1.

The accountant for Case Company determined the following balances, listed in random order, for
the month ended October 31. No investments were made during October. Use the following
accounts to answer the next three questions.

Accounts Payable  = P3,200   Prepaid Insurance  = P1,800   Jane Doe, Capital = P35,180
Cash  = P6,580    Mowing Income  =  P12,800     Equipment = P32,400
Wages Expense  = P5,400   Rent Expense  = P2,200    Jane Doe, Drawing = P2,800

Question 1: Income statement question: using the accounts above, calculate net income for the
month of October: Revenue – Expenses = Net income /(Net loss) 12,800 – 5,400 – 2,200 = 5,200

Question 2: Statement of Owner's Equity question: after calculating Net Income,

calculate capital as of October 31 Owner’s equity = Beginning owner’s equity + Investments –
Drawings + net income (Revenue – expenses) = Ending equity 35,180 - 2,800 + 5,200 = 37,580

Question 3: Balance sheet question: after calculating Net Income and ending capital for the
month of October, calculate total assets as it would appear on the Balance Sheet.

Assets (40,780) = Liabilities (3,200) + Owner’s equity (37,580)

Question 4: Balance sheet question: after calculating Net Income and ending capital for the
month of October, enter the total of Liabilities + Owner's Equity in the box below as it would
appear on the Balance Sheet on October 31.

2. The net income reported on the income statement is P90,000. However, adjusting entries have
not been made at the end of the period for supplies expense of P2,700 and accrued salaries of
P1,300. Net income, as corrected, is: R – E = NI
a. P90,000
b. P87,300
c. P86,000
d. P88,700

3. The supplies account has a balance of 500 at the beginning of the year and was debited during
the year for 2,900, representing the total of supplies purchased during the year. If 750 of supplies
are on hand at the end of the year, the supplies expense to be reported on the income statement
for the year would be: Supplies + additional supplies – supplies used (expense) = ending supplies
500 + 2,900 - x = 750
a. P2,400
b. P2,150
c. P1,650
d. P2,650

4. After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has
a balance of P450,000 and Allowance for Doubtful Accounts has a balance of P25,000. What is
the net expected realizable value of the accounts receivable? Rec – allowance = realizable value
a. P450,000
b. P25,000
c. P425,000
d. P455,000
 5. For each of the following, determine the amount of net income or net loss for the year.

(a) Revenues for the year totaled P100,500 and expenses totaled P54,500. The
owner made an additional investment of P20,000 during the year.
(b) Revenues for the year totaled P85,500 and expenses totaled P120,500. The owner
withdrew P30,000 during the year. (35,000)
(c) Revenues for the year totaled P188,000 and expenses totaled P95,000. The owner
invested an additional P30,000 and withdrew P18,000 during the year.
(d) Revenues for Smith Co. totaled P373,500 and expenses totaled P363,800. Cash
withdrawals of P35,000 were paid during the year.
6. The total assets and total liabilities of Missy's Draperies, a proprietorship, at the beginning and at
the end of the current fiscal year are as follows:

January 1 December 31
(a) Determine
Total assets the amount of net income earned during the year. The owner didP430,000
P250,000
not invest any additional assets in the business during the year and made no
Total liabilities R – E = NI x
withdrawals. 200,000 140,000
Equity 50,000(x) – Withdrawals
Owner’s equity beg (50,000) + Investments (0) + Net income 290,000
(0) = Owner’s equity, ending (290,000)

Beginning 50,000

Investments (+) 0

Withdrawals (-) (32,000)

Net income 272,000

= Ending Equity 290,000

(b) Determine the amount of net income during the year. The assets and liabilities
at the beginning and at the end of the year are unchanged from the amounts
presented above. However, the owner withdrew P32,000 in cash during the
year (no additional investments).

(c) Determine the amount of net income earned during the year. The assets and
liabilities at the beginning and at the end of the year are unchanged from the
amounts presented above. However, the owner invested an additional
P40,000 in cash in the business in June of the current fiscal year (no
withdrawals).

Beginning 50,000

Investments (+) 40,000

 Withdrawals (-) 0

Net income (+) 200,000

= Ending Equity 290,000

(d) Determine the amount of net income earned during the year. The assets and
liabilities at the beginning and at the end of the year are unchanged from the
amounts presented above. However, the owner invested an additional
P10,000 in cash in August of the current fiscal year and made twelve monthly
cash withdrawals of P3,000 each during the year.

Beginning 50,000

Investments (+) 10,000

Withdrawals (-) (36,000)

Net income (+) 266,000

= Ending Equity 290,000

7. Selected transaction data of a business for June are summarized below. Determine the following
amounts for June: (a) total revenue, (b) total expense, (c) income from operations.

Service sales charged to customers on account during June P45,000

Cash received from cash customers for services performed in June 40,000
Cash received from customers on account during June:
Services performed and charged to customers prior to June 15,000
 Services performed and charged to customers during June 30,000

Expenses incurred prior to June and paid during June 10,250

Expenses incurred and paid in June 48,500
Expenses incurred in June but not paid in June 9,000
Expenses for supplies used and insurance (not included above) applicable to June 750
a. Revenue 115,000
b. Expense 58,250
c. Net income 56,750
8. Determine the missing amount for each of the following:

Assets Liabilities Owner's Equity

(a) ? P15,000 P 6,000
(b) P30,000 ? P14,000
(c) P50,000 P 5,000 ?

9. Indicate whether each of the following represents (1) asset, (2) liability, or (3) owner's equity:

(a) accounts receivable

(b) wages payable
(c) capital
(d) cash
(e) withdrawal
(f) land