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CEBU CPAR CENTER M0CK COMPREHENSIVE EXAMINATION Visit-http://www.cebu-CPAR.c!
1. The liabiliti liabilities es section section of the balance balance sheet sheet of Pug Compan Company y on December December 31, 2005 detailed the folloing! "ccounts payable #otes payable$trade %an& note payable $10' %an& note payable ) 12' "ccrued e*penses e*penses "ccrued interest payable payable +ortgage note payable ) ' %onds payable ) 10' due une 30, 200
2,000,000 2,000,000 2,500,000 (00,000 1,000,000 350,000 500,000 -,000,000 5,000,000
The 10' ban& note payable is issued on anuary 1, 2005, payable on demand and interest is payable e/ery si* months. The 12' ban& note payable is a to$year note issued on uly 1, 200-. The ', 10 year mortgage note as issued on ctober 1, 2002. Terms of the note gi/e the holder to demand payment if the company fails to ma&e monthly interest payment. n December 31, 2005, Pug is three months behind in paying its reuired interest. hat is the total amount of current liabilities on December 31, 2005 a. P10,150,000 c. P15,450,000 d. P15,150,000 b. P1,150,000 2. To increase increase sales, sales, ue6on Company Company inaugurate inaugurated d a promotional promotional campaign on une une 30, 2005. ue6on placed placed a coupon redeemable redeemable for a premium in each pac&age of cereal sold at P200. P200. 7ach premium costs P100. " premium is offered to customers ho ho send in 5 coupons coupons and a remittanc remittance e of P30. P30. The distribu distribution tion cost cost per premium is P20. ue6on estimated estimated that only 0' 0' of the coupons issued issued ill be redeemed. redeemed. 8or the si* months ended December 31, 2005, the folloing is a/ailable! Pac&ages of cereal sold Premiums purchased Coupons redeemed
100,000 10,000 -0,000
hat is the estimated liability for coupons on December 31, 2005 P1,0(0,000 c. P30,000 a. b. P1 P1,000,000 d. P420,000 3. " ne ne product product introduced introduced by il&enson il&enson Promotions Promotions carries carries a to$year to$year arranty arranty against defects. The estimated arranty costs related to dollar sales are as follos! 9ear of sale .............................. 9ear after sale ...........................
3 percent 5 percent
:ales and actual arranty e*penditures for the years ended December 31, 200- and 2005, are as follos!
2002005
:ales P (,000,000 10,000,000
"ctual arra arranty nty 7*penditures P200,000 400,000
hat amount should il&enson report as its estimated liability as of December 31, 2005 a. P5-0,000 c. P -0,000 b. P2-0,000 d. P4-0,000
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-. #ational #ational "ppli "pplianc ance e Center Center sells ashing ashing machines machines that carry carry a three$y three$year ear arranty arranty against manufacturer;s defects. %ased on company e*perience, arranty costs are estima estimated ted at P0 P0 per per machi machine. ne. Durin During g the year year,, #atio #ationa nall sold sold -(,00 -(,000 0 ashi ashing ng machines and paid arranty costs of P3-0,000. uries suffered by +acalelon. Calauag?s counsel belie/es it is probable that +acalelon ill be aarded an estimated amount in the range beteen P2,000,000 and P3,000,000, and no amount is a better estimate of potential liability than any other amount. The accounting year ends on December 31, and the 2005 financial financial statements statements ere ere issued on +arch 31, 200. 200. hat amount of pro/ision should Calauag accrue at December 31, 2005 P-,000,000 c. P2,500,000 a. b. P3,000,000 d. P2,000,000 . n +arch 1, 200-, 200-, %ohol Company Company borroe borroed d P5,000,000 P5,000,000 and signed signed a 2$year 2$year note note bearing interest interest at 12' per annum compounded compounded annually. annually.
10,000,000 (,000,000 (00,000 500,000 200,000
The discount is related to the 10' bonds payable and the premium and bond issue cost are applicable applicable to the 1-' bonds payable. payable. #o bonds ere ere retired during 2005. 2005. Ao much interest interest e*pense e*pense on the bonds payable payable should should @ara report report in its 2005 income statement a. P2,040,000 c. P1,(40,000 d. P1,(=0,000 b. P2,0=0,000
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10.n "pril 1, 200-, erry Company sold 12,000 of its P1,000 11', 5$year face /alue bonds at =. The bonds are dated "pril 1, 200- and interest payment dates are "pril 1 and c ctob tober er 1, and and the compa company ny uses uses the the straig straight$ ht$lin line e method method of bond bond disc discoun ountt amorti6ation. n +arch 31, 2005, erry too& ad/antage of fa/orable prices of its stoc& to e*tinguish all of the bonds by issuing (00,000 shares of its P10 par /alue common stoc&. "t this time, accrued interest as paid in cash. The company?s stoc& as selling for P30 per share on +arch 1, 2005. The increase in additional paid in capital due to the con/ersion of erry?s bonds is a. P-,000,000 c. P3,1,000 b. P3,520,000 d. P 0 11. "s an induc induceme ement nt to enter enter a lease lease,, @egas @egaspi pi Compa Company ny,, a lesso lessor, r, grants grants Darag Daraga a Company, Company, a lessee, nine months of free rent rent under a fi/e year operating lease. lease. The lease is effecti/e on uly 1, 2005, and pro/ides for monthly rental of P500,000 to begin "pril 1, 200.
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1.Camarines Company is a dealer in machinery. n anuary 1, 2005, a machinery as leased to another enterprise ith the folloing pro/isions! "nnual rental rental payable payable at the end of each each year year @ease term and useful life of machinery Cost of machinery Besidual /alue$unguaranteed
2,000,000 2,000,000 5 years 5,000,000 1,000,000 10' 3.4= 0.2
"t the end of the lease term on December December 31, 200=, the machinery ill re/ert to Camarines. The perpetual in/entory system is used. Camarines incurred initial direct costs costs of P200,000 P200,000 in finali6i finali6ing ng the lease lease agreemen agreement. t. Camarine Camarines s Company should should report profit on the sale at a. P5,(00,000 c. P3,200,000 b. P,00 ,000,000 ,000 d. P3,000,000 14.%acolod Company pro/ided the folloing data in its memorandum records for a defined benefit plan on anuary 1, 2005. 8air /alue of plan assets namorti6ed past ser/ice cost "ccrued benefit obligation obligation PrepaidHaccrued benefit cost
12,000,000 1,000,000 F =,000,000G =,000,000G -,000,000
The remaining a/erage /esting period for the employees co/ered by the past ser/ice cost is 5 years. years. Transactions affecting the plan for 2005 are! :er/ice cost
3,500,000 500,000 1,200,000 2,300,000 2,500,000
c. P3,500,000 d. P5,-00,000
1(.+ara Company pro/ided the folloing comparati/e information concerning its defined benefit plan in its memorandum records! anu anuar ary y 1, 1, 200 2005 5 Dece Decemb mber er 31, 31, 200 2005 5 8air /alue of plan assets 10,000,000 11,500,000 namorti6ed past ser/ice cost 1,500,000 1,350,000 "ccrued benefit obligatio obligation n 12,500,000 12,500,000 13,035,000 13,035,000 nrecogni6ed actuarial gain 1,400,000 1,20,000 The transactions for 2005 related to the defined benefit plan are! Current ser/ice cost
2,000,000 1,000,000 1,200,000 2,(00,000 2,300,000 15,000 10 years years
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1=.%inalbagan Company obtains the folloing from its actuary on anuary 1, 2005 "ccrued benefit obligation obligation +ar&et related asset /alue nrecogni6ed net loss
=,000,000 =,000,000 10,000,000 1,500,000
Duri During ng 2005 2005,, the the actu actuar ary y dete determ rmin ined ed the the curr curren entt ser/ ser/ic ice e and and inte intere rest st cost cost at P-,000,000. The e*pected and actual return on plan assets as P1,000,000. The a/erage remaining ser/ice period of the co/ered employees is 10 years. hat is the total benefit e*pense for 2005 a. P3,000,000 c. P3,150,000 d. P3,050,000 b. P3,00,000 20.+anapla Company computed a preta* financial income of P15,000,000 for the year ended December December 31, 2005.
2,000,000 1,000,000 1,500,000 500,000
21.+atalam Company has one temporary difference at the end of 2005 that ill re/erse and cause ta*able amounts of P2,000,000 in 200 and P3,000,000 P3,000,000 in 2004. +atalam?s +atalam?s preta* financial income for 2005 is P20,000,000 and the ta* rate is 32'. There are no deferred ta*es on anuary 1, 2005. The income ta* payable for 2005 should be a. P-,(00,000 c. P,-00,000 b. P5,40,000 d. P5,--0,000 22.The accounts belo appear in the December 31, 2005 trial balance of Dumaguete Company! "uthori6ed "uthori6ed common stoc& 30,000,000 30,000,000 nissued common stoc& 5,000,000 :ubscribed common stoc& 3,000,000 :ubscription recei/able 1,000,000 "dditional "dditional paid in capital capital 10,000,000 10,000,000 Betained earnings unappropriated ,000,000 Betained earnings appropriated 2,000,000 Be/aluation surplus -,500,000 Treasury stoc&, at cost 1,500,000
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Ao much is the contributed capital of #orm Company as of December 31, 2005 a. P10, P10,10 100, 0,00 000 0 c. P11,100,000 b. P11,500,000 d. P10,500,000 2-.Eictorias Company reported the folloing in its statement of stoc&holders? euity on anuary 1, 2005! Common stoc&, P50 par /alue, authori6ed 1,000,000 shares, issued 500,000 shares "dditional "dditional paid$in paid$in capital capital Betained earnings @ess! Treasury stoc&, at cost, 100,000 shares Total stoc&holders? euity
25,000,000 25,000,000 25,000,000 15,000,000 5,000,000 4,000,000 5(,000,000
The folloing transactions occurred in 2005! une 1 -0,000 shares of treasury stoc& ere sold for P3,200,000. "ugust 31 31 200,000 shares of of pre/iously pre/iously unissued unissued common common stoc& ere sold sold for P120 per share. cto c tobe berr 1 Dist Distri ribu buti tion on of a 2$f 2$for or$1 $1 stoc stoc& & spl split it,, res resul ulti ting ng in the the com commo mon n sto stoc& c&?s ?s per per share par /alue being hal/ed. Eictorias accounts for treasury stoc& under the cost method. ournal entry should Doran Doran ma&e to record the acuisition of treasury stoc& a. Trea Treasur sury y :toc :toc& & 0,0 0,000 00 "dditional "dditional Paid$uyo 24. +an>uyod d Company as organi6ed on anuary 1, 2003. n that date it issued 500,000 500,000 shares of its P10 par /alue common stoc& at P15 per share. During the period anuary 1, 2003 through December 31, 2005, +an>uyod reported net income of P3,000,000 and paid cash di/idends di/idends of P500,000. P500,000. n anuary 5, 2005, 2005, +an>uyod purchased purchased 50,000 50,000 shares of its common stoc& at P20 per share. n December 31, 2005, -5,000 treasury shares ere ere sold at P30 per share and retired the remaining treasury treasury shares. shares. hat is the total stoc&holders? euity on December 31, 2005 a. P10,250,000 c. P10,(50,000 d. P10,350,000 b. P10,500,000
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2(.
P100 per share 50,000 shares 3 years anuary 1, 2004
The stoc& appreciation right is to be e*ercised on anuary 1, 2004. The uoted prices of %ansalan Company stoc& are 100, 12-, and 151 on anuary 1, 200-, December 31, 200- and December 31, 2005, respecti/ely. hat amount should %ansalan charge to compensation compensation e*pense for the year ended December 31, 2005 as a result of the stoc& appreciation right a. P1,400,000 c. P1,200,000 d. P 500,000 b. P1,300,000 31.#abunturan Company?s stoc&holders? euity comprised of 50,000shares of P100 par common common stoc&, stoc&, P2,0 P2,000, 00,000 000 of addit addition ional al paid$ paid$in in capita capitall and and retai retained ned earni earnings ngs of P1,500,000. :toc& di/idend of 10' as declared hen the stoc& is selling for P120 per share. hat should be the total contributed capital immediately after the issuance of the stoc& di/idend P4,000,000 c. P4,00,000 a. b. P=,100,000 d. P4,500,000 32. 32. Be* Compa Company ny as orga organi6 ni6ed ed on anu anuary ary 1, 2000. 2000. "fter fter 5 year years s of profita profitable ble operations, the euity section of the balance sheet on December 31, 200- as as follos! Common stoc&, P50 par, 1,000,000 shares authori6ed -00,000 shares issued and outstanding 20,000,000 "dditional "dditional paid in capital capital 5,000,000 5,000,000 Betained earnings 10,000,000 n anuary 20, 2005, Be* Company reacuired 50,000 shares of common stoc& at P100 per per share. share. The treas treasury ury stoc& stoc& is reco recorded rded at at cost. cost. n +arch +arch 1, 2005, 2005, the the company issued issued a 20' stoc& di/idend. di/idend. The mar&et /alue /alue of the stoc& is P100 P100 on this date. n une 30, 2005 the company company declared declared a P5 cash di/idend per share payable payable on :eptember 10, 2005. The company reported net income of P(,000,000 for the year ended ended December December 31, 2005. 2005. hat should should be the balance balance of retained retained earnings earnings on December 31, 2005
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a. P1,250,000 b. P12,-00,000
c. P11,(50,000 d. P1(,=00,000
33.The folloing information pertains to %aba& Company! I Di/idends on its 50,000 shares of 10', P100 par /alue cumulati/e preferred stoc& ha/e not been declared or paid for 3 years. I Treasury Treasury stoc& as acuired at a cost of P1,000,000 during the year. The treasury stoc& had been reissued as of year$end. hat amount of retained earnings should be appropriated as a result of these items a. P1,500,000 c. P2,500,000 b. P1,00 ,000,000 ,000 d. P 0 3-.The stoc&holders? euity of :unny Company on December 31, 2005, consists of the folloing capital balances! Preferred stoc&, 10' cumulati/e, 3 years in arrears, P100 par, P110 P110 liuidation price 150,000 shares 15,000,000 Common stoc&, P100 par, 200,000 shares 20,000,000 :ubscribed common stoc&, net of subscription recei/able of P-,000,000 ,000,000 Treasury common stoc&, 50,000 shares at cost -,000,000 "dditional "dditional paid in capital capital 3,000,000 3,000,000 Betained earnings 20,000,000 The boo& /alue per share of the common stoc& is b. P1=0.00 c. P142.00 a. P15.00
d. P2(.4
35.%in 35.%inda day yan Comp Compan any y has has incu incurr rred ed hea/ hea/y y loss losses es sinc since e its its ince incept ptio ion. n. "t the the recommendation of its president and C7, the board of directors /oted to implement uasi$reorgani6ation, through reduction of par /alue sub>ect to stoc&holders? appro/al.
50,000,000 15,000,000 15,000,000 F10,000,000G
The stoc&h stoc&holde olders rs appro/e appro/ed d the uasi uasi reorgan reorgani6at i6ation ion on Decembe Decemberr 31,2005 31,2005 to be accomplished by a reduction in in/entory of P2,000,000, a reduction in property, plant and euipment of P,000,000, and riteoff of goodill at P5,000,000. To eliminate the deficit, %indayan should reduce common stoc& by a. P23,000,000 c. P13,000,000 d. P (,000,000 b. P10,000,000 - e"# $ e%&!i"&ti" '# (uc)
