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    Exercises

    Uploaded by

    Janine Igdalino

    Copyright:

    © All Rights Reserved
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    Exercises

    Uploaded by

    Janine Igdalino
    24 views2 pages

    Copyright

    © © All Rights Reserved

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    DOCX, PDF, TXT or read online from Scribd

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    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    24 views2 pages

    Exercises

    Uploaded by

    Janine Igdalino

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Entity A started operations on January 1, 20x1.

    A summary of the transactions during the year is


    provided below:

    1. The owner invested ₱2,000,000 to the business.


    2. Acquired equipment for ₱1,000,000 cash.
    3. Obtained a 12%, one-year, bank loan of ₱500,000.
    4. Paid one-year insurance amounting to ₱160,000 on September 30, 20x1. Entity A uses the “asset
    method” in recording prepayments.
    5. Total service fees earned amounted to ₱6,000,000, one-third of which was on cash basis.
    6. Collected ₱1,800,000 accounts receivable.
    7. Total salaries expense paid amounted to ₱1,200,000.
    8. Total utilities expense paid amounted ₱500,000.
    9. Total supplies purchased on cash basis amounted to ₱120,000.
    10. Total owner’s drawings amounted to ₱1,400,000.

    Requirements:
    a. Provide the journal entries for the transactions.
    b. Post the entries to the ledger using T-accounts.
    c. Prepare the unadjusted trial balance using a worksheet.
    d. Prepare the adjusting entries (see additional information below).

    Information for adjusting entries:


    i. The equipment was acquired on January 1, 20x1 and was estimated to have a useful life of 10
    years.
    ii. The loan was obtained on July 1, 20x1. Principal and interest are due at maturity date.
    iii. The one-year insurance covers the period October 1, 20x1 to September 30, 20x2.
    iv. Unused supplies at the end of the year amounted to ₱40,000.

    e. Complete the worksheet.


    f. Prepare the closing entries.
    g. Prepare the balance sheet and income statement.
    Entity A started operations on November 1, 20x1. The following were the transactions during the
    period:

    Nov. Transactions
    1 Provided ₱100,000 cash as initial investment to the business.
    1 Acquired equipment for ₱72,000 cash. The equipment has a useful life of 4 years.
    Entity A records depreciation expense only at year-end.
    1 Paid a one-year insurance premium of ₱24,000. (Use ‘asset method’)
    12 Purchased inventory costing ₱30,000 for cash. (Use periodic inventory system)
    14 Sold goods for ₱30,000 cash.

    Dec. Transactions
    1 Sold goods with sale price of ₱24,000 in exchange for a ₱24,000, 10%, one-year note
    receivable. Principal and interest are due at maturity.
    5 Purchased inventory for ₱4,000 on account.
    26 Sold goods for ₱34,000 on account.
    27 Paid ₱2,000 account payable.
    29 Collected ₱20,000 account receivable.

    Additional information:
     There is no beginning inventory. The ending inventory per physical count is ₱21,000.
     Entity A determines at year-end that accounts receivable of ₱2,000 is doubtful of collection.
     Salaries earned by employees during the period but were not yet paid amounted to ₱20,000.

    Requirements:
    h. Provide the journal entries for the transactions.
    i. Post the entries to the ledger using T-accounts.
    j. Prepare the unadjusted trial balance using a worksheet.
    k. Prepare the adjusting entries.
    l. Complete the worksheet.
    m. Prepare the closing entries.
    n. Prepare the balance sheet and income statement.
    o. Prepare the reversing entries to be recorded in the next accounting period.

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