PRACTICAL ACCOUNTING PROBLEMS II Problem 3. Jamby and Miriam have just formed a partnership.

Jamby contributed cash of P2,205,000 and office equipment that

Problem 1. Jinky is trying to decide whether to accept a bonus cost P945,000. The equipment had been used in her sole
of 25% of net income after salaries and bonus or a salary of proprietorship and had been 70% depreciated, the appraised
P97,500 plus a bonus of 10% of net income after salaries and value of the equipment is P630,000. Jamby also contributed a
bonus as a means of allocating profit among thee partners. note payable of P210,000 to be assumed by the partnership.
Salaries traceable to the other partners are estimated to be Jamby is to have 60% interest in the partnership. Miriam
P450,000. What amount of income would be necessary so that contributed only P1,575,000 merchandise inventory at fair
Jinky would consider the choices to be equal? market value. Assume the use of bonus method, the partner’s
a. P1,100,000 capital must be in conformity with their profit and loss ratio
b. P1,197,500 upon formation.
c. P650,000
d. P1,262,500 In the formation of a partnership, which off the following is
true?
Problem 2. Susan and Suset are lawyer’s who have been a. The agreed capital of Jamby upon formation is P2,625,000
operating their own separate practices as a sole proprietors. b. The total agreed capital of the partnership is P4,375,000
They decided to combine the two firms as a partnership on c. The capital of Miriam will increase by P105,000 as a
January 3,2010. The following assets were contributed by each: result of the transfer of capital
Susan Suset d. There is either an investment or withdrawal of asset
Cash P350,000 P350,000 under the bonus method
Trade Receivables 787,500 665,000
Equipment 122,500 133,000 Problem 4. The following information is available concerning
Fixtures 161,000 Random Inc. on the date the company entered bankruptcy
proceedings:
The partners agreed to split profits on the basis of gross cash
collections from billing generated from clients. During 2010, Account Balance per books
Susan’s clients paid the firm a total of P5,250,000 and Suset’s Cash P2,860
clients paid P5,687,500. Expenses for the year were P3,780,000 Accounts Receivable 52,260
of which P1,680,000were attributable to Susan and the balance Inventory 28,000
to Suset. During 2010 Suset withdrew P2,625,000 cash for Prepaid Expenses 4,300
personal needs and contributed an additional computer valued at Buildings, Net 59,000
P77,000. What is the capital balance of Suset at December Equipment, Net 5,600
31,2010? Goodwill 7,650
a. P3,112,900 Wages Payable 2,500
b. P2,937,900 Taxes Payable 1,810
c. P2,016,000 Accounts Payable 79,000
d. P2,482,900 Notes Payable 15,150
Common Stock 72,000
Deficit 10,790 b. The branch acquired a machinery costing P18,000. The home
office will maintain the records of the asset used by the
Inventory with book value of P20,000 is a security for notes of branch. The home office was not yet notified.
P10,100. The other notes are secured by the equipment. c. The home office charged the branch for freight amounting
to P2,220. It should have been charged to its customer.
Expected realizable values of the assets are: d. The home office inadvertently recorded a laoag branch
Accounts Receivable P44,100 remittance at P4,200, as collection from its customers on
Inventory 18,500 account.
Buildings 22,500 e. On December 24,2009, the branch sent a check for P9,600
Equipment 2,000 to its suppliers on account. The branch erroneously
recorded the transaction as a remittance to the home
What is the expected amount of cash partially secured creditors office and sent a copy of the debit memo to the home
will receive? office. The home office this upon receiving the debit
a. P5,050 memo on December 29,2009.
b. P2,734 f. On December 26, 2009 the branch returned P6,600 of excess
c. P4,734 merchandise to the home office. The merchandise was
d. P4,894 received by the home office on December 30,2009 and
credited Lanao Branch Current.
Problem 5. Batanes Construction Company recognized gross loss g. The home office allocated advertising and rent expense
of P42,000 on its long-term project which has accumulated costs totalling P5,400 to Laoag branch. The home office charged
P490,000. To finish the project, the company estimates that it the said expense to Laguna Branch by mistake, Laoag
has to incur additional cost of P735,000. The contract price branch had not entered the allocation at year-end.
is: h. A home office customer remitted P3,600 to the branch. The
a. P798,000 branch inadvertently recorded this transaction on
b. P1,330,000 December 28,2009 as a transfer of cash from the home
c. P1,225,000 office. The home office made no entry during the year.
d. P1,183,000 i. Inventory costing P36,000 was sent to the branch by the
home office on December 14,2009. The branch recorded the
Problem 6. Mariano operates a branch in Laoag City. At close of transaction as a purchase of merchandise on account from
the business on December 31,2009, Laoag Branch account in the outsiders by mistake.
home office books showed a debit balance of P234,900. The
interoffice accounts were in agreement at the beginning of the Compute the unadjusted balance of the home office current
year. For purposes of reconciling the interoffice accounts, the account as of December 31,2009:
following facts were ascertained: a. P222,480
a. Computer equipment costing the home office P27,000 was b. P171,480
sent to Laoag branch. The home office will maintain the c. P188,880
records of the asset used by the branch. Meanwhile, back d. P178,320
at the branch no entry was made.
Problem 7.The following amounts were taken from the statement Goodwill 600,000
of affairs for ABC Company: Liabilities 480,000
Unsecured Liabilities with Priority P52,500 Common stock, P1 par 600,000
Stockholders’ equity 189,000 Additional paid in capital 3,120,000
Estimated liquidation expenses that have
not been entered in the accounting The agreement further provides that additional cash payments
records 23,625 would be made on January 1, 2012, equal to twice the amount by
Unsecured liabilities without priority 472,500 which average earnings of Honey Company exceed P100,000 per
Loss on realization of assets 236,250 year, prior to January 1,2012. Net income was P200,000 in 2010
and P240,000 in 2011. Assume that the liabilities recorded in
How much is the total free assets? January 1, 2010 include an estimated contingent liability
a. P401,625 recorded at an estimated amount of P160,000. What should be the
b. P408,675 amount of goodwill on January 1,2012?
c. P425,250 a. P520,000
d. P454,125 b. P600,000
c. P440,000
Problem 8.Ester, Judith and Martha were partners with capital d. P680,000
balances on January 2, 2009 of P70,000, P84,000, and P62,000,
respectively. Their loss sharing ratio is 3:5:2. On May 1,2009, Problem 10. Tito, Vic and Pete formed a joint venture in 2009
Ester retires from the partnership. On the date of retirement to sell sportswear merchandise. Pete is designed as the manager
the partnership net profit from operations is P48,000. The of the venture. The venture a agreed to divide profile and
partners agreed further to pay Ester P76,560 in settlement of losses equally. The venture is terminated on December 31, 2009
her interest. even though there is still unsold merchandise. On this date,
Pete’s trial balance shows the following account balances
Upon retirement of Ester, which of the following will result? before profit or loss distribution.
a. Goodwill of Ester is P7,840 Debit Credit
b. Judith’s capital after retirement of Ester is P36,400 Joint Venture Cash P52,500
higher than Martha. Joint Venture 10,500
c. Bonus from Ester is P9,440 Tito, Capital 24,500
d. Bonus to Judith is P5,600 Vic, Capital P28,000

Problem 9.Eros Corporation acquired the net assets of Honey Pete receives P7,500 for his share in the venture profit.
Company on January 1,2010, and made the following entry to Furthermore, he agrees to be charged for the unsold merchandise
record the acquisition: as of December 31, 2009. What is the cost of the unsold
Current assets P600,000 merchandise changed to Pete?
Equipment 900,000 a. P18,000
Land 300,000 b. P3,000
Building 1,800,000 c. P33,000
 d. P12,000 Balance P1,547,575

Problem11. Partners PG, PD and CG share profits and losses in

the ratio of 5:3:2. At the end of a very unprofitable year,
they decided to liquidate the firm. The partner’s capital Home Office
account balances at this time are as follows:
PG P330,000 Dec 10 Remittance P94,500 Dec 1 Balance P654,250
PD 373,000 22Remittance 16,500 10 Merchandise
CG 225,000 Home Office 250,800
31 Remittance 144,000 18 Merchandise
The liabilities accumulate to P450,000, including a loan of From Home
P150,000 from PG. The cash balance is P90,000. All the partners Office 407,250
are personally solvent. The partners plan to sell the assets in Balance P1,057,300
instalment.

If PD received P54,000 from the first distribution of cash, how Additional information:
much did CG receive at that time? a. Merchandise was billed to the branch at cost
a. P30,000 b. The freight charged to the Davao branch on December 12
b. P12,000 was erroneous. It should have been charged to Cebu
c. P18,000 branch.
d. P33,000 c. Expenses charged to the branch on December 31 represent
allocated portions of home office expenses chargeable to
Problem 12. The Eagle Company has a branch in Davao City. As of branch operations.
December 31,2009, books of the home office and the branch show d. The branch income summary shows a credit balance of
summaries of their reciprocal accounts as follows: P876,750.

Investment In Branch How much is the reconciled balance of the reciprocal

accounts?
Dec.1 Balance P654,250 Dec.12 Remittance P94,500 a. P2,426,800
8 Shipments 26 Remittances 166,500 b. P673,300
To Branch 250,800 c. P2,276,800
12 Freight d. P2,430,325
On shipment 3,525
16 shipments Problem 13. Shine Corporation will issue 50,000 of its P5 par
To Branch 407,250 value common shares for the net assets of Glow Company. Glow’s
28 shipments trail balance at the date
To Branch 432,000 of acquisition shows the following:
31 Expenses 60,750
 DR CR Merchandise As of December 31,2009 76,000
Current Assets P840,000 Gross profit percentage on instalment sales in
Property and Equipment 1,960,000 10% higher than the gross profit percentage
Liabilities P1,000,000 On regular sales in 2009.
Common stock, P5 par 360,000
Additional paid in capital 640,000 Repossession was made during the year and was recorded
Retained Earnings 800,000 correctly. It was a 2008 sale and the corresponding uncollected
account at the time of repossession was P6,200.
Glow’s current assets are appraised at P1,100,000 and the
property and equipment was also appraised at P2,800,000. Its What is the net income for 2009
liabilities are fairly valued. Accordingly, Shine Corporation a. P108,360
issued common shares with a total market value equal to that of b. P13,480
Glow’s net assets including goodwill of P400,000. c. P105,880
d. P107,200
What is the market value per share of Shine Corporation’s
common shares at the date of the business combination? Problem 15. The following data were taken from the statement of
a. P86 realization and liquidation of ABC Corp. for the quarter ended
b. P44 June 30, 2009
c. P58 Assets to be realized P515,625
d. P66 Supplementary credits 796,875
Liabilities to be liquidated 843,750
Problem 14. The following selected accounts appeared in the Supplementary charges 731,250
trial balance of Valentine’s Liabilities liquidated 562,500
Company as of December 31,2009: Assets acquired 562,500
Installment receivable- 2008 sales P12,000 Assets realized 656,250
Installment receivable- 2009 sales 160,000 Liabilities assumed 281,250
Inventory, December 31,2008 56,000 Assets not realized 234,375
Purchases 444,000 The ending capital balances of capital stock and retained
Repossessions 2,400 earnings are P468,750 and P187,500, respectively. A net loss of
Installment sales 340,000 P262,500 for the period. How much is the ending balance of
Regular sales 308,000 cash?
Deferred gross profit- 2008 43,200 a. P1,125,000
Operating expenses 92,000 b. P337,500
c. P843,750
Additional information: d. P862,500
Installment receivable-2008 sales,
December 31,2008 P114,200 Problem 16. On December 30, 2009, Loveless Company authorized
Inventory of new and repossessed NBSB Corp. to operate as a franchise for an initial franchise
fee of P1,950,000. Of this amount, P750,000 was received upon Analysis of the aging schedule reveals the following:
signing the agreement and the balance, represented by a note,
is due in four annual payments starting November 30, 2010. Regular accounts P352,750
Present value of P1 at 12% for periods is O.6355. Present value 2008 installment accounts 27,625
of an ordinary annuity of P1 at 12% for 4 periods is 3.0374. 2009 installment accounts 153,000
The period of refund will elapsed on January 31,2010. The
franchisor has performed substantially all of the initial Sales on an installment basis in 2008 were made at 30 percent
services but the operations of the store have yet to start. above cost and in 2009, at 33 1/3 percent above cost. What is
Collectibility of the note is reasonably certain. How much is the total realized gross profit for the year ended December 31,
the unearned franchise fee on the year ended December 31,2009? 2009?
a. P1,661,220 a. P19,975
b. P750,000 b. P44,625
c. P911,220 c. P38,250
d. P0 d. P59,285

Problem 17. On April 30,2009, the capital accounts of P,Q, and Problem 19. Ping, Pong and Pang decided to dissolve their
R shows the following balances: P-P150,000, Q-P75,000 and R- partnership on May 31, 2009. On this date, their capital
P45,000. At this time, S is admitted to the firm when he balances were as follows:
purchases a one-sixth interest in the firm for P27,500. The old Ping P87,500
partners equalized their capital investments. Afterwards, all Pong 105,000
the partners agree to divide profits and losses equally. The Pang 35,000
new partnership closes its books on June 30, 2009 reporting a
profit of P4,200 for two months. The partners made the The following provision for sharing profits and losses is
following withdrawals: P and R, P450 per month; Q and S 300 per provided in the agreement. Available income is distributed only
month. On June 30, 2009, S invests enough cash to increases his as far as it is available.
capital to a one-third interest in the partnership. How much Available income is to be distributed in the following
cash is to be invested by S? sequence:
a. P108,025 1. Ping, who is the managing partner gets a salary of
b. P68,025 P180,000 a year; the remaining partners gets a salary of
c. P67,425 P72,000 each.
d. P107,425 2. Interest is imputed on the average capital balances at
12% per annum
Problem 18. The books of Magic, Inc. show the following 3. Any remaining profits and losses are to be shared 3:2:5
balances on December 31, 2009:
The average capital balances during the period ended were
Accounts Receivable P533,375 P70,000, P85,000 and P27,500, for Ping, Pong and Pang,
Deferred Gross Profit, unadjusted 64,600 respectively.
The net income from January to May 31, 2009 was P121,500. Also, Remittance to home office 302,500
before liquidation on May 31,2009, the partnership’s cash and
liabilities, respectively, were P70,000 and P157,500 (inclusive Allowance for overvaluation of branch inventory amounted to
of customer deposits amounting to P4,000). Liquidation expenses P67,000 in the home office books.
of P7,500 was paid. For Pong to receive P126,400 in full
settlement of his interest in the partnership, how much must be In the home office books, the branch net income (loss) is:
realized from the sale of the partnership’s non-cash assets? a. P16,000
a. P408,500 b. (P15,000)
b. P416,000 c. (P7,100)
c. P457,000 d. (P5,580)
d. P402,375
Problem 22. Amor Inc., franchisor, entered into franchise
Problem 20. Bataan Construction Company recognized gross profit agreement with Adore Inc., Franchisee on July 1, 2009. The
of P42,000 on its long-term project which has accumulated costs initial franchisee fees agreed upon is P850,000,of which
of P490,000. To finish the project, the company estimates that P150,000is payable upon signing and the balance to be covered
it has to incur additional cost of P735,000. The contract price by a non-interest bearing note payable in four equal annual
is: anstallments. It was agreed that the down payment is not
a. P798,000 refundable, notwithstanding lack of substantial performance of
b. P1,330,000 services by franchiser. Probability of collection is unlikely.
c. P1,102,500
d. P1,837,500 The following expenses were incurred:
Initial services:
Problem 21. The Red Roses Company has a branch in Isabela City. Direct cost P235,000
Shipments of merchandise to the branch totaled P297,000 for the Indirect cost 75,000
year, which included a 25% mark-up on cost. Continuing services:
Direct cost 37,800
The following data summarizing branch operations for the Indirect cost 15,000
period ended December 31, 2009:
Sales on account P407,000 The management of Adore has estimated that they can borrow loan
Sales on cash basis 121,000 at rate of 12%. The franchisee commenced its operatipns on July
Collections of accounts 330,000 31,2009 A continuing franchise fee equal to 5% of its monthly
Expenses paid 149,000 gross sales. Adore reported gross sales of P1,300,000 for the
Expenses unpaid 41,000 month. When Amor prepares its financial statements on August
Purchase of merchandise for cash 143,000 31,2009, how much is the net income to be reported? PV factor
Inventory on hand, January 1 is 3.04.
(60% from outside purchases) 114,000 a. P99,350
Inventory on hand, December 31 b. P75,640
(70% from home office) 165,000 c. P46,150
 d. P35,510 Cost of direct materials used P200,000
Cost of direct labor, including site
Problem 23. The following information relates to Jenna and supervision of P50,000 150,000
Jenny’s partners capital accounts for fiscal year ending June Cost of indirect materials used 55,000
30: Cost incurred in obtaining the contract
Jenny Jenna previously written of 70,000
Balance, July 1 P86,400 P115,200 Depreciation of plant and equipment used
Add: Additional Investment, on the contract 120,000
January 1 38,400 19,200 Payroll of design and technical department
Net Income for the year: allocated to the contract 80,000
Salaries 20,500 14,500 Insurance costs (2/3 for other contracts) 180,000
Interest 7,920 9,360 Costs of contracted research and
Bonus 3,720 - development activities 105,000
Remainder 14,880 9,920 Depreciation of idle plant and equipment
Total 171,820 168,180 not used on a particular contract 60,000
Deduct: Drawings Selling costs 45,000
Monthly amounts 15,070 15,060 General and administrative expenses
Additional drawings, specifically included under the terms
June 30 2,400 403 of the contract 30,000
Balance, June 30 154,350 152,717 Borrowing cost incurred during the
construction period 130,000
Bonus is based on net income after salaries,interest and bonus. Advances made to subcontractors 100,000
If the net income remains the same the following fiscal year,
and if there is no change in the partnership agreement nor any What is the realized gross profit for the period?
additional investment, how much will Jenna’s total share of the a. P104,335
net income be the following year? b. P111,055
a. P33,577 c. P125,195
b. P33,780 d. P134,610
c. P33,696
d. P33,874 Problem 25. Forever, Inc. granted a franchise to Hopeless
Romantic for the Manila area. The franchisee was to pay a
Problem 24. On July 1, 2009, TL Construction Corp. contracred franchise fee of P250,000, payable in five equal annual
to build an office building for LQ, Inc. for a total contract anstallments starting with the payment upon signing of the
price of P2,950,000. Estimated total contract costs is agreement. The franchise was to pay monthly 3% of gross sales
P2,600,000. of the preceding month. Should the operations of the outlet
prove to be unprofitable, the franchise may be canceled wiyh
Costs incurred to date are as follows related to the project whatever obligations owing Forever, Inc. in connection with the
were as as follows: P250,000 franchise fee waived. The prevailing interest rate for
a non-interest bearing note is 14%. The first year generated a
gross sales of P1,250,000. What is the amount of unearned Problem 28. Carol and Manny agreed on a joint venture to
franchise fee after the first year of operations? purchase and sell custom-made items. They agreed to contribute
a. P287,500 P250,000 each to be used in purchasing the merchandise, share
b. P145,700 equally in any gain or loss, and record their venture
c. P195,700 transactions in their individual books.
d. P250,000 Upon termination of the venture, the following information were
available:
Problem 26.Lovebirds Corporation sells goods on the installment  Joint venture account credit balances: Carol,P180,000;
basis. For the year just ended, the following were reported: Manny, P202,000
Cost of installment sales P525,000  Cost of custom-made items taken:by Carol, P15,000; Manny,
Loss on repossession 13,500 P29,0000
Fair value of repossessed merchandise 112,500
 Expenses paid: by Carol, P18,500; Manny, P23,000
Account defaulted 180,000
Compute for the joint venture sales.
Deferred gross profit,end 108,000
a. P882,000
b. P838,000
How much was the collections for the year?
c. P923,500
a. P210,000
d. P879,500
b. P264,000
c. P390,000
Problem 29. On July 1,2009 the Venus Company acquired the net
d. P415,715
assets of Cupid Company for a consideration transferred of
P16,000,000. At the acquisition date, the carrying amount of
Problem 27. On December 31,2009, ABC Corporation combined net
Cupid’s net assets was P10,000,000.
income together with its Bacolod branch amounted to P350,000.
During the year, shipments of merchandise to the branch
At the acquisition date, a provisional fair value of
amounted to P135,000. On June 30,2009, the home office
P12,000,000 was attributed to the net assets. An additional
purchased and recorded fixed asset for the use of the branch
valuation received on May 31,2010 increased this provisional
amounting to P200,000. Useful life is 5 years. Remittance of
fair value to P13,000,000 and on July 30,2010 this fair value
P70,000 was made during the year to the home office. Purhases
was finalized at P14,000,000.
of merchandise from outside suppliers amounted to P125,000.
Ending inventories amounted to P80,000. Sales for the year was
What amount should Venus present for goodwill in its statement
reported at P400,000. The branch paid selling and
of financial position at December 31,2010?
administrative expenses amounting to P75,000. How much is the
a. P6,000,000
separate income of the home office?
b. P3,000,000
a. P105,000
c. P4,000,000
b. P225,000
d. P2,000,000
c. P245,000
d. P125,000
Problem 30. The following is the income statement of Makati
City Branch for the year ended December 31,2009. What is the ending balance of installment accounts receivable
Sales P600,000 on December 31,2010?
Cost of Sales a. P3,540,000
Inventory, beginning 80,000 b. P2,550,000
Shipments from home office 350,000 c. P2,662,500
Purchases from outsiders 110,000 d. P1,837,500
Total goods available for sale 540,000
Inventory, ending (100,000)(440,000) Problem 32. Nora and Vilma formed a joint venture to purchase
Gross Profit 160,000 and sell a special type of merchandise. The venturers agreed to
Operating Expenses (100,000) contribute cash of P270,000 each too be used in purchasing the
Net Income P60,000 merchandise, and to share profits and losses equally. They also
agreed that each shall record his purchases, sales, and
20% of the beginning inventory and 46% of the ending inventory expenses in their own books.
came from outside purchases. After effecting the necessary
adjustments the true net income of the branch was ascertained Upon termination of the joint venture, the following data are
to be P132,000. made available:
Nora Vilma
How much is the percentage mark-up on cost imposed by the home Joint Venture P234,000 CR P170,600 DR
office to the branch and the cost of goods sold of the branch Inventory Taken 10,800 33,750
in as far as the home office is concerned? Expenses paid from JV Cash 5,400 9,900
a. 25%; P288,000
b. 25%; P368,000 How much cash is to be received by Vilma in the final
c. 20%; P288,000 settlement?
d. 20%; P368,000 a. P267,950
b. P290,225
Problem 31. Lakers Corp.,which began operations on January 1, c. P323,975
2009, appropriately uses the Installment method of accounting d. P280,325
for revenues. The following information is available for the
years ended December 31,2009 and 2010:
2009 2010 Problem 33. Frenchkiss Corporation opened a sales agency in
Cost of installment sales P1,500,000 P3,000,000 Sta. Rosa Laguna in 2009. The following is a summary of the
Gross Profit realized on transactions of the sales agency:
sales made in List price P342,000
2009 225,000 135,000 Volume discount 5% and 5%
2010 - 300,000 Freight on shipment of agency 7,000
Gross profit percentage based Collections, net of 7.5% discount 249,750
on cost 30% 40% Selling expenses paid from the agency
 Revolving fund 19,250 assets of Successful, Inc. Underlying book value and fair value
Administrative expenses allocated to information for the balance sheet items of Successful at the
Agency 5% of net sales time of acquisition are as follows:
Samples shipped to agency: Book Value Fair Value
Cost 28,700 Cash P80,000 P80,000
Inventory,end 15,925 Accounts Receivable 120,000 120,000
Inventory 60,000 115,000
Remaining receivable is estimated to be 95% collectible. The Land 50,000 70,000
Company’s gross profit rate based on invoice price is 40% Building and Equipment 400,000 350,000
excluding the freight cost on shipments to agency. Less:Accumulated depreciation(120,000)
Total Assets 590,000 735,000
What is the net income of the agency for 2009?
a. P34,334 Accounts Payable P30,000 P30,000
b. P49,767 Bonds Payable 200,000 180,000
c. P47,834 Common Stock (P5 par value) 150,000
d. P47,535 Additional Paid-in Capital 70,000
Retained Earnings 140,000
Problem 34. Olongapo Construction Company entered into two Total Liabilities and Equities590,000
construction jobs which both commenced in 2009 (in thousands).
Project 1 Project 2 Successful, Inc. shares were selling at P18 and
Contract price P52,500 P37,500 Congratulations, Inc. were selling at P50 just before the
Costs incurred during 2009 30,000 35,000 merger announcement. Additional cash payments made by
Estimated Cost to Complete 15,000 8,700 Congratulations, Inc. in completing the acquisitions were:
General and administrative
Expenses 2,500 1,250 Broker’s fee paid to firm that located
Billings for clients during 2009 31,500 30,000 Successful P15,000
Collections during 2009 28,000 25,000 Engagement fee on agreed upon procedures
For share issuance 10,000
Based on the information given, how much is the gross profit Legal fees for the merger 12,000
would Colt report in its 2009 income statement? Cost of SEC registration of Congratulations
Percentage of completion Zero Profit Share 7,000
a. (6,200,000) (1,200,000)
b. 5,000,000 (6,200,000) What is the amount of additional paid in capital related to the
c. (1,200,000) (6,200,000) issuance of shares?
d. 1,300,000 (1,200,000) a. P473,000
b. P436,000
Problem 35. On January 1, 2010, Congratulations, Inc. issues c. P448,000
12,000 shares of its P10 par value stock to acquire the net d. P463,000