1. Ashby Sporting Goods Store uses the retail inventory method. Information relating to the computation of the inventory at December 31, 2020, is as follows:

Cost Retail

Inventory at January 1, 2020 P 32,000 P 80,000

Sales 580,000

Purchases 270,000 600,000

Freight-In 7,600

Net markups 40,000

Net markdowns 20,000

What is the estimated cost of ending inventory using the average cost method?

A.53,076

B.53,724

C.51,600

D.51,726

2.DVD Inc. is a wholesaler of photography equipment. The activity for the Digital cameras during July is shown below

Date Transaction Units Cost/unit

July 1 Inventory 2,000 P36.00

7 Purchase 3,000 37.00

12 Sales 3,600

21 Purchase 5,000 37.88

22 Sales 3,800

29 Purchase 1,600 38.11

If DVD Inc. uses the FIFO cost method to account inventory, the ending inventory of Digital cameras at July 31 is reported as:

A. 153,400

B. 156,912

C. 158,736

D. 159,464

3.Refer to the information in Question No. 2. If DVD Inc. uses the moving average cost method to account inventory, the ending inventory of Digital cameras at July 31 is reported as:

A.153,400

B.156,912

C.158,736

D.159,464

4. On July 1, 2020, Sprakenheit Company purchased P500,000 face value Swazzeg Company 8% bonds for P455,000 plus accrued interest to yield 10%. The bonds were designated as at fair value through profit or loss. The bonds mature on January 1, 2024 and pay interest annually on January 1. On December 31, 2020, the bonds had a market value of P472,500. On February 28, 2021, Sprakenheit sold the bonds for P460,000 plus accrued interest.

What is the interest income to be reported at the year-end of December 31, 2020?

A.40,000

B.20,000

C.36,400

D.45,500

5.Refer to the information in Question No. 4. What is the gain (loss) on sale of financial assets at the year-end of December 31, 2021?

A.(12,500)

B.12,500

C.( 5,000)

D.5,000

6. Meow Company factored P8,000,000 of accounts receivables to a finance entity at the beginning of the current year. Control was surrendered by Meow Company. The factor assessed a fee of 5% and retained a holdback equal to 10% of the accounts receivable. In addition, the factor charged 15% interest computed on a weighted average time to maturity of the accounts receivable of 30 days.

What amount was initially received by Meow Company from the factoring?

A. 6,701,370

B. 6,800,000

C. 7,501,370

D. 6,700,000

7. Hormonal Company has P1,000,000 ordinary life insurance policy on the president. The policy year and accounting year coincide. The entity provides the following data for the year ended December 31, 2020:

Cash surrender value, January 1 245,000

Cash surrender value, December 31 290,000

Annual advance premium paid-January 1 150,000

Dividend received-April 1 25,000

The entity is the beneficiary under the life insurance policy. The insured died on January 2, 2020 after payment of annual premium of P150,000 on January 1, 2021. The settlement of insurance policy is received on February 28, 2021

What is the life insurance expense on December 31, 2020?

A.85,000

B.80,000

C.150,000

D.125,000

8. Refer to the information in Question No. 7. What is the gain on life insurance settlement recorded on February 28, 2021?

A. 1,000,000

B.560,000

C.850,000

D.700,000