TEST II. Short Problems.

1. The following information relates to Bon Bil Co. for the year 2022.

Owner’s Capital, Jan 1, 2022 P 67,000 Advertising Expense P 4,500

Drawings during 2022 6,000 Rent Expense 9,500
Service Revenue 67,500 Utilities Expense 1,400
Salaries and Wages Expense 29,000

1. What is the owner’s capital at December 31, 2022? 1. 84, 100

2. Presented below is information related to the sole proprietorship of Anthony Scalin, consultant.

Service revenue-2022 P 340,000

Total expenses-2022 213,000
Assets, January 1, 2022 85,000
Liabilities, January 1, 2022 64,000
Assets, December 31, 2022 165,000
Liabilities, December 31, 2022 80,000
Drawings-2022

2. What is the drawings for 2022? 2. 63, 000

3. The balance sheet of Humility Car appears as follows:

Humi Car
Balance Sheet
May 15, 2022

Assets Liabilities & Owner’s Equity

Cash P 68,000 Liabilities
Accounts Receivable 22,000 Accounts Payable P 250,000
Office Supplies 15,000 Total Liabilities 250,000
Prepaid Rent 30,000
Office Equipment 80,000 Owner’s Equity
Building 100,000 H. Mira, Capital 65,000

Total Assets P 315,000 Total Liabilities & Owner’s Equity 315,000

3. If the total cash balance were used to pay part of the Accounts Payable, what effect would it have on Total Liabilities
and Owner's Equity? State whether it increase/decrease/no effect and the amount.

3. Total Liabilities and Owner’s Equity will decrease by 68, 000. Hence, the new balance would be 247, 000.

4. If all the office equipment were sold for P80,000, what effect would it have on Total Assets? State whether it
increase/decrease/same amount and the amount
4. Total Assets will be the same amount, 315, 000.

5. If all the office equipment were sold for P80,000, what effect would it have on H. Mira Capital? State whether it
increase/decrease/same amount and the amount.

5. H. Mira Capital account will be the same amount,

65, 000.

6. The following transactions for AC Company for June 2022, the company's first month of operations. You may omit
explanations for the transactions 1 to 4 below:

1. Purchased equipment on account for P 7,000.

2. Billed customers P 5,000 for services performed.
3. Made payment of P 2,300 on account for equipment purchased earlier in month.
4. Collected P 2,900 on customer accounts.

6. What is the balance in Accounts Payable at June 30, 2022? 6. 4, 700

7. What is the balance in Accounts Receivable at June 30, 2022? 7. 2, 100

8. L. Phair and Associates is a financial planning service. The account balances at December 31, 2022 are shown by the
following alphabetical list:

Accounts Payable P 5,000

Accounts Receivable 19,000
Automobiles 27,500
Buildings 100,000
Cash 11,700
Computer 22,000
Computer Software 4,200
Land 42,000
Owner's Capital 152,900
Notes Payable 95,000
Notes Receivable 8,100
Equipment 15,400
Supplies 800
Technical Library 2,200

8. What is the total debit column of the trial balance? 8. 252, 900

9. The records for Todd Inc. showed the following for 2022:
 Jan 1 Dec 31
Accrued expenses P 1,800 P 2,150
Prepaid expenses 720 870
Cash paid during the year for expenses, P 42,500

9. What is the amount of expense that should be reported on the income statement? 9. 42, 700

10. Mac prepared this entry on December 31, 2020

Date Account Title/Explanation P Debit Credit

R
December 31 Prepaid Rent 1800
Rent Expense 1800

10. Annual Rent is paid in advance every October 1, prepare the original entry that was recorded?

10. Answer
Date Account Title/Explanation P Debit Credit
R
October 01 Prepaid Rent 2400
Cash 2400
Paid annual rent.

11. Drive-by Truckrs prepares monthly financial statements. On July 1, the Supplies account had a balance of P 3,000.
During July, additional supplies were purchased for P4,800 and that amount was debited to Supplies Expense. On July
31, a physical count of supplies revealed that there was P2,200 on hand.

11. What is the additional supplies expense for the month? 11. 800

12. Alesandro Rental Agency prepares monthly financial statements. On September 1, a check for P 7,800 was received
from a tenant for six months' rent. The full amount was credited to Rent Revenue.

12. What is the balance of Unearned Rent Revenue as of September 30? 12. 6, 500

13. Buena Vista Social Club accumulates the following adjustment data at December 31.

1. Revenue of P 1,100 collected in advance has been earned.

2. Salaries of P 600 are unpaid.
3. Prepaid rent totaling P 500 has expired.
4. Supplies of P 450 have been used.
5. Revenue earned but unbilled total P 750
6. Utility expenses of P 200 are unpaid.
7. Interest of P 300 has accrued on a note payable.

13. Assume net income before the adjustments listed above was P 15,500. 13. 15, 300
What is the adjusted net income?

14. Interest receivable at 1/1/22 was P1,000. During 2022 cash received from debtors for interest on outstanding notes
receivable amounted to P5,000. The 2022 income statement showed interest revenue in the amount of P5,400.
Assuming reversing entries are not made.

What is the amount of accrued interest for 2022? 14. 1, 400

15. Unearned rent at 1/1/22 was P5,300 and at 12/31/22 was P8,000. The records indicate cash receipts from rental
sources during 2022 amounted to P40,000, all of which was credited to the Unearned Rent Account.

15. What is the total rent revenue for 2022? 15. 37, 300

16. Accumulated depreciation-equipment at 1/1/22 was P230,000. At 12/31/22 the balance of the account was
P270,000. During 2022, one piece of equipment was sold. The equipment had an original cost of P40,000 and was 3/4
depreciated when sold. You are to prepare the missing adjusting entry.

16. What is the depreciation expense for 2022? 16. 70, 000

17. Prepaid rent at 1/1/22 was P9,000. During 2022 rent payments of P120,000 were made and charged to "rent
expense” The 2022 income statement shows a general expense the item “rent expense” in the amount of P 125,000.
Assuming reversing entries are not made.

17. What is the amount of reduction to the Prepaid Rent account? 17. 5, 000
18. 8 Hotel initiated operations on July 1, 2022. To manage the company and officers, the managers have requested
monthly financial statements starting July 31, 2022. The adjusted trial balance amounts at July 31 are shown below. (to
be answered by #18, #19, and #20)

Debit Credit
Cash P 8,680 Accum Depreciation-Equipment P 840
Accounts Receivable 810 Notes Payable 6,000
Prepaid Rent 1,965 Accounts Payable 1,140
Supplies 1,160 Salaries and Wages Payable 360
Equipment 11,400 Interest Payable 40
Owner's Drawings 800 Unearned Sales Revenue 580
Salaries and Wages Expense 7,145 Will Qua capital 10,640
Rent Expense 1,740 Sales Revenue 15,390
Depreciation Expense 665 Total Credits P 34,990
Supplies Expense 580
Interest Expense 45
Total Debits P 34,990

18. Determine the net income for the month of July. 18. 5, 215

19. Determine the total assets at July 31, 2022 for B Hotel. 19. 23, 175

20. Determine the amount that appears for Qua, Capital at July 31, 2022. 20. 15, 055

Selected worksheet data for Patinkin Company are presented below. (to be answered by #21 and #22)

Account Titles Trial Balance Adjusted Trial Balance

Dr Cr Dr Cr
Accounts Receivable ? 31,000
Prepaid Insurance 24,000 18,000
Supplies 7,000 ?
Accumulated Depreciation 12,000 ?
Salaries and Wages Payable ? 7,600
Service Revenue 88,000 100,000
Insurance Expense ?
Depreciation Expense 8,000
Supplies Expense 5,200
Salaries and Wages Expense ? 49,000
21. What is the amount of Salaries and Wages Payable account in the trial balance? 21. 0

22. What is the balance of Accounts Receivable in the trial balance? 22. 19, 000

23. The trial balances of Orton Company follow with the accounts arranged in alphabetic order.

Trial Balances

Unadjusted Adjusted Post-Closing

Accounts Payable P 10,000 P 10,000 P 10,000

Accounts Receivable 2,200 3,200 3,200
Accum. Depreciation-Equipment 13,000 17,000 17,000
Advertising Expense 0 16,300 0
Cash 60,000 60,000 60,000
Depreciation Expense 0 4,000 0
Equipment 75,000 75,000 75,000
Owner’s Capital 82,200 82,200 102,400
Owner’s Drawings 11,000 11,000 0
Prepaid Advertising 17,800 1,500 1,500
Prepaid Rent 15,000 11,000 11,000
Rent Expense 0 4,000 0
Service Revenue 96,000 105,000 0
Supplies 3,200 700 700
Supplies Expense 2,000 4,500 0
Unearned Service Revenue 23,000 15,000 15,000
Salaries and Wages Expense 38,000 45,000 0
Salaries and Wages Payable 0 7,000 7,000

23. What is the total debit to Income Summary to close the expense accounts? 23. 73, 800
24. At March 31, account balances after adjustments for Vizzini Cinema are as follows:

Account Balances

Accounts (After Adjustments)

Cash P 6,000
Supplies 4,000
Equipment 50,000

Accum. Depreciation-Equipment 12,000

Accounts Payable 5,000
Owner's, Capital 20,000
Owner's, Drawings 12,000
Admission Ticket Revenues 60,000
Popcorn Revenues 32,000
Candy Revenues 21,000
Advertising Expense 18,000
Supplies Expense 19,000
Depreciation Expense 4,000
Rent Expense 28,000
Salaries and Wages Expense 24,000
Utilities Expense 5,000

24. What is the balance of Income Summary account before closing to capital? 24. 15, 000
25. All revenue and expense accounts have been closed at the end of the calendar year for Patton Company. The Income
Summary account has total debits of P 520,000 and total credits of P 600,000. As of the same date, Owner's Capital has a
balance of P 115,000, and Owner's Drawings has a balance of P 48,000.

25. What is the balance of the Owner's Capital at December 31, 2022? 25. 147, 000

Based on the following data, prepare the necessary adjusting entries (in general journal form) at different calendar
period. Each entry must have date and brief explanation.

28. Interest paid on a bank loan, debited using expense method, for the period of 90 days from December 11, amounted
to P900.
Date Account Title/Explanation P Debit Credit
R
Dec. 31 Prepaid Interest 900
Interest Expense 900
To record prepaid interest.

29. Store Supplies recorded using nominal account during the year was P28,750, of this amount, P11,500 was used.
Date Account Title/Explanation P Debit Credit
R
Dec. 31 Store Supplies 17, 250
Supplies Expense 17, 250
To record store supplies on hand.

30. Insurance paid for one year using real account on September 30 was P 18,000.
Date Account Title/Explanation P Debit Credit
R
Dec. 31 Insurance Expense 4500
Prepaid Insurance 4500
To record expired insurance.
31. Rent income collected for 6 months using real account on November 1 was P30,000.
Date Account Title/Explanation P Debit Credit
R
Dec. 31 Unearned Rent Income 10, 000
Rent Income 10, 000
To record earned rent income for 2
months.

32. Equipment bought on April 1, amounting to 120,000 has a useful life of 10 years without salvage value. They use
straight-line method. The company has a policy of charging depreciation on full year basis.
Date Account Title/Explanation P Debit Credit
R
Dec. 31 Depreciation Expense - Equipment 12, 000
Accumulated Depreciation -Equipment 12, 000
To record depreciation expense for
the year.
Part III. Short Problems:
Answer the following problems within the questionnaire, write the answer space provided, but be sure to put
computations and peso sign in the answer. Make sure to read what is required in the problem. Strategize your manner
of answering so that you will be able to finish on the time allotted. Focus on the questions asked.

1. The following are selected transactions related to purchases on account and cash payments completed during April of
the current year.

Apr 1 Issued Check No. 60 in payment of rent for month, P2,400.

5 Purchased office supplies from Corazon Co., P 850.
9 Issued Check No. 61 to Daniel Co. for P9,750 for cash purchase of equipment.
10 Purchased store supplies from Erwin Co., P 425.
15 Issued Check No. 62 to Corazon Co. in payment of April
5 invoice.
17 Purchased store supplies from Palon Co., P7,500.
20 Issued Check No. 63 to Erwin Co. in payment of April 10 invoice of $425.
25 Purchased equipment from Santa Co., P7,750.
27 Issued Check No. 64 to Palon Co.for partial payment of the April 17 invoice, P4,000.
30 Purchased office supplies from Winlu Co., P400.

You may use the special journals to facilitate in recording the above transactions.

Under the cash payments journal, calculate the total debit to Accounts payable. 1. Answer: 5, 275

2. Read each transaction and match the appropriate journal that it should be recorded in;

1. Owner withdrew supplies GJ

2. Sale made on account SJ
3. Payment to vendor on account CDJ
4. Payment received from customer on account CRJ
5. Purchases on account PJ
6. Adjusting journal entry for supplies used GJ
7. Owner withdrew cash CDJ
8. Company borrows money from bank CRJ
9. Record monthly depreciation GJ
10. Close revenue accounts at month end GJ

Identify the transaction number that records in the general journal 2. Answer: 1, 6, 9, 10.
3. Marshall Supplies is a janitorial supply store. Marshall Supplies uses perpetual inventory. The following four
transactions during the month of July:

(a) On July 4th, Marshall purchases inventory for sale from Tidy Wholesalers for P8,500.00 with terms 1/10,
n/30.
 (b) On July 5th, Marshall pays Express Transfer P45 for freight-in on the July 4th order.
(c) On July 12th, Marshall buys an additional P11,985 in inventory from Tidy Wholesalers with terms 1/10, n/30.
(d) On July 22nd, Marshall pays Tidy Wholesalers the balance due.

Calculate the total cash payment on July 22. Round to nearest centavo. 3. Answer: 20, 365.15
4. Bargain Wholesalers sells pet supplies to retailers including Pet World Supplies. Bargain Wholesalers uses
perpetual inventory. The following three transactions during the month of May:

(a) On May 4th, Bargain Wholesalers sells inventory to Pet World Supplies for P8,250.00, with terms 1/10, n/30.
The cost of the merchandise is P5,755.00.
(b) On May 13th, Bargain Wholesalers sells an additional P10,985 in inventory to Pet World Supplies with terms
1/10, n/30. The cost of the merchandise is P6,925.00.
(c) On May 23rd, Bargain Wholesalers receives a check from Pet World Supplies paying the balance due.

Determine the amount of discount taken on May 23rd. Round to the nearest centavo. 3. Answer: 109.85

5. On March 15th Mister Sale sells P9,525.00 on account to Gary Bruno with terms of 2/10, n/30. The cost of
merchandise sold was P6,905.00.

On March 20th a P125.00 credit memo is given to Gary Bruno due to merchandise that was the wrong color. The cost
of the returned merchandise was P65.

On March 25th Gary Bruno submits payment in full.

Compute the cash due. 5.Answer: 9,212

6. The following information is available for Myrna Zepeda relating to his merchandising business for the period January
1 to December 31, 2021.

Merchandise Inventory December 31 P 250,000

Merchandise Inventory January 1 200,000
Freight In 62,500
Purchase returns and allowances 100,000
Sales Discounts 37,500
Selling Expenses (1/6 of the cost of sales) 625,000

Compute the cost of Total or Gross Purchases for the whole year of 2021. 6. Answer: 3,837,500
7. Before month-end adjustments are made, the February 28 trial balance of Al's Enterprise contains revenue of P9,000
and expenses of $4,800. Adjustments are necessary for the following items:

- Depreciation for February is P1,300.

- Revenue collected in advance that is now earned is P3,500.
- Portion of prepaid insurance expired during February is P 400.

Determine the correct net income for Al's Income Statement for February 7. Answer: 6,000

8. Roper Electronics received its bank statement for the month of August with an ending balance of P11,740.00. Roper
determined that check #613 for P155.00 and check #601 for P420.00 were both outstanding. Also, a P6,900.00 deposit
for August 30th was in transit as of the end of the month.

Northern Bank also collected a P5,000.00 notes receivable on August 1st that was issued March 1st at 12% annual
interest. No interest revenue has been accrued on this note and Northern Bank charged Roper a P35.00 fee for the
collection service. The bank statement reveals a bank service charge of P20.00. A custome. check for P68.00 was
returned with the bank statement marked "NSF". The ending balance of the Roper cash account is P12,938.00.

Compute the adjusted cash balance per book 8. Answer: 18,065

9. The Petty Cash Fund of Dan Company had the following details:

Check drawn from the fund payable to Eva Sia, Petty Cash Custodian. P 3,200
A check held by the custodian which is from an employee
deposited to the bank marked "NSF" (no sufficient fund),
and returned by the bank 800
Details of the petty cash vouchers which were filed by the
Petty cash custodian 2,400
Supplies, P 600; transportation, P380; gas and oil, P420;
Receivable from employees, P1,000
Coins and currency in the petty cash box 1,800

How much is the Petty Cash Fund? 9. Answer: 5,000

10. Consider the cash account below.

Additional Information: cash disbursements were 75% of collection.
Cash
? Beg. Balance
110,257.76 Collections
? Disbursements
112,567.43 End Balance

How much the Beginning Balance of the Cash Account? 10. Answer: 85,002.99

11.Using the following information:

(a) The bank statement balance is P2,936.

 (b) The cash account balance is P3,194.
(c) Outstanding checks amounted to P465.
(d) Deposits in transit are P655.
(e) The bank service charge is P50.
(f) A check for P97 for supplies was recorded as P79 in the ledger.

Calculate the adjusted cash balance for Cole Co. for May 31, 2022. 11. Answer: 3,126

12. A Company shows P22,000 of insurance expense for the fiscal year. The company records showed a balance in
prepaid insurance at the beginning of the year of P5,000 and a balance at the end of the year of P3,000

What amount of cash was paid for insurance during the year? 12. Answer: 20,000

13. Company purchased a new piece of equipment on July 1, 2020 at a cost of $900,000. The equipment has an
estimated useful life of 5 years and an estimated salvage value of P75,000. The current year end is 12/31/2022. Davis
records depreciation to the nearest month.

How much is the depreciation expense for this equipment for 2021? 13. Answer: 165,000

14. During the first year of Wilkinson Co.'s operations, all purchases were recorded as asset. Store supplies in the
amount of P19,350 were purchased. Actual year-end count amounted to P6,450. During the first year of Wilkinson Co.'s
operations, all purchases were recorded as asset.

What is the effect of this transaction in the income statement if no adjustment was made and how much?

14. Answer: Overstated by 12,900.

15. Certain information relative to the 2020 operations of Asti Co. as follows:

Accounts receivable, December 31, 2020, P33,000; Accounts receivable collected during 2020, P46,000; Cash sales
during 2020, P12,000; Accounts Receivable January 1, 2020, P24,000; Non-interest bearing note from customers
which were not honored on due date, P5000,

How much is the total merchandise sold during 2020? 15. Answer: 62,000

16. ABC Company's 2021 Income statement reported total revenues, P850,000 and total expenses (including P40,000
depreciation) of P720,000. The 2021 balance sheet reported the following: accounts receivable- beginning balance,
P50,000 and ending balance, P40,000; accounts payable-beginning balance, P22,000 and ending balance, $28,000.
Therefore, based only on this information, the 2021 net cash inflow from operating activities was
 16. Answer: 186,000

17. Goods worth P12,000 were shipped on account (2/10, n/30) to ABC Company on January 12, 2020 from XYZ
Company. The term of the shipment was FOB shipping point. XYZ Company paid freight of $950. On January 12, 2020,
P2,500 worth of merchandise was received by XYZ Co. from ABC Co. due to wrong specifications. ABC Company made a
partial payment of P5,000.

How much is the subsequent collection of XYZ Company from ABC Company assuming ABC Company paid within the
discount period?

17. Answer: 5,260

18. Given the following data for the sale transaction of Orfana Cay

List price P 142,800

Trade Discount 20%
Credit Terms, discount availed 2/10:n/30
Freight cost paid upon receipt by buyer P 5,600
Freight Terms FOB Destination
Defective merchandise returned P 9,600

Compute the amount needed to settle the transaction as stated. 18. Answer: 96,947.20

19. Based on the following data taken from the records of Inspired compute for the amount of service income that
should be reported during 2021.

Accrued service income at the beginning of the year P 20,500

Accrued service income at the end of the year 22,200
Unearned Service Income at the beginning of the year 35,600
Unearned Service Income at the end of the year 14,900
Collections from clients during the year 245,800

19. Answer: 268,200

20. From the T-account for the given situation below, post the information provided:

Insurance Expense: Reversing entry for the prepaid insurance at the beginning of the period, P 4,000; payment during
the period P 21,000; ending balance close to income summary P 20,000
 Insurance Expense

Beg. - 4,000 5,000

21, 000 Closing - 20,000

25,000 25,000

Required: Prepare the journal entry with explanation. Only entries with correct explanation will be checked

20. Answer

Account Title/Explanation Debit Credit

Prepaid Insurance 5000
Insurance Expense 5000
To record unexpired insurance portion of
Prepaid insurance.