Reference no: EM133155139

Questions -

Q1. Crispin Santos started a retail merchandise business on January 1, 2021. During the year ended December 31, 2021, the entity paid trade creditors P2,000,000 and suffered a net loss of P350,000. The ledger account preclosing balances on December 31, 2021 included the following:

Accounts receivable- P600,000

Accounts payable- P750,000

Capital (total investment in cash)- P2,000,000

Expenses (paid in cash)- P100,000

Merchandise (unadjusted debit balance)- P700,000

There were no withdrawals. All sales and purchases were on credit. The merchandise account is debited for purchases and credited for sales. What is the amount of purchases for the year?

a. P2,800,000

b. P1,950,000

c. P2,000,000

d. P2,750,000

Q2. Entity A publishes quarterly interim financial reports. Entity A's annual depreciation for items of PPE is P120,000. At the end of the first quarter, Entity A's inventories have a cost of P600,000 and a net realizable value of P510,000. Entity A expects that the total employee bonuses (13th month pay) that will be paid at year-end will amount to P60,000. How much is the total amount of expense to be recognized from the items described above in Entity A's first quarter statement of profit or loss?

Q3. In January 2021, ABC Inc. paid property taxes on its factory building for the calendar year 2021 in the amount of P100,000. In the first week of July 2021, ABC made advertising campaign and paid P100,000. These advertisements are expected to benefit operations for the remainder of the calendar year. How should these expenses be reflected in ABC's quarterly interim financial reports?

a. P50,000; P50,000; P50,000; P50,000

b. P25,000; P25,000; P125,000; P25,000

c. P25,000; P25,000; P75,000; P75,000

d. P100,000; P0; P100,000; P0