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CAT
CERTIFIED ACCOUNTING TECHNICIAN

NAME: _______________________________________________________________________

EXAM PROVIDER: _______________________________________________________________

DATE OF EXAM ____________________________ VENUE: ______________________________

INSTRUCTION TO CANDIDATES

1. This is a FINAL paper.

2. This paper consists of 5 pages (back to back). PLEASE CHECK BEFORE COMMENCING.
3. Please read the problem and the instructions carefully.
4. You are given 4 hours to read, comprehend, and solve the problem.
5. All required solution must be presented in the answer sheets/forms provided.
6. Electronic hand held calculators are permitted.
7. Use black pen.

CAT EXAMINATION LEVEL1 - ACCOUNTING

CASE 1

AYALA COMPANY, a VAT- registered company employing the periodic inventory system, had the
following transactions for the month of July 2008.

DATE TRANSACTIONS
Jul 3 Purchased from BONI merchandise with list price of P16, 700, on terms 2/10, n/30. The
amount in inclusive of 12 % value-added tax (VAT).
3 Paid P600 freight charges (inclusive of 12% VAT) on merchandise purchased from BONI.
Term of freight: FOB shipping point.
7 Sold to CUBAO merchandise worth P16, 800 on terms 2/5, 1/30, n/60. This amount is
inclusive of 12% VAT
11 Settled in full the outstanding account with BONI

16 Purchased from ORTIGAS store supplies worth 2,900 on terms COD. This amount is
inclusive of 12% VAT.
18 Received a P400 cash refund for the return of store supplies bought from ORTIGAS. This
amount is inclusive of 12% VAT.
25 Collected in full the outstanding account of CUBAO

REQUIRED:

Prepared the necessary journal entries in the general record the above transactions using periodic
inventory system. Round-off amounts to the nearest two decimal places. Omit explanations.
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CASE 2

As of May 31, 2008, ELY TRADING’s cash balance with UNO BANK, as shown in the ledger, is P264,
952. Expecting the same cash balance in the bank, Mr. Ely, the owner, was surprised to receive the bank
statement from Uno Bank indicating that the company has a P301, 124 credit balance as of March 31,
2008. At a loss, Mr. Ely asked you, the company accountant, to reconcile the two cash balances. For
reconciliation purposes, you were able to gather the following:

 Undeposited and collections as of May 31 totaled P22, 500.

 As of May 31, checks already issued to payees but did not clear the bank totaled P63, 772.
 The company’s account was charged by the bank for the P300 cost of the check booklet.
 The non- sufficient funds check of the company customer, in the amount of P14, 820 was charged
to the company’s account. This NSF check has not yet been recorded in the company’s books.
 The bank statement showed a P20, 200 credit, which was not reflected in the company’s books.
This amount represents the bank’s receipt of a company customer’s payment for a P20, 000 note
with P200 interest.

REQUIRED:

Prepare all the necessary adjusting entries in the company’s book on May 31, 2008.

CASE 3

With your knowledge in special journals, you were recently hired by LOLA TRADING to take care of its
bookkeeping aspect. You were informed that the company, which used the periodic inventory system,
gives uniform credit terms of 2/10, n/30 to all of its customers. For your first tasks, you were asked to
prepare the company’s trial balance as of June 30. You were provided with the company’s journals and
ledgers, however, while on the Accounts Receivable general ledger page, you noticed that some of the
amounts were in question marks, and company transactions for the last week of June have not been
posted to both general and subsidiary ledgers. The company’s Sales Journal and Account Receivable
general ledger as shown below:

SALES JOURNAL Page 3

Date Customer Invoice No. Ref. Accounts Receivable (DR.); Sales (CR)
Jun 2 Ana 04394  P 32, 000
7 Janna 04395  18, 000
5 Dana 04396  5, 700
26 Vanna 0439  12, 900

ACCOUNTS RECEIVABLE
Acct. No. 112

Date Items F Dr Date Items F Cr

Jun 1 Balance 97, 000 Jun 3 Full payment by Hannah CRJ7 58, 000
2 Sale to Ana SJ3 32, 000 5 Returns by Ana GJ8 1, 700
2 Freight to Ana CPJ6 600 6 50% payment by Ana CRJ7 ?
7 Sale to Janna SJ3 18, 000 7 Partial payment by Janna CRJ7 5, 000
15 Sale to Dana SJ3 5, 700 23 Full settlement by Dana CRJ7 ?
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REQUIRED:

(1) Complete the amount in the Accounts Receivable general ledger. Show computations.
(2) Compute the balance of Accounts Receivable at June 30, 2008. Show computations.

CAT EXAMINATION LEVEL 1 – ACCOUNTING

CASE 4

SARAO COMPANY products jeepneys. The company’s actual condensed balance sheet data for January
1, 2009 follows:

SARAO COMPANY
Balance Sheet
January 1, 2009
(in thousands)

ASSETS LIABILITIES AND EQUITY

Current Assets: Current Liabilities
Cash P1,699 Trade and other P9,814
payables
Receivables 7,485
Merchandise Inventory 495
Prepaid expenses 2,533
Total current assets Equity
P12,572
Sara O., Capital 3,901
Non-current Assets:

Property, plant and 1,143

equipment

TOTAL ASSETS P13,715 TOTAL LIABILITIES AND P13,715

EQUITY

The following summarizes the company’s transactions during January 2009:

 Sold jeepneys for P660, 000, of which P160,000 was on cash basis, and the rest account Sarao
carried the jeepneys in the inventory for P390,000.
 Acquired inventory on account, P500, 000.
 Collected receivables, P300, 000.
 On January 2, the company used P250, 000 cash to repay some rent and insurance for 2009.
 Payments on accounts payable (for inventories), P450, 000.
 Paid selling and administrative expenses in cash P100, 000.
 A total of P90, 000 of prepaid expenses for rent and insurance expired in January 2009.
 Recognized depreciation expense of 20, 000 for January.

REQUIRED:

(1) Prepare the company’s income statement for the month ended January 31, 2009, under the
accrual basis.
(2) How much is the company’s total revenues for the month ended January 31, 2009, under the
accrual basis?
(3) Which basis (accrual or cash) provide a better measure of revenue? Why?

CASE 5

Your friend, Beatriz, has opened a movie theater. Beatriz states that she does not have time to develop and
implement a system of internal controls.

REQUIRED:
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Do the following:
(1) Provide Beatriz with the objectives of a system of internal controls.
(2) Explain to Beatriz why she should develop a system of internal controls.

CAT EXAMINATION LEVEL 1 – ACCOUNTING

CASE 6

You are given the following account balances for the company as of fiscal year-end, July 31, 2008:
 Sales (70% on terms 2/10, n/30) – P1,200,000
 Sales Returns and Allowances (70% made by credit customers) – P50,000
 Purchase Discount – P12,840
 Accounts Receivable, August 1, 2007 – P118,000
 Accounts Receivable, July 31, 2008 – P169,000
 Allowances for doubtful Accounts, August 1, 2007 – P13,500
During the year, worthless accounts totaling P15,000 were written-off. This was recorded under the
allowance method.

REQUIRED:
(1) Prepare the necessary adjusting journal entry in the company’s books on July 31, 2008 to provide
for uncollectible accounts, under the following independent assumptions:
(Note: Show supporting computations whenever necessary)
a. It is estimated that 2% of net credit sales is doubtful of collection.
b. It is estimated that 10% of outstanding Accounts Receivable is doubtful of collection.
(2) Compute the net realizable value of Accounts Receivable at July 31, 2008, after providing for bad
debts expense amounting to P18,000
CASE 7

Mr. Y, the Vice President of Operations at ZEE COMPANY, noticed that the amount of the adjusting entry
for depreciation of equipment changes every year, even when the company is applying the straight-line
method of depreciation. The amounts of depreciation reported were as follows:

Year 2005 P2,400

2006 3,400
2007 3,800
2008 3,200

You, the controller, were tasked by Mr. Y to explain the varied amounts of the depreciation expense. All
the depreciation amounts reported were verified to be correct and you were able to gather the following
information:
 The equipment was purchased some time in 2005.
 There was a purchase of additional equipment (of the same type) at the start of 2007.
 There was a sale of one of the equipment at the start of 2008.
 The company estimates the useful life of the equipment to be over 10 years with no scrap value.
 No other transactions affecting the equipment occurred during the 4-year period.

REQUIRED
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Provide brief answers to the following questions:

1) What is the straight line method of depreciation?

2) Is the concern of Mr. Y valid? State your reason/s.
3) How do you explain the increase in depreciation expense from 2005 to 2006 to Mr. Y?
4) Provide Mr. Y with a table on the computation of the depreciation expense every year. The
table should be presented as follows:

Year Cost Supporting computations Depreciation expense

2005 P2, 400
2006 3,200
2007 3, 800
2008 3, 200

CASE 8

During the month of October, SIENA CALCULATORS had the following transactions:

Oct 1 Purchased 40 calculators at a cost of P600 each from CRYSTAL CALCULATORS on

terms 2/10, n/30.
3 Sold 25 calculators to Mary for P1, 000 each on terms 2/10, n/30
5 Received credit from Crystal Calculators for the return of 4 defective calculators.
11 Paid Crystal Calculators in full.

REQUIRED:Prepare all necessary journal entries in the books of Siena Calculators for the above
transaction under a perpetual inventory system. Assume all amounts are inclusive of VAT.