ACTBAS1/ACCTBA1 GROUP BUSINESS CASE

2nd Term, AY 2013-2014

Source: Accounting Principles 8th Edition. Weygandt, Kieso, Kimmel
John Wiley & Sons (Asia) Pte Ltd.
BYP3-4, page 136 [Modified]
Goodwill Entertainment Center was established on April 1, 2013 by Jessa del Mar.
Jessa is a good manager but a poor accountant. From the trial balance prepared by a part-time
bookkeeper, Jessa prepared the following income statement for the year ended March 31, 2013.
Goodwill Entertainment Center
Income Statement
For the Year Ended March 31, 2013
Rental Income
Expenses
Wages Expense
Advertising Expense
Repairs and Maintenance
Utilities Expense
Depreciation Expense
Total expenses
Net income

90,000

(40,700)
49,300

29,800
5,200
4,000
900
800

Jessa thought that something was wrong with the statement because net income had
never exceeded P20,000 in any one year period. Knowing that you are an experienced
accountant, she asks you to review the income statement and other data.
You first look at the trial balance. In addition to the account balances reported above in
the income statement, the ledger contains the following additional selected balances on March
31, 2013.
Supplies on Hand
P
6,200
Prepaid Insurance
7,200
Notes Payable
12,000
You then make inquiries and discover the following:
1.
2.
3.
4.
5.
6.

Rental income include advanced rentals for summer occupancy, P15,000.

There were P1,700 of supplies on hand on March 31, 2013.
Prepaid insurance resulted from the payment of a one-year policy on January 1, 2013.
The mail on April 1, 2013 brought the following bills: advertising, P110; repairs made on
March 10, P260; and utilities, P180.
There are four employees who receive wages totaling P300 per day. On March 31, 2013, 2
days wages have been incurred but not paid.
The notes payable is a 3-month 10% note dated January 1, 2013.
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-2INSTRUCTIONS:
1.
2.
3.

Prepare the necessary adjusting journal entries as of March 31, 2013.

For each adjusting entry, explain to Jessa the particular generally accepted accounting
principle(s) that supports it.
Prepare the correct (adjusted) income statement for Goodwill Entertainment Center for the
year ended March 31, 2013.

CASE OUTLINE:
I. Introduction (Provide a brief introduction about the case. One to two pages only)
II. Report (This is the bulk of your paper)
III. Recommendation (Recommend/suggest to Jessa some important steps she has to
undertake in the future to avoid the situation she is presently in)
FORMAT:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)

Paper size: 8.5 x 11 (letter size or short-size)

Margin: 1 for all sides
Font and font size: Arial 11
Paragraph alignment: Justified
Paragraph spacing: Double-spaced
Length of written report: 5 10 pages, excluding cover page
No need for folder
The cover page should be as follows:
GOODWILL ENTERTAINMENT
CENTER
A business case
presented to the
Accountancy Department
In partial fulfillment of the
course requirements in ACTBAS1
Surname, First name, M.I.
Surname, First name, M.I.
Surname, First name, M.I.
(arranged alphabetically)
Section
Date

Deadline: TH-December 10, 2013

MW- December 16,2013

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