Biweekly 1.

1
A. Audit adjusting entries

1. Equipment acquisition fund ₱ 60,000

Cash ₱ 60,000
#
2.
3. Purchases ₱ 50,000
Accounts Payable ₱ 50,000
#

4. Doubtful Account Expense ₱ 9,750*

Allowance for Doubtful Accounts ₱ 9,750
#
* ₱ 615,000 x .05 = ₱ 30,750- ₱21,000 = ₱ 9,750

1. Treasury Shares ₱ 30,000

Investment ₱ 30,000
#

2. Depreciation Expense ₱ 39,200*

Accumulated Depreciation ₱ 39,200
#

*Computation for Depreciation Expense (No.6)

Furniture and Equipment ₱ 312,000
Add: Miscellaneous Equipment ₱ 90,000
Total Furniture and Equipment ₱ 402,000
Less: Acquired for cash, June 30, 2018 (₱20,000)
 Total acquired at the inception ₱ 382,000

Annual Depreciation ₱ 76,400/2 = ₱ 38,200 (by 6 months)

Annual Depreciation Rate = ₱ 38,200/₱ 382,000 = .10 or 10%

Annual Depreciation ₱ 38,200

New depreciation beginning balance ₱ 1,000**
Depreciation Expense ₱ 39,200
**(20,000 x 10% = 2,000 x 6/12)

3. Insurance Expense ₱ 1,200

Prepaid Expense ₱ 1,200
#

4. Unearned Rent Income ₱ 2,800*

Rent Income ₱ 2,800
#

*(₱ 12,800 - ₱ 10,000 = ₱ 2,800) increased

5. Miscellaneous Expense ₱ 3,000**

Accrued Expense ₱ 3,000
#
**[₱ 51,000 - ₱ 54,000 = (₱ 3,000)] decreased

Closing Entries:
Ending Inventory ₱ 650,000
Cost of Goods Sold ₱ 2,408,000
Purchases ₱ 2,474,000
Beginning Inventory ₱ 584,000
 B. Working Table

Trial Balance Adjustments Profit or Loss Financial Position

Account Titles Debit Credit Debit Credit Debit Credit Debit Credit
Cash ₱191,000 ₱ 60,000
Accounts Receivable ₱615,000
Allowance for doubtful ₱21,000 ₱ 9,750
accounts
Inventory, Dec. 31,2017 ₱584,000 ₱ 584,000
Prepaid Expense ₱ 8,000 ₱ 1,200
Investment ₱ 110,000 ₱ 30,000
Furniture and Equipment ₱ 312,000
Miscellaneous Equipment ₱ 90,000
Accumulated Depreciation ₱ 76,400 ₱ 39,200
Accounts Payable ₱ 543,000 ₱ 50,000
Accrued Expenses ₱ 51,000 ₱ 3,000
Unearned Rent Income ₱ 12,800 ₱ 2,800
Ordinary Share Capital ₱ 600,000
Retained Earnings ₱ 182,800
Sales ₱3,500,000
Rent Income ₱ 48,000 ₱ 2,800
Purchases ₱ 2,424,000 ₱ 50,000 ₱ 2,474,000
Salaries Expenses ₱ 400,000
Advertising Expense ₱ 124,000
Commission Expense ₱ 80,000
Utilities Expense ₱ 32,000
Supplies ₱ 12,000
Transportation Expense ₱ 14,000
Repair and Maintenance ₱ 16,000
Miscellaneous Expenses ₱ 23,000 ₱ 3,000
₱ 5,035,000 ₱ 5,035,000
Equipment acquisition fund ₱ 60,000
Doubtful accounts expense ₱ 9,750
Inventory, Dec. 31, 2018 ₱ 650,000
Cost of Goods Sold ₱ 2,408,000
Treasury Shares ₱ 30,000
Depreciation Expense ₱ 39,200
Insurance Expense ₱ 1,200
₱ 3,253,950 ₱3,253,950
Profit before income tax

Profit before income tax

Income tax expense (30%)
Income tax payable
Profit