NATIONAL FEDERATION OF JUNIOR PHILIPPINE INSTITUTE OF

ACCOUNTANTS -REGION III COUNCIL

2013 REGIONAL MOCK BOARD EXAMINATION

PRACTICAL ACCOUNTING 2

INSTRUCTIONS: Select the best answer for each of the following questions. Mark only one answer for
each item on the answer sheet provided. AVOID ERASURES. GOD BLESS!

1. Revenue from the snack bar and parking lot of not for profit hospitals is recorded as:
a. Patient service revenue Unrestricted
b. Resident Service revenue Unrestricted
c. Other operating revenue Unrestricted
d. Non-operating revenue Unrestricted

2. A private colleges plant group includes which of the following subgroups?

I. Renewals and replacements funds.
II. Retirement of indebtedness funds.
III. Restricted current funds.

a. I and II c. II and III

b. I and III d. All of the above

3. On January 1, 2009, Paul Corporation pays P500,000 cash and also issue 2 shares for every share
of Marie Corp. The following balance sheet of Paul Corporation and Marie Corporation before
they entered into a business combination.

Paul Corp. Marie Corp.

Book Value FMV Book Value FMV
Cash 550,000 550,000 50,000 50,000
Accounts receivable 50,000 50,000 40,000 40,000
Inventory 150,000 280,000 350,000 500,000
Land 5,000,000 5,500,000 1,000,000 1,200,000
Building 3,000,000 3,500,000 1,800,000 1,780,000
Accumulated depreciation (800,000) (250,000)
Total assets 7,950,000 9,880,000 2,990,000 3,570,000

Accounts payable 450,000 430,000 380,000 380,000

Bonds payable 500,000 530,000 400,000 420,000
Common stock
P20 par 2,000,000
P40 par 1,200,000
Additional paid in capital 1,500,000 550,000
Retained earnings 3,500,000 460,000
7,950,000 2,990,000

Page 1 of 12
 Paul shares were selling at P45 and Marie shares were selling at P58. Additional cash payment
made by Paul Corp. in completing the acquisition were:

Stock registration fee for new shares of Paul P12,000

Professional fees paid to accountant 25,000
Cost of issuance of Paul shares 15,000
Payment to stock broker and consultants 40,000

What is the total Assets after combination?

a. P11,520,000 c. P11,358,000
b. P11,423,000 d. P13,450,000

4. The partnership of Paul, Anthony and DJ is to be liquidated as soon as possible after December
31, 2009, and all cash on hand except for P20,000 contingency balance is to be distributed at the
end of each month until the liquidation is complete. Profits and losses are shared 50%, 30%, and
20% to Paul, Anthony and DJ, respectively.

A balance sheet of the partnership at December 31, 2009 contains the following accounts and
balances:
Cash P240,000 Accounts payable P300,000
Accounts receivable 280,000 Notes payable 200,000
Loan to DJ 40,000 Loan from Anthony 20,000
Inventories 400,000 Paul, Capital 340,000
Land 100,000 Anthony, Capital 340,000
Equipment (net) 300,000 DJ, Capital 200,000
Goodwill ___40,000 _______
P1,400,000 P1,400,000

In January, 2010, the loan to DJ was offset against his capital balance and the goodwill is written
off. P200,000 is collected on account, inventory items that cost P160,000 and sold for P200,000
and cash is distributed.

If available cash is distributed on January 31, 2010, Paul, Anthony and DJ, respectively, should
receive:
a. P 0; P132,000; and P6,000 c. P 0; P100,000; and P 0
b. P 0; P120,000; and P 0 d. P 0; P120,000; and P8,000

Page 2 of 12
5. Jenny Corp. produces a special kind of insecticides. Materials are added at the end of the
production of Fabricating Dept. for the month of March 2008, the following data were gathered:
Work in Process March 1 60% work to be done as to conversion cost 80,000
Started in Process during the month 200,000
Transferred to Finishing Dept. 170,000
Lost units in processing 20,000
Work in Process, March 31 60% complete as to conversion cost 90,000

The costs corresponding to the lost units were absorbed by the remaining units. Which of the
following is incorrect?
a. The EUP of conversion cost under FIFO method totaled 192,000.
b. The EUP of work in process end materials under Average method is equal to FIFO
method.
c. The EUP of materials under FIFO and Average are the same.
d. The EUP of conversion cost under FIFO is less than 48,000 compared to Average.

6. Manny and Jinky formed a joint venture to purchase and sell a special type of merchandise. The
venturers agreed to contribute cash of P405,000 each to be used in purchasing the
merchandise, and to share profits and losses equally. They also agreed that each shall record
purchases, sales and expenses in their own books.

Upon termination of the joint venture the following data are made available:
Manny Jinky
Joint Venture 351,000 CR 315,900 CR
Inventory Taken 10,800 33,750
Expenses paid from Joint venture cash 16,200 29,700

How much cash is to be received by Manny in the final settlement:

a. 763,425 c. 749,925
b. 760,725 d. 711,450

7. The following data were taken from the statement of affairs for X Corp:
Unsecured Liabilities with priority 7,000
Fully secured liabilities 30,000
Partially secured liabilities 60,000
Unsecured liabilities without priority 112,000
Assets pledge for fully secured liabilities (fair value P75,000) 90,000
Assets pledged to partially secured liabilities (fair value P52,000) 74,000
Free Assets (fair value P40,000) 70,000

The total estimated deficiency to unsecured creditors is:

a. 3,000 c. 120,000
b. 0 d. 42,000

Page 3 of 12
8. Partners Irish, Ivan and Irvin share profits and losses in the ratio of 4:3:3 at the end of a very
unprofitable year, they decided to liquidate the firm. The balances of their accounts on this date
are:
Cash 18,000
Other assets ?
Liabilities 90,000
Irish, cap 66,000
Ivan, cap 74,700
Irvin, cap 45,000

The liabilities included a loan of P30,000 from Irish. All the partners are personally solvent. The
partners plan to sell the assets on installment.

If Ivan received P33,000 from the first distribution of cash, how much did Irish received at that
time?
a. 40,400 c. 36,000
b. 24,750 d. 33,000

9. Pekto Corp. acquired an 80% interest in Sisa Corp. on January 1, 2009 for P700,000. On this date
capital stock and retained earnings of Pekto Corp. were P1,800,000 and P800,000 respectively;
and Sisas P500,000 and P100,000 respectively. The assets and liabilities of Sisa Corp. were
stated at their fair value when Pekto acquired its 80% interest. Pekto uses the cost method to
account for its investment in Sisa. The Non controlling interest is computed based on the
estimated fair values.

The net income and dividends for 2009 for the affiliated companies were as follows: Pektos net
income P300,000; Dividend Declared P180,000; Dividend payable December 31, 2009
P90,000. Sisas net income - P90,000; Dividend declared P50,000 and dividend payable
December 31, 2009 P25,000.

End of the year evaluation indicates P5,500 impairment in goodwill. The non controlling interest
at December 31, 2009 is:
a. 128,000 c. 184,000
b. 123,000 d. 181,900

10. Mado and Norin formed a partnership and agreed to divide initial capital equally, even though
Mado contributed P100,000 and Norin contributed P84,000 in identifiable assets. Under the
bonus method approach to adjust the capital accounts Norins capital should be credited
(debited) for:
a. 16,000 c. 8,000
b. (16,000) d. (8,000)

Page 4 of 12
11. P, I and N formed a joint venture in 2009 and agreed to divide profits and losses equally. The
venture is terminated on December 31, 2009 even though there are still unsold merchandise.
On this date Ps trail balance contains the following account balances before profit and loss
distribution: Joint venture cash debit balance of P120,000; Joint venture account debit balance
of P24,000; I capital debit balance of P56,000 and N capital credit balance of P64,000. P receives
P18,000 for his share in the venture profit. Furthermore, he agrees to be charged for the unsold
merchandise as of December 31, 2009. The cost of the unsold merchandise charged to P is:
a. 12,000 c. 78,000
b. 60,000 d. 54,000

12. Honda, a dealer of vehicle, sales exclusively on installment basis. One of its customers, Mr. Yu
purchased a car for P1,361,250. The cost to Honda was P762,300. After making an initial
payment of P181,500, Mr. Yu defaulted on subsequent payments. Honda lost no time in
repossessing the car which, by this time, was appraised at a value of P379,500. Honda had to
incur additional cost of repairs of P49,500 before the car was subsequently resold for P825,000
to Mr. Zi who made the initial payment of P206,250.

How much is the loss on repossession on the sale?

a. 99,000 c. 115,500
b. 281,160 d. 231,250

13. Solly and Dante are partners who share profits and losses in the ratio of 7:3, respectively. On
February 1, 2009, their respective capital accounts were as follows: Solly P140,000 and Dante
P120,000.
On that date they agree to admit Jam as partner with 1/3 interest in the capital and profit and
losses, and upon his investment of P100,000. The new partnership will begin with a total capital
of P360,000. Immediately after Jams admission, what are the capital balance of Solly, Dante and
Jam?
a. 120,000; 120,000; 120,000 c. 126,668; 113,322; 120,000
b. 126,000; 114,000; 120,000 d. 140,000; 120,000; 100,000

14. On July 10, 2009, Paul Motor, which maintains a perpetual inventory records sold a new
automobile to Anthony for P850,000. The car costs the seller P650,625, the buyer paid 25%
down and received P80,000 allowance on an old car traded, the balance being payable in equal
monthly instalments payments. The monthly amortization amounts to P30,000 inclusive of 12%
interest on the unpaid amount of the obligation. The car traded in has a wholesale value of
P120,000 after expending reconditioning cost of P22,500. After paying three instalments, the
buyer suffered major financial setback incapacitating him to continue paying so the car was
subsequently repossessed. When reacquired, the car was appraised to have a fair value of
P300,000.

How much is the realized gross profit on instalment sales during the year?
a. 96,003 c. 100,000
b. 91,623 d. 71,627

Page 5 of 12
15. The balance sheet of Mark and Anthony Partnership before liquidation are as follows: Cash
P14,000; Other Assets P71,000; Liabilities P35,000; Mark (60%) P28,000 and Anthony (40%)
P22,000.

In November, assets with book value of P34,000 are sold for P25,000. Creditors are paid in full,
liquidation expenses paid, P1,000 and P3,000 is paid to partners. How much did Anthony
received?
a. 2,100 c. 3,000
b. 900 d. 0

16. Irene uses the job order costing. Factory overhead is applied to production at a predetermined
rate of 150% of direct labor cost. Any over or under applied factory overhead is closed to cost of
goods sold account at the end of each month. Additional information is available as follows:
Direct materials 20,000
Direct labor 10,000
Applied factory overhead 15,000

Job 102, 103 and 104 were started during December. Direct materials requisitions for the month
of December totaled P130,000; direct labor costs amounted to P100,000 was incurred for
February and the actual factory overhead amounted to P160,000. The only job still in process of
December was job 104, with costs of P14,000 for direct materials and P9,000 for direct labor.

Which of the following is incorrect?

a. The total cost of goods manufactured was P388,500.
b. The work in process ending inventory P23,000.
c. The under applied overhead was P10,000 and will be credited to Cost of goods sold.
d. The applied factor overhead was for the month of December was P150,000.

17. The agency signed a construction contract with A Builders Corp. for the construction of Building,
P5,000,000. The agency paid 20% of the contact price. After 6 months, the agency received its
first billing from A Builders Corp., 90% of the contact price. On the 7th month, the company paid
the first billing less P1,000,000 WTAX.

What will be the entry of the agency on its books upon turn-over of the building by A Builders
Corp.
a. Memo Entry
b. Building 5,000,000
Construction in process 5,000,000
c. Construction in progress 4,500,000
Accounts payable 4,500,000
d. Construction in progress 4,500,000
Advances to contractors 1,000,000
Accounts payable 3,500,000

Page 6 of 12
18. On December 31, 2009 a foreign subsidiary in Hongkong submitted the following balance sheet
stated in foreign currency:
Total assets $500,000
Total liabilities 100,000
Common stock 250,000
Retained earnings 150,000
THE exchange rate are:
Current rate P3.40
Historical rate 3.10
Weighted average 3.00

Assuming the functional current of the subsidiary is the not the currency of the
hyperinflationary economy was used and the retained earnings of the subsidiary on December
31, 2009 translated to Peso is P460,000. What amount of Cumulative translation adjustment is
to be reported in the consolidated balance sheet on December 31, 2009?
a. 25,000 c. 50,000
b. 10,000 d. 125,000

19. Marie Company has under-applied overhead of P9,000 for the year. Before disposition of the
under applied overhead, selected year end balances from Maries accounting records were:

Sales 240,000
Cost of goods sold 144,000
Direct materials inventory 11,200
Work in process inventory 10,800
Finished goods inventory 18,000

Under Maries cost accounting system, over or under applied is allocated to appropriate
inventories and COGS based on year end balances. In its year income statement, Marie should
report COGS?
a. 136,500 c 153,000
b. 151,500 d. 136,800

20. During April, KC incurred the following costs on Job 200 for the manufacture of 500 motor:

Direct costs of reworking 25 units

Direct labor 400
Direct materials 250

Original cost before rework

Direct labor 2,000
Direct materials 1,650
Factory Overhead (150% of DL) 3,000

The rework costs were attributable to the exacting specifications of Job 200, and the full rework
costs were charged to specific job. Adjusted unit cost?
a. 14.60 c. 14.00
b. 15.80 d. 13.30

Page 7 of 12
21. On January 1, 2009, Gwapings Inc. paid P40,000 cash to acquire a put foreign exchange option
for 1,000,000 rupee. With an expiration date of December 31, 2009. The option hedges 2009s
forecasted exporting sales of 1,000,000 rupee. Gwapings fiscal year end June 30.
Jan 1, 2009 June 30, 2009 Dec 31, 2009
Spot Rate 1.18 1.12 1.15
Strike Price 1.19 1.19 1.19
Fair value of put option 202,500

Which of the following is true?

a. The forex loss to be presented in the income statement on December 31, 2009
amounted to P132,500, if the time value element is included in the assessment of the
hedge effectiveness.
b. The forex gain to be presented in the stockholders equity on June 30, 2009 is P70,000, if
the time value element is excluded from the assessment of hedge effectiveness.
c. The forex gain or loss on option contract on June 30, 2009 should be P162,500 if the
time value element is included in assessing the hedge effectiveness.
d. The intrinsic and time value of option on January 1, 2009 were 0 and 16,000
respectively.

22. The following quantity schedules and related information are for Dept. 1 and Dept. 2 for the
current month, August 2009, of XYZ Corp.
Dept. 1 Dept. 2
Beginning unit in process 35,000 80,000
Units started in process 550,000 585,000
Units received from preceding debt 421,200
Units added to production 62,000 563,200

Units completed and transferred 421,200 428,030

Ending units in process 163,800 135,170

All beginning units in process for both departments are 100% complete for direct materials.
Beginning units in process are 60% complete as to conversion costs in Dept 1 and 40% complete
as to conversion costs in Dept 2. All ending units in process are 100% complete as to direct
materials as well as 50% complete as to conversion costs in both departments.

For Dept. 2 what is the difference in equivalent production conversion cost basis between using
the weighted average and FIFO costing methods?
a. 21,000 units c. 44,000 units
b. 32,000 units d. 53,000 units

23. Dong Abay had the following production for the month of March:
Units
Work in Process at March 31 3,000
Work in Process at March 1 2,000
Started in Process during March 8,000
Completed and Transferred to finished goods during June 6,600
Abnormal spoilage incurred 400

Page 8 of 12
 Materials are added at the beginning of the process. As to conversion costs, the beginning work
in process was 70% completed, and the ending work in process was 60% completed. Spoilage is
detected at the end of the process. Using the weighted average method, the equivalent units for
June, with respect to conversion costs, were:
a. 8,400 c. 9,000
b. 8,800 d. 10,000

24. BBB Corp. has provided the following information for transactions that occurred during April.
This Corp. uses a JIT costing system.
Raw materials were purchased at a cost of P291,000.
All materials purchased were requisitioned for production.
Direct labor costs of P231,000 were incurred.
Actual factory overhead costs amounted to P675,000.
Applied conversion costs totaled P900,000. This included P231,000 of direct labor.
All units were completed.

Which is correct?
a. The balance of conversion cost on April was P6,000 debit.
b. The balance of finished goods account was P397,000 credit.
c. The amount of factory overhead to be backflushed was P669,000.
d. The amount of direct labor to be backflushed was P231,000.

25. ABC produces joint products A and B from a process that also yields a by product 007. The by
product requires additional processing before it can be sold. The cost assigned to the by product
is its market value less additional costs incurred after split off (NRV method). Information
concerning a batch produced in January at a joint cost of P40,000 is as follows:
Costs after split
Product Units Produced Market Value
off
A 800 P44,000 4,500
B 700 32,000 3,500
007 500 4,000 1,000

How much of the joint cost should be allocated to the joint products?
a. 35,000 c. 37,000
b. 36,000 d. 39,000

26. What is the entry to record the collection of P1,000,000 corporate income tax by the BIR in its
agency books?
a. Memo entry
b. Cash Collecting officer 1,000,000
Income tax Corporation 1,000,000
c. Cash in bank LCCA 1,000,000
Income tax Corporation 1,000,000
d. Income tax Corporation 1,000,000
Cash Disbursing officer 1,000,000

Page 9 of 12
27. During the year ended December 31, 2009 a not for profit performing arts entity received the
following donor-restricted contribution and investment income:
Cash distribution on P1,500,000 to be permanently invested.
Cash dividends and interest of P100,000 to be used for the acquisition of theatre
equipment.

As a result of these cash receipts, the statement of cash flows for the year ended December 31,
2009, would report an increase of:
a. P1,600,000 from operating activities.
b. P1,600,000 from financing activities.
c. P100,000 from operating activities and an increase of P1,500,000 from financing
activities.
d. P1,500,000 from operating activities and an increase of P100,000 from financing
activities.

28. Makati Museum, received a contributions restricted for research totaling P100,000 in 2009.
Assume the P100,000 was not expensed in 2009. These contributions were used to purchase
P70,000 of research equipment in 2009. As a result of these transactions, for the year ended
December 31, 2009, Makati Museum will report, on its statement of activities, a
a. P30,000 increase in temporarily restricted net assets.
b. P100,000 increase in temporarily restricted net assets.
c. P70,000 increase in unrestricted net assets.
d. P30,000 increase in unrestricted net assets.

29. Irvin Corp sold handicrafts goods to a US firm for $100,000 in 2009. Pertinent information on
exchange rate follows:
Buying Selling
Sep. 4 Receipts of order 45.80 46.00
Oct. 15 Date of Shipment 47.00 48.00
Dec. 13 Date of balance sheet 47.20 48.50
Jan. 6
2010 Date of settlement 46.00 47.00

The sale would approximately recorded at:

a. 4,700,000 c. 46,000,000
b. 4,580,000 d. 48,000,000

30. On December 1, 2009, A Corp received an order for equipment FOB shipping point from S Co.
the order is billed for $86,000, payable on January 31, 2010. The equipment was shipped and
invoiced to S Co on December 12, 2009.
Buying Selling
Dec. 1 51.45 51.60
Dec. 12 51.48 51.84
Dec. 31 51.72 51.96
Jan. 31, 2010 51.68 51.89

Page 10 of 12
 On the December 31, 2009 income statement of A Corp., how much is the FOREX gain (loss) to
be reported on this transaction?
a. 12,040 c. (10,320)
b. 14,280 d. (14,280)

31. Sheman Corporation exchanged its common stock, worth P500,000 for all of the net assets of
Dama Company in a business combination treated as a purchase. At the date of combination
Shemans net assets had a book value of P650,000 and a fair value of P900,000. Dama
Companys net assets had a book value of 450,000 and a fair value of 460,000.

Immediately following the combination, the net assets of the combined company should have
been reported at what amount?
a. 1,000,000 c. 1,050,000
b. 1,150,000 d. 1,100,000

32. Agency X received an allotment from DBM for Capital Outlay P1,800, MOOE P260 and PS P200.
What will be entry of the agency in its regular agency books upon receipts of allotment?
a. Cash National Treasury, MDS 2,260
SING 2,260
b. National Clearing Account 2,260
Notice of cash allocation 2,260
c. SING 2,260
Cash National Treasury MDS 2,260
d. Memo entry

33. Riza and Mark partnership operates in January 2, 2008 which reflects the following data:
Revenue 108,000
COGS 80,000
Depreciation 5,000
Interest on partners 5% on average capital
Addl information:
Riza withdraw on March 1, P5,000.
Mark withdraw on April 1, P8,000 representing his yearly salary as agreed by the
partners.
Riza and Mark have 25,000 and 18,000 beginning capital balances respectively.
Profit sharing for Riza is 2/3 and 1/3 for Mark.

How much is the ending balance of each partner after closing the net income to their capital
balances?
a. Riza 35,330 & Mark 31,404 c. Riza 35,330 & Mark 27,440
b. Riza, 34,747 & Mark 23,253 d. Riza 34,595 & Mark 27,440

34. On October 31, 2009, Michael Inc.s trustee prepares a Statement of Affairs with the following
information:
P44,000 cash will be received by the unsecured creditors whose claims total P80,000.
Raffy the janitor of the company has a claim of 1,500.

Page 11 of 12
 Michael issued to Kyla a 12%, 1yr note of P10,000 on January 1, 2009, nothing has been
pledged to this note.
Jephte holds a note of P15,000 on which interest of 450 is accrued, equipment with
book value of 14,000 has been pledged on this note. Present market value of the
equipment is 16,500.
Janzen received a 10% note of 12,000 from Michael on Feb. 1, 2009, pledged with
equipment with fair market value of 10,000.

How much the creditors will receive?

Raffy Kyla Jephte Janzen
a. 1,500 6,050 15,450 11,595
b. 1,500 10,000 15,000 12,000
c. 0 6,050 15,000 11,959
d. 825 6,000 14,000 11,100

35. Grace Inc. Purchase Charm Inc.. Their condensed balance sheets before combination show:
Charm
Grace
Book Value Fair Value
ASSETS 14,000,000 1,750,000 1,900,000
Liabilities 9,975,000 614,000
Capital stock, P100 par 5,250,000 875,000
APIC - 436,000
Retained Earnings (deficit) (1,225,000) (175,000)
Liabilities and SHE 14,000,000 1,750,000
Grace Issued its own debt and equity securities as a consideration for the net identifiable asset
of Charm. Grace incurred P50,000 in issuing its P600,000 par bonds and P60,000 in issuing its
P500,000 par shares of stock. Grace bonds is currently selling at 97 while its share of stock is at
P120.

How much is the total liabilities? What is the amount of goodwill (gain on acquisition) to be
recognized by Grace?
a. 10,539,000; (104,000) c. 11,121,000; 154,000
b. 11,121,000; (104,000) d. 10,539,000; 154,000

End of Examination
Thank you for participating in the 2013 Regional Mock CPA Board Examinations!

Page 12 of 12