FUNDAMENTALS OF ACCOUNTING SIRDAVE’SCLASSROOM/CPARCENTER

COMPLETE ACCOUNTING CYCLE – SERVICE ENTITY DWM.REYNO,CPA,DBA

Bob Lee Swagger is one of the world’s greatest sniper. Retired at the age of 45, he decided to put up a gun repair shop he called
“Musa Kuala”. The following are his transactions for the month of June, 2019:
June 1 – Bob Lee Swagger invested P4,500,000 cash in his gun repair business as a single proprietor.
3 – Bought gun repair equipments for P430,000, cash.
4 – Placed a radio advertisement and paid P22,000 cash.
4 – Bought repair supplies from ADMIRAL for P83,250, on account.
5 – Bought furniture from KAHOY Inc., P175,000 and issued promissory note due in 90 days.
6 – Placed P1,250,000 cash in the bank (BDO), this is a checking account.
7 – Paid P40,000 for mayor’s permit and P6,000 for BIR registration, issued checks for the said amounts.
8 – Billed PNP, P160,000 for services rendered during an inauguration celebration .
10 – Collected P260,000 from various customers for repair services.
11 – Paid P37,500 to Security Insurance Company.
12 – Received promissory note in the amount of P120,000 from MARAWI INC. for repair services.
12 – Issued P60,000 check to ADMIRAL as partial payment for the repair supplies bought in June 4.
13 – Collected P60,000 cash from PNP as partial payment for the billing in June 8.
15 – Paid his staff and janitors for their salaries, P109,000.
16 – Collected cash of P85,000 from GEN. DE LEON for repairs of his personal gun collection.
17 – Bought a service vehicle from Isuzu, P800,000, paying cash of P320,000 and issued check for the balance of
P480,000.
18 – Billed the DAVAO CITY, P180,000 for repair services for all guns in the city armory.
20 – Paid the following bills:
Electricity P15,000
Water 3,500
Telephone 8,500
22 – Bought from Lim Pan P100,000 of office supplies on account.
23 – Deposited P200,000 cash at BDO checking account.
24 – Issued check P40,000 to BATO for his commission in looking for clients.
25 – Paid P55,200 for rental payment of the satellite office space.
27 – Collected half of the receivables from MARAWI INC. in June 12.
30 – Paid the half month salary of employees, P109,000.
30 – Bob Lee Swagger withdrew P250,000 for personal use.

Musa Kuala
Chart of Accounts
Current Assets Current Liabilities Revenue
Cash on Hand Accounts Payable – Admiral Repair Revenue
Cash in Bank Accounts Payable – Lim Pan Expenses
Accounts Receivable – PNP Notes Payable – Kahoy Inc. Salaries and Wages Expense
Accounts Receivable – Davao City Proprietorship Repair Supplies Expense
Notes Receivable – Marawi Inc. Swagger, Capital Office Supplies Expense
Non-Current Assets Swagger, Withdrawal Rent Expense
Repair Equipments Insurance Expense
Service Vehicle Commission Expense
Furnitures Light and Water Expense
Advertising Expense
Telephone Expense
Taxes and Licenses Expense

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FUNDAMENTALS OF ACCOUNTING SIRDAVE’SCLASSROOM/CPARCENTER
COMPLETE ACCOUNTING CYCLE – SERVICE ENTITY DWM.REYNO,CPA,DBA
Requirements:
1. Prepare journal entries for the month of June.
2. Post the journal entries to the ledger accounts.
3. Prepare the necessary adjusting entries for the month of June using the following adjustment data:
1. Actual count conducted at the end of June reveals remaining supplies as follows:
a. repair supplies = 20%
b. office supplies = 10%
Note: Separate journal entries should be made for these. (Label them Journal Entry 1a and 1b).
2. Depreciation of Property Plant and Equipment should be based on the following schedule:
Estimated Salvage Value Estimated Useful Life
a. Repair Equipments 10,000 10
b. Service Vehicle 130,000 30
c. Furnitures 30,000 20
Note: Whole month depreciation should be provided in the month of acquisition.
3. Interest has accrued on notes payable at 10% rate (whole month interest should be computed for this).
4. Of the amount received on June 10, three-fourths is considered earned.
5. Accrued salaries to some employees amount to P15,300 as of June end.
6. P9,000 of the advertising expense is applicable for the months of July and August.
7. The insurance paid is for a 6-month period starting June 1, 2017.
8. 2.50% of the accounts receivable balance of PNP and Davao City is considered uncollectible.
Note: Separate journal entries should be made for these. (Label them Journal Entry 8a and 8b)
9. Interest of P490 has accrued on the notes receivable.
10. Unpaid and unrecorded telephone bills, P1,800.
11. The rent paid is for a 6-month period starting June 1, 2017.
4. Prepare a 10-column worksheet.
5. Income Statement.
6. Statement of Changes in Equity.
7. Balance Sheet.
8. Closing Entries.
9. Post-Closing Trial Balance.
10. Reversing Entries.