1. Dudong Electronics makes all of its sales on credit and accounts for them using the installment sales method. For simplicity, assume that all sales occur on the first day of the year and that all cash collections are made on the last day of the year. Dudong Electronics charges 1 8% interest on the unpaid instalment balance Data for 2011 and 2012 are as follows:
Sales Cost of Goods Sold Cash Collections 2011 sales 2012 sales
2011 P100,000 60,000
2012 P120,000 80,000
40,000
50,000 90,000
The interest income recognized in 2012 amounted to: a. P 14,040 c. 35,640
b. P21,600 d. 49,700
2. Using the same information in No.1 compute the realized gross profit in 2012: a. c.
P14,384 37,184
b. P22,800 d. 39,600
3. The books of Harry Co. show the ff. balances on December 31, 2012: Accounts Receivable 313,750 Deferred Gross Profit (before adjustment) 38,000 Analysis of the accounts receivable reveal the following: Regular Accounts 207,000 2011 instalments accounts 16, 250 2012 instalment accounts 90,000 Sales on an instalment basis in 2011 were made at 30% above cost; in 20102 at 33 1/3 above cost. Expenses paid was 1,500 relating to instalment sales. How much is the net income on instalment sales? a. 11,000 c. 16,000 b. 11,500 d. 10,250 The Palubog Company has decided to seek liquidation after previous restructuring and quasireorganization attempts failed. The company has the following condensed balance sheet as o f May 1, 2011;
Liabilities and S tockholders’ Equity
Assets Cash Receivables (net) Prepaid expenses
12,000 280,000 1,000
Accrued Payroll Loans from officers Accounts Payable
40,000 50,000 60,000
Inventory
70,000
Plant Assets Goodwill
300,000 39,000
Total
702,000
Equipment loan payable Business Loan Payable Common Stock Deficit
360,000
Total
702,000
180,000 60,000 (48,000)
The equipment loan payable is secured by specific plant assets having a book value of 300,000 and a realizable value of 350,000. Of the accounts payable, 40,000 is secured by inventory which has cost of 40,000 and a liquidation value of 44,000 . The balance of the inventory has a realizable value of 32,000. Receivables with a book value and market value of 100,000 and 80,000 respect ively have been pledge as collateral on the business loan payable. The balance of the receivables have a realized value of 150,000. 4. Assuming trustee expenses of 12,000 in addition to reco rded liabilities, which of remaining unsecured creditors has the next highest order of priority. a. Accrued Payroll b. Equipment Loan Payable c. Loan from officer d. Business loan payable 5. The realizable value of assets pledged with fully secured cre ditors is: a. 459,000 b. 44,000 c. 40,000 d. 489,000 6. Of those creditors who are partially secured, their unsecured amounts are: a. 430,000 b. 110,000 c. 540,000 d. 120,000 7. The total realizable value of free assets to unsecured creditors before unsecured creditors with priority is: a. 628,000 b. 232,000 c. 220,000 d. 198,000 8. The dividend to unsecured creditors or the expected recovery percentage of unsecured creditors (rounded) is: a. 90% b. 100% c. 88% d. 76% 9. Estimated deficiency to unsecured creditors is: a. -0b. 22,000 c. 2,000
10.
11.
12.
13.
14.
15.
16.
d. 12,000 Estimated loss on asset disposition: a. 51,000 b. 89,000 c. 51,000 d. 90,000 Estimated gain as asset disposition: a. 56,000 b. 54,000 c. 52,000 d. 6,000 Estimated amount paid to unsecured creditors with priority is: a. 10,000 b. 30,000 c. 40,000 d. 110,000 Estimated amount paid to fully secured creditors is: a. 40,000 b. 390,000 c. 470,000 d. 430,000 Estimated amount paid to unsecured creditors without priority: a. 70,000 b. 61,600 c. 20,000 d. 50,000 Estimated payment to partially secured creditors is: a. 358,800 b. 516,800 c. 168,000 d. 430,000 Estimated payment to creditors is (discrepancy is expected due t o rounding off). a. 580,000 b. 659,600 c. 571,000 d. 668,400
