PRACTICAL ACCOUNING I FIRST PRE-BOARD EXAMS

SUGGESTED SOLUTIONS/COMPUTATIONS OCTOBER 2013 BATCH

SET A/B

1/1 C Capital
Increase (decrease)
Increase in Cash 850,000
Decrease in A / R (250,000)
Decrease in ABD 50,000
Increase in MI 250,000
Decrease in PPE (350,000)
Increase in AD PPE (75,000)
Decrease in A / P 60,000
Increase in AE (70,000)
Increase in L / P (150,000)
Increase in I / P (20,000)
345,000
Less: Additional Investment (175,000)
Add: Dividends declared 120,000
Net Income 290,000


2/21 C
Revenues
Collections 480,000
add: increase in A / R 45,000
decrease in USR 20,000 545,000

Expenses
Payments 275,000
add: decrease in PPE 10,000
less: decrease in AE 15,000 270,000
less: Depreciation expenses [(300,000 20,000 /5)] 35,000
Net Income 240,000


3/5 C
Rent Expense
January 1 March 31 27,000
April 1 December 31 101,250
128,250

annual rent in 2012 (27,000 x 12/3) 108,000
multiply by: 100% + % increase in rent for 2013 125%
annual rent in 2013 135,000
multiply by: 9/12 (April December) 9/12
rent expense April December 2013 101,250


4/13 B
BDO
Unadjusted balance 800,000
add: undelivered check 45,000 845,000
MBTC
Unadjusted balance (per bank statement) 250,000
add: deposited in transit 7,000
less: outstanding checks (5,000) 252,000
PNB
Balance (net of compensating balance, P70, 000) 600,000
Correct cash in bank account 1,697,000



CRC-ACE/PA1: Solution to First Pre-board Exams (OCT 2013)


5/7 A
Per Book Per Bank
August 31 balances unadjusted 346,000 ? 332,950
Book error- UR (4,500-450) 4,050
CM note collection including interest 11,200
OC (29,000)
DM bank charges (800)
Bank error OD 16,200
DT 47,000
Bank error OR (9,200)
DM NSF checks returned (12,500)
Book error OD (12,250 22,250) 10,000
Adjusted balances 357,950 357,950


6/8 A
Adjusted book disbursements
Book disbursements- unadjusted
(100,923 beg + 747,415 rec 148,650 end) 699,688
Add: DM- December (not yet recorded by book) 1,200
Less: DM- November (recorded by book in December) (2,300) 698,588

Adjusted bank disbursements (except for OC- December)
Bank disbursements- unadjusted
(108,826 beg + 741,367 rec 136,823 end) 713,370
Less: OC- November (53,879)
Bank adjustment for overstatement error (8,000) 651,491
Outstanding checks December 47,097


7/9 B
Total income for 2012
PV of the note (Selling price of the equipment)
525,000 x PVF SS @ 11% for 3 periods 383,875
less : carrying amount of the old equipment 250,000
Gain on sale 133,875
add: Interest income for 2012
383,875 x 11 % x 6/12 21,113 154,988
Income recorded by Cherubim for 2012 525,000-250,000 275,000
Understatement(overstatement)in income for 2012 (120,012)


8/11 B
Annual installments = FA / PVF OA @ 12% for 5 periods
= 1,200,000 / 3.60478
= 332, 892

Beg Interest Annual Installment Principal Collection End
1,200,000
1,200,000 144,000 332,892 (188,892) 1,011,108
1,011,108 121,333 332,892 (211,559) 799,549


Selling price of note (PV of net future cash flows discounted at 15% on January 1, 2012
332,892 x PVF OA @ 15% for 3 periods = 760,067


Selling price 760,067
Less: CV of note 1 /1 /12 799,549
Loss on sale (39,482)



CRC-ACE/PA1: Solution to First Pre-board Exams (OCT 2013)

9/12 B
Initial AR assigned
AR, December 01 P6, 070,000
Add: Credit Sales Dec 2 (3,000,000 * 90% * 90%) 2,430,000 P8, 500,000
Multiply by: percentage of AR assigned by Zachariel 65% P5, 525,000
Less: AR assigned collected in December (4,100,000 * 70%) 2,870,000
AR assigned, December 31 P2,655,000

Initial loan amount P3, 500,000
Less: Remittance applied to principal loan in December P2, 870,000
AR assigned collected in December (4,100,000 * 70%) 35,000 2,835,000
Less: remittance applied initially to interest (3,500,000 * 1%) P665, 000
Loan balance, December 31

AR assigned, December 31 P2, 655,000
Loan balance, December 31 665,000
Equity over the assigned accounts, December 31 P1, 990,000


10/20 C
AR, January 1, 2012 P2, 500,000
Add: Credit sales (P9, 500,000) 7,600,000
Less: Sales Returns P42,500
Proceeds of collections excluding recoveries
(P6, 120,255 P72, 255) 6,048,000
Sales discount granted
w/ in 10 days (P6,048,000 * 50% * 10/90) 336,000
beyond 10 days but w/ in 20 days
(P1, 520,000 * 5/95) 80,000
Written of accounts 85,000 6,591,500
AR, December 31, 2012 P3, 508,500


11/16 A
MV of non-IB note (FA) P750, 000
Multiply by: Discount rate 14%
P 105,000
Multiply by discount period 1.5
Discount P 157, 500

MV on non-IB note (FA) P 750,000
Less: discount 157,500
Proceeds from discounting P 592, 500


12/17 B
FA of the loan P 4,000,000
Add: direct origin cost 61,500
Less: origination fee charged to 350,000
client P 3,711,500
Multiply by: effective rate of loan 12%
P 445,380
Multiply by: July December 6/12
Interest income for 2012 P 222,690
The rate of 12% was determined through interpolation


13/15 A
Inventory, per count (December 29, 2012 P 1,200,000
Add: Purchases FOB shipping point 175,000
Goods out on consignment (100,000 + 30,000) * 97,500
75% 60,000
Less: Goods held on consignment P 1,412,50
CRC-ACE/PA1: Solution to First Pre-board Exams (OCT 2013)

14/23 C
Cost Retail
Beginning inventory P 120,000 P 180,000
Purchases 320,000 580,000
Freight in 40,000
Purchase returns 10,000 366,000 15,300
Purchase discounts and allowance 4,000
Departmental transfers in 40,000 43,400
Departmental transfers out 20,000 31,250 579,375
Additional mark-up 203,150
Mark-up cancellation 150,000 139,375
Markdowns 250,000 ignore SD
Mark-down cancellation 199,375
Sales 600,000
Sales discounts 30,000
Sales returns 40,000
Employee discounts 20,000
Shrinkage, Spoilage 30,000
Shoplifting losses 10,000

CY cost ratio Total CGAS (120,000 + 366,000) 486,000
GAS cost 366,000 63.17% Less: EI - cost 88,043
GAS retail 579,375 COS FIFO retail 397,957

139,375 EI retail x 63.17% = 88,043 EI cost

15/18 B

RM, beg P65, 000 Sales P40,000
Add: RM purchases 20,000 Multiply by: cost ratio(100%-40% on SP) 60%
Less: RM end (35,000/50%) before flood 70,000 Cost of sales 24,000
RM used P15, 000 Add: FG, end 75,000
Add: DL 30,000 Less: FG, beg 72,000
OH 15,000 TCGM P27,000
TMC P60,000
GIP, beg P80, 000 RM, (70,000 * 50%)
Add: TMC 60,000 GIP (113,000 * 100%) P35,000
Less: TCGM 27,000 Cost of inventory destroyed 113,000
GIP, end P113, 000 P148, 000

16/24 C
Book Debits Bank Debits
P 875, 000 P920, 000
DT, beg (120,000)
CM-PM (12,500)
Bank correction in November (3,000)
Book correction in November (1,800)
Bank error in November (2,000)
CM-CM 110,000
Bank correction in November _ (7,000)
P 970,700 788,000
DT-November 30 P 182,700

17/25 A
AR, January 1 P 1,200,000
Add: Credit sales 8,000,000
Less: Collection net of recoveries (P 7,000,000 10,000) 6,990,000
Written off accounts 30,000
AR transferred to NR 400,000
AR, December 31 P 1,780,000

ABD, January 1 P60, 000
Add: BDE 100,000
Recovery of previously written off accounts 10,000
Less: Written off accounts 30,000
ABD, December 31 P140, 000
AR, December 31 P1, 780,000
Less: ABD, December 31 140,000
NVR, December 31 P1, 640,000
CRC-ACE/PA1: Solution to First Pre-board Exams (OCT 2013)

18/6 A

Sales on account P3, 600,000
Less: Notes received to settle accounts P400, 000
Accounts determined to be worthless 25,000
Merchandise return by customer (sales return) 15,000
Collections received 2,450,000
Discounts taken by customer 40,000 2,930,000
A/R end P 670,000

Provisions for doubtful accounts P90, 000
Less: accounts determined to be worthless 25,000
ABD, end P65, 000

AR, end P670, 000
ABD, end 65,000
NVR of AR P605, 000


19/26 A
total receivable @ 12/31/12 P1, 000,000
less: PV net future CF
principal 500,000
interest (80,000 x 5) 400,000
900,000
PVF SS @ 8% for 5 periods 0.735 661,500
P338, 500

20/19 D
The best answer is 30,000 greater over the 10 year period. The amount was based onlt on
the difference in the 2012 ending inventory but such was the cumulative effect of all the
differences over a period of 10 years.

21/22 B
Inventory cost 9.00
Net realizable value
Estimated selling price 10.00
Less: Cost of disposal 1.20 8.80
Applying the lower of cost or net realizable value the inventory should be reported at 8.80.


22/27 B
LC 250 3,800 - 950,000
AC 500 3,420 - 1,710,000
SC 400 2,850 - 1,140,000

LC = 950,000 X 2,950,000
3,800,000
= 737,500


23/28 A
Sales 6,000,000
Less: Gross profit (2,400,000)
COS 3,600,000
EI-FIFO 928,000
CGAS 4,528,000
Less: Purchases (3,174,000)
BI-FOFO 1,354,000

*15,000 units
July 25 P14, 000 62 P868, 000
July 12 P1, 000 60 P60, 000
CRC-ACE/PA1: Solution to First Pre-board Exams (OCT 2013)


24/29 A
Prepaid insurance for 2013: 299,400 x 5/12 = 124,750


25/4 B
Payments made recorded under salary expense 262,000
Less: reduction in accrued salaries during 2013 (31,000 28,000) 3,000
Salaries expense in 2013 259,000

26/4 B
Minimum guaranteed purchases in units (100,000 x 2 years) 200,000
Multiply by: Loss per unit (100 contract price 20 recoverable amount) 80
16,000,000

27/30 C
July, end required (5,400,000 cost of sales in August / 120%) x 30% = 1,350,000
Add:COS expected in July (4,500,000/ 120%) = 3,750,000
Goods available for sale 5,100,000
Less: July, beg (4,500,000 cost of sales in August / 120%) x 30% = 1,125,000
Estimated purchases for July 3,975,000

28/14 B
GP = P 624,000 = 40%
Net sales P 1,560,000

BI P 200,000
Purchases 696,000
(PR) (20,000)
Transportation 43,200
CGAS 919,200
Less: COS 655,200
264,000
Less: on hand 80,000
Estimated cost of inventory stolen P 184,000

Sales P 1,132,000
SR (40,000)
Net sales for inventory estimation P 1,092,000
Multiply by CR % 60%
COS P 655,200

29/2 D
After posting the adjusting and closing entry, the Income Summary will have a balance of P 0.


30/3 D
ABD, beg P20, 000
Add: Interim BDE (4,500,000 x 1%) 45,000
Less: write-offs (15,000)
ABD 12/31, unadjusted 50,000
ABD, required 62,000
Year-end Adj. P 12,000

31/31
Total fair values
Minions 10,000 406 4,060,000 (4,060,000 / 5,800,000) x 5,200,000 3,640,000
Cars 8,700 120 1,044,000 (1,044,000 / 5,800,000) x 5,200,000 936,000
Bugs 14,500 48 696,000 (696,000 / 5,800,000) x 5,200,000 624,000
5,800,000 5,200,000

Units sent to Gru Company under consignment 3,000
Less: Consigned goods to Gru Company sold during the period 892,500
Total sales of goods out on consignment to Gru Company
(856,800receivables / 96% SP net of 4% cash
discount)
425
Divided by: selling price per unit as provided by contract 2,100
Units (Minions) out on consignment to Gru Company 900
CRC-ACE/PA1: Solution to First Pre-board Exams (OCT 2013)


Inventory based on physical count P 1,961,800
Add: Cost of goods out on consignment
Minions Gru Company (consignee)
Unit cost (3,640,000 / 10,000) 364
Add: Freight cost per unit incurred (under consignment) 6
Cost per unit of goods out on consignment 370
Units out on consignment to Gru Company at yearend 900 333,000

Cars Lightning McQueen (consignee)
Unit cost ((936,000 / 8,700) 108
Add: freight per unit (28,00 / 3,500) 8
Cost per unit of goods out on consignment 116
Units out on consignment to Lightning McQueen at
yearend
1,400 162,000 495,400
Inventory (adjusted) at yearend 2,457,200

32/32 B

March 1 B 700 100 70,000
March 8 P 1,100 120 132,000
1,800 112.22 202,000
March 10 S (1,500) 112.22 (168,330)
300 112.22 33,670
March 14 P 1,200 140 168,000
1,500 134.45 201,670
March 17 S (800) 134.45 (107,560)
March 21 S (500) 134.45 (67,225)
200 134.45 26,885
March 26 P 800 160 128,000
1,000 154.89 154,885
March 29 S (150) 154.89 (23,235)
850 154.89 131,650

33/33 C

Accounts payable 120,000
Accrued Interest Expenses 35,000
Advances from customers 49,500
Unearned rent income 35,000
Rosalyn, capital (adjusted) 713,500
Credit column total 953,000

Rosalyn, capital (unadjusted) 420,000
Add:
Sales 800,000
Rent revenue 11,500
Interest revenue 90,000 901,500
Less:
Cost of sales 400,000
Sales return and allowances 23,000
Salaries expense 75,000
Utilities expense 45,000
Interest expense 65,000 608,000
Rosalyn, capital (adjusted) 713,500

34/35 D
Only the estimated liability for long service leave, P 1,400,000 shall be recognized as a provisions..
The payable to Simon is a regular liability item, while no obligation exist in relation to the estimated
amounts related to relocation cost and maintenance cost are not

35/35 B

Basic EPS = (NI-PD) / Average outstanding ordinary shares
= 2,000,000 (100,000 x 50 x 10%)
800,000
= 1.88
/mft