Practical Accounting Problems 2 Solutions
Practical Accounting Problems 2 Solutions
Practical Accounting Problems 2 Solutions
ACTIVITY-BASED COSTING
PROBLEM 1 ANSWER B GION CORPORATION
Direct Cost 75,000
Set-up (25*7500) 187,500
Utilities (7.60*15000) 114,000
No. of parts (20*550) 11,000
Total Cost 387,500
Cost per Unit (387500/25000) 15.50
PROCESS COSTING
PROBLEM 4 ANSWER A IDOL CO.
AVERAGE Units Materials Conversion
Completed and Transf. 12000 12000 12000
WIP end 7000 7000 4200
Total 19000 19000 16200
Cost per EUP 2.78 (52750/19000) 3.71 (60025/16200)
1
JOINT AND BY PRODUCTS
PROBLEM 6 ANSWER B ANALOG HEART INC.
(Final selling price Selling price at split-off) Additional processing cost = Incremental profit
(3 1.50) 2.50 = (1)
Product NRV Share in the joint cost Addtl processing cost TOTAL
STANDARD COSTING
PROBLEM 8 ANSWER D GANAREMOS INC.
Let x = Fixed Overhead rate per machine hour
40000x = 42000x 28500 14.25/60% = 23.75 total OH rate per machine hour
28500 = 2000x 23.75 * 40% = 9.50 Variable overhead rate per MH
x = 14.25 per machine hour
INSTALLMENT SALES
PROBLEM 10 ANSWER B SWEET SERENDIPITY CO.
GP rates: Repossessed merchandise 3400
2010 = 35% Deferred gross profit 3000
2011 = 40% Loss on repossession 1100
2012 = 35% Installment AR 2011(3000/40%) 7500
Realized gross profit:
2010: 90000*35% = 33250
2011: (167500-7500)*40% = 64000
2012 = (600000 490000)*35% = 38500
TOTAL RGP 134000
2
LONG TERM CONSTRUCTION CONTRACTS
PROBLEM 12 ANSWER A BREAKEVEN CORP
2010: 14625000/32500000 = 45%
2010 RGP:
Construction price 34000000
Est. total cost (32500000)
GP 1500000
Percentage of Completion 45%
RGP 675000
2011:
Construction price 34000000
Est. total cost (34250000)
Anticipated total loss (250000)
Less: RGP, 2010 675000
RGP, 2011 (925000)
FRANCHISE
PROBLEM 14 ANSWER B MABETH INC.
Initial franchise fee 1750000
Initial direct costs (912100)
Gross profit 837900 (47.88%)
RGP (850000*47.88%) 406980
Continuing franchise fee 28750
Interest income 27000
Indirect costs (50000)
Net income 412730
SALES AGENCY
PROBLEM 16 ANSWER D INFATUATION CO.
Sales, net of discount 516330
CGS (393750)
Samples (42000)
Expenses (35000)
Net income 45580
3
HOME OFFICE RECON
PROBLEM 18 ANSWER B ARTEMUS CO.
Branch Current Manila Home Office Current
Unadjusted balance 522110 461490
a. - 14500
b. - 36000
c. (10120) -
d. 52920 52920
Adjusted balance 564910 564910
Sales 11250000
CGS
Beginning inventory 1100000
Purchases 7150000
Less: ending inventory (870000) (7380000)
Expenses (570000)
Net income 3300000
PARTNERSHIP FORMATION
PROBLEM 21 ANSWER D 4A1 AND QUADRIBATCH
4A1 Quadribatch
Net investments before Quadribatchs cash 203000 175000
investment/withdrawal
Capital Credit of Quadribatch (203000*1.20) 243600
Additional Cash investment 68600
PARTNERSHIP OPERATIONS
PROBLEM 22 ANSWER C CC PARTNERSHIP
Caloy Chris
Balance 35000 48000
Additional Investments 30000 24000
Withdrawals (8000)
Ending balance before share in profit 57000 72000
4
PROBLEM 23 ANSWER A AUBREY AND ANN
Aubrey Ann
Salaries 52200 51800
Remaining (115000 104000)
Based on interest:
Aubrey 6000 (50%) 5500
Ann 6000 (50%) 5500
Share in profit 57700 57300
PARTNERSHIP DISSOLUTION
PROBLEM 24 ANSWER D THADDEUS, SIMON AND MARI
Net assets before Thaddeus withdrawal 199000 (450000 251000)
Adjustment for depreciation (15000)
Net assets, adjusted 184000
Payment to Thaddeus (53200)
Net assets after Thaddeus withdrawal 130800
LUMPSUM LIQUIDATION
PROBLEM 26 ANSWER D ELAINE, BEE, AND CHUA
Chuas interest before liquidation 225000
Cash received for settlement 52500
Total deduction from Chuas interest 172500
Total loss = 172500/50% 345000
CHECK:
Elaines interest 60000
Share in the total loss (69000)
Elaines interest, after loss (9000)
Bees interest 103500
Share in the total loss (103500)
Bees interest after loss 0
Book value of noncash assets 450800
Total loss from sale of noncash assets (345000 9000) 336000
Cash received from sale of noncash assets 114800
5
Priority I Din (124667 * 20%) 24933
Priority II Rae (396533 * 30%) 118960
Din (396533 * 20%) 79307 198267
Total 223200
CASH:
Let x = cash received from sale of noncash assets during January
30000 + x 80000 223200 = 0
x = 273200
JOINT VENTURE
PROBLEM 28 ANSWER C RUVI, KRIS, AND JEREMY
Jeremys capital balance before share in profit 21000
Cash received by Jeremy (22200)
Share in profit 1200
Joint Venture
CORPORATE LIQUIDATION
PROBLEM 30 ANSWER B ELI CORPORATION
Fully secured Partially secured Unsecured
6
NONPROFIT ORGANIZATIONS
PROBLEM 34 ANSWER C BLEEDING LOVE HOSPITAL
Amounts charged to patients 384000
Contractual Adjustments (90000)
Net patient service revenue 294000
FOREX
PROBLEM 36 ANSWER A CINCO CORP.
Exchange rate Peso
Net assets, 1/1/10 115000 45 5175000
Net income, 2010 90000 43.75 3937500
Div. declared, 9/1/10 (15000) 40 (600000)
Net income, 2011 22500 45 1012500
9525000
Net assets translated using the rate at the end of the 212500 47.50 10093750
year
Exchange difference (Translation adjustment) 568750
7
BUSINESS COMBINATION ACQUISITION OF NET ASSETS
PROBLEM 42 ANSWER C LOVE AND YOU CORP.
Cost of investment You Corp.
MV of stocks issued 875000 Net assets at FV 660000
Contingent 15000
consideration
Total 890000 660000
Goodwill 230000
Assets:
Loves assets at BV 900000
Add: Goodwill 230000
Less: Cash payments (53000)
Yous assets at FV 695000
Total assets 1772000
Goodwill:
Controlling (2500000 2308000) 192000
Non-controlling (685000 577000) 108000
NCINAS
SHE at date of acquisition 2800000
Excess 85000
Net income, 2011 (from date of acq.) 485000
Amortization 71250
8
Dividends declared (35000)
SHE as adjusted (before adj. for goodwill and impairment 3406250
3406250 * 20% 681250
Share in the goodwill 108000
Share in the impairment of goodwill (8100)
NCINAS 781150
JOINT ARRANGEMENT
Problem 45 Answer D
2011: 98,000 (recoverable amount less cost to sell)
2012: 101,000 cost
2013: 86,000 (recoverable amount less cost to sell)
BUSINESS COMBINATION
Problem 47 Answer B
CT 1,600,000
FV of net identifiable assets (1,300,000)
Goodwill 300,000
CT = P16 x 100,000 shares = 1,600,000
FV of the accounting acquiree = 500,000 + 1,500,000 300,000 400,000 = 1,300,000
DECONSOLIDATION
Problem 48 Answer C
FV of Proceeds 540,000
FV of Retained Interest 54,000
CA of NCI 45,000
CA of Net Assets (450,000)
Gain 189,000
INSURANCE CONTRACTS
Problem 49 Answer A
Problem 50 Answer C
Intangible asset 310M (110M + 200M)
Financial asset 200M (110M + 90M)
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