Answer Vidal Jeams E. Long Quiz Ap
Answer Vidal Jeams E. Long Quiz Ap
Answer Vidal Jeams E. Long Quiz Ap
BSA - III
Problem 1
Irene Inc., holds a valuable patent on a precipitator that prevents certain types of air pollution. Irene
does not manufacture or sell the products and process it develops. Instead, it conducts research and
develops products and processes which its patents, and then assigns to manufactures on a royalty basis.
Occasionally it sells patents. The following presents the summary of the activities in relation to the
aforementioned patent:
A count of the undeposited receipts under the custody of Irene, cashier of IMC Company, on September
30, 2020 showed the ff composition:
Currency and coins 12,310
Unused postage and documentary stamps 110
Checks:
Date Payee Drawer
3/24/2020 Cash Irene 1,000
9/20/20 IMC Surigao Corp 2,350
9/27/20 IMC Mae 1,960
9/30/20 Smart IMC 900
Cash advance voucher paid out of receipts 1,500
Total per count 20,130
Cashier’s accountability to be 18,470.
Compute: what was the amount of shortage/overage on Sept 30, 2020?
= Cash shortage of ₱ 240
Irene Corporation was organized on Jan 15, 2024 and started operation soon thereafter. The company
cashier who acted also as the bookkeeper had kept the accounting records very haphazardly. The
manager suspects of him of defalcation and engaged you to audit his account to find out the extent of
the fraud, if there is any. On November 15, when you started the examination of the accounts, you find
the cash on hand to be 25,700. From inquiry at the bank, it was ascertained that the balance of the
Company’s bank deposit in current account on the same due was 131,640. Verification revealed that the
check issued for 9,260 is not yet paid by the bank. The corporation sells at 40% above cost.
Based on the above and result of your audit, compute the ff as of November 15, 2024
Sales 1,615,040
Less: AR, 11/15 426,900
Collection from sales 1,188,140
e. Cash shortage
= ₱ 389,500
Problem 4
On Jan 1 2020, Irene Mfg. Co. began construction of a building to be used as its office headquarters. The
building was completed on June 30, 2026.
Expenditures on the project were as follows
1/1/ 2,500,000
3/31 3,000,000
6/30 4,000,000
10/31 3,000,000
1/31/2021 1,500,000
3/31/2021 2,500,000
5/31/2021 3,000,000
On Jan 3, 2021 the company obtained a 5 million construction loan with a 10% interest rate. The loan
was outstanding all of 2020 and 2021. The company’s other interest-bearing debts included a long-term
note of P 25 million with an 8% interest rate, and a mortgage of 15 million on another building with an
interest rate of 6%. Both debts were outstanding during all of 2020 and 2021. The company’s fiscal year
end is December 31.
a. Capitalizable interest in 2020
b. Capitalizable interest in 2021
c. Interest Expense in 2020
d. Interest Expense in 2021
e. Total cost of the building including interest capitalized in 2020 and 2021
Problem 5
Information pertaining to Irene Corporation’s property, plant and equipment for 2021 is presented
below:
Account balances at Jan 1, 2021
Debit Credit
Land 150,000
Building 1,200,000
Accum depn 263,100
Machinery and Equipment 900,000
Accum depn 250,000
Automotive equipment 115,000
Accum depn 84,600
Depreciation methods used and useful life
Building – 150% declining balance; 25 years
Machinery and equipment – SL; 10 years
Automotive equipment – SYD; 4 years
The salvage value of the assets is immaterial. Dep’n is computed to the nearest month.
Transactions during 2021 and other information”
a. On Jan 1, 2021, Irene purchased a new car for 10,000 cash and trade in of a two year old car
with a cost of 9,000 and a book value of 2,700. The new car has a cash price of 12,000; market
value of trade ins is not known.
b. On April 1 2021, a machine purchased for 23,000 on April 1 2016 was destroyed by fire. Irene
recovered 15,500 from its insurance company.
c. On July 1, 2021 machinery and equipment were purchased at a total invoice cost of 280,000;
additional costs of 5,000 for freight and 25,000 for installation were incurred.
d. Irene determined that the automotive equipment comprising the 115,000 balance at Jan 1, 2021
would have been depreciated at a total amount of 18,000 for the year ended December 31,
2021/
Compute for:
a. Depreciation expense for 2021 – Building
= ₱ 56,214
Problem 6
Irene Factory started operations in 2020. Irene manufactures both towels 60% of the production are
“ABC” which sell for 500 per dozen and 40% are “XYZ” which sell for 250 per dozen. During 2020, 6,000
dozens were produced at an average cost of 360 per dozen. The inventory at the end of the year was as
follows:
220 dozens “ABC” @ 360 79,200
300 dozens “XYZ” @ 360 108,000
Using relative sales value method, which management considers as a more equitable basis of cost
distribution.
a. How much of the total cost should be allocated to Class ABC
= ₱ 1, 620, 000
b. How much of the total cost should be allocated to Class XYZ
= ₱ 540, 000