FARHO4

Financial Accounting and Reporting HO#4
Additional Exercises note payable promising to pay the P 250,000 balance

over the next ten years.
Review #1 (Identifying Accounting Principles) c. The company purchased office equipment for P 6,000
Identify which accounting principle or assumption best cash.
describes each of the following practices: d. The company purchased P 4,000 of office supplies
a. If P 51,000 cash is paid to buy land, the land is and P 1,000 of office equipment on credit.
reported on the buyer’s balance sheet at P 51,000. e. The company paid a local newspaper P 1,000 cash for
b. Alissa Kees owns both Sailing Passions and Dockside printing an announcement of the office’s opening.
Supplies. In preparing financial statements for f. The company completed a financial plan for a client
Dockside Supplies, Kees makes sure that the and billed that client P 4,000 for the service.
expense transactions of Sailing Passions are kept g. The company designed a financial plan for another
separate from Dockside’s transactions and financial client and immediately collected an P 8,000 cash fee.
statements. h. M. Right withdrew P 1,800 cash from the company for
c. In December 201X0, Ace Landscaping received a personal use.
customer’s order and cash prepayment to install sod i. The company received P 3,000 cash as partial
at a new house that would not be ready for installation payment from the client described in transaction f.
until March 20X1. Ace should record the revenue from j. The company made a partial payment of P 500 cash
the customer order in March 20X1, not in December on the equipment purchased in transaction d.
20X0. k. The company paid P 2,500 cash for the office
secretary’s wages for this period.
Review #2 (Applying Accounting Equation)
a. Total assets of Caldwell Company equal P 40,000 and Review #5 (Applying Accounting Equation)
its equity is P 10,000. What is the amount of its On October 1, 20X1, Santana Rey launched a computer
liabilities? services company, Business Solutions, which is organized
b. Total assets of Waterworld equal P 55,000 and its as a proprietorship and provides consulting services,
liabilities and equity amounts are equal to each other. computer system installations, and custom program
What is the amount of its liabilities? What is the development. Rey adopts the calendar year for reporting
amount of its equity? purposes and expects to prepare the company’s first set
of financial statements on December 31, 20X1.
Review #3 (Applying Accounting Equation)
Lena Gold began a professional practice on June 1 and Oct.
plans to prepare financial statements at the end of each 1 S. Rey invested P 45,000 cash, a P 20,000
month. During June, Gold (the owner) completed these computer system, and P 8,000 of office equipment
transactions: in the company.
a. Owner invested P 50,000 cash in the company along 3 The company purchased P 1,420 of computer
with equipment that had a P 10,000 market value. supplies on credit from Harris Office Products.
b. The company paid P 1,600 cash for rent of office 6 The company billed Easy Leasing P 4,800 for
space for the month. services performed in installing a new Web
c. The company purchased P 12,000 of additional server.
equipment on credit (payment due within 30 days). 8 The company paid P 1,420 cash for the computer
d. The company completed work for a client and supplies purchased from Harris Office Products
immediately collected the P 2,000 cash earned. on October 3.
e. The company completed work for a client and sent a 10 The company hired Lyn Addie as a part-time
bill for P 7,000 to be received within 30 days. assistant for P 125 per day, as needed.
f. The company purchased additional equipment for P 12 The company billed Easy Leasing another P
8,000 cash. 1,400 for services performed.
g. The company paid an assistant P 2,400 cash as 15 The company received P 4,800 cash from Easy
wages for the month. Leasing as partial payment toward its account.
h. The company collected P 5,000 cash as a partial 17 The company paid P 805 cash to repair computer
payment for the amount owed by the client in equipment damaged when moving it.
transaction e. 20 The company paid P 1,728 cash for
i. The company paid P 12,000 cash to settle the liability advertisements published in the local newspaper.
created in transaction c. 22 The company received P 1,400 cash from Easy
j. Owner withdrew P 500 cash from the company for Leasing toward its account.
personal use. 28 The company billed IFM Company P 5,208 for
services performed.
Review #4 (Applying Accounting Equation) 31 The company paid P 875 cash for Lyn Addie’s
Miranda Right started Right Consulting, a new business, wages for seven days of work this month.
and completed the following transactions during its first 31 S. Rey withdrew P 3,600 cash from the company
year of operations. for personal use.
a. M. Right invests P 60,000 cash and office equipment
valued at P 30,000 in the company.
b. The company purchased a P 300,000 building to use
as an office. Right paid P 50,000 in cash and signed a

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Financial Accounting and Reporting HO#4

Additional Exercises note payable promising to pay the P 250,000 balance

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