Compilation Of Acctg Probs

You were given the following account balances of ABC Company as of November 30, 2006: Cash Accounts Receivable Note Receivable Inventory, Jan 1 Prepaid rent Prepaid insurance Office supplies Land Building Accumulated depreciation: Bldg Office equipment Accounts payable Notes payable Purchase returns Allowance for bad debts

15325 8900 1500 2850 10500 6000 1200 85000 100000 4000 10000 40250 25000 3200 1025

Other current liabilities Loans payable A. capital Purchases Sales Interest income Salaries expense Transportation expense Advertising expense Travel expense Utilities expense Sales returns Sales discount Purchase discount

4200 34030 109895 79000 120000 1300 11200 2100 5350 200 1500 2275 1850 1850

You were also given the following transactions to consider: 2006

Dec 1 Dec 5 Dec 10 Dec 11 Dec 12 Dec 16

Sold Land with book value of P25000 for P50000 cash. Made sales on account for P10000, term is 2/15, n/30 Purchased merchandise on cash basis. List price was P5000 and trade discount of 20% was given by the supplier. Received returned goods from Dec 5 sale. Amount was P2000. Purchased office supplies on account, P12000. Collected in full the receivable from the December 5 sale.

ADDITIONAL INFORMATION

1. Cash balance as of December 31, 2006 per the bank statement is P72315. Reconciling items to consider are as follows:

2.

Outstanding checks ? Deposit in Transit P25000 Proceeds of bank loan credited by the bank not yet taken in books P25000 Bank service charges 500 Interest on deposit not recorded by the company 1200 The company incorrectly recorded a November wage payment (part of salaries expense) at P1550. The correct amount is P1600. You were given the following information about certain inventory on account sale shipments of the company made around late December 2006 and early January 2007 relevant for analysis. Invoice # 7671 7672 7673 7674 7675 7676 7677 7678 7679 7680

3. 4.

5. 6. 7.

FOB Term Shipping Point Destination Destination Shipping Point Shipping Point Destination Destination Shipping Point Destination Shipping Point

Shipped 20-Dec 31-Dec 25-Dec 31-Dec 31-Dec 31-Dec 5-Jan 25-Dec 4-Jan 5-Jan

Recorded 31-Dec 2-Jan 31-Dec 29-Dec 2-Jan 23-Dec 6-Jan 3-Jan 31-Dec 2-Jan

Sales Price 1000 2500 1800 4200 9200 6500 7500 3900 8600 5000

Cost 900 2000 1200 3100 8000 5100 5800 2000 8200 4000

A physical inventory, taken as of the close of business on December31, 2006, shows P27380. All customers are within a three-day delivery area of the company. Bad debts is estimated by using 2% of Sales method. The building was 1 year old as of December 31, 2005 and was being depreciated at zero salvage value. Starting January 1, 2006, the building is to be depreciated with salvage value of P6000. The office equipment was acquired last July 1, 3006 and will be depreciated over two years. 1/2 of prepaid rent and insurance is expired as of December 31, 2006. Office supplies on hand are P200. Accrued interest on notes receivable is P500. Notes payable is composed of only one promissory note issued last July 1, 2006 at 20% interest per annum.

Calculate the following (as of December 31, 2006): a. b. c. d. e. f. g. h.

credit total of the unadjusted trial balance _______________ outstanding checks _______________ cash _______________ accounts receivable (net) _______________ building (net) _______________ equipment (net) _______________ cost of goods available for sale _______________ total current assets _______________

i. total assets _______________ j. A. Capital _______________ k. cost of sales _______________ l. total expenses _______________ m. bad debts expense _______________ n. inventory _______________ o. net sales _______________ p. net income _______________

BA 99.1 Final Examination 1. You were given the following: Company Cash Record:

Unadjusted balance:

Nov 30 Dec 31

P100000 120000 50000

Nov 30

56500 30000

December receipts Per bank statement:

Balance December deposits

Additional Information: Service Charges

Nov P500 Dec 750 Outstanding checks Nov 2000 Dec 5000 (including the November outstanding check of P2000) A check for P50000 in November was recorded at P5000. The correction was made January of the following year. The same check was encashed by the bank at the correct amount in November. A December deposit of P20000 was recorded at p40000. The correction was made in December. The same deposit was taken by the bank correctly. (5pts) Compute for the adjusted book balance as of November 30. __________________ (5pts) Compute for the unadjusted book balance as of December 31. _________________ 2. X Inc. started operations on January 1, 2005. The following relevant data are given for its first three years of operations. Sales Accounts Receivable Accounts written off Recovery of accounts written off Method of estimating doubtful accounts

2005 100000 50000 5000

2006 200000 75000 100000

5% of A/R

6% of A/R

2007 300000 150000 12000 2000 5% of sales

(2 pts each) Compute for the adjusted balance of the allowance account end of 2006 and 2007. 2006 ____________________ 2007 ____________________ 3. You were given the following information about certain inventory sale shipments of XYZ Company. Invoice # 7671 7672 7673 7674 7675 7676 7677 7678 7679 7680

FOB Term Destination Shipping Point Shipping Point Destination Destination Shipping Point Shipping Point Destination Shipping Point Destination

Shipped 20-Oct 31-Oct 25-Oct 31-Oct 31-Oct 2-Nov 5-Nov 25-Oct 4-Nov 5-Nov

Recorded 31-Oct 2-Nov 31-Oct 29-Oct 2-Nov 23-Oct 6-Nov 3-Nov 31-Oct 2-Nov

Sales Price 1000 2500 1800 4200 9200 6500 7500 3900 8600 5000

Cost 900 2000 1200 3100 8000 5100 5800 2000 8200 4000

A physical inventory was taken as of the close of business on Oct.31, the company’s balance sheet date. Al customers are within a three-day delivery area of the company. The unadjusted balances of Sales and Inventories accounts are P2500000 and P110000, respectively. (5pts each) Compute for the adjusted balances of Sales and Inventories. ___________________ ; ___________________ 4. The financial statements of ZZ Company contained the following errors: Ending inventory of 2003 was understated by P200. Ending inventory of 2004 was overstated by P1800. Depreciation expense of 2003 understated by P400. Insurance of P1500 was prepaid in 2003 for the years 2003, 2004, and 2005. The entire amount was expensed in 2003. On December 31, 2004, a fully depreciated machinery was sold for P3200 cash but the sale was not recorded until 2005. No corrections had been made for any of these errors. (2pts) (5pts) (5pts)

Compute for the net effect (indicate whether under or overstatement) of these errors on the 2004 gross profit. _____________________________ Compute for the net effect (indicate whether under or overstatement) of these errors on the 2003 income. _____________________________ Compute for the net effect (indicate whether under or overstatement) of these errors on capital as of December 31. _____________________________

5. You were given the following breakdown of X Company’s accounts receivable on December 31, 2006: Sales to A B C

Amount P100000 P200000 P250000

Date shipped-2006 1-Nov 31-Aug 21-Nov

Term Shipping point Destination Shipping point

2/10, n/30 2/10, n/60 5/10, 2/15, n/30

Date received-2006 15-Dec 15-Nov 20-Dec

D P300000 1-Sept Destination 2/10, n/30 1-Oct In computing the bad debts, the company uses the following estimates: not yet due 2%; 1-20 days past due, 5%; 21-40 days past due, 8%; 41-60 days past due, 10% and over 60 days, 15%. The credit period starts a day after each sale and includes holidays. (5pts) If the unadjusted balance of the allowance account is a debit of P5000, calculate bad debts expense to be reported for 2006. ____________________ 6. XC Company discounted a note with face value of P100000 at XZ Bank. The note was received by XZ on May 1, 2006. Proceeds was P106085 and the note was discounted at 12%. This note was issued by XX Corporation on January 1, 2006 and was to be paid on June 30, 2006. (5pts) Determine the original rate of interest carried by the note. ____________________ (2pts) How much is the maturity value of the note? ____________________ 7. On January 1, 2007, AZ Company received a NON-interest bearing note for P100000. This note is supposed to be paid by the maker on December 31, 2007. The note was discounted by AZ with Onion Bank on July 1, 2007. The discount was set at 12%. (5pts) Calculate the proceeds from the discounting. ____________________ 8. You were given the following purchase and sale schedule for Inventory Company. Purchase 2000 5000

Beginning 2006 1-Jan-2006 19-Feb-2006 28-April-2006 5-May-2006 22-July-2006 20-Sep-2006 15-Nov-2006 18-Dec-2006 15-Jan-2007 18-Jan-2007

Sale

Unit Cost 1.5 1.6

3000 2500

1.8 3000

5000

1.8 1000

3500

2 500

3000

2.1 200

The company sells its product at P5.5 each. (5pts) Compute for cost of goods sold for 2006 assuming weighted average inventory costing. ____________________ (5pts) Compute for gross profit of 2006 assuming FIFO. ____________________ 9. Given the following transactions: Dec 1 Dec 5 Dec 6 Dec 7 Dec 9 Dec 11 (5pts)

Purchased inventory on account for P20000, terms 2/10, n/30. P2000 was paid by AA for transporting the inventory to the company’s store. (Payment for transport is subject to VAT) Sold merchandise on account for P50000. Terms 2/10, 1/15, n/30. Returned ¼ of the Dec. 1 purchase due to some defects. Collected ½ of the receivable from Dec.15 purchase. Paid in full the payable related to the Dec. 1 purchase. Sold merchandise for cash, P15000.

Calculate the net VAT as of end of December. Indicate if payable or asset. ______________________________

10. You were given the following account balances of ABC Company as of November 30, 2006: Cash Accounts Receivable Notes receivable Inventory, Jan 1 Prepaid rent Prepaid insurance Office supplies Land Building Accumulated depreciation: Bldg Office Equipment Accounts payable Notes payable Purchase returns

P

30875 10250 2100 1750 5000 4000 1000 52000 100000 4000 10000 40250 32635 3200

Other current liabilities Loans payable A. Capital Purchases Sales Interest income Salaries expense Transportation expense Advertising expense Travel expense Utilities expense Sales returns Sales discount Purchase discount

You were also given the following transaction to consider: 2006

Dec 1 Dec 5 Dec 10

Issued check #10 for P5150 as payment for utilities expense Made sales on account for P8000, term is 2/15, n/30. Purchased merchandise on account for P5000, term is 2/10, n/30.

P

4200 34030 100110 79000 120000 2500 25150 2100 5350 200 1500 6250 6250 1850

Dec 11

Received returned goods from Dec 5 sale. Amount was P2000.

ADDITIONAL INFORMATION 1. Cash balance as of December 31, 2006 per the bank statement is P40125. Reconciling items to consider are as follows: Outstanding checks P 6125 Deposit in transit ? Proceed of bank loan credited by the bank not yet taken in books P 9000 Bank service charges 125 Interest on deposit 350 The company incorrectly recorded a November wage payment (part of salaries expense) at P1550. The correct amount is P1500. 2. You were given the following breakdown of accounts receivable as of December 31, 2006: due December 15, 2006………..…. P 1000 due December 1, 2006……………. 1500 due November 15, 2006 …………. 1750 due November 1, 2006…………… 1000 The rest are not yet due accounts. The following are the estimates of doubtful accounts expense: not yet due accounts 1 – 15 days past due 16 – 30 days past due 31 – 45 days past due Over 45 days past due

1% 5% 10% 20% 30%

3. The building was 1 year old as of December 31,2005 and was being depreciated at zero salvage value. Starting Jan. 1, 2006, the building is to be depreciated at total estimated life of 10 years and salvage value of P6000. 4. The office equipment was acquired last January 1, 2006 and will be depreciated over two and a half years. 5. The company uses the FIFO cost flow method of ending inventory valuation. And you were given the following information on inventory purchases: Beginning inventory Batch 1 Batch 2 Batch 3 Batch 4

35 units 200 500 400 272

UNIT COST P 50 60 62 60 62.50

During the year, the company sold 962 units of their inventory. A physical count on December 31, 2006 showed 445 unsold units. 6. ½ of prepaid rent and insurance is expired as of December 31, 2006. 7. Office supplies on hand is P200. 8. Accrued interest on notes receivable is P210. 9. Notes payable is composed of only one promissory note issued last July 1, 2006 at 20% per annum. Maturity date is at July 1, 2008. Calculate the following: (5pts) (5pts) (5pts) (5pts) (5pts) (5pts) (5pts) (5pts) (5pts) (5pts) (5pts) (5pts) (5pts)

a. debit total of the December 31, 2005 unadjusted trial balance. ________________________ b. deposit in transit as of December 31, 2006. ________________________ c. cash to be shown on the December 31, 2006 balance sheet. ________________________ d. accounts receivable (net of allowance) as of December 31, 2006. ________________________ e. building (net of accumulated depreciation) as of December 31, 2006. ________________________ f. equipment (net of accumulated depreciation) as of December 31, 2006. ________________________ g. total current assets as of December 31, 2006. ________________________ h. total assets as of December 31, 2006. ________________________ i. total capital as of December 31, 2006. ________________________ j. net income or loss for 2006 (indicate if income or loss). ________________________ k. cost of sales for 2006. ________________________ l. total expenses for 2006. ________________________ m. bad debts expense for 2006. ________________________

BA 99.1 Midterm Examination 1. Mr. A organized AZ Merchandising on January 1, 2006. You were given the company’s trial balance as of November 30, 2007: Cash Accounts Receivable Note Receivable Inventory, Jan 1 Prepaid rent Prepaid insurance Office supplies Land Building Accumulated depreciation: Bldg Office equipment Accounts payable Notes payable Unearned other revenue

30875 10250 2100 1750 5000 4000 1000 52000 100000 4000 10000 10250 32635 4200

Loans payable A. capital Purchases Sales Interest income Salaries expense Transportation out Freight-in Travel expense Utilities expense Sales returns Sales discount Purchase discount Purchase returns

34030 100110 79000 120000 2500 25150 2100 5350 200 1500 6250 6250 1850 3200

The following were the transactions for the month of December 2007: Dec 1 Dec 5 Dec 10 Dec 11 Dec 12 Dec 15 Dec 22 Dec 24 Dec 24 Dec 26 Dec 27 Dec 28 Dec 29

Purchased inventory on account for P20,000, terms 2/10, n/30, FOB Shipping Point. P2,000 for freight was paid by the vendor. Paid the total payable from above purchases to the supplier. Sold merchandise for P10,000. Term is FOB Destination (Freight Collect), 20% down payment, balance 2/10, 1/15, n/30. Freight was P2,000. Sold merchandise on cash basis, FOB Shipping Point, Freight Prepaid. Total selling price was P2,000 and freight was P500. (Paid by the buyer) The client of Dec. 10 returned merchandise worth P2,000. P500 was charged against the receivable while a replacement for the balance was delivered to the client. The client of December 10 settled its account with the company. Purchased for cash P10,000 worth of merchandise. Term is 2/15, n/30, FOB Destination. The vendor paid freight of P1,500. Sold merchandise on cash basis, FOB Destination, Freight Prepaid. List price is P3,000 and trade discount given was 20%. Freight was P800. Returned 1/5 of the Dec. 22 purchase. The supplier will refund the company in January, 2008. Received some returned goods coming from the Dec 24 sale. Selling price of the received goods is P1,000 and the customer was fully refunded for this. Paid travel expenses for P2,800. Received and paid the bill for electricity consumption for the month, P1,250. Sold merchandise for P20,000. Term is FOB Destination (Freight Collect), 10% down payment, balance 2/10, n/30. Freight was P5,000.

ADDITIONAL INFORMATION: All office equipment were acquired on June 30, 2006 and is depreciable over 5 years. The company however forgot to take up depreciation on the office equipment for 2006. The building is one year old as of beginning of 2007. ½ of prepaid rent and ½ of prepaid insurance is expired. Interest for one year at 12% is to be accrued on notes receivable. Ending inventory is P27,000. Bad debts is 6% of accounts receivable. Unrecorded salaries is P1,200. Required: 1) Prepare the journal entries (one entry only for each) for the December transactions. (2 pts each) 2) Calculate the following (5 pts each) as at December 31, 2007 or for 2007, respectively:

a. b. c. d. e.

Total Assets ____________________ A, Capital balance ____________________ Net sales ____________________ Cost of sales ____________________ Net income____________________

f. g. h. i. j.

Cash as of December 31, 2007 ____________________ Accounts receivable balance ____________________ Accounts payable balance ____________________ Sales discount ____________________ Purchase discounts ____________________

2. A new business has the following transactions for the month: (1) Owner invested P36,000; (2) P26,000 of supplies were purchased for cash and ½ remained unused at the end of the month; (3) P23,000 was received for payment for services rendered by the business; (4) a salary of P10,000 was paid to an employee and (5) P30,000 was borrowed from the bank (6) equipment worth P25,000 was bought by paying cash of P5,000 and the balance was payable in 45 days (7) a customer paid in advance P12,000 which remain unearned at the end of the month. Compute for total assets as at the end of the month (5 points). ____________________ Ignoring depreciation, compute for owner’s equity as at end of the month (5 points). ____________________

3. Mr. A sells home cooked meals. He purchased the following for the day: Pork=P50, Beef=P55, Fish=P30, Chicken=P95 and Shrimps=P45. Out of these purchases he made 10 pork meals, 12 beef meals, 15 fish meals, 10 chicken meals and 12 shrimps meals. He still had the following meals from yesterday’s operation: 5 pork meals, 2 beef meals, 3 fish meals, 5 chicken meals and 4 shrimp meals. Mr. A purchased the same number of items as purchased yesterday only that the price for all items today were lower by P0.50. He made exactly the same number of meals each type today compared to yesterday. Mr. A sells meals at the following prices: Pork=P10, Beef=P24, Fish=P11, Chicken=P13 and Shrimps=P14. Each meal sold comes with one cup of rice costing P2 each. Unsold meals as at the end of the day (Mr. A uses FIFO) were: Pork=2, Beef=1, Fish=1, Chicken=4 and Shrimps=5. Mr. A also pays P50 per day for stall rental. Calculate the following (5 points each except (a)): a.

b. c. d. e.

Gross profit for the day per type of meal ( 2 points each): Pork ____________________ Beef ____________________ Fish ____________________ Chicken ____________________ Shrimps ____________________ Total sales for the day ____________________ Total cost of sales for the day ____________________ Net income for the day ____________________ Inventory as of end of the day ____________________

4. Given the following inventory shipments: Invoice #

Date shipped by seller

Date received by buyer

Trade discount

List price

001

11-15-07

12-15-07

20%

P100,000

002

11-30-07

01-05-08

10%

P120,000

003

12-05-07

01-06-08

15%

P220,000

P15,000 (paid by seller)

004

12-06-07

12-25-07

--

P180,000

P4,000 (paid by seller)

005

12-10-07

12-15-07

5%

P110,000

006

12-11-07

01-02-08

--

P210,000

007

12-15-07

12-26-07

--

P150,000

008

12-25-07

01-03-08

20%

P225,000

009

12-29-07

01-05-08

--

P120,000

010

12-30-07

01-08-08

10%

P325,000

a. b. c. d. e. f.

Freight

Terms

P5,000 (paid by seller) P12,000 (paid by seller)

FOB Destination 2/10, n/30 FOB Destination 2/10, 1/15, n/30 FOB Shipping Pt. 10% down, Balance 2/10, n/30 FOB Destination 20% down Balance, 2/10, n/30 FOB Destination 2/10, n/30 FOB Shipping Pt. 2/10, n/30 FOB Destination 2/10, 1/15, n/30 FOB Destination 10% down, Balance 1/15, n/60 FOB Destination 2/10, n/30 FOB Shipping Pt. 2/10, n/30

P3,500 (paid by buyer) P6,000 (paid by buyer) P8,200 (paid by buyer) P7,500 (paid by seller) P5,500 (paid by buyer) P7,800 (paid by seller)

Date of final settlement 12-23-07 01-17-08 01-08-08 01-02-08 01-01-08 12-15-07 01-06-08 01-10-08 01-10-08 01-16-08

(5 pts) If you were the buyer, how much of the above should be taken as Purchases for 2007? ____________________ (5 pts) If you were the seller how much of the above will be taken up as Sales for 2008? ____________________ (5 pts) If you were the buyer, how much of the above will be taken up as purchase discounts for 2007? ____________________ (5 pts) f you were the seller, how much of the above will be taken up as transportation-in for 2007? ____________________ (5 pts) If you were the buyer, how much of the above is to be included in Accounts payable as of December 31, 2007? ____________________ (2 pts each) Determine the amount received by the seller on final settlement. Invoice 001 ____________________ 002 ____________________ 003 ____________________ 004 ____________________ 005 ____________________ 006____________________ 007 ____________________ 008 ____________________

009 ____________________ 010 ____________________ BA 99.1 Exercise 1 July 1 July 4 July 5 July 8

Mr. A organized Company AA on this date, he invested cash of P100,000 for the business. The business paid licenses of P500 to the city government. The business rendered service for P2,000. The customer paid in cash. Company AA rendered service valued at P1,500 to Mr. X. He paid the company P1,000 in cash and said that he will pay the balance after five days. July 10 The company bought for office supplies worth P1,200. Made a P500 down payment. July 12 Mr. X paid the full balance of his payable to Company AA. July 13 Company AA purchased office equipment on credit. Total acquisition cost is P3,200. July 13 The company rendered service on credit to Mr. Q. The service was worth P1,000. July 14 Company AA paid electricity expense for electricity consumption from July 1-14. The amount paid was P800. July 15 The treasurer of the company paid P1,000 to Mr. B. This was for repairs made on the car of Mr. A which is being used by him privately. Prepare journal entries for the above transactions. Determine the balances as of July 15 of all accounts relevant above. BA 99.1 Exercise 2 Journalize the following transactions of Company A: Jan 1 Mr. A invested P100,000 cash into the business. Additionally, he put in some supplies valued at P5,000. Jan 1 Paid rent to Mr. R amounting to P12,000. This represented rent payments for January up to June 30 this year. Jan 5 Purchased Office Equipment with cash price of P12,000. ½ was paid in cash and the balance was payable after two months. Jan 6 Rendered service to Mr. X. He paid P6,000. Jan 6 Rendered service valued at P5,000 to Mr. Z. The company received a promissory note for this. The face value was equal to the value of the service rendered with interest of 10% per annum. Jan 7 Company A purchased office equipment on credit. Purchase price is P5,000. In bringing the equipment to the company, Company A paid P1,000 for insurance and another for freight charges. Jan 8 Incurred some miscellaneous expenses equal to P1,500. Only P1,00 of this was paid as of today. Jan 9 Mr. X (from Jan6 transaction) returned complaining of back pains. He asserts it was due to the fault of the company. He threatens to sue but will not pursue the action if he will be refunded ½ of what he paid. Jan 10 The company received P1,000 as advance payment for services supposed to be rendered to Mr. Y in February. Jan 15 Purchased on account some supplies valued at P2,000. For this, the company issued a 10% promissory note of P2,000. This will be paid in March. Jan 16 Company A paid P200,000 for a parcel of land to be used by the business. In addition to the price paid, the company also paid transfer taxes of P10,000. Jan 18 Paid P500 for transportation. Transportation expense actually incurred today was P1,000. Jan 25 Rendered service for cash. Value of the service rendered was P2,000. Jan 30 Paid 25% of the balance on miscellaneous expenses incurred last Jan. 8. Jan 30 The company rendered service on credit to Mr. W. The service was worth P1,000.

BA 99.1 Exercise 3 Jan 1 Jan 1 Jan 3 Jan 4 Jan 5 Jan 6 Jan 6 Jan 8 Jan 10 Jan 15 Jan 18

Mr. A invested P100,000 into the business. The investment consisted of cash, some supplies valued at P5,000 and a photocopying machine originally bought by A for P50,000 (a brand new similar equipment can be purchased now for P75,000 and if this equipment is sold now, it can be sold for P35,000). Paid rent to Mr. R amounting to P12,000. This represented rent payments for January up to June this year. Purchased office furniture for cast P25,200. Rendered service on credit for P5,200. Purchased Office Equipment with cash price of P12,000. ½ was paid now and the balance was payable after two months. Mr. A withdrew P5,000 for personal use. Mr. a intends to return the same by next month. Rendered service valued at P5,000 to Mr. X. The company received a promissory note for this. The face value was equal to the value of the service rendered with interest of 10% per annum. Incurred some miscellaneous expenses equal to P1,500. Only p1,000 out of this was paid as of today. The company received P1,000 as advance payment for services supposed to be rendered to Mr. Y in February. Purchased some office supplies valued at P2,000 on account. The company issued a promissory not of P2,000, with interest of 10% for this. This will be paid in March. Paid P500 for transportation. Transportation expense actually incurred today was P1,000.

Jan 25 Jan 27 Jan 30

Rendered service for cash. Value of the service rendered was P2,000. Mr. A made additional cash investment of P50,000. Paid P200 of the miscellaneous expense incurred last Jan 8.

BA 99.1 Exercise You were given the following transactions of Company A for 2006, its first year of operations: Jan 1 Jan 1 Jul 1 Aug 1 Sept 1 Sept 10 Oct 1 Nov 15 Dec 5 Dec 15 Dec 20

Mr. A invested P100,000 into the business. The investment consisted of cash plus some supplies valued at P 5,000. Paid rent to Mr. R amounting to P36,000. This represented rent payments for January up to June next year. The company uses the asset method in accounting for prepayments. Purchased Office Equipment with cash price of P90,000. ½ was paid in cash and the balance was payable June 30 of next year. Rendered service valued at P5,000 to Mr. X. The company received a promissory note (due in one year) for this. The face value was equal to the value of the service rendered with interest of 10% per annum. Incurred some miscellaneous expenses equal to P1,500. Only P1,000 out of this was paid as of today. The company received P1,000 as advance payment for services supposed to be rendered to Mr. Y next year. Purchased some supplies valued at P2,000 on account. The company issued a promissory note of P2,000, with interest of P10% per annum. The note and interest will be paid in April 30. Rendered service on account for P50,000. Transportation expense actually incurred today was P1,000. Paid only p500 as of today. Rendered service for cash. Value of the service rendered was P2,000. Paid P200 of the miscellaneous expenses incurred last September 1.

ADDITIONAL INFORMATION: 1. Accrued salaries as of the end of the year is P1,200. 2. You found out that the company actually rendered service worth P200 to Mr. Y as of the end of the year. 3. The equipment’s estimated life is 5 years with no salvage value. 4. Doubtful accounts will be estimated using percentage of accounts receivable. The rate is 5%. 5. Supplies on hand a December 31, 2001 is P2,500. 6. It was discovered that an error was made last Dec. 15. The value of the service rendered was actually P5,000. REQUIREMENT: Prepare the worksheet as of December 31, 2006.

BA 99.1 Exercise Accounts receivable Accounts payable Building Cash In Bank Cash on Hand Interest payable Land notes receivable Notes payable Office Equipment Office Furniture Prepaid rent Supplies Unearned rent revenue Unexpired insurance

34567 123890 285000 23456 7890 285 175000 12250 21000 154500 25250 20000 850 20000 1200

Supplies expense Miscellaneous expense Transportation expense Precollected interest on notes Representation expense Miscellaneous revenue Unearned service revenue Salaries payable Taxes expense Light & Power expense Other assets A. Drawing Salaries expense Service revenue A. Capital

250 990 1250 1250 1400 2456 2480 2552 3200 4520 6450 12000 21350 124600 492860

You were given the following unadjusted normal account balances for XYZ Company as of December 31, 2006. You were also given the following: 1. The Note Receivable is a 2-year note and bears an annual interest of 12%. The interest is collectible on maturity date except for that part already pre-collected. The note was received January 1, 2006. 2. The Notes Payable of P21,000 was issued by the company last September 1, 2006. This note will mature in 3 years and total interest to be incurred by the end of the third year is P6300. 3. Prepaid rent represents rent payments for the next 20 months. The payment happened last October 1, 2006. 4. Supplies per count is worth P600 as of December 31. 5. 50% of unearned rent is to be recorded as revenue as of December 31, 2006. 6. Expired insurance for 2006 is P1000. ¼ of unearned service revenue was earned in 2006. 7. 10% of the Accounts Receivable is estimated to be uncollectible. Depreciation is at 10% of the cost of an asset. 8. Salaries of p2,800 should be accrued as of December 31, 2006. Prepare the UNADJUSTED trial balance on December 31, 2006. Prepare the ADJUSTING JOURNAL ENTRIES as of December 31, 2006.