ACCOUN TIN G LAB M ODULE

UPH BUSIN ESS SCHOOL

FOREWORD

Accounting Principles 1 is the very first subject that has to be learned in the accounting major. This
subject is the basic subject of the accounting. In the Accounting Principles 1, students will be introduced
to the accounting world. The basic accounting knowledge and the name of the account will be taught.

The students will learn the accounting theory in the Accounting Principles 1 theory class. But theory

A CCOU N T I N G
without practice will be useless. Some people prefer can do the practice rather learn the theory. So, the
needs of applying the theory will be the purpose of the Accounting Principles Lab. This Lab will help
students to understand the implementation of accounting in the real world.

PRI N CI PL E 1
To make the students understand the Accounting Principles 1 easier, this module has been compiled. It
contains the summary and comprehensive exercise of each chapter to improve the students
understanding. M anagem ent
By taking this course, the compiler team hopes that the students are competent in the both theory and
practice of the accounting and have the good basic to take the Accounting Principles 2.

May God bless all of you and grant you wisdom throughout the journey.

Prepared by
The Account ing Lab Team
Sincerely,
Assistant Lab. Team
ODD TERM 2021 / 2022
 FOREWORD

Accounting Principles 1 is the very first subject that has to be learned in the accounting major. This
subject is the basic subject of the accounting. In the Accounting Principles 1, students will be introduced
to the accounting world. The basic accounting knowledge and the name of the account will be taught.

The students will learn the accounting theory in the Accounting Principles 1 theory class. But theory
without practice will be useless. Some people prefer can do the practice rather learn the theory. So,
the needs of applying the theory will be the purpose of the Accounting Principles Lab. This Lab will help
students to understand the implementation of accounting in the real world.

To make the students understand the Accounting Principles 1 easier, this module has been compiled. It
contains the summary and comprehensive exercise of each chapter to improve the students
understanding.

By taking this course, the compiler team hopes that the students are competent in the both theory and
practice of the accounting and have the good basic to take the Accounting Principles 2.

May God bless all of you and grant you wisdom throughout the journey.

Sincerely,
Assistant Lab. Team
 TABLE OF CONTENTS

FOREWORD ........................................................................................................................................ 1
TABLE OF CONTENTS .................................................................................................................... 2
INTRODUCTION................................................................................................................................ 3
OUTLINE OF THE INSTRUCTION PROGRAM (SAP)............................................................. 5
MODULE 1 CHAPTER 1: ACCOUNTING IN ACTION ........................................................... 6
MODULE 2 CHAPTER 2: THE RECORDING PROCESS ........................................................ 1
MODULE 3 CHAPTER 3 : ADJUSTING THE ACCOUNTS .................................................. 17
MODULE 4 CHAPTER 4: COMPLETING THE ACCOUNTING CYCLE .......................... 24
MODULE 5 CHAPTER 5: ACCOUNTING FOR MERCHANDISING OPERATIONS..... 30
MODULE 6 CHAPTER 6: INVENTORY.................................................................................... 35
MODULE 7 CHAPTER 7: FRAUD, INTERNAL CONTROL, AND CASH CONTROL .. 41
MODULE 8 CHAPTER 8: ACCOUNTING FOR RECEIVABLES ........................................ 47
 INTRODUCTION

A. Description

Accounting lab is linked and inseparable with each of its main course (theory). Accounting lab
is intended for students to better comprehend the concepts related to its main course through
exercises and cases.

Every accounting lab is worth 0 credits and has a duration of 100 minutes, scheduled face-to-
face and equaling 2 credits.

B. General Instructive Objective

After taking this course and finishing all the materials, students are expected to be able to
identify/explain/calculate/analyze the following concepts:

1. Accounting in Action – Accounting for Service Company

2. The Recording Process
3. Adjusting the Accounts
4. Completing the Accounting Cycle
5. Accounting for Merchandising Operations
6. Inventories
7. Fraud, Internal Control, and Cash
8. Accounting for Receivables
C. Lecturing Activities
1. Students are directed to be actively involved during the learning activity in class.
2. To facilitate the teaching and learning activity, students are required to read the
reference book or related materials. Students can also read the summarized theory
available in every module.
3. The exercises compiled in this module are just a part of what is taught in theory
class.
4. Students are obligated to individually finish each exercise given in this module,
according to the lab assistant’s instructions, do quizzes as well as the mid and final
test according to the schedule given.
 D. Class Rules
• Attendance

At least attend 12 sessions from 14 sessions or equal to 85% attendance.

• Lateness
>15 Minutes regarded as absent

• Permission Exception
1. Formal permission from university or faculty
2. Hospitalized (maximum 2 weeks)
3. Sudden pass away of core family member (with supported documents).

E. Grading Composition

The final grade is the sum of the student’s theory and lab score with a composition of 85%

theory class and 15% lab course.

Below are the components of the lab course grading:

Mid-Test : 35% Absence : 10%

Final-
: 35% KAT : 10%
Test

Quiz : 10%
F. Grading Scale

Score Grade

90 – 100 A

85 – 89.99 A-

80 – 84.99 B+

75 – 79.99 B

70 – 74.99 B-

65 – 69.99 C+

60 – 64.99 C

55 – 59.99 C-
40 – 54.99 D
0 – 39.99 E
 OUTLINE OF THE INSTRUCTION PROGRAM (SAP)
Below is the instruction program for Principles of Accounting 1:

Week Module Material Type Video Title Reference

Introduction and
Accounting in
1 Tatap
1 Action – Accounting Muka
Chapter 1
for Service
Company
“The Recording Process –
The Recording
2 2 Video Pengantar Akuntansi 1” Chapter 2
Process

The Recording Tatap

3 2 Chapter 2
Process Muka

Adjusting the “Adjusting The Accounts –

4 3 Video Chapter 3
Accounts Pengantar Akuntansi 1”

Adjusting the Tatap

5 Chapter 3
3 Accounts Muka

“Completing The Accounting Cycle

Completing the
6 4 Video – Pengantar Akuntansi 1” Chapter 4
Accounting Cycle

Completing the
Accounting Cycle
7 Tatap
4 and Review Pra- Muka
Chapter 4
UTS

UTS
“Accounting for Merchandising
Accounting for
Operations – Pengantar Akuntansi
8 5 Merchandising Video
1”
Chapter 5
Operations

Accounting for
9 Tatap
5 Merchandising Chapter 5
Muka
Operations
“Inventories– Pengantar Akuntansi
10 6 Inventories Video 1” Chapter 6
 Tatap
11 6 Inventories Muka
Chapter 6

Fraud, Internal “Fraud, Internal Control, and Cash

12 7 Control, and Cash Video Control – Pengantar Akuntansi 1” Chapter 7
Control

Fraud, Internal
Control, and Cash Tatap
13 7 Chapter 7
Control Muka

Accounting for
Receivables and Tatap
14 8 Chapter 8
Review Pra-UAS Muka

UAS
 MODULE 1

“ACCOUNTING IN ACTION”

Problem 1 - Accounting Equation

A single mother, Eliza, decided to open Resmedila.inc to get some money. The following
transactions during the second month.
1. Stockholders invested $25,000 cash into the business
2. Sold goods to customer on credit for $5,000
3. Paid creditors, Dusty Co $900
4. Purchase supplies for $1,500 cash
5. Paid rent on office and advertising for the month $2,000
6. Received $5,000 from customers purchases billed in (2)
7. Received cash from customers for the service provided on credit last month $500
8. Withdrew cash from her capital for her personal use $1,000
9. Paid dividends to shareholders $3,000

Instructions
Determine the effects (increase/decrease) of each transaction on assets, liabilities, and
equity.

Problem 2 – Accounting Equation

Listed below are two different companies financial statement information.
Combo Corp Rome Corp
(In Million) (In Million

Beginning of year:
Total assets £300 £ 500

Total liabilities £100 (d)

Total equity (a) £ 350
End of year:
Total assets (b) £800
 Total liabilities £ 150 £ 100

Total equity £ 224 (e)

Changes during year in equity:

Additional investment £150 £ 80

Dividends £ 80 £ 100
Total revenues £25 (f)
Total expenses (c) £ 200

Instructions
Determine the missing amount.

Problem 3 : Accounting Equation

HIMEJI Doujin Company was formed on June 1 2021. On June 28, 2021 the statement
of financial position showed Cash $ 100,000, Accounts Receivable $ 5,000, Supplies $
4,000, Equipment $ 255,000, Account Payable $ 100,000, Notes Payable $64,000, Share
Capital Ordinary $ 200,000. During July, the following transactions occurred.
1. Shareholders invested $10,000 in cash in exchange for ordinary shares of Legal
Service Company
2. Paid $800 for July Rent office space
3. Purchased office equipment in cash $3,000
4. Peformed legal services for clients for cash $1,500
5. Incurred Utilities expense for the month on account $900
6. Borrowed $700 from a bank on a note payable
7. Performed a legal services for clients on account $2,000
8. Paid monthly expenses : salaries $500, advertising $1,100
Instructions
Prepare a tabular analysis of the March transactions beginning with June 28 balances.
The column heading should be as follow:
Cash + Account Receivable + Supplies + Equipment = Notes Payable + Account
Payable + Share Capital + Revenue – Expenses – Dividends.

Problem 4 : Statement of Preparation

Rin started a consulting firm. Rin Ltd on March 1, 2021. Rin invested $250,000 cash in the
business. The following are the assets and liabilities of the company at March 31 and the
revenues and expenses for the month of March.
Cash $ 250,000
Account Receivable $ 45,000
Supplies $ 70,000
Advertising Expense $ 50,000
Equipment $ 160,000
Notes Payable $ 100,000
Account Payable $ 110,000
Service Revenue $ 300,000
Gasoline Expense $ 8,000
Maintenance and Repair Expense $ 5,000
Utilities Expense $ 10,000
Rent Expense $ 12,000
Salaries and Wages Expense $ 120,000

No additional Investment were made in that month. There is a dividend of $ 30,000 during the
month

Instruction:
Prepare income statement and retained earnings statement for the month of March and
a statement of financial position at March 31, 2021.
Homework

Financial Statement information about four different companies is as follows

Instructions
Determine the missing amounts.

Lala Lolo Lulu Lili

Jan 1, 2019
Assets $1,000,000 $1,200,000 (g) $
1,600,000
Liabilities (a) (d) $650,000 $ 750,000

Equity $750,000 $400,000 $350,000 (j)

Dec 31,
2019
Assets $850,000 $1,500,000 $2,000,000 (k)
Liabilities $500,000 (e) $ 400,000 $ 900,000

Equity (b) (h) $

$850,000 1.500.000

Equity

changes in
year
Additional (c) $140,000 $ 110,000 $ 160,000
investment
Dividends $110,000 (f) $ 150,000 $ 150,000
Total $3,000,000 $ 3,200,000 (i) $
revenues 5,500,000
Total $3.400,000 $ 3,000,000 $3,520,000 (l)
expenses
 MODULE 2
THE RECORDING PROCESS

Problem 1: Journalize Transactions

Due to it’s relevancy, a Parent Company called Health & Wellness.Co expanded on their
corporations to focus more on providing COVID-19 medical tools and equipments. Thus, a
subsidiary company called Corona-Care. Inc was born on 1 September 2020. The following
transactions were made during their first month of operations.

September 1 Invested $50,000 cash in exchange for ordinary shares

1 Hired a research personnel at a salary of $350 per week payable monthly.
The personnel got to work the day of the employment.
6 Paid $500 for Advertising
9 Performed health consulting services and billed Customers for $5.200
13 Purchased therapy supplies on account from Bross Company $5,500
16 Received and Paid utility Bills for $145
18 Purchased equipment with cash from the Officals.Inc $10.200
19 Incurred advertising expense of $3,000 on account
22 Declared & paid $ 800 cash dividend
24 Paid office rent for the month $5.500 cash
27 Received $1,700 cash advance from Mr. Crane for a health consultation
29 Received $1,350 cash for services completed to their respective customers
30 Paid the research personnel for the month

Instruction

Prepare the journal entries for each transactions for the month of September.
Problem 2 : Trial Balance & T account Ledger

Langford.Co’s accountant has prepared the following journal transactions for June 2020 that are
presented below :

Date Account Titles & Explanation Debit Credit

June 1 Cash $ 50.000
A, Capital $ 50.000
12 Equipment $ 12.000
Accounts Payable $ 12.000
13 Rent Expense $ 3.500
Cash $ 3.500
23 Accounts Receivable $ 23.000
Service Revenue $ 23.000
27 Accounts Payable $ 6.700
Cash $ 6.700

Instructions

1. Posting these journal transactions into T-account Ledger.

2. Prepare a Trial Balance at June 30, 2020.
Homework : Journalize Transactions, T-accounts, & Trial Balance

Lavish Union.Co is a company who’s mainly providing services for an planning & organizing
events. They have an Ending Trial Balance of the following :

Lavish Union Company

Trial Balance
August 31, 2020
Cash $ 35.000
Accounts Receivable $ 20.000
Supplies $ 10.000
Prepaid Rent $ 15.500
Equipment $ 23.000
Accounts Payable $ 15.000
Share Capital-Ordinary $ 50.000
Retained Earnings $ 38.500
$ 103.500 $ 103.500

During October 2020, the following transactions occurred:

October 03 Purchased new equipment from Bartoli Company costing $105.000 and paid
$20,000 cash now and agreed to pay the remaining on account.
October 05 Finished orders from decorating Ms. Garcia’s Sweet 17 Birthday Celebration Party
$70,000 and make up amounted to $120,000 in the same customer. Make up
payment received on cash and for the decorating service the billed will be sent.
October 06 Purchased supplies costing $ 35,000 on account.
October 09 Received $120,000 in cash for services rendered to customers.
October 12 Received payment of the bill sent to Ms. Garcia.

October 19 Received $300,000 in cash as advanced payment from Capital.Inc for service.
October 21 Paid the remaining balance on account for Bartoli Company.

October 29 Paid $29,000 for salaries and wages.

October 30 Paid for advertising expense of $15,500.
Instructions

1. Journalize the transactions occurred in October 2020.

2. Prepare a general ledger using T-accounts. Enter the opening balances in the ledger
accounts as of October 1, 2020.
3. Prepare a trial balance on October 31, 2020.
 MODULE 3
ADJUSTING THE ACCOUNTS

Problem 1 : Adjusting Entries

The ledger of Anderson Company shown below on December 31, 2021 includes the selected
accounts before adjusting entries are prepared.

Accounts Debit Credit

Account Receivable $ 12,000

Supplies $ 26,000

Equipment $ 17,200
Accumulated Depreciation – $0
Equipment
Notes Payable $ 14,000

Interest Payable $0

Salaries and Wages Payable $ 700

Service Revenue $ 48,000

Insurance Expense $ 7,500

The information below has been gathered at December 31, 2021.

1. Supplies of $12,500 are on hand.
2. Performed services for a client in December 2021, the client will be billed $6,200.
3. Depreciation on the equipment for 2021 is $4,000.
4. Borrowed $14,000 by signing a 10%, one-year note on Oct 1, 2021.
5. Paid $7,500 for 12 months of insurance coverage on 30 April 2021.
6. On October 1,2021, collected $48,000 for services to be performed from October 1,2021
through May 31, 2022.
7. The company pays 8 employees who are paid every week with a salary payment schedule
every Friday. Five people are paid $500/week and the rest are paid $200/week. On
December 31, 2021 is Wednesday and employees don't work on weekends.
Instructions
Prepare annual adjusting entries for the seven items described above.
Problem 2 : Adjusting Entries
The ledger of Keeds Company on 30 June of the current year includes the selected accounts,
shown below, before adjusting entries have been prepared.

Accounts Debit Credit

Prepaid Insurance $ 22,000

Supplies $ 8,200
Equipment $ 30,850

Accumulated Depreciation- $3,500

Equipment

Notes Payable $ 25,000

Unearned Rent Revenue $ 92,000

Interest Expense $ 8,500

Salaries and Wages Expense $ 50,950

An analysis of the accounts show the following.

1. The equipment depreciates $520 per month.
2. Insurance expires at the rate of $380 per month.
3. Interest of notes payable is accrued (the notes payable was since January 1 on the same
year with 12%).
4. 1/2 of the unearned rent revenue was recognized in the middle of the year
5. Supplies on hand total $4,450.
Instructions
Prepare the adjusting at 30 June for Keeds Company, assuming that the adjusting entries are
made semiannually.
Problem 3 : Adjusting Entries, Ledger, & Adjusted Trial Balance

Claresta started his own consulting firm, Bellingham Company, on January 1, 2019. The trial
balance before adjustment on 31 December 2021 is as follows.
Bellingham Company
Trial Balance
December 31, 2021

Account Debit Credit

Number
101 Cash $40,000
126 Supplies 18,500
130 Prepaid Insurance 16,400
140 Land 48,000
143 Buildings 296,100
157 Equipment 80,000
201 Accounts Payable $21,000
208 Unearned Rent Revenue 24,400
275 Mortgage Payable 87,000
311 Share Capital—Ordinary 320,000
332 Dividends 10,500
429 Rent Revenue 170,000
622 Maintenance and Repairs 13,300
Expense
726 Salaries and Wages Expense 78,000
732 Utilities Expense 21,600

$622,400 $622,400
In addition to those accounts listed on the trial balance, the chart of accounts for Bellingham
Company also contains the following accounts and account numbers: No. 112 Accounts
Receivable, No.144 Accumulated Depreciation – Buildings, No. 158 Accumulated Depreciation
– Equipment, No. 212 Salaries and Wages Payable, No. 230 Interest Payable, No. 631 Supplies
Expense, No. 711 Depreciation Expense, No. 718 Interest Expense, and No. 722 Insurance
Expense.
Other data:
1. Annual depreciation is $4,800 on buildings and $3,200 on equipment. Machine and
Buildings acquired on 1 April 2021.
2. The company paid insurance in advance of $16,400 for 2021 with the following details:

Company Date Policy Amount Time Period

UOB 1 August 2021 $7,800 2 year
Citibank 1 October 2021 $8,600 1 year

3. A count on December 31 shows $8,200 of supplies on hand.

4. Unearned rent revenue of $5,400 was recognized for service performed prior to December
31.
5. The mortgage interest rate is 12% per year (the mortgage was taken out on September 1).
6. Salaries of $12,500 were unpaid at December 31.
7. Rentals of $9,500 were due from tenants at December 31.

Instructions
a). Journalize the adjusting required as of December 31, 2021.
b). Prepare a ledger using the three-column form of account. Enter the trial balance amounts and
post the adjusting entries. (Use J1 as the posting reference).
c). Prepare an adjusted trial balance on December 31, 2021.
Homework : Journal Transactions, Adjusting Entries, Ledger Accounts,
Adjusted Trial Balance, Statement of Preparation
On December 1, 2021, the account balance of Daily Light, Inc were as follows.

No. Debit No. Credit

101 Cash $ 12,500 158 Accumulated Depreciation
- Equipment $10,500
112. Accounts 20,500
Receivable
201 Accounts Payable 4,000

126 Supplies 8,600 209 Unearned Service Revenue 6,200

157 Equipment 78,500 212 Salaries and Wages 9,500
Payable
311 Share Capital—Ordinary 57,500
320 Retained Earnings 32,400
$120,100 $120,100

During December, the following summary transactions were completed.

Dec 02 Purchased supplies on account $14,500.

Dec 05 Received $50,200 cash for services performed in December.
Dec 08 Paid $8,000 for salaries due employees, of which $2,600 is for October salaries.
Dec 12 Purchased equipment on account $5,800.
Dec 18 Received $14,800 cash from customers on account.
Dec 21 Paid creditors on account $3,000.
Dec 24 Paid December rent $6,000.
Dec 26 Received $2,400 from customers for future service.
Dec 28 Paid salaries $2,600.
Dec 29 Performed services on account and billed customers for services provided $6,680.

Adjustment data consist of:

1. Unearned service revenue $2,500 is recognized for services performed.
2. Accrued salaries payable $6,800.
3. Supplies on hand $5,300.
4. Depreciation for the month is $2,400.

Instructions
a). Journalize the December transactions.
b). Journalize the adjusting entries at December 31, 2021.
c). Post to ledger accounts using the three-column form of account. (Use J1 for posting reference.
Use the following additional accounts: No. 400 Service Revenue, No. 631 Supplies Expense, No.
711 Depreciation Expense, No. 726 Salaries and Wages Expense and No. 729 Rent Expense).
d). Prepare an adjusted trial balance.
e). Prepare an Income Statement and a retained earnings statement for December and a Statement
of Financial Position at December 31, 2021.
 MODULE 4

COMPLETING THE ACCOUNTING CYCLE

Problem 1 : The Accounting Cycle
Clara opened Cleaner Inc. On June 1, 2021 During this month, the following transactions were
completed.
Jun 1 Issued 30,000 shares of share capital ordinary for $30,000 cash.
Jun 2 Purchase used truck for $21,000 paying, $6,850 cash and the balance on account.
Jun 5 Purchase cleaning supplies for $4,500 on account.
Jun 8 Paid $5700 cash on one-year insurance policy effective June 1.
Jun 10 Billed customer $4,225 for cleaning services.
Jun 16 Paid $4150 cash on amount owed on truck and $1500 on amount owed on cleaning
supplies.
Jun 20 Collected $4,225 cash from customers billed on June 10.
Jun 25 Paid $2,350 cash for employee salaries.
Jun 28 Billed customers $6,750 for cleaning service.
Jun 30 Paid $540 for the monthly gasoline bill for the truck.
Jun 30 Declared and paid $450 cash dividends.
The chart of accounts for Cleaner Inc. contains the following accounts: No. 101 Cash, No. 112
Accounts Receivable, No. 126 Supplies, No. 130 Prepaid Insurance, No. 157 Equipment, No. 158
Accumulated Depreciation – Equipment, No. 201 Account Payable, No. 212 Salaries and wages
payable, No. 311 Share Capital-Ordinary, No. 320 Retained Earning, No. 332 Dividend, No. 350
Income Summary, No. 400 Service Revenue, No. 633 Gasoline Expense, No. 631 Supplies
Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, and No. 726 Salaries and
Wages Expense.

Instructions
a. Journalize the June transaction.
b. Enter the following adjustments on worksheet and complete the worksheet.
1. Unbilled revenue for service performed at June 29 was $2,575.
2. Depreciation on equipment for the month was $500.
3. One-twelfth of the insurance expired.
4. An Inventory count shows $450 cleaning supplies on hand at June 30.
5. Accrued but unpaid employee salaries were $1,000.
c. Prepare the income statement, retained earnings statement and classified statement of
financial position for June 30.
d. Prepare the closing entries and post-closing trial balance.
*) The worksheet is given on the next page
Homework : The Accounting Cycle & Worksheet

KOALA COMPANY
Worksheet
For the Month Ended March 31, 2021

Account Tittles Trial Balance

Dr Cr
Cash 5,050
Account Receivable 3,235
Supplies 2,200
Accounts Payable 1,900
Unearned Service Revenue 245
Share Capital—Ordinary 4000
Service Revenue 5500
Salaries and Wages Expense 970
Miscellaneous Expense 190

Other data:
1. A physical count reveals $750 of supplies on hand
2. $145 of the unearned revenue is still unearned at the month-end
3. Accrued salaries are $270

The chart of accounts for Koala Company contains the following accounts: No. 101 Cash, No. 112
Accounts Receivable, No. 126 Supplies, No. 201 Account Payable, No. 210 Unearned Service
Revenue, No. 212 Salaries and wages payable, No. 311 Share Capital-Ordinary, No. 320 Retained
Earnings, No. 332 Dividend, No. 350 Income Summary, No. 400 Service Revenue, No. 631
Supplies Expense, No. 725 Miscellaneous Expense, No. 726 Salaries and Wages Expense

Instructions
a. Enter the trial balance on a worksheet and complete the worksheet.
b. Prepare the income statement, retained earnings statement for March, and Statement of
financial position at March 31.
c. Prepare the closing entries.
d. Prepare the post-closing trial balance.
 MODULE 5
ACCOUNTING FOR MERCHANDISING OPERATIONS

Problem 1 – Perpetual Inventory System

Oldtown Inc. distributes racks to retail store and extends credit term of 2/10, n/30 to all its
customers. At the end of May, Oldtown's inventory consisted of racks costing $1,600. During the
month of July, the following merchandising transaction occurred.

July 1 Purchased racks on account for $2,000 from Nelson Manufactures, FOB destination,
terms 3/10, n/30. The appropriate party also made a cash payment of $130 for freight on
this date.

July 4 Sold racks on account to George for $5,000. The cost of suitcases sold is $2,500.
July 8 Paid Nelson Manufactures in full.
July 10 Received payment in full from George.
July 15 Sold suitcases on account to Virginia Co. for $6,500. The cost of the suitcases sold was
$3,250.
July 18 Purchased suitcases on account for $6,000 from ABC Manufactures, FOB shipping point,
terms 1/10, n/30. The appropriate party also made a cash payment of $200 for freight on
this date.

July 20 Received $250 credit for racks returned to ABC Manufactures.

July 23 Received payment in full from Virginia Co.
July 25 Sold suitcases on account to Astrid Co. for $6,000. The cost of suitcases sold was
$3,500.
July 30 Paid ABC Manufactures in full.
July 31 Granted Astrid Co. $300 credit for suitcases returned costing $150.

Instructions
Journalize the transactions for the month of July for Oldtown Corp. using a perpetual inventory
system.
Problem 2 - Periodic Inventory System
The following transactions were completed during May by Taylor Appliances.

Aug 1 Purchased balls from Harry Co. $3,000, terms 2/12, n/30.
Aug 5 Paid freight on John Co. purchase $120.

Aug 9 Sold merchandise to members $5,000, terms n/30.

Aug 10 Received credit of $200 from Harry Co. For a ball that was returned.
Aug 12 Purchased basketball shoes from HI Sports for cash $950.

Aug 15 Paid Harry Co. In full.

Aug 17 Purchased sofas and shorts from BS Station $920, terms 1/15, n/60.

Aug 18 Paid freight on Shoes Station purchased $75.

Aug 22 Sold appliances to members $2,000, terms n/30.
Aug 25 Received $980 in cash from members in settlement of their account.

Aug 28 Paid BS Station in full.

Aug 31 Granted an allowance of $456 to members for basketball clothing that did not fit
properly.

Instructions
Prepare the August Transactions using a periodic inventory system.
Problem 3 : Perpetual and Periodic System

The following transactions were completed during August by UNI Clothing.

Jan 2 Purchased pants from Invisible Co. $3,100, FOB shipping point, terms 2/15, n/60.
5 Paid freight on Invisible Co. purchase $90.
7 Sold hats to members $2,000, terms n/30. The merchandise sold had a cost of
$1,500.
10 Received credit of $80 from Invisible Co. for pants that was returned.
12 Purchased jackets from Alexandra for cash $2,150.
13 Paid Invisible Co. In full.
15 Purchased cardigans from Delta $2,000, FOB Shipping Point, terms
3/10, n/60.
16 Received cash refund of $175 from Alexandra for damaged jackets that was returned.

18 Paid freight on Delta purchase $75.

19 Sold jackets to members $1,050, terms n/45. The cost of merchandise sold was $520.
22 Received $825 in cash from members in settlement of their account.
25 Paid Delta in full.
28 Granted an allowance of $95 to members for hats that was torn. The cost of the hat
is $55.

Instructions
Prepare the January’s transactions using a perpetual and periodic inventory system.
Homework : Income Statement
At the end of Petrol Ltd.’s fiscal year on December 31, 2020, these accounts appeared in its
adjusted trial balance.

Freight – In $ 8,500
Inventory (1 Jan 2020) $ 52,000

Purchases $ 820,000
Purchases Discount $ 32,000

Purchases Return and Allowances $ 5,500

Sales Revenue $ 862,000

Sales Return and Allowances $ 34,000

Additional facts:
1. Merchandise inventory on December 31, 2020, is $88,000
2. Petrol Ltd. uses a periodic system.

Instructions
Prepare an income statement through gross profit for the year ended December 31,2020.
 MODULE 6
INVENTORIES

Problem 1 : Periodic and Perpetual System Using FIFO and Average Method
Ace Hardware is a retailer company in USA. It uses the perpetual inventory method. All sales returns from
customers result in the goods being returned to inventory, the inventory is not damaged. Assume that there
are no credit transactions, all amounts are settled in cash. The following information is available for Ace
Hardware during April 2021.

Date Description Quantity Price/

Unit

Mar 26 Ending 55 $50

inventory
Apr 4 Purchase 35 $83
9 Sale 75 $90
12 Sale return 15 $90
15 Purchase 40 $75
24 Sale 35 $92

28 Purchase 14 $75
return

Instructions

a. Calculate the COGS, Ending Inventory, and Gross Profit under a periodic inventory
system and perpetual inventory system using FIFO method.
b. Calculated the COGS, Ending Inventory, and Gross Profit under a periodic inventory system
using Weighted-Average method and perpetual inventory system using Moving-average
method.
Problem 2 : Retail Inventory Method
The following shows information about Craft retail store. Determine the missing amounts using
retail inventory method.

At Cost At Retail
Beginning Inventory $45,000 $84,000
Goods Purchased $145,000 …………
Goods available for sale ………… $225,000
Net sales $60,000 $95,500
Ending Inventory ………… …………

Problem 3 : Periodic and Perpetual Average Cost Method

You have the following information for Blue Moon Diamonds. Blue Moon Diamonds uses the
periodic inventory method for its inventory transactions. Blue Moon Diamond only carries one
brand and six of diamonds – all are identical. Each batch of diamonds is carefully coded and
marked with its purchase cost.
June 1 : Beginning Inventory 650 diamonds at a cost of $780 per diamond.
June 8 : Purchased 560 diamonds at a cost of $820 each.
June 15 : Sold 250 diamonds for $1,225 each.
June 20 : Purchased 680 diamonds at a cost of $850 each.
June 28 : Sold 520 diamonds for $1,480 each.
Instructions
Calculate:
(1) Ending Inventory
(2) Cost of Goods Sold
(3) Gross Profit under each of the following method:

a). Periodic Average Cost Method

b). Perpetual Average Cost Method
(4) Gross Profit Margin
Homework : Periodic Inventory System Using FIFO and Average Cost
Method
Automotive Industry had a beginning inventory on January 1 of 850 units of Product X at a cost
of $35 per unit. During the year, the following purchases were made.

Units Unit Cost

May 18 150 $ 24

July 24 500 $ 42
September 12 330 $ 40

December 16 400 $45

On 22 December, 1,800 units were sold for $75. Raven Company uses a periodic inventory
system.
1. Determine the cost of goods available for sale using table.
2. Determine the Ending inventory and COGS under the two assumed cost flow methods
(FIFO and average-cost).
3. Which cost flow method results in:
A). The higher inventory amount for the statement of financial position.
B). The higher COGS for the income statement.
 MODULE 7
FRAUD, INTERNAL CONTROL, AND CASH CONTROL

Problem 1 : Petty Cash Fund

Moonfell Wood Ltd. maintains a petty cash fund for small expenditures. These transactions
occurred during the month of July.

July 01 Established the petty cash fund by writing check payable to a petty cash custodian
for $350.

July 10 Replenished the petty cash fund by writing check for $225. On this date, the fund
consisted of $57 in cash and these petty cash receipts: freight out $43, entertainment
expense $72, postage expense $45, and miscellaneous expense $59.

July 17 Replenished the petty cash fund by writing check for $159. On this date, the fund
consisted of $26 and these petty cash receipts: freight out $28, postage expense $27,
charitable contributions expense $88, and miscellaneous expense $24.
July 25 Moonfell Wood Ltd. decides to increase the amount of petty cash fund to $500.

July 31 Replenished the petty cash fund by writing check for $200. On this date, the fund
consisted of $69 in cash and these petty cash receipts: freight out $42, entertainment
expense $57, postage expense $68, and miscellaneous expense $33.
Instructions

Journalize the petty cash transactions.

Problem 2 : Bank Reconciliation & Adjusting Entries
The following transactions occurred at Arendelle Co. on December 31, 2021:

1. Bank account showed a balance of $20,090.

2. Cash balance per books, December 31 $19,696.
3. Bank collected $5,700 note for Elsa’s Company in December, with an interest of $250.
Collection fee was $50. Interest on the note has been accrued.
4. Deposit in transit $4,848 and checks outstanding on December 31 totaled $737.
5. Bank statement showed NSF charge of $275.
6. Bank statement showed charges of $120 for the service charge of maintaining the checking
account.
7. Arendelle Co. issued check no. 505 for $1,231 to Olaf’s Company on account. This check,
which was cleared by bank in November, was incorrectly journalized and posted by
Arendelle Co. for $231. This check had been issued to pay for purchases of Machinery.
Instructions
1. Prepare the bank reconciliation at December 31, 2021.

2. Journalize the adjusting entries at December 31, 2021.

Problem 3 : Bank Reconciliation

The Cash account of Moors Corporation showed a balance of $168,969 on October 31, 2021. The
bank statement as of the date showed a balance of $178,328. Upon comparing the statement with
the cash records, the following facts were determined.

1. There were bank service charges for October of $222.

2. A bank memo stated that Moors Corporation’s note for $18,000 and interest $888 had been
collected on October 15 and the bank had made a charge of $111 on the collection.
3. Deposit in transit was $12,743 and outstanding checks on October 31 was $7,034.
4. Check No.404 in the amount of $12,400 had been entered in the cash journal as $14,200
and Check No.415 in the amount of $1,080 had been entered in the cash journal as $1,800.
Both checks had been issued to pay for purchases of supplies.
5. The bank had charged the Moors Corporation’s account for a customer’s uncollectible
check amounting to $666 on October 25.
6. There was a cancelled check of $5,341 issued by Aurora Company that was incorrectly
charged to Moors Corporation by the bank.
Instructions
Prepare the bank reconciliation at October 31, 2021.
Homework : Bank Reconciliation & Adjusting Entries
On November 30, 2021, Atlantica Corporation had a cash account per its general ledger showed a
balance of $58,430.
The bank statement from Secret Treasure Bank on that date showed the following date showed the
following balance.
Secret Treasure Bank
Checks and Debits Deposits and Credits Daily Balance
11-30 $56,789

A comparison of the details on the bank statement with the detail in the Cash account revealed the
following facts.
1. Cash sales of $2,190 on November 5 were deposited in the bank. The cash receipts journal
entry and the deposit slip were incorrectly made for $2,910. The bank credited Atlantica
Corporation for the correct amount.
2. On November 17, the company issued check no. 753 for $2,930 to Flounder on account.
The check, which cleared the bank in November, was incorrectly journalized and posted
by Atlantica Corporation for $2,390. This check had been issued to pay for purchases of
Equipment.
3. The statement included a debit memo of $650 for the printing of additional company
checks.
4. Included with the cancelled checks was a check issued by Aquamarine Company to
Atlantis Corporation for $5,535 that was incorrectly charged to Atlantica Corporation by
the bank.
5. On November 25, the bank statement showed an NSF charge of $1,964 for check issued
by Ariel, a customer, to Atlantica Corporation on account.
6. Outstanding checks at November 27 totaled $4,341 and deposits in transit were $7,280.
7. A $10,000 note receivable was collected by the bank for Atlantica Corporation on
November 12 plus $812 interest. The bank charged a collection fee of $105. No interest
has been accrued on the note.
Instructions
1. Prepare the bank reconciliation at November 30, 2021.
2. Prepare the necessary adjusting entries for Atlantica Corporation on account.
 MODULE 8
ACCOUNTING FOR RECEIVABLES

Problem 1 : Inadequate Receivables

The ledger of Chaotic.Inc at the end of current year shows:
Account Receivable $ 400,000; Sales Revenue $ 640,000; and Sales Return and Allowance $
240,000.

Instructions :

1. If Chaotic.Inc uses direct write-off method, journalize the adjusting entry at December 31,
assuming Chaotic.Inc determines that Servish’s $ 31,000 balance is uncollectible.
2. If Allowance for Doubtful Accounts has a credit balance of $ 29,700 in the trial balance,
journalize the adjusting entry at December 31, assuming bad debt are expected to be :
a. 4% of net sales.
b. 12% of accounts receivable.

Problem 2 : Notes Receivable

Promising.Co has the following transaction (related to notes receivable during the last two
months of 2020). The company doesn’t make any entries to accrue the interest, except at
December 31.
(1 year = 360 days)

Nov. 1 Loaned $ 58,000 to Magnifico.Inc on 12-month, 9% note

Dec. 10 Sold goods to Sakura.Inc receiving a $ 45,000, 90-day, 12% note

16 Received a $ 42,500, 180-day, 10% note in exchange for NaiNai. Co’s

outstanding account receivable

31 Accrued interest revenue on all notes receivable

Instructions :

1. Journalize the transaction for Promising.Co

2. Record the collection of the Magnifico.Inc note at its maturity.
Problem 3 : Age of Accounts Uncollectible

Information related to Shelter Company for 31 December 2020 is summarized as following:

Account Receivables $ 250,000,000

Allowance for Doubtful Accounts (CR) $ 10,500,000

Sales $ 850,000,000

Sales return $ 95,000,000

Shelter Company categorizes its account receivables based on their age:

Age of Accounts Amount Estimated

uncollectible percentage
1-30 days $ 100,000,000 1%
31-60 days $ 80,000,000 3%
61-90 days $ 55,000,000 8%
Over 90 days $ 45,000,000 10%

Instructions :
If Shelter Company uses allowance method for their uncollectible accounts:

1. Prepare the adjusting entry if its bad debt expense assumes to be 1% of net sales.
2. Prepare the adjusting entry if its bad debt expense assumes to be 6% of Account
Receivables.
3. Prepare the adjusting entry if its bad debt expense assumption is based on age of accounts
uncollectible.
Homework : Notes & Interest Receivable

Alpha closes its books every 30 September. selected ledger account balances are:

Notes Receivable = $ 41,000

Interest Receivable = $ 170

Notes Receivable includes the following:

Date Maker Face Value Term Interest

Aug. 16 Beta $25,000 60 days 12%

Aug. 27 Omega $ 7,000 60 days 7%

Sept. 30 Sigma $ 18,000 6 months 10%

*Interest is computed using a 360-day year. During October, the following transactions were completed.

Oct 9 Made sales of $ 19,000 on credit sales.

Oct 12 Made sales of $ 6,500 on VISA credit card. The credit card’s service charge is
2%.

Oct 14 Added $680 to customer balance for finance charges on unpaid balance.
Oct 15 Received full payment from Beta on the amount due.

Oct 26 Received notice that Omega’s note has been dishonored (Assume that Omega
is expected to pay in the future).

Instruction:
Journalize the October transactions and the October 31 adjusting entry for accrued interest
receivables.