Final Examination Accounting 17NC

Name: ___________________________________________ Schedule:

_____________________

On the format given below, write the capital letter of your answers.
1. ____ 11. ____ 21. ____ 31. ____ 41. ____
2. ____ 12. ____ 22. ____ 32. ____ 42. ____
3. ____ 13. ____ 23. ____ 33. ____ 43. ____
4. ____ 14. ____ 24. ____ 34. ____ 44. ____
5. ____ 15. ____ 25. ____ 35. ____ 45. ____
6. ____ 16. ____ 26. ____ 36. ____
7. ____ 17. ____ 27. ____ 37. ____
8. ____ 18. ____ 28. ____ 38. ____
9. ____ 19. ____ 29. ____ 39. ____
10. ____ 20. ____ 30. ____ 40. ____

1. The Sales Director of Can Can Co. suggests that certain credit terms be modified. He
estimates the following effects:
Sales will increase by at least 20%.
Accounts receivable turnover will be reduced to 8 times from the present turnover of 10
times.
Bad debts, now at 1% of sales will increase to 1.5%. Sales before the proposed changes is
at P900,000. Variable cost ratio is 55% and desired rate of return is 20%. Fixed expenses
amount to P150,000.

Should the company allow the revision of its credit terms?

a. Yes, because income will increase by P68,850.
b. Yes, because losses will be reduced by P78,800.
c. No, because income will be reduced by P13,000.
d. No, because losses will increase by P28,000.

2. Slippers Mart has sales of P3 million. Its credit period and average collection period are both
30 days and 1% of its sales end as bad debts. The general manager intends to extend the
credit period to 45 days which will increase sales by P300,000. However, bad debts losses on
the incremental sales would be 3%. Costs of products and related expenses amount to 40%
exclusive of the cost of carrying receivables of 15% and bad debts expenses. Assuming 360
days a year, the change in policy would result to incremental investment in receivables of
a. P24,704. c. P701,573
b. P65,000. d. P9,750.

Items 3-6: You are requested to reconstruct the accounts of Angela Trading for analysis. The
following data were made available to you:
Gross margin for 19x8 P472,500
Ending balance of merchandise inventory P300,000
Total stockholders equity as of December 31, 19x8 P750,000
Gross margin ratio 35%
Debt to equity ratio 0.8:1
Times interest earned 10
Quick ratio 1.3:1
Ratio of operating expenses to sales 18%
Long-term liabilities consisted of bonds payable with interest rate of 20%

Based on the above information,

3. What was the operating income for 19x8?
a. P472,500 b. P243,500 c. P205,550 d. P229,500
4. How much was the bonds payable?
a. P400,000 b. P200,750 c. P114,750 d. P370,500
5. Total current liabilities would amount to
a. P600,000 b. P714,750 c. P485,250 d. P550,00
6. Total current assets would amount to
a. P630,825 b. P780,000 c. P580,000 d. P930,825

7. It is budgeting time for Del Co. The following assumptions were agreed upon for the next year
after a strategic planning session which covered a five-year horizon
1. Sales is estimated to be at 70,000 units at its national selling price of P126.00. 75% of
 total sales are on credit. 1.5% of net sales is provided for doubtful accounts.
2. Sales discounts are given to various customers at different rates and net to gross ratio
is at 93%
3. Mark-up on merchandise is at 45% of invoice cost. Beginning inventory is P80,900 and
is expected to be reduced by P15,000 at the end of the period.
4. Selling and administrative expenses is expected to be 15% of gross sales.
5. Depreciation is computed at P500,000.

The projected operating income for the year is

a. P252,741 b. P296,841 c. P252,341 d. P173,802

Items 8-10: For purposes of preparing the cash projections and other budget estimates for the
third quarter of 2014, the following information is presented to you by the management of Virgo
Corporation:
Second Quarter Sales Data: Pesos Units
April P 530,000 10,600
May 550,000 11,000
June 570,000 11,400

Projected sales for the next four months Pesos Units

July 540,000 10,800
August 550,000 11,000
September 560,000 11,200
October 580,000 11,600

All sales are on charge basis and billed at the end of the month. A 5% discount is given on
collections within the 15 days from billing date.

Sales collections are generally made as follows:

70% within the month following the billing date with 40% of this being collected within
the discount period.
27% on the second month following the billing date.
3% considered uncollectible

Merchandise purchases are generally paid as follows:

50% within the month they are incurred.
50% after the month they are incurred

Ending inventory in units (cost per unit is P40) is 30% higher than the following months sales in
units. Operating expenses are on cash basis and are estimated to be 15% of the current months
sales including monthly depreciation of P10,000. As of June 30, 2014, Accounts Receivable
balance was P630,000 and Merchandise Inventory was P565,000.

8. The budgeted cash collections for the month of July would be

a. P547,500 b. P539,520 c. P556,020 d. P391,020
9. The budgeted cash payments of the month of September would be
a. P518,000 b. P533,600 c. P468,800 d. P459,600
10. The projected net income for September would be
a. P122,200 b. P112,000 c. P28,000 d. P38,000

11-12: Car Comapnay reported net income of P3,000,000 for the current year. Changes occurred
in certain accounts as follows:
Equipment 250,000 increase
Accumulated depreciation 400,000 increase
Note payable 300,000 decrease

During the year, Car sold equipment costing P250,000, with accumulated depreciation of
P120,000 for a gain of P50,000.
In December of the current year, Car purchased equipment costing P500,000 with
P200,000 cash and a 12% note payable of P300,000.

11. In the statement of cash flows, what amount should be reported as net cash used in investing
activities?
a. 20,000 b. 120,000 c. 220,000 d. 350,000
12. In the statement of cash flows, what amount should be reported as net cash provided in
operating activities?
a. 3,400,000 b. 3,520,000 c. 3,470,000 d. 3,570,000

13. Rill Company owns a 20% royalty interest in an oil well. Rill receives royalty payments on
January 31 for the oil sold between the previous June 1 and November 30, and on July 31 for oil
between December 1 and May 31. Production reports show the following sales:
June 1 , 2013 November 30, 2013 3,000,000
December 1, 2013 December 31, 2013 500,000
December 1, 2013 May 31, 2014 4,000,000
June 1, 2014 November 30, 2014 3,250,000
December 1, 2014 December 31, 2014 700,000

What amount should be reported as royalty revenue for 2014?

a. 1,400,000 b. 1,440,000 c. 1,490,000 d. 1,590,000

14. On September 30, 2013, Barry bought a car for P3,600,000. A down payment of P1,600,000 was made, with the balance due in 10
monthly installments, the first to be made at the end of October. Barry is to make monthly payments of P200,000 plus interest on the
unpaid balance at 12%. What is the total collection on January 31, 2014: a. 214,000
c. 218,000
b. 216,000 d. 220,000

15. Asser Computer Co. began operation at the beginning of 2014. During the year, it had cash
sales of P6,875,000 sales on installment basis of P16,500,000. Asser adds a markup on cost of
25% on cash sales and 50% on installment sales. Installment receivable at the end of 2014 is
P6,600,000. Total realized gross profit for 2014 is:
a. 4,765,000 c. 4,576,000
b. 4,675,000 d. 4,567,000

16. Delta Machine Tool Incorporated produces varied product lines without the use of direct labor.
An extensive setup procedure is required. Because no single base for a predetermined overhead
rate will provide Delta with reliable product cost information, overhead is classified into two cost
pools and two predetermined overhead rates are used. For 2014, it is estimated that total
overhead costs will consist of P525,000 of overhead related to setups and P900,000 of overhead
related to machine usage. Total machine usage is expected to be 3,600 hours for the year, and
the total number of setups is expected to be 300. Job RST required parts and materials costing
P56,000, 70 hours of machine time, and four setups. What is the cost of Job RST?
a. 80,500 c. 90,800
b. 85,800 d. 98,500

17. Downtown Company provided the following data for the preparation of the 2014 statement of
cash flows.
December 31 January 1
Property, plant and equipment 1,120,000 1,060,000
Accumulated depreciation 310,000 440,000

During the year, an equipment with original cost of P350,000 was sold for a gain of P45,000.
Depreciation for the year was P100,000. What amount of cash paid to acquired property, plant
and equipment during the year?
a. 390,000 c. 510,000
b. 290,000 d. 410,000

Items 14-17: We were given the following information which were obtained from the Single-
Entry records of MAULA & BALATERO Company:
Jan. 1 June 30
Interest Receivable P12,000 P 9,600
Accounts Receivable 540,000 1,056,000
Notes Receivable 180,000 144,000
Merchandise Inventory 456,000 120,000
Store and Office Equipment(net) 390,000 360,000
Prepaid Operating Expense 30,000 26,400
Interest Payable 3,600 6,000
Accounts Payable 420,000 300,000
Notes Payable 120,000 144,000
Accrued Operating Expense 32,400 60,000
An analysis of the cash book shows the following:
Balance, Jan. 1 P180,000
Receipts:
Interest Income 24,000
Accounts Receivable 432,000
Notes Receivable 180,000
Investment by Jenny 72,000 708,000
888,000
Disbursements:
Interest Expense P18,000
Accounts Payable 624,000
Notes Payable 96,000
Operating Expense 204,000 942,000
Balance, June 30- bank overdraft (P54,000)

Based on the above and the result of your examination, determine the following for the six
months ended June 30, 2014:
18. Sales:
a. P948,000 c. P1,092,000
b. P132,000 d. P1,164,000
19. Purchases:
a. P624,000 c. P816,000
b. P576,000 d. P504,000
20. Operating Expenses, excluding depreciation
a. P172,800 c. P228,000
b. P231,600 d. P235,200
21. Net Loss
a. P 4,800 c. P 152,400
b. P132,000 d. P 1,221,600

22. New Rage Cosmetics has used a traditional cost accounting system to apply quality control
costs uniformly to all products at a rate of 14.5% of direct labor cost. Monthly direct labor cost
for Satin Sheen makeup is P27,500. In an attempt to distribute quality control costs more
equitably, New Rage is considering activity-based costing. The monthly data shown in the chart
below have been gathered for Satin Sheen.
Quantity for
Activity Cost Driver Cost Rates Satin Sheen
Incoming material Type of 11.50 per 12 types
inspection material type
In-process inspection Number of 0.14 per 17,500 units
units unit
Product certification Per order 77per order 25 orders

The monthly quality control cost assigned to Satin Sheen makeup using activity-based costing is
a. 88.64 per order.
b. 525.50 lower than the cost using the traditional system.
c. 8,500.50
d. 525.50 higher than the cost using the traditional system.

Items 23-25: A company has identified the following overhead costs and cost drivers for the
coming year.
Overhead Item Cost Driver Budgeted Cost Budgeted Activity
Level
Machine setup No. of setups $ 20,000 200
Inspection No. of inspections $130,000 6,500
Material No. of material $ 80,000 8,000
handling moves
Engineering Engineering hours $ 50,000 1,000
$280,000
The following information was collected on three jobs that were completed during the year:
Job 101 Job 102 Job 103
Direct materials $5,000 $12,000 $8,000
Direct labor $2,000 $ 2,000 $4,000
Units completed 100 50 200
Number of setups 1 2 4
Number of inspections 20 10 30
Number of material 30 10 50
moves
Engineering hours 10 50 10

Budgeted direct labor cost was $100,000, and budgeted direct material cost was $280,000.
23.If the company uses activity-based costing, how much overhead cost should be allocable to
Job 101?
a. $1,300 b. $2,000 c. $5,000 d. $5,600
24.If the company uses activity-based costing, compute the cost of each unit of Job 102.
a. $340 b. $392 c. $440 d. $520
25.The company prices its products at 140% of cost. If the company uses activity-based costing,
the price of each unit of Job 103 would be
a. $98 b. $100 c. $116 d. $140

26. Newmass, Inc. paid a cash dividend to its common shareholders over the past 12 months of
$2.20 per share. The current market value of the common stock is $40 per share, and
investors are anticipating the common dividend to grow at a rate of 6% annually. The cost to
issue new common stock will be 5% of the market value. The cost of a new common stock
issue will be
a. 11.50% b. 11.79% c. 11.83% d. 12.14%

27. Grateway Inc. has a weighted average cost of capital of 11.5 percent. Its target capital
structure is 55 percent equity and 45 percent debt. The company has sufficient retained earnings
to fund the equity portion of its capital budget. The before-tax cost of debt is 9 percent, and the
companys tax rate is 30 percent. If the expected dividend next period (D 1) is $5 and the current
stock price is $45, what is the companys growth rate?
a. 2.68% b. 3.44% c. 4.64% d. 6.75%

28. Grover Co. had a beginning inventory of 1,750 units 70% complete, ending inventory of
3,000 units 20% complete, and transferred out 24,500 units. Weighted-average unit costs were
2.15 for materials, 1.75 for conversion costs. All materials are added at the start of the process.
The cost of ending inventory is
a. 2,340 b. 6,450. c. 7,500. d. 11,700.

29. South River Chemical manufactures a product called Zbek. Direct materials are added at the
beginning of the process, and conversion activity occurs uniformly throughout production. The
beginning work-in-process inventory is 60% complete with respect to conversion; the ending
work-in-process inventory is 20% complete. The following data pertain to May:

Units
Work in process, May 1 15,000
Units started during May 60,000
Units completed and 68,000
transferred out
Work in process, May 31 7,000

Direct Conversion
Total Materials Costs
Costs:
Work in process, May 1 $ $16,500 $
41,250 24,750
Costs incurred during 72,000
May 234,63 162,630
0
Totals $275,8 $88,500 $187,38
80 0

Using the weighted-average method of process costing, the total costs remaining in work in process on May 31 are:
a. $14,020. b. $12,040. c. $17,480. d. $25,640.

Items 30-31: Ohio Chemical manufactures two industrial chemicals in a joint process. In
October, direct material costing P120,000 was processed at a cost of P300,000, resulting in
16,000 pounds of Pentex and 4,000 pounds of Glaxco. Pentex sells for P35 per pound and Glaxco
sells for P60 per pound. Management generally processes each of these chemicals further in
separable processes to produce more refined products. Pentex is processed separately at a cost
of P7.50 per pound, with the resulting product, Pentex-R, selling for P45 per pound. Glaxco is
processed separately at a cost of P10 per pound, and the resulting product, Glaxco-R, sells for
P100 per pound.

30. Assuming that total joint production costs amounted to $500,000, the allocated joint costs of
product Glaxco using relative-sales-value method is:
a. 350,000 b. 200,000 c. 150,000 d. 225,000

31. Assuming that total joint production costs amounted to $500,000, the allocated joint costs of
product Glaxco using net-realizable-value method is:
 a. 150,000 b. 100,000 c. 312,500 d. 187,500

32. On June 30, 2014, Mr. Tauzin entered into a franchise agreement with TM Company to sell
their products. The agreement provides for an initial franchise fee of P1,250,000, payable as
follows: P350,000 cash to be paid upon signing of the contract, and the balance in five equal
annual payments every December 31, starting December 31, 2014. Mr. Tauzin signs 15% interest
bearing note for the balance. The agreement further provides that the franchisee must pay a
continuing franchise fee equal to 5% of its month gross sales. On October 30, the franchisor
completed the initial services required in the contract at a costs of P 787,500 and incurred
indirect costs of P42,900. The franchisee commenced business operations on November 2, 2014.
The gross sales reported to the franchisor are: November sales, P121,000 and December sales
P147,500. The first installment payment was made in due date. Assuming the collectibility of the
note is not reasonably assured, in its income statement for the year ended December 31, 2005,
how much is the net income of TM Company?
a. P 234,125 b. P 220,700 c. P 301,625 d. P 166,625

33. On July 1, 2014, Hot Company signed an agreement to operate as a Franchisee of Dryers Ice
Cream, Company for an initial franchise fee of P10,000,000. On the same date, Hot Company
paid P 6,000,000 and agreed to pay the balance evidence by a non-interest bearing note in four
annual payments of P 1,000,000, beginning July 1, 2015. The collectibility of the note is not
reasonably assured. Hot Company can borrow at 14% for a loan of this type. The present value of
an annuity of 1 at 14% for 4 periods is P2.91. Dryers Company rendered initial services so that
Hot Company can start their operations. The total cost of such services is P2,000,000. The
franchisor also incurred indirect cost of P50,000. The franchise agreement further requires the
franchisee to pay continuing franchise fee at 5% of its monthly gross sales. The total sales
reported by Hot Company up to December 31, 2014 is P5,000,000. Assuming the use of the
installment method of revenue recognition, what is the net income of Dryers Ice Cream
Company for the year ended December 31, 2014?
a. P 4,630,000 b. P 4,880,000 c. P 5,056,700 d. P
4,833,700

34. Porpol Company discovered the following errors in its financial records at the beginning of the
year 2015:

The physical inventory count on December 31, 2014 excluded a merchandise with a cost
of P38,000 that had been temporarily stored in a public warehouse. Porpol uses the
periodic inventory system.
During 2014, a competitor filed a patent infringement suit against Porpol claiming
damages of P440,000. The companys legal counsel has indicated that an unfavorable
verdict is probable and a reasonable estimate of the courts award to the competitor is
P250,000. The company has not reflected or disclosed this situation in the financial
statements.
A trademark was acquired at the beginning of 2013 for P100,000. No amortization has
been recorded since acquisition. It is the companys policy to amortize all intangibles with
a definite life for a maximum of 20 years. At the time of acquisition, the trademark was
estimated to have a definite life of 20 years.

What is the effect of the above errors on the January 1, 2015 accumulated profits?
a. 222,000 understated c. 222,000 overstated
b. 288,000 understated d. 255,000 overstated

35. Bayle Company is in the process of adjusting its books at the end of 2011. Bayles records
revealed the following information:
Bayle failed to accrue sales commissions at the end of 2009 and 2010 as follows:

2009 220,000
2010 140,000
In each case, the sales commissions were paid and expensed in January of the
following year.

Errors in ending inventory for the last three years were discovered to be as follows:

2009 400,000 understated

2010 540,000 overstated
2011 150,000 understated

The unadjusted retained earnings balance on January 1, 2011 is P12,600,000 and the unadjusted
net income for 2011 was P3,000,000. Dividends of P1,750,000 were declared during 2011. What
is the adjusted net income for 2011?
a. 3,180,000 c. 3,830,000
b. 3,230,000 d. 3,980,000
34. The XYZ Corporation manufactures one product and accounts for cost by a job-order cost
system. You have obtained the following information for the year ended December 31, 2013 from
the corporations books and records:

Total manufacturing cost added during 2013

based on actual direct materials, actual
direct labor and applied factory overhead
on actual direct labor cost P 1,000,000

Cost of goods manufactured based on actual

direct materials and direct labor and
applied factory overhead 970,000

Applied factory overhead to work in process

based on direct labor cost 75%

Applied factory overhead for the year, based on

total manufacturing cost 2%

Beginning work in process inventory was 80% of ending work in process inventory. The cost of
direct materials used for the year ended December 31, 2013 is:
a. 370,000 c. 270,000
b. 340,000 d. 150,000

35. Daisy Manufacturing Corporation started 150 units in process on Job Order No.007. The prime
costs placed in process consisted of P30,000 and P18,000 for materials and direct labor,
respectively, and a pre-determined rate was used to charge factory overhead to production at
133-1/3% of the direct labor cost. Upon completion of the job order, units equal to 20% of the
good output were rejected for failing to meet strict quality control requirements. The company
sells rejected units as scrap at only 1/3 of production cost, and bills customers at 150% of
production cost. If the rejected units were ascribed to company failure, the billing price of Job
Order No. 0007 would be?
a. 60,000 c. 80,000
b. 70,000 d. 90,000

36. X, Y and Z, a partnership formed on January 1, 2013 had the following initial investment:
X - P100,000
Y - 150,000
Z - 225,000

The partnership agreement states that profits and losses are to be shared equally by the
partners after consideration is made for the following:

Salaries allowed to partners: P60,000 for X, P48,000 for Y and P36,000 for Z.
Average partners capital balances during the year shall be allowed 10%.

Additional information:

On June 30, 2013 X invested an additional P60,000

Z withdrew P70,000 from the partnership on September 30, 2013.
Share in the remaining partnership profit was P5,000 for each partner.

The total partnership capital on December 31, 2013 was:

a. 742,750 c. 675,550
b. 734,250 d. 672,750

37. and PP, P25,000.00. They agreed to share profits and losses 80% and 20% respectively. PP is
the general manager and works in the partnership full time and is given a salary of P5,000.00 a
month; an interest of 5% of the beginning capital (of both partner) and a bonus of 15% of net
income before the salary, interest and the bonus.

The profit and loss statement of the partnership for the year ended December 31, 2013 is as
follows:

Net Sales P 875,000

Cost of goods sold 700,000
Gross Profit P 175,000
 Expenses (including the salary, interest and the bonus) 143,000
Net income P 32,000

The amount of bonus to PP in 2013 amounted to:

a. 15,000 c. 16,500
b. 15,300 d. 18,000

38. The Molino Furniture Company appropriately used the installment sales method in accounting
for the following installment sale. During 2014, Molin to sold furniture to an individual for P3,000
at a gross profit of P1,200. On June 1, 2014, this installment account receivable had a balance of
P2,200 and it was determined that no further collections would be made . Molino, therefore,
repossessed the merchandise. When reacquired, the merchandise was appraised as being worth
only P1,000. In order to improve its salability, Bengal incurred costs of P100 for reconditioning.
Normal profit on resale is P200. What should be the loss on repossession attributable to this
merchandise:
a. 1,000 c. 520
b. 620 d. 320

39. Asser Computer Co. began operation at the beginning of 2014. During the year, it had cash
sales of P6,875,000 sales on installment basis of P16,500,000. Asser adds a markup on cost of
25% on cash sales and 50% on installment sales. Installment receivable at the end of 2014 is
P6,600,000. Total realized gross profit for 2014 is:
a. 4,765,000 c. 4,576,000
b. 4,675,000 d. 4,567,000

40. Lovely Construction Co. was engaged on October 1, 2013 to construct a building for a
contract price of P8,400,000 payable in 5 installments. 1/5 of the contract price was to be paid
upod completion of each quarter of the work, the final payment being due within 10 days after
acceptance of the completed project.

By December 29, 2013, 3/4 of the building had been completed whereupon the third billing was
made in accordance with the term of the contract (cash had been received on the previous
billings). During 2013, a total of P4,200,000 had been disbursed by Lovely for costs incurred and,
at year-end, outstanding accounts payable for materials purchases totaled P1,000,000. Lovely
expected that an additional P1,800,000 would be required to complete the project.

Using the percentage-of-completion method on an output basis proportion method, the gross
profit to be recognized in the 2013 income state would be:
a. 1,050,000 c. 1,400,000
b. 1,250,000 d. 1450,000

41. Dasma Corporation entered into a construction agreement in 2012 that called for a contract
price of P9,600,000. At the beginning of 2013, a change order increased the initial contract price
by P480,000. The company uses the percentage-of completion basis of revenue recognition. in
relation to the project, the following are obtained;

2012 2013
Cost incurred to date P4,920,000 P8,640,000
Estimated costs to complete 4,920,000 2,160,000
Billings made 5,280,000 8,520,000
Collection made 4,380,000 7,500,000

What gross profit (loss) should Dasma Corp. recognize in 2013?

a. 240,000 c. (480,000)
b. (240,000) d. 480,000

42. Erap Co. filed a voluntary bankruptcy petition on August 15, 2008, and the statement of
affairs reflects the following amounts:

Book Value Estimated

Current
Value
Assets:
Assets pledged with fully secured creditors P 300,000 P 370,000
Assets pledged with partially secured
Creditors 180,000
120,000
Free assets 420,000
320,000
P 900,000 P 810,000
 Liabilities:
Liabilities with priority P70,000
Fully secured creditors 260,000
Partially secured creditors 200,000
Unsecured creditors 540,000
P1,070,000

Assume that the assets are converted to cash at the estimated current values and the business
is liquidated. What amount of cash will be available to pay unsecured non-priority claims?
a. 240,000 c. 320,000
b. 280,000 d. 360,000

43. Katherine, a CPA, has prepared a statement of affairs. Assets which there are no claims or
liens are expected to produce P70,000, which must be allocated to unsecured claims of all
classes totaling P105,000. The following are some of the claims outstanding:

Accounting fees for Katherine, P1,500

An unrecorded note for P1,000, on which P60 of interest has accrued, held by Angie.
A note for P3,000 secured by P4,000 receivables, estimated to be 60% collectible held by
Joy.
A P1,500 note, on which P30 of interest has accrued, held by Joyots. Property with a book
value of P1,000 and a market value of P1,800 is pledged to gurantee payment of principal
and interest.
Unpaid income taxes of P3,500.

Compute the estimated payment to partially secured creditors:

a. 1,060 c. 2,490
b. 1,950 d. 2,790

44. Zan Company provided the following data:

Trade accounts receivable, net 840,000 780,000
Inventory 1,500,000 1,400,000
Accounts payable 950,000 980,000

Total sales were P12,000,000 for 2014 and P11,000,000 for 2013. Cash sales were 20% of
total sales each year. Cost of goods sold was P8,400,000 for 2014.
Variable general and administrative expenses for 2014 were P1,200,000. They have varied
in proportion to sales, 50% have been paid in the year incurred and 50% the following
year. Unpaid G&A expenses are not included in accounts payable.
Fixed G&A expenses, including P350,000 depreciation and P50,000 bad debt, totaled
P1,000,000 each year. 80% of fixed G&A expenses involving cash were paid in the year
incurred and 20% the following year. Each year there was a P50,000 bad debt estimate
and a P50,000 writeoff. Unpaid G&A expenses are not included in accounts payable.

What is the cash collected from customers during 2014? 12,010,000

a. 12,840,000 c. 12,440,000
b. 12,780,000 d. 12,010,000

45. Downtown Company provided the following data for the preparation of the 2014 statement of
cash flows.
December 31 January 1
Property, plant and equipment 1,120,000 1,060,000
Accumulated depreciation 310,000 440,000

During the year, an equipment with original cost of P350,000 was sold for a gain of P45,000.
Depreciation for the year was P100,000. What amount of cash paid to acquired property, plant
and equipment during the year?
a. 390,000 c. 510,000
b. 290,000 d. 410,000