GUHIT MERCHANDISE is an architectural firm.

The company began its operations on August 1, 2018

owned and operated by MR SALUN G. GUHIT. The owners initially invested P350,000 cash. The following
trial balances came from the general ledger of GUHIT SERVICES of July 31, 2019, end of the annual fiscal
period.

DR CR
Cash 272,281
Accounts Receivable 319,888
Supplies
Prepaid Rent
Furniture and Equipment 190,000
Accumulated Depreciation 49,500
Accounts Payable 75,500
Salaries Payable
Interest Payable
Unearned Rent
Unearned Professional Fee
Notes Payable 50,000
Bank Loan payable, due 12.31.25 200,000
Guhit, Capital
Guhit, Drawings 192,500
Professional Income 894,500
Rent Income 65,000
Miscellaneous Income 13,789
Salaries Expense 277,500
Rent Expense 150,000
Supplies Expense 106,250
Legal Services 12,000
Utilities Expense ?
Taxes Expense 24,895
Repairs and Maintenance 12,750
Interest Expense
Depreciation Expense 49,500
Miscellaneous Expense 10,222

Additional Information gathered as of July 31, 2019.

 The amount of supplies per physical count amounted to P32,830

Original Entry: EXPENSE METHOD

DR CR
Supplies Expense 106,250
Supplies 106,250
 Adjusting Entry:

DR CR
Supplies 32,830
Supplies Expense 32,830

 Salaries incurred but not yet paid amounted to P10,245

DR CR
Salaries Expense 10,245
Salaries Payable 10,245

 The note payable was dated April 30, 2019. The principal and the interest will be paid after nine
months with 12% interest per annum.

DR CR
Interest Expense 1,500
Interest Payable 1,500

Solution:
50,000 x 0.12= 6000
6,000 x 3= 18,000
18,000/12= 1,500

 The company paid two months advance and one-month deposit of rent August 1, 2018. The
company religiously paid monthly rental at the end of each month beginning August 31, 2018.

Original Entry: EXPENSE METHOD

DR CR
Rent Expense 30,000
Cash 30,000

Adjusting Entry:

DR CR
Prepaid Rent 30,000
Rent Expense 30,000

Solution:
Rent Expense= 150,000/15 months (2 months advance 1-month deposit= 3 months + 12
months) = 10,000 monthly
 The equipment was purchased at the beginning of its first year of operations. Estimated of the
furniture and equipment is 3 years with residual value. The company charges monthly
depreciation at the end of each month except for the last month of the fiscal year end.

Original Entry:
 DR CR
Depreciation Expense 49,500
Accumulated Depreciation 49,500
Adjusting Entry:

DR CR
Depreciation Expense 4,500
Accumulated Depreciation 4,500

Solution:
49,500/11= 4,500
4,500 x 12 = 54,000 (annual)
 At the end of the year, the company should have a balance of 15,000 representing advance
collection of professional Income.

Original Entry: INCOME METHOD

DR CR
Cash 894,500
Professional Income 894,500

Adjusting Entry:

DR CR
Professional Income 15,000
Unearned Professional 15,000
Income

 The amount of rent income already earned was P12,000.

Original Method: INCOME METHOD

DR CR
Cash 65,000
Rent Income 65,000

Adjusting Entry:

DR CR
Rent Income 53,000
Unearned Rent Income 53,000

 The loan from bank was acquired on December 1, 2018 which will be matured 5 years after with
18 % per annum. Interest is payable annually every birthdate of loan.

DR CR
Interest Expense 24,000
 Interest Payable 24,000

Solution:
200,000 x .18 = 36,000
36,000 x 8 = 288,000/12 = 24,000
 GUHIT SERVICES
WORKSHEET
JULY 31, 2019
  Trial Balance Adjustment Adjusted Trial Balance Income Statement Balance Sheet
  DR CR DR CR DR CR DR CR DR CR
Cash 272,281       272,281       272,281  
Accounts Receivable 319,888       319,888       319,888  
Supplies     32,830   32,830       32,830  
Prepaid Rent     30,000   30,000       30,000  
Furniture & Equipment 190,000       190,000       190,000  
Accumulated Depreciation   49,500   4,500   54,000       54,000
Accounts payable   75,500       75,500       75,500
Salaries Payable   10,245   10,245   10,245       10,245
Interest Payable       25,500   25,500       25,500
Unearned Rent       53,000   53,000       53,000
Unearned Professional Fee       15,000   15,000       15,000
Notes Payable   50,000       50,000       50,000
Bank Loan Payable (12.31.25)   200,000       200,000       200,000
Guhit, Capital           350,000   350,000    
Guhit, Drawings 192,500       192,500       192,500  
Professional Income   894,500 15,000     879,500   879,500    
Rent Income   65,000 53,000     12,000   12,000    
Miscellaneous Income   13,789       13,789   13,789    
Salaries Expense 277,500   10,245   287,745   287,745      
Rent Expense 150,000     30,000 120,000   120,000      
Supplies Expense 106,250     32,830 73,420   73,420      
Legal Services 12,000       12,000   12,000      
Utilities Expense         80,503   80,503      
Taxes Expense 24,895       24,895   24,895      
Repair and Maintenance 12,750       12,750   12,750      
Interest Expense     25,500   25,500   25,500      
Depreciation Expense 49,500   4,500   54,000   54,000      
Miscellaneous Expense 10,222       10,222   10,222      
1,738,53
Totals     171,075 171,075 1,738,534 4 701,035 1,255,289 1,037,499 483,245
Net Income             554,254     554,254
              1,255,289 1,255,289 1,037,499 1,037,499
Salvage Value= 28,000

Solution:
54,000 (Depr. Expense)/ 12 (months)= 4,500
4,500 x 36 (months or 3 years) = 162,000 (Depreciable Cost)
190,000 (Historical Cost (equipment)- 162,000= 28,000