UST-JPIA Preliminary Examination Reviewer in CA5101

Name:________________________________ Section:__________________

Theories (1.5pts each, 30%) Computation (2.5 pts. each, 70%)

1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
10 10
11 11
12 12
13 13
14 14
15 15
16 16
17 17
18 18
19 19
20 20
21
22
23
24
25
26
27
28

vpld_pogi69.2018 1
 CA5101: Mock Preliminary Exam

I. STATEMENT VALIDATION (THEORIES)

DIRECTIONS: Write MAHABA if the statement is true, and write MATIGAS if false.

1. Assets and liabilities have a direct relationship.

2. RA 9298 is also known as the Philippine Accountancy Act of 2005.
3. Assets – Equity = Liabilities
4. Failure to record an adjusting entry for an accrual results to an overstatement of the
capital and liabilities of the business.
5. Accounts payable is an example of a real account.
6. In every adjusting entry, only real accounts are affected.
7. The use of asset method generally results in higher income even if adjustments are
made at year-end.
8. The difference between accruals and deferrals is the timing of the cash flows.
9. Allowance for bad debts and accumulated depreciation accounts are contra-asset
accounts.
10. A trial balance, regardless if adjusted or unadjusted, may have equal balances but
may have some mistakes embedded in it.
II. MULTIPLE CHOICE (THEORIES)
DIRECTIONS: Choose the best answer. Write E if the answer is not in the choices
11. The following are the fundamental characteristics of financial statements EXCEPT:
A. Verifiability
B. Comparability
C. Understandability
D. Timeliness
12. Na-ta Tai A. Co. had purchased a year's worth of rent in September 30th, 2018 amounting to
Php 340,000. The following entries MAY be made assuming the use of the EXPENSE method
EXCEPT:
A. A debit to Rent Expense for P340,000 and a credit to cash for the same amount
B. A credit to Rent Expense for P255,000 and a debit to Prepaid Rent for the same amount
C. A debit to Prepaid Rent for P340,000 and a credit to cash for the same amount
D. A debit to Prepaid Rent for P255,000 and a credit to Rent Expense for the same amount
13. In what book did the Father of Double-Entry Bookkeeping write his knowledge of such?
A. Summa de arithmetica
B. Summa de arithimetica
C. Fundamentals of Accounting: Vol. 1
D. Fundamentals of Accounting: Vol. 2

vpld_pogi69.2018 2
14. Which of the following statements is true?
I. Reversing entries are an optional step in the accounting cycle.
II. In the event where a conflict between the conceptual framework and the Standards may
occur, the Standards shall prevail over the aforementioned.
III. Current assets are assets expected to be consumed or realized in the normal operating
cycle, or within twelve months as of acquisition, whichever is longer.
IV. A post-closing trial balance is made after closing entries.
A. I only
B. II and IV
C. I, II, and III
D. All statements are true
15. Revenues less expenses result to:
A. Profit/Loss
B. Gain/Loss
C. Capital
D. Liabilities
16. Pek Squared LLC paid P900,000 for a 25-month advertisement contract with TV company on
June 2, 2018. It also received a total of P1,000,000 on July 31, 2018 as advances from customers
for the aircon maintenance services it offers, which will be performed during a 40-month period
beginning August 31, 2018.
From the above problem, determine the net income/loss, prepaid assets, and unearned revenue
for the year ended 2018.
Net Income/Loss Prepaid Assets Unearned Revenue
A. 152,000 648,000 100,000
B. (152,000) 252,000 100,000
C. (152,000) 648,000 900,000
D. 152,000 252,000 900,000

17. The following are liabilities except for:

A. Finance Lease Receivable
B. Utilities Payable
C. Defined Benefit Obligation
D. Accrued Interest Expense
18. The ending balance of accounts receivable, less the ending balance of the allowance for
doubtful accounts results to:
A. Carrying Value
B. Current Cost
C. Amortized Cost
D. Zonal Value

vpld_pogi69.2018 3
19. Which does not belong to the group?
A. Land
B. Equipment
C. Vehicles
D. Building
20. The following are to be considered current assets EXCEPT:
A. Software acquired three months before the next balance sheet date
B. Cash and cash equivalents
C. Prepaid Expenses purchased two years ago and are still unexpired
D. Accounts Receivable

III. COMPUTATIONAL FLUENCY

DIRECTIONS: Supply the answer. Round off your FINAL answer to two decimal places.
Problem A:
Count To Nine Mo Co. purchased an eight hundred eighty-seven thousand sixty-nine-peso piece of
equipment on September 10, 2018. It had incurred delivery costs amounting to four thousand
pesos, and testing costs amounting to six thousand pesos. After twelve years, its value will
decrease to sixty-nine thousand and sixty-nine pesos.

1. How much is the van’s carrying value on August 28, 2023? P552,069
2. How much is its accumulated depreciation balance as of July 25, 2022? P270,250

Problem B:
The following are transactions that have occurred in the past month of March for Jordy’s Auto
Repair Shop & Car Wash.
01 Jordy invested Php 200,000 in cash and Php 50,000 worth of cleaning and
repair supplies to his business.
02 Repaired the car of Rev. Fr. Ramon R. Aquino, O.P., the parish priest of his
barangay, after an accident, for cash, Php 20,000.
09 Performed services on account to Gina Cole-Mocquo, Php 25,000 whilst
using Php 30 worth of nuts and bolts.
10 Performed services for free due to his barangay tanod having a ‘free
carwash’ program.
11 Washed the car of Mayor Cecilio Flordeluna for Php 350, and used Php 250
worth of cleaning supplies in the process.
12 Had the air conditioning of his shop repaired, but decided to let the expense
accrue for it will be paid the following month, Php 10,000
15 Paid the salaries of his water boy, Php 4,000
23 Collected 69% of the July 9 transaction

vpld_pogi69.2018 4
 25 Billed customers for repairs, Php 25,000 and used Php 30,000 worth of
spare parts; sideskirts, emblems, windshields, spark plugs, and the like.
30 Paid salaries of the water boy again.
31 Charged for unpaid utilities by Meralco, Php 5000

FIND THE:
3. Total cash 229,600
4. Total liabilities 15,000
5. Gross service income 70,350
6. Total debit balance of the adjusted trial balance 335,350
7. The balance of Jordy, capital (assuming nominal accounts were closed) 267,070

Problem C:
The following information was gathered from the trial balance of HEEMASIN MO Co. Massage Hut.
HEEMASIN MO Co. Massage Hut
Trial Balance
December 31, 2019

Cash 1,560,000.00
Accounts Receivable 350,000.00
Supplies 45,000.00
Massage Equipment 60,000.00
Accounts Payable 540,000.00
Mandu, Capital 1,820,000.00
Mandu, Drawing 40,000.00
Salaries Expense 500,000.00
Utilities Expense 300,000.00
Transportation Expense 55,000.00
Rent Expense 700,000.00
Fees Earned 1,250,000.00
TOTAL 3,610,000.00 3,610,000.00

vpld_pogi69.2018 5
ADDITIONAL INFORMATION:
 Depreciation of equipment is at 5% of acquisition cost annually.
 The equipment was acquired on January 2 of year of reporting.
 Fees unearned but collected totaled Php 300,000, which was initially recorded as revenue.
 Supplies on hand were at Php 20,000 at year end.
 The rent was purchased on July 5, 2019. The entity used the expense method.

FIND:
8. Gain or loss on sale of equipment, assuming it was sold on March 1st the following year for
P45,000 18,500 loss
9. Total expenses, adjusted as of December 31, 2019. 291,333.33
10. Capital balance as of December 31, 2019 1,438,666.67
11. Income Summary at December 31, 2019 0
12. Total assets as of the end of the period 2,278,666.67
13. Total current liabilities as of the end of the period 840,000
14. Net income/loss for the period ended 391,333.33 loss

Problem D:

Malaki Ang Titik Co. uses the allowance method of recognizing uncollectible accounts. The
following summary schedule was prepared from an aging of accounts receivable outstanding on
December 31, 2069:

# of days outstanding: Amount Probability of collection

0 – 15 days P 268,000 95 %
16 – 30 days 400,200 90 %
31 – 60 days 317,300 82 %
61 – 90 days 887,700 75 %
Over 90 days 339,800 69 %

The following information is available for 2069:

Credit sales P 3,460,900

Allowance for bad debts, Jan. 1 103,250
Allowance for bad debts, Dec. 31 (prior to
adjustments) 90,600

15. What amount that is to be reported as uncollectible accounts expense for 2069? 707,377
16. What is the amount of amortized cost of accounts receivable as of December 31, 2069?
1,415,023

Problem E:

Ginaccle Co. owns an office building and leases the offices under a variety of rental agreements
involving rent paid in advance monthly or annually. Not all tenants make timely payments of their
rent. The following data were taken from the balance sheets of Ginaccle:
 Rent receivable were P68,000 and P104,000 for 2019 and 2020, respectively.
 Deferred rentals were P64,000 and P50,000 for 2019 and 2020, respectively.
 During 2020, Ginaccle received P180,000 cash from tenants.

vpld_pogi69.2018 6
 17. What amount of rental revenue should Ginaccle record for 2020? 230,000
Problem F:

On November 11, 2019, Iyo Ten Mo Co. had equipment amounting to Php 3,350,000 with a
carrying value of Php 2,739,350. It was purchased exactly 5 years ago and is expected to be valued
at Php 300,000 at the end of its product life cycle.

FIND:
18. Depreciation Expense for the year 2019 122,130
19. Annual Depreciation 122,130
20. Useful life 24.97 years
21. Gain or loss of sale of equipment at August 13,2019, assuming it was sold for Php
2,500,000. 269,882.5 loss

Problem G:

The following were to be accounted for in the year 2029:

Service Revenue P 780,000

Rent Expense 52,000
Depreciation Expense 78,000
Salaries Expense 80,000
Heat, Light & Power 10,000
Insurance Expense 65,000
Mickey-D, Capital 900,000

22. What is the balance of the Income Summary account after closing entries at December 31,
2029? 0
23. What is the balance of Mickey-D’s capital account after closing entries at December 31,
2029? 1,395,000
24. What is net income for the year ended, 2029? 495,000

Problem H:

Ninong Bax pays his employees every Friday. For the week of July 30 – August 3, 2018, he had
accrued Php 45,000 worth of salaries to his employees. July 31st falls on a Tuesday. Assume a
fiscal year of August 1 – July 31.

25. Assuming reversing entries were made, what is the balance of the salaries expense account
as of August 3, 2018? 27,000
26. Assuming reversing entries were not made, what is the balance of the salaries expense
account as of August 3, 2018? 27,000

vpld_pogi69.2018 7
Problem I:

Joms’ accounts receivable as of the end of the year amounted to P80,000. Sales during the year
amounted to P220,000 for in which 80% were on credit, the adjusted beginning balance of the
allowance for uncollectible accounts was P10,000, and the unadjusted ending balance of
allowance for uncollectible accounts was 3,000. During the year, P6,000 of previously written off
accounts receivable was recovered, while P9,000 of the accounts receivable were written off.

27. Assuming 98% of the current year credit sales were collectible, how much is the amortized
cost? 76,480
28. How much is doubtful accounts expense assuming only 10% of total accounts receivable is
uncollectible? 5,000

vpld_pogi69.2018 8