1. The physical inventory of Pangasinan Company on December 31, 2009 showed
merchandise with a cost of P 4,000,000 was on hand at that date. You also discovered the
following items were all excluded from the count:
a. Merchandise costing P160,000 , which was held by Pangasinan on consignment. The
consignor is a subsidiary.
b. A special machine, fabricated to order for a customer costing P 400,000 was finished
and specifically segregated in the back part of the shipping room on December 31, 2009.
The customer was billed on that date and the machine excluded from inventory although
it was shipped on January 4, 2010.
c. Merchandise costing P 80,000 which was shipped by Pangasinan f.o.b destination to a
customer on December 31, 2009. The customer expects to receive the merchandise on
January 3, 2010.
d. Merchandise costing P 120,000 which was shipped by Pangasinan f.o.b shipping point
to a customer on December 29, 2009
e. Merchandise costing P 50,000 shipped by a vendor F.O.B shipping point on December
28, 2009 and receive by Pangasinan on January 10, 2010.
The corrected balance of Pangasinan’s inventory should be
a. P 4,530,000 c. P 4,480,000
b. P 4,130,000 d. P 4,690,000
2. On January 2004, Entity A issued a 10 percent convertible debenture with a face value
of P 1,000,000 maturing on 31 December 2013. The debenture is convertible into
ordinary shares of Entity A at a conversion price of P25 per share. Interest is payable half
yearly in cash. At the date of issue, Entity A could have issued non convertible debt with
a ten year term bearing a coupon interest rate of 11 percent.
On January 1 2009, to induce the holder to convert the convertible debenture promptly,
Entity A reduces the conversion price to P20 if the debenture is converted before 1 March
2009 (ie within 60 days). The market price of Entity A’s ordinary shares on the date the
terms are amended is P 40 per share.
Compute the amount to be recognize in profit or loss as a result of the amendment of the
terms
a. P 400,000 c. P 50,000
b. P 200,000 d. P 0
3. Cookie Company is negotiating a loan with Excel Bank. Cookie needs P 3,600,000. as
part of the loan agreement Excel Bank will require Cookie to maintain a compensating
balance of 15% of the loan amount on deposit in a checking account at the bank. Cookie
currently maintains a balance of 200,000 in the checking account. The interest rate
Cookie is required to pay on the loan is 12%. Excel bank pays 1% interest on checking
accounts. the amount of the loan is
