BASIC ACCOUNTING WORKBOOK Final Version 1
BASIC ACCOUNTING WORKBOOK Final Version 1
BASIC ACCOUNTING WORKBOOK Final Version 1
JOURNALIZING TRANSACTIONS
Jan 1 Pedro Cruz invests P80,000 cash to start the business and a building with an original cost of
P110,000 and a fair value of P90,000.
Jan 3 Purchased five photocopy machines for P250,000, paying P50,000 cash and signing a 5-
year, 10% note for the balance.
Jan 4 Paid P1,500 cash for radio advertising.
Jan 5 Purchased P15,000 office supplies on account.
Jan 6 Land was purchased for P150,000. A down payment of P65,000 cash was made and a note
was signed for the remainder.
Jan 7 Services were rendered to customers for cash, P50,000.
Jan 8 Rendered photocopy services amounting to P17,000 on cash.
Jan 16 Paid P3,800 from the Jan 5 transaction.
Jan 20 The owner withdrew P3,500 from the business for personal use.
Jan 23 Received P12,000 cash from a customer for copying services to be done next month.
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Jan 25 Billed a customer for P3,550 for photocopying services already done.
Jan 27 Rendered half of the services relating to the Jan 23 transaction.
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Dec 20 Performed consulting services for cash, P30,000.
Dec 24 Billed clients for consulting services, P38,000.
Dec 28 Received P70,000 from Lopez as advanced payment for services yet to be rendered.
Dec 30 Owner withdrew P12,000 from the business.
November 1, Alvarez contributes P40,000 cash to start a new business named PPE.
2, PPE purchases land for cash P20,000.
3 PPE buys supplies on account from NBS, paying P3,000 at a later date.
8 PPE earns P5,500 of revenue and collects this amount in cash from clients.
10 PPE performs a service for clients promising to pay P3,000 at a later date.
15 PPE pays P3,200 in cash for expenses: P2,000 for rent and P1,200 for salaries. PPE pays
monthly salary of P2,400, half on the 15th and half on the first day of the next month.
21 PPE pays P400 for supplies bought last November 3.
22 PPE collects P2,000 from the client from November 10.
25 Alvarez withdraws P3,000 cash from the business.
December 1, PPE prepays three months’ rent of P3,000.
December 1, PPE paid salaries of P1,200.
December 1, PPE acquired a P50,000 building in exchange for a 2-year, 3% note payable. The
building has P20,000 residual value and 10 years useful life.
December 1, PPE received furniture worth P18,000 from Alvarez. The furniture has no residual
value and 3 years useful life.
15 PPE received a telephone bill for P300.
15 PPE paid employee salaries of P1,200.
21 SME contracted PPE to provide training services and agreed to pay P5,600 in advance.
28 PPE collected cash of P7,000 for Revenue that the business earned by providing services for
clients.
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NICK ↑A* Atout
Problem 4. Journalize the following transactions. -
Dec. 1 Received 8%, 5-month, P50,000 note from Suzy for gown that Susie Taylors designed and
delivered on the same day.
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Dec. 2 Susie Taylors bought ribbons from Cruz Sewing Supplies Shop amounting to P16,800
paying 20% down and the balance on credit.
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Dec. 3 Mina, the sewer in the shop made salary advances amounting to P4,000.
Dec. 3 Paid month’s rent, P7,000.
Dec. 4 Anna, a frequent customer paid P42,000 for the remainder of the gown she requested
Susie Taylors to design for her three months ago.
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Dec. 5 Owner withdrew fabrics worth P500 for her personal use.
Dec. 6 The owner went to BIR to amend some tax registration.
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Dec. 6 Paid Felix Repair Center P2,500 for the repair of one of the sewing equipment.
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Dec. 8 Paid the transportation fare of Bea, the liaison staff of Susie Taylors amounting to P550.
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Dec. 9 Paid the P20,000 accounts payable to Pedro Service Company.
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** Unearned
Dec. 10 Owner withdrew P30,000 cash from the business fund for emergency use.
Dec. 13 Paid licenses and taxes, P2,350.
Dec. 14 Received utility bills to be paid next month, P1,300.
Dec. 18 Susie Taylors signed a P250,000 contract of creating all the gowns for the bridesmaids in
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the wedding of Cath and Joe on July, 2023. The couple paid 30% down payment.
Dec. 20 Paid the internet December bill received from Smart Telecom amounting to P2,200.
Dec. 27 Billed Teatro Batangan for P75,000 for the costumes sewed for their theater actors and
actresses.
July 1 Mr. Gutierrez, the proprietor deposited P4,000,000 at BDO under the account name of
GGS Cinema.
July 1 Acquired GGS Cinema for P6,000,000 allocated as follows: Land, P3,000,000; Building,
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P1,400,000, Sound Equipment, P1,000,000 and Office Equipment and Furniture and Fixtures,
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P600,000. Paid down payment of P3,000,000 and assume a loan for the balance.
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July 2 Building space is rented out at a monthly rate of P10,000. Received two months deposit
and two month advance, effective as of July 2, 2020.
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July 3 Purchased supplies from Retail Trading for P22,000 on credit.
July 4 Returned damaged supplies worth P4,500 to Retail Trading for which the account of GGS
Cinema was charged for the same amount.
July 7 Paid annual insurance premium for P8,000 effective July 1, 2020.
July 9 Paid rental fees for the showing of Superman vs Batman, P400,000.
July 11 SMM, a customer of the business made an advance booking for the private viewing of
their employees of the movie Indiana Jones. Contract is P450,000. SMM paid advance payment
of P70,000 and the balance on credit.
July 14 Admission revenues collected for the three week period amounted to P400,000.
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July 15 Paid janitorial costs for the first half of the month, P25,000.
July 15 Paid salaries for P24,000 for the 1’st half of the month.
July 17 Paid P300,000 installment due on the loan.
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July 20 Acquired additional office supplies for P9,500 cash.
July 25 Paid rental fees for the showing of Feng Shui for P500,000.
July 28 Admission revenues collected for the second half of the month amounted to P250,000.
July 30 Paid janitorial costs for P25,000 for the 2’nd half of the month. Paid also salaries for
P24,000 for the 2’nd half of the month.
- July 30 Gutierrez and friends watched the two movies shown for the month for which Mr.
Gutierrez was charged for P12,000 and was considered as a withdrawal on his part.
~July 31 Received P100,000 from SMM in partial settlement of amount due.
July 31 Paid Ernesto Plumbing Services P4,500 for the monthly fee for the maintenance of the
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building.
July 1. Owner invested P500,000 cash along with computer equipment that had a market value of
php.120,000 two years ago but was now worth P100,000 only.
July 2. Paid P15,000 cash for the rent of office space for the month.
July 4. Purchased P12,000 of additional equipment on credit.
July 8. Completed a work for a client and immediately collected the P32,000 cash.
July 10. Completed work for a client and sent a bill for P27,000 to be paid within 30 days.
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July 12. Purchased additional equipment for P8,000 in cash.
July 15. Paid an assistant P6,200 cash as wages for 15 days.
July 18. Collected P15,000 on the amount owed by the client.
July 25. Paid P12,000 cash to settle the liability on the equipment purchased.
July 28. Owner withdrew P500 cash for personal use.
July 30. Completed work for another client who paid only P40,000 for 50% of the system design.
July 31. Paid salary of assistant P700.
July 31. Received PLDT bill, P1,800 and Meralco bill P3,800
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May 1 Owner deposited P50,000 of his own money into the business’ account.
May 3 Employed a working student to begin work on the first Monday of next month, with
weekly salary of P1000.
May 5 Purchased office supplies for P380 and a laptop for P20,500, both on credit.
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7 Received a bill for computer repair from Hidalgo Services, P4,880.
10 Received and deposited tuition from students, P52,500.
11 Received and paid the telephone bill, P1,300.
15 Purchased chairs from EEE Furniture, P20,000, paying P8,800 in cash and the remainder on
account.
18 Paid accounts to MMS Ads, P5,200.
21 Joe withdrew P12,000 for personal consumption.
24 Received a bill for gas from Surigao Oil Company, P2,800.
25 Received and deposited tuition from students, P41,400.
27 Paid salaries of the office assistants, P22,000.
28 Bought a fax machine on credit from LPK Office Machines, P6,500.
29 Received P10,000 tuition from a student who had charged the tuition on account last month.
30 Received and paid the water utility bill, P2,600.
31 Paid internet bill, P920.
31 Joe invested personal laptop, with a fair market value of P22,500, in the business.
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29 Received and paid the telephone bill, P1,500.
30 Paid the salaries of the employees, P11,000.
31 Hoshi withdrew cash for personal use, P10,000.
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Problem 10. Journalize the following transactions.
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PREpard
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Oct 1 Chaeyoung transferred cash from a personal account to an account to
be used for the business, P200,000.
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-3 Chaeyoung invested in the business personal equipment having a fair market value of P34,000.
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4 Bought office supplies on account from NBS, P13,000.
5 Paid rent for the month, P7,000.
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6 Bought a used service vehicle car for P80, 000, paying P40,000 down, with the balance due in
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20 days.
9 Received invoice and paid 1-year insurance premium to PRU Company, P6,000.
12 Performed services for DLS Co. . Billed DLS for services performed, P6,150.
16 Received bill from DK Suppliers for stationeries, P1,200.
17 Billed JYP Clinic for services rendered, P14,000.
22 Paid CalPet for gasoline for vehicle, P500.
24 Performed services at a school event. Billed event coordinators for services rendered, P14,000.
27 Paid NBS P2,500 to apply on an account.
29 Received cash from DLS Co. in full payment of account.
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30 Billed Progressive Bank for services rendered, P11,000.
31 Received and paid telephone bill, P1,000.
31 Paid salaries to admin employees, P22,400.
31 Chaeyoung withdrew cash for personal use, P15,000.
Apr. 1 Invested in the business painting equipment valued at P15,000 and placed P40,000 in a
business’ savings account.
3 Acquired a delivery vehicle costing P70,000. Paid P40,000 cash and issued a note for the
remainder.
4 Purchased painting supplies on credit for P5,000.
5 Rendered a painting service and billed the customer P2,000.
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7 Received P1,000 cash for painting a dormitory room.
8 Bought painting supplies for P1,500 cash.
9 Received a P2,000 check from the customer billed on April 5.
9 Paid P6,000 for an insurance policy for a one-year coverage.
10 Billed a customer P4,000 for a painting job.
11 Paid the assistant P2,000 for a 2-day work.
12 Paid P700 for maintenance of the vehicle.
12 Paid for the painting supplies purchased on April 4.
14 Purchased painting supplies for P1,600 on account.
20 Received a telephone bill for P800, due next month.
22 Received P4,000 in cash from the customer billed on April 10.
23 Transferred P5,000 to a personal checking account.
24 Received P1,500 in cash for painting a classroom.
28 Paid P5,000 on the note signed for the vehicle.
29 Paid the assistant P1,400 for half-day work.
May 2 Jennie transferred P72,000 cash from a personal savings account to a checking account to
start a business.
4 Bought office equipment on credit from Kyungsoo Shop, P20,000.
5 Acquired office supplies on account from Momo Suppliers, P7,000.
6 Rendered accounting services for Cube Company and sent a bill of P19,000 for services
performed.
6 Paid for accounting supplies for use in the practice, P10,000.
8 Paid Momo Suppliers, P4,000 on account.
9 Acquired a building space for the accounting practice, P200,000. A down payment of P30,000
was made and issued a note for the remainder.
10 Paid salaries, P11,000.
12 Received P9,000 from Cube Company, billed on May 6.
14 Paid telephone expense, P1000.
15 Received cash, P9,500, from Dahyun Enterprise for accounting services rendered for the
month.
17 Purchased office supplies on account from Momo Suppliers, P4,650.
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20 Withdrew P8,000 for personal use.
22 Paid salaries, P10,000.
24 Billed Jihyo Logistics P18,000 for accounting services rendered.
27 Paid P5,500 for taxes and licenses.
29 Paid P1,200 rent on a fax machine.
Feb. 1 Deposited P40,000 cash in a bank account in the name of the new company.
3 Acquired cleaning supplies on credit, P12,000.
5 Acquired cleaning equipment on account, P10,000.
6 Acquired an old service vehicle costing P60,000 for the business, paying P15,000 cash, and
issued a note for the balance due in 40 days.
7 Paid rent on office space for the month, P5,000.
9 Received P25,000 cash for cleaning services performed.
11 Paid for a radio advertisement, P3,000.
13 Paid for insurance for the next eight months by recording prepaid insurance, P5,200.
15 Paid P9,000 on account.
16 Paid miscellaneous expenses, P2,000.
20 Billed customers P13,000 for cleaning services rendered.
22 Paid salaries, P8,000.
24 Received P6,200 from customers billed on Feb. 20.
24 Paid amount due on the note, P2,400.
25 Paid telephone expense, P1000.
27 Paid admin staff salaries, P12,000.
28 Billed customers for cleaning services rendered, P20,000.
30 Withdrew P10,000 from the business.
Oct. 1 Deposited P20,000 at the Trust Bank in the name of Sunoo Logistics.
2 Acquired a service vehicle costing P60,000, paying P9,000 in cash, and financing the remainder
by issuing a 12% note.
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4 Paid rent for the month, P3,000.
5 Acquired supplies on credit, P8,000.
7 Paid P6,000 for a 3-month insurance premium.
8 Received P12,000 cash for delivery done for Nmixx Shop.
11 Acquired additional supplies for cash, P2,000.
12 Paid salaries, P6,500.
14 Completed deliveries for Straykids Company and billed the company P15,000.
16 Paid full amount owed from the Oct. 5 transaction.
18 Paid miscellaneous expenses, P1,000.
20 Withdrew cash from the business, P6,000.
22 Collected P5,000 on account from Straykids Company.
23 Paid salaries, P4,000.
25 Paid utilities expense, P1,800.
28 Billed New Jeans Corporation for delivery services rendered, P12,000.
ADJUSTING ENTRIES
Problem 1. Prepare adjusting journal entries for RM Corporation as of December 31, 2021.
Below are the following information.
1. Supplies account had a beginning balance of P19,000 and the same account has an ending
balance of P 41,000. Supplies acquired during the year amounted to P75,000.
2. Office equipment was acquired on May 1 of the current year at a cost of P750,000. It has
a salvage value of P30,000 and useful life of 10 years.
3. On November 17, 2021 the company borrowed P200,000 from SBC by issuing a 15%
one- year note.
4. The Prepaid Insurance account has a balance of P120,000 as of yearend. The balance
represented two insurance policies acquired during the year as follows: Policy I for
P70,000 dated March 1, 2021 and Policy II was purchased on September 30, 2021 for
P50,000;
5. The balance of Painting Supplies at year-end is P22,000 of which P9,000 is unused.
6. Notes Receivable has a balance of P60,000 which is a 120 day 15% note received on
October 21, 2021.
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7. Salaries Expense per ledger is P240,000 of which P 22,500 is paid in advance.
8. RM Corporation signed a lease contract with Suga Rentals on May 1, 2021 for rental of
office space for the next 12 months for P120,000. A second lease was signed on July 31
of the same year for pantry space for 8 months for P 60,000 both paid in advance.
9. Advertising contract is recorded at P80,000 as Advertising expense. This is a 12-month
contract signed April 1, 2021.
10. Income Collected in Advance has a balance of P150,000 of which 60% has been earned.
11. Interest Revenue of P5,000 is recorded of which P2,000 is actually earned. Interest
expense of P3,000 is recorded , of this P1,000 is paid in advance.
Problem 2. Prepare adjusting journal entries for Hobi Company as of December 31, 2021.
Below are the following information.
1. Advertising Expense shows a balance of P48,000, paid on June 30, 2021 and the contract
is for 10 months.
2. Prepaid Insurance has a balance of P120,000 per ledger. P50,000 is expired.
3. Delivery van was acquired on September 30, 2020 at a cost of P30,000,000 with a
residual value of P80,000 and service life of 30 years.
4. Gardening supplies has a balance per ledger of P25,000. Of this P14,000 was used.
5. Loans Payable was issued on October 24, 2021 for P130,000 at 20% for ten months. No
interest has been accrued on this loan.
6. Taxes balance per ledger is P12,000 of which P2,500 applies to the year 2022.
7. Computer has a balance of P200,000 purchased on June 1, 2021 with life of 5 years and
scrap value of P30,000.
8. Notes Receivable was received on August 1, 2021 in the amount of P80,000 at 14% per
annum. No interest has been accrued on the note.
9. Furniture has a ledger balance of P180,000 as of December 31, 2021. Additional furniture
were acquired on March 31, 2021 in the amount of P30,000. Furniture are depreciated at
10% per year.
10. Rent Expense has a balance of P112,000 paid on May 30, 2021. Contract on the rent is
for 16 months.
11. Unpaid licenses as of year-end, P18,000.
12. Accounts Receivable has a balance of P500,000 and Allowance for Doubtful Accounts is
P40,000. It is estimated that 10% of Accounts Receivable is considered uncollectible.
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Problem 3. Journalize the adjusting entries for the following data at December 31, close of
current year.
1. The prepaid insurance account before adjustment on December 31 has a balance of
P40,000. After month end review, unexpired balance should have been P12,000.
2. Salaries are paid uniformly P127,610 for a five-day workweek, ending on Friday. The
last payout of the year was Friday, December 26.
3. Kitchen supplies account balance before adjusting, P17,000; Kitchen supplies inventory
on December 31, P6,000.
4. Store supplies of P18,000 were bought during the year and were debited to Store supplies
expense account. On December 31, supplies of P9,000 are still on hand.
5. The Prepaid Advertising account shows a total of P58,000 representing the cost of one-
year contract dated June 30.
6. On September 1, Deferred Rent was credited for P200,000 representing rental for ten
months beginning on that date.
7. The company acquired cooking equipment on July 31, costing P400,000 with an
estimated resale value of P20,000 after an estimated useful life of 12 years.
8. Accounts receivable balance on December 31 amounted to P1,000,000. Of this amount,
P10,000 are estimated to be uncollectible.
9. The Notes receivable account has a balance of P180,000 representing a 120-day, 15%
note received on August 1. The interest on the note is collectible upon maturity.
Problem 4. The following information were gathered from books of Sana Company at
December 31, 2022, the end of its first year of operations. Prepare the necessary adjusting
entries.
a. Supplies of P35,000 were bought during the year and were debited to Supplies expense
account. On December 31, supplies of P18,000 are on hand.
b. The Prepaid Insurance account shows a balance of P34,000, representing the cost of a
two-year insurance policy dated August 1, 2022.
c. On November 1, 2022, the company rented one of its spaces and received P30,000,
representing five-month rent beginning on that date. The amount was credited to
Deferred Rent Revenue.
d. The company purchased equipment on June 1, 2022 costing P200,000. It has an estimated
useful life of 8 years and scrap value of P20,000.
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e. It is estimated that 6% of the accounts receivable at the end of the year is uncollectible.
Accounts Receivable balance at December 31, 2022 is P200,000. The Allowance for
Doubtful Accounts shows a credit balance before adjustment of P5,000.
f. On December 1, the company issued a 120-day, 10% note for P180,000. The interest on
the note is payable on maturity.
Problem 5. The following information is available for the year 2022 for the records of
Sunghoon Company, which adjusts and closes its accounts every December 31.
a. The company pays all workers every Friday. The total payroll for five-day workweek
ending January 3, 2023 is P60,000.
b. Equipment with a cost of P280,000, 10-year life, and a P30,000 resale value is to be
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Problem 6. The following information relates to Twice Company on June 30, 2022. The
company follows a fiscal-year ending June 30. -
a. Twice Company's weekly payroll is P40,000, paid every Friday for a five-day work
week. June 30, 2022 is a Thursday.
b. On May 31, 2022, the company borrowed P300,000 from BPI with a term of 120 days at
12% interest per annum.
c. In April, the company advertised in the local radio station at a cost of P30,000. Amount
-160
is unpaid and unrecorded.
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d. Laptop that cost P70,000, and has no salvage value was purchased on January 1, 2022.
It’s useful life is 4 years.
e. At the beginning of the year, Supplies amounted to P25,000. During the year, P50,000 of
supplies were acquired and recorded to the asset account. At year-end, there were
P19,000 of supplies on hand.
f. On May 1, 2022, Twice Company contracted to perform installation services for a new
housing project. The contract was for P200,000 for 20 homes. Full payment was
received on May 1, 2022 and was fully credited to Unearned Revenue. As of June 30,
2022, 15 houses have been completed.
g. On April 1, 2022, a one-year insurance policy was acquired for P120,000 and was
debited to Insurance Expense.
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Problem 7. Prepare the December 31 adjusting entries for the following independent
assumptions.
A. Taehyung Company purchased office supplies costing P10,000 and debited Office
Supplies for the full amount. At the end of the period, a count of office supplies tallied
P6,400 still on hand.
B. S. Coups Company purchased a computer for P4,800 on December 1. It is estimated that
annual depreciation on the computer will be P960.
C. Jun Company received P18,000 on October 1 which represents a 6 rent on a building it
rents to a client. Rent Income was credited for the full P18,000.
D. Dino Company purchased P8,500 worth of laundry supplies on June 1 and recorded them
as an asset. On December 31, an inventory of the laundry supplies indicated only P4,000
on hand.
E. On November 1, Axel Store paid P8,000 to Ram Rentals for 4 months’ rent beginning
November 1. Prepaid Rent was debited for the full amount.
F. HYBE University sold season tickets for the 2022 football season for P160,000. A total
of 8 games will be played during November and December. In December, three games
were played.
G. At December 1, Langga Inc. had supplies on hand of P1,500. During the month, Langga
purchased supplies of P2,200 and used supplies of P1,000.
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H. A shop signs a 5-month note on November 1 in the amount of P50,000 with annual
interest of 10%. What is the adjusting entry to be made on December 31 for the interest
expense accrued to that date, if no entries have been made previously for the interest?
I. Bini Corp paid employee wages on and through Friday, December 26, and the next
payroll will be paid in January. There are three more working days in December (29–31).
Employees work 5 days a week and the company pays P1,000 a day in wages. What will
be the adjusting entry to accrue wages expense at the end of December?
J. Pacioli Company borrowed P150,000 from the bank signing a 9%, 9-month note on
September 1. Principal and interest are payable to the bank on June 1.
K. Jake is a lawyer who requires that his clients pay him in advance of legal services
rendered. Jake credits Legal Service Revenue when his clients pay him in advance. In
October 1, Jake collected P24,000 in advance fees and completed 60% of the work
related to these fees by end of December 31.
L. On May 1, Heesung purchased an insurance policy for P30,000 for coverage for the
calendar year. The entire amount was charged to Insurance Expense on May 1.
Problem 8. Prepare the December 31 adjusting entries for each independent assumption.
1. The Insurance Expense account had a debit balance on December 31, 2020 of P72,000
representing premium for a 3-year insurance policy effective September 1, 2020.
2. Deferred Rent Income was credited for P 60,000 on August 1, 2020 representing ten
months’ rent collected in advance.
3. As of December 31, 2020, revenues already earned but not yet collected amounted to
P75.000.
4. Supplies costing P22,000 purchased during the period was debited to the Supplies
account. During the year, P5,000 worth of supplies were consumed.
5. Office Equipment per ledger on December 31, 2020 shows a balance of P 500,000.
Office Equipment acquired during the year was P 60,000 on June 1, 2020. All equipment
have a depreciation rate of 25% per annum.
6. Unearned Service Revenues account showed a credit balance of P100,000 per ledger on
December 31. Of this, 40% had been actually earned.
7. Unearned service income has a balance of P 600,000 of which 50% has been earned.
8. On December 31, 2020, a 120-day, 9% Notes Payable has a balance of P100,000. The
note was issued on December 19, 2020. No interest has been taken on this note.
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9. The Prepaid Insurance account has balance of P 180,000 on December 31, 2020.
The balance represented two insurance policies acquired during the year. Policy A for P
110,000 was acquired on April 1, 2020 and Policy B was acquired on July 31, 2020 for P
70,000. Policy A is a payment for a 2-year plan while Policy B is for a one-year plan.
10. On November 1, 2020, Silva borrowed P150,000 cash from BDO by issuing a 12% notes
payable due in one year. The interest is payable upon maturity of the note.
11. Reyes purchased a three-year insurance policy for P 180,000 on July 31, 2020.
12. On September 1, 2020, Cindy paid P80,000 representing rental for ten months beginning
on this date.
13. Office supplies on hand on May 1, 2020, amounted to P 1,400. During the year, office
supplies of P 3,500 were purchased. On December 31, there are unused supplies of
P2,400.
14. Dennis purchased an office equipment on August 1, 2020, for P40,000. On January 1,
2020, the office equipment has a balance of P25, 000. All assets of the company have
estimated useful life of 10 years with no salvage value.
15. Anna reports accounts receivable of P600,000 and Allowance for doubtful accounts of
P3,000 (debit balance); 5% of the receivables are estimated to be uncollectible.
-25%
Tempest Enterprises has the following balances as of December 31, 2022:
Required: Prepare the adjusting entry for each of the following assumptions.
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a. 15% of Accounts Receivable is uncollectible.
b. Allowance for Doubtful Accounts is to be increased to P20,000.
c. Allowance for Doubtful Accounts is to be increased by P20,000.
d. The net realizable value of Receivable should be P300,000.
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-Problem 10. Listed below are accounts found in Lany Services’ books at December 31,2022.
No year-end adjustments had been recorded, yet.
- Advertising Expense
Interest Expense
Rent Income
P156,000
0
P1,000,000
Prepaid Insurance
Unused Supplies
Salaries Expense
P32,000
P10,000
P450,000
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The following Information relates to adjustments at December 31:
a. The company counted the unused supplies on hand at December 31 and ascertained the
same amounted to P6, 000.
b. A 10% interest bearing note amounting to P150, 000 was dated August 31. It was due in
March 31, 2023.
c. P120, 000 of the rent income has been collected in advance and will not be earned until
the following year.
d. The prepaid insurance comprise of (a) P12,000, 1-year insurance covering the period
April 1, 2022 to May 31, 2023; and, (b) P20,000, fire insurance from which insurance
record indicated that P10,000 has expired during the year.
e. Salaries unpaid at December 31, P15,000
f. The advertising expense was for ads in local tv station paid at the beginning of the year,
80% has been used and the remainder will be used next year.
Problem 11. JK Shop encountered the following situations. Prepare adjusting entries on
December 31, 2022.
1. JK collected P12,500 from a customer in 2022. 75% of services was performed by the
end of 2022.
2. JK paid P28,000 rent on December 1 for the 4 months starting December 1.
3. JK’s three employees worked 4 days by the end of 2022 but will only be paid in 2023.
The total 5-day work week pay for each employee amounts to P10,000.
4. JK performed legal services for a client in December 2022. On December 31, it had not
billed the client for services provided of P15,800.
18
5. JK purchased P32,700 of supplies in 2022; at year-end, P11,600 of supplies remain
unused.
6. JK purchased equipment amounting P68,900 on August 1, 2022. The equipment is
estimated to be used over 5 years.
7. JK borrowed P30,000 on October 1, 2022, signing an 12% one-year note payable.
Problem 12. The following information is available for the year ended December 31, 2022.
Prepare the adjusting entries.
19
Problem 13. Stacey Mendoza started her own accounting firm on June 1, 2022. The trial
balance at June 30 is as follows:
Mendoza, Accounting
Trial Balance
Debit Credit
Cash 50,000
Accounts Receivable 30,000
Supplies 29,000
Prepaid Insurance 24,000
Equipment 150,000
Accumulated Depreciation – -
Equipment
Accounts Payable 68,000
Unearned Service Revenue 42,000
Salaries and Wages Payable -
Mendoza, Capital 155,000
Mendoza, Drawings 15,000
Service Revenue 78,000
Supplies Expense -
Depreciation Expense -
Insurance Expense -
Salaries and Wages Expense 30,000
Rent Expense 15,000
Utilities Expense -
Additional data:
20
4. P14,000 of the balance in the unearned service revenue account remains unearned at the
end of the month.
5. June 30 is a Wednesday, and employees are paid on Fridays. Mendoza Accounting has
two employees who are paid P20,000 each for a five day work week.
6. The equipment has a 5-year life with no residual value.
7. Invoice representing P22,000 of services performed during the month has not been
recorded as of June 30.
Required:
Problem 14. Prepare the adjusting entries for BTS Company under each of the following
situation for the year ending Dec. 31, 2022:
1. Paid P36,000 for a 1-year fire insurance policy to commence on August. The amount of
premium was debited to Prepaid Insurance.
2. Borrowed P180,000 by issuing a 1-year note with 10% interest to EXO Bank on
November 1, 2022.
3. Paid P280,000 cash to acquire a service vehicle on May 1. The vehicle was expected to
have a 4-year life and a P20,000 salvage value. Depreciation is computed on a straight-
line basis.
4. Received P24,000 cash advance for a contract to provide services in the future. The
contract required a 10-month commitment, starting September 1.
5. Purchased P12,000 of supplies on account. At year end, P4,850 of supplies remained on
hand.
6. Invested P170,000 in a certificate of deposit that paid 7% annual interest. It was acquired
on July 1 and carried a 1-year term to maturity.
7. Paid P48,000 cash in advance on June 30 for a 1-year lease on office space.
21
Problem 15. Prepare the year-end adjusting entries for Twice Company under each of the
following situation:
1. The Laundry Supplies account showed a beginning debit balance of P12,000 and
purchases of P13,000. The ending debit balance was P8,000.
2. Depreciation for the office equipment is estimated to be P25,000.
3. A one-year fire insurance policy was purchased for P96,000. The company has been
covered for the last three months.
4. Accrued interest on notes payable amounted to P22,000.
5. The company received a P180,000 advance payment during the year on services to be
rendered. By year-end, one-third of the services had been performed.
6. Payroll for the five-day workweek, to be paid on Friday, is P80,000. The last day of the
period is a Tuesday.
7. Services amounting to P13,500 had been performed but not yet billed or lodged.
Revenue.
(7
Services performed but
unbilled total P3,000.
Ans.
Supplies of P300 have been
used. P.EXP.
Prepaid insurance amounting
P5,000 has expired.
p-Exp. Eish/AisO
Collected P3,000 in advance
for services to be rendered. Def. Rev. (isO/RisU
Utility expense of P7,000 are
A.E. EisU/LisU
[
unpaid.
Salaries of P11,000 are
unpaid.
22
Problem 2. Identify the impact on the balance sheet for year-end December 31 if the
following information is not used to adjust the accounts. (Ex., “Assets Overstated”, “OE
Understated”; note: include the amount of adjustments)
&
Problem 3. For each of the following oversights, state whether total assets will be
understated (U), overstated (O), or no
-
effect (NE).
23
Problem 4. Indicate (a) the type of adjustment (prepaid expense, unearned revenue, accrued
revenue, or accrued expense), and (b) status of the accounts before adjustment (overstated
or understated) for each of the following:
1. A law firm received P2,000 cash for legal services to be rendered in the future. The full
amount was credited to the liability account Unearned Legal Fees. If the legal services
have been rendered at the end of the accounting period and no adjusting entry is made,
this would cause
a. expenses to be overstated.
b. net income to be overstated.
c. liabilities to be understated.
d. revenues to be understated.
24
2. If a company fails to make an adjusting entry to record supplies expense, then
a. owner's equity will be understated.
b. expense will be understated.
c. assets will be understated.
d. net income will be understated.
3. If a company fails to adjust a Prepaid Rent account for rent that has expired, what effect
will this have on that month's financial statements?
a. Failure to make an adjustment does not affect the financial statements.
b. Expenses will be overstated and net income and owner's equity will be understated.
c. Assets will be overstated and net income and owner's equity will be understated.
d. Assets will be overstated and net income and owner's equity will be overstated.
4. At March 1, Stan Inc. reported a balance in Supplies of P200. During March, the
company purchased supplies for P750 and consumed supplies of P800. If no adjusting
entry is made for supplies
a. owner’s equity will be overstated by P800.
b. expenses will be understated by P750.
c. assets will be understated by P150.
d. net income will be understated by P800.
5. DMI Inc. pays its rent of P120,000 annually on January 1. If the February 28 monthly
adjusting entry for prepaid rent is omitted, which of the following will be true?
a. Failure to make the adjustment does not affect the February financial statements.
b. Expenses will be overstated by P10,000 and net income and owner’s equity will be
understated by P10,000.
c. Assets will be overstated by P20,000 and net income and owner’s equity will be
understated by P20,000.
d. Assets will be overstated by P10,000 and net income and owner’s equity will be
overstated by P10,000.
25
6. Ali Corporation purchased a one-year insurance policy in January 2008 for P66,000. The
insurance policy is in effect from March 2008 through February 2009. If the company
neglects to make the proper year-end adjustment for the expired insurance
a. Net income and assets will be understated by P55,000.
W
CLOSING ENTRIES
Problem 1. Valdez Company earned net income of P103,000 during 2022. The company had
owner’s withdrawals totaling P30,000 during the period. Prepare the entries to close Income
Summary and the Drawing account.
Problem 2. At May 1, 2022, Bangtan Company reported a balance of P50,000 in the Bangtan,
Capital account. The company earned revenues of P42,000 and incurred expenses of P24,000
during May 2022. The company had owner drawings of P5,000 during the month.
b. What is the balance in Bangtan, Capital on the May 31, 2022 post-closing trial balance?
Problem 3. Using below data, prepare entries to close the revenue and expense accounts as
well as the income summary account.
Service revenues
~ P280,000 Interest
- Income P10,000
-
-
Wages Expense P12,000
- X -
-
Accrued Rent Income P8,000
-
Deferred Commission Income P13,500
26
Problem 4. Prepare the necessary closing entries based on the following selected accounts.
Problem 5. All revenue and expense accounts have been closed at the end of the calendar year
for Oppa Company. The Income Summary account has total debits of P820,000 and total credits
of P1,180,000. As of the same date, Capital account has a balance of P400,000, and Drawing
account has a balance of P42,000.
Required
① Problem 6. At August 30, account balances after adjustments for Tempest Cinema are as
follows:
- Cash A P708,110
Supplies 25,000
-
-
Equipment E
Accumulated Depreciation—Equipment
120,000
5,000
- Accounts Payable
L 80,000
- Capital E 612,000
-
Drawing
E 13,000
- &
Admission Revenues
E 272,500
-
Food cart Revenues
E 35,000
~
Advertising Expense E 12,200
27
IEn
Supplies Expense 11,000
Depreciation Expense 15,000
Rental Expense 28,900
Licenses Expense 9,400
Salaries Expense 45,000
Utilities Expense 16,890
Problem 7. The adjusted account balances of the SVT Shop at July 31 are as follows.
Prepare the necessary closing entries.
Drawing 13,000
28
CORRECTING ENTRIES
Problem 1. Prepare the necessary correcting entry for each of the following.
1. A payment on account of P1,500 was debited to Accounts Payable P1,600 and credited to
Cash P1,600.
2. The collection of Accounts Receivable of P1,000 was recorded as a debit to Cash P1,000
and a credit to Service Revenue P1,000.
3. A payment of P10,000 for salaries was recorded as a debit to Supplies Expense and a
credit to Cash.
4. A purchase of supplies on account for P2,500 was recorded as a debit to Equipment and
a credit to Accounts Payable.
5. A collection on account of P3,700 from a customer was credited to Accounts Receivable
P7,300 and debited to Cash P7,300.
6. The purchase of supplies on account for P2,300 was recorded as a debit to Equipment
P2,300 and a credit to Accounts Payable P2,300.
7. A check for P7,500 from JYP, a customer on account, was debited to Cash P7,500 and
credited to Service Revenue, P7,500.
8. A payment for Advertising Expense costing P4,200 was debited to Utilities Expense,
P2,400 and credited to Cash P2,400.
9. A bill for P8,400 for Office Supplies purchased on account was debited to Office
Equipment, P4,800 and credited to Accounts Payable P4,800.
10. A check for P7,000 was issued for goods previously purchased on account. The
bookkeeper debited Accounts Receivable and credited Cash for P7,000.
11. A check for P3,800 was received as payment on account. The bookkeeper debited
Accounts Payable for P8,300 and credited Accounts Receivable for P8,300.
12. When making the entry to record the year's depreciation expense, the bookkeeper debited
Accumulated Depreciation for P6,000 and credited Cash for P6,000.
13. When accruing interest on a note payable, the bookkeeper debited Interest Receivable for
P1,200 and credited Interest Payable for P1,200.
14. Cash paid on accounts payable for P9,300 was recorded as a debit to Accounts Payable
P3,900 and a credit to Cash P3,900.
15. The purchase of supplies on account for P5,000 was debited to Equipment P5,000 and
credited to Accounts Payable P5,000.
29
16. Jeff withdrew P1,200 of cash and the bookkeeper debited Accounts Receivable for P120
and credited Cash P120.
Problem 1. Determine the invoice price recorded as sales, amount to be discounted, cash
discount and the amount collected for the following sales, assuming customers paid within
the discount period.
30
Problem 3. Journalize the following transactions for the month of September. (Periodic
system)
1 – Lara Sanchez started a merchandise business with an investment of P35,000 cash, P29,000
merchandise and P4 ,500 shop supplies.
4 - Received a credit memorandum from Luzon Traders for damaged goods returned, P900.
9 - Purchased a cash register from Royals Co. for P12,000, terms: P5,800 down payment, balance
on credit.
9 - Received a 20-day, 12% note from Sam Evans, evidencing the P7,000 loan given to him.
15 - Received merchandise from Arthur Nery Corp., P6,000, for which a 15-day, 10% note was
issued.
31
18- The owner withdrew merchandise costing P3,150 for her personal consumption.
24- The owner transferred her vehicle for the permanent use of the business, P50,000.
25 - Sold merchandise to Kath Bernardo, P8,500, receiving down payment of P3,500, 20-day 6%
note for the balance, 1/15, n/40.
29 - Borrowed P6,000, 60-day, 12% note from Red Ribbon Bank. Interest of P120 was deducted
in advance.
30 - Paid the 15-day, 12% note given to Arthur Nery Corp. on September 15.
June 7 Sold merchandise on account to Seventeen Company, terms n/30, FOB shipping point,
P20,000.
8 Purchased merchandise on credit from TaeTae Company, terms n/30, FOB shipping point,
P50,000.
9 Paid Dahyun Logistics for delivery charges on merchandise purchased on Dec. 8, P300.
10 Purchased merchandise on account from Ibarra Wholesale, terms n/30, FOB shipping point,
32
13 Purchased office supplies on credit from Heart Shaker Company, terms n/10, P14,000.
14 Sold merchandise on credit to Mina Company, terms n/30, FOB shipping point, P13,000.
14 Returned damaged merchandise received from TaeTae Company on Dec. 8 for credit, P4,000.
21 Paid TaeTae Company the balance from transactions of Dec. 8 and 14.
July 1 Sold merchandise to PSJ Enterprises on account, terms n/30, FOB shipping point, P32,000.
8 Purchased merchandise on account from Dexter Suppliers, n/30, FOB shipping point, P18,000.
15 Sold merchandise on account to Cardo Shop, n/30, FOB shipping point, P19,000.
33
Problem 6. Journalize the following transactions assuming perpetual system is used.
Problem 7. V sold goods on credit to Suga with terms 2/10, n/30. The goods had a cost of P1,500
and a selling price of P1,900. Both use a perpetual inventory system. Record the sale on the books
of V and the purchase on the books of Suga.
Problem 8. Siquijor Company sells merchandise on credit for P12,000 to Lion Corp with terms
of 2/10, n/60. Lion Corp returns P1,200 of merchandise that was damaged, along with a check to
settle the account within the discount period. What journal entry does Siquijor Company make
upon collection and receipt of the damaged merchandise?
Problem 9. Journalize the June transactions for Draco Company (seller) assuming it uses
perpetual inventory system.
June 13 Sold 6 motors at a cost of P400 each to DLS Company, terms 1/10, n/30. The motors
cost Draco P250 each.
June 15 One damaged motor was returned to Draco.
June 23 Received payment in full from DLS Brothers.
Problem 10. On July 1, Brian Store had an inventory of 20 boards at a cost of P200 each. During
the month of July, the following transactions occurred.
July 4 Purchased 30 boards at a cost of P200 each from Emmy Company, terms 2/10, n/30.
July 6 Sold 18 boards to ADU Company for P300 each, terms 2/10, n/30.
July 7 Received credit from Emmy Company for the return of 2 damaged boards.
July 13 Issued a credit memo to ADU Company for the return of a defective boards.
July 14. Paid Emmy Bicycle Company in full.
Prepare the journal entries to record the transactions assuming the company uses a
perpetual inventory system.
34
Problem 11. Assume that Goblin Company uses a periodic inventory system and has these
balances: Purchases P400,000; Purchase Returns and Allowances P23,000; Purchase Discounts
P14,000; and Transportation-in P25,000. Determine the net purchases and cost of goods
purchased.
Problem 12. Assume that JCL Company uses a periodic inventory system and has these account
balances: Purchases P320,000; Purchase Returns and Allowances P22,000; Purchase Discounts
P16,000; and Freight-in P27,000; beginning inventory of P65,000; ending inventory of P45,000;
and net sales of P725,000. Determine the cost of goods sold.
Problem 13. Use the below information to prepare a multiple-step income statement for the
year ended December 31, 2022.
Sales P560,000
Sales Returns and Allowances 20,000
Sales Discounts 7,000
Cost of Goods Sold 386,000
Freight-out 2,000
Advertising Expense 15,000
Interest Expense 18,000
Store Salaries Expense 55,000
Utilities Expense 28,000
Depreciation Expense 7,000
Interest Revenue 30,000
Problem 14. The income statement of Nisperos, Inc. includes below data:
35
Freight-in 10,000
Operating expenses 300,000
Purchases 540,000
Problem 15. Fill out below table with the correct figures.
36
8. Office Equipment
9. Buildings
10. Advances to Employees
11. Notes Receivable (180-days)
12. Unexpired Rent
13. Prepaid Insurance
14. Notes Receivable (14 months)
15. Delivery Equipment
16. Rent Receivable
17. Stationery and Office Supplies
18. Prepaid Interest Expense
19. Store Supplies Unused
20. Laundry Supplies on Hand
37
19. Accrued Utilities Expense
20. Accrued Salaries Expense
38
PK, Capital 400,000
PK, Drawing 14,000
Repairs and Maintenance Expense 18,400
Representation Expense 11,000
Rent Income 42,000
Salaries and Wages Expense 60,000
Delivery Equipment 100,000
Transportation Expense 32,000
Unearned Rent Income 30,000
Utilities Expense 20,000
Problem 4. Use below information to prepare a classified balance sheet for the year ended
December 31, 2022.
Accounts Payable P2,700
Accumulated depreciation – equipment 4,000
ABC, Capital 7,800
Intangible assets 2,500
Notes Payable (due in 3 years) 7,500
Accounts Receivable 1,500
Cash 2,600
Short-term Investments 1,000
Equipment 7,500
Long-term investments 6,900
39
Problem 5. Indicate for each account, the financial statement column to which the account
should be extended by placing a check mark (√) in the appropriate column.
↳
= Income Statement
-- Balance Sheet
Account Title DR CR DR CR
=
Cash
Capital
Unearned
Income
Supplies
Accrued Rent
Income
Utilities Expense
stohe
Used Supplies
L Rent Payable
Mortgage
L Payable
Deferred Interest
Revenue
Drawing
Accum.
Depreciation –
Building
Equipment
Land
Telephone
Expense
Bonds Payable
Patent
A
Accounts
Receivable
Service Revenue
40
Problem 6. Complete the August worksheet. Add necessary accounts.
Additional data:
41
TOTALS 132 132
Supplies
Expense
Salaries
Payable
TOTALS
Net Income
TOTALS
DR CR
Cash 800,000
Accounts Receivable 28,000
Allowance for Doubtful Accounts 6,700
Merchandise Inventory, beginning 790,000
Store Supplies 45,000
Prepaid Insurance Expense 78,000
Prepaid Advertising Expense 60,000
Equipment 220,000
Accumulated Depreciation - Equipment 16,000
Furniture 280,000
Accumulated Depreciation - Furniture 30,000
Accounts Payable 49,000
Lee, Capital 1,943,100
Lee, Drawing 20,000
Sales 498,000
Sales Discounts 2,000
42
Sales Returns and Allowances 5,000
Purchases 103,000
Purchase Discounts 4,500
Purchases Returns and Allowances 6,500
Freight In 4,000
Freight Out 800
Rent Expense 46,000
Janitorial Services Expense 15,000
Salaries Expense 57,000
TOTAL 2,553,800 2,553,800
Additional Data:
C
1. Unpaid utility bills at October 31, P15,000.
2. On October 31, an inventory count of the store supplies showed P30,000 were on hand.
3. On September 1, 2021, the business acquired a ten-month fire insurance policy for
P78,000.
4. On August 1, 2021, the business signed a five-month advertising contract for P60,000 for
a newspaper advertisement.
5. On May 1, 2021, the business bought an equipment for P220,000. It has an estimated
useful life of five years and a residual value of 10,000.
6. On April 1, 2021, the firm acquired a furniture for P280,000. The furniture has an
estimated useful life of five years with no salvage value.
7. The Allowance for Doubtful Accounts is to be increased by 1⁄2 of 1% of accounts
W receivable.
8. Based on a physical count, ending inventory was determined to be P650,000.
Required:
1. Complete the 10-column worksheet.
2. Prepare the adjusting, closing and reversing entries.
3. Prepare the post-closing trial balance.
4. Create the SFP, multi-step income statement, and Statement of changes in
equity.
43
Problem 8. Using below information, prepare a balance sheet and an income statement as of
December 31, 2022.
BERGEL COMPANY
DR CR
Cash 32,000
Accounts Receivable 25,000
Merchandise Inventory 35,000
Building 150,000
Accumulated Depreciation— 20,000
Building
Accounts Payable 12,000
Unruh, Capital 149,000
Unruh, Drawing 20,000
Sales 305,000
Sales Discounts 6,000
Sales Returns & Allowances 8,000
Cost of Goods Sold 173,000
Selling Expenses 18,000
Administrative Expenses 19,000
486,000 486,000
44
Problem 9. CORRECTING TRIAL BALANCE
Sheldon Company
Trial Balance
DR CR
Cash P44,800
Supplies 70,800
Equipment 560,000
916,600 1,017,200
45
Errors discovered:
Income Statement
46
The accountant of the business neglected the following information:
P
Problem 11. Indicate the account title for the other part of each adjusting entry.
Problem 12. KBS Company acquired an equipment on August 1 for P120,000, paying P36,000
cash as down payment and issuing a 14%, 3-month note for the balance. The equipment is
estimated to depreciate P24,000 each year.
Required:
47
- -
Problem 13. Below are sample adjusting entries. Prepare the reversing entries.
↓
Interest Revenue 34,000
4. Rent Expense 12,000
Prepaid Rent 12,000
5. Depreciation expense 55,000
Accumulated Depreciation 55,000
6. Rent Income 13,500
Deferred Rent Income 13,500
7. Laundry Supplies Expense 20,000
Laundry Supplies 20,000
8. Utilities Expense 8,000
Utilities Payable 8,000
9. Deferred Commission Income 4,000 -
48
&
Problem 14. Identify the normal balance of the following accounts. Classify them also as
permanent or temporary account and whether each account is closed. Identify also the
financial statement where each account appears. (Put a check mark)
I
Sales Returns and Allowances
⑦
Advances to Employees
Prepaid Insurance
Miscellaneous Expense
E
Service Tools -
Freight Out -
Service Revenues -
Bad Debts Expense -
Purchases -
Land -
Vehicle -
Prepaid Rent -
0
Advances from customers -
-
Consulting Revenues
Prepaid Salaries ~
Transportation Expense -
Sales ~
Taxes and Licenses
Professional Income
-
Purchase Returns and Allowances -
Accounts Payable -
Notes Receivable -
Accrued Consulting Income
Accounts Receivable
Mortgage Payable
I ~
-
- ~
Short-term Investments
Plant
Purchase Discounts -
Goodwill -
Unused Office Supplies
Expired Insurance ~
Unearned Service Revenues
~ -
Interest Receivable -
Note: All students who ordered this workbook will be included in our private gmeet classes and will have
access to our weekly class tutorials wherein I will discuss the answers in this workbook. To qualify to
attend the class, send a “selfie” holding this workbook as proof, and include the following details in your
email (full name, email address, contact number) then send to liriolimuel211993@gmail.com. Will also
add you in our private facebook group chat. Thanks!
49
Problem 14. Identify the normal balance of the following accounts. Classify them also as
permanent or temporary account and whether each account is closed. Identify also the
financial statement where each account appears. (Put a check mark)
Note: All students who ordered this workbook will be included in our private gmeet classes and will have
access to our weekly class tutorials wherein I will discuss the answers in this workbook. To qualify to
attend the class, send a “selfie” holding this workbook as proof, and include the following details in your
email (full name, email address, contact number) then send to liriolimuel211993@gmail.com. Will also
add you in our private facebook group chat. Thanks!
49