1. Easy Company’s beginning and ending total liabilities were P 840,000 and P 1,000,000, respectively.
At year-end, owners’ equity was P 2,600,000 and total assets were P 200,000 larger than at the
beginning of the year. During the year, the new share capital issued exceeded dividends by P
240,000.
What was the net income or loss for the year?
a. P 280,000 income c. P 200,000 loss
b. P 280,000 loss d. P 40,000 income
2. Ensure Company maintains a medical and dental clinic and keeps limited accounting records. Its
assets and liabilities at the beginning and end of current year are as follows:
Beginning End
Cash in bank P12,000 P(5,000)
Accounts receivable 68,000 70,000
Medical supplies 30,000 15,000
Accounts payable 40,000 20,000
Notes payable-bank 20,000 25,000
Medical equipment, net 150,000 125,000
During the year, the owner withdrew cash of P12,000 and made additional investment of P50,000.
The profit (loss) of Ensure Company for the year is
a. P8,000 c. P(68,000)
b. P(2,000) d. P(78,000)
3. Haze Company provided the following information for 2016:
January 1 December 31
Cash P 620,000 P?
Accounts receivable 670,000 900,000
Merchandise inventory 860,000 780,000
Accounts payable 530,000 480,000
The sales and cost of goods sold were P 7,980,000 and P 5,830,000, respectively. All sales and
purchases were on credit. Various expenses of P 1,070,000 were paid in cash. There were no other
pertinent transactions.
What is the cash balance on December 31, 2016?
a. P 1,090,000 c. P 2,570,000
b. P 1,500,000 d. P 3,050,000
4. M. Nan keeps single-entry records for his business. The accounts payable per files on May 1 was
P110,000, and May 31 was P140,000. During the month, P45,000 was paid for cash purchases;
P22,500 was allowed on purchased returns; P480,000 was paid on accounts payable; and P10,000
was paid for freight in. the inventory on May 1 was P50,000 and May 31 was P60,000.
What is the cost of sales for the month of May?
a. P355,000 c. P345,000
b. P175,000 d. P365,000
5. Certain information relative to the 2016 operations of Anko Co. follows:
Accounts receivable, January 1, 2016 P34,000
Accounts receivable collected during 2016 46,000
Cash sales during 2016 12,000
Inventory, January 1, 2016 18,000
Inventory, December 31, 2016 16,500
Purchases of inventory during 2016 40,000
Gross margin on sales 13,500
What is Anko's accounts receivable balance at December 31, 2016?
a. P28,000 c. P34,000.
b. P31,000 d. P43,000.
6. During 2016, Noller Co. sold equipment that had cost P294,000 for P176,400. This resulted in a gain
of P12,900. The balance in Accumulated Depreciation—Equipment was P975,000 on January 1,
2016, and P930,000 on December 31. No other equipment was disposed of during 2016.
Depreciation expense for 2016 was
a. P45,000. c. P85,500.
b. P57,900. d. P175,500.
Items 7 – 10: Following are the data relating to the operations of Centrum Company for six months
which started on July 1, 2016:
Cash receipts:
Investment by the owner P 250,000
Collections on sales on account 310,000
Proceeds of a note payable dated October 1,
2016 and due October 1, 2017, discounted at 18% 24,600
Cash disbursements:
Purchase of land and building on July 1, 2016 P 240,000
20% down payment on furniture and fixtures purchased
on installment on July 31, 2016 4,000
On accounts payable 280,000
For other operating expenses 45,000
Of the sales on account, P4,000 was returned because of poor quality and there was purchase return of
P5,000.
On December 31, 2016, the following balances were available:
Accounts receivable, P66,000;
Accounts payable,P67,000;
Accrued other operating expenses, P3,500.
The land has an allocated cost of P40,000.
Annual depreciation is 4% on the building and 10% on the furniture and fixtures.
Inventory on December 31, 2016 is P21,700.
7. Gross sales for the period amounted to
a. P376,000 ` c. P461,000
b. P380,000 d. P465,000
8. Gross purchases is amounted to
a. P347,000 c. P377,000
b. P352,000 d. P382,000
9. Cost of sales for the period is
a. P355,300 c. P325,300
b. P350,300 d. P320,300
10. Total operating expenses for the period is
a. P46,500 c. P53,500
b. P48,500 d. P58,500
Items 11 – 15: John Snow, a retired engineer, formed Ralph Loren Trading on July 1, 2017, investing his
retirement pay of P400,000 in the business. To cut on operating expenses, he did not hire an
accountant; as a consequence, his accounting records were incomeplete.
On Jauary 1, 2018, his cash balance was P410,000 and on December 31, 2018, it was P430,000. He
wanted to have an idea of the result of his operations for the year ended December 31, 2018. The
following information and other data were gathered for the year 2018:
Jan. 1 Dec. 31
Acounts receivable – trade P 130,000 P 170,000
Money market placement 20,000 15,000
Accrued interest on money market placement 800 600
Merchandise inventory 175,300 280,400
Prepaid rent expense 6,000 4,500
Delivery equipment (at cost) 120,000 120,000
Store fixtures (at cost) 50,000 50,000
Rent deposit 12,000 6,000
Other assets 1,000 1,000
Jan. 1 Dec. 31
Accounts payable – trade P 390,000 P 480,000
Notes payable (delivery equipment) 100,000 60,000
Accrued interest on notes payable 12,000 8,000
Accrued operating expenses (excluding rent) 8,000 10,000
Snow was able to arrange with the owner of the building that his rental deposit be reduced by 50% and
the amount applied against rentals in 2018.
From the 2018 cash memoranda of John Snow, you were able to extract the following:
Cash received from:
Sales P 380,000
Interest on money market placement 4,000
Collections of accounts receivable 1,328,000
Matured money market placement, not rolled over ______5,000
Total P 1,717,000
Cash payments for:
Merchandise purchases P 210,000
Interest on notes payable 25,000
Trade payables 940,000
Notes payable (delivery equipment) 40,000
Operating expenses 470,000
John Snow, drawing _____12,000
Total P 1,697,000
You have established that the fixed assets have not been depreciated since they were acquired on July
1, 2017. Estimated life of these assets is ten years.
Determine the following for the year 2018:
11. Total sales
a. P1,368,000 c. P1,668,000
b. P1,748,000 d. P 988,000
12. Cost of sales
a. P1,134,900 c. P 850,000
b. P1,060,000 d. P 924,900
13. Total operating expenses
a. P479,500 c. P492,500
b. P489,000 d. P496,500
14. Net profit
a. P 99,400 c. P106,900
b. P116,600 d. P384,300
15. John Snow, Capital, December 31, 2018
a. P406,600 c. P494,000
b. P499,400 d. P519,500
