MANUEL L.

QUEZON UNIVERSITY ​ ​ ​School

of Accountancy and Business Arts
Integrated Review in Theory of Accounts and Practical
Accounting 1 ​ ​ ​Day 4
1. A retailer imported goods at a cost of P 260,000, including
P 40,000 non-refundable import duties and P 20,000
refundable purchase taxes. The risks and rewards of
ownership of the imported goods were transferred to the
retailer upon collection of the goods from the harbor
warehouse. The retailer was required to pay for goods upon
collection. The retailer incurred P10,000 to transport the
goods to its retail outlet and a further P 4,000 in delivering
the goods to its customer. Further selling costs of P 6,000
were incurred in selling the goods.
What amount should the inventory be valued?
a. P 240,000
b. P 250,000
c. P 260,000
d. P 270,000
2. The inventory on hand at December 31, 2014 for Conrad
Company is valued at a cost of P947,800. The following
items were not included in this inventory amount:
A. Purchased goods in transit, shipped FOB destination.
Invoice price-P 32,000, which includes freight charges
of P 1,600.
B. Goods held on consignment by Conrad at a sales price
of P 28,000, including sales commission of 20% of the
sales price.
C. Goods sold to Ube Company, under terms FOB
destination, invoiced for P 24,400 which includes P
1,000 freight charges to deliver the goods. The goods
are in transit.
D. Purchased goods in transit, terms FOB shipping point.
Invoice price-P 48,000. Freight costs P 3,000
E. Goods out on consignment to Can Company, sales
price, P 36,400. Shipping cost of P2,000.
Mark-up on cost for sales is 30%.

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 What is the correct cost of inventory to be reported in
Conrad’s financial statement?
a. P 1,022,400
b. P 1,041,800
c. P 1,046,800
d. P 1,078,800
3. Power Company reviewed its year-end inventory and found
the following items:
A. A package containing a product costing P 81,600 was
standing in the shipping area when the physical
inventory was conducted. This was not included in the
inventory because it was marked “Hold for the
shipping instructions “. The purchased order was dated
December 19 but the package was shipped and the
customer was billed January 2, 2015.
B. A special machine, fabricated to order for a particular
customer, was finished and in the shipping room on
Dec. 30, 2014. The customer was billed on that date
and the machine was excluded in the inventory. The
machine was costing P 230,000 was shipped Jan. 2,
2014.
C. Merchandise costing P 23,500 was received on
January 3, 2015 and the related purchase invoice was
recorded January 5, 2015. The invoice showed the
shipment was made December 29, 2014, FOB
destination.
D. Goods costing P 150,000 were sold and delivered on
Dec. 20, 2014. The sale was accompanied by a
repurchase agreement that Power will “buyback” the
inventory in February 2015.
How much is the inventory adjustment on December 31,
2014?
a. P 81,600 increase
b. P 231,600 increase
c. P 461,600 increase
d. P 485,999 increase
4. Marker Company has the following information pertaining
to its merchandise inventory as of December 31, 2014:
Inventory on hand (including merchandise received

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 o​ n consignment of P
20,000) ​ ​ ​ ​ ​P 200,000
Inventory purchased with a buyback
agreement ​ ​ ​ 100,000
Merchandise in transit, FOB, shipping point,
​including P 5,000 freight
cost ​ ​ ​ ​ ​ 155,000
Merchandise in transit, Free alongside, including
​delivery cost alongside the vessel of P 6,000
​but excluding the cost of shipment of P
3,000 ​ ​ ​ 250,000
Merchandise in transit, CIF (including insurance costs
​and freight of P
8,000) ​ ​ ​ ​ ​ ​ 175,000
What amount should Marker Company report as value of
its inventory in its 2014 statement of financial position?
a. P 749,000
b. P 757,000
c. P 763,000
d. P 857,000
5. The accounting records of Token Company show the
following information For 2014:
In store
​Inventory, December 31 ​ ​ ​ ​P
290,000
​Inventory, January 1 ​ ​ ​ ​ 220,000
​Purchases ​ ​ ​ ​ ​ 960,000
​Freight in ​ ​ ​ ​ ​ 20,000
​Freight out ​ ​ ​ ​ ​ 60,000
Out on consignment
​Inventory, December 31 ​ ​ ​ ​P
40,000
​Inventory, January 1 ​ ​ ​ ​ 24,000
​Shipment from consignor ​ ​ ​ 120,000
​Freight out to consignees ​ ​ ​ 10,000
​Freight out ​ ​ ​ ​ ​ 16,000
What would be the cost of sales of Token for 2014?
a. P 904,000
b. P 970,000

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 c. P 1,014,000
d. P 1,024,000
6. On March 1, 2014, Good Company purchased a tract of
land for P 18,000,000. Good incurred additional cost of P
4,500,000 during the remainder of year 2014 in preparing
the land for sale. The land was subdivided into residential
lots as follows:
Lot Class ​Number of Lots ​ ​Sales Price
per Lot
A ​ ​ 100 ​ ​ ​ P 240,000
B ​ ​ 100 ​ ​ ​ 160,000
C ​ ​ 200 ​ ​ ​ 100,000
Using the relative sales value method, how much should be
allocated to Class A lot?
a. P 7,200,000
b. P 8,640,000
c. P 9,000,000
d. P 10,800,000
7. On June 1, 2014, Pitt Corp. sold merchandise with a list
price of P 50,000 to Bull on account. Pitt allowed trade
discounts of 30%, 20% and 10%. Credit terms were 2/15,
n/40 and the sale was made FOB destination. Bull paid P
2,000 of delivery costs.
On June 12, 2014, how much did Pitt receive from Bull as
full payment?
a. P 22, 696
b. P 24,696
c. P 26,656
d. P 26,696
Question 8 and 9: Light Company is a wholesaler of
scented candles. The activity for item number 1234 during
June is presented below:
Date ​ ​ Transaction ​ ​ ​
Units ​ ​ Cost
June 01 ​ ​Inventory balance ​ ​
6,000 ​ ​P 20.00
04 ​ ​Purchases ​ ​ ​
9,000 ​ ​ 24.00

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 12 ​ ​Sales ​ ​ ​ ​10,800 ​ ​

19 ​ ​Purchases ​ ​ ​14,400 ​ ​
26.00

22 ​
​Sales ​ ​ ​ ​11,400 ​ ​
29 ​ ​Purchases ​ ​ ​
4,800 ​ ​ 27.00
8. Under the FIFO periodic inventory system, how much is
the ending inventory of item #1234 at June 30?
a. P 280,800
b. P 278,400
c. P 302,400
d. P 316,800
9. Under the weighted average cost periodic inventory system,
how much is the ending inventory of item #1234 at June
30?
a. P 278,400
b. P 294,720
c. P 302,400
d. P 316,800
10. During January 2014, Metro Company, which maintains a
perpetual inventory system, recorded the following
information pertaining to its inventory:
Unit ​ ​Total ​
Units
Units ​ ​Cost ​ ​Cost ​
​on Hand
Balance on 01/01/14 ​ ​1,000 ​ ​P
40 ​ ​P 40,000 ​1,000
Purchased on 01/04/14 ​ ​600 ​ ​P
120 ​ ​P 72,000 ​1,600
Sold on
01/20/14 ​ ​900 ​ ​ ​ ​ ​ ​700
Purchased on 01/25/14 ​ ​400 ​ ​P
200 ​ ​P 80,000 ​1,100
Under the moving-average method, what amount should
Metro report a inventory at January 31, 2014?
a. P 105,600

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 b. P 129,000
c. P 132,000
d. P 156,000
11. The Moonlight Corporation applies the lower of cost or
net realizable value (NRV) inventory. Data regarding the
items in work-process inventory are shown below:
Shorts ​ ​
Pants
Historical cost ​ ​ ​ ​ ​ ​ P
56,640 ​P 90,000
Selling
price ​ ​ ​ ​ ​ ​ ​108,800 ​ ​
108,000
Estimated cost to complete ​ ​ ​ ​ ​
14,400 ​ ​ 20,400
Replacement cost ​ ​ ​ ​ ​ ​
50,400 ​ ​ 95,400
Normal profit margin as a percentage of selling
price ​ ​ 25% ​ ​ 10%
Under the lower of cost or NRV rule, the pants should be
valued at –
a. P 76,800
b. P 87,600
c. P 90,000
d. P 95,400
12. The closing inventory of gender Company amounted to P
284,000 at December 31, 2014. This total includes two
inventory lines about which the inventory taker is
uncertain.
Item 1 – 500 items which had cost P15 each and which
were included at P 7,500. These items were found to
have been defective at the balance sheet date. Remedial
work after the balance sheet date cost P 1,800 and they
were then sold for P20 each. Selling expenses were P
400.
Item 2 – 100 items that had cost P10 each but after the
balance sheet date, these were sold for P8 each with
selling expenses of P 150.
What figure should appear in Gender’s statement of

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 financial position for inventory?
a. P 283,650
b. P 283,950
c. P 284,000
d. 284,300
13. During 2014, Time Company signed a non-cancelable
contract to purchase 1,000 sacks of rice at P900 per sack
with delivery to be made in 2015. On December 31, 2014,
the price of the rice had fallen to P850 per sack. On May 9,
2015, the Company accepts delivery of rice when the price
is P880 per sack.
In the December 31, 2014 statement of comprehensive
income, what amount of loss on purchase commitment
should be included?
a. None
b. P 20,000
c. P 30,000
d. P 50,000
14. The Classic Company sells Product A. During the year,
the company moved to a new location, the inventory
records for Product A were misplaced. The bookkeeper has
been able to gather some information from the sales records
and gives you the data shown below:
July sales: ​57,200 units at P100
July purchases:
​ Date ​ ​Quantity ​ ​Unit Cost
​July 5 ​ ​ 10,000 ​ ​ ​ P65.00
​ 9 ​ ​ 12,500 ​ ​ ​ 62.50
​ 12 ​ ​ 15,000 ​ ​ ​ 60.00
​ 23 ​ ​ 14,000 ​ ​ ​ 62.00
On July 31, 16,000 units were on hand with a total value of
P 988,000. Classic has always used a periodic FIFO
inventory costing system. Gross profit on sales for July was
P2,058,750. What is the total cost and unit cost,
respectively, of the beginning inventory?
a. P 1,345,400 and P62.00
b. P 1,353,538 and P62.38
c. P 1,367,100 and P63.00
d. P 1,450,000 and P66.82

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 15. On the eve of June 15, 2014, a fire destroyed the entire
merchandise inventory of Chronic Merchandising
Corporation. The merchandise was not insured with any
insurance company. The following data were gathered:
Inventory, January 1 ​ ​ ​ ​P 250,000
Purchases, January 1 to June 15 ​ ​ ​
1,500,000
Sales January 1 to June 15 ​ ​ ​ 2,000,000
Markup percentage on cost ​ ​ ​ 25%
What is the approximate inventory loss as a result of the
fire?
a. P 150,000
b. P 250,000
c. P 312,500
d. P 500,000
16. The following information appears in Davila Company’s
records for the year ended December 31, 2014:
Inventory, January 1, P 325,000; Purchases, P
1,150,000; Purchase returns, P 40,000;
Freight in, P 30,000; Sales, P 1,700,000; Sales
discounts, P 10,000; Sales returns, P15,000
On December 31, the company conducted a physical
inventory which revealed that the ending inventory was
only P 210,000. Davila’s gross profit on net sales has
remained constant at 30% in recent years. Davila suspects
that some inventory may have been pilfered by one of the
company’s employees.
How much is the estimated cost of missing inventory on
December 31?
a. P 75,500
b. P 82,500
c. P 210,000
d. P 292,500
17. On December 24, 2014, a fire destroyed totally the raw
materials bodega of Weary Manufacturing Co. there were
no purchases of raw materials from the time of the fire until
December 31, 2014.
Inventories ​ ​Jan. 1, 2014 ​ ​Dec. 31,
2014

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 Raw materials ​ ​P 180,000 ​ ​ ​?
Factory supplies ​ 12,000 ​ ​ P 10,000
Goods in process ​ 370,000 ​ ​ 420,000
Finished goods ​ ​ 440,000 ​ ​
450,000
The accounting records show the following data:
​Sales ​ ​ ​ ​ ​P 2,400,000
​Purchased of raw materials ​ ​ 800,000
​Purchases of factory supplies ​ ​ 60,000
​Freight in raw materials ​ ​ ​ 30,000
​Direct labor ​ ​ ​ ​ 440,000
Manufacturing overhead, 75% of direct labor; gross profit
rate, 35% of sales.
What is the cost of the raw materials destroyed by the fire?
a. P 130,000
b. P 150,000
c. P 160,000
d. P 222,000
18. On September 15, 2015, a fire destroyed a significant
portion of the merchandise inventory of Peso Wholesale
Corporation. The following information was available from
the records of the company:
January 1, 2015
to Date of Fire ​ ​
2014
​Sales ​ ​ ​ ​ ​ ​ P
450,200 ​ ​P 530,180
Sales returns and allowances ​ ​ ​
5,100 ​ ​ 5,980
Purchases ​ ​ ​ ​ ​
378,245 ​ ​ 405,476
Purchase returns and allowances ​ ​
10,295 ​ ​ 11,110
Beginning inventory ​ ​ ​ ​
105,650 ​ ​ 120,160
The company determined the cost of inventory not
damaged to be P 69,738. Damaged merchandise, which
cost P 15,000, had an estimated realizable value of P 5,000.
What is the estimated fire loss on September 15, 2015?

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 a. P 51,684
b. P 61,684
c. P 66,684
d. P 74,738
19. Sultan Co. uses the retail inventory method to estimate its
inventory for interim statement purposes. Data relating to
the inventory computation at June 30, 2014 are as follow:
COST ​ ​ RETAIL
Inventory, January 1 ​ ​P 820,000 ​ ​P
1,262,800
Net purchases ​ ​ ​ 2,280,000 ​ ​
3,607,200
Net mark-ups ​ ​ ​ ​ ​ ​ 450,000
Net markdowns ​ ​ ​ ​ ​ ​
320,000
Sales ​ ​ ​ ​ ​ ​ ​ 4,350,000
Sales returns ​ ​ ​ ​ ​ ​ 300,000
Employee discount ​ ​ ​ ​ ​ ​
100,000
Sales discount ​ ​ ​ ​ ​ ​ 80,000
Normal shrinkage ​ ​ ​ ​ ​ ​
50,000
What is the estimated cost of June 30, 2014 inventory using
the average approach?
a. P 466,000
b. P 496,000
c. P 616,000
d. P 800,000
20. The Bony Department store uses a calendar year and the
FIFO retail inventory method (assuming stable prices).
Information relating to the computation of the inventory at
December 31 is as follows:
COST ​ ​RETAIL
​Inventory, January 1 ​ ​ ​P 320,000 ​P
800,000
​Sales ​ ​ ​ ​ ​ ​ ​5,800,000
​Purchases ​ ​ ​ ​2,100,000 ​6,000,000
​Freight-in ​ ​ ​ ​70,000 ​ ​
​Net markups ​ ​ ​ ​ ​ ​400,000

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 ​ et markdowns
N ​ ​ ​ ​ ​ ​200,000
What is the ending inventory at cost at December 31 using
the FIFO retail inventory method?
a. P 420,000
b. P 430,000
c. P 440,000
d. P 460,000
21. Presented below is information related to Carnation,
Incorporation;
Cost ​ ​ ​
Retail
Inventory, January 1, 2014 ​ ​ ​ ​P
250,000 ​ ​P 390,000
Purchases ​ ​ ​ ​ ​ ​
914,500 ​ ​ 1,460,000
Purchase returns ​ ​ ​ ​ ​
60,000 ​ ​ 80,000
Purchase discounts ​ ​ ​ ​ ​
18,000 ​ ​ ​-0-Gross sales (after employee
discounts) ​ ​ -0- ​ ​ ​ 1,260,000
Sales returns ​ ​ ​ ​ ​ -0- ​ ​
​ 97,500
Markups ​ ​ ​ ​ ​ ​ -0- ​ ​
​ 120,000
Markup cancellations ​ ​ ​ ​
-0- ​ ​ 40,000
Markdowns ​ ​ ​ ​ ​ ​
-0- ​ ​ 45,000
Markdown cancellations ​ ​ ​ ​
-0- ​ ​ 20,000
Freight-in ​ ​ ​ ​ ​ ​
79,000 ​ ​ ​-0-
Employee discounts granted ​ ​ ​ ​
-0- ​ ​ ​ 8,000
Loss from breakage ​ ​ ​ ​ ​
-0- ​ ​ ​ 2,500
Assuming that Carnation, Inc. uses the conventional retail
inventory method, how much would be the cost of its
ending inventory at December 31, 2014?

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 a. P 365,085
b. P 391,200
c. P 410,760
d. P 420,280
Question 22-24: Solo Company acquired forest assets for a
lump sum amount of P 20,000,000 which is equal to the
lump sum value of the group of assets at the time of
purchase the company is unable to determine the fair value
of the trees separately since no active market was clearly
available. The other assets in the group had determinable
fair value. The forest assets are listed below and their
related fair value less point of sell costs:
Land under trees ​ ​ ​2,000,000
Roads in forest ​ ​ ​ ​1,000,000
22. What amount should the biological asset be initially
recorded?
a. P 1,000,000
b. P 2,000,000
c. P 17,000,000
d. P 19,000,000
23. What amount should the non-current non-depreciable
asset be initially recorded?
a. P 1,000,000
b. P 2,000,000
c. P 17,000,000
d. P 19,000,000
24. What amount should the non-current depreciable asset be
initially recorded?
a. P 1,000,000
b. P 2,000,000
c. P 17,000,000
d. P 19,000,000
Question 25 and 26: Central Farm Corporation reported the
following lists of biological assets and agricultural produce
for the year ended December 31, 2014:
​Assets ​ ​ ​ ​ ​Fair value
​Dairy cattle ​ ​ ​ P 3,000,000
​Beef cattle ​ ​ ​ ​5,000,000
​Sheep ​ ​ ​ ​ ​2,000,000

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 ​Calves on dairy cattle ​ ​ ​1,000,000
​Calves on dairy cattle ​ ​ ​1,500,000
​Lambs ​ ​ ​ ​ ​ 800,000
​Milk on dairy cattle ​ ​ ​ 500,000
​Carcass on beef cattle ​ ​ ​ 600,000
​Wool ​ ​ ​ ​ ​ 400,000
25. What amount of biological asset should Central Farm
Company report in its December 31, 2014 statement of
financial position?
a. P 8,000,000
b. P 10,000,000
c. P 13,300,000
d. P 14,800,000
26. What amount should Central Farm Company report as
inventory related to the above biological assets?
a. P 500,000
b. P 600,000
c. P 1,100,000
d. P 1,500,000
27. Vortex Company’s standing cane fair value as of January
1, 2014 was P 2,700,000 and as of December 31, 2014 was
P 2,250,000. The fair value of the agricultural produce
harvested during the period was P 2,100,000, on the
respective dates of harvest.
What net amount of gain or loss should Vortex Company
report in its December 31, 2014 profit or loss related to the
biological asset and agricultural produced?
a. None
b. P 550,000
c. P 1,650,000
d. P 2,100,000
Question 28-30: rainbow Company has the following
information pertaining to its biological assets for the year
2014:
A herd of 100, 2-year old animals was held at January 1,
2014. Ten animals aged 2.5 years were purchased on July
1, 2014 for P 5,400 and ten animals were born on July 1,
2014. No animals were sold or disposed of during the
period. Per unit fair values less estimated point-of-sale

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 costs were as follows:
2.0-year old animal at January 1, 2014 ​ ​
P 5,000
Newborn animal at July 1,
2014 ​ ​ ​ ​3,500
2.5-year old animal at July 1,
2014 ​ ​ ​5,400
Newborn animal at December 31,
2014 ​ ​ ​3,600
0.5-year old animal at December 31,
2014 ​ ​4,000
​2.0-year old animal at December 31,
2014 ​ ​5,250
​2.5-year old animal at December 31,
2014 ​ ​5,550
​3.0-year old animal at December 31,
2014 ​ ​6,000
28. How much of the increase in the fair value of the
biological assets due to price change?
a. None
b. P 25,000
c. P 26,500
d. P 27,500
29. How much of the increase in the fair value of the
biological assets due to physical change?
a. P 75,000
b. P 79,500
c. P 110,000
d. P 118,500
30. What is the fair value of the biological assets as of
December 31, 2014?
a. P 554,000
b. P 581,500
c. P 700,000
d. P 735,000
1

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