BSA 2201 – Intermediate Accounting 3 LEC09A – Single-Entry Accounting

SINGLE ENTRY ACCOUNTING

Problem 1
The following data are obtained from the single-entry records kept by the proprietor of Articuno Store for 2020:

December 31 January 1
Cash P1,600,000 P1,200,000
Notes receivable 1,200,000 400,000
Accounts receivable 2,000,000 1,600,000
Merchandise inventory 960,000 1,600,000
Equipment 1,120,000 1,200,000
Notes payable 480,000 720,000
Accounts payable 1,040,000 1,200,000
Interest payable 40,000 80,000
Unearned rent income 40,000 120,000

The cash book shows the following information:

Balance, January 1 P1,200,000

Receipts:
Accounts receivable (after sales discount
of P100,000) P3,000,000
Notes receivable 960,000
Cash sales 800,000
Rent income 80,000
Sales of equipment costing P200,000
and carrying amount of P100,000 120,000
Investment 600,000 5,560,000
6,760,000
Payments:
Accounts payable P1,520,000
Notes payable 1,280,000
Cash purchases 600,000
Interest expense 160,000
Expenses 800,000
Equipment 400,000
Withdrawals 400,000 5,160,000
Balance, December 31 P1,600,000

The following supplementary information is available:

1) Accounts receivable of P120,000 were written-off as uncollectible.
2) Returns of P320,000 were made on merchandise sales.
3) Allowances of P80,000 were received on merchandise purchases.

Required:
a) Compute the net income or loss using the single-entry method.
b) Prepare an income statement for 2020.

Problem 2
An analysis of the incomplete records of Zapdos Company produced the following information applicable to 2020:

Increases
Cash P420,000
Accounts receivable 140,000
Accounts payable 40,000
Prepaid insurance 20,000

Decreases
Inventory P100,000
Equipment 10,000
Notes receivable 60,000
Salaries payable 30,000

Summary of cash transactions

Receipts:
Cash sales P 300,000
Collections on accounts receivable 3,000,000
Collections on notes receivable 240,000
Interest on notes receivable 20,000
Purchase returns and allowances
(total purchase returns and allowances, P80,000) 50,000

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BSA 2201 – Intermediate Accounting 3 LEC09A – Single-Entry Accounting

Disbursements:
Cash purchases P100,000
Payments on accounts payable P1,650,000
Sales returns and allowances
(total sales returns and allowances, P120,000) 40,000
Insurance 70,000
Salaries 1,000,000
Equipment 80,000
Other expenses 150,000
Dividends 100,000

Required:
a) Income statement for the year ended December 31, 2020.
b) Proof of the net income or loss using the single-entry method.

Problem 3
Moltres Company provided the following information for the preparation of financial statements for 2020:

Balances – January 1, 2020

Cash P 400,000
Accounts receivable 120,000
Inventory 230,000
Prepaid insurance 35,000
Land 500,000
Building 2,000,000
Accumulated depreciation – building 700,000
Equipment 800,000
Accumulated depreciation – equipment 240,000
Accounts payable 170,000
Accrued salaries 20,000
Advances from customers 90,000
Share capital 2,500,000
Retained earnings 365,000

Relevant information are as follows:

1) Dividends of 5% were declared on June 30 and on December 31, 2020.
2) All depreciable assets should be depreciated at 10% per year.
3) Doubtful accounts are estimated to be 5% of year-end accounts receivable. The accounts receivable totaled P200,000
on December 31, 2020.
4) Cash receipts for 2020 are summarized as follows:

Advances from customers P 70,000

Cash sales and collections from accounts receivable 2,960,000
Sales of equipment on December 31, 2020 costing
P50,000 on which P30,000 of depreciation
had been accumulated 45,000
P3,075,000

5) Cash disbursements for 2020 are summarized as follows:

Insurance premium P 80,000

Purchase of equipment on October 1 200,000
Cash purchases and payments on accounts payable 1,640,000
Salaries 390,000
Dividends paid 125,000
Other expenses 135,000
P2,570,000

6) Additional data on December 31, 2020 are as follows:

Inventory P245,000
Prepaid insurance 25,000
Advances from customers 50,000
Accrued salaries 30,000
Accounts payable 100,000

Required:
a) Income statement for the year ended December 31, 2020.
b) Statement of financial position as at December 31, 2020.

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