1. A restaurant purchased kitchen equipment on Jan 1, 2016 for $40,000. It is estimated that the equipment will have a $4,000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31,

$3,000

$3,300

$3,600

$4,000

2. Two methods of writing-off accounts receivable are the

allowance method and the accrual method

allowance method and the net realizable method

direct write-off method and the accrual method

direct write-off method and the allowance method

3. An aging of a company’s accounts receivable indicates that $8,000 is estimated to be uncollectible. If Allowance for Doubtful Accounts has a $2,000 credit balance, the adjustment to record bad debts for the period will require a

Debit to Provision for Doubtful Accounts for $8,000

Debit to Allowance for Doubtful Accounts for $8,000

Credit to Provision for Doubtful Accounts for $6,000

Credit to Allowance for Doubtful Accounts for $6,000

4. Allowance for Doubtful Accounts

is offset against current liabilities

increases the cash realizable value of accounts receivable

appears on the balance sheet

is offset against accumulated depreciation

Describe in detail the audit process required in performing an audit from beginning to end. Identify how you would address auditing standards in your work.

1. On March 1, 20x7, E and F formed a partnership with each contributing the following assets:

The building is subject to a mortgage loan of P80,000, which is to be assumed by the partnership. The partnershipagreement provides that E and F share profits and losses at 30% and 70% respectively. Assuming that thepartners agreed to bring their respective capital in proportion to their P & L ratios, and using F capital as the base.

Compute the capital account balance of F on March 1, 20x7.

Select one:

a. P350,000

b. P510,000

c. P460,000

d. P430,000

2.

On March 1, 20x7, E and F formed a partnership with each contributing the following assets:

The building is subject to a mortgage loan of P80,000, which is to be assumed by the partnership. The partnership agreement provides that E and F share profits and losses at 30% and 70% respectively. Assuming that the partners agreed to bring their respective capital in proportion to their P & L ratios, and using F capital as the base.

How much is the additional cash to be invested by E?

Select one:

a. -0-

b. P200,000

c. P20,000

d. P100,000

3.

SS, TT, UU, and VV, partners to a law firm, shares profits at ratio of 4:3:1:1. On June 30, relevant partners’ accounts follow:

On this day, cash of P60,000 is declared as available for distribution to partnersas profits. Who among the partners will benefit from the P60,000 cash distribution?

Select one:

a. All of the partners

b. TT and VV

c. TT, UU and VV

d. TT only

4.

Brand Constructions began operation in 20x8. Construction activities for the first year is shown below. All contract are with different customers, and any work remaining at December 31, 20x8 is expected to be completed in 20x9. Brand uses the cost-to-cost percentage of completion in accounting for its projects.

Calculate the amount of inventory recognized as a current asset in the 20x8 balance sheet.

Select one:

a. P86,000

b. P-0-

c. P24,000

d. P70,000

5.

Partnership of T, U and V and their profit and loss ratios were as follows:

T decided to retire from the partnership and by mutual agreement, the assets were adjusted to their current fairvalue of P625,000. The partnership paid P200,000 cash for T’s equity in the partnership, exclusive of the loanwhich was repaid in full.

The capital balances of U and V, respectively, after T’s retirement from the partnership was:

Select one:

a. P146,250 and P218,750

b. P147,857 and P217,143

c. P139,286 and P205,714

d. P94,286 and P145,714

6.

On June 1, A and B pooled their assets to form a partnership, with the firm to take over their business assets and assumethe liabilities. Partners’ capitals are to be based on net assets transferred after the following adjustments:

1. B’s inventory is to be increased by P5,000.
2. An allowance for doubtful accounts of P2,800 and P2,500 are to be set up on the books of A and B, respectively.
3. Accounts payable of P7,000 is to be recognized on the books of A.

The individual trial balances on June 1, before adjustments follow:

What is the capital balance of B after adjustments?

Select one:

a. P45,200

b. P35,500

c. P42,000

d. P42,500

What are the features provided after Turkey's customs union? (embodiment)

7.61/ At the beginning of 2013, Gannon Company received a three-year zero-interest-bearing $1,000 trade note. The market rate for equivalent notes was 8% at that time. Gannon reported this note as a $1,000 trade note receivable on its 2013 year-end statement of financial position and $1,000 as sales revenue for 2013. What effect did this accounting for the note have on Gannon's net earnings for 2013, 2014, 2015, and its retained earnings at the end of 2015, respectively? And explain Why?

7.56/ Assuming that the ideal measure of short-term receivables in the balance sheet is the discounted value of the cash to be received in the future, failure to follow this practice usually does not make the balance sheet misleading because (Explain why choosing?)
a. most short-term receivables are not interest-bearing.
b. the allowance for uncollectible accounts includes a discount element.
c. the amount of the discount is not material.
d. most receivables can be sold to a bank or factor.

In December 2016, Learer Company’s manager estimated next year’s total direct labor cost assuming 40 persons working an average of 2,000 hours each at an average wage rate of $30 per hour. The manager also estimated the following manufacturing overhead costs for 2017.

Indirect labor $ 340,200 Factory supervision 110,000 Rent on factory building 101,000 Factory utilities 107,000 Factory insurance expired 87,000 Depreciation—Factory equipment 473,000 Repairs expense—Factory equipment 79,000 Factory supplies used 87,800 Miscellaneous production costs 55,000 Total estimated overhead costs $ 1,440,000 At the end of 2017, records show the company incurred $1,599,000 of actual overhead costs. It completed and sold five jobs with the following direct labor costs: Job 201, $623,000; Job 202, $582,000; Job 203, $317,000; Job 204, $735,000; and Job 205, $333,000. In addition, Job 206 is in process at the end of 2017 and had been charged $36,000 for direct labor. No jobs were in process at the end of 2016. The company’s predetermined overhead rate is based on direct labor cost. Required 1-a. Determine the predetermined overhead rate for 2017. 1-b. Determine the total overhead cost applied to each of the six jobs during 2017. 1-c.

Determine the over- or underapplied overhead at year-end 2017. 2. Assuming that any over- or underapplied overhead is not material, prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold at the end of 2017.

I found the discussion of self constructed assets to be interesting. These would be assets that the company itself builds instead of buys. The book talks about the difficulties in establishing the cost of the asset. How much of the company's overhead should be allocated to the project? How should interest incurred during construction be handled? There are a few options/opinions about how to handle overhead, which do you find to be best?

A. Seahawks, Inc. had the following consignment transactions during December:

No. sales of consigned goods were made through December 31. Seahawks' December 31 balance sheet should include consigned inventory at

Select one:

a. P12,500

b. P18,900

c. P18,000

d. P12,000

B. Ricoa Company has been forced into bankruptcy and liquidity. Unsecured claims will be paid at the rate of P0.75 on the peso. Coco Company holds a noninterest-bearing not receivable from Ricoa in the amount of P80,000, collateralized by machinery with a liquidation value of P20,000.
The total amount to be realized by Coco on this note receivable is

Select one:

a. P65,000

b. P45,000

c. P60,000

d. P80,000

C.

Maggy Corporation filed a voluntary bankruptcy petition on August 1, 20x7, and the statement of affairs reflects the following information:

The amount that will be paid to creditors with priority is

Select one:

a. P14,000

b. P20,000

c. P15,000

d. P16,000

The following information is available for Robstown Corporation for 20Y8: Inventories January 1 December 31 Materials $347,000 $435,000 Work in process 627,000 590,600 Finished goods 608,200 571,000 December 31 Advertising expense $ 295,200 Depreciation expense-office equipment 44,400 Depreciation expense-factory equipment 55,000 Direct labor 669,600 Heat, light, and power-factory 22,480 Indirect labor 76,750 Materials purchased 658,600 Office salaries expense 185,300 Property taxes-factory 18,200 Property taxes-office building 32,400 Rent expense-factory 32,500 Sales 3,016,000 Sales salaries expense 419,000 Supplies-factory 15,900 Miscellaneous costs-factory 9,600 Required:

a. Prepare the 20Y8 statement of cost of goods manufactured. For those boxes in which you must enter subtracted or negative numbers use a minus sign.*

b. Prepare the 20Y8 income statement. *Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

Colt Company reports pretax financial “income” of $143,000 in 2016. In addition to pretax income from continuing operations (of which revenues are $295,000), the following items are included in this pretax “income:” Problems Colt's taxable income totals $93,000 in 2016. The difference between the pretax financial income and the taxable income is due to the excess of tax depreciation over financial depreciation on assets used in continuing operations. At the beginning of 2016, Colt had a retained earnings balance of $310,000 and a deferred tax liability of $8,100. During 2016, Colt declared and paid dividends of $48,000. It is subject to tax rates of 15% on the first $50,000 of income and 30% on income in excess of $50,000. Based on proper interperiod tax allocation procedures, Colt has determined that its 2016 ending deferred tax liability is $14,100.

Required: Prepare a schedule for Colt to allocate the total 2016 income tax expense to the various components of pretax income.
Prepare Colt's income tax journal entry at the end of 2016. Prepare Colt's 2016 income statement.
Prepare Colt's 2016 statement of retained earnings. Show the related income tax disclosures on Colt's December 31, 2016, balance sheet.

The valuation of plant and equipment to allow for fair market value will be reference to IFRS IAS 16. Does the standard differ from GAAP valuation? Do you see this debate getting settled soon? Please take a side and defend your position.

Regency Corp. uses a standard cost system to account for the costs of its one product. Fixed overhead is applied to production at a rate of $27.10 per unit, based on budgeted production is 2,445 per month. During November, Regency produced 2,295 units. Fixed overhead incurred totaled $70,420.

a. Calculate the fixed overhead spending variance.

b. Calculate the fixed overhead volume variance.

Wisner Corporation's financial statements for 2019 showed the following:

This company has debt of $120,000 and contributed capital of $200,000. A consultant recommended that a better capital structure would be $220,000 debt and contributed capital of $100,000. Assume the company pays no dividends, the interest on the debt would be paid in cash annually at 6%, and income taxes are paid in cash annually.

1. Prepare the adjusted income statement for 2018 as if Wisner was under the alternative capital structure.

2. Complete the following table for 2018: For ratios use year end balances.

3. What do you think of the consultant's recommendation?

Ferris Corporation makes a single product—a fire-resistant commercial filing cabinet—that it sells to office

furniture distributors. The company has a simple ABC system that it uses for internal decision making. The

company has two overhead departments whose costs are listed on the following page:

Manufacturing overhead .................................. $500,000

Selling and administrative overhead ................ 300,000

Total overhead costs ........................................ $800,000

The company’s ABC system has the following activity cost pools and activity measures:

Activity Cost Pool Activity Measure

Assembling units ..................... Number of units

Processing orders .................... Number of orders

Supporting customers ............. Number of customers

Other ........................................ Not applicable

Costs assigned to the “Other” activity cost pool have no activity measure; they consist of the costs of

unused capacity and organization-sustaining costs—neither of which are assigned to orders, customers, or

the product.

Ferris Corporation distributes the costs of manufacturing overhead and of selling and administrative

overhead to the activity cost pools based on employee interviews, the results of which are reported below:

Required:

1- Perform the first-stage allocation of overhead costs to the activity cost pools and find manufacturing overhead for Assembling units.

2-Compute activity rates for the activity cost pools and find the activity rate for processing orders

3-Compute activity rates for the activity cost pools and find the activity rate for supporting customers

4-Office Mart is one of Ferris Corporation’s customers. Last year, Office Mart ordered filing cabinets four different times. Office Mart ordered a total of 80 filing cabinets during the year. What is the ABC cost for Assembeling unit?

5-Office Mart is one of Ferris Corporation’s customers. Last year, Office Mart ordered filing cabinets four different times. Office Mart ordered a total of 80 filing cabinets during the year. What is the ABC cost for Processing orders?

Question 2
Heinrich Bauer Stahl Ltd is a company that manufactures steel products. The following trial
balance was extracted from the records of Heinrich Bauer Stahl on 31 December 2018.
Additional information:
 Heating, lights and power for manufacturing as well as rent are to be apportioned: 4/5
Factory, 1/5 office.
N$ N$
Balances
Inventory at 1 January 2018:
· Raw materials 6,800.00
· Finished goods 12,200.00
· Work in progress -
Transactions
Capital 30,000.00
Drawings 4,000.00
Sales 180,000.00
Purchases of raw materials 36,000.00
Carriage inwards 1,600.00
Factory wages 37,000.00
Office salaries 33,800.00
Heinrich Bauer: salary and expenses 20,800.00
Heating, lights and power for manufacturing 5,000.00
Rent 7,500.00
Factory insurance 1,900.00
Advertising 2,800.00
Bank 7,200.00
Cash 650.00
General expenses:
· Factory 2,400.00
· Office 1,500.00
Bad debts 1,300.00
Discount received 3,200.00
Carriage outwards 750.00
Plant and machinery, at cost less depreciation 18,200.00
Car, at cost less depreciation 8,400.00
Trade receivables and payables 15,400.00 12,000.00
225,200.00 225,200.00
Balances
Inventory at 31 December 2018:
· Raw materials 5,800.00
· Finished goods 16,400.00
· Work in progress -
Page 16 of 18
 Factory insurance is to be apportioned: ¾ Factory , ¼ office
 Heinrich Bauers’ expenses and salary are to be regarded as selling expense and has sole
use of the entity’s vehicle.
 Depreciation for the year should be charged as follows:
o Vehicle N$ 1,000.00
o Plant and Machinery N$ 3,000.00
 Factory insurance paid in advance at 31 December 2017 was N$ 300.00 and office
general expenses unpaid were N$ 150.
You are required to:
Prepare the following accounts in the general ledger of Heinrich Bauer Stahl Ltd:
1. Raw material inventory ( 3 Marks)
2. Factory overhead expenses ( 4 Marks)
3. Finished goods and
4. Prepare a statement of profit or loss and other comprehensive income for the year
ending 31 December 2018. ( 11 Marks)