Manila

ADVANCED FINANCIAL ACCOUNTING AND REPORTING

First Preboard Examination

SOLUTIONS

1. B

Down payment 87,500

PV of note [(468,750 - 87,500) ÷ 4] x 2.80 266,875
Initial franchise fee 354,375
Direct cost (141,750)
Gross profit 212,625
Interest income (266,875 x 16%) 42,700
Indirect cost (12,750)
Net income 242,575

2. A

Down payment 100,000

PV of note (175,000 x 4) 700,000
Initial franchise fee 800,000

Allocation based on stand-alone selling prices:

Construction of stall 500,000
Delivery of 8,000 units of materials (150,000 ÷ 75%) 200,000
Right to access trade-name (residual approach) 100,000
Initial franchise fee 800,000

Allocated Initial franchise fee to performance obligations:

Construction of stall (800,000 x 5/8) 500,000
Delivery of 8,000 units of materials (800,000 x 2/8) 200,000
Right to access trade-name (800,000 x 1/8) 100,000
Initial franchise fee 800,000

Revenue recognition:
Construction of stall (500,000 x 90%) 450,000
Delivery of 8,000 units of materials (200,000 x 6/8) 150,000
Right to access trade-name (100,000 x 1/5) 20,000
Revenue from initial franchise fee 620,000

3. B

Unearned revenue:
Construction of stall (500,000 x 10%) 50,000
Delivery of 8,000 units of materials (200,000 x 2/8) 50,000
Right to access trade-name (100,000 x 4/5) 80,000
Unearned revenue 180,000
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4. A

Initial cost of consigned goods (1,920 x 12) 23,040

Freight from consignor to consignee 480
Total cost of consigned goods 23,520

Cash sales (3,600 x 6) 21,600

Credit sales (4,320 x 2) 8,640
Total sales 30,240
Cost of sales (23,520 x 8/12) (15,680)
Gross profit 14,560
Expenses (freight from consignee to
(500)
customer)
Commission expense (30,240 x 15%) (4,536)
Net income 9,524

5. A

Consigned inventory still on-hand in Entity B

7,840
(23,520 x 4/12)

6. D

Cash sales collection 21,600

Credit sales collection (8,640 x 20%) 1,728
Total collection from sale 23,328
Payments on behalf of consignor (480 + 500) (980)
Commission (4,536)
Net remittance 17,812

7. C
8. B

Investment in Branch Home Office Current

Unadjusted balance 445,785 450,000
a) home office error in recording
4,800
remittance
b) branch failed to record home office
850
debit memo
c) branch failed to record home office
(1,200)
credit memo
d) branch recorded the expense charge
(1,225)
by the home office twice
e) error by branch in recording the
(90)
freight-in
f) error by branch in recording the
2,250
asset transfer
Adjusted balance 450,585 450,585
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9. C

Shipments from HO at Cost 237,500

x 120%
Overallowance from shipments from HO 285,000

Overallowance balance before adjustment 375,000

Overallowance from shipments from HO (285,000)
Overallowance from beginning inventory 90,000
BI from home office merchandise at Cost 360,000
BI from home office merchandise at Billed Price 450,000
BI from outside purchases 93,000
Shipments from HO at Billed Price (237,500 x 220%) 522,500
Purchases from outsiders 125,200
Total goods available for sale reported by branch 1,190,700

10. A

BI from home office merchandise at Billed Price 450,000

BI from home office merchandise at Cost ÷ 360,000
Billed price percentage LAST YEAR 125%

BI from home office merchandise at Cost 360,000

Shipments from HO at Cost 237,500
EI from home office merchandise at Cost (345,000 x 80%) (276,000)
Cost of goods sold from home office merchandise at Cost 321,500

NOTE: Since the billed price percentage last year 2023 (125%) and the billed price percentage
this year 2024 (220%) are not the same, therefore it will affect the computation of the EI from
the home office merchandise at Billed Price because we will apply the concept of FIFO upon
sale of the merchandise. The cost of goods sold at cost (321,500), under the FIFO concept,
means this amount of merchandise sold will first be exhausted from the BI from home office
merchandise at cost (360,000). Thus, 38,500 (360,000 - 321,500) worth of merchandise are still
part of the EI from home office merchandise at cost (276,000). The breakdown of the total EI
from home office merchandise at cost (276,000) is 38,500 that came from the BI and the
remaining 237,500 that came from the shipments from HO. To compute correctly the EI from
home office merchandise at Billed Price, we will use 125% for the 38,500 worth of merchandise
from BI and 220% for the 237,500 worth of merchandise from shipments from HO.

BI from home office merchandise at Billed Price 450,000

BI from outside purchases 93,000
Shipments from HO at Billed Price (237,500 x 220%) 522,500
Purchases from outsiders 125,200
EI from home office merchandise at Billed Price
(570,625)
(38,500 x 125%) + (237,500 x 220%)
EI from outside purchases (345,000 x 20%) (69,000)
Cost of goods sold reported by the branch 551,075
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11. B

BI from home office merchandise at Cost 360,000

BI from outside purchases 93,000
Shipments from HO at Cost 237,500
Purchases from outsiders 125,200
Total goods available for sale of the branch in the combined statement 815,700

12. A

BI from home office merchandise at Cost 360,000

BI from outside purchases 93,000
Shipments from HO at Cost 237,500
Purchases from outsiders 125,200
EI from home office merchandise at Cost (345,000 x 80%) (276,000)
EI from outside purchases (345,000 x 20%) (69,000)
Cost of goods sold of the branch in the combined statement 470,700

13. B
14. C

15. D
Sales (364,500 x 65%) 236,925
Sales discount (82,175 ÷ 95% x 5%) (4,325)
Net sales 232,600
Cost of sales (291,600 x 65%) (189,540)
Gross profit 43,060
Rent expense (70,200 x 3/12) (17,550)
Advertising expense (4,650)
Utilities expense (6,300)
Depreciation expense (11,000 x 15% x 2/12) (275)
Sample expense (8,400 x 3/7) (3,600)
Net income of the agency for the 3 months ended August 31, 2024 10,685

16. C
17. B
18. B
19. B

20. D

Total budgeted OH 14,240,000

Total budgeted machine hrs ÷ 1,600,000
Predetermined rate 8.9

21. B

Machine hrs used J1 68,000

x 8.9
OH applied J1 605,200
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22. D

Budgeted OH materials related 3,840,000

Budgeted cost of materials ÷ 12,800,000
Predetermined rate .30

Budgeted OH machine related 10,400,000

Budgeted cost of materials ÷ 1,600,000
Predetermined rate 6.50

Direct materials J3 312,000

Direct labor J3 144,000
OH applied J3 244,400 [(312,000 x .30) + (23,200 x 6.50)]
Total cost J3 700,400

23. C
24. B

25. C
26. A

Total cost of 40,500 units 12,960,000 (40,500 x 320)

Rework cost 108,000
NRV spoiled units (27,000)
Total cost good units 13,041,000
Good units ÷ 40,050 (40,500 - 450)
Cost per good unit 325.62

27. C

Approximate NRV:
X: (75 - 35 - 10) x 1,500 45,000
Z: (112.5 - 50 - 30) x 2,200 71,500
116,500

Share of Z in joint cost (80,000 x 71.5/116.5) 49,099

Separable cost (30 x 2,200) 66,000
Total cost of Z 115,099

Sales (112.5 x 2,200) 247,500

Cost of sales (115,099 x 100%) (115,099)
Gross profit 132,401
Expense (50 x 2,200) (110,000)
Net income 22,401
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28. A

Allocation table:
Admin Personnel A B C
Admin (based on Asset value) - 300/925 150/925 75/925 400/925
Personnel (based on No. employees) - - 15/30 5/30 10/30

Admin Personnel A B C
Direct OH costs 450,000 175,000 350,000 100,000 125,000
Admin (based on Asset value) (450,000) 145,946 72,973 36,486 194,595
Personnel (based on No. employees) - (320,946) 160,473 53,491 106,982
Total - - 583,446 189,977 426,577

29. C

Purchased materials 2,550,000

Increase in RIP account (12,000)
Cost of goods manufactured (DM Cost only) 2,538,000

30. A

31. A
32. D
33. C

BI units 5,000
Transferred-in units 50,000
EI units (2,000)
Completed units 53,000

Completed units 53,000

BI units (5,000)
Started and completed units 48,000

Transferred-in Direct materials Conversion

BI:
T-in: (5,000 x 100%)
5,000 5,000 5,000
DM: (5,000 x 100%)
CC: (5,000 x 100%)
Started and completed 48,000 48,000 48,000
EI:
T-in: (2,000 x 100% complete)
DM: (2,000 x 0% complete) 2,000 - 1,400
CC: (2,000 x 70% complete)

55,000 53,000 54,400

 Page 7

Alternatively:
Transferred-in Direct materials Conversion
Completed 53,000 53,000 53,000
EI:
T-in: (2,000 x 100% complete)
DM: (2,000 x 0% complete) 2,000 - 1,400
CC: (2,000 x 70% complete)

55,000 53,000 54,400

NOTE: Since All of the materials were added at the end of the process, it means it is 0%
complete as to Ending inventory. Transferred-in is always 100% complete. Under the weighted
average method the beginning inventory is always accounted 100% in the EUP schedule.

Transferred-in Direct materials Conversion

BI + Current Period Cost 137,500 66,250 95,200
÷ 55,000 ÷ 53,000 ÷ 54,400
Cost per EUP 2.50 1.25 1.75

Completed Cost: (5.5 x 53,000) 291,500

EI Cost:
T-in: (2,000 x 2.50) 5,000
CC: (1,400 x 1.75) 2,450
7,450

34. B

Conversion
BI: (5,000 x 60% to complete THIS YR) 3,000
Started and completed 48,000
EI: (2,000 x 70% complete) 1,400
52,400

Alternatively:
Conversion
Completed 53,000
EI: (2,000 x 70% complete) 1,400
BI Last year: (5,000 x 40% complete LAST YR) (2,000)
52,400

35. D

Direct materials
BI: (5,000 x 100% to complete THIS YR) 5,000
Started and completed 48,000
EI: (2,000 x 0% complete) -
53,000
 Page 8

Alternatively:
Direct materials
Completed 53,000
EI: (2,000 x 0% complete) -
BI Last year: (5,000 x 0% complete LAST YR) (-)
53,000

Direct materials
Current Period Cost 51,250
÷ 53,000
Cost per EUP 0.97

36. D
37. C
38. C
39. A
40. D
41. B
42. D
43. A
44. B
45. C
46. D

47. C

240,000 + 360,000 = 600,000 (total interest of M) - 216,000 = 384,000 / 20% = 1,920,000 -

48,000 = 1,872,000 ( loss on realization). 3,120,000 - 1,872,000 = 1,248,000 (proceeds)
48. B

720,000 - 120,000 = 600,000 (total interest of R) - [1,920,000 x 30%] 24,000

49. A

RZ 420,000 x 3 = 1,260,000 (total agreed capital) - 1,050,000 (total contributed capital) =

210,000 (revaluation upward). 210,000 x 70% = 147,000 + 315,000 = 462,000.

50. C

1,050,000 (total contributed capital) - 990,000 (total agreed capital) = 60,000 (revaluation
downward). 990,000 / 3 = 330,000 (credited to RZ).
420,000 - 330,000 = 90,000 (bonus to old partners). 30,000 ( net increase to old partners).
30,000 x 30% = 9,000 + 315,000 = 324,000.

51. B

1,050,000 (total contributed capital) - 1,500,000 (total agreed capital) = 450,000 (revaluation
upward). 1,500,000 / 3 = 500,000 (credited to RZ).
420,000 - 500,000 = 80,000 (bonus to RZ) . 370,000 ( net increase to old partners).
370,000 x 70% = 259,000 + 315,000 = 574,000.
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52. B

HQ 329,500 + ( 360,000 x 30%) = 437,500 - 493,750 = 56,250 (share in gain on realization)

56,250 / 30% = 187,500
LF 668,000 + (360,000 x 45%) = 830,000 + (187,500 x 45%) 914,375

53. A

VR 416,250 + (360,000 x 25%) = 506,250 + (187,500 x 25%) 553,125

54. D

45,000,000 + 24,000,000 - 18,000,000 - 36,000,000 = 15,000,000 (share in NI) 15M / 40% =

37,500,000.

55. B

TD 406,000 - (105,000 x 20%) 385,000 - 372,400 = 12,600 (bonus to remaining)

SM 448,000 - (105,000 x 40%) 406,000 + (12,600 x 50%) 412,300

56. C

MR 539,000 - (105,000 x 40%) 497,000 + (12,600 x 50%) 503,300

57. A

OO 45,000,000 / 60% = 75,000,000 x 40% = 30,000,000 (agreed capital of PP) - 24,000,000 =

6,000,000

58. B

loss on realization 130,000

Liquidation expenses 26,000
BV of unsold assets 962,000
Anticipated expenses 104,000 {[364,000 + 754,000 - 910,000 - 26,000] - 78,000}
1,222,000

K 728,000 - (1,222,000 x 70%) = (127,400)

L 572,000 - (1,222,000 x 30%) = 205,400 -127,400 = 78,000

59. B

L (1,487,500 -30,000) = 1,457,500 + 477,050 + 323,750 = 2,258,300 / 3 = 752,767

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60. C
61. C

K L M
Interest 300,000 750,000 450,000
Salary 360,000 - 270,000
Remainder 700,000 1,750,000 1,050,000 (1,750,000 / 50%)
Share in NI 1,360,000 2,500,000 1,770,000
Capital, beg 2,000,000 3,000,000
Withdrawal (500,000) (200,000)
2,860,000 4,570,000

L, Capital (6.5M + 1M - 5M) 2.5 Share in NI

62. D

2,400,000 + 180,000 - 1,200,000 - 6,000 = 1,374,000

63. A

1,374,000 - 120,000 - 450,000 = 804,000 (net free assets) / [1,400,000 + 10,000] = 57.02%

64. B

310,000 (liabilities to be liquidated in October) + 15,800 (increase in liabilities) + 235,000

(assets realized) + 36,500 (Assets not realized) + 28,750 + 30,950 [18,500 + 12,450 ] (net loss)
657,000.
657,000 - 23,500 - 60,800 (liabilities not liquidated) - 100,800 - [265,000 (liabilities paid)]
206,900

65. D

Cash beg = 18,500 (estate equity) + 310,000 (liabilities) - 206,900 (non cash assets) 121,600.
Cash end = 12,450 (estate deficiency) - 60,800 (liabilities) - 36,500 (non cash assets) 11,850.
121,600 - 11,850 = 109,750.

66. A

CP 180M
TEC (210)
Anticipated loss (30) x 100% = (30M)

67. D

CP 180M
TEC (198)
Anticipated loss (18M) x 100% = (18M)

CinP [58.8M + 24.36M - 18] 65.16M - 75M (PB) = 9.84M CL

 Page 11

68. A

% of completion in 2025 [83.16 / 198] 42%

% of completion in 2026 [132 / 200] 66%

180M x 24% = 43.2M

69. B

% oc completion in 2027 [141.96 / 169] 84%

CP 180M 180M
TEC (200) (169)
EGP (20M) 11M
100% 84%____
RGP to date (20M) 9,240,000
20,000,000
29,240,000

CGS 2027 3,160,000

GP 2027 29,240,000
Revenue 2027 32,400,000 M (180M x 18%)

70. D

CP 180M 180M
TEC (169) 171
EGP 11M 9M
84%____ 100%___
9,240,000 9,000,000
(9,240,000)
(240,000)

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