PROBLEM A Cash 15,000

Juvy Camua opened her tutorial center on June 1, 2022. The following transactions Camua, Drawings 2,000
occurred during the first month of operations: Cash 2,000

Jul 1 Opened an account for their tutorial center with PNB, P60,000.
2 Paid P12,000 for July rent. Questions:
3 Paid barangay and municipal taxes, P2,500.
10 Provided tutorial services to students for cash, P14,000. 1. What is the amount of Cash at the end of the period?
18 Received P4,000 from client for services rendered.
(60,000 – 12,000 – 2,500 + 14,000 + 4,000 + 30,000 – 4,050 – 15,000 – 2,000)
25 Borrowed P30,000 cash from a lending company and issued a 60 day note.
= 72,450
27 Rendered tutorial services on account, P4,500.
30 Paid electricity bill, P3,200 and telephone bill, P850. 2. What is the amount of net income for the period?
31 Purchased a Wiley Book to be used by the center, on account, P45,000.
31 Paid one month salary of the secretary, P15,000. Service Revenue = (14,000 + 4,000 + 4,500) = 22,500
31 Withdrew P2,000 for personal use.
Expenses = (12,000 + 2,500 + 4,050 + 15,000) = 33,550
General Journal
22,500 – 33,550 = (11,050)

DATE PARTICULARS DEBIT CREDIT 3. How much is the total liability of the company at month end?

Jul 1 Cash 60,000 (30,000 + 45,000) = 75,000

Camua, Capital 60,000
4. What is the balance of J. Camua, Capital at the end of the period?
2 Rent Expense 12,000
Cash 12,000 (60,000 – 2,000 – 11,050) = 46,950

3 Taxes and Licenses 2,500

Cash 2,500 PROBLEM B
10 Cash 14,000 Builders Electrical Services gave you the following trial balance dated June 30, 2022
Service Revenue 14,000 which you should correct based on the additional information:

18 Cash 4,000 a) A journal entry with a debit to accounts receivable of P500 was posted to the debit
Service Revenue 4,000 side of notes receivable.
+ 500 Accounts Receivable
25 Cash 30,000 — 500 Notes Receivable
Notes Payable 30,000
b) A journal entry with a debit to accounts payable for P195 was posted to the correct
27 Accounts Receivable 4,500 account but on the credit side.
Service Revenue 4,500 — 390 Accounts Payable

30 Utilities Expense 4,050 c) A transaction was credited and posted to repair income P2,000 instead to the
Cash 4,050 accounts receivable account.
— 2,000 Repair Income
31 Wiley Book 45,000 — 2,000 Accounts Receivable
Accounts Payable 45,000
d) A P500 debit entry to salary expense was not posted.
Salaries Expense 15,000 + 500 Salary Expense

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 Builders, Drawing 6,500
e) A P500 debit entry to furniture was posted twice. Repair income 133,000
— 500 Furniture and Fixture Interest income 300
Electrical supplies expense 15,000
f) A journal entry with a debit to cash of P450 was posted to the debit side of cash as Rent expense 40,000
P540. Salary expense 60,500
—90 Cash Utilities expense 25,000
Total 220,410 220,410
g) A journal entry with a credit to accounts receivable of P100 was posted to the correct
account but as P1,000.
+ 900 Accounts Receivable Questions:

h) A journal entry with a debit to Builders, Drawing P500 was posted to the debit side 5. What is the correct total of the trial balance? 220,410
of Builders, Capital. 6. What is the amount of total assets? 40,310
+ 500 Builders, Capital
+ 500 Builders, Dawings 7. What is the amount of total liabilities? 30,610

8. What is the amount of net income/loss? (7,200)

Accounts Dr. Cr.
Cash 4,500 (-90) 9. What is the amount of capital end? 42,800
Accounts receivable 12,000 (+500 -2,000+
900)
Notes receivable 15,000 (+500)
PROBLEM C
Electrical supplies 500
Furniture and fixtures 10,000 (-500) President Consulting Services adjusts its accounts every end of the year. On December
Electrical equipment 33,100 31, 2022, the unadjusted trial balance of the company as taken from its general ledger
Accounts payable 5,750 (-390)
were as follows:
Notes payable 25,250
Builders, Capital 56,000 (+500) President Consulting Services
Builders, Drawing 6,000 (+500) Trial Balance
Repair income 135,000 (-2,000) December 31, 2022
Interest income 300 Cash 98,000
Electrical supplies expense 15,000 Consulting fees receivable 46,800
Rent expense 40,000 Prepaid office rent 12,600
Salary expense 60,000 (+500) Prepaid dues and subscription 600
Utilities expense 25,000 Unused supplies 1,200
Total 221,500 222,300 Equipment 72,000
Accumulated depreciation – equipment 20,400
Notes payable 30,000
Accounts Dr. Cr. Unearned consulting fees, 11,900
Cash 4,410 Grace Poe, Capital 9,200
Accounts receivable 11,400 Consulting fees earned 514,360
Notes receivable 14,500 Salaries expense 277,640
Electrical supplies 500 Telephone expense 5,100
Furniture and fixtures 9,500 Rent expense 44,000
Electrical equipment 33,100 Dues and subscriptions expense 3,120
Accounts payable 5,360 Supplies expense 3,200
Notes payable 25,250 Depreciation expense – equipment 13,200
Builders, Capital 56,500 Miscellaneous expense 8,400

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 Total 585,860 585,860 Salaries Payable 3,400

Other Data:

a) On November 1, the company signed a new rental agreement and paid four Questions:
months’ rent in advance for a total amount of P12,600. This advance payment
was debited to the Prepaid Office Rent account. 10. Total revenue
b) Dues and subscriptions expired during the year amounted to P100.
(514,360 + 5,700 + 22,00) = 542,060
c) An estimate of supplies on hand was made on December 31; the estimated cost
of the unused supplies was P900. 11. Total expense
d) The useful life of the equipment has been estimated at 5 years from date of
acquisition. (354,660 + 6,300 + 100 + 900 + 14,400 + 200 + 3,400) = 379,960
e) Accrued interest on notes payable amounted to P200 at year-end.
12. Net income for 2022
f) Consulting services valued at P5,700 were rendered during December to clients
who had made payment in advance. 542,060 – 379,960 = 162,100
g) It is the custom of the firm to bill clients only when consulting work is completed
or in the case of prolonged engagements, at monthly intervals. On December 13. Total assets
31, engineering services valued at P22,000 have been rendered to clients but
not yet billed. No advance payments had been received from these clients. (210,800 + 22,000 – 6,300 – 100 – 14,400) = 211,100
h) Salaries earned by employees but not paid as of December 31 amounted to
14. Total liabilities
P3,400.
(41,900 + 200 – 5,700 +3,400) = 39,800
Determine the amounts to be reported in the company’s statement of comprehensive
income and statement of financial position after taking effect the above adjustments

Adjusting Journal Entries PROBLEM D

Rent Expense 6,300 On June 1, 2022, Ayu Sin Repair Shop had the following assets and liabilities:
Prepaid Office Rent 6,300
Cash 15,000
Dues and Subscription Expense 100 Repair Supplies 24,000
Cash 100 Repair Equipment 40,000
Accounts Payable 28,000
Supplies Expense 300 Capital 51,000
Unused Supplies 300

Depreciation Expense 14,000 After one month’s operation the shop received cash of P12,000 for services rendered
Accumulated Depreciation 14,000 and paid P3,000 rent, P1,500 utility and P5,000 of its accounts payable. Repair supplies
used amounted to P6,000.
Interest Expense 200
15. Based on the above information, how much is the new total assets?
Interest Payable 200
(15,000 + 24,000 + 40,000 + 12,000 – 3,000 – 1,500 – 5,000 – 6,000) = 75,500
Unearned consulting fees 5,700
Consulting fees earned 5,700 16. Based on the above information, how much is the new equity?

Consulting Fees Receivable 22,000 (51,000 + 12,000 – 3,000 – 1,500 – 6,000) = 52,500
Consulting fees earned 22,000

Salaries Expense 3,400

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PROBLEM E Assets 700,000
Liabilities 400,000
Given are the following selected data on JPIA Company Revenues 500,000
Expenses 380,000
Revenue from professional services rendered for cash 245,000
Revenue from professional services rendered on account 80,000
Additional cash invested by Cathy 52,000 In preparing the statement, the accountant overlooked the following items:
Expenses incurred on account 24,000
Expenses incurred on cash 70,000 Accrued interest on notes payable 4,000
Cash withdrawn 38,000 Depreciation for the year 12,000
Initial investment 500,000 Portion of fees revenue applicable to the next accounting period 5,000
Portion of insurance expense applicable to the next accounting period 7,000
17. How much is the ending balance of JPIA, capital? 745,000 Fees earned but not yet recorded 8,000

Adjusting Journal Entries

PROBLEM F
Interest Expense 4,000
On March 1, 2022, PBB Co. borrowed cash and signed a 36-month interest-bearing note Interest Payable 4,000
on which both the principal and interest are payable on February 28, 2023.
Depreciation Expense 12,000
18. On December 31, 2022, the liability for accrued interest is equivalent to how many Accumulated Depreciation 12,000
months? 10 months
Service Revenue 5,000
Unearned Service Revenue 5,000

PROBLEM G Prepaid Insurance 7,000

Insurance Expense 7,000
Kobe Company has cash disbursement for 2022, its first year of operations, in the
amount of P1,085,000. The following items are assembled for proper adjustments: Accounts Receivable 8,000
Service Revenue 8,000
a) Depreciation of building and equipment for 2022 computed under the straight- line
method amounted to P206,000
b) Prepaid insurance of P39,000, 3/5 of which related to 2022, is included in the cash 20. How much is the adjusted amount of revenue?
disbursement figure. (39,000 x 3/5 = 23,400)
c) Employees’ salaries are due P43,000 at the end of 2022. (500,000 – 5,000 + 8,000) = 503,000

19. How much is the total expenses under the accrual basis of accounting? 21. How much is the adjusted amount of expense?

(1,085,000 + 206,000 – 23,400 + 43,000) = 1,310,600 (380,000 + 4,000 + 12,000 – 7,000) = 389,000

22. Compute for the adjusted total assets at the year-end.

(700,000 – 12,000 + 7,000 + 8,000) = 703,000

23. Compute for the adjusted total liabilities at the year-end.

PROBLEM H (400,000 + 4,000 + 5,000) = 409,000

At the end of its first year of operation, AFB Company’s accountant prepared its financial 24. What is the unadjusted balance of Utol, capital?
statement and showed the following amounts:
Capital = Assets – Liabilities

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 700,000 – 400,000 = 300,000

503,000 – 389,000 = 114,000 28. How much will be the net book value of the machinery on December 31, 2025?

300,000 + 114,000 = 414,000 2021 to 2024 = 182,000 + 52,000 (2025) = 234,000

Net Book Value = 562,000 – 234,000 = 328,000

PROBLEM I

Early in 2022, Allaina Company received P150,000 from a customer for services to be PROBLEM 1
rendered, and this amount was credited to service revenue. At the end of 2022, it was
determined that ¼ of those services had been performed. The accounts below were taken from the adjusted trial balance of JPIA Company at
December 31, 2020:
25. How much is the adjusted balance of service revenue account as at December 31,
2022? Cash P240,000 CA
Notes receivable 125,000 CA
(150,000 x 1/4) = 37,500 Accounts receivable 235,000 CA
Allowance for doubtful accounts 45,000 – CA
Notes payable 250,000 CL
Accounts payable 75,000 CL
PROBLEM J Merchandise inventory, January 1 100,000 -
Office supplies 35,000 CA
Accounts receivable of P135,000 and an allowance for doubtful accounts of P1,500 Machinery, net 350,000 -
appears in the general ledger of Haiti Company. The company estimated that 2% of Land 890,000 -
accounts receivable is considered doubtful of collection at the end of the accounting Income tax payable 87,000 CL
period. SSS payable 24,000 CL
Prepaid insurance 12,000 CA
26. How much will be the net realizable value of the accounts receivable for this
Freight-out 15,000 -
particular transaction?
Accrued expenses 33,000 CL
2% of 135,000 = 2,700
Merchandise inventory per physical count at the end of the year amounts to P125,000
Net Realizable Value= 135,000 – 2,700 = 132,300 and the notes payable is payable starting December 31, 2021, at P100,000 per year. It
is a non-interest-bearing note. At the end of the year:

How much is the amount of current assets?

PROBLEM K
Cash P240,000
The company acquired machinery for P562,000 on June 30, 2021. The estimated life of Notes receivable 125,000
the asset is 10 years with a salvage value of P42,000. Accounts receivable 235,000
Allowance for doubtful accounts 45,000
27. How much will be the balance of the accumulated depreciation account as at Merchandise inventory, December 31 125,000
December 31, 2024? Office supplies 35,000
Prepaid insurance 12,000
562,000 – 42,000 = 520,000 / 10 years = 52,000 (ANNUAL DEPRECIATION) Total 727,000
June 2021 – December 2021 = 6 months
How much is the amount of current liabilities?
52,000 x 6/12 = 26,000
Notes payable 100,000
2022 | 2023 | 2024 = 52,000 x 3 years = 156,000 + 26,000 (2022) = 182,000 Accounts payable 75,000
Income tax payable 87,000

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 SSS payable 24,000 ADRIAN Co. uses the periodic inventory system and begins with P35,000 inventory.
Accrued expenses 33,000 During the year, ADRIAN purchases P480,000 of additional inventory and cost of goods
Total 319,000 sold amounts to P450,000; gross profit, P145,000.

Beginning Inventory 35,000

Purchases 480,000
Total Goods Available for Sale 515,000
Ending Inventory 65,000
Cost of Goods Sold 450,000
PROBLEM 2 Gross Profit 145,000
Angelo Corp. reports operating expenses in two categories: (1) selling and (2) general
and administrative. The adjusted trial balance at December 31, 2023, included the What is the balance of the inventory account to be presented in the Statement of
following expense accounts: Financial position of Adrian Company as at the end of the year?
Accounting and legal fees P120,000 GAE 65,000
Advertising expense 150,000 SE
Transportation-out 75,000 SE
Sales discount 60,000 -
Bad debts 30,000 GAE
Officer’s salaries 180,000 GAE PROBLEM 4
Rent for office space 160,000 GAE / SE
Sales salaries and commissions 110,000 SE Beginning inventory of Friendship Co. is P420,000; However, management wants to limit
Store supplies expense 12,500 SE inventory on hand at year end at P240,000. If Net Sales for the year are projected to be
Depreciation – Office building 125,000 GAE P1,350,000 and Gross Profit amounted to 40% of cost;

One-half of the rented premises were occupied by the sales department. Sales 1,350,000 140%
Cost of Goods Sold 964,285.71 100%
How much of the expenses listed above should be included in Angelo’s selling Gross Profit 385,714.29 40%
expenses for 2023?

Advertising expense 150,000 Beginning Inventory 420,000

Transportation-out 75,000 Purchases 784,285.71
Sales salaries and commissions 110,000 Total Goods Available for Sale 1,204,285.71
Store supplies expense 12,500 Ending Inventory 240,000
Rent for office space (50%) 80,000 Cost of Goods Sold 964,285.71
Total 427,500 Gross Profit 385,714.29

How much is the amount of gross profit?

How much of the expenses listed above should be included in Angelo’s general
and administrative expenses for 2023? 385,714.29
Accounting and legal fees P120,000 How much is the amount of merchandise purchased by Friendship Co.?
Bad debts 30,000
Officer’s salaries 180,000 784,285.71
Rent for office space (50%) 80,000
Depreciation – Office building 125,000
Total 535,000

PROBLEM 5
PROBLEM 3

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Compute the amount received by MIKE Co.:
Sales Invoice List Price Trade Discount Terms Freight Date Paid
Date Cost
1. Oct. 16 P200,000 30%;20% 2/10 n/30 FOB P4,000 Oct. 20
Dest; Prepaid PROBLEM 6
2. Sept. 7 P140,000 30%;10% 2/10 n/30 FOB P5,000 Sept. 15
ship.pt ALFRED Co. purchased merchandise from VIVIAN Co. for P30,600 list price subject to
Prepaid
a trade discount of 25%. The goods were purchased on terms of 2/10; n/30 fob
destination - freight prepaid; P1,000. ALFRED returned P4,000 of the merchandise to
1. How much cash is received? VIVIAN and later paid the amount due within the discount period.

List Price 200,000 How much is the amount paid by ALFRED Co.?
Trade Discount (30%,20%)
List Price 30,600
Invoice Price 112,000
Trade Discount (25%)
Less: Cash Discount (2%) 2,240
Invoice Price 22.950
Cash Received 109,760
Less Purchase Returns 4,000
18,950
2. How much cash is received? Less: Cash Discount (2%) 375
Cash Paid 18,571
List Price 140,000
Trade Discount (30%;10%)
Invoice Price 88,200 PROBLEM 7
Less: Cash Discount (2%) 1,764
86,436 Harana Co. purchased an item of merchandise quoted and listed at P280,000 under the
Add: Freight Cost 5,000 following terms: trade discount 10%; 20%; 30% fob destination; freight-collect; freight
Cash Received 91,436 cost is P15,000;

At what amount should the merchandise be recorded in the books, assuming

Harana Co. uses the Perpetual inventory system?

PROBLEM 6 List Price 280,000

Trade Discount (10%; 20%; 30%)
On January 1, 2020, SLURPEE Co. bought merchandise worth P132,000, terms Invoice Price 141,120
3/15;n/60. On January 8, the firm received a credit memo for P32,000 of defective
merchandise returned. On Jan. 18, SLURPEE paid the full amount.

Purchases 132,000
Purchase Returns and Allowances 32,000 PROBLEM 8
Cash Paid 100,000
Sales P430,000; Purchases P218,000; Ending inventory P110,000; Purchase returns
P20,000; Sales returns P40,000; Freight in P22,000; Freight out P10,000; Operating
How much will SLURPEE pay to settle its account? expenses P102,000; Gross Profit is 40% of net sales.

100,000 Sales 430,000

Sales Returns and Allowances 40,000
Net Sales 390,000
How much is the balance of the sales discount account after the January 18 Beginning Inventory 14,000
transaction? Purchases 218,000
Purchase Returns and Allowances 20,000
No discount since it is paid beyond the discount period Freight-in 22,000

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 Net Purchases 220,000 Gross Profit P540,000
Total Goods Available for Sale 344,000 Net Income P50,000
Ending Inventory 110,000 Purchases P320,000
Cost of Goods Sold 234,000 Decrease in Inventory P15,000
Gross Profit 156,000
Less: Operating Expenses 102,000 What is the amount of sales for 2022?
Freight-out 10,000 112,000
Net Income Sales 875,000
Purchases 320,000
Decrease in Inventory 15,000
From the data given: Cost of Goods Sold 335,000
Gross Profit 540,000
How much is the beginning inventory?

14,000

PROBLEM 11
How much is the increase or decrease in Merchandise inventory?
Use the following information to answer the question:
Beginning Inventory 14,000
Ending Inventory 110,000 Sales P750,000
Decrease in Merchandise Inventory (14,000) Sales Returns and Allowances P15,000
Sales Discounts P10,000
Purchases P170,000
Purchase Returns and Allowances P20,000
Transportation – in P30,000
PROBLEM 9 Selling Expenses P75,000
General and Administrative Expenses P275,000
On January 1, 2020, Duterte Co. sold merchandise with an invoice price of P1,500,000
(Disregard VAT) to Robredo Co. Credit terms 3/10, n/30. On January 3, Robredo Co.
In addition, the beginning merchandise inventory was P55,000 and ending Merchandise
returned damaged goods and was issued a credit memo for P126,000. Robredo Co.
Inventory was P35,000.
paid half of the account on January 10 and on January 31 paid the whole amount.
Sales 750,000
Sales 1,500,000
Sales Returns and Allowances 15,000
Sales Returns 126,000
Sales Discounts 10,000 25,000
Net Sales 1,374,000 Net Sales 725,000
Beginning Inventory 55,000
How much was collected from Robredo Co. on January 31?
Purchases 170,000
1,374,000 / 2 = 687,000 Purchase Returns and Allowances 20,000
Freight-in 30,000
Net Purchases 180,000
How much is the balance of net sales to be presented in the Statement of Total Goods Available for Sale 235,000
Comprehensive Income? Ending Inventory 35,000
Cost of Goods Sold 200,000
1,374,000 Gross Profit 525,000
Less: Operating Expenses
Selling Expenses 75,000
PROBLEM 10 General and Administrative 275,000 350,000
Expenses
Arriba Amor Co. had the following data for 2022 Net Income 175,000

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 Merchandise inventory decreased from last year 500,000
Net sales 1,500,000
Cost of sales for the period was… Operating expenses 100,000
Interest expense 2,000
200,000
Loss on sale of equipment 10,000

Net income for the period was…

Net Sales 725,000
175,000 Purchases 580,000
Purchase Returns and Allowances 20,000
Freight-in 5,000
Net Purchases 565,000
Merchandise inventory decreased 500,000
PROBLEM 12 Cost of Goods Sold 1,065,000
Gross Profit 435,000
A credit sales of P3,000 is made on August 10, terms 2/10, net/30. A return of P200 is Less: Operating Expenses 100,000
granted on August 15. The amount received as payment in full on August 20 is: Interest expense 2,000
Loss on sale of equipment 10,000 112,000
Sales 3,000 Net Income 323,000
Sales Returns and Allowances (200)
Invoice Price 2,800
Less: Cash Discount (2%) (56) How much is the amount of net income during the year?
Cash Paid 2,744
323,000

Compute for the Cost of goods sold.

PROBLEM 13
1,065,000
Merchandise subject to terms 1/10, n/30. FOB shipping point is sold on account to a
customer for P30,000. The seller paid the transportation cost of P2,000 and issued a
credit memorandum for P10,000 prior to payment. What is the amount of cash discount
allowable?
PROBLEM 15
Sales 30,000
The following are selected accounts in the trial balance of Harana Company:
Sales Returns & Allowances (10,000)
Invoice Price 20,000 Freight-in 66,000
Less: Cash Discount (1%) 200 Administrative expenses 605,000
19,800 Sales returns and allowances 33,000
Add: Freight-in 2,000 Selling expenses 165,000
Cash Paid 17,800 Sales 1,650,000
Purchases 374,000
Sales discounts 22,000
PROBLEM 14 Purchase returns and allowances 44,000
Amelia Enterprises paid P580,000 for purchases during the year. Other information
follows: In addition, beginning inventory was P121,000 and ending inventory was P77,000 on
December 31.
Purchase returns and allowances 20,000
Freight-in 5,000

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 Sales 1,650,000 Total Goods Available for Sale 2,320,000
Sales Returns and Allowances 33,000 Ending Inventory 320,000
Sales Discounts 22,000 55,000 Cost of Goods Sold 2,000,000
Net Sales 1,595,000 Gross Profit 2,900,000
Beginning Inventory 121,000 Less: Operating Expenses
Purchases 374,000 Selling Expenses 2,000,000
Purchase Returns and Allowances 44,000 General & Administrative 500,000 2,500,000
Freight-in 66,000 Expenses
Net Purchases 396,000 Less: Finance Cost
Total Goods Available for Sale 517,000 Interest Expenses 2,000,000 20,000
Ending Inventory 77,000 Net Income 380,000
Cost of Goods Sold 440,000
Gross Profit 1,155,000
Less: Operating Expenses Ending Inventory = Beginning Inventory – 20%
Selling Expenses 165,000 = 400,000 – 20% = 80,000
General & Administrative 605,000 770,000 = 400,000 – 80,000
Expenses = 320,000
Net Income 385,000 Administrative Expenses = COGS x 25%
= 2,000,000 x 25%
= 500,000
Compute the total net income. Gross Sales = Administrative Expenses / 10%
= 500,000 / 10%
385,000 = 5,000,000
Selling Expenses = 4/5 of Operating Expenses – 80%
Administrative Expenses = (remaining) 20%
Compute the total cost of goods sold.
Total Operating Expenses = Administrative Expenses / 20%
440,000 = 500,000 / 20%
= 2,500,000

PROBLEM 16 Selling Expenses = 2,500,000 x 80%

= 2,000,000 OR
The financial records of Karen were destroyed by fire at the end of the current year. = 2,500,000 – 500,000
However, certain statistical data related to the income statement are available: = 2,000,000

Interest expense 20,000

Cost of goods sold 2,000,000 How much will be the total amount of selling expenses?
Sales discount 100,000
2,000,000

The beginning inventory was P400,000 and decrease by 20% during the year.
Administrative expenses are 25% of cost of goods sold but only 10% of gross sales. Ignoring income tax, how much was the net income for the current year?
Four-fifths of operating expenses relate to sale activities.
380,000

Sales 5,000,000 How much will be the total amount of the total net purchases?
Sales Discounts 100,000
Net Sales 9,900,000 1,920,000
Beginning Inventory 400,000
Net Purchases 1,920,000

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PROBLEM 16 Merchandise inventory, January 1 350,000
Prepaid insurance 12,000
The accounts below were taken from the adjusted trial balance of Lionel Company at Total Current Assets 1,147,000
December 31, 2022:

Cash 430,000 PROBLEM 17

Petty cash fund 10,000
Notes receivable 110,000 Lionel Enterprises has a gross profit rate based on cost of 25% during the year. Other
Accounts receivable 235,000 information follows:
Allowance for bad debts 35,000
Notes payable 300,000 Net sales 1,000,000
Accounts payable 75,000 Operating expenses 100,000
Accrued interest expense 26,000 Interest income 2,000
Merchandise inventory, January 1 400,000 Gain on sale of equipment 10,000
Office supplies 35,000
Machinery, net 750,000
How much is the total revenue during the year?
Mortgage payable 500,000
Land 800,000 Sales 1,000,000 125%
Income tax payable 80,000 Cost of Goods Sold 800,000 100%
SSS payable 40,000
Gross Profit 200,000 25%
Prepaid insurance 12,000
Freight-out 15,000
Accrued utilities expense 75,000 Gross Profit 200,000
Unearned rent income 70,000 Less: Operating Expenses 100,000
Total Revenue 100,000
Other Income: Interest Income 2,000
Merchandise inventory per physical count at the end of the year amounts to P350,000
Gain on sale of equipment 10,000
and the notes payable is payable starting December 31, 2025 at P100,000 per year. It
Net Income 212,000
is a non-interest bearing note. The mortgage is payable on December 31, 2025. At the
end of the year:

How much is the amount of current liabilities?

PROBLEM 18
Accounts payable 75,000
Accrued interest expense 26,000 The following data are available from Isabelle Company’s accounting records for the
Income tax payable 80,000 month of August:
SSS payable 40,000
Accrued utilities expense 75,000 Inventory, Jan 1 650,000
Unearned rent income 70,000 Purchases 3,200,000
Total Current Liabilities 366,000 Net sales 4,500,000
Purchase returns 75,000
Freight-in 50,000
How much is the amount of current assets?

Cash 430,000 The gross profit rate for the year is 40% of net sales, the cost of goods sold in August is:
Petty cash fund 10,000
Notes receivable 110,000 Gross Profit = 4,500,000 x 40% = 1,800,000
Accounts receivable 235,000
Allowance for bad debts (35,000) Net Sales 4,500,000
Office supplies 35,000 Inventory, Jan 1 650,000
Purchases 3,200,000

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 Purchase Returns and Allowances 75,000
Freight-in 50,000
Net Purchases 3,175,000
Total Goods Available for Sale 3,825,000
Ending Inventory 1,125,000
Cost of Goods Sold 2,700,000
Gross Profit 1,800,000

PROBLEM 18

Davis Co. purchased an item of merchandise quoted and listed at P400,000(Disregard

VAT) under the following terms: trade discount 10%; 20%; 30% fob destination; freight-
collect ,freight cost is P5,000

At what amount should the merchandise be recorded in the books, assuming

Davis Co. uses the perpetual inventory system?

List Price 400,000

Invoice Price 201,600
Less: Cash Discount (10%; 20%; 30%)

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