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Basic Accounting

Exercise 1

Corals Company is a newly incorporated research service company near a college. During the first
month of operations, February 2013, the business engages in the following transactions:

a. The company issues ordinary shares to the stockholders, who invest Php250,000 to open the
business.
b. The company purchases on account office supplies costing Php3,500.
c. The company pays cash of Php200,000 to acquire a lot next to the campus. The company
intends to use the land as a building site for a business office.
d. The company performs research for clients and receives cash of Php19,000.
e. The company pays Php1,000 on the account payable it created in transaction (b).
f. The company pays cash expenses for office rent (Php4,000) and utilities (Php1,000).
g. The company sells a small parcel of land for its cost of Php50,000.
h. The business declares and pays cash dividend of Php12,000.

Requirements:
1. Prepare journal entries for the above transactions.
2. Post transactions to the ledger and show the balance in each account after all the transactions
have been posted.
3. Prepare the trial balance at February 28, 2013.
4. Prepare the Profit and Loss Statement, and Statement of Changes in Equity for the month ended
and Balance Sheet as of February 28, 2013.




Exercise 2

The balance sheet of Tedder Co. as of March 31, 2013 is as follows:



The following transactions occurred from April to June 2013:
A. Receivable related transactions:
1. Collected P150 000 from the receivables outstanding as of March 31.
2. Total credit sales amounted to P350 000.
3. 60% of the sales were collected as of June 30.
4. Receivables of P10 000 were ascertained to be worthless and were written off.
B. Inventory related transactions:
1. Total credit purchases from April to June was P180 000.
2. Cost of goods sold was P220 000.
3. P150 000 was paid as of June 30.
C. Depreciation
The machinery and equipment are depreciated over 8 years and 10 years, respectively.
D. Fair Value (FV): Trading Securities/Available for Sale Securities(AFS)
1. Half of the amount of the trading securities was sold for
P270 000.
2. As of June 30, the fair value of the remaining trading securities was P280 000.
3. The available-for-sale securities have a fair value of P620 000 as of June 30.
E. Other transactions
4. Supplies: At the end of June, P80 000 of the supplies were still unused
5. Salaries: Salaries incurred and paid amounted to P40 00
6. Utilities: Utilities paid totaled P10 000.
7. Dividends: Tedder Co. paid dividends to its stockholders, P20 000.

Requirements:
1. Prepare journal entries (JEs) for the above transactions.
2. Post transactions to the ledger and show the balance in each account after all the transactions
have been posted.
3. Prepare the trial balance at June 30, 2013.
4. Prepare the Profit and Loss Statement, and Statement of Changes in Equity for the month ended
and Balance Sheet as of June 30, 2013.

Exercise 3
Tedder Co. (Continuation of Exercise 2)


The following transactions occurred from July to September 2013:


A. Accounts Receivables

1. Collected P75,000 from the receivables outstanding as of June 30.

2. Total credit sales amounted to P200,000. Half of the sales were collected as of September 30.
3. Receivables amounting to P25,000 were ascertained to be worthless and uncollectable.


B. Inventory

1. Payables amounting to P105,000 were paid as of of September 30.

2. Total credit purchases amounted to P90,000. All was paid as of September 30.

3. Cost of good sold is P140,000.


C. Depreciation

1. No change in the depreciation method and useful lives used by the Company.


D. Fair value Adjustments: Trading Securities/Available for Sale Securities

1. Further sale of of trading securities with book value of P120,000 was sold for P100,000.

2. Remaining trading securities as of September 30 are valued at 110%.

3. Available for sale securities valued at 90%.


E. Other Transactions

1. Unused supplies as of September 30 is P60,000.

2. Salaries incurred and paid amounted to P35,000.

3. Total utilities paid totaled P7,500.

4. Tedders declared and paid dividends of P15,000 to its stockholders.

Requirements:
1. Prepare journal entries for the above transactions.
2. Post transactions to the ledger and show the balance in each account after all the transactions have been
posted.
3. Prepare the trial balance at September 30, 2013.
4. Prepare the Profit and Loss Statement, and Statement of Changes in Equity for the three months ended
and Balance Sheet as of September 30, 2013.