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College of Accountancy & Finance

ACCO 3016 - FINANCIAL ACCOUNTING AND REPORTING, Part 1

Solve on a separate work sheet. Choose the best answer and shade the corresponding letter on the answer sheet
provided. Theory 1 - 30 1 point each; Problems 31 - 65 2 points each. Good luck!

____ 1. This enhancing characteristic requires that users be well-informed and diligent enough for the information
to be useful.
a. Relevance c. Understandability
b. Reliability d. Comparability

____ 2. This is the assumption that provides support for the measurement of property, plant and equipment at cost
rather than at market values that would be realized in the event of voluntary liquidation or forced sale.
a. Accrued basis c. Going concern
b. Economic entity d. Stable monetary unit

____ 3. A petty cash system is designed to


a. cash checks for employees
b. handle cash sales
c. account for all small cash receipts and disbursments
d. pay small miscellaneous expenses

____ 4. In most situations, the petty cash fund is reimbursed just prior to the year end and an adjusting entry is
made to avoid
a. the overstatement of cash and the understatement of expenses
b. the understatement of cash and the overstatement of expenses
c. the misstatement of revenues
d. the understatement of cash with the appropriate statement of expenses

____ 5. Which of the following is not considered cash for financial reporting purposes?
a. Petty cash funds and change funds
b. Money orders, travelers’ checks, and personal checks
c. Coin, currency, and available funds
d. Postdated checks, and I.O.U.s

____ 6. In preparing a monthly bank reconciliation, which of the following items would be added to the balance
reported on the bank statement to arrive at the correct cash balance?
a. Outstanding checks
b. Bank service charge
c. Deposits in transit
d. Customer’s note collected by bank on behalf of the depositor

____ 7. A bank overdraft should be


a. reported as a deduction from the current asset section
b. reported as a deduction from cash
c. netted against cash a net cash amount reported
d. reported as a current liability when there is no valid basis for offsetting against another
bank account
____ 8. Cash on hand and in bank on the statement of financial position excludes
a. checks drawn before the reporting date but held for later delivery to creditors
b. time deposits
c. US dollars deposited in a foreign currency depository account
d. cash received for the acquisition of fixed assets

____ 9. The journal entries for a bank reconciliation


a. are taken from the balance per bank section only
b. may include a debit to Office Expense for bank service charges
c. may include a credit to Accounts Receivable for an NSF check
d. may include a debit to Accounts Payable for an NSF check

____ 10. A bank may return a check to the maker for all of the following reasons except
a. the amount of the check is too small c. the check has been altered
b. the signature is missing d. the maker’s account has been closed

____ 11. Cash on hand and in bank on the statement of financial position excludes
a. checks drawn before the reporting date but held for later delivery to creditors
b. time deposits
c. US dollars deposited in a foreign currency depository account
d. cash reserved for the acquisition of fixed assets

____ 12. In preparing a monthly bank reconciliation, which of the following items would be added to the balance
reported on the bank statement to arrive at the correct cash balance?
a. Outstanding checks
b. Bank service charge
c. Deposits in transit
d. A customer’s note collected by bank on behalf of the depositor

____ 13. Notes or accounts receivable from officers, employees, or affiliated companies should be reported in the
statement of financial position as
a. current assets, if collectible within twelve months
b. non-current assets only
c. trade notes and accounts receivable, if they otherwise qualify as current assets
d. offsets to capital

____ 14. Which of the following is not a valid basis for using trade discounts as adjustment to list price?
a. To avoid frequent changes in price catalogs
b. To encourage collection of account within a specified period
c. To make price differentials among different classes of customers
d. to encourage customers to buy in big quantities

____ 15. If a note is exchanged for property and no interest rate is stated, at what amount should the note be
recorded at the date of exchange?
a. At fair market value of the property or note
b. At maturity value of the note
c. At face value of the note
d. At carrying value of the property
____ 16. A form of receivables financing which is equivalent to an absolute sale of accounts receivable is
a. pledge of accounts receivable c. factoring
b. assignment of accounts receivable d. discounting of notes receivable

____ 17. When the allowance method of recognizing uncollectible accounts expense is used, the entries at the time
of collection of an account previously written off would
a. increase profit
b. decrease profit
c. increase the allowance for uncollectible accounts
d. decrease the allowance for uncollectible accounts

____ 18. The account credited when a note receivable is discounted with recourse is
a. Liability on discounted notes c. Accounts receivable
b. Notes receivable d. Allowance for discounted notes

____ 19. A company writes off as uncollectible an account receivable from a bankrupt customer. The company has
an adequate amount in its Allowance for bad debts. This transaction will
a. decrease profit for the period
b. decrease total current assets
c. decrease the amount of owners’ equity
d. have no effect on total current assets

____ 20. A company writes off as uncollectible an account receivable from a bankrupt customer. The company has
an adequate amount in its allowance for bad debts. This transaction will
a. decrease profit for the period.
b. decrease total current assets.
c. decrease the amount of owners’ equity.
d. have no effect on total current assets.

____ 21. Which of the following would not be reported as inventory?


a. Land acquired for resale by a real estate firm.
b. Agricultural produce held by a farm.
c. Partially completed goods held by a manufacturing company.
d. Machinery acquired by a manufacturing company for use in the production process.

____ 22. Goods on consignment should be included in the inventory of


a. the consignor but not the consignee
b. the consignee but not the consignor
c. both the consignor and the consignee
d. neither the consignor nor the consignee

____ 23. Which of the following inventory costing methods reports most closely the current cost of inventory on the
statement of financial position?
a. First-in, first-out c. Last-in, first-out
b. Specific identification d. Weighted average

____ 24. The gross profit method of estimating inventory would not be useful when
a. a periodic system is in use and inventories are required for interim statements
b. inventories have been destroyed or lost by fire, theft, or other casualty, and the specific
data required for inventory valuation are not available
c. there is a significant change in the mix of the products being sold
d. there is significant unmonitored change in the relationship between gross profit and the
selling price of goods being sold

____ 25. The retail inventory method would include which of the following in the calculation of the goods available
for sale at both cost and retail?
a. Purchase returns c. Markdowns
b. Sales returns d. Markups

____ 26. When using the moving average method of inventory valuation, a new unit cost must be computed after
each
a. purchase
b. issuance from inventory
c. purchase and issuance from inventory
d. month-end

____ 27. In periodic inventory system that uses the weighted average cost flow method, the beginning inventory is
a. net purchases minus the ending inventory
b. net purchases minus the cost of goods sold
c. total goods available for sale minus the net purchases
d. total goods available for sale minus the cost of goods sold

____ 28. How should the following costs affect a retailer’s inventory?
Freight-in Interest on inventory loan
a. Increase No effect
b. Increase Increase
c. No effect Increase
d. No effect No effect

____ 29. The average retail method is based on the assumption that the
a. ratio of gross margin to sales is approximately the same each period
b. ratio of cost to retail changes at a constant rate
c. beginning inventory and the cost of goods sold contain the same proportion of high-cost
and low-cost ratio goods
d. the gross margin percentage applicable to ending inventory and to the goods sold during
the period is the same

____ 30. The use of the gross profit method assumes that
a. the amount of gross profit is the same as in prior years.
b. sales and cost of goods sold have not changed from the previous year.
c. inventory values have not increased from previous years.
d. the relationship between sales price and cost of goods sold is similar in prior years.

____ 31. Laguna Company had the following account balances at December 31, 2014:
Cash in banks P2,250,000
Cash on hand 125,000
Cash legally restricted for additions to plant
(expected to be disbursed in 2015) 1,600,000
Cash in banks include P600,000 of compensating balances against short-term borrowing arrangements. The
compensating balances are legally restricted as to withdrawal by Laguna Company. In the current assets
section of Laguna Company’s December 31, 2014 statement of financial position, total cash should be
reported at
a. P1,775,000 b. P2,250,000 c. P2,375,000 d. P3,975,000

____ 32. The balance sheet of Bulacan Company shows cash of P237,390. The following items were found to
comprise this amount:
Cash in Metrobank per bank statement (outstanding checks as of year-end totaled
P5,200) - P99,320; Savings account at Far East Bank - P30,800; Petty cash fund
(including expense receipts of P250) - P1,500; Cash on hand (undeposited sales
receipts) - P4,200; Sinking fund cash - P20,000; Cash in foreign bank (in equivalent
pesos) - P62,000; Customers’ checks on hand: Traveler’s checks - P4,450 and
Certified check - P3,120; Short-term treasury bills - P12,000.
What is the correct amount of cash in Bulacan Company’s balance sheet?
a. P231,940 b. P211,940 c. P199,940 d. P196,820

____ 33. Samar Company’s checkbook balance at December 31, 2014 was P250,000. In addition, Samar held the
following items in its safe on that date:
• Check payable to Samar Company deposited December 15 and included on
December 31 checkbook balance, but returned by the bank on December 30
stamped “NSF”. The check was redeposited on January 2, 2015 and cleared on
January 9, 2015 - P25,000.
• Check payable to Samar Company dated January 2, 2015 in payment of a sale
made in December 2014, not included in December 31 checkbook balance -
P100,000.
• Check drawn on Samar Company’s account, payable to a vendor, dated and
recorded in Samar Company’s books on December 31, but not mailed until
January 10, 2015 - P15,000.
What is the amount of cash in Samar Company’s December 31, 2014 balance sheet?
a. P340,000 b. P260,000 c. P250,000 d. P240,000

____ 34. The following information is available for Cavite Company on March 31, 2014:
Bank statement balance, March 31, 2014 P586,280
Note collected by bank, including interest of P10,000,
not yet taken up in the books 250,000
NSF check returned with the bank statement 85,040
Outstanding checks as of March 31, 2014 273,880
Bank service charges for March 2014 5,140
What is the correct cash balance at March 31, 2014?
a. P152,580 b. P312,400 c. P472,220 d. P307,260

____ 35. The following data pertains to Lucena Trading on April 30, 2014:
Correct cash balance in a general checking account with
Equitable-PCIBank P320,000
Overdraft in a special checking account with Genbank
(Lucena does not have another account with Genbank) 20,000
Cash accumulated in a special fund that will be used for
plant expansion in five years 150,000
Cash surrender value of life insurance policy 32,000
Cash travel advances in the hands of sales personnel 12,000
Currency and coins in petty cash fund (the company has
not replenished the fund to the imprest amount of
P2,000) 580
How much cash should Lucena Company report on the April 30, 2014 statement of financial position?
a. P332,580 b. P320,580 c. P322,000 d. P302,000

Bataan Company
At September 30, 2014, cash receipts and cash disbursements per general ledger Cash in Bank account of
Bataan Company are P305,000 and P240,000, respectively. The bank statement for the same month
indicates that only P302,000 in deposits were received during the month and checks clearing the bank were
P236,000. The August 31, 2014 bank reconciliation showed deposits in transit of P95,000. Outstanding
checks at September 30, 2014 were P20,000.

____ 36. Refer to Bataan Company. How much were the deposits in transit at September 30, 2014?
a. P98,000 b. P95,000 c. P92,000 d. P3,000

____ 37. Refer to Bataan Company. How much were the outstanding checks at August 31, 2014?
a. P4,000 b. P16,000 c. P20,000 d. P24,000

Davao Company
Davao Company is preparing its March 31 bank reconciliation. The following data are available:
Per bank Per books
Balance, February 28 P926,750 P899,250
March deposits reflected 595,000* 612,500
March checks reflected 771,250** 762,500
Note collected (including P2,500 interest) 252,500
Service charge 1,500
Balance, March 31 1,001,500 749,250
From the February 28 bank reconciliation:
Deposits in transit, P21,250; Outstanding checks, P48,750

* Erroneously includes a deposit of P31,250 by Davoa Corporation


** Erroneously includes a check drawn by Davis Company for P18,750

____ 38. Refer to Davao Company. The deposit in transit at March 31 is


a. P70,000 b. P38,750 c. P17,500 d. P3,750

____ 39. Refer to Davao Company. What is the amount of outstanding checks at March 31?
a. P58,750 b. P18,750 c. P10,000 d. P8,750

____ 40. In preparing its August 31, 2014 bank reconciliation, Leyte Company has available the following information:
Balance per bank statement, August 31, 2014 - P180,500; Deposit in transit, August
31, 2014 - P32,500; Return of customer’s check for insufficient funds, August 31,
2014 - P6,000; Outstanding checks, August 31, 2014 - P27,500; Bank service
charges for August 2014 - P1,000.
What is the unadjusted cash balance per books at August 31, 2014?
a. P192,500 b. P185,500 c. P180,000 d. P173,500

____ 41. The petty cash fund of Tacloban Trading at the end of the fiscal year ended June 30, 2014, is composed of
the following:
Currencies P15,200
Coins 4,800
Paid vouchers:
Office supplies 7,000
Postage stamps 8,000
Loans to employees 24,000
Customer’s check returned by bank marked “NSF” 11,000
Check drawn by the company, payable to the order of
the petty cash custodian, representing her salary 50,000
Check payable to an employee dated July 16, 2014 16,000
The amount of petty cash fund that should be shown on the statement of financial position sheet at June 30,
2014 of Tacloban Trading is
a. P20,000 b. P70,000 c. P86,000 d. P120,000

____ 42. Cebu Company’s ledger showed a balance in its cash account at December 31, 2014 of P545,800, which was
determined to consist of the following:
Petty cash fund P 2,880
Cash in Metrobank (reconciliation shows that a check of
P4,800 is still outstanding at December 31, 2014) 269,400
Notes receivable in the possession of a collecting agency 20,000
Undeposited receipts, including a customer’s postdated
check for P8,400 and traveler’s check for P8,000 142,400
Bond sinking fund - cash 102,000
IOUs signed by employees 3,960
Paid vouchers not yet recorded 5,160
Total P545,800
At what amount should “Cash on hand and in bank” be reported on Cebu Company’s December 31, 2014
balance sheet?
a. P398,280 b. P406,280 c. P414,680 d. P529,800

Batangas Company
The cashier of Batangas Company misplaced all the bank statements for the past year. You reviewed the
accounting records and discovered that the following journal entry was made to reconcile the June 30, 2014
bank records and accounting records:
Accounts Receivable 15,202.40
Miscellaneous Expense 125.00
Notes Receivable 2,000.00
Interest Revenue 100.00
Cash 13,227.40
Pre-adjustment cash balance in the accounting records was P76,837, outstanding checks were P2,075, and
no other adjustments were required.

____ 43. Refer to Batangas Company. What is the bank statement balance at June 30, 2014?
a. P65,684.60 b. P74,762.00 c. P78,912.00 d. P87,989.40
____ 44. Refer to Batangas Company. What is the correct cash balance at June 30, 2014?
a. P65,684.60 b. P63,609.60 c. P76,837.00 d. P74,762.00

Romblon Company
The following were abstracted from Romblon Company’s unadjusted trial balance at December 31, 2014:
Debit Credit
Accounts Receivable P1,000,000
Allowance for Uncollectible Accounts P 8,000
Net Credit Sales 3,000,000
Romblon Company estimates that 3% of the accounts receivable balance at the end of the year will become
uncollectible.

____ 45. Refer to Romblon Company. After adjustment at December 31, 2014, the allowance for uncollectible
accounts should have a credit balance of
a. P90,000 b. P82,000 c. P38,000 d. P30,000

____ 46. Refer to Romblon Company. What is the bad debts expense for the year ended December 31, 2014?
a. P90,000 b. P38,000 c. P30,000 d. P22,000

____ 47. You are given the following data for Manila Company:
Cash Credit Total
Cost of sales P500,000 P4,500,000 P5,000,000
Cash received from
customers 650,000 5,850,000 6,500,000
Merchandise were marked to sell as follows: Cash sales, 30% above cost and credit sales, at 40% of sales, all
of which are collectible . The balance of accounts receivable at the end of the year was
a. P1,475,000 b. P1,650,000 c. P450,000 d. P125,000

Palawan Company
On January 1, 2014, Palawan Company had Accounts Receivable and Allowance for Bad Debts of P640,000
and P48,000, respectively. Sales (all on credit) during 2014 amounted to P7,200,000. Accounts of P28,000
were written off during the year. Analysis of Palawan Company’s accounts receivable at December 31, 2014
revealed the following:
Age Amount Estimated uncollectible
0 - 60 days P480,000 1%
61 - 120 days 360,000 2%
Over 120 days 400,000 6%
There are no other transactions affecting accounts receivable.

____ 48. Refer to Palawan Company. How much is the cash collected from customers during 2014?
a. P5,960,000 b. P6,572,000 c. P6,600,000 d. P7,772,000

____ 49. Refer to Palawan Company. What is Palawan Company’s bad debts expense for 2014?
a. P56,000 b. P40,000 c. P36,000 d. P16,000

____ 50. Marawi Company had the following data relating to its accounts receivable:
Accounts receivable, December 31, 2013 P1,300,000
Credit sales for 2014 5,400,000
Collections from customers during 2014
(excluding recoveries) 4,750,000
Accounts written off, September 30, 2014 125,000
Collections of accounts written off in prior years
(not included in above collections) 25,000
Estimated uncollectible receivables per aging at
December 31, 2014 165,000
At December 31, 2014, Marawi Company’s net accounts receivable is
a. P1,660,000 b. P1,685,000 c. P1,825,000 d. P1,850,000

____ 51. You are given the following information relating to Bacolod Trading:
Gross profit rate based on cost 25%
Accounts receivable, December 31, 2013 P120,000
Collections on accounts receivable in 2014 645,000
Cost of goods available for sale in 2014 690,000
Merchandise inventory, December 31, 2014 150,000
Assuming all sales were on account, what was the company’s accounts receivable balance at December 31,
2014?
a. P105,000 b. P150,000 c. P159,000 d. P195,000

Bohol Company
Bohol Company has the following data relating to accounts receivable for the year ended December 31,
2014:
Accounts receivable, January 1 P 960,000
Allowance for bad debts, January 1 38,400
Sales during the year; all on account,
terms: 2/10, 1/15, n/30 4,800,000
Cash received from customers during the year 5,120,000
Accounts written off during the year 35,200

An analysis of cash received from customers during the year revealed that
P2,822,400 was received from customers availing the 10-day discount period,
P1,584,000 was received from customers availing the 15-day discount period,
P9,600 represented recovery of accounts written off, and the balance was received
from customers paying beyond the discount period. King’s year-end balance of
allowance for bad debts were estimated to be 5% of the outstanding accounts
receivable as at December 31, 2014, based on the aging of the accounts.

____ 52. Refer to Bohol Company. Accounts receivable balance at December 31, 2014 is
a. P614,400 b. P579,200 c. P540,800 d. P531,200

____ 53. Refer to Bohol Company. Bad debts expense for the year ended December 31, 2014 is
a. P14,240 b. P16,000 c. P17,920 d. P23,840

Agusan Corporation
On January 1, 2014, Agusan Corporation sold equipment costing P570,000 with accumulated depreciation of
P240,000 on the date of sale. Agusan Corporation received as consideration for the sale, a P600,000, non-
interest bearing note, due January 1, 2017. There was no established exchange price for the equipment and
the note had no ready market. The prevailing rate of interest for a note of this type at January 1, 2014 was
10%. The present value of 1 at 10% for three periods is 0.75.

____ 54. Refer to Agusan Corporation. In Agusan Corporation’s 2014 profit or loss, how much should be reported as
interest income?
a. P60,000 b. P49,500 c. P45,000 d. P20,250

____ 55. Refer to Agusan Corporation. What is the note’s carrying amount at December 31, 2014?
a. P510,000 b. P495,000 c. P450,000 d. P202,500

____ 56. On October 31, 2014, Mactan Company engaged in the following transactions:
• Obtained a P500,000, 6-month loan from Citibank, discounted at 12%. The
company pledged P600,000 of accounts receivable as security for the loan.
• Factored P1,000,000 of accounts receivable without recourse on a notification
basis with Easy Finance Company. Easy Finance Company charged a factoring
fee of 5% of receivables factored and withheld 10% of the receivables
factored.
What is the total cash received from the financing of receivables and the amount of loss, respectively?
a. P1,320,000 and P50,000 c. P1,320,000 and P150,000
b. P1,420,000 and P50,000 d. P1,420,000 and P150,000

____ 57. Pampanga Company’s physical inventory on December 31, 2014 showed that merchandise with a cost of
P364,000 was on hand at that date. Excluded from this amount are the following items:
• Merchandise costing P30,000 held by Pampanga on consignment.
• Merchandise costing P45,000 shipped FOB shipping point to a customer on
December 29, 2014. The goods were expected to be received by the
customer on January 4, 2015.
• Merchandise costing P62,000 shipped FOB destination to a customer on
December 31, 2014. The goods wee expected to be received by the customer
on January 6, 2015.
• Merchandise costing P78,000 shipped by a vendor FOB destination on
December 30, 2014 and received by Pampanga on January 5, 2015.
• Merchandise costing P54,000 shipped by a vendor FOB seller on December
31, 2014 and received by Pampanga on January 3, 2015.
What is the correct inventory that should appear in Pampanga Company’s statement of financial position at
December 31, 2014?
a. P603,000 b. P504,000 c. P487,000 d. P480,000

____ 58. Albay Company’s inventory at December 31, 2014 was P750,000 based on a physical count of goods priced
at cost and before any necessary year-end adjustments relating to the following:
• Included in the physical count were goods billed to a customer FOB shipping
point on December 31, 2014. These goods had a cost of P15,000 and were
picked up by the carrier on January 10, 2015.
• Goods shipped FOB shipping point on December 28, 2014 from a vendor to
Albay were received on January 4, 2015. The invoice cost was P25,000.
What amount should Albay Company report as inventory on its December 31, 2014 statement of financial
position?
a. P735,000 b. P740,000 c. P760,000 d. P775,000

____ 59. The inventory on hand December 31, 2014 for Malabon Company is valued at a cost of P1,500,000. The
following items were not included in the inventory:
• Purchases of goods still in transit, shipped FOB destination, with price of
P150,000 which includes freight charge of P25,000.
• Goods held on consignment by Malabon at a sales price of P100,000,
excluding a 20% commission on the sales price. Freight paid by Malabon is
P10,000.
• Goods sold in transit FOB destination with invoice price of P245,000 whcih
includes freight charge of P20,000 to deliver the goods.
• Purchases of goods still in transit FOB shipping point with invoice price of
P300,000. Freight cost, P30,000.
• Goods out on consignment with sales price of P150,000. Shipping cost to
consignee is P15,000.
The company’s policy on its selling price is 150% of cost. What is the correct inventory at December 31,
2014?
a. P2,095,000 b. P2,080,000 c. P2,050,000 d. P1,500,000

____ 60. The inventory and purchases data of Ilocos Company for the last quarter of 2014 are as follows:
• Beginning inventory: At cost - P650,000; At retail - P1,075,000
• Purchases during the period: At cost - P2,450,000;
At retail - P3,025,000
• Freight-in - P50,000; Net markup - P400,000; Net markdown - P300,000
• Net sales during the period - P3,880,000
What is the ending inventory at estimated cost using the retail inventory method?
a. P320,000 b. P256,000 c. P240,000 d. P224,000

____ 61. The accounting staff of Tarlac Company submitted an inventory list at December 31, 2014 which showed a
total of P2,500,000. You gathered the following information relating to various inventory items.
• Merchandise costing P40,000 were excluded from the inventory total since
the goods were segregated and packaged for delivery to a customer. The
goods were transferred to the delivery department on December 28, 2014 to
be shipped on January 3, 2015.
• Supplier’s invoice for P15,000 worth of merchandise dated December 28,
2014 was received through the mails on December 30, 2014. Shipment term
is FOB shipping point. Since the goods arrived only on January 4, 2015, the
items were not included in the inventory.
• Goods valued at P200,000 were sent to a customer for approval and were
excluded in the ending inventory. The customer informed Tarlac by facsimile
message of the acceptance of goods on January 4, 2015.
• On December 27, 2014, an order for P25,000 worth of merchandise was
placed. This was included in the year-end inventory although the goods were
received only on January 5, 2015. Seller shipped the goods FOB destination.
What is the correct merchandise inventory of Tarlac Company at December 31, 2014?
a. P2,755,000 b. P2,730,000 c. P2,530,000 d. P2,500,000
____ 62. Sorsogon Company recorded the following data pertaining to one of its inventory items during January
2014.
January 1, 2014 Inventory, 80 units @ P2,000
January 8, 2014 Sold 40 units
January 30, 2014 Purchased 120 units @ P2,400
What is the moving average unit cost of this item at January 31, 2014?
a. P2,200 b. P2,240 c. P2,300 d. P2,400

____ 63. The inventory records of Pasig Company show the following purchases during its first quarter operations:
January 15,000 units P187,500
February 20,000 units 240,000
March 13,000 units 167,700
The March 31 inventory using the weighted average method is P279,000. The March 31 inventory using the
periodic first-in, first-out method is
a. P281,700 b. P279,000 c. P277,500 d. P275,500

____ 64. The following data relate to the first three years of operations for Makati Company:
2012 2013 2014
Net profit under FIFO P300,000 P450,000 P160,000
Net profit under WA 120,000 320,000 120,000
Ending inventory under FIFO 550,000 670,000 710,000
How much is the ending inventory in 2014 using the weighted average method?
a. P1,060,000 b. P710,000 c. P360,000 d. P350,000

____ 65. On September 30, 2014, a fire at Catanduanes Company’s only warehouse caused severe damage to its
entire inventory. Based on recent history, Catanduanes has a gross profit of 30% on cost. The following
information is available from Catanduanes Company’s records for the nine months ended September 30,
2014: Inventory, January 1, 2014 - P550,000; Purchases - P3,000,000; Net sales - P3,640,000. A physical
inventory disclosed usable damaged goods which Catanduanes estimates can be sold to a jobber for
P50,000. Using the gross profit method, what is the estimated cost of goods sold for the nine months ended
September 30, 2014?
a. P2,800,000 b. P2,750,000 c. P2,548,000 d. P2,485,000
ACCO 3016 - FINANCIAL ACCOUNTING AND REPORTING, Part 1
Answer Section

MULTIPLE CHOICE

1. ANS: C PTS: 1
2. ANS: C PTS: 1
3. ANS: D PTS: 1
4. ANS: A PTS: 1
5. ANS: D PTS: 1
6. ANS: C PTS: 1
7. ANS: D PTS: 1
8. ANS: B PTS: 1
9. ANS: B PTS: 1
10. ANS: A PTS: 1
11. ANS: D PTS: 1
12. ANS: C PTS: 1
13. ANS: A PTS: 1
14. ANS: B PTS: 1
15. ANS: A PTS: 1
16. ANS: C PTS: 1
17. ANS: C PTS: 1
18. ANS: A PTS: 1
19. ANS: D PTS: 1
20. ANS: D PTS: 1
21. ANS: D PTS: 1
22. ANS: A PTS: 1
23. ANS: A PTS: 1
24. ANS: D PTS: 1
25. ANS: A PTS: 1
26. ANS: A PTS: 1
27. ANS: C PTS: 1
28. ANS: A PTS: 1
29. ANS: D PTS: 1
30. ANS: D PTS: 1
31. ANS: A PTS: 1
32. ANS: B PTS: 1
33. ANS: D PTS: 1
34. ANS: B PTS: 1
35. ANS: B PTS: 1
36. ANS: A PTS: 1
37. ANS: B PTS: 1
38. ANS: A PTS: 1
39. ANS: A PTS: 1
40. ANS: A PTS: 1
41. ANS: B PTS: 1
42. ANS: B PTS: 1
43. ANS: A PTS: 1
44. ANS: B PTS: 1
45. ANS: D PTS: 1
46. ANS: D PTS: 1
47. ANS: B PTS: 1
48. ANS: B PTS: 1
49. ANS: D PTS: 1
50. ANS: A PTS: 1
51. ANS: B PTS: 1
52. ANS: C PTS: 1
53. ANS: A PTS: 1
54. ANS: C PTS: 1
55. ANS: B PTS: 1
56. ANS: A PTS: 1
57. ANS: D PTS: 1
58. ANS: D PTS: 1
59. ANS: A PTS: 1
60. ANS: C PTS: 1
61. ANS: B PTS: 1
62. ANS: C PTS: 1
63. ANS: A PTS: 1
64. ANS: C PTS: 1
65. ANS: A PTS: 1