Proposed answers

PROBLEM 1: Accounting Process

Date
Jan 1

7
8
9
10
15

16
17
18
24

26
28

Accounts & Explanation

Cash on Hand
Merchandise Inventory
Mison, Capital
Purchases
Input Tax
Accounts Payable
Purchases
Input Tax
Accounts Payable
Freight In
Input Tax
Cash on Hand
Accounts Receivable
Sales
Output Tax
Accounts Payable
Purchase Return
Input Tax
Cash on Hand
Sales
Output Tax
Salaries
Withholding Tax
Cash on Hand
Accounts Receivable
Sales
Output Tax
Accounts Payable
Cash on Hand
Sales Returns
Output Tax
Cash on Hand
Cash on Hand
Sales Discount
Output Tax
Accounts Receivable
Cash on Hand
Accounts Receivable
Cash on Hand
Sales
Output Tax

Debit
500,000
40,000

Credit
540,000

14,553
1,746
16,299
8,000
960
8,960
500
50
550
7,840
7,000
840
784
700
84
22,400
20,000
2,400
7,000
350
6,650
6,720
6,000
720
4,480
4,480
1,000
120
1,120
3,292.80
60.00
7.20

3,360

7,840
7,840
22,400
20,000
2,400
Page 1 of 35

Proposed answers
30
31

Accounts Payable
Cash on Hand
Utilities
Utilities Payable
Salaries
W/T Payable
SS Premium Payable
PH Premium Payable
Pag-ibig Premium Payable
Cash

Name: Octo
Date
Particulars

1/10,n/30
10
Returns
30
Full Payment

3,000
7,000

Debit

350
210
105
140
6,195

Credit
16,008.30

Balance
16,008.30
15,444.00
0

564.30
15,444.00
F

Debit

Credit
8,800

Balance
8,800
4,400

Credit

Balance

7,700

7,700
0

4,400

Name: Thats Entertainment

Date
Particulars

Re
f

2/10,n/30
Full Collection

Debit
7,700

Name: Music & Magic

Date
Particulars
1/16
2/10,n/30
24
Partial collection
Accounts Receivable
1/9
7,700
1/24
16
6,600
3,300
Balance 3,300
26
7,700

15,515
3,000

Ref

Name: Villar
Date
Particulars
1/7
2/10,n/30
17
Partial payment

1/9
26

15,515

Ref

Debit
6,600

Credit
3,300

1/10
17
30

Balance
6,600
3,300

Accounts Payable
564.30 1/14
16,008.30
4,400
7
8,800.00
15,444 Balance 4,400

PROBLEM 2: Completion of the Accounting Process

Kenneth Toyland
8-Column Worksheet
For the year ended June 30, 2007
Account Title
Cash In Hand

Trial Balance
Debit
75200

Credit

Adjustments
Income Statement
Debit
Credit
Debit
Credit

Balance Sheet
Debit
75200

Credit

Page 2 of 35

Proposed answers
Cash On Bank
Accounts Receivable
Allowance for DA
Notes Receivable
Merch. Invty., 7/1
Prep. Store Ins.
Store Furn. & Fixtures
Accum. Depn.
Office Furn. & Fix.
Accum. Depn.
Accounts Payable
Notes Payable
Unearned Commission
Withholding Tax Payable
SS & EC Payable
Philhealth Payable
Pag-ibig Payable
Alfonso, Capital
Alfonso, Personal
Sales
Sales Ret. & Allowances
Sales Discount
Purchases
Freight In
Purch. Ret. & Allow.
Purchase Discount
Advertising Expense
Salary Expense
Sales
Salary Expense
Office
Rent Expense
Utilities Expense
Taxes Expense
Interest Expense
SS & EC Expense
Philhealth Expense
Pag-ibig Expense
Interest Income
Totals
Adjustments:
Bad Debts
Interest Receivable
Insurance Expense
Depn. Store Furn. & Fix.
Depn.-Off.Furn. & Fix.
Accrued Salaries
Prepaid Advertising
Interest Payable
Commission Income
Merch. Invty. End
Income & Exp. Sum.
Taxes Payable
Totals
Net Income
TOTALS

487288
112000
4800
89500
6300
16000
15000

30000
5020
2880
242000
6000
9000
60000

4000

a)

1600

c)

3150

500

d)

2100

900
54000
180000
2400
490
522
100
200
521900

e)

3,000

h)

487288
112000
89500

15000

5020
2880
242000
6000

3000
2000
550

f)

300

8700
60550

33400

33400

96800
42400
12000
600
6424
1200
2400

96800
42400
13437
2400
6424
1200
2400

1354900

j)
g)

3150
16000

800

583200

e)

4800

1437
1800

3000
1354900

b)
a)
b)
c)
d)
e)

1600
20
3150
2100
3000

f)

300

i) 67125
81882

20

583200

550

g)
h)

1800
800

i) 67125
j) 1437
80445

3900
54000
180000
1600
490
522
100
200
521900

3020

20

3150
2100
3000

300
800
67125
622961
36184
659145

2600

3000
2000

1600

e)

30000

5600

550
1800

67125

659145

810883

659145

810883

Kenneth Toyland
Page 3 of 35

1437
774699
36184
810883

Proposed answers
Post Closing Trial Balance
June 30, 2005
Cash On Hand
Cash In Bank
Accounts Receivable
Allowance for Bad Debts
Notes Receivable
Merchandise Inventory
Prepaid Insurance
Store Furniture & Fixtures
Accumulated Depreciation - Store Furniture & Fix.
Office Furniture & Fixtures
Accumulated Depreciation Office Furniture & Fix.
Interest Receivable
Prepaid Advertising
Accounts Payable
Notes Payable
Salaries Payable
Interest Payable
Unearned Commission
W/Tax Payable
SS & EC Payable
PH Payable
Pag-ibig Payable
Alfonso, Capital
Closing Entries:
Income & Expense Summary
Purchases
Merchandise Inventory, June 1
Rent Expense
Taxes
Salary Expense - Office
Salary Expense - Sales
Depreciation Expense - Store Furniture & Fixtures
Depreciation Expense - Office Furniture & Fixtures
Freight In
Advertising Expense
Sales Returns & Allowances
Doubtful Accounts Expense
Sales Discount
Insurance Expense - Sales
Utilities Expense
Interest Expense

Debit
75,200
487,288
112,000

Credit

5,600
4,800
67,125
3,150
16,000
2,600
15,000
3,900
20
300

______
780,883

54,000
180,000
550
1,800
1,600
490
522
100
200
528,084
780,883

622,961
242,000
89,500
96,800
13,437
33,400
60,550
3,000
2,100
6,000
8,700
5,020
1,600
2,880
3,150
42,400
2,400
Page 4 of 35

Proposed answers
SS & EC
Pag-ibig
PhilHealth
Sales
Merchandise Inventory, June 30
Purchase Returns & Allowances
Purchase Discount
Interest Income
Commission Income
Income & Expense Summary
Alfonso, Capital
Income & Expense Summary
Alfonso, Capital
Alfonso, Personal
Reversing Entries:
Advertising Expense
Prepaid Advertising
Interest Payable
Interest Expense
Interest Income
Interest Receivable
Taxes Payable
Taxes Expense

6,424
2,400
1,200
583,200
67,125
3,000
2,000
3,020
800
659,145
36,184
30,000

36,184
30,000

300
300
1,800
1,800
20
20
1,437
1,437

PROBLEM 3: Financial Statement Analysis

a.

Venture A
Total revenues
P2,000,000
Total expenses
950,000
Net Income
P1,050,000
Return on Owners Equity:
Operating Ratio:
1,050,000 / 10,500,000
10% 1,050,000 / 2,000,000 52,5%
650,000 / 5,500,000
11.82% 650,000 / 1,500,000 43.3%

b.
Cash from Customers
Disbursements for expenses
Cash inflow

Venture A
P1,750,000
800,000
P 950,000

Venture B
P1,500,000
850,000
P 650,000

Venture B
P500,000
200,000
P300,000

Venture A is more profitable and liquid.

PROBLEM 4: Accounting Cycle

Name: Auring Cold Store
Terms: 2/10, n/30
Page 5 of 35

Proposed answers
Date
May 25
June 4
28

Explanation
SI
SI
Full coll. Of May 31 bal.

Name: Ben Supermart

Terms: 2/10, n/30
Date
Explanation
Apr 12
SI
June 21
Note on file

Name: Chit Grocery

Terms: 2/10, n/30
Date
Explanation
May 5
SI
June 8
Full collection
25
SI

Name: Joffre's Farm

Terms: 2/10, n/30
Date
Explanation
May 29
PI
June 1
PI
Down payment
Name: Johnny's Piggery
Terms: 2/15, n/30
Date
Explanation
May 25
PI
June 18
PI
Down payment

Debit
2,500

Debit
3,750
2,240

Name: Virgie Meat Mart

Terms: 2/10, n/30
Date
Explanation
May 30
SI
June 9
Partial collection
Name: Myna's Variety Store
Terms: 2/10, n/30
Date
Explanation
June 7
SI
Note on File

Debit
1,450
6,160

Debit
2,550

Debit
14,300

Debit
492.80

Debit
1,540

Credit
1,450

Credit
2,500

Credit
3,750

Credit
1,500

Credit
14,300

Balance
1,450
7,610
6,160

Balance
2,500
0

Balance
3,750
0
2,240

Balance
2,550
1,050

Balance
14,300
0

Credit
2,450
2,464

Balance
2,450
4,914
4,421.20

Credit
2,400
3,080

Balance
2,400
5,480
3,940

Name: Josie's Chicken

Page 6 of 35

Proposed answers
Terms: 2/15, n/30
Date
May 31
June 15

Explanation
PI
Full payment

Debit
2,500

Credit
2,500

Balance
2,500
-

JOURNAL ENTRIES:
DATE
June 1

4
5
7
8
9
10
12
14
15
18

PARTICULARS
Purchases
Input Tax
Cash On Hand
Accounts Payable
Purchases
Input Tax
Cash On Hand
Advances to Employees
Cash On Hand
Accounts Receivable
Sales
Output Tax
Gas & Oil
Input tax
Cash On Hand
Notes Receivable
Sales
Output Tax
Cash In Bank
Accounts Receivable
Cash In Bank
Accounts Receivable
Cash In Bank
Sales
Output Tax
Repairs and Maintenance
Cash On Hand
Sales Returns & Allowances
Output Tax
Notes Receivable
Accounts Payable
Cash On Hand
Purchases
Input Tax
Accounts Payable
Cash On Hand

DEBIT
2,200
264

CREDIT
492.80
1,971.20

2,850
342
3,192
150
150
6,160
5,500
660
300
36
336
15,680
14,000
1,680
3,750
3,750
1,500
1,500
14,000
12,500
1,500
500
500
300
36
336
2,500
2,500
2,750
330
1,540
1,540
Page 7 of 35

Proposed answers
20
21
23
25
28

30

Purchases
Input Tax
Cash On Hand
Notes Receivable
Accounts Receivable
Cash In Bank
Notes Receivable
Interest Income
Accounts Receivable
Sales
Output Tax
Cash In Bank
Accounts Receivable
Notes Payable
Interest Expense
Cash In Bank
Rent Expense
Utilities Expense
Cash On Hand
Cash In Bank
Sales
Output Tax
Salaries Expense
Withholding Taxes Payable
SSS& PH: Premiums Payable
Pag-ibig Payable
Advances to Employees
Cash on Hand
Output Tax
Input Tax
VAT Payable

4,000
480
4,480
2,500
2,500
15,459.08
15,344
115.08
2,240
2,000
240
1,450
1,450
150,000
3,375
153,375
3,000
850
3,850
13,440
12,000
1,440
5,000
300
200
100
150
4,250
21,284
7,952
13,332

TRIAL BALANCE
AB Meat Mart
Trial Balance
As of June 30, 2007
Cash On Hand
Cash In Bank
Accounts Receivable
Notes Receivable
Merchandise Inventory
Prepaid Supplies
Furniture & Equipment
Delivery Jeep

P 53,709.20
50,958.08
9,450.00
2,500.00
173,800.00
1,500.00
17,655.00
215,200.00
Page 8 of 35

Proposed answers
Accounts Payable
Withholding Taxes Payable
SSS, PH Payable
HDMF Payable
A. Barzaga, Capital
A. Barzaga, Drawing
Sales
Sales Discount
Sales returns & Allowances
Purchases
Freight In
Purchase Discount
Purchase Returns & Allowances
Utility Expense
Gas & Oil
Salary Expense
Repairs and Maintenance
Taxes & Licenses
Rent Expense
Commission Expense
SS & PH Premium Expense
HDMF Premium Expense
Interest Income
Interest Expense
VAT Payable
Totals

P 8,361.20
3,290.00
2,900.00
1,297.00
471,148.00
20,000.00
304,650.00
3,500.00
2,800.00
76,010.00
1,105.00
1,550.00
3,000.00
2,660.00
300.00
64,850.00
4,255.00
3,000.00
78,000.00
14,500.00
8,516
2,000
115.08
3,375.00
_________
P809,643.28

13,221.00
P809,643.28

INCOME STATEMENT
AB Meat Mart
Income Statement
For six months ended June 30, 2007
Net Sales (note 1)
Cost of Sales (note 2)
Gross Income
Less Operating Expenses:
Selling Expenses (note 3)
General Expenses (note 4)
Operating Loss
Interest Income
Interest Expense
Net Loss

P298,350.00
185,500.00
P112,850.00
P123,072.32
55,008.68
(

115.08
3,375.00)

178,081.00
65,231.00
3,259.92
P68,490.92

NOTES TO THE FINANCIAL STATEMENTS:

Page 9 of 35

Proposed answers
Note 1: Sales
Less: Sales Returns & Allowances
Sales Discount
Net Sales
Note 2: Cost of Goods Sold
Merchandise Inventory Beginning
Add: Net Purchases
Purchases
Add Freight In
Totals
Less: Purchase Discount
Purch. Ret. & Allow.
Total Goods Available for Sale
Less Merchandise Inventory End
Note 3: Selling Expenses:
Rent
Commission Expense
Salaries
Utilities
Gas & Oil
Repairs and Maintenance
SS & PH
HDMF
Total
Note 4: Rent
Note 4: Utilities
Salaries
Taxes & Licenses
SS & PH
HDMF

304,650.00
2,800
3,500

6,300.00
298,350.00

173,800
76,010
1,105
77,115
1,550
3,000

4,550

72,565
246,365
60,865

P185,500

P52,000.00
14,500.00
43,233.33
1,773.33
300.00
4,255.00
5,677.33
1,333.33
P123,072.32
P26,000.00
886.67
21,616.67
3,000.00
2,838.67
666.67
P55,008.68

CAPITAL STATEMENT:
AB Meat Mart
Capital Statement
For six months ended June 30, 2007
Barzaga Capital Jan. 1
Less: Drawings
Net Loss
Barzaga Capital June 30

471
(20,0
(68,490
P 382,65

BALANCE SHEET:
Page 10 of 35

Proposed answers
AB Meat Mart
Balance Sheet
As of June 30, 2007
Assets
Current Assets:
Cash (note 1)
Trade & Other Receivables
Merchandise Inventory
Prepaid Supplies
Fixed Assets (note 3)
Total

P104,667..28
11,950.00
60,685.00
1,500.00

178,982.28
232,855.00
P411,837.28

Liabilities & Owner's Equity

Liabilities:
Trade & Other Payables
Owner's Equity
Total

P 29,180.20
382,657.08
P411,837.28

NOTES TO THE FINANCIAL STATEMENTS:

Note 1: Cash On Hand
Cash In Bank
Cash
Note 2: Accounts Receivable
Notes Receivable
Trade & Other Receivable

Schedule of Accounts Receivable

Auring Cold Store
Chit Grocery
Virgie Meat Mart
Total
Schedule of Accounts Payable
Joffre's Farm
Johnny's Piggery
Total

P 53,709.20 Note 3: Furniture & Equipment

50,958.08
Delivery Jeep
P104,667.28
Fixed Assets
P 9,450 Note 4: Accounts Payable
2,500
VAT Payable
P11,950
W/Tax Payable
SS & PH Payable
Pag-ibig Payable
Trade & Other Payables

P 17,655
215,200
P232,855
P 8,361.20
13,332.00
3,290.00
2,900.00
1,297.00
P27,883..20

P6,160
2,240
1,050
P9,450
P4,421.20
3,940.00
P8,361.20

PROBLEM 5: Completing the Accounting Cycle

Date
Dec. 31

Accounts and Explanation

Debit

Credit

Closing Entries:
Sales
Sales Returns

403,320
4,050
Page 11 of 35

Proposed answers
Income & Expense S

399,270

Income & Expense S

344,840.83

Mdse Invty End

50,400.00

Purch Returns

3,420.00

Purchases

190,600.00

Delivery Expense

6,250.00

Rent Expense

70,020.00

Salaries

63,000.00

Office Expense

3,240.00

Bad Debts

967.50

Depreciation

2,033.33

Supplies

1,050.00

Interest Expense

10,500.00

Mdse Invty Beg

51,000.00

Income and Expense S

54,429.17

Javier, Capital

54,429.17

Javier Capital

14,400

Javier Drawings

Account Titles
Cash
Accts Receivable
Allowance for Bad Debts
Mdse Invty Jan 1
Supplies
Office Furn & Fix
Accum Depn
Accts Payable
Loans Payable
Javier Capital
Javier Drawing
Sales
Sales Returns
Purchases
Purch Returns
Delivery Expense
Rent Expense
Salaries
Office Expense
Totals
Bad Debts
Depreciation
Supplies Expense

14,400

Trial Balance
Debit
Credit
313,490

Adjustments
Debit
Credit

35,350

Adjusted
Trial Balance
Debit
Credit
313,490
35,350

800

a) 967.50

51,000
2,650
37,000

c) 1,050.00
4,300

D
31

3
1,767.50

51,000
1,600
37,000

b) 2,033.33

51,000

3
6,333.33

15,710
200,000
163,500

15,710
200,000
163,500

14,400

14,400
403,320

1
403,320

4,050
190,600

4,050
190,600
3,420

6,250
70,020
63,000
3,240
791,050

Income Statement
Debit
Credit

403,320
4,050
190,600

3,420

3,420

6,250
70,020
63,000
3,240

6,250
70,020
63,000
3,240

967.50
2,033.3
3
1,050.0

967.50
2,033.3
3
1,050.0

791,050
a) 967.50
b) 2,033.33
c) 1,050.00

Page 12 of 35

Proposed answers
Interest Expense
Interest Payable
Merchandise Invty Dec 31

d) 10,500.00
14,550.83

Net Income

0
10,500.00

d) 10,500.00

14,550.83

0
10,500.00
10,500.00

804,550.83

804,550.83

402,710.83
54,429.17
457,140

Page 13 of 35

50,400
457,140

5
45

457,140

45

Proposed answers
PROBLEM 6: Financial Statement Analysis
2007
P9,000
46,700/37,700= 1.24:1
37,000/37,700= .98:1

Working Capital
Current Ratio
Acid Test Ratio

2006
P3,630
36,300/32,670= 1.11:1
27,800/32,670= .86:1

More liquid in 2007

Turnover
335,052/2,628.5= 127.47 times
13,620/500= 27.24 times

Cr Card Receivable
Accts Receivable
Credit card collection is

more efficient

Inventories

Turnover
21,472/6,600 = 3.25 times

Collection Period
2.82 days
13.22 days

Holding Period
110.77 days

Holding period is quite long at 110.77 days.

PROBLEM 7: Accounting Process
a)
a)

b)
c)
d)
e)

f)
g)
h)
i)

Particulars
Land
Cash
Carmelo, Capital

Debit
300,000
250,000

550,000

Resort
Cash

108,000

Cash
Mortgage Payable

300,000

Resort Improvements
Cash

285,400

Equipment
Cash
Notes Payable
Furniture & Fixtures
Cash

108,000
300,000
285,400
48,000
12,000
36,000
120,000
120,000

Linen
Cash

7,894

Supplies
Accounts Payable

4,200

Vending Purchases

Credit

7,894
4,200
540

Page 14 of 35

Proposed answers
Cash
j)

k)
l)

m)
n)
o)

540

Cash
Credit Card Receivable
Room Sales Revenue

84,303
4,437
88,740

Cash
Vending Sales Revenue

8,800
8,800

Wages
W/Tax Payable
SS Premium Payable
Pag-ibig Premium Payable
PH Premium Payable
Cash
Accounts Payable
Cash

31,200
1,560
936
624
312
27,768
3,200
3,200

Insurance Expense
Cash

4,200
4,200

Mortgage Payable
Interest Expense
Cash

15,000
2,000
17,000

b)
a)
c)
j)
k)

Cash
b) 108,000
d) 285,400
e)
12,000
f) 120,000
g)
7,894
i)
540
l)
27,768
m)
3,200
n)
4,200
o)
17,000

250,000
300,000
84,303
8,800

g
)
i)

Linen Purchases
7,894
Vending Purchases
540

Credit Card Receivables

j) 4,437

h
)

Supplies
4,200

Land
a)

300,000

Land
a
)

300,0
00

b
)

108,0
00

d
)

Resort Improvements
285,4
00

e
)

Equipments
48,00
0

Resort

Page 15 of 35

Proposed answers
Accounts Payable
m 3,200 h 4,200
)
)

f
)

Notes Payable
e 36,00
)
0

n
)

o
)

Mortgage Payable
15,00 c 300,0
0
)
00

Carmelo Capital
a
)

Furniture & Fixtures

120,0
00
Prepaid Insurance
4,200
Wages

l)

31,20
0
SS Premium Payable
l)
935

550,0
00

Vending Sales Revenue

k 8,800
)
Room Sales Revenue
j) 88,74
0

W/Tax Payable
l) 1,560
Pag-ibig Premium Payable
l)
624

PhilHealth Premium Payable

l)
Interest Expense
2,000

o)

Cash
Linen Purchases
Vending Purchases
Credit Card Receivable
Supplies

Trial Balance
Debit
Credit
57,10
1
7,894
540
4,437

Furnishings

4,200
300,0
00
393,4
00
48,00
0
120,0
00

Prepaid Insurance

4,200

Land
Building
Equipment

Notes Payable
Mortgage Payable
Accounts Payable
Withholding Tax Payable
SS & EC Payable
Philhealth Payable
Pag-ibig Payable
Carmelo, Capital

312

36,00
0
285,0
00
1,000
1,560
936
624
312
550,0

Adjustments
Debit
Credit

Income
Statement
Debit
Credit

Balance Sheet
Debit
Credit
57,10
1

7,894
540
8)
533

3)
350

4,437
3,667
300,0
00
393,4
00
48,00
0
120,0
00
3,850

36,00
0
285,0
00
1,000
1,560
936
624
312
550,0

Page 16 of 35

Proposed answers
Vending Sales
Room Sales

31,20
0

Wages
Interest Expense

2,000
972,9
72

00
8,800
88,74
0
______
_
972,9
72

00
8,800
2)
4,160
4)
360

35,36
0

88,740

2,360

1)
7,220

Linen Inventory

7,220

2)
4,160

Wages Payable

4,160

3)
350

Insurance Expense

350
4)
360

Interest Payable
Depreciation Equipment
Accumulated Depreciation
Equipment
Depreciation Furniture
Accumulated Depreciation
Furniture
Depreciation Building
Accumulated Depreciation
Building

360

5)
375

375
5)
375

375

6)
1,177

1,177
6)
1,177

1,177

7)
1,464

1,464
7)
1,464

1,464

8)
533

Supplies Expense
Totals

8,419

Net Income

8,419

533
50,05
3
54,70
7
104,7
60

104,760

104,760

937,6
75

54,70
7
937,6
75

Problem 8: Recording Accounting Transactions

Jan. 1

Merchandise Inventory
Cash In Bank
Cash On Hand
Lopez Capital

200,000
400,000
100,000
700,000

Deposit for Rent

Cash in Bank

Purchases
Input Tax
Freight In
Accounts Payable

358,400
43,276.80
2,240

Purchases
Input Tax
Accounts Payable

38,032
4,564

Freight In
Input Tax
Cash On Hand

25,000

25,000

403,916.80

42,596
1,286
154
1,440

Page 17 of 35

Proposed answers
6

11

Accounts Receivable
Sales
Output Tax

8,960

Accounts Payable
Purchase Ret. & Allow.
Input Tax

1,800

Accounts Payable
Cash In Bank
Purchase Discount
Input Tax

8,000
960
1,584
216
403,916.80
395,888.60
7,168
860

14

Cash In Bank
Sales
Output Tax

15,680

15

Salaries
Withholding Tax Payable
Cash On Hand

14,000

16

Accounts Payable
Purchase Discount
Input Tax
Cash In Bank

40,796

17

Cash In Bank
Accounts Receivable

16,800

19

Sales Ret. & Allow.

Output Tax
Cash On Hand

11,000
1,320

20

Accounts Receivable
Sales
Cash On Hand
Output Tax

35,056

21

Cash In Bank
Sales
Output Tax

9,520

Sales Returns
Output Tax
Accounts Receivable

4,200
504

Service Charge
Cash In Bank

1,125

Utility Expense

5,650

24

364
44
40,388
8,960

Cash In Bank
Sales
Output Tax

23

700
13,300

8,960

18

22

14,000
1,680

15,000
1,800

12,320
30,000
1,300
3,756
8,500
1,020

4,704
1,125

Page 18 of 35

Proposed answers
Cash On Hand
25

Salaries
Withholding Tax Payable
SS Premium Payable
PH Premium Payable
Pag-ibig Payable
Cash On Hand

14,000

28

Rent Expense
Cash In Bank

12,500

30

1/7
1/11
1/16

5,650
700
840
420
560
11,480
12,500

Merchandise Inventory
Income Summary

553,000

Accounts Payable
1,800.00
1/3 403,916.80
403,916.80
1/4 42,596.00
40,796.00

1/6
1/20

553,000

Accounts Receivable
8,960
1/17
35,056
1/22

8,960
4,704

Balance 30,352
Supplier's Subsidiary Ledgers:
Hong Kong
Date
Particulars
Jan. 3 2/10, n/30
11 full payment
Folks Wear
Date
Particulars
Jan. 4 2/10, 1/15, n/30
7 returns
16
paid in full
Sari
Date
1/6
17
Robinson
Date
1/20
22

Debit

Credit
403,916.8
0

Balance
403,916.
80
0

Credit

Balance
42,596
40,796

Debit
8,960

Credit

Balance
8,960
0

Debit
35,056

Credit

403,916.8
0
F

Debit
1,800
40,796

Particulars
2/10, n/30
full collection

Particulars
2/10, n/30
returns

8,960

4,704

Balance
35,056
30,352

Page 19 of 35

Proposed answers
PROBLEM 9: Completion of the Accounting Process
Credo's Auto Supply
Worksheet
For the year ended Dec. 31, 2007
Account Title
Cash On Hand
Cash In Bank
Accounts Receivable
Supplies
Merch. Invty.
Prepaid Interest
Store Equipment
Furniture & Fixtures
Accounts Payable
Loans Payable
Credo, Capital
Credo, Personal
Sales
Sales Discount
Purchases
Purchase Discounts
Salaries
Utilities Expense
Rent Expense

Supplies Expense
Dep.Exp.-Store Equip.

Trial Balance
Debit
Credit
14750
375275
64000
1900
165300
6000
115000
59000
7500
100000
444472
5
32500
897000
16800
310000
880
91600
89980
10800
0
145010
5

Adjustments
Debit

Prepaid Rent
Salaries Payable

1400

4)

1000

16800
310000
6)
450
7)
3500

_______

5)
36000

Debit

Income Statement
Credit

165300

189768

Balance Sheet
Debit
14750
375275
64000
500
189768
5000
115000
59000

Credit

75000
100000
444725

32500
897000
880

16800
310000

92050

92050

93480

93480

72000

72000

1400

1400

8250

8250

897000
880

145010
5
1)
1400
2)
8250
2)
8250
3)
11800

Acc.Depn.-Office Furn.
Interest Expense

1)

Adjusted Trial Balance

Debit
Credit
14750
375175
64000
500
165300
5000
115000
59000
7500
100000
444725
32500

Acc.Dep-Store Equip.
DepnExp.-Office Furn.

Credit

8250
11800

3)
11800
4)
1000
5)
36000

11800
11800

1000

11800
1000

36000
6)

8250

36000
450

450

Page 20 of 35

Proposed answers
Utilities Payable
62400

450
7)
3500
62400

3500
1474105

1474105

3500
772080
315568
108764
8

1087648

891793

1087648

891793

576225
315568
891793

Page 21 of 35

Proposed answers
Credo's Auto Supply
Post Closing Trial Balance
Dec. 31, 2007
Cash On Hand
Cash In Bank
Accounts Receivable
Supplies Inventory
Merchandise Inventory
Prepaid Interest
Prepaid Rent
Store Equipment
Accumulated Depreciation - Store Equipment
Furniture & Fixtures
Accumulated Depreciation - Furniture &
Fixtures
Accounts Payable
Loans Payable
Salaries Payable
Utilities Payable
Credo, Capital

Debit
14,750
375,275
64,000
500
189,768
5,000
36,000
115,000
59,000

Credit

8,250
11,800

______
859,293

7,500
100,000
450
3,500
727,793
859,293

Credo's Auto Supply

Income Statement
For the year ended Dec. 31, 2007
Net Sales (note 1)
Cost of sales (note 2)
Gross Profit
Selling Expenses
General Expenses
Operating Income
Interest Expense

P880,200
284,652
595,548
(225,410)
( 53,570)
316,568
1,000
315568
897,000
16,800
880,200

Note 1:

Gross Sales
Less Sales Discount
Net Sales

Note 2:

Merchandise Inventory 1/1

Less Net Cost of Purchases
Purchases
310,000
Less Purchase Discount
880
Total Goods Available for Sale
Less Merchandise Inventory, 12/31 (40%x474,420)
Cost of Sales
Rent Expense Store
Utilities Expense Store
Sales Salaries
Supplies Expense Store
Depreciation Expense - Store Equipment
Selling Expense
Rent Expense Office
Utilities Office
Supplies Office

Note 3:

Note 4:

165,300
309,120
474,420
189,768
284,652
54,000
70,110
92,050
1,000
8,250
225,410
18,000
23,370
400

Page 22 of 35

Proposed answers
Depreciation Office

11,800
53,570

Credo's Auto Supply

Capital Statement
For the year ended Dec. 31, 2007
Credo, Capital Jan. 1
Net Income
Credo, Drawings
Credo, Capital, Dec. 31

P444,725
315,568
( 32,500)
727,793

PROBLEM 10: Recording Accounting Transactions

Date
July 1

Particulars
Merchandise Inventory
Cash on Hand
Lopez, Capital

Debit
50,000
200,000

250,000

Purchases
Cash on Hand
Accounts Payable

7,500

Purchases
Accounts Payable

10,000

Freight In
Cash on Hand

Cash on Hand
Accounts Receivable
Sales

4,000
5,000

Supplies
Cash on Hand

1,500

15,000

Accounts Payable
Purchase Returns & Allow

500

12

Sales Returns & Allow

Cash on Hand

220

17

9,000

500
220

Cash on Hand
Sales Discount
Accounts Receivable

4,950
50

Office Salaries
Sales Salaries
Cash on Hand

2,500
3,500

Cash on Hand

15,000

1,500

10

15

10,000
750

Cash on Hand
Sales

13

2,500
5,000

750

Credit

5,000

6,000
14,000
Page 23 of 35

Proposed answers
Sales
18

Accounts Payable
Purchase Discount
Cash on Hand

19

Accounts Receivable
Cash on Hand
Sales

20

Accounts Payable
Cash on Hand

25

Cash on Hand
Accounts Receivable

31

Office Salaries
Sales Salaries
Store Rent
Store Utilities
Cash on Hand
Office Supplies Expense
Office Supplies

14,000
5,000

5,836.10

4,500

150
4,850
500
5,336.10
4,500

1,167.22
1,167.22
2,500
3,500
5,000
3,000
14,000
500

500

PROBLEM 11: Completion of the Accounting Process

Date
Dec. 31
1)

Particulars
Professional Fees Revenue
Income & Expense Summary

Debit
276,300

Income & Expense Summary

Salaries
Supplies
Utilities
Rent
Depreciation
Interest
Bad Debts

163,865

Income & Expense Summary

Margallo, Capital

112,435

3)
4)

Margallo, Capital
Margallo, Drawing

2)

Reversing Entries:
Salaries Payable
Salaries
Interest Payable
Interest Expense
Supplies Expense

Credit
276,300
96,100
12,000
37,800
7,200
7,125
80
3,560
112,435

19,000

12,000

19,000

12,000

80
80
5,000
Page 24 of 35

Proposed answers
Supplies
Ac
ct.
No
.

Account
Titles
Cash
Accounts
receivable
Prepaid rent
Equipment

Trial
Balance

Supplies
Utilities
Totals
Rent
Depreciation

Adjustment
s

186
000
71
200
19
200
177
500

Accum deprn
Accounts
payable
Notes
payable
Margallo,
capital
Margallo,
drawings
Professional
fees
Salaries

5,000

a)
7200
5
500
18
000
12
000
300
000

190
00

Allow for bad

debts
Supplies
Totals

Balance
Sheet
186
000
71
200
12
000
177
500

12
625
180
00
120
00
300
000

126
25
180
00
120
00
19
000

19
000
276
300

841
00
170
00
378
00
611
800

Income
Statement

186
000
71
200
12
000
177
500

b)
7125

276
300
C)
1200
0

2763
00

96
100

961
00

12
000
37
800

120
00
378
00

7
200
7
125

72
00
71
25

611
800
a)
7200
b)
7125

Salaries
payable
Interest
expense
Interst
payable
Bad debts

Adjusted
Trial
Balance

c)
1200
0
d)
80

12
000
80

d)80
e)
3560

3496

80

80

35
60

3
560

80
35
60

e)35
60
f)
5000
349

12
000

3
560
50
00
634

634

1638

2763
Page 25 of 35

Proposed answers
65
Net income
Totals

565

565

65
1124
35
2763
00

00
2763
00

112
435
470
700

Page 26 of 35

Proposed answers
PROBLEM 12: RECORDING & POSTING TRANSACTIONS
July 1

2
5
6
7

8
10

12
14
15
18
20
22

23

28
29

30

Merchandise
Equipment
Reyes, Capital
Accounts Payable
Cash In Bank
Cash On Hand
Reyes, Capital
Input Tax
Purchases
Accounts Payable
Freight In
Input Tax
Cash On Hand
Input Tax
Furniture & Fixtures
Notes Payable
Cash In Bank
Accounts Payable
Cash In Bank
Accounts Receivable
Cash On Hand
Sales
Output Tax
Accounts Receivable
Sales
Output Tax
Purchases
Input Tax
Cash In Bank
Cash On Hand
Purchase Returns
Input Tax
Reyes, Drawing
Cash On Hand
Notes Receivable
Accounts Receivable
Cash On Hand
Accounts Receivable
Accounts Payable
Cash In Bank
Purchases
Input Tax
Notes Payable
Cash On Hand
Accounts Receivable
Accounts Receivable
Sales
Output Tax
Cash On Hand
Cash In Bank
Sales
Output Tax
Cash On Hand

80,000
150,000
200,000
50,000

224,000
6,000
250,000

2,400
20,000
1,250
150

22,400
1,400

1,056
8,800
4,856
5,000
5,000

5,000

9,800
9,800
17,500
2,100
7,280
35,000
4,200

6,500
780
39,200

2,520

2,250
270

5,000

5,000

9,800

9,800

2,427

2,427

17,400
13,000
1,560

17,400
14,560

4,853
44,800
31,360
24,640
9,800

4,853
40,000
4,800
50,000
6,000

Page 27 of 35

Proposed answers

31

Notes Receivable
Interest Income
Input Tax
Freight Out
Cash On Hand
Salaries
W/Tax Payable
SS Payable
PH Payable
HDMF Payable
Cash On Hand
Service Charge
Cash In Bank

Name: Ana Gonzalo

Terms: 2/10, n/15
Date
Explanation
July SI
10 Down payment
20 10 days, 6%
note

9,783.67
16.33

30
250

280

15,000

750
450
225
300
13,275

739.20

Debit
18,250

Credit
9,125
9,125

739.20

Balance
18,250
9,125
0

Accounts Payable Subsidiary Ledger

Name: Steel Co.
Terms:
Date
Explanation
July 1

Debit

Credit
60,000

Balance
60,000
0

Name: Sherwin
Terms: 4,500 down payment, balance 2/10, 1/15, n/30
Date
Explanation
F
Debit
Credit
Balance
July 5 PI
22,000
22,000
7 Partial
5,000
17,000
22 payment
17,00
0
Full payment
Customer: A. Dimaano
Date
Explanation
July 12 n/30
22 partial
23 full collection
Customer: Universal Bank
Terms: 2/10, n/30
Date
Explanation
July 28

Debit
17,150

Debit
22,000

Credit

Balance
5,716.67
11,433.33

Credit

17,150
11,433.33
0

Balance
22,000

Page 28 of 35

Proposed answers

Page 29 of 35

Proposed answers
PROBLEM 13: COMPLETION OF THE ACCOUNTING CYCLE
a) and b)
Account Titles
Cash In Bank
Cash On Hand
Accounts Receivable
Allowance for Bad Debts
Prepaid Insurance
Leasehold Improvements
Accumulated Depn- LhI
Furniture & Fixtures
Accum. Depn. Furn. & Fix
Accounts Payable
Notes Payable
Advance from Client
SS & EC P)rem Pay
PH Prem Pay
HDMF Prem Pay
WT Payble
Jasmin, Capital
Jasmin, Personal
Parking Fees
Interest Income
Rent
Office Supplies Expense
Salaries
Utilities
Taxes
HDMF
PhilHealth
SS & EC
Salaries Payable
Office Supplies
Depn. Exp.- Leasehold Im.
Interest Expense
Interest Payable
Insurance Expense
Depn Exp-Furn & Fix
Bad Debts
Taxes Pay
Total
Net Income

Jasmins Park Place

Trial Balance
200,000
23,000
176,000

Adjustments

3,000

g)
a)

4,800
504,000
42,000

5,800
3,600

d) 50,400

30,000
3,000
35,000
400,000
15,000
534
176
200
1,516
144,500

f)
c)

4,000

7,500
J)1,150.60
175.00
200.00

85,500
869,157
14,000
180,000
8,000
186,000
96,000
18,000
2,200
1,926
12,657

a)

c)

7,500

b)

1,400

4,000

i) 5,814
j) 200.00
175.00
1,150.60
a)

4,000

b)
1,400
d) 50,400
h) 14,000
h)
e)
f)
g)
1,528,083

1,528,083

14,000

3,600
4,000
5,800

97,884.6

i)5,814
97,884.60

Adjusted Trial Balance

200,000
23,000
176,000
8,800
1,200
504,000
92,400
30,000
7,000
35000
400,000
7500
1,684.60
351.00
400.00
1,516
144,500
85,500
876,657
14,000
180,000
6,600
190,000
96,000
23,814
2,400
2,101
13,807.60
4,000
1,400
50,400
14,000
14,000
3600
4,000
5,800
5,814
1,613,622.6
1,613,622.6

Income Statement

Balance
200,000
23,000
176,000
8,800
1,200
504,000
92,400
30,000
7,000
35,000
400,000
7,500
1,684.6
351
400
1,516
144,500

`
85,500
876,657
14,000
180,000
6,600
190,000
96,000
23,814
2,400
2,101
13,807.6

4,000
1,400
50,400
14,000
14,000
3,600
4,000
5,800
5,814
592,522.6
298,134.4
890,657

890,657
890657

1,021,100

298134.4
1,021,100

Page 30 of 35

Proposed answers
c)

Maria Jasmin, Realtor

Balance Sheet
December 31, 2008
ASSETS
Current Assets
Cash on Hand
Cash in Bank
Accounts Receivable
176,000
Less Allowance
8,800
Prepaid Insurance
Office Supplies
Total
Property Plant & Equip
Leasehold Imp.
504,000
Less Acc. Depn.
92,400
Furniture & Fixtures
30,000
Less Accum Depn.
7,000
Total

LIABILITIES & OWNER'S EQUITY

23,000
200,000
167,200
1,200
1,400
392,800
411,600
23,000

Total Assets

434,600
827,400.00

Current Liabilities:
Accounts Payable
35,000
Notes Payable
400,000
Unearned Rent
7,500
Taxes
5,814
Salaries Payable
4,000
Interest Payable
14,000
Taxes Payable
5,814
SS and EC
1,684.60
PH
351.00
HDMF
400.000
W/Tax
1,516.00
Total
Jasmin, Capital
Total Liab. & Owner's Equity

470,265.60
357,134.40
827,400.00

d)
Maria Jasmin, Realtor
Income Statement
For the year ended Dec. 31, 2008
Revenue:
Expenses:

Rent Income
Interest Income
Total
Taxes
Salaries
Utilities
Rent
Depreciation Leasehold Imp.
Depreciation - Furniture
Interest Expense
Office Supplies
Bad Debts
Insurance
HDMF
PH
SS and EC

P876,657
14,000
P890,657
23,814
190,000
96,000
180,000
50,400
4,000
14,000
6,600
5,800
3,600
2,400
2,101
13,807.60
592,522.60
P 298,134.40

Net Income
Maria Jasmin, Realtor
Capital Statement
For the year ended Dec. 31, 2008
Jasmin, Capital Jan. 1
Net Income
Jasmin, Personal
Jasmin, Capital Dec. 31

P144,500
298,134.40
( 85,500)
P357,134.40

Page 31 of 35

Proposed answers
PROBLEM 14: RECORDING & POSTING TRANSACTIONS
Sept. 5
8
10
14
15

16
17
24

25

29

30
31

Purchases
Input Tax
Accounts Payable
Freight In
Input Tax
Cash
Accounts Payable
Cash
Accounts Receivable
Sales
Output Tax
Accounts Payable
Cash
Purchase Discount
Input Tax
Freight Out
Input Tax
Cash
Sales returns & Allowances
Output Tax
Accounts Receivable
Cash
Sales Discount
Input Tax
Accounts Receivable
Furniture & Fixtures
Input Tax
Cash
Accounts Payable
Cash
Accounts Receivable
Sales
Output Tax

120,000
14,400
134,400
5,500
660
6,160
67,200
67,200
69,440
62,000
7,440
67,200
64,512
2,400
288
1,500
180
1,680
2,350
282
2,632
65,472
1,193
143
66,808
90,500
10,860
45,250
45,250
25,000
39,400
57,500
6,900

Freight Out
Input Tax
Cash
Accounts Payable
Cash
Furniture & Fixtures
Input Tax

Supplier: Ang's Furniture

Date
Particulars
5/5
2/10, n/30 FON S.P.
10
Partial
15
Full
Supplier: Hill Furnishing
Date
Particulars
5/25
2/10, n/30
5/31
Full payment

500
60
560
45,250
44,236.40
905
108.60
F

Debit

Credit
134,400

Balance
134,400
67,200
0

Credit
45,250

Balance
45,250
0

67,200
67,200
F

Debit
45,250

Page 32 of 35

Proposed answers
Customer: Ramos
Date
5/29

Particulars
2/10, n/30

Debit
39,400

Credit

Balance
39,400

Customer: Danilo
Date
5/14
17
24

Particulars
2/10, n/30
CM
Full collection

Debit
69,440

Credit

Balance
69,440
66,808
0

2,632
66,808

May 10
15
31

Accounts Payable
67,200
5/5
67,200
25
45,250

134,400
45,250

5/14
29
Balance

Accounts Receivable
69,440
5/17
39,400
24
39,400

2,632
66,808

Page 33 of 35

Proposed answers
PROBLEM 15: COMPLETION OF THE ACCOUNTING CYCLE
Account Titles
Cash
Accounts Recble
Allow for Bad Debts
Prepaid Supplies
Library
Accum Depn-Library
Office Furn & Fix
Acum Depn Office furn & Fix
Loans Payable
Accounts Payable
Rubio, Capital
Rubio Personal
Medical Fees Earned
Salaries
Rent
Taxes
Utilities
Interest Expense
Totals
Rent Payable
Depreciation-Library
Depreciation-Furn & Fix
Unearned Medical Fees
Supplies Used
Taxes Payable
Interest Payable
Utilities Payable
Bad Debts
Totals
Net Income

Trial Balance
356,500
205,000

Adjustments
7,550

Income Statement

h) 2,700
d) 8,750

11,500
155,000
15,500

Balance
356,500
205,000
10,250
2,750
155,000

b)15,500

31,000

96,000

96,000
2,000
200,000
18,000
180,650

b) 9,200

11,200
200,000
18,000
180,650

42,000

42,000
729,000

72,000
110,000
9,.000

c) 12,500

716,500
72,000
120,000
18,220

a)10,000
e) 2,500
i) 6,720
g) 6,000
f) 6,000

75,700
20,000

81,700
26,000
a) 10,000

b)15,500
b) 9,200

10,000
15,500
9,200

c) 12,500
d) 8,750

12,500
8,750

e) 2,500
i) 6,720
f) 6,000
g) 6,000
1,152,700

1,152,700

h) 2,700
79,870

79,870

9,220
6,000
6,000
2,700
354,070
362,430
716,500

716,500
716,500

857,250

362,430
857,250

Page 34 of 35

Proposed answers

Page 35 of 35