1.

Daily Machine Works

1 G. Income statement - expenses
2 D. Financial Position - non current liabilities
3 B. Financial Position - Non current assets
4 F. Income statement - Revenues
5 A. Financial Position - current assets
6 G. Income statement - expenses
7 C. Financial Position - current liabilities
8 A. Financial Position - current assets
9 H. Capital statement
10 B. Financial Position - Non current assets
11 G. Income statement - expenses
12 G. Income statement - expenses
13 A. Financial Position - current assets
14 B. Financial Position - Non current assets
15 A. Financial Position - current assets
16 C. Financial Position - current liabilities
17 F. Income statement - Revenues
18 G. Income statement - expenses
19 H. Capital statement
20 A. Financial Position - current assets
21 A. Financial Position - current assets
22 B. Financial Position - Non current assets
2. On My Own Way
a. Cash Drawings 5,000.00
Ending Capital 420,000.00
Original Investment (200,000.00)
Additional Investment (160,000.00)
Net Profit ₱ 65,000.00

b.
On My Way
Statement of Financial Position
As of December 31,2016

ASSETS
Current Assets
Cash 280,000
Due from Clients 75,000
Supplies 5,000
360,000
Non-Current Assets
Car 300,000
Total Assets 660,000

LIABILITIES AND EQUITY

Current Liabilities
Accounts Payable 40,000
Non-Current Liabilities
Notes Payable 200,000
Total Liabilities 240,000

Equity: 420,000

Total Liabilities and Equity 660,000

Requirement 1
a Bad Debts Expense 5000
Allowance for Bad Debts 5000

c Depreciation Expense 60000 Owner's Equity, January 1

Accumulated Depreciation 60000 Add:
Total
Requirement 2 Less:

Cost principle of accounting. The Cost principle requires that assets be recorded
at The cash amount (or The equivalent) at The time that an asset is acquired.
Further, The amount recorded will not be increased for inflation or
improvements in market value.

b.

Sta

Current Assets

Total Current Assets

Non-Current Assets

Total Non-Current Assets

Total Assets

L
Current Liabilities

Total Liabilities

Equity:

Total Liabilities and Equ

 Statement of Equity

Owner's Equity, January 1 80,000

Net Profit 130,000
210,000
Owner's Drawing 30,000
₱ 180,000.00

Statement of Financial Position

ASSETS
Current Assets
Cash 7,000
Accounts Receivable, net 35,000
Total Current Assets 42,000

Non-Current Assets
Car, net 120,000
Land 110,000
Total Non-Current Assets 230,000
Total Assets 272,000

LIABILITIES AND EQUITY

Current Liabilities
Accounts Payable 40,000
Notes Payable 50,000
Interest Payable 2,000
Total Liabilities 92,000

Equity: 180,000

Total Liabilities and Equity 272,000

 Company A Company B Company C Company D
December 31, 2015
Assets 50,000.00 40,000.00 30,000.00 180,000.00
Liabilities 23,500.00 22,500.00 14,000.00 38,000.00
Beginning Capital 26,500.00 17,500.00 16,000.00 142,000.00 Beginning Capital
Add; Owner Investm
December 31, 2016
Assets 53,000.00 44,000.00 ₱ 53,750.00 250,000.00 Total
Liabilities ₱ 17,000.00 27,500.00 25,000.00 64,000.00 Less;
Ending Capital 36,000.00 16,500.00 28,750.00 186,000.00 Ending Capital

During year 2016

Owner's investments 5,000.00 1,500.00 7,750.00 ₱ 38,000.00
Net income (loss) 7,500.00 ₱ 2,500.00 9,000.00 12,000.00
Owner's drawings 3,000.00 5,000.00 4,000.00 6,000.00
Net Change 9,500.00 (1,000.00) 12,750.00 44,000.00
Beginning Capital
Add; Owner Investm

Total
Less;
Ending Capital

Beginning Capital
Add; Owner Investm

Total
Less;
Ending Capital

Beginning Capital
Add; Owner Investm

Total
Less;
Ending Capital
 Company A
Statement of Equity
For the year ended 2016

Beginning Capital 26,500

Add; Owner Investment 5,000
Net Profit 7,500 12,500
39,000
Drawings 3,000
Ending Capital 36,000

Company B
Statement of Equity
For the year ended 2016

Beginning Capital 17,500

Add; Owner Investment 1,500
Net Profit 2,500 4,000
21,500
Drawings 5,000
Ending Capital 16,500

Company C
Statement of Equity
For the year ended 2016

Beginning Capital 16,000

Add; Owner Investment 7,750
Net Profit 9,000 16,750
32,750
Drawings 4,000
Ending Capital 28,750

Company C
Statement of Equity
For the year ended 2016

Beginning Capital 142,000

Add; Owner Investment 38,000
Net Profit 12,000 50,000
192,000
 Drawings 6,000
Ending Capital 186,000
 Luna Rental Agency Requirement 1
Income Statement a Rental Fees Revenue
For the year ended 2017 Interest Income
Gain on Sale of Cars

Revenues:
Rental Fees Revenue 93,500.00 b Income Summary
Interest Income 1,250.00
Gain on Sale of Cars 15,000.00
Total Revenue 109,750.00
Less: Expenses
Interest Expense 500.00
Doubtful Accounts 2,200.00
Depreciation Expense 750.00 c Income Summary
Advertising Expense 800.00
Insurance Expense 8,000.00 12,250.00
Net Income ₱ 97,500.00 d Luna, Drawings

Luna Rental Agency

Statement of Equity
For the year ended 2016

Beginning Capital 750,000

Add: Net Profit 97,500
Total 847,500
Less; Drawings 6,000
Ending Capital 841,500
Requirement 1
Rental Fees Revenue 93,500.00
Interest Income 1,250.00
Gain on Sale of Cars 15,000.00
Income Summary 109,750.00

Income Summary 12,250.00

Interest Expense 500.00
Doubtful Accounts 2,200.00
Depreciation Expense 750.00
Advertising Expense 800.00
Insurance Expense 8,000.00

Income Summary 97,500.00

Luna, Capital 97,500.00

Luna, Drawings 6,000.00

Luna, Capital 6,000.00
a.
Billiard and Bowling Plaza
Income Statement
For the year ended 2016

Revenues:
Billiard Revenue 50,000.00
Bowling Revenue 95,000.00
Total Revenue 145,000.00
Less: Expenses
Supplies Expense 2,250.00
Depreciation Expense 2,500.00
Rent Expense 22,000.00
Advertising Expense 15,000.00
Utilities Expense 14,400.00
Wages Expense 28,000.00
Taxes Expense 8,750.00 66,150.00
Net Income ₱ 78,850.00

Billiard and Bowling Plaza

Statement of Equity
For the year ended 2016

Beginning Capital 268,950

Add: Net Profit 78,850
Total 347,800
Less; Drawings 5,000
Ending Capital 342,800

b.
a. Cash received from customers
Billiard Revenue 50,000.00
Bowling Revenue 95,000.00
Due from customer - 25,000.00
Total cash received from customers 120,000.00

b. Cash paid for expenses

Prepaid Supplies 5,000.00
Rent Expense 22,000.00
Advertising Expense 15,000.00
Utilities Expense 1,900.00
Wages Expense 23,000.00
Taxes Expense 5,050.00
 Cash paid for expenses 71,950.00

c. Cash paid for furniture and equipment

Furniture and equipment 250,000.00
Accounts Payable 28,000.00
Cash paid for furniture and equipment 222,000.00

d. Cash borrowed from the bank 60,000.00

e. Cash invested by the owner,net of drawings 263,950.00

Cash, ending ₱ 150,000.00
a.
iPadala
Income Statement
For the year ended December 31, 2016

Delivery Fee Revenues 230,000.00

Less: Expenses
Depreciation Expense- Equipment 5,000.00
Interest Expense 2,000.00
Salaries Expense 75,000.00
Utilities Expense 12,500.00
Rent Expense 90,000.00
Supplies Expense 35,000.00
Depreciation Expense- Truck 10,000.00
SS & EC Premium Expense 1,125.00
PhilHealth Premium Expense 500.00
Pag-ibig Premium Expense 300.00 231,425.00
Net Loss (1,425.00)

iPadala
Statement of Equity
For the year ended December 31, 2016

Beginning Capital 120,000

Less: Net Profit - 1,425
Total 118,575
Less; Drawings 14,500
Ending Capital 104,075

iPadala
Statement of Financial Position
As of December 31, 2016

ASSETS
Current Assets
Cash on Hand and In Bank 17,775
Accounts Receivable 6,000
Supplies Unused 3,000 26,775

Non-Current Assets
Equipment, net 55,000
Delivery Truck, net 490,000 545,000
Total Assets ₱ 571,775.00

LIABILITIES AND EQUITY

Current Liabilities
Accounts Payable for Supplies 10,000
Withholding Taxes Payable 650
SS & EC Premium Payable 2,450
PhilHEalth Premiums Payable 500
Pag-ibig Premiums Payable 600
Utilities Payable 1,500
Notes Payable due July 1, 2017 400,000
Interest Payable 2,000 417,700

Non-Current Liabilities
Bank Loan 50,000
Total Liabilities 467,700
Equity: 104,075
Total Liabilities and Equity ₱ 571,775.00
8..
a Collection from Customers
Revenues 230,000.00
Accounts Receivable (6,000.00)
Collection from Customers ₱ 224,000.00

b. Payment for Supplies

Unused Supplies 3,000.00
Supplies Expense 35,000.00
Accounts Payable (10,000.00)
Payment for Supplies ₱ 28,000.00

c Other operating expenses paid

Interest Expense 2,000.00
Utilities Expense 12,500.00
Rent Expense 90,000.00
Utilities Payable (1,500.00)
Interest Payable (2,000.00)
Other operating expenses paid ₱ 101,000.00

d Payroll
Salaries Expense 75,000.00
SS & EC Premium Expense 1,125.00
PhilHealth Premium Expense 500.00
Pag-ibig Premium Expense 300.00
Withholding Taxes Payable (650.00)
SS & EC Premium Payable (2,450.00)
PhilHEalth Premiums Payable (500.00)
Pag-ibig Premiums Payable (600.00)
Payroll expenses paid ₱ 72,725.00

TOTAL CASH FLOW FROM OPERATING ACTIVITIES ₱ 22,275.00

 GENERAL JOURNAL

Date
Account Titles and Explanation P.R. Debit
YR-2020
Delivery Service Revenue 230,000
Income Summary
To close the revenue accounts

Income Summary 231,425

Depreciation Expense- Equipment
Interest Expense
Salaries Expense
Utilities Expense
Rent Expense
Supplies Expense
Depreciation Expense- Truck
SS & EC Premium Expense
PhilHealth Premium Expense
Pag-ibig Premium Expense
To close the expense accounts

Estrella, Capital 1,425

Income Summary
To close the net loss to capital accounts

Estrella, Capital 14,500

Estrella, Drawings
To close the drawings account
Balance 477,350
 GJ-1

iPadala
POST CLOSING TRIAL BALANCE
December 31, 2016
Credit
Acct code Account titles
Cash on Hand and In Bank
230,000 Accounts Receivable
Supplies Unused
Equipment, net
Delivery Truck, net
5,000.00 Accounts Payable for Supplies
2,000.00 Withholding Taxes Payable
75,000.00 SS & EC Premium Payable
12,500.00 PhilHEalth Premiums Payable
90,000.00 Pag-ibig Premiums Payable
35,000.00 Utilities Payable
10,000.00 Notes Payable due July 1, 2017
1,125.00 Interest Payable
500.00 Bank Loan
300.00 Estrella, Capital

BALANCE

1,425

14,500
477,350
adala
G TRIAL BALANCE
ber 31, 2016 Estrella, Capital Income Summary
1,425.00 120000 231,425.00
Debit Credit 14500
17,775
6,000
3,000
55,000
490,000
10,000
650
2,450 104075 0
500
600 Yes, the balance of the Income Summary closed to the capital account is th
1,500
400,000
2,000
50,000
104,075

571,775 571,775
 Income Summary
230000
1425

ed to the capital account is the same as the profit (or loss) in the income statement.
Solution Solution
a. Current Ratio = Current Assets / Current Liabilities
Master Padala
Ipadala 26,775 / 417,700
Ipadala is more illiquid than Master Padala.

Quick Ratio = Quick Assets / Current Liabilities

Master Padala
Ipadala 23,775 / 417,700
Ipadala is more illiquid than Master Padala.

b. SOLVENCY RATIOS
Debt Ratio = Liabilities / Total Assets 467,700 / 571,775
G. Equity Ratio = Total Equity / Total Assets 104,075 / 571,775
No it's not. Their source of funds comes from creditors more than the invesmtnet of owners

C. Profitability
Return on Equity = Net Income / Equity (-1425/104075
BDO bonds is more attractive than Ipadala.
Answer

1.60
0.06

1.20
0.06

0.82
0.18

- 0.01
a and b and b

August Cash 382,500.00

Unearned Subscription Income 382,500.00 Earned

adjusting Unearned Subscription Income 238,000.00

Subscription Income 238,000.00

closing Subscription Income 238,000.00

Income Summary 238,000.00

c…
August Cash 382,500.00
Subscription Income 382,500.00

adjusting Subscription Income 144,500.00

Unearned Subscription Income 144,500.00
Sept
closing Subscription Income 238,000.00 Oct
Income Summary 238,000.00 Nov
Total
reversing entry
Unearned Subscription Income 144,500.00
Subscription Income 144,500.00 c
Unearned Subscription Income Subscription Income
238,000.00 382,500.00 Collections 238,000.00 238,000.00 Earned

144,500.00 -

Quarterly Semi-Annual Total Price Earned Unearned Total

100.00 100.00 200.00 85.00 59,500.00 17,000.00 76,500.00
200.00 200.00 400.00 85.00 102,000.00 51,000.00 153,000.00
300.00 150.00 450.00 85.00 76,500.00 76,500.00 153,000.00
600.00 450.00 1,050.00 238,000.00 144,500.00 382,500.00

Unearned Subscription Income Subscription Income

144,500.00 Unearned Unearned 144,500.00 382,500.00 Collections
Closing 238,000.00

144,500.00 -
a. b..
August Notes Receivable 500,000.00
Service Income 500,000.00
2014
adjusting Interest Receivable 25,000.00 Interest Receivable
Interest Income 25,000.00 (b) 25,000.00 ©

Reversing Interest Income 25,000.00

Interest Receivable 25,000.00

e Cash 500,000.00
Notes Receivable 500,000.00

Cash 33,333.33
Interest Income 33,333.33 25000

2014
Service Income 500,000.00 2015
Interest Income 25,000.00 Interest Receivable
Total Income 525,000.00 25,000.00 25000 ©

2015 Interest Income 8,333.33

0
 2014
Interest Income
25,000.00 25000 (b)

2015
Interest Income
25,000.00 33333.33

8333.333