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SEATWORK NO. 1
Answer Key with Solutions
EASY ROUND
Problem 1
Cash receipts from subscribers ₱ 7,200,000.00
Divided by: No. of months in a year 12
Monthly cash receipts from the subsciber ₱ 600,000.00
Deferred Revenue
₱ 5,400,000.00 ₱ 7,200,000.00
Answer for Problem 1:
₱ 1,800,000.00 A. P 1,800,000
Problem 2
Asset ₱ 210,000.00 Year end balances:
Liabilities (120,000.00) Assets ₱ 270,000.00
Equity ₱ 90,000.00 Liabilities (171,000.00)
Equity ₱ 99,000.00
Changes during the year: Equity, adj. (87,000.00)
Equity, beginning ₱ 90,000.00 Net Income ₱ 12,000.00
Investments 72,000.00
Withdrawals (75,000.00) Answer for Problem 2:
Equity, ending ₱ 87,000.00 D. P 12,000
Problem 3
Market Value of Biological Asset ₱ 5,000.00
Estimated Commission to brokes and dealers (500.00)
Estimated Transfer Cost and other costs (300.00)
Valuation of Biological Assets ₱ 4,200.00
Problem 4
Purchase of shirts: Journal Entries:
List Price ₱ 100,000.00 Date of Purchase of Shirts
1st Trade discount 20% 27-May Purchase 72,000.00
List Price after TD ₱ 80,000.00 Accounts Payable 72,000.00
2nd Trade discount 10% To record the purchase of shirts
Invoice Price ₱ 72,000.00
Payment of shirts purchased on May 27, 2009
Payment of shirts puchased: 8-Jun Accounts Payable 70,560.00
Invoice Price ₱ 72,000.00 Purchase Disc. Lost 1,440.00
Purchase Discount 2% Cash 72,000.00
Purchase disc. lost ₱ 1,440.00
Answer for Problem 4:
B. Debit on purchase discount lost
Problem 6
Accumulated Depreciation ₱ 42,000.00
Sum of the Years rate
Remaining Useful Life 7
SYD 55
Cost of Equipment (Residual Value is deducted) ₱ 330,000.00
Residual Value 5,000.00
Cost of Equipment on December 31, 2005 ₱ 335,000.00
Problem 7
Accumulated Depreciation ₱ 42,000.00
Sum of the Years rate
Remaining Useful Life 7
SYD 55
Cost of Equipment (Residual Value is deducted) ₱ 330,000.00
Residual Value 5,000.00
Cost of Equipment on December 31, 2005 ₱ 335,000.00
Bonus Question:
AVERAGE ROUND
Problem 1
Accounts Receivable- beginning ₱ 1,300,000.00
Credit Sales 5,400,000.00
Collections from customers (4,750,000.00)
Accounts written off (125,000.00)
Aging of Accounts Receivable (165,000.00)
Accounts Receivable- ending ₱ 1,660,000.00
Accounts Receivable
₱ 1,300,000.00 ₱ 4,750,000.00 Answer for Problem 1:
5,400,000.00 125,000.00 D. P 1,600,000
165,000.00
₱ 1,660,000.00
Problem 2
Land held by Quirino Inc. for undetermined future use ₱ 5,000,000.00
A vacant building owned by Quirino Inc. and to be leased out ₱ 20,000,000.00
A hotel owned by Sugo Inc., a subsidiary of Quirino Inc,
and for which Sugo Inc. provides security services for
the guest belonging ₱ 50,000,000.00
Investment Properties of Quirino Inc. ₱ 75,000,000.00
Problem 3
Puchased Annuity ₱ 418,250.00
First Installment 50,000.00
Contest prize expense for 2009 ₱ 468,250.00
Problem 4
The criteria for Intangible Asset has not been met
Answer for Problem 4: therefore it is expensed for the current year and
D. 0 cannot be used as a tax base.
Problem 5
Total Expense on the vesting date ₱ 8,000,000.00
Expenses incurred:
2007 (2,000,000.00)
2008 (2,100,000.00)
Total expense charged to income statement for 2009 ₱ 3,900,000.00
Problem 6
1st Quarter 2nd Quarter
Sales ₱ 20,000,000.00 ₱ 30,000,000.00
Provision of warranty claims 5% 10%
Total ₱ 1,000,000.00 ₱ 3,000,000.00
Problem 7
Principal ₱ 180,000.00
PV 0.74
Total ₱ 132,300.00
Answer for Problem 7:
Principal ₱ 200,000.00 A. P 67,700
PV (132,300.00)
Difference ₱ 67,700.00
DIFFICULT ROUND
Problem 1
Membership Fee ₱ 6,000.00
No. of mos over 12 3/4 Answer for Problem 1:
Total membership A. P 4,600
fee earned ₱ 4,500.00
Problem 2
Interest ₱ 180,000.00
PV of OA of 1 of 10%, 4 periods 3.1699
Total ₱ 570,582.00
Bonds without
conversion ₱ 2,619,582.00
Problem 3
The answer is nil because it is an
Answer for Problem 3: operating lease in which there is no
D. Nil recognition of profit because it is
recognized at the end of lease term.
Problem 4
1,200 shares x P 48 57600
1,000 shares x P 50 50000
7600
No. of years 3
Total 2533.3
Year 1
No. of shares 1,000
Share Price 52
Total 52000
Vesting period 3
Total 17333.3 Answer for Problem 4:
A. P 21,867
Year 2
No. of shares 1,000
Share Price 55
Total 55000
Rem. vesting period 2/3
Total 36666 2/3
Compensation Expense
for Year 2 21866.7
Problem 5
Estimated Cost for Year 1 ₱ 20,000,000.00
Estimated Cost for 3 years 100,000,000.00
Fair Value of Land 120,000,000.00
Income from government grant ₱ 24,000,000.00
Problem 6
Cost ₱ 130,000.00 Third Year
Residual Value (10,000.00) Carrying Amount ₱ 120,000.00
Total ₱ 120,000.00 Remaining UL 3
SYD 15
Firat Year Depreciation ₱ 24,000.00
Carrying Amount ₱ 120,000.00
Remaining UL 5 Cost ₱ 130,000.00
SYD 15 Accumulated Depreciation (96,000.00)
Depreciation 40000 Carrying Amount ₱ 34,000.00
Problem 7