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Lecture #2

Business Transaction and the Accounting Cycle

Business Activities- transaction and events

External Transaction
-exchanges between two
entities.
e.g.
1. Purchase of Office
Supplies
2. Acquisition of Office and
Store Supplies on Credit
3. Payment for business and
operating expenses.
4. Payment of Accounts
Payable.
5. Rendering of Services for
Cash
6. Selling of Goods on
credit.
4. Collection of Accounts
receivable.
Example Company
Statement of Financial Position (Balance Sheet) -Balance Sheet Accounts are
As of December 31, 2014 real or permanent account
-Its ending balance is carried
into the next accounting period
and is not closed.
Assets Liability
Cash and cash Equivalent xx Accounts Payable xx
Investments xx Notes Payable xx
Accounts Receivable xx Unearned Revenue/Deferred Revenue xx
Allowance for Doubtful Account (xx) xx Accrued Expenses xx
Notes Receivable xx Total Liablity xx
Merchandise Inventory xx
Prepaid Expenses xx Equity
Unused Store and Office Supplies xx Owner, Capital xx
Property Plant and Equipment xx Owner, Withdrawal (xx)
Intangible Asset xx Total Equity xx
xx Tota Liability and Owner's Equity xx

Example Company
Statement of Financial Performance (Income Statement)
For the Period Ended December 31, 2014
-Income Statement accounts are temporary
Income /Revenue or nominal account.
Service Revenue xx -They are accounts that are opened at the
beginning of a period and then closed at the
Sales xx end of the period
Gains xx Note: Closing process applies only to
temporary accounts e.g. Withdrawals and
Other Income xx Income /Summary Account.
Gross Income xx
Less: Expenses
Office or Administrative Expenses xx
Office Rent Expense xx
Office Salaries Expense xx
Insurance Expense xx
Utility Expense xx
Depreciation Expense-Furniture and Fixtures xx
Depreciation Expense-Equipment xx
Depreciation Expense-Office Building xx
Office Supplies Expense xx xx
Selling Expense
Store Rent Expense xx
Store Salries Expense xx
Advertising and Promotion Expense xx
Depreciation Expense-Store Furniture and Fix xx
Depreciation Expense-Store Equipment xx
Depreciation Expense-Store Building xx
Store Supplies xx xx
Other Expenses
Losses xx
Miscellaneous Expenses xx xx
Finance Cost
Interest Expense xx
Total Expenses xx
Net Income xx
Effects of transaction in the Accounting Equation
Owner's Equity
Transactions Journal Entry (Capital-
Withdrawal+Revenue-
Asset = Liability + Expenses)
DR CR
1 The owner made initial investment of 500,000.00 Cash Capital 500,000.00 500,000.00
2 The owner made additional investment of 400,000 Cash Capital 400,000.00 400,000.00
3 Rendered Services for Cash 256,000 Cash Service Revenue 256,000.00 256,000.00
4 Rendered Services on Account 400,000 AR Service Revenue 400,000.00 400,000.00
5 Purchase office Furniture on account 75,000 Office Furniture AP 75,000.00 75,000.00
6 Payment of Salaries Expense 120,000 Salaries Expense Cash (120,000.00) (120,000.00)
7 Owner withdrew cash amounting to 50,000 Owners, Witdrawal Cash (50,000.00) (50,000.00)
8 Payment of Accounts Payable related to Transaction #5 AP Cash (75,000.00) (75,000.00)
9 Purchase of Office Supplies for Cash 35,000.00 Office Supplies Cash 35,000.00
(35,000.00)
Total 1,386,000.00 - 1,386,000.00

Asset decrease
when
Asset increase 1. There are
when withdrawals by
1. There are the owner.
investment by 2. Payment of Liabilities Equity
the owner in expenses for increase when decrease
the form of cash payment 1. There is a Equity increase when
Liabilities when 1. There is
cash and non of assets like purchase of decrease
cash asset. PPE and Inv. supplies and 1. There is withdrawals
when additional and incurring
2. Rendering of 3. Payment of PPE on 1. There is
Services for Accounts account or investment by of business
payment of expenses
cash or on Payable/NP bank the owner
AP, NP and
account. 4. Payment of borrowings. 2. There is sale
related
3. Purchase of Accrued 2. There is an of goods and
payable acct..
an asset on Expenses. accrual of services in
account or cash business cash or on
basis expenses account
3. There is a
receipt of
Unearned
/deferred
revenue

The Nature of Debit and Credit


Account Title
Left Side Right Side
Debit (DR) Credit (CR)
This is called the T-
This is a tool used to understand the effects of one or Account which represents
more transaction. a ledger account.
Double Entry Accounting -every transaction be recorded
in at least two accounts,the total amount of debit
should equals the total amount of credit, following the
accounting equation.

Debit and Credits Effects for the Component Account


Now, here is the rule: To increase an asset, you debit it; to decrease an asset, you credit it. The opposite applies to liabilities and capital.
To increase a liability or a capital account, you credit it; to decrease a liability or capital account, you debit it. 
Expenses are debited when incurred and income is credited when earned. Here's a table to summarize that:
Accounting
Normal Balance Element To Increase To Decrease
DR 1. Asset Debit Credit
CR 2. Liability Credit Debit
3. Capital 
CR investment Credit Debit
4. Capital 
DR withdrawal Debit Credit
CR 5. Income Credit Debit
DR 6. Expense Debit Credit
Tip: If you are having a hard time remembering the table above, you actually only need to familiarize yourself with the
To Increase part. The action to decrease the accounts is simply the opposite of the action to increase them.
The Accounting Records of Business Entitiy The Accounting Cycle

1. Analysis of Business Transaction


Source documents is analyze by the accountant as to the impact
1. Source Documents- of a given transaction on A, L, OE, R, E
e.g. Official Receipts, Sales Invoices, Purchase Invoices 2. Journalize- records transaction in chronological order in the
and debit and credit memorandum
journal.
3. Posting-transfer debit and credits from Journal to the ledger.
4. Prepare unadjusted TB
5. Prepare and Post the adjusting Entries
6. Prepare adjusted Trial Balace
7. Prepare Financial Statement
2. Book of Original Entry-
it refers to the journal where transactions are 8. Prepare and post closing entries
recorded in a chronological order 9. Prepare Post Closing Trial Balance
10. Prepare the reversing entries (optional)
Special Journals
a. Sales Journal-it records only the sales of goods on
credit.
b. Purchase journal-it records the purchase of
merchandise on credit.
c. CashReceipt Journal-used to record the receipt of
cash.
d. Cash Disbursement journal-used to record
payments in cash

Books of Final Entry-these are general ledgers and


subsidiary ledgers.

General Ledger -is a group of many accounts and


record of informationfor each asset, liab, equity,
revenue and expense account.

Subsidiary Ledger- is a deviced used in storing the


details of certain GL account.

Note: Account that requires Subsidiary Ledger


includes AR and AP
ACCOUNTING FOR PAYROLL
Elite General Enterprise
General Payroll
September 16-30, 2017

SSS Philhealth Witholding Pag-Ibig Total


Name of Employee Tax Status Monthly Salary Semi Monthly Contributions Contributions Taxes Contributions Deduction Net Pay
Karen Bernardo M 35,000.00 17,500.00 581.30 481.25 1,184.09 100.00 2,346.64 15,153.36
Danny Padilla HDF 25,000.00 12,500.00 454.20 343.75 237.01 100.00 1,134.96 11,365.04
Jane Reid S 12,000.00 6,000.00 345.20 165.00 - 100.00 610.20 5,389.80
Choo Martin M1 24,000.00 12,000.00 436.00 330.00 143.40 100.00 1,009.40 10,990.60
Jan Ilustre HDF 9,500.00 4,750.00 345.20 130.63 - 100.00 575.83 4,174.18

-
Total 105,500.00 52,750.00 2,161.90 1,450.63 1,564.50 500.00 5,677.03 47,072.98

Karen Bernardo Danny Padilla James Reid


Gross Semi Monthly Pay 17,500.00 Gross Semi Monthly Pay 12,500.00 Gross Semi Monthly Pay 6,000.00
Less: SSS Contribution (581.30) Less: SSS Contribution (454.20) Less: SSS Contribution (345.20)
PHIC (481.25) PHIC (343.75) PHIC (165.00)
PAG-IBIG (100.00) PAG-IBIG (100.00) PAG-IBIG (100.00)
Taxable Pay 16,337.45 Taxable Pay 11,602.05 Taxable Pay 5,389.80

Taxable Pay 16,337.45 Taxable Pay 11,602.05 Taxable Pay 5,389.80


On (See Table) (10,417.00) On (See Table) (10,417.00) On (See Table) -
Subtotal 5,920.45 Subtotal 1,185.05 Subtotal 5,389.80
Multiply by 20% Multiply by 20% Multiply by 0%
Subtotal 1,184.09 Subtotal 237.01 Subtotal -
Add - Add - Add -
Witholding Tax 1,184.09 Witholding Tax 237.01 Witholding Tax -

Choo Martin - Jan Ilustre


Gross Semi Monthly Pay 12,000.00 Gross Semi Monthly Pay 4,750.00
Less: SSS Contribution (436.00) Less: SSS Contribution (345.20)
PHIC (330.00) PHIC (130.63)
PAG-IBIG (100.00) PAG-IBIG (100.00)
Taxable Pay 11,134.00 Taxable Pay 4,174.18

Taxable Pay 11,134.00 Taxable Pay 4,174.18


On (See Table) (10,417.00) On (See Table) -
Subtotal 717.00 Subtotal 4,174.18
Multiply by 20% Multiply by 0%
Subtotal 143.40 Subtotal -
Add - Add -
Witholding Tax 143.40 Witholding Tax -

Journal Entry

Salary Expense 52,750.00


SSS Contribution Payable 2,161.90
Witholding Tax Payable 1,564.50
Philhealth Contribution Payable 1,450.63
Pag-Ibig Payable 500.00
Cash 47,072.98

Employer Contribution Table


Monthly Salary SSS Philhealth
Name of Employee Credit Contributions Contributions EC Pag-Ibig Total
Karen Bernardo 30,000.00 1,208.70 481.25 30.00 100.00 1,819.95
Danny Padilla 25,000.00 930.80 343.75 10.00 100.00 1,384.55
Jane Reid 14,000.00 709.80 165.00 10.00 100.00 984.80
Choo Martin 14,500.00 894.00 330.00 10.00 100.00 1,334.00
Jan Ilustre 8,500.00 709.80 130.63 10.00 100.00 950.43
Total 4,453.10 1,450.63 70.00 500.00 6,473.73

Journal Entry
SSS Contribution Expense 4,453.10
Philhealth Contribution Expense 1,450.63
EC Contribution Expense 70.00
Pag-Ibig Contribution Expense 500.00
SSS Contribution Payable 4,453.10
Philhealth Contribution Payable 1,450.63
EC Contribution Payable 70.00
Pag-Ibig Contribution Payable 500.00
-
To record employer's share in various payroll deduction
ACCOUNTING FOR PAYROLL
Elite General Enterprise
General Payroll
September 16-30, 2017

SSS Philhealth Witholding Pag-Ibig Total


Name of Employee Monthly Salary Monthly Salary Contributions Contributions Taxes Contributions Deduction Net Pay
Gadhel Suarez 58,717.00 58,717.00 581.30 807.36 8,473.84 100.00 9,962.49 48,754.51
Lina Acama 52,554.00 52,554.00 581.30 722.62 6,954.27 100.00 8,358.19 44,195.81
Gbeth Rivera 42,099.00 42,099.00 581.30 578.86 4,376.46 100.00 5,636.62 36,462.38
Cyannide Go 29,010.00 29,010.00 581.30 398.89 1,419.36 100.00 2,499.55 26,510.45
Jess Samsom 24,224.00 24,224.00 581.30 333.08 475.32 100.00 1,489.70 22,734.30

-
Total 206,604.00 206,604.00 2,906.50 2,840.81 21,699.25 500.00 27,946.56 178,657.44

Gadhel Suarez Lina Acama Gbeth Rivera


Gross Monthly Pay 58,717.00 Gross Monthly Pay 52,554.00 Gross Monthly Pay 42,099.00
Less: SSS Contribution (581.30) Less: SSS Contribution (581.30) Less: SSS Contribution (581.30)
PHIC (807.36) PHIC (722.62) PHIC (578.86)
PAG-IBIG (100.00) PAG-IBIG (100.00) PAG-IBIG (100.00)
Taxable Pay 57,228.34 Taxable Pay 51,150.08 Taxable Pay 40,838.84

Taxable Pay 57,228.34 Taxable Pay 51,150.08 Taxable Pay 40,838.84


On (See Table) (33,333.00) On (See Table) (33,333.00) On (See Table) (33,333.00)
Subtotal 23,895.34 Subtotal 17,817.08 Subtotal 7,505.84
Multiply by 25% Multiply by 25% Multiply by 25%
Subtotal 5,973.84 Subtotal 4,454.27 Subtotal 1,876.46
Add 2,500.00 Add 2,500.00 Add 2,500.00
Witholding Tax 8,473.84 Witholding Tax 6,954.27 Witholding Tax 4,376.46

Cyannide Go - Jess Samsom


Gross Monthly Pay 29,010.00 Gross Monthly Pay 24,224.00
Less: SSS Contribution (581.30) Less: SSS Contribution (581.30)
PHIC (398.89) PHIC (333.08)
PAG-IBIG (100.00) PAG-IBIG (100.00)
Taxable Pay 27,929.81 Taxable Pay 23,209.62

Taxable Pay 27,929.81 Taxable Pay 23,209.62


On (See Table) (20,833.00) On (See Table) (20,833.00)
Subtotal 7,096.81 Subtotal 2,376.62
Multiply by 20% Multiply by 20%
Subtotal 1,419.36 Subtotal 475.32
Add - Add -
Witholding Tax 1,419.36 Witholding Tax 475.32

Journal Entry

Salary Expense 206,604.00


SSS Contribution Payable 2,906.50
Witholding Tax Payable 21,699.25
Philhealth Contribution Payable 2,840.81
Pag-Ibig Payable 500.00
Cash 178,657.44

Employer Contribution Table


Monthly Salary SSS Philhealth
Name of Employee Credit Contributions Contributions EC Pag-Ibig Total
Gadhel Suarez 58,717.00 1,208.70 807.36 30.00 100.00 2,146.06
Lina Acama 52,554.00 1,208.70 722.62 30.00 100.00 2,061.32
Gbeth Rivera 42,099.00 1,208.70 578.86 30.00 100.00 1,917.56
Cyannide Go 29,010.00 1,208.70 398.89 30.00 100.00 1,737.59
Jess Samsom 24,224.00 1,208.70 333.08 30.00 100.00 1,671.78
Total 6,043.50 2,840.81 150.00 500.00 9,534.31

Journal Entry
SSS Contribution Expense 6,043.50
Philhealth Contribution Expense 2,840.81
EC Contribution Expense 150.00
Pag-Ibig Contribution Expense 500.00
SSS Contribution Payable 6,043.50
Philhealth Contribution Payable 2,840.81
EC Contribution Payable 150.00
Pag-Ibig Contribution Payable 500.00
-
To record employer's share in various payroll deduction
ACCOUNTING FOR PAYROLL
Rex Trading
General Payroll
April 16-30, 2014

SSS Philhealth Witholding Pag-Ibig Total


Name of Employee Tax Status Monthly Salary Semi Monthly Contributions Contributions Taxes Contributions Deduction Net Pay
Brad Pit ME2 30,000.00 15,000.00 581.30 375.00 1,923.43 100.00 2,979.73 12,020.28
Mandy Moore HDF 25,000.00 12,500.00 581.30 312.50 1,834.80 100.00 2,828.60 9,671.40
Ruffa Mae Quinto S 10,000.00 5,000.00 363.30 125.00 265.98 100.00 854.28 4,145.73
Anabelle Reyes ME1 14,500.00 7,250.00 526.80 175.00 435.41 100.00 1,237.21 6,012.79
Dennis Trillo ME1 8,500.00 4,250.00 308.80 100.00 40.75 100.00 549.55 3,700.45
Willie Revilla ME2 8,500.00 4,250.00 308.80 100.00 - 100.00 508.80 3,741.20
Gloria Moran S 10,000.00 5,000.00 363.30 125.00 265.98 100.00 854.28 4,145.73
-
Total 106,500.00 53,250.00 3,033.60 1,312.50 4,766.34 700.00 9,812.44 43,437.57

Brad Pit Mandy Moore Ruffa Mae Quinto


Gross Semi Monthly Pay 15,000.00 Gross Semi Monthly Pay 12,500.00 Gross Semi Monthly Pay 5,000.00
Less: SSS Contribution (581.30) Less: SSS Contribution (581.30) Less: SSS Contribution (363.30)
PHIC (375.00) PHIC (312.50) PHIC (125.00)
PAG-IBIG (100.00) PAG-IBIG (100.00) PAG-IBIG (100.00)
Taxable Pay 13,943.70 Taxable Pay 11,506.20 Taxable Pay 4,411.70

Taxable Pay 13,943.70 Taxable Pay 11,506.20 Taxable Pay 4,411.70


On (See Table) (10,000.00) On (See Table) (7,917.00) On (See Table) (3,333.00)
Subtotal 3,943.70 Subtotal 3,589.20 Subtotal 1,078.70
Multiply by 25% Multiply by 25% Multiply by 15%
Subtotal 985.93 Subtotal 897.30 Subtotal 161.81
Add 937.50 Add 937.50 Add 104.17
Witholding Tax 1,923.43 Witholding Tax 1,834.80 Witholding Tax 265.98

Annabelle Reyes - Dennis Trillo Willi Revilla


Gross Semi Monthly Pay 7,250.00 Gross Semi Monthly Pay 4,250.00 Gross Semi Monthly Pay 4,250.00
Less: SSS Contribution (526.80) Less: SSS Contribution (308.80) Less: SSS Contribution (308.80)
PHIC (175.00) PHIC (100.00) PHIC (100.00)
PAG-IBIG (100.00) PAG-IBIG (100.00) PAG-IBIG (100.00)
Taxable Pay 6,448.20 Taxable Pay 3,741.20 Taxable Pay 3,741.20

Taxable Pay 6,448.20 Taxable Pay 3,741.20 Taxable Pay 3,741.20


On (See Table) (6,042.00) On (See Table) (3,542.00) On (See Table) -
Subtotal 406.20 Subtotal 199.20 Subtotal 3,741.20
Multiply by 20% Multiply by 10% Multiply by 0%
Subtotal 81.24 Subtotal 19.92 Subtotal -
Add 354.17 Add 20.83 Add -
Witholding Tax 435.41 Witholding Tax 40.75 Witholding Tax -

Gloria Moran
Gross Semi Monthly Pay 5,000.00 Journal Entry
Less: SSS Contribution (363.30)
PHIC (125.00) Salary Expense 53,250.00
PAG-IBIG (100.00) SSS Contribution Payable 3,033.60
Taxable Pay 4,411.70 Witholding Tax Payable 4,766.34
Philhealth Contribution Payable 1,312.50
Taxable Pay 4,411.70 Pag-Ibig Payable 700.00
On (See Table) (3,333.00) Cash 43,437.57
Subtotal 1,078.70
Multiply by 15%
Subtotal 161.81
Add 104.17
Witholding Tax 265.98

Employer Contribution Table


Monthly Salary SSS Philhealth
Name of Employee Credit Contributions Contributions EC Pag-Ibig Total
Brad Pit 30,000.00 1,208.70 375.00 30.00 100.00 1,713.70
Mandy Moore 25,000.00 1,208.70 312.50 30.00 100.00 1,651.20
Ruffa Mae Quinto 14,000.00 1,041.30 175.00 10.00 100.00 1,326.30
Anabelle Reyes 14,500.00 1,078.70 175.00 10.00 100.00 1,363.70
Dennis Trillo 8,500.00 636.20 100.00 10.00 100.00 846.20
Willie Revilla 8,500.00 636.20 100.00 10.00 100.00 846.20
Gloria Moran 10,000.00 746.70 125.00 10.00 100.00 981.70
Total 6,556.50 1,362.50 110.00 700.00 8,729.00

Journal Entry
SSS Contribution Expense 6,556.50
Philhealth Contribution Expense 1,362.50
EC Contribution Expense 110.00
Pag-Ibig Contribution Expense 700.00
SSS Contribution Payable 6,556.50
Philhealth Contribution Payable 1,362.50
EC Contribution Payable 110.00
Pag-Ibig Contribution Payable 700.00
-
To record employer's share in various payroll deduction
Rich Trading
General Payroll
April 16-30, 2014
1)

SSS Philhealth Witholding Pag-Ibig Total


Name of Employee Tax Status Monthly Salary Semi Monthly Contributions Contributions Taxes Contributions Deduction Net Pay
Jaime Lopez M 35,000.00 17,500.00 581.30 437.50 3,247.69 100.00 4,366.49 13,133.51
Claire Dy S 25,000.00 12,500.00 581.30 312.50 1,834.80 100.00 2,828.60 9,671.40
Jessica Santos S 12,000.00 6,000.00 436.00 150.00 416.97 100.00 1,102.97 4,897.03
Dino Santiago M+1 24,000.00 12,000.00 581.30 300.00 1,452.68 100.00 2,433.98 9,566.03
Susan Haw S+1 9,500.00 4,750.00 345.20 112.50 794.26 100.00 1,351.96 3,398.04
Cindy Lopez M+2 9,500.00 4,750.00 345.20 112.50 1.27 100.00 558.97 4,191.04
Margie Diaz S 10,000.00 5,000.00 363.30 125.00 1,265.88 100.00 1,854.18 3,145.83
-
Total 125,000.00 62,500.00 3,233.60 1,550.00 9,013.54 700.00 14,497.14 48,002.87

Jaime Lopez Claire Dy Jessica Santos


Gross Semi Monthly Pay 17,500.00 Gross Semi Monthly Pay 12,500.00 Gross Semi Monthly Pay 6,000.00
Less: SSS Contribution (581.30) Less: SSS Contribution (581.30) Less: SSS Contribution (436.00)
PHIC (437.50) PHIC (312.50) PHIC (150.00)
PAG-IBIG (100.00) PAG-IBIG (100.00) PAG-IBIG (100.00)
Taxable Pay 16,381.20 Taxable Pay 11,506.20 Taxable Pay 5,314.00

Taxable Pay 16,381.20 Taxable Pay 11,506.20 Taxable Pay 5,314.00


On (See Table) (12,500.00) On (See Table) (7,917.00) On (See Table) (5,000.00)
Subtotal 3,881.20 Subtotal 3,589.20 Subtotal 314.00
Multiply by 30% Multiply by 25% Multiply by 20%
Subtotal 1,164.36 Subtotal 897.30 Subtotal 62.80
Add 2,083.33 Add 937.50 Add 354.17
Witholding Tax 3,247.69 Witholding Tax 1,834.80 Witholding Tax 416.97

Dino Santiago - Susan Haw Cindy Lopez


Gross Semi Monthly Pay 12,000.00 Gross Semi Monthly Pay 4,750.00 Gross Semi Monthly Pay 4,750.00
Less: SSS Contribution (581.30) Less: SSS Contribution (345.20) Less: SSS Contribution (345.20)
PHIC (300.00) PHIC (112.50) PHIC (112.50)
PAG-IBIG (100.00) PAG-IBIG (100.00) PAG-IBIG (100.00)
Taxable Pay 11,018.70 Taxable Pay 4,192.30 Taxable Pay 4,192.30

Taxable Pay 11,018.70 Taxable Pay 4,192.30 Taxable Pay 4,192.30


On (See Table) (8,958.00) On (See Table) 3,542.00 On (See Table) (4,167.00)
Subtotal 2,060.70 Subtotal 7,734.30 Subtotal 25.30
Multiply by 25% Multiply by 10% Multiply by 5%
Subtotal 515.18 Subtotal 773.43 Subtotal 1.27
Add 937.50 Add 20.83 Add -
Witholding Tax 1,452.68 Witholding Tax 794.26 Witholding Tax 1.27

Margie Diaz
Gross Semi Monthly Pay 5,000.00 Journal Entry
Less: SSS Contribution (363.30)
PHIC (125.00) Salary Expense 62,500.00
PAG-IBIG (100.00) SSS Contribution Payable 3,233.60
Taxable Pay 4,411.70 Witholding Tax Payable 9,013.54
Philhealth Contribution Payable 1,550.00
Taxable Pay 4,411.70 Pag-Ibig Payable 700.00
On (See Table) 3,333.00 Cash 48,002.87
Subtotal 7,744.70
Multiply by 15% To record Payment of Salaries for the period April 16-30 , 2014
Subtotal 1,161.71
Add 104.17
Witholding Tax 1,265.88

2) Employer Contribution Table

Monthly SSS Philhealth


Name of Employee Salary Credit Contributions Contributions EC Pag-Ibig Total
Jaime Lopez 35,000.00 1,208.70 437.50 30.00 100.00 1,776.20
Claire Dy 25,000.00 1,208.70 312.50 30.00 100.00 1,651.20
Jessica Santos 12,000.00 894.00 150.00 10.00 100.00 1,154.00
Dino Santiago 24,000.00 1,208.70 300.00 30.00 100.00 1,638.70
Susan Haw 9,500.00 709.80 112.50 10.00 100.00 932.30
Cindy Lopez 9,500.00 709.80 112.50 10.00 100.00 932.30
Margie Diaz 10,000.00 746.70 125.00 10.00 100.00 981.70

Total 6,686.40 1,550.00 130.00 700.00 9,066.40


3) Journal Entry

SSS Contribution Expense 6,686.40


Philhealth Contribution Expense 1,550.00
EC Contribution Expense 130.00
Pag_Ibig Contribution Expense 700.00
SSS Contribution Payable 6,686.40
Philhealth Contribution Payable 1,550.00
EC Contribution Payable 130.00
Pag-Ibig Contribution Payable 700.00
-
To record employer's share in various payroll deduction
Sweet life
General Payroll
June 16-30, 2017
1)

SSS Philhealth Witholding Pag-Ibig Total


Name of Employee Tax Status Monthly Salary Semi Monthly Contributions Contributions Taxes Contributions Deduction Net Pay
Richard Gomez M2 50,000.00 25,000.00 581.30 687.50 2,991.05 100.00 4,359.85 20,640.15
Wilma Doesn’t HDF 28,000.00 14,000.00 581.30 385.00 503.34 100.00 1,569.64 12,430.36
Carina Cruz S 48,000.00 24,000.00 581.30 660.00 2,747.93 100.00 4,089.23 19,910.78
Anabelle Yilmaz M2 20,500.00 10,250.00 581.30 281.88 - 100.00 963.18 9,286.83
Carlo Rimas S 10,500.00 5,250.00 381.50 144.38 - 100.00 625.88 4,624.13
Esther Joy Dek M1 11,500.00 5,750.00 417.80 158.13 - 100.00 675.93 5,074.08
Miguel Vera S 23,000.00 11,500.00 472.30 316.25 38.89 100.00 927.44 10,572.56
-
Total 191,500.00 95,750.00 3,596.80 2,633.13 6,281.21 700.00 13,211.13 82,538.87

Richard Gomez Wilma Doesn’t Carina Cruz


Gross Semi Monthly Pay 25,000.00 Gross Semi Monthly Pay 14,000.00 Gross Semi Monthly Pay 24,000.00
Less: SSS Contribution (581.30) Less: SSS Contribution (581.30) Less: SSS Contribution (581.30)
PHIC (687.50) PHIC (385.00) PHIC (660.00)
PAG-IBIG (100.00) PAG-IBIG (100.00) PAG-IBIG (100.00)
Taxable Pay 23,631.20 Taxable Pay 12,933.70 Taxable Pay 22,658.70

Taxable Pay 23,631.20 Taxable Pay 12,933.70 Taxable Pay 22,658.70


On (See Table) (16,667.00) On (See Table) (10,417.00) On (See Table) (16,667.00)
Subtotal 6,964.20 Subtotal 2,516.70 Subtotal 5,991.70
Multiply by 25% Multiply by 20% Multiply by 25%
Subtotal 1,741.05 Subtotal 503.34 Subtotal 1,497.93
Add 1,250.00 Add - Add 1,250.00
Witholding Tax 2,991.05 Witholding Tax 503.34 Witholding Tax 2,747.93

Annabelle Yilmaz - Carlo Rimas Esther Joy Dek


Gross Semi Monthly Pay 10,250.00 Gross Semi Monthly Pay 5,250.00 Gross Semi Monthly Pay 5,750.00
Less: SSS Contribution (581.30) Less: SSS Contribution (381.50) Less: SSS Contribution (417.80)
PHIC (281.88) PHIC (144.38) PHIC (158.13)
PAG-IBIG (100.00) PAG-IBIG (100.00) PAG-IBIG (100.00)
Taxable Pay 9,286.83 Taxable Pay 4,624.13 Taxable Pay 5,074.08

Taxable Pay 9,286.83 Taxable Pay 4,624.13 Taxable Pay 5,074.08


On (See Table) - On (See Table) - On (See Table) -
Subtotal 9,286.83 Subtotal 4,624.13 Subtotal 5,074.08
Multiply by 0% Multiply by 0% Multiply by 0%
Subtotal - Subtotal - Subtotal -
Add - Add - Add -
Witholding Tax - Witholding Tax - Witholding Tax -

Miguel Vera
Gross Semi Monthly Pay 11,500.00 Journal Entry
Less: SSS Contribution (472.30)
PHIC (316.25) Salary Expense 95,750.00
PAG-IBIG (100.00) SSS Contribution Payable 3,596.80
Taxable Pay 10,611.45 Witholding Tax Payable 6,281.21
Philhealth Contribution Payable 2,633.13
Taxable Pay 10,611.45 Pag-Ibig Payable 700.00
On (See Table) (10,417.00) Cash 82,538.87
Subtotal 194.45
Multiply by 20% To record Payment of Salaries for the period June 16-30 , 2017
Subtotal 38.89
Add -
Witholding Tax 38.89

2) Employer Contribution Table

Monthly SSS Philhealth


Name of Employee Salary Credit Contributions Contributions EC Pag-Ibig Total
Richard Gomez 50,000.00 1,208.70 687.50 30.00 100.00 2,026.20
Wilma Doesn’t 28,000.00 1,208.70 385.00 30.00 100.00 1,723.70
Carina Cruz 18,000.00 1,208.70 247.50 10.00 100.00 1,566.20
Anabelle Yilmaz 20,500.00 1,208.70 281.88 30.00 100.00 1,620.58
Carlo Rimas 10,500.00 783.50 144.38 10.00 100.00 1,037.88
Esther Joy Dek 11,500.00 857.20 158.13 10.00 100.00 1,125.33
Miguel Vera 13,000.00 967.70 178.75 10.00 100.00 1,256.45

Total 7,443.20 2,083.13 130.00 700.00 10,356.33


3) Journal Entry
SSS Contribution Expense 7,443.20
Philhealth Contribution Expense 2,083.13
EC Contribution Expense 130.00
Pag_Ibig Contribution Expense 700.00
SSS Contribution Payable 7,443.20
Philhealth Contribution Payable 2,083.13
EC Contribution Payable 130.00
Pag-Ibig Contribution Payable 700.00
-
To record employer's share in various payroll deduction
Rich Trading
General Payroll
April 16-30, 2014

Name of Employee Tax Status Monthly Salary Semi Monthly SSS Contributions
Jaime Lopez M 35,000.00 17,500.00 581.30
Claire Dy S 25,000.00 12,500.00 581.30
Jessica Santos S 12,000.00 6,000.00 436.00
Dino Santiago M+1 24,000.00 12,000.00 581.30
Susan Haw S+1 9,500.00 4,750.00 345.20
Cindy Lopez M+2 9,500.00 4,750.00 345.20
Margie Diaz S 10,000.00 5,000.00 363.30

Total 125,000.00 62,500.00 3,233.60

Jaime Lopez- Married Claire Dy-S


Gross Semi Monthly Pay 17,500.00 Gross Semi Monthly Pay
Less: SSS Contribution (581.30) Less: SSS Contribution
PHIC (437.50) PHIC
PAG-IBIG (100.00) PAG-IBIG
Taxable Pay 16,381.20 Taxable Pay

Taxable Pay 16,381.20 Taxable Pay


On (12,500.00) On
Subtotal 3,881.20 Subtotal
Multiply by 30% Multiply by
Subtotal 1,164.36 Subtotal
Add 2,083.33 Add
Witholding Tax 3,247.69 Witholding Tax
Rich Trading
General Payroll
April 16-30, 2014

Philhealth Contributions Witholding Taxes Pag-Ibig Contributions Total Deduction


437.50 3,247.69 100.00 4,366.49
312.50 1,834.80 100.00 2,828.60
150.00 416.97 100.00 1,102.97
300.00 100.00 981.30
112.50 100.00 557.70
112.50 100.00 557.70
125.00 100.00 588.30
-
1,550.00 5,499.46 700.00 10,983.06

Jessica Santos-S
mi Monthly Pay 12,500.00 Gross Semi Monthly Pay
Contribution (581.30) Less: SSS Contribution
(312.50) PHIC
(100.00) PAG-IBIG
11,506.20 Taxable Pay

11,506.20 Taxable Pay


(7,917.00) On
3,589.20 Subtotal
25% Multiply by
897.30 Subtotal
937.50 Add
1,834.80 Witholding Tax
Net Pay
13,133.51
9,671.40
4,897.03
11,018.70
4,192.30
4,192.30
4,411.70

51,516.94

emi Monthly Pay 6,000.00


SS Contribution (436.00)
(150.00)
(100.00)
5,314.00

5,314.00
(5,000.00)
314.00
20%
62.80
354.17
416.97
East System Colleges of Rizal
R. Palma St. San Pedro Morong, Rizal
Fundamentals of Accounting

Multiple Choice (Nos. 1-5)

Property , Plant & Equipment include:


a. Deposits on machinery not yet received. c. Land held for possible use as future plant site
b. Idle Equipment awaiting sale. d. Newly aquired equipment used in the business.
Which of the following is not a major characteristics of Property Plant and Equipment?:
a. Possesses physical substance c. Acquired for use
b. Aquired for resale d. Yield services over a number of years.
Dpreciation is
a. A cash expense c. Land held for possible use as future plant site
b. A process of valuation d. Newly aquired equipment used in the business.
Alex Company acquired a new machinery for cash. The debit to the machinery account should include:
a. Purchase Price c. Installation Cost
b. The Freight Cost d. All of these
Rullen Company purchased a brand new machinery with invoice /purchase price of P 40,000. In addition , the incidental
expense prior to the use of machinery are s follows
Freight 1,000.00
Installation Cost 45,000.00
insurance Premiums paid while in transit 3,500.00
Insurance Premium for one year 4,000.00
Testing Cost 12,000.00

Rullen should debit Machinery account for:


a. P 467,000 c. P 470,500
b. P 474,500 d. P 465,400

Identification (Nos. 6-10)

Factory/Manufacturing Overhead Direct Labor Cost


Prime Cost
Conversion Cost Direct Materials

____________1 The sum of direct materials and labor cost .


____________2 Compensation incurred or paid of factory workers that directly convert raw materials into finished product
____________3 The sum of direct labor and factory overhead.
____________4 Includes indirect materials, indirect labor factory taxes, factory rent etc.
____________5 Cost of Materials that directly formed the finished Product.

III. Problem Solving

Numbers 21-50
Mary Joy Albos , the Payroll Accountant of GENUINE GENERAL ENTERPRISE is preparing the payroll from
the period January 1-30, 2018. It is the policy of the company to deduct the SSS, PAG-IBIG, & PHILHEALTH monthly
contributions every 30th of the month while witholding taxes are remitted 15th day of the following month . Details
are as follows:

Name of Position Monthly Salary Tax Status


Employees
Gadhel Suarez Manager P 58,717.00 Married , no qualified dependent
Lina Acama Supervisor 52,554.00 Head of the Family , no qualified dependent chi
Gbeth Rivera Department Head 42,099.00 Head of the Family , 1 qualified depedent child
Cyannide Go Project Manager 29,010.00 Married ,3 qualified dependent child
Jess Samson Adminstrative Officer 20,179.00 Married ,1 qualified dependent child

Required:
1. Complete the Payroll Sheet for the period January 1-31 Use the format /heading below: (2 points each)

Name of Employees

PHIC Cont.
Name of Witholdin Pag-Ibig Total
Employee Tax Status Monthly SSS Cont. g Taxes Cont. Deduction

Total

2. Prepare the journal entries to record the payment of salaries of the employee. (5 points)

3. Complete the Employer's Contribution Table. Use the format/heading below (2 points each)

Name of SSS PHILHEALTH EC PAG-IBIG TOTAL


Employee Monthly Salary Credit

4. Prepare the journal entries to record the employer's share in the SSS, EC, PHILHEALTH & PAG-IBIG
contribution during payroll. (5 points)
SSS CONTRIBUTION TABLE
PHILHEALTH CONTRIBUTION TABLE

IV Determining the Missing Amount (Nos. 40-50)


Instruction: Complete the missing amount of each independent case as provided below
Case 1 Case 2 Case 3
Sales P 950,000.00 ? 5,298,100.00
Direct Materials 190,000.00 860,000.00 1,346,500.00
Direct labor 300,000.00 380,000.00 764,200.00
Manufacturing Cost 260,000.00 ? 1,578,300.00
Total Manufacturing Cost 750,000.00
Add: Work in process Inventory , beginning 80,000.00 180,000.00 ?
Total Cost Put into Process 830,000.00
Less: Work -In process inventory , ending ? 340,000.00 288,450.00
Cost of Goods Manufactured 660,000.00 1,460,000.00 3,501,750.00
Add: Finished Goods Inventory , beginning 90,000.00 340,000.00 194,800.00
Total Cost of Goods Available for Sale 750,000.00
Less: Finished Goods inventory , ending 320,000.00 ? ?
Cost of Goods Sold ? 1,320,000.00 3,520,950.00

Gross Margin ? 360,000.00 1,777,150.00


Operating Expense 190,000.00 280,000.00 ?
Net Income (Loss) 330,000.00 ? (397,070.00)

Prepared By:

JOUHARA G. SAN JUAN


Instructor
East System Colleges of Rizal
R. Palma St. San Pedro Morong, Rizal
Fundamentals of Accounting

I. Multiple Choice

1 Property , Plant & Equipment include:


a. Deposits on machinery not yet received. c. Land held for possible use as future plant site
b. Idle Equipment awaiting sale. d. Newly aquired equipment used in the business.
2 Which of the following is not a major characteristics of Property Plant and Equipment?:
a. Possesses physical substance c. Acquired for use
b. Aquired for resale d. Yield services over a number of years.
3 Dpreciation is
a. A cash expense c. Land held for possible use as future plant site
b. A process of valuation d. Newly aquired equipment used in the business.
4 Alex Company acquired a new machinery for cash. The debit to the machinery account should include:
a. Purchase Price c. Installation Cost
b. The Freight Cost d. All of these
5 Rullen Company purchased a brand new machinery with invoice /purchase price of P 40,000. In addition , the incidenta
expense prior to the use of machinery are s follows
Freight 1,000.00
Installation Cost 45,000.00
insurance Premiums paid while in transit 3,500.00
Insurance Premium for one year 4,000.00
Testing Cost 12,000.00

Rullen should debit Machinery account for:


a. P 467,000 c. P 470,500
b. P 474,500 d. P 465,400
6
II. Problem Solving
Numbers 21-50
Wilma Santos , the Payroll Accountant of ELITE GENERAL ENTERPRISE is preparing the payroll fro the
period September 16-30, 2014. It is the policy of the company to deduct the SSS, PAG-IBIG, & PHILHEALTH monthly
contributions every 30th of the month while witholding taxes every 15th and 30th of the month . Details are as
follows:

Name of Position Monthly Salary Tax Status


Employees
1 Karen Bernardo Manager P 35,000.00 Married , no qualified dependent
2 Danny Padilla Supervisor 25,000.00 Head of the Family , no qualified dependent child
3 Jane Reid Secretary 12,000.00 Single
4 Choco Martin Accountant 24,000.00 Married ,1 qualified dependent child
5 Jan Illustre Sales Clerk 9,500.00 Head of the Family , 1 qualified depedent child

Required:
1. Complete the Payroll Sheet for the period September 16-30, 2014. Use the format /heading below: (2 points each)

Name of Employees

PHIC Cont.
Name of Semi Witholdin Pag-Ibig
Employee Tax Status Monthly SSS Cont. g Taxes Cont. Total Deduction

Total

2. Prepare the journal entries to record the payment of salaries of the employee. (5 points)

3. Complete the Employer's Contribution Table. Use the format/heading below (2 points each)

Name of Monthly EC
Employee Salary Credit SSS PHILHEALTH PAG-IBIG TOTAL

4. Prepare the journal entries to record the employer's share in the SSS, EC, PHILHEALTH & PAG-IBIG contribution
during payroll. (5 points)
PHILHEALTH CONTRIBUTION TABLE

III Determining the Missing Amount


Instruction: Complete the missing amount of each independent case as provided below
Case 1 Case 2 Case 3
Sales P 950,000.00 ? ?
Direct Materials 190,000.00 860,000.00 1,346,500.00
Direct labor 300,000.00 380,000.00 764,200.00
Manufacturing Cost 260,000.00 ? 1,578,300.00
Total Manufacturing Cost 750,000.00
Add: Work in process Inventory , beginning 80,000.00 180,000.00 ?
Total Cost Put into Process 830,000.00
Less: Work -In process inventory , ending 170,000.00 340,000.00 288,450.00
Cost of Goods Manufactured 660,000.00 1,460,000.00 3,501,750.00
Add: Finished Goods Inventory , beginning 90,000.00 340,000.00 194,800.00
Total Cost of Goods Available for Sale 750,000.00
Less: Finished Goods inventory , ending 320,000.00 ? ?
Cost of Goods Sold 430,000.00 1,320,000.00 3,520,950.00

Gross Margin 520,000.00 360,000.00 1,777,150.00


Operating Expense 190,000.00 280,000.00 ?
Net Income (Loss) 330,000.00 ? (397,070.00)

Prepared By:

JOUHARA G. SAN JUAN


Instructor
SSS Contribution Schedule
Employer - Employee
Monthly Salary
Range of Compensation SOCIAL SECURITY EC Total Contribution
Credit
ER EE TOTAL ER ER EE Total
9,250.00 - 9,749.99 9,500.00 699.80 345.20 1,045.00 10.00 709.80 345.20 1,055.00
9,750.00 - 10,249.99 10,000.00 736.70 363.30 1,100.00 10.00 746.70 363.30 1,110.00
10,250.00 - 10,749.99 10,500.00 773.50 381.50 1,155.00 10.00 783.50 381.50 1,165.00
10,750.00 - 11,249.99 11,000.00 810.30 399.70 1,210.00 10.00 820.30 399.70 1,220.00
11,250.00 - 11,749.99 11,500.00 847.20 417.80 1,265.00 10.00 857.20 417.80 1,275.00
11,750.00 - 12,249.99 12,000.00 884.00 436.00 1,320.00 10.00 894.00 436.00 1,330.00
12,250.00 - 12,749.99 12,500.00 920.80 454.20 1,375.00 10.00 930.80 454.20 1,385.00
12,750.00 - 13,249.99 13,000.00 957.70 472.30 1,430.00 10.00 967.70 472.30 1,440.00
13,250.00 - 13,749.99 13,500.00 994.50 490.50 1,485.00 10.00 1,004.50 490.50 1,495.00
13,750.00 - 14,249.99 14,000.00 1,031.30 508.70 1,540.00 10.00 1,041.30 508.70 1,550.00
14,250.00 - 14,749.99 14,500.00 1,068.20 526.80 1,595.00 10.00 1,078.20 526.80 1,605.00
14,750.00 15,249.99 15,000.00 1,105.00 545.00 1,650.00 30.00 1,135.00 545.00 1,680.00
15,250.00 15,749.99 15,500.00 1,141.80 563.20 1,705.00 30.00 1,171.80 563.20 1,735.00
15,750.00 - over 16,000.00 1,178.70 581.30 1,760.00 30.00 1,208.70 581.30 1,790.00

SSS Contribution Table is brought to you by SSSContributionTable.Com

This new and updated SSS Contribution Table will be effective on January 2014.For now, the old SSS Contribution is still applicable.
SE / VM / OFW

Total Contribution

1,045.00
1,100.00
1,155.00
1,210.00
1,265.00
1,320.00
1,375.00
1,430.00
1,485.00
1,540.00
1,595.00
1,650.00
1,705.00
1,760.00

applicable.