FATHER SATURNINO URIOS UNIVERSITY

FINANCIAL ACCOUNTING
QUALIFYING EXAMINATION MENTORING PROGRAM (DAY 2)
1. Tresh, Inc. had the following bank reconciliation at March 31, 2010:
Balance per bank statement, 3/31/10
Add: Deposit in transit

C
P37,200
10,300
47,500
12,600
P34,900

Less: Outstanding checks

Balance per books, 3/31/10
Data per bank for the month of April 2010 follow:
Deposits
P46,700
Disbursements
49,700
All reconciling items at March 31, 2010 cleared the bank in April. Outstanding checks at April 30,
2010 totaled P6,000. Deposits in transit at April 30, 2010 amounts to P5,300. Moreover, the bank
credited to the account of Tresh, Inc. customer note collected by the bank amounting to P12,800
and debited the account of the Company for bank service charges amounting to P600. What is
the cash balance per books at April 30, 2010?
a.
P33,500
b.
P45,700
c.
P21,300
d.
P38,500
2. Ace Co. prepared an aging of its accounts receivable at December 31, 2010 and determined that
the net realizable value of the receivables was P300,000. Additional information is available as
follows:
Allowance for uncollectible accounts at 1/1/10credit balance
P 34,000
Accounts written off as uncollectible during 2010
23,000
Accounts receivable at 12/31/10
325,000
Uncollectible accounts recovered during 2010
5,000
For the year ended December 31, 2010, Ace's uncollectible accounts expense would be
a.
P25,000.
b.
P23,000.
c.
P16,000.
d.
P9,000.

3. Dole Corp.'s inventory, determined during the physical count at December 31, 2010, totaled
D
P800,000 before any necessary year-end adjustments relating to the following transactions:
Goods shipped f.o.b. destination on December 20, 2010 from a vendor to Dole were
received January 2, 2011. The invoice cost was P65,000.
Goods shipped f.o.b. shipping point on December 18, 2010 from a vendor to Dole were
received January 3, 2011. The invoice cost was P20,000.
Goods shipped f.o.b. shipping point on December 21, 2010 from Dole to a customer
were received by the customer January 2, 2011. The invoice cost was P5,000.
Goods shipped f.o.b. destination on December 19, 2010 from Dole to a customer were
received by the customer January 2, 2011. The invoice cost was P3,000.
At December 31, 2010, what amount should Dole report as total inventory?
a.
P843,000.
b.
P800,000.
c.
P823,000.
d.
P818,000.
4. Groh Co. recorded the following data pertaining to raw material X during January 2010:
Units
Date
Received
Cost
Issued
On Hand
1/1/10
Inventory
P8.00
3,200
1/11/10
Issue
1,600
1,600
1/22/10
Purchase
4,000
P9.40
5,600
The moving-average unit cost of X inventory at January 31, 2010 is
a.
P8.70.

b.
c.
d.

P8.85.
P9.00.
P9.40.

5. Keen Company's accounting records indicated the following information:

Inventory, 1/1/10
P 600,000
Purchases during 2010
3,000,000
Sales during 2010
3,800,000
A physical inventory taken on December 31, 2010, resulted in an ending inventory of P700,000.
Keen's gross profit on sales has remained constant at 25% in recent years. Keen suspects some
inventory may have been taken by a new employee. At December 31, 2010, what is the estimated
cost of missing inventory?
a.
P50,000.
b.
P150,000.
c.
P200,000.
d.
P250,000.

6. Henke Co. uses the retail inventory method to estimate its inventory for interim statement
purposes. Data relating to the computation of the inventory at July 31, 2010, are as follows:
Cost
Retail
Inventory, 2/1/10
P 200,000
P 250,000
Purchases
1,000,000
1,575,000
Markups, net
175,000
Sales
1,750,000
Estimated normal shoplifting losses
20,000
Markdowns, net
110,000
Under the lower-of-cost-or-market method, Henke's estimated inventory at July 31, 2010 is
a.
P72,000.
b.
P84,000.
c.
P96,000.
d.
P120,000.

7. On December 1, 2010, Hogan Co. purchased a tract of land as a factory site for P800,000. The
old building on the property was razed, and salvaged materials resulting from demolition were
sold. Additional costs incurred and salvage proceeds realized during December 2010 were as
follows:
Cost to raze old building
P70,000
Legal fees for purchase contract and to record ownership
10,000
Title guarantee insurance
16,000
Proceeds from sale of salvaged materials
8,000
In Hogan 's December 31, 2010 balance sheet, what amount should be reported as land?
a.
P826,000.
b.
P862,000.
c.
P888,000.
d.
P896,000.

8. Colt Football Co. had a player contract with Watts that is recorded in its books at P3,600,000 on
July 1, 2010. Day Football Co. had a player contract with Kurtz that is recorded in its books at
P4,500,000 on July 1, 2010. On this date, Colt traded Watts to Day for Kurtz and paid a cash
difference of P450,000. The fair value of the Kurtz contract was P5,400,000 on the exchange
date. The exchange had commercial substance. After the exchange, the Kurtz contract should be
recorded in Colt's books at
a.
P5,850,000.
b.
P4,500,000.
c.
P5,950,000.
d.
P5,400,000.

9. Pike Co. purchased a machine on July 1, 2010, for P400,000. The machine has an estimated
useful life of five years and a salvage value of P80,000. The machine is being depreciated from
the date of acquisition by the 150% declining-balance method. For the year ended December 31,

2010, Pike should record depreciation expense on this machine of

a.
P120,000.
b.
P80,000.
c.
P60,000.
d.
P48,000.
10. Hahn Co. takes a full year's depreciation expense in the year of an asset's acquisition and no
depreciation expense in the year of disposition. Data relating to one of Hahn's depreciable assets
at December 31, 2011 are as follows:
Acquisition year
2009
Cost
P140,000
Residual value
20,000
Accumulated depreciation
96,000
Estimated useful life
5 years
Using the same depreciation method as used in 2009, 2010, and 2011, how much depreciation
expense should Hahn record in 2012 for this asset?
a.
P16,000
b.
P24,000
c.
P28,000
d.
P32,000

11. In January 2010, Fehr Mining Corporation purchased a mineral mine for P4,200,000 with
removable ore estimated by geological surveys at 2,500,000 tons. The property has an estimated
value of P400,000 after the ore has been extracted. Fehr incurred P1,150,000 of development
costs preparing the property for the extraction of ore. During 2010, 340,000 tons were removed
and 300,000 tons were sold. For the year ended December 31, 2010, Fehr should include what
amount of depletion in its cost of goods sold?
a.
P516,800
b.
P456,000
c.
P594,000
d.
P673,200

12.

Lopez Corp. incurred P420,000 of research and development costs to develop a product for which
a patent was granted on January 2, 2006. Legal fees and other costs associated with registration
of the patent totaled P80,000. On March 31, 2011, Lopez paid P150,000 for legal fees in a
successful defense of the patent. The total amount capitalized for the patent through March 31,
2011 should be
a.
P230,000.
b.
P500,000.
c.
P80,000.
d.
P650,000.

13.

January 2, 2008, Koll, Inc. purchased a patent for a new consumer product for P270,000. At the
time of purchase, the patent was valid for 15 years; however, the patents useful life was
estimated to be only 10 years due to the competitive nature of the product. On December 31,
2011, the product was permanently withdrawn from the market under governmental order
because of a potential health hazard in the product. What amount should Koll charge against
income during 2011, assuming amortization is recorded at the end of each year?
a.
P 27,000
b.
P162,000
c.
P189,000
d.
P216,000

14.

Riley Co. incurred the following costs during 2011:

Significant modification to the formulation of a chemical product
Trouble-shooting in connection with breakdowns during commercial
production
Cost of exploration of new formulas
Seasonal or other periodic design changes to existing products
Laboratory research aimed at discovery of new technology

A
P160,000
150,000
200,000
185,000
225,000

In its income statement for the year ended December 31, 2011, Riley should report research and
development expense of
a.
P585,000.
b.
P735,000.
c.
P770,000.
d.
P920,000.
15.

On September 1, 2010, Herman Co. issued a note payable to National Bank in the amount of
P1,200,000, bearing interest at 12%, and payable in three equal annual principal payments of
P400,000. On this date, the bank's prime rate was 11%. The first payment for interest and
principal was made on September 1, 2011. At December 31, 2011, Herman should record
accrued interest payable of
a.
P48,000.
b.
P44,000.
c.
P32,000.
d.
P29,334.

16.

Included in Vernon Corp.'s liability account balances at December 31, 2010, were the following:
D
7% note payable issued October 1, 2010, maturing September 30, 2011
P250,000
8% note payable issued April 1, 2010, payable in six equal annual
installments of P150,000 beginning April 1, 2011
600,000
Vernon's December 31, 2010 financial statements were issued on March 31, 2011. On January
15, 2011, the entire P600,000 balance of the 8% note was refinanced by issuance of a long-term
obligation payable in a lump sum. In addition, on March 10, 2011, Vernon consummated a
noncancelable agreement with the lender to refinance the 7%, P250,000 note on a long-term
basis, on readily determinable terms that have not yet been implemented. On the December 31,
2010 balance sheet, the amount of the notes payable that Vernon should classify as short-term
obligations is
a.
P0.
b.
P850,000.
c.
P250,000.
d.
P350,000.

17.

Felton Co. sells major household appliance service contracts for cash. The service contracts are
for a one-year, two-year, or three-year period. Cash receipts from contracts are credited to
unearned service contract revenues. This account had a balance of P480,000 at December 31,
2009 before year-end adjustment. Service contract costs are charged as incurred to the service
contract expense account, which had a balance of P120,000 at December 31, 2009. Outstanding
service contracts at December 31, 2009 expire as follows:
During 2010
During 2011
During 2012
P100,000
P160,000
P70,000
What amount should be reported as unearned service contract revenues in Felton's December
31, 2009 balance sheet?
a.
P360,000.
b.
P330,000.
c.
P240,000.
d.
P220,000.

18.

Yount Trading Stamp Co. records stamp service revenue and provides for the cost of redemptions
in the year stamps are sold to licensees. Yount's past experience indicates that only 80% of the
stamps sold to licensees will be redeemed. Yount's liability for stamp redemptions was
P7,500,000 at December 31, 2009. Additional information for 2010 is as follows:
Stamp service revenue from stamps sold to licensees
P5,000,000
Cost of redemptions
3,400,000
If all the stamps sold in 2010 were presented for redemption in 2011, the redemption cost would be
P2,500,000. What amount should Yount report as a liability for stamp redemptions at December 31,
2010?
a.
P9,100,000.
b.
P6,600,000.
c.
P6,100,000.

d.
19.

P4,100,000.

During 2010, Eaton Co. introduced a new product carrying a two-year warranty against defects.
The estimated warranty costs related to peso sales are 2% within 12 months following sale and
4% in the second 12 months following sale. Sales and actual warranty expenditures for the years
ended December 31, 2010 and 2011 are as follows:

2010
2011

Sales
P 800,000
1,000,000
P1,800,000

Actual Warranty
Expenditures
P12,000
30,000
P42,000

At December 31, 2011, Eaton should report an estimated warranty liability of

a.
P0.
b.
P10,000.
c.
P30,000.
d.
P66,000.
20.

In March 2011, an explosion occurred at Kirk Co.'s plant, causing damage to area properties. By
May 2011, no claims had yet been asserted against Kirk. However, Kirk's management and legal
counsel concluded that it was reasonably possible that Kirk would be held responsible for
negligence, and that P4,000,000 would be a reasonable estimate of the damages. Kirk's
P5,000,000 comprehensive public liability policy contains a P400,000 deductible clause. In Kirk's
December 31, 2010 financial statements, for which the auditor's fieldwork was completed in April
2011, how should this casualty be reported?
a.
As a note disclosing a possible liability of P4,000,000.
b.
As an accrued liability of P400,000.
c.
As a note disclosing a possible liability of P400,000.
d.
No note disclosure of accrual is required for 2010 because the event occurred in 2011.

21.

On January 1, 2006, Goll Corp. issued 1,000 of its 10%, P1,000 bonds for P1,040,000. These
bonds were to mature on January 1, 2016 but were callable at 101 any time after December 31,
2009. Interest was payable semiannually on July 1 and January 1. On July 1, 2011, Goll called all
of the bonds and retired them. Bond premium was amortized on a straight-line basis. Before
income taxes, Goll's gain or loss in 2011 on this early extinguishment of debt was
a.
P30,000 gain.
b.
P12,000 gain.
c.
P8,000 loss.
d.
P8,000 gain.

22.

On July 1, 2010, Spear Co. issued 1,000 of its 10%, P1,000 bonds at 99 plus accrued interest.
The bonds are dated April 1, 2010 and mature on April 1, 2020. Interest is payable semiannually
on April 1 and October 1. What amount did Spear receive from the bond issuance?
a.
P1,015,000
b.
P1,000,000
c.
P990,000
d.
P965,000

23.

On January 1, 2010, Solis Co. issued its 10% bonds in the face amount of P3,000,000, which
mature on January 1, 2020. The bonds were issued for P3,405,000 to yield 8%, resulting in bond
premium of P405,000. Solis uses the effective-interest method of amortizing bond premium.
Interest is payable annually on December 31. At December 31, 2010, Solis's adjusted
unamortized bond premium should be
a.
P405,000.
b.
P377,400.
c.
P364,500.
d.
P304,500.

24.

On July 1, 2010, Nall Co. issued 2,500 shares of its P10 par common stock and 5,000 shares of
its P10 par convertible preferred stock for a lump sum of P125,000. At this date Nall's common
stock was selling for P24 per share and the convertible preferred stock for P18 per share. The

amount of the proceeds allocated to Nall's preferred stock should be

a.
P62,500.
b.
P75,000.
c.
P90,000.
d.
P68,750.
25.

At December 31, 2010 and 2011, Plank Corp. had outstanding 2,000 shares of P100 par value
8% cumulative preferred stock and 10,000 shares of P10 par value common stock. At December
31, 2010, dividends in arrears on the preferred stock were P8,000. Cash dividends declared in
2011 totaled P30,000. What amounts were payable on each class of stock?
Preferred Stock
Common Stock
a.
P16,000
P14,000
b.
P22,000
P8,000
c.
P24,000
P6,000
d.
P30,000
P0

26.

On December 31, 2010, the stockholders' equity section of Arndt, Inc., was as follows:

Common stock, par value P10; authorized 30,000 shares;

issued and outstanding 9,000 shares
Additional paid-in capital
Retained earnings
Total stockholders' equity

P 90,000
116,000
174,000
P380,000

On March 31, 2011, Arndt declared a 10% stock dividend, and accordingly 900 additional shares
were issued, when the fair market value of the stock was P18 per share. For the three months
ended March 31, 2011, Arndt sustained a net loss of P32,000. The balance of Arndts retained
earnings as of March 31, 2011, should be
a.
P125,800.
b.
P133,000.
c.
P134,800.
d.
P142,000.
27.

In 2010, Hobbs Corp. acquired 9,000 shares of its own P1 par value common stock at P18 per
share. In 2011, Hobbs issued 4,000 of these shares at P25 per share. Hobbs uses the cost
method to account for its treasury stock transactions. What accounts and what amounts should
Hobbs credit in 2011 to record the issuance of the 4,000 shares?

a.
b.
c.
d.
28.

Treasury
Stock
P72,000
P72,000

Additional
Paid-in Capital
P28,000
P96,000
P68,000

Retained
Earnings
P70,000

P28,000

Common
Stock

P4,000
P4,000

On January 1, 2010, Sharp Corp. granted an employee an option to purchase 6,000 shares of
Sharp's P5 par value common stock at P20 per share. The Black-Scholes option pricing model
determines total compensation expense to be P140,000. The option became exercisable on
December 31, 2011, after the employee completed two years of service. The market prices of
Sharp's stock were as follows:
January 1, 2010
December 31, 2011

P30
50

For 2011, should recognize compensation expense under the fair value method of
a.
P90,000.
b.
P30,000.
c.
P70,000.
d.
P0.
29.

On January 2, 2010, for past services, Rosen Corp. granted Nenn Pine, its president, 16,000
C
stock appreciation rights that are exercisable in 2010 and expire on January 2, 2012. On exercise,
Nenn is entitled to receive cash for the excess of the market price of the stock on the exercise

date over the market price on the grant date. Nenn did not exercise any of the rights during 2010.
The market price of Rosen's stock was P30 on January 2, 2010, and P45 on December 31, 2010.
As a result of the stock appreciation rights, Rosen should recognize compensation expense for
2010 of
a.
P0.
b.
P120,000.
c.
P240,000.
d.
P480,000.
30.

Didde Co. had 300,000 shares of common stock issued and outstanding at December 31, 2010.
No common stock was issued during 2011. On January 1, 2011, Didde issued 200,000 shares of
nonconvertible preferred stock. During 2011, Didde declared and paid P100,000 cash dividends
on the common stock and P80,000 on the preferred stock. Net income for the year ended
December 31, 2011 was P620,000. What should be Didde's 2011 earnings per common share?
a.
P2.07
b.
P1.80
c.
P1.73
d.
P1.47

31.

At December 31, 2011 and 2010, Miley Corp. had 180,000 shares of common stock and 10,000
shares of 5%, P100 par value cumulative preferred stock outstanding. No dividends were
declared on either the preferred or common stock in 2011 or 2010. Net income for 2011 was
P400,000. For 2011, earnings per common share amounted to
a.
P2.22.
b.
P1.94.
c.
P1.67.
d.
P1.11.

32.

Marsh Co. had 2,400,000 shares of common stock outstanding on January 1 and December 31,
2011. In connection with the acquisition of a subsidiary company in June 2010, Marsh is required
to issue 100,000 additional shares of its common stock on July 1, 2012, to the former owners of
the subsidiary. Marsh paid P200,000 in preferred stock dividends in 2011, and reported net
income of P3,400,000 for the year. Marsh's diluted earnings per share for 2011 should be
a.
P1.42.
b.
P1.36.
c.
P1.33.
d.
P1.28.

33.

Foyle, Inc., had 560,000 shares of common stock issued and outstanding at December 31, 2010. On
July 1, 2011, an additional 40,000 shares of common stock were issued for cash. Foyle also had
unexercised stock options to purchase 32,000 shares of common stock at P15 per share
outstanding at the beginning and end of 2011. The average market price of Foyle's common stock
was P20 during 2011. What is the number of shares that should be used in computing diluted
earnings per share for the year ended December 31, 2011?
a.
580,000
b.
588,000
c.
608,000
d.
612,000

34.

At December 31, 2010, Jeter Corp. had the following equity securities that were purchased during
2010, its first year of operation:
Fair
Unrealized
Cost
Value
Gain (Loss)
FV through P&L:
Security A
P 90,000
P 60,000
P(30,000)
B
15,000
20,000
5,000
Totals
P105,000
P 80,000
P(25,000)

FV through OCI:
Security Y

P 70,000

P 80,000

P 10,000

Z
Totals

85,000
P155,000

55,000
P135,000

(30,000)
P(20,000)

All market declines are considered temporary. Fair value adjustments at December 31, 2010
should be established with a corresponding charge against
Income
Stockholders Equity
a.
P45,000
P 0
b.
P30,000
P30,000
c.
P25,000
P20,000
d.
P25,000
P 0
35.

Rich, Inc. acquired 30% of Doane Corp.'s voting stock on January 1, 2010 for P400,000. During C
2010, Doane earned P160,000 and paid dividends of P100,000. Rich's 30% interest in Doane
gives Rich the ability to exercise significant influence over Doane's operating and financial
policies. During 2011, Doane earned P200,000 and paid dividends of P60,000 on April 1 and
P60,000 on October 1. On July 1, 2011, Rich sold half of its stock in Doane for P264,000 cash.
What should be the gain on sale of this investment in Rich's 2011 income statement?
a.
P43,000.
b.
P34,000.
c.
P49,000.
d.
P58,000.

36.

For calendar year 2010, Kane Corp. reported depreciation of P1,200,000 in its income statement.
On its 2010 income tax return, Kane reported depreciation of P1,800,000. Kane's income
statement also included P225,000 accrued warranty expense that will be deducted for tax
purposes when paid. Kane's enacted tax rates are 30% for 2010 and 2011, and 24% for 2012 and
2013. The depreciation difference and warranty expense will reverse over the next three years as
follows:
Depreciation Difference
Warranty Expense
2011
P240,000
P 45,000
2012
210,000
75,000
2013
150,000
105,000
P600,000
P225,000

These were Kane's only temporary differences. In Kane's 2010 income statement, the deferred
portion of its provision for income taxes should be
a.
P200,700.
b.
P112,500.
c.
P101,700.
d.
P109,800.
37.

On December 31, 2010, Harris Co. leased a machine from Catt, Inc. for a five-year period. Equal
annual payments under the lease are P630,000 (including P30,000 annual executory costs) and
are due on December 31 of each year. The first payment was made on December 31, 2010, and
the second payment was made on December 31, 2011. The five lease payments are discounted
at 10% over the lease term. The lease is appropriately accounted for as a capital lease by Harris.
In its December 31, 2011 balance sheet, Harris should report a lease liability of
a.
P1,902,000.
b.
P1,872,000.
c.
P1,711,800.
d.
P1,492,200.

38.

On January 1, 2011, Frost Corp. changed its inventory method to FIFO from LIFO for both
financial and income tax reporting purposes. The change resulted in an P800,000 increase in the
January 1, 2011 inventory. Assume that the income tax rate for all years is 30%. The cumulative
effect of the accounting change should be reported by Frost in its 2011
a.
retained earnings statement as a P560,000 addition to the beginning balance.
b.
income statement as a P560,000 cumulative effect of accounting change.
c.
retained earnings statement as an P800,000 addition to the beginning balance.
d.
income statement as an P800,000 cumulative effect of accounting change.

39.

On January 1, 2008, Lake Co. purchased a machine for P792,000 and depreciated it by the
straight-line method using an estimated useful life of eight years with no salvage value. On
January 1, 2011, Lake determined that the machine had a useful life of six years from the date of
acquisition and will have a salvage value of P72,000. An accounting change was made in 2011 to
reflect these additional data. The accumulated depreciation for this machine should have a
balance at December 31, 2011 of
a.
P438,000.
b.
P462,000.
c.
P480,000.
d.
P528,000.

40.

Black, Inc. is a calendar-year corporation whose financial statements for 2010 and 2011 included
errors as follows:

Year
2010
2011

Ending Inventory
P162,000 overstated
54,000 understated

Depreciation Expense
P135,000 overstated
45,000 understated

Assume that purchases were recorded correctly and that no correcting entries were made at
December 31, 2010, or at December 31, 2011. Ignoring income taxes, by how much should
Black's retained earnings be retroactively adjusted at January 1, 2012?
a.
P144,000 increase
b.
P36,000 increase
c.
P18,000 decrease
d.
P9,000 increase
41.

The next three questions are based on the following:

Jamison Corp.'s balance sheet accounts as of December 31, 2011 and 2010 and information
relating to 2011 activities are presented below.
December 31,
2011
2010
Assets
Cash
P 440,000
P 200,000
Short-term investments
600,000

Accounts receivable (net)

1,020,000
1,020,000
Inventory
1,380,000
1,200,000
Long-term investments
400,000
600,000
Plant assets
3,400,000
2,000,000
Accumulated depreciation
(900,000)
(900,000)
Patent
180,000
200,000
Total assets
P6,520,000
P4,320,000
Liabilities and Stockholders' Equity
Accounts payable and accrued liabilities
P1,660,000
P1,440,000
Notes payable (nontrade)
580,000

Common stock, P10 par

1,600,000
1,400,000
Additional paid-in capital
800,000
500,000
Retained earnings
1,880,000
980,000
Total liabilities and stockholders' equity
P6,520,000
P4,320,000
Information relating to 2011 activities:

Net income for 2011 was P1,500,000.

Cash dividends of P600,000 were declared and paid in 2011.

Equipment costing P1,000,000 and having a carrying amount of P320,000 was sold in
2011 for P360,000.

A long-term investment was sold in 2011 for P320,000. There were no other transactions
affecting long-term investments in 2011.

20,000 shares of common stock were issued in 2011 for P25 a share.

Short-term investments consist of treasury bills maturing on 6/30/12.

Net cash provided by Jamisons 2011 operating activities was

a.
P1,500,000.
b.
P2,120,000.
c.
P2,080,000.
d.
P2,160,000.
42.

Using the information in no. 41, net cash used in Jamisons 2011 investing activities was
a.
P2,320,000.
b.
P1,820,000.
c.
P1,680,000.
d.
P1,720,000.

43.

Using the information in no. 41, net cash provided by Jamisons 2011 financing activities was
a.
P480,000.
b.
P520,000.
c.
P1,080,000.
d.
P1,680,000.

44.

Unruh Corp. and its divisions are engaged solely in manufacturing operations. The following data
(consistent with prior years' data) pertain to the industries in which operations were conducted for
the year ended December 31, 2011.
Assets
Industry
Revenue
Profit
12/31/11
A
P 8,000,000
P1,320,000
P16,000,000
B
6,400,000
1,120,000
14,000,000
C
4,800,000
960,000
10,000,000
D
2,400,000
440,000
5,400,000
E
2,500,000
540,000
5,600,000
F
2,100,000
180,000
2,200,000
P26,200,000
P4,560,000
P53,200,000

In its segment information for 2011, how many reportable segments does Unruh have?
a.
Three
b.
Four
c.
Five
d.
Six
45.

The following information pertains to Nixon Corp. and its divisions for the year ended December
31, 2011.
Sales to unaffiliated customers
P2,500,000
Intersegment sales of products similar to those sold to
unaffiliated customers
750,000
Interest earned on loans to other operating segments
50,000

Nixon and all of its divisions are engaged solely in manufacturing operations. Nixon has a
reportable segment if that segment's revenue exceeds
a.
P330,000.
b.
P325,000.
c.
P255,000.
d.
P250,000.
46.

Fina Corp. had the following transactions during the quarter ended March 31, 2011:
Loss from hurricane damage
Payment of fire insurance premium for calendar year 2011

P350,000
500,000

What amount should be included in Fina's income statement for the quarter ended
March 31, 2011?
a.
P850,000
b.
P475,000
c.
P212,500
d.
P500,000

47.

The next three questions are based on the following:

The following trial balance of Reese Corp. at December 31, 2010 has been properly adjusted
except for the income tax expense adjustment.
Reese Corp.
Trial Balance
December 31, 2010
Dr.
Cr.
Cash
P 775,000
Accounts receivable (net)
2,695,000
Inventory
2,085,000
Property, plant, and equipment (net)
7,366,000
Accounts payable and accrued liabilities
P 1,701,000
Income taxes payable
654,000
Deferred income tax liability
85,000
Common stock
2,350,000
Additional paid-in capital
3,680,000
Retained earnings, 1/1/10
3,450,000
Net sales and other revenues
13,360,000
Costs and expenses
11,180,000
Income tax expenses
1,179,000
P25,280,000
P25,280,000
Other financial data for the year ended December 31, 2010:

Included in accounts receivable is P1,200,000 due from a customer and payable in quarterly
installments of P150,000. The last payment is due December 29, 2012.

The balance in the Deferred Income Tax Liability account pertains to a temporary difference
that arose in a prior year, of which P20,000 is classified as a current liability.

During the year, estimated tax payments of P525,000 were charged to income tax expense.
The current and future tax rate on all types of income is 30%.

In Reese's December 31, 2010 balance sheet,

The current assets total is
a.
P6,080,000.
b.
P5,555,000.
c.
P5,405,000.
d.
P4,955,000.
48.

Using the information in no. 47, the current liabilities total is

a.
P1,850,000.
b.
P1,830,000.
c.
P2,375,000.
d.
P2,440,000.

49.

Using the information in no. 47, the final retained earnings balance is
a.
P4,451,000.
b.
P4,536,000.
c.
P4,976,000.
d.
P4,905,000.

50.

Didde Corp. reports operating expenses in two categories: (1) selling and (2) general and
administrative. The adjusted trial balance at December 31, 2010 included the following expense
and loss accounts:

Accounting and legal fees

Advertising
Freight-out
Interest
Loss on sale of long-term investment

P140,000
180,000
80,000
70,000
30,000

Officers' salaries
Rent for office space
Sales salaries and commissions

225,000
220,000
170,000

One-half of the rented premises is occupied by the sales department. Didde's total selling
expenses for 2010 are
a.
P540,000.
b.
P460,000.
c.
P430,000.
d.
P370,000.