ACCOUNTANCY DEPARTMENT
Accounting Review 3
Quizzer
Process Costing Paul Corporation has the following information for the current current month: Units started Beginning WIP: (!" complete# %ormal spoilage (discrete# &'normal spoilage nding WIP: ()0" complete# *ransferr *ransferred ed out Beginning WIP costs: aterial Con-ersion
100,000 units $0,000 units ,!00 units !,000 units 14,!00 units +),000 units P1!,000 10,000
&ll materials are added at the start of the production process. Paul corporation inspects goods at )!" completion as to con-ersion. a. b. c. #.
What hat ar are What What are are What What are are What What are are
the the EUP EUP the the EUP EUP the the EUP EUP the the EUP EUP
for for mate aterials als usi using ng FIFO FIFO 100 00,0 ,00 00 for for conv conver ersi sion on cost costs s usi using ng FIFO FIFO 10 106, 6,5 55 5 for for mater ateria ials ls us usin ing g W!" 1 10, 0,00 000 0 for for con conve vers rsio ion n cos costs ts us usin ing g W!" W!" 11 11$, $,5 55 5
Installment Accounting &pple Inc. anufactured ten units of Iphone ) with total production costs of P/0,000 . n anuar2 1, $0$1, &pple Inc . sold all ten units of Iphone ) at a total price of P+30,000 with the term of pa2ment as follows: (1# cash downpa2ment of P$00,000, ($# preowned Iphone / with tradein allowance of P30,000 and (# the 'alance pa2a'le in four e5ual annual installment e-er2 6ecem'er 1 . *he custom customer er iss issued ued a four four2ear 2ear nonint noninter erest est 'eari 'earing ng note note for the 'alanc 'alance e with with e7ecti-e interest rate at 10" and the note8s discounted -alue is P!!4,)$/ . *he fair -alue of the trade in Iphone / is P14!,$)4. P14!,$)4. for the 2ear ended 6ecem'er 1, $0$1 $0 $1,, &p &ppl ple e Inc Inc. collec collected ted all the instal installme lment nt due and repor reported ted operat operating ing e9penses in the amount of P!0,000 . n 6ecem'er 1, $0$$, $ out of ten customers defaulted on the installment due which resulted ti the repossession of two units of Iphone ) . ach repossessed units has an estimated selling price of P$0,000 after reconditioning costs of P!,000 . the estimated costs to sell of each repossessed unit is P,000 with normal prot of 10" . n the sale date, one of the two repossessed units was reconditioned at a cost of P!,000 and was sold at a 'argain price of P13,000 . ;or the 2ear ended $0$$, &pple Inc . collected all the installment due e9cept those defaulted contracts and reported operating e9penses in the amount of P 40,000 . Page 1 of 4
What is the net income%loss to be re&orte# b' a&&le Inc. For the 'ear en#e# 01 an# 0, res&ectivel'.
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Franchise Accounting
a. What is the net income to be re&orte# b' (tarbeans for the 'ear en#e# ecember $1, 016 if the collection of the notes receivable is /1 reasonabl' assure# 62,0+2 b. What is the net income to be re&orte# b' (tarbeans for the 'ear en#e# ecember $1, 016 if the collection of the notes receivable is / not reasonabl' assure# $+5,320
Construction contracts n anuar2 1, $01, egaworld Inc. entered into a construction contract with an owner to 'uild an oil rener2. *he contract has the following characteristics. *he oil rener2 is highl2 customi=ed to the owner8s specications and changes to these specications '2 the owner are e9pected o-er the contract term. *he oil rener2 does not ha-e an alternati-e use to the contractor. %onrefunda'le interim progress pa2ments are re5uired as a mechanism to nance the contract. *he owner can cancel the contract at an2 time (with a termination penalt2#> an2 wor? in process is the propert2 of the owner. &s a result, another entit2 would not need to perform the tas?s performed to date. Ph2sical possession and title do not pass until the completion of the contract. *he contractor determines the contract has a single performance o'ligation to 'uild the rener2. *he preponderance of e-idence suggests that the contractor8s performance creates an asset that the customer controls and control is 'eing transferred o-er time. egaword Inc. concluded that input method (cost to cost# instead of output method is more reasona'le method for measuring the progress toward satisf2ing its performance o'ligation. *he contract duration is 2ears with total estimated contract re-enue of P00. *he total estimated contract cost as of 6ecem'er 1, $01 is P$00, the cost incurred during $01 is P1$0 including P$0 related to contractor caused ine@ciencies which do not representAdepict the transfer of goods or Page $1, of 4$0$, the total estimated contract ser-ices to the customer. &s of 6ecem'er cost 'ecomes P$!0 due to increase in cost of raw materials. *he cost incurred during 2ear $0$ is 10! including P! related to contractorcaused ine@ciencies which do not representAdepict the transfer of goods or ser-ices to the customer. n# (emester !.). 016 * 01+ .-. -egio
Un#er IF4( 15, hat is the net income%loss to be re&orte# b' "egaorl# Inc. for the 'ears en#e# 0$1 an# 0$, res&ectivel' 0 and (1!#
Corporate Liquidation Because of ina'ilit2 to pa2 its de'ts, the Ba?it?a2a anufacturing Compan2 has 'een forced into 'an?ruptc2 as of &pril 0, $010. *he 'alance sheet on that date shows: &<<*< Cash &ccounts ecei-a'le %otes ecei-a'le In-entories Prepaid e9penses and and 'uilding 5uipment I&BII*I< &ccounts pa2a'le %otes pa2a'le D P%B %ote pa2a'le D suppliers &ccrued wages &ccrued ta9es ortgage 'ond pa2a'le Common stoc? D P10 par etained earnings
P$,)00 +,!0 13,!00 3),3!0 +!0 /1,$!0 43,300 P$!+,400 P!$,!00 1!,000 !1,$!0 1,3!0 4,/!0 +0,000 )!,000 (0,3!0# P$!+,400
&dditional information: a. &ccounts recei-a'le of P1/,+!0 and notes recei-a'le of P1$,!00 are e9pected to 'e collecti'le. *he good notes are pledged to P%B. '. In-entories are e9pected to 'ring in P4!,100 when sold under 'an?ruptc2 condition. c. and and 'uildings ha-e an appraised -alue of P+!,000. the2 ser-e as securit2 on the 'onds. d. *he current -alue of the e5uipment, net of disposal cost is P+,000.
What is the estimate# &a'ment to all cre#itors P11,50
Home ofce accounting &rtemus Co. operates a 'ranch in anila Cit2. n 6ecem'er 1, $01, the anila 'ranch in the home o@ce 'oo?s showed a de'it 'alance of P!$$,110. *he intero@ce accounts were in agreement at the 'eginning of the 2ear. ;or purposes of reconciling the intero@ce accounts, the following facts were gi-en: •
•
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•
•
*he 'ranch wroteo7 uncollecti'le accounts amounting to P10,1$0. *he allowance for dou'tful accounts is maintained in the 'oo?s of the home o@ce. *he home o@ce recorded the writeo7 as a writeo7 of its own accounts recei-a'le. *he 'ranch collected accounts recei-a'le from home o@ce8s customers amounting to P!$,+$0, net of $" cash discount. *he 'ranch treated the said transaction as if it was a collection from its own customers. *he home o@ce was not 2et notied of the said collection.
It is the polic2 of the home o@ce to 'ill its 'ranches at $0" a'o-e cost. What is the una#7uste# balance of the home o8ce*current account in the boo9s of "anila branch on ecember $1, 01$ P4!"4#$
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n# (emester !.). 016 * 01+ .-. -egio
