11. Which method may be used to record cash discounts received for paying suppliers promptly?

A. Gross Method

B. Net Method

C. Net Method or Gross Method

D. Average Method

12.From a theoretical viewpoint, which of the following costs would be considered inventoriable?

I. Freight

II. Warehousing

A. Neither I nor II

B. II only

C. I only

D. Both I and II

13 . Goods on consignment should be included in the inventory of

A.The consignor but not the consignee

B. Both the consignor and the consignee

C. Neither the consignor nor the consignee

D. The consignee but not the consignor

14.Goods on consignment should be included in the inventory of

A .The consignor but not the consignee

B. Both the consignor and the consignee

C. Neither the consignor nor the consignee

D. The consignee but not the consignor

15.The cost of purchase of inventory does not include

A. Freight, handling and other cost directly attributable to the acquisition of goods

B. Purchase price

C. Trade discounts, rebates and other similar items

D. Import duties and irrecoverable taxes

16.On January 1, 2020, MJE Company acquired 300,000 ordinary shares (equivalent to 10% of the total ordinary shares ) of La Salle Company for P9,000,000. The following events took place:

• La Salle Company reported net income of P1,800,000 for the calendar year 2020.
• MJE received from La Salle Company a dividend of P1.00 per ordinary share.
• The market value of La Salle Company shared had declined to P25.

MJE Company has elected to measure the investment atFair value through other comprehensive income.

What is the carrying value of the investment on December 31,2020? (Subsequent Measurement) Show Complete Solution

A. 7,500,000

B. 9,000,000

C. 8,880,000

D. 9,250,000

17.On January 1, 2020, MJE Company acquired 300,000 ordinary shares (equivalent to 10% of the total ordinary shares ) of La Salle Company for P9,000,000. The following events took place:

• La Salle Company reported net income of P1,800,000 for the calendar year 2020.
• MJE received from La Salle Company a dividend of P.50 per ordinary share.
• The market value of La Salle Company shared had increased to P32 per share.

MJE Company has elected to measure the investment atFair value through other comprehensive income.

What is thedividend incomethat should be reported in the MJE's Profit or Loss Statement for the year 2020?

Show Complete solution

A. Zero

B. 600,000

C. 180,000

D. 150,000

18.On January 1, 2020, JBL COMPANY purchased 12% five-year bonds with face amount of P5,000,000 forP5,500,000includingtransaction cost of P100,000. The bonds provide an effective yield of 10%. The bonds are quoted at 115 on December 31, 2020. The entity classifies the investment asFVPL.Interest is paid every December 31.

What amount ofinterest incomeshould be reported on December 31,2020?

Show complete solution

A. 600,000

B. 660,000

C. 540,000

D. 550,000

19.Abraham Company purchased P 600,000 of 10% bonds of Jacob Co. on January 1, 2020, paying P 564,150. The bonds mature January 1, 2030; interest is payable each July 1 and January 1. The discount provides an effective yield of 11%. Abraham Company uses the effective-interest method and plans tohold these bonds to maturity.

For the year ended December 31, 2020, Abraham Company should reportinterest incomefrom the Jacob Co. bonds of:

Show Complete solution

A. P 63,588.

B. P 62,113.

C. P 60,000.

D. P 62,052.

20.On January 2, 2020, JB Company purchased 25% of the outstanding common stock of KJ, Inc. and subsequently used the equity method to account for the investment.

During 2020 KJ, Inc. reported net income of P 630,000. Dividend received by JB related to Investment in KJ,Inc is 67,500.

The ending balance in the Investment in Pod Company account at December 31, 2020 was P 480,000 after applying the equity method during 2020.

What was the purchase price JB Company paid for its investment in KJ, Inc?

Show complete solution

A. P 255,000

B. P 390,000

C. P 570,000

D. P 705,000