Você está na página 1de 7

MIDTERM EXAMINATION

ADVANCE FINANCIAL ACCOUNTING I

PART I:THEORY 15 ITEMS

1. It refers ti the extinguishment of the of the juridical personality of a corporation for causes expressly
provided by law.

a) Corporate liquidation
b) Corporate dissolution
c) Corporate rehabilitation
d) Corporate termination

2. It refers to process of winding up affairs of the corporation by settling its corporate debts and
distributing the remainder to the stockholders.

a) Corporate liquidation
b) Corporate dissolution
c) Corporate rehabilitation
d) Corporate termination

3. After the date of corporate dissolution what is the maximum period allowed by law to dissolved
corporation to complete its liquidation process?

a) 1 year
b) 2 years
c) 3 years
d) 4 years

4. what is the term used when the total stockholders equity has debit balance/

a) Deficit
b) Deficiency
c) Delinquency
d) Default

5. which of the following unsecured debts with priority shall be paid first during corporate liquidation?

a) Corporate liabilities to employees


b) Obligation arising from corporate crime
c) Corporate liabilities arising from taxes to government
d) Obligations arising from corporate tort or quasi-delict

6. which of the following creditors can always fully recover its claim from a dissolved corporation during
corporate liquidation?

a) Fully secured creditors


b) Partially secured creditors
c) Unsecured creditors with priority
d) Unsecured creditors without priority

7. which of the following items is not being considered in the computation of recovery percentage of
unsecured creditors without priority?
a) Assets reserved for fully secured credits
b) Assets reserved for partially secured liabilities
c) Unsecured portion of partially secured liabilities
d) Assets not used as collateral for any liability

8. under IAS 18, what is the measurement of sales revenue from installment sales?

a) Book value of the consideration received or receivable


b) Fair value of the consideration received or receivable
c) Cost of the consideration received or receivable
d) Carrying amount of the consideration received or receivable

9. under IAS 18, if the company receives long term non-interest bearing note receivable as consideration
for the sale of its inventories on an installment basis, what is the measurement of sales revenue from
installment sales?

a) Face value of the notes receivable


b) Maturity value of note receivable
c) Present value of note receivable
d) Undiscounted value of note receivable

10. how shall the difference between the fair value and nominal amount of the longterm note received as
consideration in an installment sales be accounted for?

a) It shall be recognized as expense on the date of sale


b) It shall be recognized as gain on exchange on the date of sale
c) It shall be recognized as interest revenue over the term of the note using effective interest method
d) It shall be recognized as interest revenue over the term of the note using straight line method

11. in an installment sales, if the collection of the note receivable is not remote and not reasonably, how
shall the gross profit be recognized?

a) It shall be fully recognized on the date of sale using accrual basis


b) It shall be recognized in proportion to the amount of collection under instalment method
c) It shall not be recognized
d) It shall be recognized fully only on the year of the receivable is completely collected

12. under generally accepted accounting principles, what is the proper presentation of deferred gross
profit from installment sales?

a) It shall be presented as current liability


b) It shall be presented as equity
c) It shall be presented as deferred revenue
d) It shall be presented as contra-installment receivable account

13.if the fair value of the repossessed inventory cannot be estimated reliably at the date of repossession,
what shall be the basis of initial measurement of repossessed inventory?

a) Estimated selling price less reconditioning cost less cost to sell


b) Estimated selling price less reconditioning cost
c) Estimated selling price less cost to sell
d) Estimated selling price less reconditioning cost less cost to sell less normal profit

14. if the initial measurement of repossessed inventory is lower than the net of defaulted instalment
receivable and its corresponding deferred gross profit, the difference shal be recognized as
a) Loss on repossession to be presented by as current asset
b) Deferred loss on repossession to be presented as current asset
c) Gain on repossession to be presented as part of other comprehensive income
d) Deferred gain on repossession to be presented as current liability

15. Ill be giving my trust to you by answering this exam with your own and I will let Allah swt decide if you
will just copy with your classmates.

a) Yes sir,
b) No sir,
c) Partially sir,
d) I don’t care sir.

PART II: PROBLEM SOLVING 15 items SHOW YOUR SOLUTION. 3 POINTS EACH

Problem 1. Tocalo Corporation had the following statement of financial position:

Cash 5,000 Note payable(short term) 97,000

Marketable securities 30,000 Accounts payable 85,000

Accounts receivable 25,000 Accrued Expenses 18,000

Inventory 51,000 Note payable(long term) 208,000

Prepaid expense 3,000 share capital 95,000

Land 120,000

Building 105,000

Equipment 95,000

Intangible assets 10,000

 The note payable (short term) is secured by the inventory and the note payable (long term) is
secured by the land and building
 Marketable securities have a fair value of P35,000 and dividends of P1,000 are due from his
investment
 Only 15,000 can be collected from the account receivable
 Inventory can only be sold at P48,000
 Prepaid expenses include a refund of P1,000
 The intangible assets have no resale value
 Fair value of land and building P238,000 and fair value of equipment P58,000
 Administrative expenses of P31,500 are estimated as liquidation expenses
 Salaries of P12,000 and payroll taxes of P3,000 are accrued
 Interest on the long term note payable of P8,000 has not been accrued

1. How much is the estimated deficiency?

a) 38,000
b) 46,000
c) 43,000
d) 47,000

2. what is estimated recovery percentage?

a) 66.30%
b) 72.16%
c) 65,57%
d) 67,79%

3. what is estimated recovery for partially secured creditors?

a) 83,497.60
b) 80,301.45
c) 80,655.50
d) 81,378.15

4. how much is the estimated recovery for unsecured creditors without priority?

a) 63,500
b) 58,344
c) 59,655
d) 57,702

5. what is the amount of net free assets?

a) 98,500
b) 89,500
c) 87,500
d) 90,500

PROBLEM 2. The following information was gathered form the books of Khaf corporation which is
currently undergoing bankruptcy proceedings:

 Note payable of P97,500 is secured by furniture and equipment with a carrying amount of
P120,000 that is estimated to be 75% realizable.
 A mortgage payable of P192,500 is secured by building valued at P35,000 less than carrying
amount of 230,000
 Assets not mentioned above have an estimated value of P62,500, an amount that is P15,000
above carrying amount
 Total liabilities not mentioned above total P96,000, including claims with priority of P18,500

1. how much is the estimated loss on asset realization?

a) 65,000
b) 50,000
c) 80,000
d) 60,000

2. how mch is the estimated recovery percentage?

a) 80,65%
b) 56.77%
c) 54.71%
d) 51.76%
3.how much is the estimated recovery percentage for partially secured creditors?

a) 96,67%
b) 96.52%
c) 98.51%
d) 96.29%

PROBLEM 3. AMSIA INC. Is under court-supervised liquidation due to its insolvency. The court appointed
liquidator has provided the following data after conducting an inventory of AMSIA’s assets and liabilities:

 The total assets which are not used as security for any liability amounted to P5Million while the
total unsecured liabilities amounted to 20million
 The total assets which are used as collateral or security for corporate obligations amounted to
P10m. ¾ of these assets secure a mortgage payable with book value of P2M including interest
while the remainder secure a note payable with book value of P3.5M including interest.
 Salaries payable amounted to 2M while taxes due government amounted to P1M

1.What is the estimated recovery percentage of unsecured creditors without priority?

a) 25%
b) 37.5%
c) 41.67%
d) 52.5%

2. using the same data in number 1. What is the amount received by partially secured creditors?

a) 2,750,000
b) 2,875,000
c) 2,916,700
d) 3,025,000

PROBLEM 4. The WA KO NAG TOON company recognizes profit on credit sales on installment basis. At
the end of 2021, before the accounts are adjusted, the ledger shows the following:
Installment Accounts receivable 2020 337,500
Installment Accounts receivable 2021 525,000
Deferred gross profit 2020 185,000
Deferred gross profit 2021 272,500
Regular Sales 1,500,000
Cost of Regular Sales 960,000
Each year the gross profit on installment sales was 8% lower than the regular sales. In 2021, the gross
profit on installment sales was 4% higher than 2020.
How much is the total realized gross profit in 2021?
a. 229,500
b. 769,500
c. 181,000
d. 721,000

Problem 5. INDIRA appliances sells home theater set both on installment and cash basis. Mr.X purchased
a set from QR appliances on March 30, 2020 for 367,500 which has a cost of 289,800.
A used set is accepted as downpayment, 89,600 being allowed on the trade in. The used set can be
resold for 112,140 after reconditioning cost of 5,362. The company expects to make a 20% gross profit
on the sale of used set.
The balance of the sale is to be paid on a 10-month installment basis starting may 1, 2021. Mr. X
defaulted payment starting November 1, 2020 and the set was immediately repossessed.
The repossessed merchandise was appraised at a value of P65,625 at the time of repossession. QR had
incur additional cost of repairs amounting to P6,475 before the car was subsequently resold on
December 1, 2020 for P90,125 cash to Mr. Y.
What is the net income to be recognized for 2020?
a. 69,293
b. 44,490
c. 51,415
d. 68,243

Problem 6. NAMROLA company sells appliances on the installment basis. Below are information for the
past three years:

2016 2015 2014


Installment sales 750k 600k 400k
Cost of sales 450k 375k 260k
Collections on:
2016 installment sales 275k
2015 installment sales 180k 240k
2014 installment sales 125k 120k 150k

Repossessions on defaulted accounts included one made on a 2016 sale for with the unpaid balance
amounted to 5,000. The depreciated value of the appliance repossessed was 2,500.

The realized gross profit in 2016 on collections of 2016 installment sales was:
a. 108,000
b. 110,000
c. 221,250
d. 221,500

PROBLEM 7. The following account balances appeared on the books of SARAH company on December
31,2021:

Cash 150,000

Receivables 800,000

Merchandise Inventory 75,000

Accounts payable 30,000

Deferred Gross profit-2019 261,250

Sales 1,250,000

Purchases 640,000
Expenses 425,000

# the receivables account is controlling account for three subsidiary ledgers which showed the following
totals:

2020 installment contracts 150,000

2021 installment contracts 600,000

Charge accounts(terms 30days,net) 50,000

 The gross profit on sales was 55% on installment contracts for 2020 and 50% on installment
contracts for 2021.
 Collections on installment contracts for 2020 totaled P300,000 for the year just closed, on
installment contracts for 2021, P400,000 and on charge accounts, P200,000
 Account balances from installment sales made prior to 2020 were also collected.
 Repossession for the year was on installment contracts for 2020 on which the uncollected
balance at the time of repossession amounted to P50,000
 Merchandise repossessed was erroneously debited as a newly acquired merchandise equal to
the amount defaulted by the customer.
 This repossessed merchandise had a true worth of P20,000 at the time of repossession and was
unsold at year end.
 The final inventory of the merchandise (new) valued at cost amounted to P45,000

1.What is the total realized gross profit in 2021?

a) 626,250
b) 756,250
c) 495,000
d) 365,000

2.What is the net income for 2021?

a) 331,250
b) 301,250
c) 328,750
d) 382,500