Financial Accounting Q&a

Use the following information in the next five questions.
 The following data pertain to Relax Company on December 31, 2019:

Cash, (including sinking fund of P500,000 with trustee) is 2,000,000; Notes receivable (including P200,000
pledged and P700,000 discounted) is 1,200,000; Accounts receivable — unassigned is
receivable — assigned is 800,000; Note receivable discounted is 700,000; Equity of assignee in accounts
receivable assigned is 500,000; Inventory, (including P600,000 cost of goods in transit purchased FOB
destination). The goods were received on January 3, 2020 is 2,800,000 and Allowance for doubtful accounts is
100,000.
 An analysis of Risen Company's liabilities disclosed the following on December 31, 2019
Accounts payable, ( after deducting debit balances in suppliers' accounts amounting to P100,000) 4,000,000;
Accrued expenses 1,500,000; Credit balances of customers' accounts 500,000; Stock dividend payable
1,000,000; Claims for increase in wages and allowance by employees of the entity, covered in a pending lawsuit
400,000 Estimated expenses in redeeming prize coupons 600,000.
 The unadjusted current assets and shareholders' equity of Rio Company on December 31, 2019 are as follows: Cash
600,000; Financial assets at fair value (including cost of
P300,000 of Rio Company's shares) 1,000,000; Trade accounts receivable 3,500,000; Inventory 1,500,000; Share
capital 5,000,000; Share premium 2,000,000; Retained earnings 500,000.
 Rice Company was incorporated on January 1, 2019, with P5,000,000 from the issuance of share capital and
borrowed funds of P 1,500,000. During the first year, net income was P2,500,000. On December 15, Rice paid a
P500,000 cash dividend. No additional activities affected shareholders' equity in 2019. On December 31, 2019, Rice's
liabilities had increased to P 1,800,000.
 Reid Company, which began operations on January 1, 2018, has elected to use cash basis accounting for tax
purposes and accrual basis accounting for its financial statements. Reid reported sales. of P1,750,000 and P800,000 in its
tax returns for the years ended December 31, 2019 and 2018, respectively. Reid reported accounts receivable of P300,000
and P500,000 on December 31, 2019 and 2018, respectively.
1. What total amount of current assets should be reported in the statement of financial position of Relax
Company on December 31, 2019?
a. 7,900,000
b. 8,000,000
c. 7,400,000
d. 7,700,000
2. What total amount of current liabilities should be reported in the statement of financial position of Risen Company
on December 31, 2019?
a. 6,700,000
b. 6,600,000
c. 7,100,000
d. 7,700,000
3. What total amount of shareholders equity should be reported in the statement of financial position of Rio
Company on December 31, 2019?
a. 7,200,000
b. 7,500,000
c. 7,800,000
d. 5,200,000
4. What total amount of total assets should be reported in the statement of financial position of Rice Company
a. 6,500,000
b. 9,300,000
c. 8,800,000
d. 6,800,000
5. What total amount of sales should be reported in the statement of financial performance of Reid Company
a. 1,450,000
b. 1,550,000
c. 1,950,000
d. 2,050,000
6. Metro Company reported net income of P7,500,000 for the year.
Investment in Videogold stock carried on the equity basis 550,000 increase
Accumulated depreciation, caused by major repair to project equipment 210,000 decrease
Premium on bonds payable 140,000 decrease
Deferred tax liability 180,000 increase
What is the net cash provided by operating activities?
a. 7,540,000 c. 6,990,000
b. 7,270,000 d. 6,780,000
7. Royal Company provided the following data for the current year:
Sales- 10,000,000
Cost of goods sold 5,300,000
Operating expenses 3,800,000
December 31 January 1
Prepaid operating expenses 1,000,000 700,000
Accounts payable 1,350,000 1,200,000
Inventory 2,500,000 2,100,000
Accounts receivable 1,400,000 1,375,000
Under cash basis, what amount should be reported as purchases for the current year?
a. 5,550,000
b. 5,100,000
c. 5,850,000
d. 5,150,000
8. During 2019, the "other revenues and gains" section of Myrrlyn Company's Statement of
Comprehensive Income contains P5,000 interest revenue, P15,000 equity in an associate's earnings, and P25,000
gain on sale of available for sale securities. The sale of the available for sale securities increased the current portion
of income tax expense by P10,000. What is the amount of the reclassification adjustment in relation to other
comprehensive income?
a. 35,000
b. 15,000
c. 25,000
d. 5,000
9. Effective January 1, 2019, King Company adopted the accounting policy of expensing advertising and
promotion costs as they are incurred. Previously, advertising and promotion costs applicable to future periods were
recorded in prepaid expenses. King can justify the change, which was made for both financial statement and
income tax reporting purposes. King's prepaid advertising and promotion costs totaled P600,000 on
December 31, 2019. The income tax rate is 30%.
a. 600,000
b. 180,000
c. 42,000
d. 0
10. Correy Company and its divisions are engaged solely in manufacturing operations. The following data (consistent with
prior year's data) pertain to the industries in which operations were conducted for the current year ended December 3
1:
Total Operating Identifiable
Industry revenue profit assets
A 10,000,000 1,750,000 26,000,000
B 8,000,000 1,400,000 17,500,000
C 6,000,000 1,200,000 12,500,000
D 3,000,000 550,000 7,500,000
E 4,250,000 675,000 7,000,000
F 1,500,000 225,000 3,000,000
32,750,000 5,800,000 67,500,000
In its segment information for the current year, what are the reportable segment?
a. A, B, C and D
b. A, B, C, D and E
c. A, B, C, D, E and F
d. A, B and C
11. Harper Company incurred an inventory loss from market decline of P840,000 on June 30, 2019. What
amount of the inventory loss should be recognized in Harper's quarterly income statement for the.three
months ended June 30, 2019?
a. 210,000
b. 280,000
c. 420,000
d. 840,000
12. Sunshine Company had total assets of P4,000,000 and shareholders' equity of 2,080,000 at the beginning of the year.
During the year, assets increased by 520,000 and liabilities decreased by 820,000. What is the shareholders' equity
at the end of the year?
a. 3,420,000
b. 3,700,000
c. 3,380,000
d. 1,340,000
Use the following information in the next five questions.

Debbie Company provided following data:
2019 2018
Cash 350,000 150,000
Accounts receivable, net 840,000 580,000
Merchandise inventory 660,000 420,000
Prepaid expenses 50,000 100,000
Long term investment 80,000
Property, plant and equipment 1,130,000 600,000
Accumulated depreciation 110,000 50,000
Accounts payable 530,000 40,000
Accrued expenses 140,000 130,000
Dividend payable 70,000
Note payable - long term debt 500,000
Share capital 1,200,000 900,000
Retained earnings 560,000 330,000
Net credit sales 6,400,000 4,000,000
Cost of goods sold 5,000,000 3,200,000
Expenses 1,000,000 520,000
Net income 400,000 280,000
All accounts receivable and accounts payable relate to trade merchandise. Accounts payable are recorded
net and always paid to take all of the discounts allowed. The allowance for doubtful accounts at the end of
2019 was the same as at the end of 2018. No receivables were charged against the allowance during 2019.
The proceeds from the note payable were used to finance a new store building. Share capital was sold to provide
additional working capital.
13. What is the amount of cash collections from customers in 2019?

a. 5,560,000
b. 5,850,000
c. 6,140,000
d. 6,400,000
14. What is the amount of cash payments to merchandise creditors in 2019?
a. 4,670,000
b. 4,910,000
c. 5,000,000
d. 5,150,000
15. What is the net cash provided by operating activities?
a. 400,000
b. 100,000
c. 200,000
d. 110,000
16. What is the net cash provided by financing activities?
a. 140,000
b. 300,000
c. 500,000
d. 700,000
17. What is the net cash used in investing activities?
a. 80,000
b. 530,000
c. 610,000
d. 660,000
18.

Financial Accounting Q&a

Uploaded by

Copyright:

Available Formats

Financial Accounting Q&a

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Financial Accounting Q&a

Uploaded by

Copyright:

Available Formats

Use the following information in the next five questions.

 The following data pertain to Relax Company on December 31, 2019:

Use the following information in the next five questions.

13. What is the amount of cash collections from customers in 2019?

You might also like