Mock Qualifying Exam Xavier University- Junior Phlippine Institute of Accountants

Intermediate Accounting

1.To be reported as "cash and cash equivalent" the cash item must be
a. Unrestricted in use for current operations
b. Available for the purchase of property,plant and equipment
c. Set aside for the liquidation of long-term debt
d. Deposited in bank

2.In preparing a monthly bank reconciliatation , which of the following items would be added to the balance
per bank statement to arrive at the correct cash balance?
a. Outstanding Checks
b. Deducted from the bank statement balance
c. Deposit in transit
d. A customer's note collected by the bank on behalf of the depositor

3. When preparing a bank reconciliation, bank credits are

a. Added to the bank statement
b. Deducted from the bank statement balance
c. Added to the balance per book
d. Deducted from the balace per book

4. Trade recievables are classified as current assets if they are reasonably expected to be collected
a. Within one year
b. Within the normal operating cycle
c. Within one year or within the normal operating cycle , whichever is shorter
d. Within one year or within the normal operating cycle , whichever is longer

5. Nontrade receivables are classified as current assets only if they are reasonably expected to be realized in cash
a. Within one year or within the normal operating cycle , whichever is shorter
b. Within one year or within the normal operating cycle , whichever is longer
c. Within the normal operating cycle
d. Within one year, the length of the operating cycle notwithstanding

6. Which of the following is not permitted in accounting for uncollectible accounts receivable?
a. Percentage of accounts receivable, allowance method
b. Percentage of sales, allowance method
c. Direct writeoff method
d. All of the choices are acceptable under PFRS

7. The cost of purchase of inventory does not include

a. Purchase price
b. Import duties and irrevocable taxes
c. Freight, handling and other costs directly attributable to the acquisition of goods
d. Trade discounts, rebates and other similar items
8. Biological assets are measured at
a. Cost b. Lower of cost and net realizable value
c. Net realizable value d. Fair value less cost of disposal

9.How owud the carryin value of a bond payable be affected by the amortization of each of the following?
Discount Premium
a. No effect No effect
b. Increase No effect
c. Increase Decrease
d. Decrease Increase

10. For the issuer of ten year bonds, the amount of amortization using the effective interest method would
increase each year of the bonds were sold at a
Discount Premium
a. No No
b. Yes Yes
c. No Yes
d. Yes No

11. The write-off of a worthless patent is an example of

a. Cause and effect association b. Systematic and rational allocation
c. Immediate recognition d. Amortization of intangibles

12. When a loss contingency exiss the likelihood that the future event will or will not occur can be expressed
by a range of outcome. Which range means that the future event occuring is very slight?
a. Remote b. Reasonably possible
c. Probable d. Certain

13. The accrual approach in accounting for product warranty cost

a. Is required for income tax purposes
b. Is frequently justified on the basis of expendiency when warranty cost is immaterial
c. Finds the expense account being charged when the seller performs in compliance with the warranty
d. Represents accepted practice and should be used whenever the warranty is an integral
and inseparable part of sale

14. A department store received cash and issued a gift certificate that is redeemable in merchandise, When
the gift certificate was issued
a. Deferred revenue account should be decreased
b. Deferred revenue account should be increased
c. Revenue account should be decreased
d. Revenue account should be increased

15. Which of the followinf statements is incorrect concerning a contingent liability?

 a. A contingent liability is both probable and measurable
b. An entity shall not recognize a contingent liability in financial statements
c. If a contingent liability is remote, no disclosure is required
d. A contingent liability is disclosed only

16. Allen Walker Company provided the following information on December 31, 2015:
Cash on Hand 200,000
Cash in BDO-102 2,000,000
Cash in BDO-101 -95,000
Savings Account (awaiting transfer to 90-day time deposit) 500,000
Petty cash fund (unreplenished vouchers, P 2,450 ; unaccounted P90) 10,000
Commercial paper with maturity of 2 months 500,000
Treasury bill with maturity of 6 months 1,000,000
Postdated customer checks 100,000

What total amount should be reported as "cash and cash equivalent"?

a. 2,612,460 b. 2,615,000
c. 3,115,000 d. 3,112,460

17. The acountant of Gintama Co. provided the following data in reconciliing the April 30 cash in bank balance
Balance per bank, April 30 P130,350
Balance per book, April 30 85,000
Bank Service Charge 2,000
Deposits in Transit 49,000
Outstanding Checks 17,650
Note collected by bank including P11,200 interest
(Gintama Co. not yet informed) 136,000
Check drawn by Zura Co. erroneously charged
by bank to Gintama's account 54,600

A transposition error was made in recording a sale and deposit in the sales journal and cash receipts journal
in April
Correct Amount P 13,658
Recorded as P16,358

What is the adjusted cash balance in April 30?

a. 216,500 b.161,700
c. 213,500 d. 260,600
For 18-20 :
Black Butler Company provided for doubtful accounts expense monthly at 3% of credit sales.
The balance in the allowance for doubtful accounts was P1,000,000 on January 1, 2018

During 2018, credit sales totaled P20,000,000, interim provisions for doubtful accounts were made
at 3% of credit sales, P200,000 accounts were written off and recoveries of accounts of previously
written off amounted to P50,000

An aging of accounts receivable was made at December 31, 2018

1-60 days 6,000,000 10% Uncollectible
61-180 days 2,000,000 20% Uncollectible
181-360 days 1,500,000 30% Uncollectible
More than one year 400,000 50% Uncollectible
9,900,000

18. What amount sjould be reported as doubtful accounts expense for the current year?
a. 2,250,000 b. 800,000
c.1,650,000 d. 850,000

19. What is the year-end adjustment to the allowance for doubtful accounts on December 31, 2018?
a. 800,000 debit b.800,000 credit
c. 200,000 debit d. 200,000 credit

20. What is the net realizable value of accounts receivable in december 31,2018?
a.8,450,000 b.8,250,000
c. 7,650,000 d.9,900,000

Mob Psycho Company has an 8% note recievable dated June 30,2014, in the original amount of P1,500,000. Payments
of P500,000 in principal plus accrued interest are due annually on July 1, 2018 , 2019, 2020

21. In June 30, 2019 statement of financial position, what amount should be reported as current asset for
for interest on the note receivable?
a. 40,000 b. 120,000
c. 80,000 c.200,000

For Nos. 22-24

All Might Company is a dealer in equipment. On December 31,2018 the entity sold an equipment
in exchange for a non-interest bearing note requiring five annual payments of P500,000. The first
payment was made on December 31,2019

The market intrest rate for similar notes was 8%. The relevant present value factors are:
PV of 1 for 5 periods 0.68
PV of an ordinary annuity of 1 at 8% for 5 periods 3.99
22. On December 31, 2018, what is the carrying amount of the note recievable?
a.2,500,000 b.1,995,000
c. 1,700,000 d. 1,495,000

23. What amount of interest income should be reported for 2019?

a.505,000 b. 101,000
c. 159,600 d. 119,600

24. What is the carrying amount of the note receivable on December 31, 2019?
a. 1,654,600 b. 2,154,600
c. 2,000,000 d. 1,495,000

For No.25-27
Elric Bros. Bank loaned P 5,000,000 to a borrower on January 1,2013. The terms of the loan require
principal payments of P 1,000,000 each year for 5 years plus interest at 8%.

The first principal and interest payment is due on January 1, 2014. The borrower made the required
payments during 2014 and 2015. However, during 2015 the borrower began to experience financial
difficulties equiring the bank to reassess the the collectibility of the loan.

On December 31, 2015, the bank has determien that the remaining principal payment will be
collected as originally scheduled but the collection of the interest is unlikely. The bank did not
accrue interest on December 31, 2015. The present value of 1 at 8% is as follows.
For one period 0.93
For two periods 0.86
For three periods 0.79

25. What is the impairment loss for 2015?

a.420,000 b.210,000
c.630,000 d.0

26.What is the interest income for 2016?

a.223,400 b.143,200
c.240,000 d.0

27. What is the carrying amount of th loan receivable on December 31,2016?

a. 1,933,200 b. 2,000,000
c. 2,066,800 d. 1,856,800

28. Sailor Moon Company assigned P4,000,000 of account receivable as collateral for a P2,000,000 6% loan with
a bank. The entity also paid a finance fee of 5% on the transaction upfront. What would be ercorded as a gain or loss
on the transfer of accounts recievable?
a. 200,000 loss b. 100,000 loss
b. 240,000 gain d. 0
29. The audit of Killua&Gon Co. revealed a physical inventory on December 31, 2013 with a cost of P4,000,000
the following items were excluded from the count:
i. A special machine,fabricated to the order for a customer costing P400,000, was finished and
specifically segregated on Dec. 31, 2013. The customer was billed on that date and the machine
excluded from inventory although it was shipped on January 4, 2014.
ii. Merchandise costing P50,000 was shipped by a vendor FOB seller on December 28,2013 and
received by Hisoka Company in January 10,2014

What is the correct inventory on December 31,2013?

a. 4,550,000 b. 4,050,000
c. 4,500,000 d. 4,000,000

30. On January 1,2013, Geralt Company signed a three year,non cancelable purchase contract to purchase up to
5,000 units of computer part annually at P100 per unit and guaranteed a minimun annual purchase of 1,000 units.
During 2013, the part unexpectedly became obsolete. The entity had 2,500 units of inventory on
December 31,2013 and believed these parts can be sold as scrap for 20 per unit.

What amount of loss from the purchase commitment should be reported in 2013?
a.160,000 b.248,000
c. 200,000 d. 360,000

For 31-34
Eren Company has different kinds of farm animals on January 31,2013. During 2013, several acquisitions occured
to these farm animals. A detailed summary of these transactions is as follows.

Carrying amount on January 1, 2013:

20 Hogs ( 3 years old) 500,000
Purchases on June 30, 2013:
4 Dairy Cattle ( 1 year old) 150,000
Fair Value less cost of disposal on Dec.31,2013
20 Hogs ( 3 years old) 550,000
4 Dairy Cattle ( 1 year old) 170,000
Fair Value less cost of disposal on Dec.31,2013
20 Hogs ( 4 years old) 600,000
4 Dairy Cattle ( 1.5 years old) 200,000
There were no farm animals sold during the year and niether were there any newborns nor deaths

31. What is the carrying amount of the biological assets on December 31, 2013?
a. 650,000 b. 700,000
c. 720,000 d. 800,000
32. What is the gain attributable to price increase?
a. 80,000 b. 150,000
b. 70,000 d. 200,000

33. What is the gain attributable to physical change?

a. 80,000 b. 150,000
b. 70,000 d. 200,000

34. What is the total change in fair value of biological assets?

a. 80,000 b. 150,000
b. 70,000 d. 200,000

The sales of Leon K. Enterprises for the current year was P 2,000,000. Percentage distribution of some of the
items in the incom statement was as follows:
Selling Expense 10% of sales
Administrative expense, exlcuding bad debts 15% of sales
Bad Debts expense 3% of sales
it is ascertained that administrative expenses are 25% of cost of sales

35. What is the net income for the current year?

a. 300,000 b. 500,000
c. 440,000 d. 240,000

Yennefer Company used the conventional retail inventroy method to account for inventory
Cost Retail
Beginning inventory and purchases 6,000,000 9,200,000
Net markup 400,000
Net markdown 600,000
Sales 7,800,000

36. What amount should be reported as cost of sales for the year?
a. 5,000,000 b.5,500,000
c. 5,250,000 d. 5,750,000

During 2013, Joel&Ellie Company purchased marketable equity securities for P1,850,000, excluding P50,000
brokerage fee, to be held as trading investments. In 2013, the entity appriopriately reported an unrealized loss
of P200,000 in the income statement. There was no change during 2013 in the composition of the portfolio
of trading securities. Pertinent date on December 31,2014 are as follows:

Security Cost Market Value 12.31.14

 A 600,000 700,000
B 450,000 400,000
C 800,000 900,000

In March 2015, Security C was sold for 750,000

37. What amount of unrealized gain/ (loss) on these securities should be included in the 2014 income statement?
a. 350,000 gain b.150,000 gain
c.350,000 loss d.150,000 loss

38. What is the carrying value of trading securities on December 31, 2014?
a. 1,850,000 b.2,000,000
c. 2,350,000 d. 1,900,000

For Nos. 39 and 40 assume the securities were accounted as non-trading:

39.What amount of unrealized gain or loss these securities should be included in the 2014 comprehensive
income?
a. 300,000 loss b.150,000 loss
b. 300,000 gain d.150,000 gain

40. What amount of gain or loss on sale of these securities should be included in the income statement?
a. 350,000 gain b. 300,000 gain
c. 150,000 gain d. 0

For No.41 and 42

Markiplier Company includes one coupon in each package of cereal it sells. A towel is offered
as premium to customers who send in 10 coupons.. Data for the premium offer are:
2015 2016
Packages of cereal sold 500,000 800,000
Number of towels purchased at P40 per towel 30,000 60,000
Number of towels distributed as premium 20,000 50,000
Number of towels to be distributed as
premium bext period 5,000 3,000

41. In its 2016 income statement, Markiplier company should report premium expense at

d. 1.920,000

42. In its 2015 Balance sheet, the estimated liability for premiums whill show a balance of
a
c.200,000
SOLUTIONS

1 A. 16 D. 31 D. 46 NO. 16
2 C. 17 A. 32 B 47 Cash
3 C. 18 B. 33 A. 48 Cash in BDO (2,000,000-95,000)
4D 19 D. 34 C. 49 Com. Paper
5D 20 B. 35 D. 50 Petty Cash Fund (10,000-2,450-90)
6 C. 21 C. 36 A. Savings Acount
7 D. 22 B 37 A. Cash and Cash Eq.
8 D. 23 C. 38 B
9 C. 24 A. 39 A. NO. 17
10 D. 25 B. 40 D. Unadjusted Balances
11 C. 26 B. 41 C. Bank Service Charge
12 A. 27 C. 42 Deposits in transit
13 C. 28 D. 43 Outstanding Checks
14 B. 29 B 44 Collection of Note
15 D. 30 A. 45 Erroneous Bank Depit
Transposition error (16,358-13,658)
Adjusted Balances

NO. 18-20 pracc act p.246 ITYPE SHON

No. 21
Prin. Bal Prin. Pay.
 2018 1,500,000
2019 1,000,000 500,000
2020 500,000 500,000

NO.22-24
Date Annual ColInt. Inc.
12.31.2018
12.31.201 500,000 159,600

NO.25-27
1,000,000 x 1 = 1,000,000
1,000,000 x 0.93 = 930,000
1,000,000 x 0.86 = 860,000
Carrying Amount 2,790,000
Note receivable -3,000,000
Impairment loss -210,000

Carrying Amount 2,790,000

1.1.16 Payment -1,000,000
C.A. 1,790,000
Interest Rate 0.08
Interest Income 143,200

No.28
Gain or loss is only recognized during sales in FACTO
Assignment is NOT a sale; its secured borrowing thu

No. 29
FOB seller = FOB destination

Physical count 4,000,000

Shipped Merch 50,000
Correct Inventory 4,050,000
 200,000
1,905,000
500,000
10,000-2,450-90) 7,460
500,000
3,112,460

Book Bank
85,000 130,350
-2,000
49,000
-17,650
136,000
54,600
6,358-13,658) -2,700
216,300 216,300

.246 ITYPE SHON

Interest *prin bal X 0.08

 120,000
80,000
40,000

Prin. Pay. PV
1,995,000 (500,000 x 3.99)
340,400 1,654,600

Impairment Loss 210,000

Interest Inc. -143,200
Allow. For Loan Impair 66,800
Loan Rec. 2,000,000
CA of Loan Rec. 2,066,800

cognized during sales in FACTORING

sale; its secured borrowing thus no gain or loss