1.) On January 1, 20x1, Entity A had the following general...

1.) On January 1, 20x1, Entity A had the following general borrowings. A part of the proceeds was used to finance the construction of a qualifying asset:

Principal

12% bank loan (1.5 years) P1,000,000

10% bank loan (3 year) 8,000,000

Expenditures made on the qualifying asset were as follows:

Jan. 1 P 5,000,000

March 1 4,000,000

August 31 3,000,000

December 1 2,000,000

Construction was completed on December 31, 20x1.

A.) How much borrowing costs are capitalized to the cost of the constructed qualifying asset?

A. P 1,045,000

B. P 971,111

C. P 1,026,667

D. P 920,000

E. Answer not given

B.) How much is the cost of the qualifying asset on initial recognition?

A. P 14,920,000

B. P 15,045,000

C. P 13,010,000

D. P 14,971,111

E. Answer not given

2.) Entity A is preparing its March 31, 20x1 bank reconciliation. The following information was determined:

• The cash balance per books is P280,000 while the cash balance per bank statement is P320,000
• Credit Memo - P20,000
• Debit Memo - P15,000
• Deposit in transit - P75,000
• Outstanding checks - P25,000
• The disbursement per books are overstated by P45,000
• The bank debits are understated by P40,000

How much is the adjusted balance of cash?

A. P380,000

B. P370,000

C. P285,000

D. P330,000

E. Answer not given

3.) ABC Company acquired 100,000 ordinary shares of DEF Company and 300,000 ordinary shares of XYZ Company. Both DEF Company and XYZ Company had 1,000,000 ordinary shares outstanding.

DEF Company reported net income of P3,000,000 and paid dividends of P2,000,000 during the current year.

XYZ Company reported net income of P4,000,000 and paid dividends of P1,000,000 during the current year.

What total amount of income from the investments should be reported for the current year?

A. P 1,200,000

B. P 1,500,000

C. P 1,400,000

D. P 500,000

E. Answer not given

4.) Hera Company provided the following information:

Balance per bank statement, May 31 - 1,300,000 - Balance per book, May 31 - 1,405,000 

Deposit outstanding - 150,000 - Bank service charge (5,000)

Checks Outstanding (50,000)

Correct bank balance, May 31 - 1,400,000 - Correct book balance, May 31 - 1,400,000

June data are as follows: Bank Book

Checks recorded 1,100,000 1,250,000

Deposit recorded 800,000 900,000

Service charges by bank 25,000 -

Note collected by bank,  P 250,000 plus interest 275,000

NSF checks returned with June 30 statement 50,000

Balances 1,200,000 1,050,000

What is the adjusted cash balance on June 30?

A. P1,250,000

B. P1,400,000

C. P1,050,000

D. P1,200,000

E. Answer not given