Week-2-afar-quiz.pdf

ADVANCED FINANCIAL ACCOUNTING & REPORTING REVIEW QUESTIONS 1.

Jinky is trying to decide whether to accept a bonus of 25% of net income after salaries and bonus or a salary of P97,500 plus a bonus of 10% of net income after salaries and bonus as a means of allocating profit among the partners. Salaries traceable to the other partners are estimated to be P450,000. What amount of income would be necessary so that Jinky would consider the choices to be equal? a. P1,100,000

b. P1,197,500

c. P650,000

d. P1,262,500

2. Jamby and Minam just formed a partnership. Jamby contributed cash of P2,205,000 and office equipment that cost P945,000. The equipment had been used in her sole proprietorship and had been 70% depreciated, the appraised value of the equipment is P630,000. Jamby also contributed a note payable of P210,000 to be assumed by the partnership. Jamby is to have 60% interest in the partnership. Miriam contributed only P1,575,000 merchandise inventory at fair market value. Assume the use of bonus method, the partners’ capital must be in conformity with their profit and loss ratio upon formation. In the formation of a partnership, which of the following is true? a.

The agreed capital of Jamby upon formation is P2,625,000

b. The total agreed capital of the partnership is P4,375,000 c.

The capital of Miriam will increase by P105,000 as a result of the transfer of capital

d. There is either an investment or withdrawal of asset under the bonus method 3. Batanes Construction Company recognized gross loss of P42,000 on its long-term project which has accumulated costs of P490,000. To finish the project, the company estimates that it has to incur additional cost of P735,000. The contract price is: a. P798,000

b. P1,330,000

c. P1,225,000

d. P1,183,000

4. Ester, Judith and Martha were partners with capital balances on January 2, 2009 of P70,000, P84,000 and P62,000, respectively. Their loss sharing ratio is 3:5:2. On may 1, 2009, Ester retires form the partnership. On the date of retirement the partnership net profit form operations is P48,000. The partners agreed further to pay Ester P76,560 in settlement of her interest. Upon retirement of Ester, which of the following will result? a.

Goodwill of Ester is P7,840

b. Judith capital after retirement of Ester is P36,400 higher than Martha. c.

Bonus from Ester is P9,440

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d. Bonus to Judith is P5,600 5. The following selected accounts appeared in the trail balance of Valentine’s Company as of December 31, 2009: Installment receivable – 2008 sales

P

12,000

Repossessions

P

2,400

Installment receivable – 2009 sales

160,000

Installment sales

340,000

Inventory, December 31, 2008

56,000

Regular sales

308,000

Purchases

440,000

Deferred gross profit – 2008

43,000

Operating expenses

92,000

Additional information: Installment receivable – 2008 sales, December as of December 31, 2008 Inventory of new and repossessed merchandise as of December 31, 2009 Gross profit percentage on installment sales in 2008 is 10% higher than the gross profit percentage on regular sales in 2009. Repossessions was made during the year and was recorded correctly. It was a 2008 sale and the corresponding uncollected account at the time of repossession was P6,200. What is the net income for 2009 a.

P108,360

b. P13,480

c. P105,880

d. P107,200

6. On November 30, 2009, Loveless Company authorized NBSB Corp. to operate as a franchisee for an initial franchise fee of P1,950,000. Of his amount, P750,000 was received upon signing the agreement and the balance, represented by a note, is due in four annual payments starting November 30, 2010. Present value of P1 at 12% for 4 periods is 0.6355. Present value of an ordinary annuity of P1 at 12% for 4 periods is 3.0374. The period of refund will elapsed on January 31, 2010. The franchisor has performed substantially all of the initial services but the

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operations of the store have yet to start. Collectibility of the note is reasonably certain. How much is the unearned franchise fee on the year ended December 31, 2009? a. P1,661,220 7.

b. P750,000

c. P991,220

d. P0

On April 30, 2009, the capital accounts of P, Q shows the following balances: P – P150,000, Q – 75,000 and R – P45,000. At this time, S is admitted to the firm when he purchases a one-sixth interest in the firm for P27,5000. The old partners equalized their capital investments. Afterwards, all the partners agree to divide profits and losses equally. The new partnership closes its books on June 30, 2009 reporting a profit of P4,200 for two months. The partners made the following withdrawals: P and R, P450 per month; Q and S per month. On June 30, 2009, S invests enough cash to increase his capital to a one-third interest in the partnership. How much cash is to be invested by S? a. P108,025

b. P68,025

c. P67,425

d. P107,425

8. Forever, Inc. granted a franchise to Hopeless Romantic for the manila area. The franchise was to pay a franchise fee of P250,000, payable in five equal annual installments starting with the payment upon signing of the agreement. The franchise was to pay monthly 3% of gross sales of the preceding month. Should the operations of the outlet prove to be unprofitable, the franchise may be canceled with whatever obligations owing Forever, Inc. in interest bearing note is 14%. The first year generated a gross sales of P1,250,000. What is the amount of unearned franchise fee after the first year of operations? a. P287,500

b. P145,700

c. P195,700

d. P250,000

9. Lovebirds Corporation sells goods on the installment basis. For the year just ended, the following were reported: Cost of installment sales

P 525,000

Loss on repossession

13,500

Fair value of repossessed merchandise

112,500

Account defaulted

180,000

Deferred gross profit, end

108,000

How much was the collections for the year? a. P210,000

b. P264,000

c. P390,000

d. P415,715

10. DEF Company, which began operations on January 1, 2009 appropriately, uses the instalment method of accounting. The following data pertain to DEF’s operations for year 2009:

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Instalment sales (Before adjustment)

P450,000

Operating expenses (before write-off And repossessions)

P36,000

Regular sales

187,500

Cash collections on instalment sales

107,500

Cost of regular sales including interest of P12,000

156,000

Cost of instalment sale

315,000

Instalments receivables written-off Due to defaults

22,000

FMV of repossessed Merchandise

27,000

Repossessed accounts

50,000

Actual value of trade-in Merchandise

40,000

Trade-in allowance

70,000

How much is the deferred gross profit at December 31, 2009? What is the net income for the year ended December 31, 2009? a.

P50,500 ; P65,000

c. P41,000 ; P63,000

b. P50,500 ; P91,500

d. P41,000 ; P75,000

11. The partnership agreement of X, Y and Z provides for the division of net income as follows: I. Y, who manages the partnership is to receive a salary of P16,500 monthly. II. Each partner is to be allowed interest at 15% on ending capital. III. Balance is to be divided 25:30:45. During 2009, X invested an additional P96,000 in the partnership. Y made an additional investment of P60,000 and withdrew P90,000, and Z withdrew P70,000. No other investments or withdrawals were made during 2009. On January 1, 2009, the capital balances were X, P280,000; Y, P300,000; and Z, P170,000. Total capital at year-end was P975,000. Compute the capital balance of each partner at year-end: X

Y

Z

a.

P 36,750

P214,920

b.

412,750

484,920

77,330

c.

316,750

514,920

149,330

d.

398,750

412,500

P(20,670)

87,250

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12. The balance sheet as of September 30, 2009, for the partnership of D, E and F shows the following information: Assets, P360,000; D, loan, P20,000; D, capital, P83,000; E, capital, P77,000; F, capital, P180,000. It was agreed among the partners that D retires from the partnership, and it was also further agreed that the assets should be adjusted to their fair value of P345,000 as of September 30, 2009. Net loss prior to the retirement of D amount to P70,000. The partnership is to pay D P62,000 cash for D’s partnership interest, which would include the payment of his loan. No goodwill is to be recorded. D, E and F share profit 40%, 15% and 45% respectively. After D’s retirement, how much would F’s capital balance be? a.

P66,000

b. P147,000

c. P136,500 d. P182,250

13. Partners A, B and C share profits and losses in the ratio of 5:3:2. At the end of a very unprofitable year, they decided to liquidate the firm. The partner’s capital account balances at this time are as follows: A, P616,000; B, P697,200; C, P420,000. The liabilities accumulate to P840,000, including a loan of P280,000 from A. The cash balance is P168,000. All the partners are personally solvent. The partners plan to sell the assets in instalment. If B received P100,800 from the first distribution of cash, how much did C receive at that time? a.

P56,000

c. P33,600

b. P22,400

d. P61,600

14. On July 1, 2007, NR Construction Corp. contracted to build an office building for FM, Inc. for a total contract price of P12,875. Contract cost incurred

2007

2008

P 9,375

P 65,625

Estimated costs to complete

84,375

50,000

Billings to FM, Inc.

12,750

74,750

2009 P 56,250 34,375

How much is the Construction in Progress account balance at December 31, 2008, using the percentage of completion method? How much is the Construction in Progress, net of Progress Billings at December 31, 2008, using the zero-profit method? How much is the realized gross profit/(loss), using percentage of completion method in 2009? a.

P71,875; P2,875; P(9,375)

c.P71,875;P15,625;P(9,375)

b. P74,687.50; P2,875; P(6,250)

d.P71,875;P15,625;P(6,250)

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15. On January 2, 2009, SD Company signed an agreement to operate as a franchisee of TQ Products, inc. for an initial franchise fee of P937,500 for 7 years. Of this amount, P175,000 was paid when the agreement was signed and the balance payable in four annual payments beginning on December 31, 2009. SD signed a non-interest bearing note for the balance. SD’s rating indicates that he can borrow money at 16% for the loan of this type. Assume that substantial services amounting to P283,500 had already been rendered by TQ Products and that additional indirect franchise cost of P25,500 was also incurred. PV factor is 2.80.

If the collection of the note is not reasonably assured, the net income for the year ended December 31, 2009 is a.

P313,435

b. P228,035

c. P168,135 d. P253,535

16. Omega Inc. started a 4-year contract to build a dam. Activities commenced on February 1, 2007. The total contract price amounted to P12 million, and it was estimated that the work would be completed at a total cost of P9.5 million. In the construction agreement the customer agreed to accept increases in wage tariffs additional to the contract price. The following information refers contract activities for the financial year ending December 31, 2007: a.

Costs for the year:

P’000

Materials………………………………………..

P1,400

Labor……………………………………………..

800

Operating overheads……………………….

150

Subcontractors………………………………..

180

b. Current estimate of total contract costs indicates the following: 

Materials are to be P180,000 higher than expected.



Total labor costs are to be P300,000 higher than expected. Of this amount, only P240,000 would be brought about by increased wage tariffs. The other amount would be due to inefficiencies.



c.

A savings of P300,000 is expected on operating overheads.

During the current financial year the customer requested a variation to the original contract and it was agreed that the contract price would be to increased by P900,000. The total estimated cost of this extra work is P750,000.

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d. By the end of 2007, certificates issued by quantity surveyors indicated a 25% stage of completion. 17. Compute the amount of gross profit or loss to be recognized in 2007 using contract costs in proportion to estimated contract costs (percentage of completion method): a.

P568,000

c. P610,000

b. P577,000

d. P755,000

18. Compute the amount of gross profit or loss to be recognized in 2007 using percentage of the work certified (percentage of completion method – output method using actual cost approach): a.

P568,000

c. P610,000

b. P577,000

d. P755,000

19. Tam’s Pizza, Inc. charges an initial franchise fee of P50,000 for the right to operate as a franchisee of Tam’s Pizza. Of this amount, P10,000 is payable when the agreement was signed and the balance is payable in five annual payments of P8,000 each. In return for the initial franchise fee, the franchiser will help locate the site, negotiate with the lease or purchase of the site, supervise the construction activity, and provide the bookkeeping services. The credit rating of the franchisee indicates that money can be borrowed at 8%. The present value of an ordinary annuity of five receipts of P8,000 each discounted at 8% is P31,941.68. If the initial downpayment is not refundable and no future services are required by the franchiser, but collection of the note is so uncertain that recognition of the note as an asset is unwarranted, the entry should be: a.

Cash……………………………………10,000.00 Notes Receivable…………………….. 40,000.00 Discounts on Notes Receivable…………. 8,058.32 Unearned Franchise Fees…………………41,941.68

b. Cash……………………………………10,000.00 Notes Receivable……………………..40,000.00 Discounts on Notes Receivable……………8,058.32 Revenue from Franchise Fees……………41,941.68

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c.

Cash ……………………………………10,000.00 Revenue from Franchise Fees……………10,000.00

d. Cash…………………………………….10,000.00 Unearned Franchise Fees………………...10,000.00 20. On April 1, 2004, Motorola, Inc. entered into a franchise agreement with a local businessman. The franchisee paid P45,000 and gave a P30,000, 8%, 3 years notes payable with interest due annually on March 31. Motorola recorded the P75,000 initial franchise fee as revenue on April 1, 2004. On December 30, 2004, the franchisee decided not to open the outlet under Motorola’s name. Motorola cancelled the franchisee’s note and refunded P24,000 less accrued interest on the note, of the P45,000 paid on April 1. What entry should Motorola make on December 30, 2004? a.

Loss on Repossessed Franchise……………24,000 Cash……………………………………………………24,000

b. Loss on Repossessed Franchise……………22,200 Cash …………………………………………………..22,200 c.

Loss on Repossessed Franchise…………….52,000 Cash………………………………………………………22,200 Notes Receivable…………………………………….30,000

d. Revenue from Franchise Fees……………….75,000 Interest Income…………………………………..1,800 Cash……………………………………………………22,200 Notes Receivable……………………………………..30,000 Revenue from Repossessed Franchise…………….21,000 21. Maranan Motors Sales cars on the installment basis. Presented below are data for the past three years:

Installment sales Cost of sales

2007

2006

2005

P2,880,000

P2,304,000

P1,543,000

1,728,000

1,440,000

1,002,950

Collection on:

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2007 installment sales

1,008,000

2006 installment sales

391,000

921,000

2005 installment sales

478,000

462,000

578,000

Repossessions on defaulted accounts included one made on a 2005 sale for which the unpaid balance amounted to P20,000. The depreciated value of the car repossessed was P10,000. The unrecovered cost of the car in 2005 and repossessed in 2007 is : a.

P6,500

c. P10,000

b. 7,000

d. 13,000

22. Ondoy Company began operations on January 1, 2011 and appropriately uses the installment method of accounting. The following data are available for 2011 and 2012 Installment sales

2011

2012

1,200,000

1,500,000

Cash collections from: 2007 sales

400,000

2008 sales

500,000 600,000

Gross profit on sales

30%

40%

The realized gross profit for 2012 is a.

600,000

b. 240,000 c.

390,000

d. 440,000 23. On January 1, AwAw and BeBe pooled their assets to form a partnership, with the firm to take over their business assets and assume the liabilities. Partners capitals are to be based on net assets transferred after the following adjustments. (Profit and loss are allocated equally.) BeBe's inventory is to be increased by P4,000; an allowance for doubtful of P 1,000 and Pl.500 are to be set up in books of AwAw and BeBe, respectively; and accounts payable of P4,000 is to be recognized in AwAw's books. The individual trial balances on August, before adjustments, follow: AwAw

BeBe

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Assets

P75.000

P113,000

Liabilities

5,000

34,500

What is the capital of AwAw and BeBe after the above adjustments? a.

AwAw, P65,000; BeBe, P76.000

b. AwAw, P65,000; BeBe, P81.000 c.

AwAw, P68,750: BeBe, P77,250

d. AwAw, P75.000; BeBe, P81.000 24. The Partnership has the following balances in their trial balance: (1) Sales = P70,000 (2) Cost of Goods Sold = P40,000 (3) Operating Expenses = P10,000 (4) Salary allocations to partners = P13,000 (5) Interest paid to banks = P2,000 (6) Partners' withdrawals = P8,000 The partnership net income (loss) is: a.

(3,000)

b. 18,000 c.

20.000

d. 5,000 25. The following data are provided by the Troubled Company: Assets at book value

150,000

Assets at net realizable value

105,000

Liabilities at book value: Fully secured mortgage

60,000

Unsecured accounts and notes payable 70,000 Unrecorded liabilities: Interest on bank notes

500

Estimated cost of administering estate 6,000 The court has appointed a Trustee to liquidate the company. When the Trustee records the assets and liabilities, it should include an estate deficit of: a.

31,500

b. 25,000

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c.

31,000

d. 25,500 26. Mimi, Jojo, and Kaka are forming a new partnership. Mimi is to invest cash of P100,000 and stamping equipment originally costing P120.000 but has a second-hand value in the market at P50,000. Jojo is to invest cash of P160,000, while Kaka, whose family is engaged in selling stamping equipment, is to contribute cash of P50,000 and a brand new stamping equipment to be used by the partnership with a regular price of P 120.000 but which cost their family's business P100,000. Partners agree to share profits equally. The capital balances upon formation are: a.

Mimi, P220,000; Jojo, P160,000; and Kaka, P150,000

b. Mimi, P176,666; Jojo, P176,666; and Kaka, P176,668 c.

Mimi, P160,000; Jojo, P160,000; and Kaka, P160,000

d. Mimi, P150,000; Jojo, P160,000; and Kaka, P170,000 27. On June 30, 2012, Aida, Lorna and Fe formed a partnership by combining their separate business proprietorship. Aida contributed cash of P75.000. Lorna contributed property with a P54,000 carrying amount, a P60.000 original cost, and P120.000 fair value. The partnership accepted responsibility for the P52.500 mortgage attached to the property. Fe contributed equipment with a P45,000 carrying amount, a P112,500 original cost, and P82.500 fair value. The partnership agreement specifies that profits and losses are to be shared equally but is silent regarding capital contributions. Who among the partners has the largest capital balance? a.

Lorna

b

Fe

c.

All capital account balances are equal

d. Aida 28. Dimagiba Company began operation at the beginning of 2012. During the year, it had cash sales of 6,875,000 and sales on installment basis of 16,500,000. Dimagiba adds a markup on cost of 25% on cash sales and 50% on installment sales. Installments receivable at the end of 2008 is 6,600,000. The resulting realized gross profit for 2012 is: a.

3,300,000

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b. 1,375,000 c.

4,675,000

d. 3,575,000 29. On October 1, 2011, Mario Corporation, a real estate developer, sold land to Diego Company for 5,000,000. Diego paid cash of 600,000 and signed a ten-year 4,400,000 note bearing interest at 12%. The carrying amount of the land was P4,000,000 on the date of sale. The note was payable in forty quarterly principal installments of 110,000 beginning January 2, 2012. Mario appropriately accounts for the sale under the cost recovery method. On January 2, 2012, Diego paid the first principal installment of 110,000 and interest of 132,000. For the year ended December 31, 2012, what total amount of income should Mario recognize from the land sale and the financing? a.

309,640

b. 508.200 c.

208,000

d. 0 30. Popoy has a dilemna. He is trying to decide whether to accept a salary of 40,000 or a salary of 25,000 plus a bonus of 10% of net income after salary and bonus as a means of allocating profit among the partners. Salaries traceable to the other partners are estimated to be 100,000. What amount of income would be necessary so that Popoy would consider the choices to be equal? a.

165,000

b. 305,000 c.

265,000

d. 290,000 31. Nonoy and Mar are considering forming a partnership whereby profits will be allocated through the use of salaries and bonuses. Bonuses will be 10% of net income after total salaries and bonuses. Nonoy will receive a salary of P30.000 and a bonus. Mar has the option of receiving a salary of P40,000 and a 10% bonus or simply receiving a salary of P52,000. Both partners will receive the same amount of bonus. Determine the level of net income that would be necessary so that Jo would be indifferent to the profit sharing option selected. a.

300,000

b. 240,000

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c.

334,000

d

94,000

32. Batanes Construction Company recognized gross loss of P42,000 on its long-term project which has accumulated costs of P490,000. To finish the project, the company estimates that it has to incur additional cost of P735,000. The contract price is: a. P798,000

b. P1,330,000

c. P1,225,000

d. P1,183,000

33. On January 2, 2009, SD Company signed an agreement to operate as a franchisee of TQ Products, inc. for an initial franchise fee of P937,500 for 7 years. Of this amount, P175,000 was paid when the agreement was signed and the balance payable in four annual payments beginning on December 31, 2009. SD signed a non-interest bearing note for the balance. SD’s rating indicates that he can borrow money at 16% for the loan of this type. Assume that substantial services amounting to P283,500 had already been rendered by TQ Products and that additional indirect franchise cost of P25,500 was also incurred. PV factor is 2.80.

If the collection of the note is not reasonably assured, the net income for the year ended December 31, 2009 is a.

P313,435

c. P168,135

b. P228,035

d. P253,535

34. Perez, Reyes and Suarez were partners with capital balances as of January 1, 2009 of P100,000, P150,000 and P200,000 respectively. They share profits on a 5:3:2 ratio. On July 1, 2009, Perez withdraw from the partnership. For the six month period ending June 30, 2009, the partnership generated a net income P140,000. Partners agreed that at the time of withdrawal, certain inventory had to be revalued at P70,000 from its cost of P50,000. Further, partners agreed to pay Perez P195,000 for his interest. What are the capital balances of Reyes and Suarez after Perez’s retirement?

Reyes

a.

Suarez

P217,000

P238,000

b. P189,000

P226,000

c.

P177,000

P218,000

d. P187,500

P226,000

35. Assuming goodwill to Perez is recorded, what is the capital balance of Reyes after Perez’s retirement?

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a.

P232,000

b. P186,000

c. P189,000

d. P190,000

36. Assuming total goodwill of the partnership is to be recorded, what is the capital balance of Suarez after Perez’s retirement? a.

P238,000

b. P226,000

c. P234,000

d. P232,000

37. Perez, Que and Ramos are partners sharing earnings in the ratio of 5:3:2, respectively. As of December 31, 2008, their capital balance showed P95,000 for Perez, P80,000 for Que, and P60,000 for Ramos. On January 1,2009 the partnership admitted Santos as a new partner and according to the agreement, Santos will invest P80,000 in cash to the partnership and will also purchase 15% of Que’s interest for P10,000. SActos will share 20% in the earnings while the ratio of the original partners will remain proportionately the as before Santos’ admission. After Santos’ admission, the total capital of the partnership will be P330,000 while Santos’ capital account will be P70,000. What is the balance of Que’s capital account after the admission of Santos? a.

P81,100

b. P79,100

c. P74,600

d. P72,600

38. On March 1, 2008, Alma and Betty formed a partnership with cash investments of Alma, P480,000 and Betty, P240,000. The partners agree to allocate profits and losses as follows: 1.

Alma and Betty will be allowed a monthly salary of P48,000 and P24,000, respectively.

2. The partners will be allowed with interest of 10% of their capital balances at the beginning of each year. 3. The remainder will be divided on the basis of their beginning capital for the year of operation and equally for the subsequent years. 4. Each partner is allowed to withdraw up to P24,000 a year. Any withdrawal in excess of the figure will be treated as a direct reduction from their capital balances. In 2008 the partnership suffered a net loss of P36,000. But in 2009 they earned a profit of P132,000. The partners withdraw the maximum amount each year. On January 2, 2010 a new partner, Cora was admitted in the partnership for an investment of P400,000 for a 40% interest. No revaluation of assets is to be recorded. After the admission of Cora, the partners agreed to divide profits and losses, 4:2:4, to Alma, Betty and Cora, respectively. On January 2, 2010, what is the entry to record the admission of Cora? a.

Cash

Alma, Capital

Betty, Capital

P400,000 33,000 33,000

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Cora, Capital

P467,000

b. Cash

P400,000

Cash

P400,000

Cora, Capital

c.

P400,000

Alma, Capital

32,000

Betty, Capital

16,000

Cora, Capital

P448,000

d. Cash

P448,000

Cora, Capital

P448,000

39. On January 2, 2009, Belo and Reyes formed a partnership. Belo contributed capital of P350,000 and Reyes, P50,000. They agreed to share profits and losses 80% and 20%, respectively. Reyes is given a salary of P10,000 a month; and interest of 5% of the beginning capital of both partners and a bonus of 15% of net income before the salary, interest and bonus. The income statement of the partnership for the year ended December 31, 2009 as follows: Revenues

P1,750,000

Cost of goods sold

1,400,000

Gross profit

350,000

Expenses (including partners salary, interest and bonus) Net profit

286,000 P

64,000

What is the amount of bonus to Reyes in 2009? a.

P41,400

b. P32,912

c. P36,000

d. P26,800

Numbers 40 to 43 are based on the following data: Arman Company has the following debit balances as of the year ended December 31, 2009: Direct materials inventory

P 90,000

Work in process inventory

207,000

Finished goods inventory

297,000

Under-applied factory overhead

24,000

Cost of goods sold

447,000

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Additional information for 2009 Cost of direct materials purchased

P246,000

Cost of direct materials requisitioned

282,000

Cost goods completed

612,000

Applied factory overhead (120% of direct labor cost)

288,000

40. What is the Direct Materials Inventory on January 1, 2009? a.

P180,000

b. P162,000

c. P126,000

d. P108,000

41. What the Work in Process Inventory on January 1, 2009? a.

P95,000

b. P90,000

c. P9,000

d. P8,000

42. What is the Finished Goods Inventory on January 1, 2009? a.

P150,000

b. P144,000

c. P132,000

d. P145,000

43. What is the actual factory overhead incurred during 2009? a.

P264,000

b. P280,000

c. P312,000

d. P321,000

Numbers 44 and 45 are based on the following data: During August, Marlon Machine Company started production job orders 16,17 , and 18. Job order 15 was in process at the beginning of the month with direct material costs of P35,000, direct labor cost of P21,000, and applied factory overhead of P25,300. During the month, direct materials were requisitioned, and direct labor was identified with the job orders as follows:

Job Order No. 15

Direct Materials

Direct Labor

P -

P26,000

16

39,000

45,000

17

53,000

47,000

18

47,000

16,000

Factory overhead is applied to the orders at 120% of direct labor cost. Job orders 18 was incomplete on August 31. 44. What is the cost of goods manufactured for August? a.

P432,900

b. P376,600

c. P342,800

d. P358,600

c. P18,400

d. P156,400

45. What is the cost of work in process on August 31? a.

P138,000

b. P82,200

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Questions 46 - 48 are based on the following data: The data has been gathered from the records of Roque Manufacturing Company for April 2009:

Units

Work in process, April 1 (40% complete as to conversion costs)

5,000 units

Started in May

90,400 units

Work in process, April 30 (70% complete as to conversion costs)

4,000 units

Work in process, April 1

P 24,875

Materials cost incurred in April

P433,920

Conversion costs incurred in April

P115,250

Cost

The company uses the FIFO process costing method. Materials added at the beginning of processing while conversion costs is evenly during the process. 46. What are the equivalent units of production of?

Materials

a.

Conversion Costs

90,400

92,200

b. 95,400

91,200

c.

86,400

89,400

d. 92,400

90,600

47. What is the cost of units transferred out in April? a.

P551,345

b. P547,595

c. P522,720

d. P526,470

c. P19,200

d. P22,000

48. What is the cost of ending work in process? a.

P22,700

b. P23,700

Questions 49 to 51 are based on the following data: Jimmy Company manufactures a highly sensitive smoke alarm and uses the FIFO method for process costing. The total manufacturing costs for the month of June is P264,000 and 2,750 units are completed during the month. The inventories at the beginning of June are: Units in process (80% complete) Units on hand (complete)

1,250 units

P128,000

600 units

76,800

The inventories at the end of June are: Units in process (50% complete) Units on hand (complete)

500 units 700 units

49. What is the equivalent unit of production?

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a.

2,000

c. 2,200

b. 3,000

d. 1,750

50. What is the total cost of the units completed? a.

P92,400

c. P231,000

b. P79,200

d. P363,000

51. What is the total cost of units in process at the end? a.

P33,000

c. P32,000

b. P32,200

d. P66,000

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