appropriately uses the
installment sales method of accounting. The following information is available for
2015: Installment accounts receivable, December 31, P800,000; Deferred gross profit,
December 31, before recognition of realized gross profit for 2015, P560,000; gross
profit rate on cost, 40%
For the year ended December 31, 2015, cash collections and realized gross profit on
sales should be:
a. P600,000; P240,000 b. P1,160,000;331,429
c. P600,000; P320,000 d. P1,160,000;240,000
Answer: B
Deferred gross profit P560,000
Divided by the gross profit rate 40%/140
%
Accounts receivable, beginning 1,960,000
Accounts receivable, ending 800,000
Cash collections 1,160,000
Multiply by the gross profit rate 40%/140
%
Realized gross profit P331,429
5. On June 1, 2014, Cecil Company paid P800,000 cash for all the issued and
outstanding common stock of Glen Corporation. The carrying values for the Glens
assets and liabilities on
June 1, 2014, follow:
Cash P150,000
Accounts receivable 180,000
Capitalized software costs 320,000
Goodwill (net of accumulated amortization of P80,000) 100,000
Liabilities ( 130,000)
a. P220,000 b. P120,000
c. P300,000 d. P160,000
Answer: B
Cash P150,000
Accounts Receivable 140,000
Capitalized Software Cost 320,000
In process research and development 200,000
Total Assets 810,00
0
Liabilities 130,000
Net Assets Acquired 680,000
Amount paid 800,000
Goodwill P120,000
Difficult
1. On December 31, the partnership accounts of I. Gabon, J. Hipolito and K. Imperial who share
profits and losses in the ratio of 5:3:2 follow:
Total partnership assets on this day stands at P211,200, including cash of P64,200. The
partnership is liquidated and Imperial ultimately receives P33,000 in final liquidation.
Answer: B
K. Imperial, Capital P39,000
K. Imperial, Drawing 4,800
Total equity 43,800
Cash settlement (33,000)
Share in loss 10,800
Divided by P/L ratio 2/10
Total loss on realization P54,000
2. Roel, Jekell and Mike, CPAs, decide to form a partnership and agree to distribute profits in
the ratio 6:3:3. It is agreed, however, that Roel and Jekell shall guarantee fees from their own
clients of P600,000 and P500,000 respectively, that any deficiency is to be charged directly
against the account of the partner failing to meet the guarantee, and that any excess is to be
credited directly to the account of the partner with fees exceeding the guarantee. Fees earned
during 2014 are classified as follows:
Operating expenses for 2014 are P200,000. Determine the share of Roel on the
operating results for the year 2014.
a. P650,000 b. P500,000
c. P1,050,000 d. P900,000
Answer: D
Total revenue (600,000+500,000+100,000) P1,200,000
Expenses (200,000)
Net income 1,000,000
Drawings
Net income (loss) Caine Osman Roberts
2012 440,000 150,000 78,000 52,000
2013 185,000 150,000 78,000 52,000
2014 (105,000) 100,000 52,000 52,000
At the beginning of 2015, Caine and Osman agreed to permit Roberts to withdraw
from the firm. Since the books for the firm had never been audited, the partners
agreed to an audit in arriving at the settlement amount. In withdrawing, Roberts was
allowed to take certain furniture and was charged P15,000, although the book value
was P45,000; the balance of Roberts interest was paid in cash.
Answer: C
Total income (440,000+185,000-105,000) P520,00
0
Adjustment (-6,500+1,500-20,000-1,500-3,500-2,000) (32,000)
Adjusted total net income 488,000
Multiplied by the P/L percentage 12.50%
Share in net income 61,000
Original investment 125,000
Total withdrawal (52,000 x 3) (156,000
)
Share on the impairment of the furniture (45,000-15,000) x (3,750)
12.50%
Fair value of the furniture (15,000)
Cash received by Roberts from the partnership P11,250
4. Summary adjusted trial balance for the home office and branch of TJ Corporation at
December 31, 2014 are as follows:
Credits:
Other liabilities P 90,000 P 25,000
Capital stock 500,000 -
Retained earnings 100,000 -
Home office - 175,000
Unrealized profit in branch inventory /
loading 10,000 -
Sales 537,500 300,000
Shipments to branch 200,000 -
Branch profit 62,500 _______
Total credits P1,500,000 P 500,000
Additional information:
1. The home office ships merchandise to its branch at 120% of home office cost.
2. Inventories at December 31, 2014 are P70,000 for the home office and P60,000
for the branch. The branch inventory is at transfer prices.
The net income of the home office and the branch (own books and in the home
offices books)
a. P120,000;62,500;25,000 b. P137,500;62,500;62,500
c. P120,000;25,000;25,000 d. P137,500;25,000;62,500
Answer: D
Home office:
Sales P537,50
0
Cost of sales (50,000+500,000-200,000-70,000) (280,000
)
Expenses (120,000
)
Net income P137,50
0
Branch
Sales P300,00
0
Cost of sales (45,000+240,000-60,000) (225,000
)
Expenses (50,000)
Net income, per branchs books 25,000
Realized profit (225,000 x 20%/120%) 37,500
Net income, per home offices books P62,500
5. Yanni Company recognizes construction revenue and expenses using the percentage
of completion method. During 2012, a single long-term project was begun which
continued through 2014. Information on the project was as follows:
Compute the profit recognized from the long-term construction contract in 2012 and
2013 and construction expenses in 2014:
2012 2013 2014
a. P17,000 P50,00 P226,00
0 0
b. P22,000 P64,00 P246,00
0 0
c. P17,000 P50,00 P364,00
0 0
d. P22,000 P56,00 P610,00
0 0
Answer: A
Construction in Progress
CI 105,000
Profit 17,000
122,000
CI 192,000
Profit 50,000
364,000
CI 226,000
Profit 20,000
610,000
Clincher
2. The records of Good Samaritan Hospital, a nonprofit organization, had the following
book balances on June 30, 2015:
Good Samaritans net patient service revenues for the year ended June 30, 2015
amounts to:
a. P1,090,000 b. P1,000,000
c. P990,000 d. P1,080,000
Answer: C (Easy)
Patient service rendered P1,240,000
Charity care (100,000)
Contractual adjustment (150,000)
Net patient revenue P990,000
3. Sharon Company uses the installment sales method in accounting for its installment
sales. On January 1, 2014, Sharon Company had an installment account receivable
from Rowena with a balance of P18,000. During 2014, P4,000 was collected from
Rowena. When no further collection could be made, the merchandise sold to Rowena
was repossessed. The merchandise had a fair market value of P6,500 after the
company spent for P600 for reconditioning of the merchandise. The merchandise was
originally sold with a gross profit rate of 40%.
Answer: A (Average)
FMV after reconditioning cost P6,500
Less: Reconditioning cost 600
FMV before reconditioning cost 5,900
Less: Unrecovered cost (18,000-4,000)=14,000 x 60% 8,400
Loss (P2,500)
Answer: D (Average)
C D Total
Salaries P15,000.00 P15,000.00 P30,000.00
Interest (9% x Average) 4,725.00 2,925.00 7,650.00
Bonus * 16,667.00 0.00 16,667.00
Balance (equally) 22,841.50 22,841.50 45,683.00
P59,233.50 P40,766.50 P100,000.00
Average Capital (Use Calculator)
C: 60,000 x 2 = M+
55,000 x 4 = M+
50,000 x 4 = M+
45,000 x 2 = M+ MR/12 = 52,500
D: 40,000 x 2 = M+
35,000 x 4 = M+
30,000 x 4 = M+
25,000 x 2 = M+ MR/12 = 32,500
5. KCF Corporation is being liquidated. The trustee has determined that the unsecured
claims will receive P0.50 on the peso. Jen Corporation holds a P100,000 mortgage
note receivable from KCF that is secured by marketable securities with P 75,000 book
value and P 82,000 fair value. How much of the mortgage receivable will be
recovered by Jen?
a. P84,000 b. P91,000
c. P87,500 d. P94,500
Answer: B (Easy)
Secured portion P82,000
Unsecured portion (18,000 x 0.50) 9,000
Amount recovered P91,000