1. AC09301 Corporation had 700,000 shares of common
stock authorized and 300,000 shares outstanding at December 31, 2011. The following events occurred during 2012 January 31 Declared 10% stock dividends June 30 Purchased 100,000 shares August 1 Reissued 50,000 shares November 30 Declared 2-for-1 stock split At December 31, 2012, how many shares of common stocks are outstanding? a. 560,000 b. 600,000 c. 630,000 d. 660,000 2. When a new partner is admitted into a partnership and the new partner receives a capital credit less than the tangible assets contributed, which of the following explains the difference? I. The new partner's goodwill has been recognized. II. The old partners received a bonus from the new partner. a. I only b. II only c. Either I or II d. Neither I nor II
3. If the demand for mac and cheese decreases as income increases, mac and cheese is a(n) a. complementary good. b. normal good c. inferior good. d. substitute good. 4. On December 31, 2006, general ledger of AC09301 Companys account receivable showed a balance of P1,400,000. Because of continuing decrease in expected cash flows on its financial assets, AC09301 Company has decided to estimate the cash flows of the outstanding receivables. The estimates are based on the expected peso amount to be received on the outstanding receivables; the category (age) which also includes the length and period of collectability and time factor for similar borrowers. Category Amount Time Factor A P400,000 .909 B 300,000 .826 C 250,000 .751 D 150,000 .683 How much should AC09301 Company report its account receivable in its December 31, 2006 balance sheet? 5. On December 31, 2010, AC09301 Corporation held wool (agricultural produce) that it had purchased from three other farms at a cost of P30,000. The fair value less cost to sell of this wool was determined to be P32,000 at the year-end. This wool was subsequently sold for P33,000 (after deducting cost to sell of P500) on February 14, 2011. At December 31, 2010, how much is the carrying amount of the wool? 6. On 1 July 2010, Miserable Co. handed over to a client a new computer system. The contract price for the supply of the system and after-sales support for 12 months was P800,000. Miserable estimates the cost of the after-sales support at P120,000 and it normally marks up such costs by 50% when tendering for support contracts. The revenue Miserable should recognize in its financial year ended 31 December 2010 is:
AVERAGE 1. On December 31, 2007, the cash items of Shinno owned and operated by A were listed below: Coins and currency ,P50,000; Checks received from customers, P600,000; Certificate of deposit, term: 12 months, P800,000;Petty cash fund, P4,000; Postage stamps, P600; Bank A, checking account balance, P2,100,000; Post-dated check, customer, P10,000; Money order from customer, P15,000; Cash in savings account, P100,000; Bank draft from customer, P40,000; Utility deposit to gas company, refundable, P5,000; Cash advance received from customer, P8,000; NSF check, P20,000; Cash advance to company executive, collectible upon demand, P200,000; Bank B, checking account, overdraft, P20,000; IOUs from employees, P12,000 What amount of cash and cash equivalents should DHair Company report in its December 31, 2007 balance sheet? 2. On November 15, 2008, Socrates entered in to a commitment to purchase 200,000 units of raw material X for P8,000,000 on March 15, 2009. Socrates entered into this purchase commitment to protect itself against the volatility in the price of raw material X. By December 31, 2008, the purchase price of material X had fallen to P35 per unit. However, by March 15, 2009, when Socrates took delivery of the 200,000 units, the price of the material had risen to P42 per unit. How much will be recognized as gain on purchase commitment on March 15, 2009? a. P1,400,000 b. P1,000,000 c. P400,000 d. P 0 3. At the end of the year 2011, the carrying amount of a certain asset is P350,000 and has an accumulated depreciation of P140,000, has a useful life of ten years and depreciated using straight line method. At what year the asset was acquired when the asset is purchased at the beginning of the year? a. 2008 b. 2007 c. 2009 d. 2006 4. The inventory on hand at December 31, 2008 for Fair Company valued at a cost of P947,800. The following items were not included in this inventory amount: a. Purchased goods, in transit, shipped FOB destination invoice price P32,000 which included freight charges of P1,600. b. Goods held on consignment by Fair Company at a sales price of P28,000, including sales commission of 20% of the sales price. c. Goods sold to Garcia Company, under terms FOB destination, invoiced for P18,500 which includes P1,000 freight charges to deliver the goods. Goods are in transit. d. Purchased goods in transit, terms FOB shipping point, invoice price P48,000, inclusive of freight cost, P3,000. e. Goods out on consignment to Manil Company, sales price P36,400, shipping cost of P2,000. Assuming that the company's selling price is 140% of inventory cost, the adjusted cost of Fair Company's inventory at December 31, 2008 should be a. P1,039,300 b. P1,039,500 c. P1,055,700 d. P1,037,300 5. The partnership of X and Y shares profits and losses in the ratio of 60 percent to X and 40 percent to Y. For the year 2008, partnership net income was double X's withdrawals. Assume X's beginning capital balance was $80,000, and ending capital balance (after closing) was $140,000. Partnership net income for the year was: a. $120,000 b. $300,000 c. $500,000 d. $600,000 DIFFICULT 1. During the course of your examination of the financial statements of H Co., a new client, for the year ended December 31, 2008, you discover the following: P3,000. by P5,000. purchased on January 2, 2007, for P1,500. The entire amount was charged as an expense in 2007. During 2008 the company received a P1,000 cash advance from a customer for merchandise to be manufactured and shipped during 2009. The P1,000 had been credited to sales revenues. The company's gross profit on sales is 50%. Net income reported on the 2008 income statement (before reflecting any adjustments for the above items) is P20,000. The proper net income for 2008 is a. P26,500 c. P23,500 b. P16,500 d. P20,500 2. The price of circuit boards used in the manufacturing of LCD televisions has fallen. This will lead to ________ LCD televisions. a. an increase in the supply of b. a decrease in the supply of c. an increase in the quantity supplied of d. a decrease in the quantity supplied of 3. On January 1, 2006, Cherry Company issued its 10%, 5- year convertible debt instrument with a face amount of P5,000,000 for P5,217,344. Interest is payable every December 31 of each year. The debt instrument is convertible into 50,000 ordinary shares with a par value of P100. When the debt instruments were issued, the prevailing market rate of interest for similar debt without conversion option is 11%. The Company incurred transaction cost of P70,000 related to the issue of the compound instrument. (Carry PV factors up to 3 decimal places) How much of the net proceeds represent the equity component? 4. Joy Corp. is engaged in a research and development project to produce a new product. In the year ended December 31, 2007, the company spent P1,200,000 on research and concluded that there were sufficient grounds to carry the project on to its development stage and a further P750,000 had been spent on development. At that date management had decided that they were not sufficiently confident in the ultimate profitability of the project and wrote off all the expenditure to date to the income statement. In 2008 further direct development costs have been incurred of P800,000 and the development work is now almost complete with only an estimated P100,000 of costs to be incurred in the future. Production is expected to commence within the next few months. Unfortunately the total trading profit from sales of the new product is not expected to be as good as market research data originally forecasted and is estimated at only P1,500,000. Assuming the other criteria given in PAS 38 are met, how much should be capitalized as of December 31, 2008?