Tarlac State University

College of Business & Accountancy

Department of Accountancy
Fundamentals of Accounting 1 and 2
Mid-term Examination, Summer, A.Y. 2020-2021

NAME: _________________________________ Total Score: ___________ Grade: _________

Section: ______________

TEST I THEORIES (1 point each item, Total 10 points) Test I Score: ____________

Write the letter of your answer before the item number by referring to the choice letters that follow. (Use
UPPERCASE letters only).

(A) true, true (C) false, false

(B) true, false (D) false, true

______1. 1st The Trial Balance is one of the financial statements prepared at the end of the accounting
period.
2nd The classifying phase of the accounting process includes posting to the books of original
entry.
______2. 1st Investment of a non-cash asset with an attached liability will decrease the capital to be
credited to the owner if the related liability is to be assumed by the business.
2nd Investment of a noncash asset with an attached liability will not decrease the capital to be
credited to the owner if the related liability is not to be assumed by the business.
______3. 1st Journalizing includes recording business transactions in a chronological order to the
books of original entry.
2nd Government accounting is also known as Tax Accounting because it involves
determination of tax to be paid to the government.
______4. 1st Auditors are responsible for the preparation of financial statements.
nd
2 Summarizing includes sorting and grouping of business transactions according to nature
and similarity.
______5. 1st The payment of business liability using the personal cash of the owner will be treated as a
withdrawal.
2nd Interest on interest bearing note to supplier is to be recorded as “Interest Income”.
st
______6. 1 Interest attached on interest bearing note from a customer is to be recorded as “Interest
Expense”.
2nd An asset is recognized when it is reasonably possible that future economic benefits will
flow to the entity and the asset has a cost or value that can be measured reliably.
______7. 1st A business transaction will result to either an increase or a decrease in the elements of the
accounting equation.
2nd Collection of an interest-bearing note from a customer will include a debit to the cash
account at the principal amount of the note collected plus the interest earned.

______8. 1st Profit is the excess of expenses over generated revenues.

2nd Income is recognized when it is probable that an increase in future economic benefits
related to an increase in an asset or a decrease in a liability has arisen and that the increase in economic benefits
can be measured reliably.
______9. 1st During the process of journalizing, the “F” or reference column of the general journal
must be filled-out immediately after recording the journal entry.
2nd Operating cash flows are derived mainly from the principal revenue producing activities
of the entity.
______10. 1st The Trial Balance gives information on the financial condition of the entity as of a given
date.
2nd Revenues are resources controlled by the entity as a result of past transactions or events
and from which future economic benefits are expected to flow to the entity.

Page 1 of 4
TEST II ACCOUNTING EQUATION (2 points each item, Total 10 points)

1. On March 1, 2014, Elmo Bolado created EBOLA Medical Clinic with the following investments: Cash,
P1,500,000; Furniture and Fixtures which Elmo bought a year ago for P150,000 but the market value as of the
date of investment amounts to P120,000; and an Equipment, P250,000 with an unpaid balance from the supplier
amounting to P60,000 which is not to be assumed by the EBOLA. As at December 31, 2014, total assets
increased by 30% and liabilities increased to P40,000. How much is the increase in owner’s equity from the
date of EBOLA’s formation to December 31, 2014?

2. The net claims of the creditors from Tricky Services amounted to P1,100,000. Creditors’ claims are
equivalent to 20% of total assets. How much is the total liabilities of Tricky Services?

3. During the start of the current year, the creditors’ claims over Tor General Services amounted to P500,000
which is equivalent to 25% of total economic resources. As a result of the operations during the year, liabilities
increased by 20% and net worth increased to P2,220,000. How much is the combined total of the liabilities and
owner’s equity of Tor General Services as at year-end?

4. When the current year started, the liabilities of Slave Services amounted to P400,000 and its net assets was
30% lower than its total liabilities. As a result of the operations during the year, liabilities increased by 10%
and the residual interest of the owner increased to P300,000. How much is the increase in Total Assets of Slave
Services during the year?

5. When the current year started, the liabilities of Slave Services amounted to P400,000 and its net assets was
30% lower than its total liabilities. As a result of the operations during the year, liabilities increased by 10%
and the residual interest of the owner increased to P300,000. How much is the Total Assets of Slave Services at
the end of the year?

TEST III JOURNALIZING (1 point each journal entry, Total 15 points)

The following are the ledger balances of JohnnyTor Services owned by Johnny Torres as of June 30, 2013:
Cash 150,000 Equipment 60,000 Torres, Capital 190,000
Accounts Receivable 30,000 Accounts Payable 15,000 Service Income 170,000
Notes Receivable 40,000 Notes Payable 25,000 Salaries Expense 24,000
Supplies 20,000 Salaries Payable 4,000 Utilities Expense 12,000
Furniture and Fixture 65,000 Utilities Payable 5,000 Taxes and Licenses Expense 8,000
Journalize the following July 2013 transactions of JohnnyTor Services:
3 Paid the utility bill from the previous month.
5 Rendered services to B-Navy Company. B-Navy paid a 60% down payment of P15,000. The balance is
collectible in two (2) equal installments due on July 15 and July 30.
7 Paid the June unpaid salaries.
10 Paid the notes payable including interest. The notes payable is an 18% 20-day note issued on June 20,
2013.
12 A personal liability of Johnny Torres amounting to P3,000 was paid by JohnnyTor Services.
14 Collected the notes receivable including interest. The notes receivable is an 18% 20-day note issued by
a customer on June 24, 2013.
15 Collected the first installment from B-Navy Company.
17 Collections for the day: P10,000 from cash clients; and P20,000 from account clients from the previous
month.
18 Acquired additional equipment from Mally Neis Company by paying a down payment of P12,000. The
balance of P8,000 is to be paid in two (2) equal installments on July 25 and August 5.

Page 2 of 4
20 The accounts payable of JohnnyTor Services from the previous month was paid from the personal cash
of Johnny Torres.
22 Marou Syng Company paid a 30% down payment of P15,000 for services rendered by JohnnyTor
Services.
25 Paid the first installment due to Mally Neis Company.
26 Collected half of the balance of Marou Syng Company.
28 Received the utility bills amounting to P4,200 for the billing period ending July 27.
30 Collected the 2nd installment due from B-Navy Company.

TEST IV FINANCIAL STATEMENTS (15 points)

Problem 1 (2 points)
From the following account balances, compute for the trade and other receivables to be presented in the
December 31, 2013 Statement of Financial Position: Cash in Banks – P200,000; Cash on Hand – P15,000;
Accounts Receivable – P50,000; Allowance for Doubtful Accounts – P2,000; Notes Receivable (due April 15,
2015) – P100,000; Commission Receivable – P3,000; Interest Receivable – P1,500; Supplies – P8,000; and
Prepaid Rent – P12,000.

Problem 2 (4 points)
Mautang Company’s liability accounts as at the of the fiscal year June 30, 2013 follows: Accounts Payable
P95,000; Utilities Payable P12,000; Notes Payable (Due July 31, 2014) P80,000; Unearned Service Income
P12,000; Interest Payable P3,000; and Loans Payable P1,600,000. The Loans Payable is to be paid in twelve
(12) equal quarterly installments commencing on December 1, 2013.

2.1 How much is the total Trade and Other Payables (current) to be presented in the Statement of Financial
Position as of June 30, 2013? (2 points)
2.2 How much is the total Non-current Liabilities to be presented in the Statement of Financial Position as of
June 30, 2013? (2 points)

Problem 3 (2 points)
The following data were made available for the year ended December 31, 2013: Trickie, Capital (1/1/2013) –
P800,000; Trickie made additional investments during the year amounting to P80,000; Trickie’s withdrawal
during the year amounted to P30,000; and Trickie, Capital (12/31/2013) P600,000.
From the given data, how much is the Net Income or Net Loss for the year?

Problem 4 (2 points)
The following data were made available for the year ended December 31, 2013: Trickie, Capital (1/1/2013) –
P800,000; Trickie made additional investments during the year amounting to P80,000; Trickie’s withdrawal
during the year amounted to P30,000; and Net Income for the year – P350,000.
From the given data, how much is the capital of Trickie to be presented in the December 31, 2013 Statement of
Financial Position?

Problem 5 (2 points)
The operations of Backward Company for the year ended June 30, 2013 reported a net loss of P150,000.
Interest Expense for the year amounted to P3,500. Total expenses for the year amounted to P680,000 including
the interest expense. How much is the total revenue earned by Backward Company for the year ended June 30,
2013?

Problem 6 (3 points)
As at December 31, 2013, Weirdo Company’s Total Liabilities amounted to P650,000 and Owner’s Equity
amounted to P750,000. Available asset accounts balances were as follows: Cash and Cash equivalents
Page 3 of 4
P125,000; Prepaid Expenses P35,000; Property and Equipment, net P1,200,000. If current assets is composed
of Cash and cash equivalents, Trade and Other Receivable and Prepaid Expenses, and non-current assets is
composed only of Property and Equipment, net, how much is the balance of Trade and Other Receivables?

TEST V ADJUSTMENTS (1 point each item, Total 15 points)

The following require adjustments as at the end of the fiscal year June 30, 2013:

At the start of the year, supplies on hand amounted to P5,000. During the year, acquisition of supplies
amounting to P30,000 were debited to Supplies on Hand account. At the end of the year, physical count of
supplies showed that there were P8,000 still unused.
1. What is the required adjusting journal entry at year-end?
2. How much supplies expense will be shown in the Income Statement for the year ended June 30, 2013?

Accounts Receivable as at year-end amounted to P150,000. Management estimates that 5% of the accounts
receivable is doubtful of collection. The unadjusted balance of the Allowance for Doubtful Accounts amounted
to P5,000.
3. What is the required adjusting journal entry to recognize doubtful account for the year?
4. How much is the net realizable value of Accounts Receivable after adjustment?

Payment for advertising on February 1, 2013 amounting to P20,000 was debited to Prepaid Advertising account.
As of the end of the fiscal year, 80% of the advertising has expired.
5. What is the required adjusting journal entry at the end of the fiscal year?
6. How much is the balance of Prepaid Advertising account after adjustment?

An equipment with a cost of P315,000 has a monthly depreciation of P5,000. The equipment’s useful life
ended on March 31, 2013. The equipment has a salvage value of P15,000.
7. What is the required adjusting journal entry, if any, at the end of the fiscal year?
8. How much is the book value of the equipment at the end of the fiscal year?

On March 31, 2013, the business applied for a loan of P100,000 with an interest of 18% per annum maturing
on September 30, 2013. On the same day, the loan was approved and the interest was paid in advance which
was debited to Prepaid Interest account. The business received the loan proceeds of P91,000.
9. What is the required adjusting entry at the end of the fiscal year to adjust the prepaid interest account?
10. How much interest expense is to be presented in the June 30, 2013 Income Statement?

The business collected P100,000 on April 1, 2013 from a customer for services to be rendered during the
months of April, May, June and July of the year 2013. The collection was credited to Service Income account.
11. What is the required adjusting entry at the end of the fiscal year to adjust the Service Income account?
12. How much Unearned Service Income is to be presented in the June 30, 2013 Statement of Financial
Position?

The Furniture and Fixture account has a balance of P700,000. They are estimated to be useful for 10 years.
P400,000 of the Furniture and Fixtures were acquired on July 1, 2011. The balance of the Furniture and
Fixtures was acquired on January 1 of the current fiscal year.
13. What is the required adjusting journal entry at the end of the fiscal year?
14. How much is the book value of Furniture and Fixtures as of June 30, 2013?

Salaries have remained unpaid for 10 working days to 10 employees. Seven of the employees are paid P800 per
day and the rest are paid P600 per day.
15. How much salaries payable is to be presented in the June 30, 2013 Statement of Financial Position?
Page 4 of 4