Problem 1

The January 1,2018 statement of financial position of Shift Nako Company's show:
Accounts payable P200,000
Merchandise Inventory 165,000
Additional information for the current year, arrange chronologically:
a) Cash purchase of the company amount to P800,000 and present 10% of gross purchases.
b) Freight charge of P2,000 was paid.
c) Ninety percent of the purchase on accounts was paid beyond the discount term of the 5/10,n/30 terms.
d) amount paid beyond discount period is P5,940,000.
e) purchase return amounted to P80,000. Ali returns were from purchase on cash.
f) The company use the periodic method in recording inventory and gross method in recording discount.
g) Records reveal that at the end of accounting period, inventory on hand amounted to P195,000.
Requirements: Compute the cost of goods sold
Problem 2
Brainless company began operations on January 1, 2015 and adopted the weighted average method of inventory
pricing.
2015 2016 2017
Sales P3,000,000 P4,000,000 P4,800,000
Less: Cost of Sales 1,500,000 2,000,000 2,400,000
Gross Income P1,500,000 P2,000,000 P2,400,000
Less: Expenses 800,000 900,000 1,000,000
Net Income P700,000 P1,100,000 P1,400,000
Comparative inventory amount:
Weighted average FIFO
December 31,2015 P270,000 P420,000
December 31,2016 300,000 500,000
December 31,2017 380,000 650,000
Requirements: Revise the condense comparative income statement, compute the net income on 2016 assuming
the entity used the FIFO method.
Problem 3
In testing the sales cut-off for the Pitokpitok Company in connection with an audit for the year ended December
31,2018, you find the following information.
A physical inventory was taken as of the close of business on October 31,[Link] customers are within a three-
day delivery area of the company's plant. The adjusted balances of sales and inventories are P7,461,300 and
P363,300, respectively.
Date Date
Invoice Number FOB terms Shipped Recorded Sales Cost

6671 Destination Oct. 20 Oct. 31 P3,000 P2,700

6672 Shipping Point Oct. 31 Nov. 2 7,000 6,000
6673 Shipping Point Oct. 25 Oct.31 5,400 3,600
6674 Destination Oct. 31 Oct.29 12,600 9,300
 6675 Destination Oct. 31 Nov. 2 27,600 24,000
6676 Shipping Point Nov. 2 Oct.23 19,500 15,300
6677 Shipping Point Oct. 25 Nov. 6 22,500 17,400
6678 Destination Oct. 20 Nov. 3 11,700 6,000
6679 Shipping Point Nov. 4 Oct.31 25,800 24,600
6680 Destination Nov. 5 Nov. 2 15,000 12,000
Requirements: Based on the foregoing information, compute the October 31,2018,unadjusted balance of sales and
inventories.
Problem 4
Mouthful Company specializes in the sale of IBM compatibles and software packages. It had the following
transactions with one of its suppliers:
Purchase of IBM compatibles at list price P 4,250,000
Invoice price of Purchases of commercial software packages 1,680,000
Purchase return and allowance 70,000
Purchase discounts taken 23,800
Purchases were made throughout the year with trade discount of 20% and 30%, with credit terms of 2/10,n/30.
All returns and allowances took place within 5 days of purchase and prior to any payment on account. Purchase
discount lost is 56,000, half of this amounts were due to nonpayment during the year and the balance were due to
late payment. How much is the total cash paid in settling the accounts payable?
Problem 5
The following information was provided by the bookkeeper of Munimuni, Inc.:
a) Sales for month of June totaled 286,000 units
b) The following purchases were made in June:
Date Quantity Unit cost
June 4 50,000 P 13.00
8 62,500 12.50
11 75,000 12.00
24 70,000 12.40
c) There were 108,500 units on hand on June 1 with a total cost of P 1,450,000.
Munimuni, Inc. uses a periodic fifo costing system. The company's gross profit for June was P 2,058,750. The
286,000 units sold in June had a unit selling price of?
Problem 6
Hinoktokman Company's accounting records indicated the following information:
Inventory at January 1,2002 P 500,000
Purchases during 2002 2,640,000
Sales during 2002 3,200,000
Purchase Discounts 50,000
Purchase Returns 150,000
Freight-In 60,000
A physical inventory taken on December 31,2002 resulted in an ending inventory of P575,000. obsolete
Inventories worth of P5,000 was not included in physical count. Hinoktokman's gross profit on cost has remained
constant at 33 1/3% in recent years. Hinoktokman suspects some inventory may have been taken by a new
employee. At December 31,2002,what is the estimated cost of missing inventory?
Problem 7
The records of Ampalaya Company show the following for the current year:
Cost Retail
Beginning inventory P 500,000 P 640,000
Purchases 4,500,000 7,300,000
Freight-In 100,000
Purchase return 150,000 250,000
Purchase allowance 90,000
Departmental transfer in 100,000 160,000
Net markup 150,000
Net markdown 500,000
Sales 6,600,000
Sales allowance 50,000
Employee discount 100,000
Spoilage and breakage 200,000
What is the amount of estimated ending inventory under the conventional retail, FIFO and average cost retail
method?
Problem 8
Tabangmgalangit Company is engage in raising dairy livestock. Information regarding its activities relating to the
dairy livestock is as follows:
Carrying amount on January 1,2018 P
5,000,000
Increase due to purchases 2,000,000
Gain arising from change in fair value less cost of disposal attributable to price change
400,000
Gain arising from change in fair value less cost of disposal attributable to physical change
600,000
Decrease due to sales
850,000
Decrease due to harvest
200,000
What is the carrying amount of the biological asset on December 31,2018?
Problem 9
Tagam Company has a herd of ten 2-year old animals on January 1, 2018. One animal aged 2.5 years was
purchased on July 1,2018 for P108,and one animal was born on July 1, 2018. No animals were sold or disposed of
during the year. The fair value less cost of disposal per unit is as follows:
2-year old animal on January 1 P 100
2.5-year old animal on July 1 108
New born animal on July 1 70
2-year old animal on December 31 105
2.5-year old animal on December 31 111
Newborn animal on December 31 72
3-year old animal on December 31 120
 0.5-year old animal on December 31 80
What is the gain (loss) from change in fair value of biological assets that should be recognized in 2018?

Problem 10
A recent fire severely damaged Paramalhas Company's administration building and destroyed many of its
financial records. You have been contracted by Paramalhas' management to reconstruct as much financial
information as possible for the month of July. You learn that Paramalhas makes a physical inventory count at the
end of each month to determined monthly ending inventory values. You also find out that the company applies the
average cost method.
You are able to gather the following information by examining various documents:
Inventory, July 31 150,000 units
Total cost of goods available for sale in July P356,400
Gross profit on sales for July P303,000
Cost of inventory, July 1 P0.35 per unit
The following are Paramalhas' July purchases of merchandise:
Date Quantity Unit cost
July 6 180,000 P 0.40
12 150,000 0.41
16 120,000 0.42
17 150,000 0.45
Compute the inventory value, July 31.
Problem 11
You noted the following related to the biological assets owned by Teardrop Farms, Inc. in connection with your
audit.
Carrying amount, January 1,2019 P 800,000
Purchases
230,000
Gain arising from changes in fair value less cost to sell attributable to physical changes
60,000
Gain arising from changes in fair value less cost to sell attributable to price changes
40,000
Sales
110,000
Compute the carrying amount of biological assets on December 31,2019.
Problem 12
At the beginning of current year, Bungagsingot Company purchased marketable equity securities to be held as
"trading" for P5,000,000. The entity also paid transaction cost amounting to P200,000.
The securities had market value of P5,500,000 at year end and the transaction cost that would be incurred on sale
is estimated at P100,000. No securities were sold during the current year.
What amount of unrealized gain or loss on these securities should be reported in the income statement for the
current year?
Problem 13
On December 31,2018,Bungasbuling Company appropriately reported a P100,000 unrealized losses.
There was no change during 2019 in the composition of the portfolio of nontrading equity securities held at fair
value through other comprehensive income.
Security Original cost Market value-December 31,2019
A P 1,200,000 P 1,300,000
B 900,000 500,000
C 1,600,000 1,500,000
Requirement: What amount of gain (loss) on these securities should be included in the statement of
comprehensive income for the year ended December 31, 2019 as component of other comprehensive income?
Problem14
During 2018, Kumagko Company bought the shares of Kumingking Company.
June 1 20,000 shares @P100 P 2,000,000
December 1 30,000 shares @P120 3,600,000
Transaction for 2019:
January 10 Received 20% share dividend
July 20 Received cash dividend of P10 per share
December 10 Sold 30,000 shares at P125 per share
What is the gain on the sale of shares under FIFO approach?
Problem 15
During 2018, Kumagko Company bought the shares of Kumingking Company.
June 1 20,000 shares @P100 P 2,000,000
December 1 30,000 shares @P120 3,600,000
Transaction for 2019:
January 10 Stock split 2 shares for every shares held
July 20 Received cash dividend of P10 per share
December 10 Sold 30,000 shares at P125 per share
What is the gain on the sale of shares under average approach?
Problem 16
During 2018 Whitening Lugod Company bought 20,000 shares of Blackening Lugod Company at P100 per share
held as investment in equity securities.
The following are the transaction during current year 2019:
 On February, Whitening received 2,000 share dividend from Blackening Company.
 On April, Whitening received P2 share cash dividend from Blackening Company.
 On June, Whitening receive a P50,000 cash dividend from Uy Antibiotic in which Whitening owns 30%
interest.
 On August 1,Whitening received P40,000 liquidating dividend from Balbastro Deworming Capsule.
Whitening owns 5% interest in Balbastro.
 On September, Whitening receive property dividend from Blackening. The carrying amount and fair value
of asset are P100,000 and P75,000 respectively.
What amount should be reported as dividend income for the current year?
Problem 17
Logik Company issued rights to subscribe to its stock, the ownership of 4 shares entitling the shareholders to
subscribe 1 share at P100.
Nahalib Company owns 50,000 shares of Logik Company with total cost of P5,000,[Link] share is quoted right-
on at 125.
What is the cost of the new investment if all of the stock right are exercised by their investor?
Problem 18
During the 2018,Tig-ang Company held 30,000 shares of Lagdos Company's costing P3,300,000. The share own is
less than 10% of Lagdos' share capital and accounted using cost method.
On July 1, 2019, 2,000 share dividend was declared and issued by Lagdos to Tig-ang. On September 10,P120,000
cash was received in lieu of 1,000 share dividend with fair value of P125 per share.
On November 17, Tig-ang received 5,000 shares in lieu of P250,000 cash dividend. The fair value of shares receive
are P65 per share. On December 25, P1 cash dividend per shares held.
Requirement: compute the dividend income and investment balance on 2019
Problem 19
At the beginning of current year, Suwang Company purchased 30% interest in Katsuri Company for
P2,500,[Link] this date Katsuri's identifiable net assets approximated their fair values. The investee reported net
income of P1,000,000 and paid P500,000 dividends during the current year.
What amount should be reported as investment in associate at year end by Suwang?
Problem 20
On July,2018,Wangkig Company purchased 30,000 shares of Kaspahun Company's 100,000 outstanding ordinary
shares for P200 per share. On December 15, 2018,the investee paid P400,000 in cash dividend to the ordinary
shareholders. The investee's net income for the year ended December 31, 2018 was P1,200,000,earned evenly
throughout the year. What amount of dividend income form the investment should be reported by Wangkig on
her 2018 income statement?
Problem 21
At the beginning of current year, Edmarpogi Company purchased 40% of the outstanding ordinary shares of
Jufelalamat, paying P6,400,000 when the carrying amount of the net asset of Jufelalamat Company equaled
P12,500,000.
The difference was attributable to equipment which had a carrying amount of P3,000,000 and a fair market value
of P5,000,000 and to building which had a carrying amount of 2,500,000 and fair value of P4,000,000.
The remaining useful life of the building and equipment was 4 years and 12 years respectively.
During the current year, Jufelalamat company reported net income of P5,000,000 and paid cash dividend of
P2,500,000. What is the carrying amount of the investment in associate at year end?
Problem 22
Celsolegend Company acquired 20,000 shares of Louiedgreat Company on January 1,2018 at P100 per share.
Louiedgreat had 80,000 shares outstanding with a carrying amount of P9,600,000.
The difference between the carrying amount and fair value of Louiedgreat Company on January 1, 2018 is
attributable to a broadcast license which is an identifiable intangible asset.
Louiedgreat Company recorded earnings of P3,600,000 and P3,900,000 for 2018 and 2019, respectively, and paid
per share dividend of P16 in 2018 and P20 per share in 2019.
Celso Company has a 20-year straight line amortization policy for the broadcast license.
What is the carrying amount of the investment in associate on December 31,2019?
Problem 23
On January 1,2015,Sapyot Company acquired as a long term investment for P7,000,000, a 40% interest in Dugyot
Company when the fair value of Dugyot's net asset was P17,500,[Link] net losses Dugyot Company during
2015, 2016,2017 and 2018 are P5,000,000,P7,000,000,P8,000,000 and P4,000,000 respectively.
On January 1, 2017, Sapyot made cash advances of P2,000,000 to Dugyot. On December 21, 2018, it is not
expected that Sapyot Company will provide further financial support for Dugyot Company.
What amount should be reported as loss from investment for 2018?
Problem 24
In order to finance Pitokpitok Company's planned expansion, a 10% P5,000,000 face value bonds were issued for
P5,300,000,plus accrued interest on December 1,[Link] Buogon Company. Interest is payable November 1 and
May 1. On August 31, 2014,P2,500,000 face value of bonds were retired at 103% plus accrued interest.
By the end of year 2015,the carrying amount of investment in bonds was reported at P2,575,000. The straight line
amortization method is used. On September 1, 2016, Buogon decided to retire the remaining bonds at 1% lower
than original issue price plus accrued interest. Compute the gain or loss on retirement of investment in bonds on
September 1,2016?
Problem 25
Buraot company owned 30,000 ordinary shares of wood company acquired on July 31 at a total cost of
P1,100,000. On December 1,Buraot received 30,000 share rights from Wood. Each right entitles the holder to
acquire one share at P45
The market price of Wood's share on this date was P50 and the market price of each right was [Link] sold the
rights on December 31 for P450,000 less a P10,000 commission.
What amount should be reported as gain from the sale of rights?
Problem 26
Pasmoskigwa Company owned 50,000 ordinary shares of Band Company. These shares were purchase by
Pasmoskigwa for P120 per share.
On august 30, Band distributed 50,000 share rights to Pasmoskigwa. Pasmoskigwa was entitled to buy one new
share of Band Company for P90 cash and two of these rights.
On August 30, each share had a market value of P130 and each right had a market value of P120.
What total cost should be recorded for the new shares that are acquired by exercising the rights?
Problem 27
Ecclesia Company issued rights to subscribe to its stock, the ownership of 4 shares entitling the shareholder to
subscribe for one share at P100.
Jealina company owns 50,000 shares of Ecclesia company with total cost of P5,000,000. The share is quoted right-
on at P125.
What is the cost of the new investment if all of the stock rights are exercised by the investor?
Problem 28
At the beginning of current year, Bilbil Company purchase 30% interest in Buktot company for P2,500,000.
On this date Buktot's shareholders' equity was P5,000,000. The carrying amount of Buktot's identifiable net asset
approximated their fair values, except for land whose fair value exceeded the carrying amount by P2,000,000.
The investee reported net income of P1,000,000 and paid no dividend during the current year.
What amount should be reported as investment in associate at year end?
Problem 29
At the beginning of the year, Bong company purchase 30,000 shares of Latt company's ordinary share for
P6,000,[Link] that date, the carrying amount of the acquired shares on Latt's book was P4,000,000.
Bong attributed the excess of cost over carrying amount to patent. The patent has a remaining useful life of 10
years. During the current year, Bong's officers gained majority on Latt's board of directors.
Latt company reported earnings of P5,000,000 for the current year and declared and paid dividend of P3,000,000
at year end.
What is the carrying amount of the investment in associate at year-end?
Problem 30
On July 1,2018, Hubakon company purchase 25% of Wall Company's outstanding ordinary share and no goodwill
resulted from the purchase.
Hubakon appropriately carried his investment at equity and the balance in Hubakon's investment account was
P1,900,000 on December 31,2018.
Wall company reported net income of P1,200,000 for the year ended December 31, 2018, and paid cash dividend
totaling P480,000 on December 31,2018.
How much did Hubakon pay for the 25% interest in wall?
Problem 31
On January 1,2018,Purl Company purchased as long term investment P5,000,000 face value of Shaw Company's
8% bonds for P4,562,[Link] bonds were purchased to yield 10% interest.
The bonds mature on January 1,2023 and pay interest annually on December 31. The interest method of
amortization is used.
What is the interest income for 2019?
Problem 32
On July 1,2018,York Company purchased as a long term investment P1,000,000 of Park Company's 8% bonds for
P946,000,including accrued interest of P40,[Link] bonds were purchased to yield 10% interest.
The bonds mature on January 1, 2024 and pay interest annually on January [Link] Company used the effective
interest method of amortization.
On December 31,2018,what is the carrying amount of the investment in bonds?
Problem 33
At the beginning of current year, Denmark Company purchase 10 year bonds with a face amount of P1,000,000
and a stated interest rate of 8% per year payable semiannually June 30 and December 31. The bonds were
acquired to yield 10%. What is the market price or purchase price of bonds (round off only the final answer)?
Problem 34
On January 1,2018,Toronto company purchased bonds with face amount of P2,000,000. The bonds are dated
January 1,2018 and mature on January 1,[Link] interest on bonds is 10% payable annually every December 31.
The prevailing market rate interest on the bonds is 12%.
What is the present value of the bonds on January 1, 2018 (round off only the final answer?
Problem 35
On January 1,2018,Arab company purchased serial bonds with face amount of P3,000,000 and stated 12%
interest payable annually every December 31.
The bonds are to be held as financial asset at amortized cost with a 10% effective yield. The bonds mature at an
annual installment of P1,000,000 every December 31. The present value of 1 at 10% for:
One period 0.91
Two period 0.83
Three period 0.75
What is the present value of the serial bonds on January 1,2018?
Problem 36
Bangladesh company purchased an investment property on January 1,2016 for P2,200,000. The property had a
useful life of 40 years and on December 31,2018 had a fair value of P3,000,000. On December 31,2018,the
property was sold for net proceeds of P2,900,000. The entity used the cost model to account for the investment
property. What is the carrying amount of the investment property on December 31,2018?
Problem 37
Fall Company provided the following information in relation to a bond sinking fund that was placed in trust as
reacquired by the underwriter:
Bond sinking fund P 4,500,000
Additional investment during the year 900,000
Dividend income on investment 150,000
Interest revenue 300,000
 Administration cost 50,000
Carrying amount of bonds payable 8,000,000
What is the carrying amount of the bonds sinking fund on December 31?