Team PRTC Nationwide Open Online First Pre-Board Examination

October 2021 Licensure Examination for Certified Public Accountants (LECPA)

August 1 to 3, 2021

Suggested Answers and Solutions

MANAGEMENT ADVISORY SERVICES (MAS)

1 B 16 A 31 B 46 A 61 D
2 D 17 C 32 B 47 D 62 D
3 D 18 D 33 D 48 A 63 C
4 D 19 D 34 B 49 C 64 A
5 A 20 C 35 B 50 D 65 A
6 C 21 A 36 A 51 A 66 A
7 B 22 C 37 D 52 C 67 B
8 B 23 C 38 D 53 D 68 D
9 B 24 D 39 A 54 D 69 D
10 B 25 B 40 B 55 D 70 C
11 A 26 D 41 B 56 C
12 A 27 B 42 C 57 B
13 B 28 B 43 A 58 A
14 B 29 B 44 A 59 B
15 A 30 C 45 B 60 C
Solutions to Computational Problems
 AUDITING (AUD)

1 B 16 C 31 D 46 B 61 B
2 D 17 C 32 C 47 C 62 D
3 B 18 A 33 B 48 C 63 D
4 A 19 A 34 A 49 B 64 C
5 A 20 B 35 A 50 A 65 B
6 D 21 C 36 B 51 D 66 C
7 B 22 C 37 A 52 B 67 D
8 B 23 B 38 B 53 A 68 B
9 C 24 B 39 A 54 A 69 D
10 D 25 C 40 C 55 C 70 B
11 D 26 C 41 A 56 D
12 D 27 C 42 B 57 B
13 B 28 D 43 C 58 B
14 A 29 A 44 C 59 D
15 C 30 B 45 B 60 C
 Solution to Computational Problems

PROBLEM NO. 1 - Diaz Corporation

Question No. 36 - B
Down tube shifter (NRV) 1,056,000
Bar end shifter (Cost) 728,000
Head tube shifter (Cost) 780,000
Finished goods inventory, 12/31/21 2,564,000

Question No. 37 - A

Cost NRV LCNRV

Acquired at 20% above current market price 480,000 400,000 400,000
Remaining materials 480,000 509,600 480,000
960,000 909,600 880,000

Question No. 38 - B

Factory supplies, 12/31/21 (P276,000 - P16,800) 259,200

Question No. 39 - A
Finished goods inventory, 12/31/21 (see no. 36) 2,564,000
Work in process inventory, 12/31/21 (at NRV) 434,800
Raw materials, 12/31/21 (see no. 37) 880,000
Factory supplies, 12/31/21 (see no. 38) 259,200
4,138,000
Question No. 40 - C

PROBLEM NO. 2 - Petecio Corporation

Question no. 41 - A
Sale of land and building Gain (loss)
Sales proceeds (a) 1,700,000

Less CA of land and building (P800,000+P1,050,000) 1,850,000 (150,000)

Sale of equipment
Sales proceeds (b) 120,000
Less CA of equipment
(b) 150,000 (30,000)
Trade-in of equipment
Trade-in value (f) 47,000
Less CA of equipment (P40,000 - P15,000) 25,000 22,000
Net gain (loss) (158,000)
Question no. 42 - B
Payment to architect 300,000
Payment to city council for approval of building construction 150,000
Payment for safety fence around construction site 50,000
Payment to construction contractor 3,000,000
Payment for safety
inspection 30,000
Payment for removal of safety fence 20,000
Cost of the new building 3,550,000

Question no. 43 - C
Equipment, beginning 700,000

b) Sale of equipment (400,000)

c) Purchase of new equipment - cash [(P300,000x.98)+1,000+3,000] 298,000
f) Purchase of new equipment - trade-in (P103,000 + P47,000) 150,000

f) Equipment traded-in (40,000)

Equipment, ending 708,000

Question no. 44 - C
Land (donated by
president) 1,000,000
Land improvements (P500,000 +
P80,000) 580,000
New Building (See no.
42) 3,550,000
Equipment (See no. 43) 708,000
Total cost of PPE 5,838,000

Question no. 45 - B

PROBLEM NO. 3 - Marcial Corporation

Question no. 46 - B
Cost of patent 4,000,000
Less amortization in 2005
(P4,000,000/10) 400,000
Carrying amount, 1/1/21 3,600,000
Divide by revised remaining useful life 5
Patent amortization for
2021 720,000
Question no. 47 - C
Carrying amount, 1/1/21 (see no. 46) 3,600,000
Less amortization in 2021 (see no. 46) 720,000
Carrying amount,
12/31/21 2,880,000
Question no. 48 - C
Cost of franchise 960,000
Less amortization in 2021 (P960,000/10) 96,000
Carrying amount of franchise, 12/31/21 864,000
Carrying amount of patent, 12/31/21 (see no. 47) 2,880,000
Carrying amount of intangible assets, 12/31/21 3,744,000

Question no. 49 - B
Patent amortization (see no. 46) 720,000
Franchise amortization (see no. 48) 96,000
Periodic franchise fee (P5,000,000 x 5%) 250,000
R and D expense 866,000
Total expenses in 2021 1,932,000

Question no. 50 - A

PROBLEM NO. 4 - Saso Corporation

Question No. 51 - D
Total deposits 4,200,000
Less adjusted cash in bank:
Balance per bank statement 300,000
Less outstanding checks 60,000 240,000
Total check disbursements 3,960,000
Less other disbursements by check :
Payment of loan 150,000
Payment of interest 30,000
Payment for equipment 534,000 714,000
Payments for merchandise purchases 3,246,000

Question No. 52 - B
Total deposits 4,200,000
Less deposits other collections:
Cash investment 600,000
Proceeds from bank loan 600,000 1,200,000
Collections deposited in the bank 3,000,000
Add collections not deposited:
Cash on hand, 12/31/21 150,000
Add disbursements in cash 660,000
Total 810,000
Less customers' deposit 90,000 720,000
Collections from sales 3,720,000
Question No. 53 - A
Sales (P3,720,000+P1,080,000) 4,800,000
Less cost of sales:
Purchases (P3,246,000 + P420,000) 3,666,000
Less inventory, 12/31/21 906,000 2,760,000
Gross profit 2,040,000
Less expenses:
Utilities 120,000
Salaries 120,000
Supplies 240,000
Doubtful accounts 60,000
Depreciation – building (P5,400,000/15) 360,000
Depreciation – equipment (P480,000/5) 96,000
Interest expense [P30,000 + (P534,000 - P480,000)] 84,000 1,080,000
Net income 960,000

Question No. 54 - A
Share capital (72,000 shares x P100) 7,200,000
Share premium (P7,800,000 - P7,200,000) 600,000
Retained earnings (P960,000 - P180,000) 780,000
Total shareholders' equity 8,580,000

Question No. 55 - C
Current assets:
Cash (P240,000 + P150,000 ) 390,000
Accounts receivable - net (P1,080,000 - P60,000) 1,020,000
Inventory 906,000 2,316,000
Noncurrent assets:
Land 1,800,000
Building - net (P5,400,000 - P360,000) 5,040,000
Equipment - net (P480,000 - P96,000) 384,000 7,224,000
Total assets 9,540,000
PROBLEM NO. 5 - Obiena Corporation
Question No. 56 - D
PVF used to calculate the annual payment (P1.2M/P341,180) 3.5172
Ordinary annuity factor at 13% for 5 periods 3.5172

Question No. 57 - B 2020 Profit

over
(under)
Sales - over
Reported 2,005,900
Should be 1,500,000 505,900
Interest income - under
Reported 0

Should be (refer to amortization schedule) 156,000 (156,000)

Net misstatement 349,900

RE,
Question No. 58 - B 12/31/21
over
(under)
2020 profit overstated (see no. 57) 349,900
2021 profit understated (interest income under)
Reported 0

Should be (refer to amortization schedule) 131,927 (131,927)

Net misstatement 217,973

Question No. 59 - D
Amount reported under current assets
[P1,705,900 - (P341,180 x 2)] 1,023,540
Should be (refer to amortization schedule) 236,456
Net misstatement of WC, 12/31/21 - over (under) 787,084

Amortization schedule:
Interest
Date Payment (13%) Principal CA
1/1/20 1,200,000
12/31/20 341,180 156,000 185,180 1,014,820
12/31/21 341,180 131,927 209,253 805,567
12/31/22 341,180 104,724 236,456 569,111
12/31/23 341,180 73,984 267,196 301,915
12/31/24 341,180 39,265 301,915 -
1,705,900

Question No. 60 - C
PROBLEM NO. 6 - Yulo Corporation
Question No. 61 - B
Total proceeds 206,500
Less accrued interest (P200,000 x 9% x 5/12) 7,500
Net proceeds 199,000
Less cost of treasury notes:
Total amount paid 198,500
Less accrued interest (P200,000 x 9% x 3/12) 4,500 194,000
Gain on sale of treasury notes 5,000

Question No. 62 - D
Sales proceeds 70,000
Carrying amount (previous fair value) 90,000

Gain (loss) on sale of Vault shares (20,000)

Question No. 63 - D
Interest income on Ring Co. bonds (P300,000 x 12%) 36,000
Interest income on Phil. tresury notes (P200,000 x 9% x 8/12) 12,000
Total 48,000

Question No. 64 - C
Floor Textile shares (6,000 shares x P44) 264,000
Ring Co. Bonds (P300,000/P1,000 x P950) 285,000
Fair value, 12/31/21 549,000

Question No. 65 - B
Fair value, 12/31/21 (See no. 64) 549,000
Carrying amount before FV adjustment, 12/31/21
Carrying amount, 12/31/21 640,600
Purchase of Phil. treasury notes, 4/1 194,000

Carrying amount of Vault, Inc. shares sold, 7/1 (90,000)

Sale of Phil. treasury notes, 12/1 (194,000) 550,600

Fair vaue adjustment gain (loss) (1,600)

PROBLEM NO. 7 - Didal Corporation
Question No. 66 - C
Unadjusted cash 500,000
Undelivered checks 150,000

DAIF check (5,000)

Adjusted cash 645,000

Question No. 67 - D
Unadjusted accounts receivable 1,300,000
Unrecorded sales (shipped 12/30/21) 50,000
DAIF check 5,000
Adjusted accounts receivable 1,355,000

Allowance for doubtful accounts (P1,355,000 x 1.5%) (20,325)

Net realizable value 1,334,675

Question No. 68 - B
Unadjusted accounts payable 600,000
Undelivered checks 150,000
Unrecorded purchases (P100,000 x .98) 98,000

Unrecorded purchase return (80,000)

Adjusted accounts payable 768,000

Question No. 69 - D
Machinery and equipment 950,000

Acc. Dep. - machinery and equipment (95,000)

Cars and trucks 1,200,000

Acc. dep. - cars and trucks (P1,200,000 x 30% x 8/12) (240,000)

CA of property and equipment 1,815,000

Question No. 70 - B
 TAXATION (TAX)

1 C 16 C 31 D 46 A 61 B
2 C 17 C 32 D 47 C 62 C
3 B 18 A 33 D 48 C 63 A
4 C 19 C 34 A 49 D 64 A
5 C 20 C 35 A 50 B 65 A
6 A 21 C 36 C 51 B 66 A
7 C 22 C 37 E 52 B 67 A
8 B 23 D 38 C 53 A 68 A
9 B 24 A 39 D 54 A 69 A
10 B 25 C 40 E 55 A 70 A
11 B 26 B 41 D 56 D
12 E 27 A 42 D 57 A
13 C 28 A 43 D 58 A
14 B 29 B 44 D 59 A
15 A 30 C 45 A 60 A
No. Explanation/Solution
1. For taxpayer convenience.
2. For taxpayer convenience.
3. For taxpayer convenience.
4. RMCs are amplifications of the law
5. Regulation of importation.
6. Tax Amnesty is an act of Congress
7. Specific provision of NIRC
8. BIR Rule
9. Section 2 of Tax Code in relation to E.O. 366
10. There is violation of due process if no e-LOA
11. Employee, estate and trust - graduated only while for NRANETB, final tax
12. All are self-employed
13. Express rule
14. The pre-dominant test is applied
15. The location of the REAL property determines the source of the income
16. The amount is a trust fund for the government and cannot be used for any other purpose
17. -
18. CGT is 30 days from notarization; DST is 5th day following month of notarization
19. -
20. S1 and S2 were interchanged.
21. FBT is based on GUMV
22. Plane ticket may be subject to FBT if not economy; Travel expense is with limitation; Cost of lodging is
exempted as there is no threshold provided. In claiming expense, basic rule is there must be proof
23. S1 is true
S2 is true because it is subject to Withholding Tax on Compensation
S3 is true
S4 is false because the basis is the gross up monetary value
24. The flow must be a return on capital
25. Explanation:
S1 is true
S2 is true
S3 is false because there is option to use graduated tax
26. S1 True; S2 False (Gross sales); S3 True; S4 True
27. S1 is false because there are incomes which are exempted. The statement is true if it says “Generally, all
incomes are taxable”
28. The minimum wage is exempted regardless of amount
29. Specific requirement
30. Express provision of regulation
31. Sole employer and tax due is equal to tax withheld
32. Sole employment and tax due is equal to tax withheld
33. Nicanor and Andres have multiple employers; tax due is not equal to tax withheld on Jose; Goyo is
required due to his business
34. Pension, dividends and retirement pay be exempted from tax; prize is subject to final tax
No. Explanation/Solution
35. All are required to use itemized deduction
36. Foreign tax payments can be expense or tax credit; interest expense can ne expense or capitalized
37. All are deduction from gross income
38. S1 – must chose in 1st quarter or initial return; S2 – choice is irrevocable; S4 – for corp, record of
GROSS INCOME is required.
39. All falls under definition of corporation
40. All are true.
41. Gross compensation Php 2,800,000
Non-taxable compensation
13th month pay Php 90,000
Mandatory contributions 50,000
Taxable compensation income 2,660,000
Withholding tax on compensation 701,200

42. Gross receipts

Walk-in 1,000,000
Paid for by PhilHealth 1,000,000
Undeclared receipts 2,000,000
Commission 500,000
Total gross receipts 4,500,000

43. Office Rental 250,000

Representation expense 45,000
Salary of staff nurse 250,000
Gas and oil 50,000
Utilities expense (office) 100,000
Total gross receipts 695,000

44. Gross receipts 4,500,000

Less: Cost/Allowable deductions 695,000
Gross Income 3,805,000
Add: Taxable compensation 2,660,000
Total taxable income 6,465,000

Tax due 1,918,800

Less: Tax credits:
Quarterly ITR 30,000
Philhealth 100,000
ABC Hosp 300,000 430,000
Income Tax Payable 1,488,800
No. Explanation/Solution
45. Rental 250,000 x 5% = 12,500
46. Employees Compensation Frequency Tax Withheld
Nicanor 537 Daily 0
Jose 20,000 Weekly 3,884.50
Andres 30,000 Semi monthly 4,583.25
Goyo 200,000 Monthly 51,499.89

47. Dividends from XYZ Corp. a foreign corp* (dominant income is abroad) – Php 1,000,000
48. Dividends from XYZ Corp. a foreign corp* (dominant income is abroad) – Php 1,000,000
Interest income from long-term investments (6th year) – Php 1,000,000
Raffle Prize (car) – Php 1,000,000
49. Gross sales – Php 1,500,000
Rental income – Php 1,000,000

Cost of sales – Php 500,000

Salaries and wages – Php 100,000
Rent Expense – Php 100,000
Depreciation – Php 100,000
Utilities Expense – Php 100,000
Repairs and Maintenance – Php 100,000

50. Interest income from bank deposits – Php 100,000

Dividends from ABC Corp. – Php 100,000
Cash Prizes – Php 100,000

Sale of real property classified as capital asset: PHP 600,000 (P10M x 6%)
Selling price – Php 5 Million
Zonal value – Php 10 Million
Assessed value – Php 4 Million
Appraiser’s value – Php 20 Million
Sale of shares of stocks not listed: PHP 150,000 (P2M-P1M=P1MX15%)
Selling price – Php 2,000,000
Acquisition Cost – Php 1,000,000
Fair market value of stocks – Php 3,000,000

51. SP 7M; ZV 10M; AV 9M

Zonal value of lot – Php 5 Million
Assessor’s value of house – Php 5 Million
Total – Php 10 Million x 6% = Php 600,000

52. Selling price – Php 2 Million

Acquisition Cost – Php 1 Million
NCG – Php 1 Million
X 15%
CGT – Php 150,000
No. Explanation/Solution
53. Monetized vacation leave credits (10 days at Php 1,000 per day) – Php 10,000
Uniform allowance – Php 6,000
Christmas cash gift – Php 5,000
Annual medical assistance – Php 10,000
54. Monetized vacation leave credits (20 days at Php 1,000 per day) – Php 20,000
Monetized sick leave credits (20 days at Php 1,000 per day) – Php 20,000
Uniform allowance – Php 6,000
Christmas cash gift – Php 5,000
Annual medical assistance – Php 10,000
55. Php 8 Million /65% x 35% = 4,307,692
56. Condo Rental 300,000 x 50% = 150,000
Car 3M / 5years x 50% x 3/12 75,000
Expenses 70,000 x 3mos 210,000
Total 435,000
Divide by 65%
Multiply by 35% 35%
FBT 234,231

57. Salaries and wages – Php 1,000,000

Transportation and travel – Php 20,000
Rental - Php 240,000
Representation expense – Php 100,000
Depreciation expense – Php 200,000
Office supplies – Php 20,000
Miscellaneous expenses – Php 10,000

58. Salaries and wages – Php 1,000,000

Transportation and travel – Php 20,000
Rental - Php 240,000
Representation expense – Php 100,000
Depreciation expense – Php 200,000
Office supplies – Php 20,000
Miscellaneous expenses – Php 10,000

59. Gross receipts 10,000,000

Less: Cost of service 6,000,000
Gross income 4,000,000
Less: Expenses 1,590,000
Taxable income 2,410,000
Tax Due 621,200
No. Explanation/Solution
60. Gross receipts 10,000,000
Less: Cost of service 6,000,000
Gross income 4,000,000
Less: Expenses 1,590,000
Taxable income 2,410,000

61. A GPP is exempted from income tax

62. Gross receipts 10,000,000
OSD (40% of gross sales 4,000,000
Taxable income 6,000,000

63. Gross receipts 10,000,000

Cost of service 6,000,000
Gross income 4,000,000
OSD (40% of gross income) 1,600,000
Taxable income 2,400,000

64. 13th month pay and other benefits 40,000.00

SSS 10,000.00
Philhealth contributions 10,000.00
Pagibig contributions 10,000.00
Union dues 10,000.00
65. Gross compensation income 400,000
Less:
13th month pay and other benefits 40,000.00
SSS 10,000.00
Philhealth contributions 10,000.00
Pagibig contributions 10,000.00
Union dues 10,000.00 80,000
Net taxable compensation income 320,000

66. GSP (highest) 10M x 6% = 600,000

67. 13th month pay and other benefits 90,000.00
Separation Pay 500,000.00
Total exclusions 590,000.00
68. Limit Actual Lower/Allowed Disallowed
Gross sales 1,000,000 x rate .5% = 5,000 50,000 5,000 45,000
Gross receipts 2,000,000 x rate 1% = 20,000 100,000 20,000 80,000
Total disallowed 125,000
No. Explanation/Solution
69. Gross receipts 4,250,000
OSD (40% of GR) 1,700,000
Taxable income 2,550,000

Tax due 666,000

Less; 2307 425,000
Overpayment 241,000
70. Gross receipts 4,250,000
Cost/opex 3,150,000
Taxable income 1,100,000

Tax due 220,000

Less; 2307 425,000
Overpayment 205,000
 REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS (RFBT)

1 C 21 B 41 A 61 D 81 B
2 C 22 C 42 B 62 D 82 C
3 D 23 D 43 B 63 C 83 C
4 D 24 A 44 D 64 C 84 E
5 D 25 D 45 B 65 A 85 D
6 A 26 C 46 B 66 B 86 B
7 B 27 D 47 A 67 A 87 C
8 B 28 C 48 A 68 A 88 D
9 A 29 B 49 A 69 C 89 D
10 A 30 D 50 B 70 D 90 A
11 C 31 A 51 A 71 C 91 C
12 D 32 D 52 C 72 D 92 B
13 B 33 C 53 B 73 B 93 D
14 A 34 A 54 C 74 C 94 A
15 D 35 D 55 D 75 A 95 B
16 D 36 C 56 A 76 E 96 D
17 C 37 C 57 B 77 C 97 D
18 D 38 A 58 B 78 C 98 A
19 A 39 B 59 A 79 A 99 A
20 A 40 D 60 A 80 D 100 C
 FINANCIAL ACCOUNTING AND REPORTING (FAR)

1 C 16 C 31 C 46 D 61 B
2 C 17 B 32 C 47 B 62 C
3 C 18 B 33 B 48 C 63 C
4 D 19 A 34 C 49 C 64 D
5 A 20 B 35 A 50 A 65 A
6 D 21 A 36 B 51 B 66 C
7 B 22 A 37 C 52 C 67 B
8 A 23 C 38 C 53 A 68 A
9 A 24 B 39 C 54 C 69 C
10 D 25 D 40 A 55 D 70 D
11 D 26 A 41 A 56 A
12 A 27 B 42 B 57 D
13 A 28 C 43 A 58 C
14 B 29 B 44 B 59 D
15 C 30 A 45 D 60 C
Solutions to Computational Problems
Question No. 70 - D
 ADVANCED FINANCIAL ACCOUNTING AND REPORTING (AFAR)

1 D 16 A 31 D 46 D 61 D
2 D 17 A 32 D 47 A 62 B
3 C 18 C 33 D 48 D 63 A
4 D 19 A 34 D 49 A 64 D
5 B 20 A 35 B 50 D 65 C
6 A 21 B 36 B 51 B 66 C
7 D 22 A 37 B 52 D 67 C
8 B 23 C 38 C 53 B 68 A
9 D 24 B 39 D 54 B 69 B
10 C 25 A 40 D 55 C 70 A
11 B 26 B 41 D 56 D
12 B 27 C 42 D 57 D
13 C 28 B 43 C 58 C
14 C 29 B 44 A 59 C
15 A 30 C 45 D 60 D
 Solution to Computational Problems

1. D
2. D
3. C
4. D
348,000 + 232,000 = 580 ÷ 80% x 20% = 145,000

5. B
A B 45000
348,000 202,000 550,000 500,000
(75,000) (50,000) (125,000) (120,000)
273,000 152,000 425,000 425,000 Cash

6. A
A B 385,000
155,000 175,000 175,000
(26,000) (39,000) (65,000) (120,000)
129,000 136,000 265,000 265,000 Cash

7. D
8. B
9. D
M N Totals
25,600 47,000 72,600
(2,800) (4,200) (7,000) Loss on inventory
(8,720) (13,080) (21,800) Possible loss on receivables
(13,760) (20,640) (34,400) Possible loss on PPE
320 9,080

10. C
A J
1,000 8,000
1,000 8,000

11. B
AA (P50,000 + P40,000) x 60% P 54,000 P&L AA 50%
BB (P50,000 + P40,000) x 40% 36,000 BB 50%
Total P 90,000 TOTAL 100%

12. B
AA BB CC TOTAL
Capital, 01/01/15 P 54,000 P 36,000 P --- P 90,000 P&L AA 40%
1ST QTR LOSS ( 7,500) (7,500) --- (15,000) BB 40%
Capital, 03/31/15 P 46,500 P 28,500 --- P 75,000 CC 20%
Purchase of interest ( 9,300) (5,700) 15,000 --- TOTAL 100%
Capital, 04/01/15 P 37,200 P22,800 P15,000 P 75,000
13. C

AA [ ( P46,500 x 20%) - (P 3,000 x 50%) ] P 7,800

BB [ ( P28,500 x 20%) - (P 3,000 x 50%) 4,200
TOTAL p 12,000

14. C
AA BB CC DD TOTAL P&L AA 28%
Capital, 04/01/15 P37,200 P22,800 P15,000 --- P 75,000 BB 28%
2nd QTR PROFIT 4,000 4,000 2,000 --- 10,000 CC 14%
Capital, 06/30/15 P41,200 P26,800 P17,000 --- P 85,000 DD 30%
DD’s contribution ( 1,800) (1,800) ( 900) 34,500 30,000 TOTAL 100%
Capital, 07/01/15 P39,400 P25,000 P 16,100 P34,500 P115,000

15. A
AA BB CC DD TOTAL
Capital, 07/01/15 P39,400 P25,000 P16,100 P34,500 P115,000
3rd QTR PROFIT 4,200 4,200 2,100 4,500 15,000
Capital, 09/30/15 P43,600 P29,200 P18,200 P39,000 P130,000 RPL AA 28
Cash paid to BB (30,000) (30,000) CC 14
Bonus to BB ( 311) 800 ( 156) ( 333) --- DD 30
Capital, 10/01/15 P43,289 P --- P18,044 P38,667 P100,000 TOTAL 72

16. A
AA CC DD TOTAL
Capital, 10/01/15 P 43,289 P 18,044 P 38,667 P100,000
4th QTR PROFIT 7,778 3,889 8,333 20,000
BBL P 51,067 P 21,933 P 47,000 P120,000
Realization loss/
Liquidation expenses (4,667) (2,333) ( 5,000) (12,000)
Cash paid partners P46,400 P19,600 P42,000 P108,000

17. A
18. C
19. A
Total estimated cash (P28,000 + P72,000 + P61,600 + P26,400) P 188,000
Less priority claims: Income taxes P 6,400
Note payable (secured portion) 72,000
Salaries payable 4,800
Administrative/liquidation expenses 16,000 99,200
Estimated net amount available for non-priority claims P 88,800
20. C
Net free assets (please see above computation) P 88,800
Less non-priority claims
Notes payable (unsecured portion) P 24,000
Accounts payable 68,000
Bonds payable 56,000 148,000
Estimated deficiency P(59,200)
Estimated recovery rate (ERR): P88,800 / P148,000 60%

Notes payable : Total Book Value P96,000

Secured portion 72,000 x 100% P 72,000
Unsecured portion P 24,000 x 60% 14,400
P 86,400
21. B
Cash Available 3,774,000
Less:Unsecured w/ Priority (382,500 +1,275,000 +765,000) 2,422,500
Cash available to unsecured 1,351,500
Less: Unsecured without priority (1,122,000 + 1,581,000) 2,703,000
Deficiency to Creditors 1,351,500
Recovery Rate ( 1,351,500/2,703,000) 50%

22. A
Amount of deficiency to creditors 1,351,500

23. C
Amount at 100% 2,422,500

24. B
The remaining cash after payment to claims with priority
Or 2,703,000 x 50% 1,351,500

25. A
26. B
RBNI (P 48,000 – P8,800 – P24,000 – P15,360 – P9,600 + P16,000) P6,240
Add allowance realized from branch sales to outsiders:
Allowance before adjustment (AFOVOBI) P 5,760
Required allowance on the BEI (P13,440/120%) x 20% 2,240 3,520
True branch net income P9,760
27. C
28. B
29. B
30. C
31. D
32. D
 HO 120,000
Br ONE (72,000/1.2) 60,000
Br TWO @ cost 80,000
TOTAL 260,000

33. D
Br One; COGS (60,000+300,000-72,000) 288,000
Divide by 120%
COGS @ Cost 240,000
Multiply by 20%
Realized Deferred Profit 48,000

34. D
35. B
36. B
37. B
101,500 + 329,875* + 350,000 = 781,375
There is a shipment in transit therefore, shipment is (253,750* 1.3) 329,875

38. C
SIT 329,875 – 263,900= 65,975
Inv, end:
Branch
HO ((73,500-48,475) + 65,975)= 91,000/ 1.3= 70,000
OV 48,475
Home Office 210,000
Inv , end as per Combined FS 328,475

39. D
40. D
41. D
42. D
43. C
Cost (196,000/80%) 245,000
FV of NA 119,000+ 13,000+ 29,000+ 140,000- 71,000 230,000
Goodwill 15,000

44. A
615,000- 196,000+ 301,000+ 15,000 735,000

45. D
196,000/ 80% x 20% 49,000
46. D
400,000+ 112,000 + 49,000 561,000

47. A
CNI = (P107,520 + P49,920 + 32,256 - P30,720) P158,976

48. D
(1) To CI P107,520 + [(P49,920 - P30,720) * 75%] + P32,256 P154,176
(2) To NCI [(P49,920 - P30,720) * 25%] 4,800
Total P158,976
49. A
Adjusted reciprocal balance (380,625 + 6,750) P 387,375

Add other adjustments (4,375 + 1,125) 5,500

Unadjusted balance of Home Office account P 392,875

50. D
HO DVO CBU

Branch – DVO 70,800 SFHO 66,600 none

STBR-DVO 55,500 F/in 4,200
AFOVOBI 11,100 HO 70,800
Cash 4,200

Branch-CBU 70,000 HO 70,800 SFHO 66,600

Excess freight 800 SFHO 66,600 F/in 6,200
Branch – DVO 70,800 F/in 4,200 Cash 2,800
HO 70,000
STBR-DVO 55,500
STBR-CBU 55,500

51. B
Upstream adjustments
RGP on beginning inventory (P6,125 x 25%) P 1,531
Downstream adjustments
DGP on ending inventory (P10,500 x 30%) 3,150

COGS = (P1,232,000 + P882,000) –P56,000 -P1,531 + 3150 P2,059,619

52. D
CNI = P80,500 + P78,750 + P1,531 – P3,150 P 157,631

53. B
PNI (from own operations (P122,500 – P42,000) P 80,500
Plus parent’s investment income:
Adjusted SNI (P78,750 + P1,531 ) P80,281
X CI% 80%
Investment income before dwnstrm adjstmnt P64,225
Less dwnstrm adjstmnt 3,150 61,075
Share of parent’s shareholders from CNI P 141,575

54. B
Adjusted SNI P 80,280
X by NCI% 20%
NCI in CNI (P161,043 – P145,249) P 16,056

55. C

56. D

57. D

58. C
59. C

60. D
Cost of investment P 385,000
Less book value of net assets 437,500
Overstatement of building P (52,500)
Annual amortization P 5,250
CNI = P78,750 – P8,750 + P5,250) P 75,250

61. D
Parent’s Retained Earnings, 1/2/15 P 446,250
Plus CNI (subsidiary is fully-owned) 75,250
Less Parent’s Cash dividends 8,750
Consolidated Retained Earnings, 12/31/15 P 512,750

62. B
RBNI (P1,350,000 - P90,000 - P562,500 - P562,500 - P206,250 + P172,500) P
101,250
Plus Realized allowance (given)
95,250
TBNI P
196,500

63. A
HO beginning inventory (already at cost price) P
56,250
Branch beginning inventory, yet at billed price P90,000
Less allowance on the branch beg invty (P123,750 - P112,500) 11,250
78,750
Combined beginning inventory P
135,000

64. D
Beginning inventory (see Item 16) P
135,000
Purchases (P1,687,500 + P562,500)
2,250,000
Ending inventory (P281,250 + (P135,000 + P37,500 - P28,500)
(425,250)
Combined cost of sales
P1,959,750
65. C
Combined sales (P2,250,000 + P1,350,000)
P3,600,000
Less combined cost of sales (see item 17)
1,959,750
Gross profit
P1,640,250
Less Operating expenses (P543,750 + P206,250)
750,000
Net profit P
890,250

66. C
Cash to be available (P85,000 + P55,000 + P50,000 P 190,000
Less prioritized claims-
FSC P 70,000
With priority 10,000
PSC (secured portion) 55,000 135,000
Estimated net amount available P 55,000
Less unsecured amount
PSC (unsecured portion) P 10,000
Without priority 90,000 100,000
Estimated deficiency P(45,000)

TBV P65,000
Secured portion 55,000 x 100% P 55,000
Unsecured portion 10,000 x 55% 5,500 P 60,500

67. C
(P90,000 x 55%) P 49,500

68. A
69. B
70. A
600,000 + 300,000 – 125,000

END