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    Auditing First Preboard Solutions

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    lorenz
    This document contains an auditing exam from the CPA Review School of the Philippines with multiple choice questions and problems covering various auditing topics such as acquisition of assets, intangible assets, investments, retained earnings, dividends, share capital, and shareholders' equity. It provides the answers to the questions along with relevant accounting entries and calculations.

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    Auditing First Preboard Solutions

    Uploaded by

    lorenz
    213 views2 pages
    This document contains an auditing exam from the CPA Review School of the Philippines with multiple choice questions and problems covering various auditing topics such as acquisition of assets, intangible assets, investments, retained earnings, dividends, share capital, and shareholders' equity. It provides the answers to the questions along with relevant accounting entries and calculations.

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    This document contains an auditing exam from the CPA Review School of the Philippines with multiple choice questions and problems covering various auditing topics such as acquisition of assets, intangible assets, investments, retained earnings, dividends, share capital, and shareholders' equity. It provides the answers to the questions along with relevant accounting entries and calculations.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    213 views2 pages

    Auditing First Preboard Solutions

    Uploaded by

    lorenz
    This document contains an auditing exam from the CPA Review School of the Philippines with multiple choice questions and problems covering various auditing topics such as acquisition of assets, intangible assets, investments, retained earnings, dividends, share capital, and shareholders' equity. It provides the answers to the questions along with relevant accounting entries and calculations.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    CPA REVIEW SCHOOL OF THE PHILIPPINES

    Manila

    AUDITING
    FIRST PRE-BOARD EXAMINATION February 17, 2023

    1. B 6. D 11. D 16. B 21. C 26. C 31. A


    2. B 7. B 12. B 17. D 22. D 27. B 32. C
    3. A 8. D 13. D 18. D 23. D 28. C 33. B
    4. A 9. D 14. C 19. D 24. B 29. D 34. C
    5. C 10. D 15. C 20. C 25. C 30. A 35. B

    36. A 41. C 46. C


    37. B 42. D 47. C
    38. A 43. A 48. C
    39. D 44. C 49. B
    40. A 45. B 50. A

    Situation 1

    51. A Acquisition cost (P8,297,000 – P297,000 = P8,000,000 x75%) P6,000,000


    Reconditioning cost 342,000
    Salvaged materials – garage (66,000)
    Construction of warehouse 1,013,000
    Total cost - Buildings P7,289,000
    52. B Land - acquisition cost (P8,000,000 x 25%) P2,000,000
    53. B Machinery (P310,000 + P610,000) P920,000
    54. C Share premium (P640,000 – P40,000) + (P1,110,000 – P1,000,000) P710,000
    55. A Patent (P640,000 – P310,000) P330,000
    Franchise 500,000
    Total intangibles P830,000

    Situation 2

    56. A Cost of franchise, Jan. 1, 2023


    Down payment P 75,000
    Present value of installment payments (P45,000 x 2.91371) 131,116
    Total 206,116
    Amortization for 2023 (P206,116/10 years) (20,612)
    Carrying amount, Dec. 31, 2023 P185,504

    57. A Cost of patent, Jan. 2, 2023 P49,200


    Amortization for 2023 (P49,200/8 years) (6,150)
    Carrying amount, Dec. 31, 2023 P43,050

    58. A Cost of trademark, July 1, 2023 P120,000


    Amortization for 2023 (P120,000/20 years x 3 6/12) (21,000)
    Carrying amount, Dec. 31, 2023 P 99,000

    59. A Amortization of franchise P20,612


    Amortization of patent 6,150
    Amortization of trademark (P120,000/20 years) 6,000
    Total amortization for 2023 P32,762

    60. C Interest expense (P131,116 x 14%) P 18,356


    Franchise fee on revenue from operations (P2,700,000 x 5%) 135,000
    Litigation expenses – trademark 30,000
    Total P183,356

    Page 1 of 2 Pages
    CPA REVIEW SCHOOL OF THE PHILIPPINES (CPAR) - MANILA
    AUDITING PROBLEMS

    Situation 3

    61. D Sales price (P125 x 3,000 shares) P375,000


    Carrying amount (P219,000 x 3,000/6,000) 109,500
    Gain on sale of Bulik shares P265,500

    62. C Sales price (P600,000 x 110%) P660,000


    Carrying amount 600,000
    Gain on sale of Gudo bonds P 60,000

    63. A Entry made:


    Cash 640,920
    Investment in trading securities 640,920

    Should be:
    Cash 640,920
    Loss on sale of trading securities 19,080
    Investment in trading securities (P22 x 30,000) 660,000

    Adjusting entry:
    Loss on sale of trading securities 19,080
    Investment in trading securities 19,080

    64. B Balance, Jan. 1, 2023 P5,349,000


    Jan. 31 sale of Robusta (660,000)
    Mar. 31 purchase of Wilma (P24.25 x 15,000) 363,750
    July 31 sale of Bulik (109,500)
    Aug. 1 sale of Gudo (600,000)
    Carrying amount (before market adjustment), Dec. 31, 2023 P4,343,250

    65. B Market value, Dec. 31, 2023 P4,500,000


    Carrying amount 4,343,250
    Unrealized gain on trading securities P 156,750

    Situation 4

    66. B Retained earnings per books, Dec. 31, 2022 P1,941,000


    Understatement of Dec. 31, 2022, ending inventories 63,000
    Retained earnings, Jan. 1, 2023, as restated P2,004,000

    67. C Retained earnings, Jan. 1, 2023, as restated P2,004,000


    Net income 1,350,000
    Cash dividends:
    Preference shares (P50 x 9% x 30,000 shares) (135,000)
    Ordinary shares (P1 x 744,000) (744,000)
    Retained earnings, Dec. 31, 2023 P2,475,000

    68. D Share premium – preference shares (P4 x 30,000) P120,000

    69. C Share premium – ordinary shares:


    Balance, December 31, 2022 P 2,250,000
    April 29 issuance (P7 x 150,000) 1,050,000
    Nov. 12 sale of 10,000 treasury shares (P5 x 3,000) 15,000
    Balance, December 31, 2023 P3,315,000

    70. C Preference shares (P50 x 30,000) P 1,500,000


    Ordinary shares (P10 x 750,000) 7,500,000
    Share premium – preference shares 120,000
    Share premium – ordinary shares 3,315,000
    Retained earnings 2,475,000
    Treasury shares (P16 x 3,000 shares) (48,000)
    Total shareholders’ equity P14,862,000

    ---END---

    Page 2 of 2 Pages

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