Fundamentals of Accountancy Business & Management 2 Page 1

Philippine Christian University

Sampaloc 1, Dasmariñas City, Cavite 4114
SENIOR HIGH SCHOOL
S.Y. 2020-2021
MODULE IN FUNDAMENTALS OF ACCOUNTING, BUSINESS AND
MANAGEMENT 2 (GRADE 11)
QUARTER 4 - WEEK 3, 4, 5, 6 & 7 (APRIL 18- MAY 20, 2022)

LESSON: ACCOUNTING PRACTICE SET

Overview

We’re done with all the topics that should be covered for the Fundamentals of Accountancy
Business and Management 1 and 2. You have already gained the knowledge needed for the completion of this
course and it is now time to apply these skills into practice.

Objectives
At the end of these activities, you are expected to:
1. Develop skills in the preparation of financial statements by applying the steps in the accounting cycle.

Test Yourself

Write on the space provided T if the statement is True and F if the statement if False.
1. A company has ₱550,000 in net sales and ₱193,000 in gross profit. This means its cost of goods sold
equals
a. ₱743,000
b. ₱550,000
c. ₱357,000
d. ₱193,000
e. ₱(193,000)
2. A company purchased ₱4,500 of merchandise on May 1 with terms of 2y10, ny30. On May 6, it returned
₱250 of that merchandise. On May 8, it paid the balance owed for merchandise, taking any discount it
is entitled to. The cash paid on May 8 is
a. ₱4,500
b. ₱4,250
c. ₱4,160
d. ₱4,165
e. ₱4,410
3. A company has cash sales of ₱75,000, credit sales of ₱320,000, sales returns and allowances of
₱13,700, and sales discounts of ₱6,000. Its net sales equal
a. ₱395,000
b. ₱375,300
c. ₱300,300
Disclaimer: This module is adapted and modified from the source materials listed in the references list. This is an
exclusive property of Philippine Christian University-Dasmariñas SHS and is provided only to enrolled students for
their academic use. This module is provided for free by the school through softcopy and/or printed media.
Reproduction of this module without official permission is prohibited.
 Fundamentals of Accountancy Business & Management 2 Page 2

d. ₱339,700
e. ₱414,700
4. A company’s quick assets are ₱37,500, its current assets are ₱80,000, and its current liabilities are
₱50,000. Its acid-test ratio equals
a. 1.600
b. 0.750
c. 0.625
d. 1.333
e. 0.469
5. A company’s net sales are ₱675,000, its costs of goods sold are ₱459,000, and its net income is ₱74,250.
Its gross margin ratio equals
a. 32%
b. 68%
c. 47%
d. 11%
e. 34%

Discussion/Activity

Santana Rey created Business Solutions on October 1, 2011. The company has been successful, and its
list of customers has grown. To accommodate the growth, the accounting system is modified to set up separate
accounts for each customer. The following chart of accounts includes the account number used for each
account and any balance as of December 31, 2011. Santana Rey decided to add a fourth digit with a decimal
point to the 106 account number that had been used for the single Accounts Receivable account. This change
allows the company to continue using the existing chart of accounts.

No. Account Title Dr. Cr.

101 Cash 48,372.00
106.1 Alex’s Engineering Co -
106.2 Wildcat Services -
106.3 Easy Leasing -
106.4 IFM Co 3,000.00
106.5 Liu Corp -
106.6 Gomez Co 2,668.00
106.7 Delta Co -
106.8 KC, Inc -
106.9 Dream, Inc -
119 Merchandise inventory -
126 Computer supplies 580.00
128 Prepaid insurance 1,665.00
131 Prepaid rent 825.00
163 Office equipment 8,000.00
164 Accumulated depreciation - Office equipment 400.00
167 Computer equipment 20,000.00
Disclaimer: This module is adapted and modified from the source materials listed in the references list. This is an
exclusive property of Philippine Christian University-Dasmariñas SHS and is provided only to enrolled students for
their academic use. This module is provided for free by the school through softcopy and/or printed media.
Reproduction of this module without official permission is prohibited.
 Fundamentals of Accountancy Business & Management 2 Page 3

168 Accumulated depreciation—Computer equipment 1,250.00

201 Accounts payable 1,100.00
210 Wages payable 500.00
236 Unearned computer services revenue 1,500.00
301 S. Rey, Capital 80,360.00
302 S. Rey, Withdrawals -
403 Computer services revenue -
413 Sales -
414 Sales returns and allowances -
415 Sales discounts -
502 Cost of goods sold -
612 Depreciation expense—Office equipment -
613 Depreciation expense—Computer equipment
623 Wages expense -
637 Insurance expense -
640 Rent expense -
652 Computer supplies expense -
655 Advertising expense -
676 Mileage expense -
677 Miscellaneous expenses -
684 Repairs expense—Computer -

In response to requests from customers, S. Rey will begin selling computer software. The company will
extend credit terms of 1y10, ny30, FOB shipping point, to all customers who purchase this merchandise.
However, no cash discount is available on consulting fees. Additional accounts (Nos. 119, 413, 414, 415, and
502) are added to its general ledger to accommodate the company’s new merchandising activities. Also,
Business Solutions does not use reversing entries and, therefore, all revenue and expense accounts have zero
beginning balances as of January 1, 2012. Its transactions for January through March follow:

Jan. 4 The company paid cash to Lyn Addie for five days’ work at the rate of ₱125 per day.
Four of the five days relate to wages payable that were accrued in the prior year.

5 Santana Rey invested an additional ₱25,000 cash in the company.

7 The company purchased ₱5,800 of merchandise from Kansas Corp. with terms of 1y10,
ny30, FOB shipping point, invoice dated January 7.

9 The company received ₱2,668 cash from Gomez Co. as full payment on its account.

11 The company completed a five-day project for Alex’s Engineering Co. and billed it
₱5,500, which is the total price of ₱7,000 less the advance payment of ₱1,500.

Disclaimer: This module is adapted and modified from the source materials listed in the references list. This is an
exclusive property of Philippine Christian University-Dasmariñas SHS and is provided only to enrolled students for
their academic use. This module is provided for free by the school through softcopy and/or printed media.
Reproduction of this module without official permission is prohibited.
 Fundamentals of Accountancy Business & Management 2 Page 4

13 The company sold merchandise with a retail value of ₱5,200 and a cost of ₱3,560 to Liu
Corp., invoice dated January 13.

15 The company paid ₱600 cash for freight charges on the merchandise purchased on
January 7.

16 The company received ₱4,000 cash from Delta Co. for computer services provided.

17 The company paid Kansas Corp. for the invoice dated January 7, net of the discount.

20 Liu Corp. returned ₱500 of defective merchandise from its invoice dated January 13. The
returned merchandise, which had a ₱320 cost, is discarded. (The policy of Business
Solutions is to leave the cost of defective products in cost of goods sold.)

22 The company received the balance due from Liu Corp., net of both the discount and the
credit for the returned merchandise.

24 The company returned defective merchandise to Kansas Corp. and accepted a credit
against future purchases. The defective merchandise invoice cost, net of the discount,
was ₱496.

26 The company purchased ₱9,000 of merchandise from Kansas Corp. with terms of 1y10,
ny30, FOB destination, invoice dated January 26.

26 The company sold merchandise with a ₱4,640 cost for ₱5,800 on credit to KC, Inc.,
invoice dated January 26.

29 The company received a ₱496 credit memorandum from Kansas Corp. concerning the
merchandise returned on January 24.

31 The company paid cash to Lyn Addie for 10 days’ work at ₱125 per day.

Feb. 1 The company paid ₱2,475 cash to Hillside Mall for another three months’ rent in
advance.

3 The company paid Kansas Corp. for the balance due, net of the cash discount, less the
₱496 amount in the credit memorandum.

5 The company paid ₱600 cash to the local newspaper for an advertising insert in today’s
paper.

11 The company received the balance due from Alex’s Engineering Co. for fees billed on
January 11.

15 Santana Rey withdrew ₱4,800 cash from the company for personal use.

Disclaimer: This module is adapted and modified from the source materials listed in the references list. This is an
exclusive property of Philippine Christian University-Dasmariñas SHS and is provided only to enrolled students for
their academic use. This module is provided for free by the school through softcopy and/or printed media.
Reproduction of this module without official permission is prohibited.
 Fundamentals of Accountancy Business & Management 2 Page 5

23 The company sold merchandise with a ₱2,660 cost for ₱3,220 on credit to Delta Co.,
invoice dated February 23.

26 The company paid cash to Lyn Addie for eight days’ work at ₱125 per day.

27 The company reimbursed Santana Rey for business automobile mileage (600 miles at
₱0.32 per mile).

Mar. 8 The company purchased ₱2,730 of computer supplies from Harris Office Products on
credit, invoice dated March 8.

9 The company received the balance due from Delta Co. for merchandise sold on February
23.

11 The company paid ₱960 cash for minor repairs to the company’s computer.

16 The company received ₱5,260 cash from Dream, Inc., for computing services provided.

19 The company paid the full amount due to Harris Office Products, consisting of amounts
created on December 15 (of ₱1,100) and March 8.

24 The company billed Easy Leasing for ₱9,047 of computing services provided.

25 The company sold merchandise with a ₱2,002 cost for ₱2,800 on credit to Wildcat
Services, invoice dated March 25.

30 The company sold merchandise with a ₱1,048 cost for ₱2,220 on credit to IFM
Company, invoice dated March 30.

31 The company reimbursed Santana Rey for business automobile mileage (400 miles at
₱0.32 per mile).

The following additional facts are available for preparing adjustments on March 31 prior to financial statement
preparation:

a. The March 31 amount of computer supplies still available totals ₱2,005.

b. Three more months have expired since the company purchased its annual insurance policy at a ₱2,220
cost for 12 months of coverage.
c. Lyn Addie has not been paid for seven days of work at the rate of ₱125 per day.
d. Three months have passed since any prepaid rent has been transferred to expense. The monthly rent
expense is ₱825.
e. Depreciation on the computer equipment for January 1 through March 31 is ₱1,250.
f. Depreciation on the office equipment for January 1 through March 31 is ₱400.
g. The March 31 amount of merchandise inventory still available totals ₱704.

Disclaimer: This module is adapted and modified from the source materials listed in the references list. This is an
exclusive property of Philippine Christian University-Dasmariñas SHS and is provided only to enrolled students for
their academic use. This module is provided for free by the school through softcopy and/or printed media.
Reproduction of this module without official permission is prohibited.
 Fundamentals of Accountancy Business & Management 2 Page 6

Requirements:
1. For the month ended March 2012, compute the following using the Line Item: (Performance Task #1)
a. Total Current Assets
b. Total Non-current Assets
c. Total Current Liabilities
d. Total Owner’s Capital
e. Total Net Sales
f. Total Cost of Goods Sold
g. Total Selling Expenses
h. Total Administrative Expenses
2. How much is the Net Income/(Loss) for the month of: (Performance Task #2)
a. January
b. February
c. March
3. How much is the cash provided or used from operating activities for the month of: (Performance Task #3)
a. January
b. February
c. March
4. For the month March 2012, compute for the following: (Performance Task #4)
a. Current ratio
b. Days in inventory
c. Days in receivable
d. Debt to equity ratio
e. Working capital
f. Net Sales ratio
g. Gross profit ratio
h. Cash percentage change

References
Fundamentals of Accountancy, Business and Management 2, Ferrer and Millan
Fundamental Accounting Principles 20th edition, Wild, Shaw and Chiappetta

Disclaimer: This module is adapted and modified from the source materials listed in the references list. This is an
exclusive property of Philippine Christian University-Dasmariñas SHS and is provided only to enrolled students for
their academic use. This module is provided for free by the school through softcopy and/or printed media.
Reproduction of this module without official permission is prohibited.
 Fundamentals of Accountancy Business & Management 2 Page 7

Activity # 1 (Written #1)

Name: _______________________________ Strand and Section: _______________

Date/ Week No. _______________________ Score: ________/30_______________

Use the following information for the next six questions:

Entity A, a VAT-registered business, had total sales of ₱3,000,000 and total purchases of ₱1,200,000 (both
exclusive of VAT) during 20x1.

Show all your solutions

1. How much is the Output VAT?

2. How much is the Input VAT?

3. How much VAT should Entity A remit to the BIR?

4. What is the journal entry to record the sales?

5. What is the journal entry to record the purchases?

6. What is the offsetting entry needed in order to present the net VAT payable in the statement of financial
position?

Disclaimer: This module is adapted and modified from the source materials listed in the references list. This is an
exclusive property of Philippine Christian University-Dasmariñas SHS and is provided only to enrolled students for
their academic use. This module is provided for free by the school through softcopy and/or printed media.
Reproduction of this module without official permission is prohibited.