FINANCIAL ACCOUNTING PROCESS

QUIZZER

1. On July 1, 2019, Gizelle opened Libero Company, a perfume shop with an initial investment of
P900,000. Libero Company borrowed a total of P300,000 to finance its initial operation. In early
September, Gizelle issued a personal check for P100,000 in payment for one of Libero
Company's loan. In mid-December, Gizelle took merchandise costing P50,000 which were
marked to sell for P75,000 for personal use. Sales and other income in 2016 amounted to
P750,000 while total expenses totaled P300,000. Libero Company's liabilities decreased to
P175,000.
The assets of Libero Company at December 31, 2019 is _______________.

2. Jia Company was incorporated on June 1, 2019 issuing 5,000, P10 ordinary shares for a total
consideration of P80,000 and borrowed funds totaling P20,000. Operations in 2019 resulted in
an excess of income over expenses of P150,000 Additional1,000 ordinary shares were issued for
a total cash consideration of P15,000. On December 1, 2019, Jia Company declared cash
dividends of P40,000 for holders on record as of December 31, 2019 to be distributed in January
15, 2020.
At December 31, 2016 total assets Increased by P140,000.
The liabilities of Jia Company at December 31, 2019 is ______________.

3. Molde Company's total assets on December 31, 2019 were 30% higher than the total assets on
January 1, 2019. Total equity on January 1, 2019 amounting to P120,000 was 25% lower than
the total liabilities on that date. During 2018, total liabilities increased by 15%.
Molde Company's equity at December 31, 2019 is ______________.

4. The assets and liabilities for Mika Company are as follows: 

December 31, 2019 December 31, 2018 
Assets P1,400,000 P2,100,000
Liabilities P700,000 P1,800,000

During the year, Mika Company made an additional investment of P100,000 and withdrew
P70,000.
The net income (loss) for 2019 is _______________.

5. Carlos Company's account balances showed the following changes:

Current assets 450,000 Increase

Non-current assets 200,000 Decrease
Current liabilities  270,000 Decrease
Non-current liabilities 180,000 Increase
Ordinary shares  40,000 Increase
Premium on ordinary shares  10,000 Increase
 There were no other changes in the retained earnings account other than a ca P300,000
dividend payment and the current year's net income.
Carlos Company's current year's net income (loss) is _____________.

6. Some account balances included in the ledger of Amy Company at the end of 2019 are as
follows: 

Accounts payable  300,000 Accrued interest income  80,000

Accounts receivable  250,000 Accrued salaries expense  90,000
Administrative expenses 150,000 Accumulated depreciation  150,000
Cash in bank  100,000 Allowance for doubtful accounts 60,000
Deferred tax asset  40,000 Bonds payable  500,000
Finance costs  90,000 Capitalized development costs 600,000
Land 900,000 Finance lease obligation  140,000
Machinery  300,000 Net loss - exchange differences 60,000
Notes payable  150,000 Premium on Bonds Payable 100,000
Office Equipment 220,000 Provision related to pensions 200,000
Prepaid Supplies 60,000 Retained Earnings 380,000
Share Capital – Ordinary 390,000 Revaluation Surplus 100,000
Treasury Shares 50,000 Unearned Service Income 100,000

The sum of accounts with debit balances is ________________.

7. Some account balances for Kim Company as of the end of the accounting period are as follows:

Advances to Employees  120,000  Accounts Receivable 400,000

Cash and Cash Equivalents 450,000  Accrued Interest Expense 25,000
Cost of Goods Sold 100,000  Advances from Customers 150,000
Deferred Tax Liabilities 300,000  Dividends 75,000
Distribution Costs 200,000  Inventory 60,000
Interest Income 90,000  Investment in Associate 700,000
Land 80,000  Net Unrealized Gains – AFS 280,000
Patent 300,000  Premium on Share Capital 200,000
Prepaid Insurance  40,000  Provisions for pending lawsuits 150,000
Share Capital 800,000  Retained Earnings 300,000
Trade Receivables 200,000  Treasury Shares 140,000

The sum of accounts with credit balances is ______________.

8. The trial balance of Ara Company does not balance. The debit column totaled P174,000 while
the credit column totaled P147,200. An examination of the ledger shows these errors
 Collection from a credit customer was recorded (both dr and cr) as P14,500 instead of
P15,400.
 Acquisition of a computer table on account for P6,000 was recorded as a debit to Office
expense and a credit to Accounts payable.
 Purchases of inventory units on account was recorded as P231,000 instead of P213,000
 Services performed on account for a client, P12,000 was recorded as a debit to Accounts
Receivable for P12,000 and a credit to Service Revenue of P1,200.
 A payment of P3,000 for utilities used was posted as a debit to Utilities Expense and a
debit to Cash
 The rent revenue account was totaled at P48,000 instead of P58,000
The correct debit/credit column totals should be _________________.
9. The trial balance of Alyssa Company does not balance.
X
Alyssa Company
Trial Balance
December 31, 2019
Debit Credit
Cash 87,700
Accounts Receivable 65,000
Rent Receivable 16,700
Inventory 37,200
Prepaid Insurance 11,300
Property and Equipment 133,500
Accounts Payable 72,500
Accrued Expenses 26,300
Income Tax Payable 13,000
Alyssa, Capital 89,250
Service Revenue 202,000
Rent Revenue 50,100
Interest Income 18,750
Utilities Expense 82,000
Advertising Expense 33,100
Income Tax Expense 25,000

Your review of the ledger reveals the following:

a. Each account had a normal balance

 b. Debit footings in Property and equipment, and Accounts Payable were each overstated by
P3,000
c. Debit footings in Rent, receivable and Rent revenue were each understated by P6,200
d. Credit footings in Prepaid insurance and Inventory were each overstated by P2,700
e. Credit footings in Cash and Income taxes payable were each understated by P1,300
f. Transposition errors were made in Accounts Receivable and Service Revenue; the correct
balances were P56,000 and P220,000 respectively
g. Credit posting to Advertising Expense of P1,800 was omitted

The debit/credit column totals in Alyssa Company's trial balance is 

10. The accounts receivable balance at the start of the year was P1,250,000. Collections from credit
customers - current for the period totaled to O P4,300,000. Sales discounts granted P60,000.
Accounts deemed worthless COT during the year P180,000. Bad debts expense for the year
P75,000. At the end of the year, the accounts receivable balance was P1,120,000.
Credit sales for the year is ______________.

11. Unearned rent beginning, P450,000; Unearned rent end, P670,000. Total rental revenue during
the year, P960,000.
Rent collected for the period is _____________.

12. Decrease in accounts receivable, P120,000; Increase in advanced from customers, P80,000;

Total sales for the year P1,700,000
Collections from customers for the year is ______________.

Use the following information for questions 13 - 14 

Inventory, beginning, P4,800,000. Accounts payable, beginning P2,900,000. Payments made to

suppliers for purchases made during the year, P7,500,000. Purchase returns amounted to
P120,000; Freight-in P70,000. Inventory, ending (physical count), P4,200,000. Accounts payable,
ending 419 31, 2015, P8,400,000.

13. Total purchases made during the year amounts to ______________.

14. The amount reported as cost of goods sold amounts to ______________. 

15. Prepaid rent beginning of the year, P125,000; Rent expense during the year, P270,000; Prepaid
rent end of the year, P260,000. 
Total rent paid during the year is ______________.

16. Salaries payable, beginning, P450,000; Salaries paid during the year totaled P1,500,000. Salaries
payable, ending P760,000.
Total salaries paid during the year is ______________.
17. Increase in prepaid expenses (utilities), P90,000; Increase in accrued expenses (utilities),
P70,000. Utilities expense for the year P300,000.
Payments for utilities during the year is ______________.

18. Allowance for bad debts beginning, P24,000; Written-off uncollectible accounts during the year,
P12,000; Recoveries from previously written-off accounts P4,500; Allowance for doubtful
accounts end, P39,500
The bad debts expense for the year amounts to ______________.

19. Accumulated depreciation and impairment - equipment, January 1, 2019, P700,000; Equipment
costing P290,000 was sold for P140,000 resulting in a loss of P25,000. Accumulated depreciation
and impairment - equipment, December 31, 2018, P910,000.
The amount of depreciation expense for the year amounted to ______________.

20. Retained earnings, beginning P1,300,000. During the year, the company declared dividends of
P800,000 paying P500,000. Retained earnings, ending P1,200,000.
The amount of net income (loss) during the period is ______________.

21. Salaries payable at the start of the year was P0. Salaries are paid every Friday for the current
week. Three employees receive a salary of P7,500 each per week. Employees do not work on
weekends. December 31 fell on a Wednesday. All employees worked the last day of December.
The appropriate adjusting entry at the end of the year is ______________.

22. Forwarded a loan to another company on August 1, 2019 and received an 8-month, 12.6% note
with a face amount of P800,000.
The appropriate adjusting entry to be made at December 31, 2019 is ______________.

23. A truck costing P1,400,000 was acquired on August 21, 2016. It has a estimated useful life of 20
years and a residual value equal to 8% of cost. The Company uses the straight-line method in
recording depreciation on its machines 
The appropriate adjusting entry to be made at December 31, 2019 is ______________.

24. The Allowance for Bad Debts has an unadjusted balance of P1,200 as of December 31, 2019.
Based on an aging schedule, it is determined that the balance of the allowance account should
be P1,950 at December 31.
The appropriate adjusting entry to be made at December 31, 2019 is ______________. 

25. During 2019, DC Company entered into two advertising contracts and U paid a total of P480,000
A nominal account was debited for this advance payment. The contract provides for a monthly
ad placement in two widely read magazines. The terms of the contracts are as follows: 
Contract Date  Amount No. of Issues
MFT Magazine August 1 P180,000  15
DJB Digest October 1 P300,000 6
 The first ad placement runs in the month in which the contract is signed. The appropriate
adjusting entry to be made at December 31, 2019 is ______________.

26. Supplies costing P28,000 were acquired during the year and was recorded to a real account. A
count made on December 31, 2019 indicated that supplies on hand was P16,500. 
The appropriate adjusting entry to be made at December 31, 2019 is

27. AJ Company began subleasing office space in its new building in 2019. At  December 31, AJ
Company had the following rental contracts that are paid in full for the entire term of the lease.
AJ Company recorded all advance collections initially under a liability account
Date Term (months) Contract Price
August 1 12 P75,000
October 1 18 P125,000

The appropriate adjusting entry to be made at December 31, 2019 is ______________. 

28. FW Company sold "Fitness Certificate” for P4,200 each, which entitles holder to a 12-month
exclusive membership in Fit & Wright Gym. The following contracts that are paid in full are as
follows:
Date Contract period # of Contracts
February 26 March 1, 2019 - February 28, 2020  15
May 23 June 1, 2019 - May 31, 2020 20
August 18 September 1, 2019 - August 31, 2020 10

Amounts collected were recorded initially under a revenue account. The appropriate adjusting
entry to be made at December 31, 2016 is ______________.

29. The adjusted trial balance of Zo Company at the end of the year showed the following accounts:

Accounts payable  4,500 Accrued interest income  62,000

Accounts receivable  5,200 Accrued salaries expense  190,000
Zo, Capital 280,500 Accumulated depreciation  216,000
Zo, Drawing 130,000 Depreciation Expense 47,500
Building 600,000 Notes Payable 90,000
Dividend Revenue 25,000 Pension Expense 44,500
Finance Costs 60,000 Premium on Bonds Payable 100,000
Insurance Expense 7,500 Prepaid Supplies 36,500
Interest Income 90,000 Professional Fees earned 500,000
Prepaid Insurance 23,000 Salaries Expense 225,000
Supplies Expense 11,500 Utilities Expense 87,000

The balance of the Income Summary account after all the required balances have been
transferred to this account. ______________.
30. The bookkeeper of CT Company prepared the following closing entries at the end of the
calendar year:
Dec 31 Interest Revenue 9,400
Accounts Payable 3,900
Capital Stock 12,000
Sales 60,000
Income Summary 85,300
Dec 31 Income Summary 53,500
Gain on Sale of Land 3,000
Cost of Goods Sold 32,000
Accounts Receivable 12,000
Operating Expenses 4,000
Other Assets 3,500
Dividends 5,000
Dec 31 Income Summary 31,800
Retained Earnings 31,800

The correct amount of Income Summary to be closed to the retained earnings at December 31 is

______________.

31. On August 1, 2019, Aimee Company receives a P900,000, 12%, 4-year note. Principal of
P225,000 plus interest is collected every July 31. At December 31, 2019 the following adjusting
entry was made to take up accrued interest.

Interest receivable 45,000

Interest revenue 45,000

A reversing entry was made by Aimee Company at the start of 2020. Principal and interest were
received on July 31 2020. Aimee Company records all collections using nominal accounts.
a. The appropriate adjusting entry on December 31, 2020 is ______________.
b. Assuming that Aimee Company did not prepare a reversing entry and records all collection
in a nominal account, the appropriate adjusting entry to be made on December 31, 2020 to
take up accrued interest is ______________.

32. On March 1, 2019, Adrian Company issues a P750,000, 9%, 5-year note. Principal of P150,000
plus interest is payable every February 28. At December 31, 2019, the following adjusting entry
was made to take up accrued interest.

Interest expense 56,250

Interest payable 56,250

A reversing entry was made by Adrian Company at the start of 2020. Principal and interest were
paid on February 28. Adrian Company records all payments using nominal accounts.
 a. The appropriate adjusting entry to be made on December 31, 2020 to take up accrued
interest is ______________.
b. Assuming that Adrian Company did not prepare a reversing entry and records all collection
in a nominal account, the appropriate adjusting entry to be made on December 31, 2020 to
take up accrued interest is ______________.

33. On August 1, 2019, Audrey Company leased office space. The annual rent of P240,000 was
payable in advance on August 1. At December 31, 2020, the following adjusting entry was made

Prepaid rent 140,000

Rent expense 140,000 

A reversing entry was prepared by Audrey Company at the start of 2020. On August 1, 2020,
Audrey Company renewed its lease contract, the annual rent which was immediately paid on
that day has increased to P350,000.

a. The appropriate adjusting entry to be made on December 31, 2020 is ______________. 

b. Assuming that Audrey Company did not prepare a reversing entry, the appropriate adjusting
entry to be made on December 31, 2020 is ______________. 

34. Amber Company sells gym membership that entitles the holder to a one-year unlimited use of
Amber Company's facilities. Amber Company collected a total of P450,000 in membership fees
during 2019. The adjusting entry to establish the unearned portion at that time:

Membership fees 140,000

Unearned membership fees 140,000

A reversing entry was prepared by Amber Company at the start of 2020. Likewise, Amber
Company collected a total of P700,000 for the year. The total amount earned for 2020 was
P590,000.
a. The appropriate adjusting entry to be made on December 31, 2020 is
b. Assuming that Amber Company did not prepare a reversing entry, the appropriate adjusting
entry to be made on December 31, 2020 is ______________.