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Northern Metro Review School of Accountancy

CONTACT NO. PLDT 775-4594/ SMART 0920-9027995/ GLOBE 0917-8050303/0905-6017011


UNITS 202-204, A&S BUILDING, 189 MC ARTHUR HIGHWAY, BARANGAY POTRERO, MALABON CITY

Financial Accounting and Reporting Quiz #1

1. Kayumanggi Company’s unadjusted trial balance on December 31, 2018 appears below. The company
uses the perpetual method to record inventory transactions.
Gross Sales 7,500,000
Sales returns 200,000
Cost of goods sold 5,500,000
Inventory losses 120,000
Inventory 2,800,000
Inventory on hand, determined by physical count, had a cost of 3,000,000 and a net realizable value of
2,700,000. No inventory write-down has been recorded for the year. On December 15, 2018, Kayumanggi
recorded a 200,000 credit sale of goods costing 150,000. These goods were sold on FOB destination
terms and were in transit on December 31, 2082. The goods were included in the physical count.

How much should be reported as cost of goods sold for 2018?


a. 5,500,000 c. 5,700,000
b. 5,720,000 d. 5,620,000

2. The following accounts were extracted from the books of Camarines Goods Company for the year ended
December 31, 2018:
Legal and audit fees 1,800,000
Rent for office space 1,700,000
Rent for plant operations 2,300,000
Interest on bank loan 2,100,000
Loss on inventory shortages and pilferages 350,000
The Company’s top Operations Managers and Finance department share equally in the use of office
space. Likewise, Logistics and the rest of the Operations departments share in the plant operations space.

What is the amount of general and administrative expenses that should be reflected in the income
statement of Camarines Goods?
a. 2,650,000 c. 5,800,000
b. 3,500,000 d. 3,800,000

3. The following information is available from Bulacan Crispy Company's accounting records for the
current year:
Purchases 4,700,000
Purchase discounts 150,000
Beginning inventory 1,450,000
Ending inventory 1,650,000
Freight out 400,000
The company gives out sales discounts to long term customers. Sales discounts granted for the year
amounted to 250,000. Sales returns increased this year to 2% of sales or 300,000 in value.

The Company’s cost of goods sold for the current year is


a. 4,050,000 c. 4,350,000
b. 4,100,000 d. 3,800,000

4. Sick Company reported that the office supplies account has a balance at the beginning of 2018 of
P800,000 before the reversing entry. Payments for purchases of office supplies during 2018 amounted to
P5,000,000 and were recorded as expense. A physical count at the end of 2018 revealed supplies costing
P950,000 were on hand. Reversing entries are used by Sick. What was the debit in the adjusting entry at
the end of 2018?
a. Office supplies expense, P150,000
b. Office supplies, P150,000
c. Office supplies expense, P4,850,000
d. Office supplies, P950,000

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5. Kuliglig Company provided the following income statement information relating to the current year:
Net income 4,200,000
Unrealized gain on available for sale securities 350,000
Debit balance foreign currency translation adjustment 75,000
Surplus on revaluation 1,050,000
The amount of recognized gains and losses for the current year should show net amount at
a. 5,250,000 b. 4,475,000 c. 5,525,000 d. 5,675,000

6. Seattle Company sells boats for P300,000 each. Seattle Company also provides mooring facilities for
P20,000 per annum. Seattle Company sells these goods and services separately. If a purchaser of a boat to
buy mooring facilities for a year there is a 5% discount on the whole package, thus the “package” costs
P320,000 less P16,000 (5% discount). On July 1, 2018, Seattle Company has sold 2 boats for a package.
On December 1, 2018, Seattle Company has also sold 2 boats for package price.

What amount of revenue from sale of boats should Seattle Company report in its December 31, 2018
profit or loss?
a. P570,000 b. P600,000 c. P1,140,000 d. P1,200,000

7. Using the preceding information, what amount of mooring revenue should Seattle Company report in its
December 31,2018 profit or loss?
a. None b. P22,667 c. P57,000 d. P76,000

8. Supreme travel agency sells low price holidays. The agency has entered into advertising agreement with a
radio broadcaster. The agreement provides for the travel agency to place radio advertisement to the value
of P150,000 and in return the radio broadcaster advertises on the travel agency’s web page. The travel
agency has previously sold similar website advertising space to others for cash of P100,000.

How much advertising revenue should Supreme Travel Agency recognize?


a. None b. P50,000 c. P100,000 d. P150,000

9. Mix Company, a toy retailer sells toy for P100. A voucher entitling the bearer to a discount of P50 on a
subsequent purchase of the same type of toy is issued with each sale. The retailer has a historical
experience that for every two vouchers issued, one is redeemed. Mix Company has sold 1,000 toys and
has issued 1,000 vouchers as of December 31, 2018.

What amount of revenue from sale of toys should Mix Company report in its December 31, 2018 profit or
loss?
a. P20,000 b. P50,000 c. P80,000 d. P100,000

10. Gallant Corporation, a distributor of machinery, bought a machine from the manufacturer in November
2018 for P200,000. On December 30, 2018, Gallant sold this machine to Accord Company for P300,000
under the following terms: 2% discount if paid within 30 days; 1% discount if paid after 30 days but
within 60 days, or payable in full within 90 days if not paid within the discount period. However, Accord
Company had the right to return this machine to Gallant if Accord’s obligation to Gallant would be
cancelled.

In Gallant’s net sales for the year ended December 31, 2018, how much should be included for the sale of
this machine?
a. None
b. P294,000
c. P297,000
d. P300,000