FINANCIAL ACCOUNTING AND REPORTING

Completing the Accounting Process

EXERCISE 1:
State whether the following accounts are REAL ACCOUNTS (RA) or NOMINAL ACCOUNTS (NA)

1. Accounts Receivable
2. Allowance for Doubtful Accounts
3. Doubtful Accounts Expense
4. Sales
5. Sales Returns and Allowance
6. Purchases
7. Purchase Discounts
8. Freight-in
9. Merchandise Inventory, beginning
10. Merchandise Inventory, ending
11. Building
12. Depreciation Expense
13. Accumulated Depreciation
14. Eric Reyes, Capital, end of year
15. Accounts Payable
16. Eric Reyes, Drawing
17. Land
18. Unexpired Insurance
19. Unearned Revenue

EXERCISE 2:
Using the following adjusted account balances at December 31, 2019, prepare closing journal entries.

Debit Credit
Pedro Penduko, Capital 350,000
Pedro Penduko, Drawing 15,000
Service Revenue 330,000
Salaries Expense 250,000
Utilities Expense 70,000
Miscellaneous Expense 25,000

EXERCISE 3:
Presented below is the partial worksheet prepared by the accountant of Maria Makiling for the year ended
December 31, 2019.

Income Statement
account Names Debit Credit

Merchandise Inventory, 1/1/2019 50,000 60,000

Sales 410,000
Sales Returns and Allowances 7,000
Sales Discounts 3,000
Purchases 180,000
Purchase Returns and Allowances 3,000
Purchase Discounts 2,000
Freight-in 3,000

Required:
Prepare the closing journal entries at December 31, 2019.