DMCCF – JPIA REVIEW CLASSPRACTICAL ACCOUNTING PROBLEMS 1 STATEMENT OF FINANCIAL POSITION AND COMPREHENSIVE INCOME 1. Kirk Company provided the following information for 2011: Accounting and legal fees 120,000 Advertising 150,000 Freight out 80,000 Interest expense 70,000 Loss on sale of investment 30,000 Officer’s salaries 225,000 Rent for office space 220,000 Sales salaries and commissions 140,000 One half of the rented promises are occupied by the sales department. What should be reported as distribution costs for 2011? a. 480,000 b. 400,000 c. 370,000 d. 360,000 2. During 2011, Myrlyn Company decided to change from FIFO method inventory valuation to weighted average method. Inventory balances under each method were: FIFO WEIGHTED AVE. 12/31/09 9,000,000 8,500,000 12/31/10 8,000,000 8,300,000 12/31/11 7,000,000 6,400,000 Ignoring income tax in its 2011 statement of retained earnings, what amount should Myrlyn report as the effect of this accounting change? a. 200,000 decrease b. 200,000 increase c. 300,000 decrease d. 300,000 increase 3. On January 1, 2008, Reena Company purchased a machine for P 5,280,000 and depreciated it by the straight-line method using an estimated useful life of eight years with no residual value. On January 1, 2011, Reena determined that the machine had a useful life of six years from the date of acquisition and will have a residual value of P 480,000. An accounting change was made in 2011 to reflect these additional data. What is the accumulated depreciation for this machine on December 31, 2011? a. 2, 920,000 b. 3,080,000 c. 3,200,000 d. 3,520,000 4. On January 1, 2009, Stephen Company purchased for P 6,000,000 a machine with useful life of 5 years and residual value of 600,000. The machine was depreciated by the double declining balance method and the accumulated depreciation of the machine was 3,840,000 on December 31, 2010. Stephen changed to the straight line method on January 1, 2011 and the residual value did not change. In its 2011 income statement, what amount should be reported as depreciation for this machine? a. 720,000 b. 520,000 c. 432,000 d. 312,000 5. Albert Co. provided the following data for 2011: Sales 575,000 Cost of goods sold 240,000 Interest revenue 25,000 Administrative expenses 70,000 Sales commissions 50,000 Freight out 15,000 Loss on sale of equipment 10,000 Loss on extinguishment of debt 20,000 Uncollectible accounts expense 15,000 The finished goods inventory is 400,000 on January 1, 2011 and 360,000 on December 31, 2011. The income tax is 30%. What amount should be reported as income from continuing operations? a. 126,000 b. 180,000 c. 140,000 d. 147,000 6. Adrian Company provided the following data for the current year: 1 500.000.000.000 b. 870. 7.000 Accounts receivable 7. 2012: Cash (includes P 300.000.000 b.500.000 5.000 Net income 1.500.000.000 net of tax.January 1 5. net of tax (54.000 Adjustment of profits of prior years. 9.000 c.500.000) Gain on extinguishment of bonds payable. 18.000 Deferred tax asset 2. 6.000 Inventory 4.000.000 600.000.000 d.000 7. While preparing its 2011 financial statements.000 sinking fund) 4. discovered errors in its 2010 and 2009 depreciation.350.000 customer’s postdated check and P 1.000 On December 31.000 Deferred tax asset 2.000) Loss from fire.000.000 Accounts receivable 7.000 d. net of tax (75.000 Prepaid expenses 500.050.000 300. net of tax 220.400. 7. 18.000. 8.000.000.000 Noncurrent asset classified as “held for sale” 3.000 Total current assets 22.400.500.000. net of customers’ credit balances of P600. 661.000 c.800.000 2.000 100.000 3. Manuel Company reported the following current assets on December 31.000) What should be reported as net income for 2011? a.600.000 d. 816.000 5.000 5.000.000.000.000 d. 2012. what amount should be reported as total current assets? a.500.000 2 .’s December 31.000 900.500.000. 3.000 9.500.000 Retained earnings – December 31 7. Karen Co. 8.000 400.DMCCF – JPIA REVIEW CLASS Income from continuing operations Income from discontinued operations Unrealized gain on available for sale securities Unrealized gain futures contract designated as a cash flow hedge Actuarial loss during the year fully recognized Foreign translation adjustment – debit Revaluation surplus during the year How much is the comprehensive income for the current year? a.000.Siegfred Co. These errors resulted in overstatement of each year’s net income by 200. What is the balance of retained earnings on December 31. 2011 statement of financial position reported the following current assets: Cash 4. 650.000 Noncurrent asset classified as “held for sale” 3.000 Inventory 4.500.000 8.000.500.000 c. 18.000 b.000.600. 2011 Leizel declared dividends of 2.500.000 c. On December 31. 2011? a. reported net income of 741.500.000 Customer’s debit balances.500.000 b.000 The net income for 2011 was 3.000) Selling price of Manuel Company’s unsold goods sent out on consignment At 125% of cost excluded from ending inventory 3.000 Prepaid expenses 500. Leizel Co.000 7.000 2. 18. The following amounts were reported in 2010 and 2009: 2010 2009 Retained earnings . 5.200.000 Allowance for doubtful accounts (500.500. net of tax (140.000 22.000 10.000 for 2011 which included the following items: Unrealized loss on available for sale securities. 000 Share premium 4.000. All receivables on these contracts are considered to be collectible within 12months.000.800.000. net of customers’ credit balances of 400.000 d.000. 2011? a.600.000.000.000 And employee IOU of 100.000.000 3 . on December 31. 14.000 5.000 12.000 Earnings from long-term contracts 55. Solida has not recorded income tax expenses.000 Cost and expenses 60.000.000 Share capital 10. 2011 what should be reported as total current asset? a. net 20.000.000 were charged to income tax expense.000.000.000.000.000 Property.000 Retained earnings unappropriated 5.000 were charged to prepaid taxes.000 b.500. 19.000.000 c.000.000 Accounts receivable.000 Ordinary share capital 15.500.000.500.000.000 7.000) Selling price of unsold goods sent out on consignment at 150% of cost And excluded from ending inventory 3.000 d. plant and equipment 25.000 Net sales and other revenue 80.000 80.The trial balance of Solida Co. 2011 is a follows: Cash 4. including customer’s credit balances of 200.000 Accounts receivable 14.000.000.000. 25.000 During the year estimated tax payments of 5.000 c. estimated tax payments of 8.000 125.000 Cash in bank per bank statement (outstanding checks on December 31. 2011 P 300.000 Retained earnings – January 1 8.000.000 Deferred tax liability 3.000.300. 15. The tax rate is 30%. 2011 has been adjusted except for income tax expense: Cash 5.000.200.000) 3. 18.000 11.000 Accounts payable 9.000.The following trial balance of Alvin Co. During 2011.000 1.000. 17. net 8.000.DMCCF – JPIA REVIEW CLASS Cash on hand. 10.000 Retained earnings restricted for note payable 3.000 b.000. There were no temporary or permanent differences.000.000 Billings in excess of cost on long-term contracts 1.000 Property.000.000.000.000. What should be reported as total current assets on December 31.000 Income tax expense 11. What amount should be reported as total current liabilities on December 31.000 Customers’ debit balances.000.000.000. 17.000.000.000 Total cash 4. 18.000 Note payable-noncurrent 3.000 80.000 Cost and expenses 35.000 c. The tax rate is 30%.000.000 d.000.000.000.000 Solida uses the percentage of completion method to account for long-term construction contracts for financial statement and income tax purposes. on December 31. 2011? a. 13.000.000 b.000 Cost in excess of billings on long-term contracts 5.000 125.000 Allowance for doubtful accounts (500.000 Income tax payable 6.000.000 On December 31. plant and equipment. 18. Deferred tax liability will reverse in 2012. 18.000 Prepaid taxes 8.000 Inventory 10.000 Share premium 2. 2. what amount should be reported as total retained earnings? a.000 d.200.000 Retained earnings 630.000 were charged to prepaid taxes.000 Revenue 3.000 Accounts payable 120. on December 31.000 JAY EMMERSON N. 2.000 every April 1 and October 1. 2. 2011.600.650. The entity has not yet recorded income tax expense. 1.530. DIMASUHID. 2011. 2011 has been adjusted except for income tax expense.000 Share capital 500.000 Share premium 680. On December 31.000 5.000 Prepaid taxes 300.000 c.000 During 2011.000 On December 31.029. Cash 550. CPA 4 . net 1.000 Accounts receivable. 1.000 ________ 5.000 c.000 d.530.The following trial balance of Lean Co.630.DMCCF – JPIA REVIEW CLASS 13. 1.200.000 Expenses 2.600.950. estimated tax payments of 300. Included in accounts receivable is 500.330. and the tax rate is 30%.500. what amount should be reported as total current assets? a. There were no differences between financial statement and income tax income.000 b.000 Foreign currency translation adjustment 430.000 b. 1.000 due from a customer special terms granted to his customer require payment in equal annual semi-annual installments of 125.250. 1.