CHAPTER 1

Ex 1.
1. D 2. B 3. C 4. H 5. A 6. G 7. F 8. E

Ex 2 1) B. Financial Accounting Ex 3. 1) Single Proprietorship

2) C. Cost Accounting 2) Service Business
3) A. Social Accounting 3) Manufacturing Business
4) D. Management Accounting 4) Accounting
5) E. Auditing 5) Partnership
6) H. Tax Accounting 6) Corporation
7) G. Government Accounting 7) Creditors
8) L. Forensic 8) Business Entity
9) I. Info System Design 9) Transactions
10) K Advanced Acctg 10) Financial Statements
11) F Environmental Acctg 11) Net Income
12) J Controllership 12) Social responsibility
Ex 4. 1) E 6) B 13) Short term solvency or liquidity
14) Merchandising business
2) A 7) K 15) Business Documents
3) J 8) A, H , E
4) I 9) D
5) L

Ex 5.
1.A 2. G 3. B 4. I 5. C 6. F 7. H 8. A, E, I 9. D 10.B
Ex 6.
a. 2 b. 1 c. 4 d. 13 e. 3 f. 11 g. 6 h. 8 i. 9

Ex 7 Assets = Liabilities + Owner’s Equity

Cash P250,000 Notes Pay P160,000 Investments – Drawings P 19,000
Net Income ? 131,000
Accts Recble ( 50,000) Accts Pay (110,000)
P200,000 P50,000 P150,000
Ex 8.
Service Fee P550,000.00
Commission Income 231,760.00
Interest Income 11,100.00
Rent Income 24,000.00
Total Revenues P816,860.00

Insurance Expense P 600.00

Depreciation Expense – Furniture & Equipment 5,000.00
Bad Debts 1,800.00
Taxes Expense 14,000.00
Utility Expense 2,200.00
Salaries 195,000.00
Advertising 40,500.00
Depreciation Expense – Building 67,500.00
Interest Expense 1,350.00
Supplies Expense 1,500.00
Total Expenses P 339,450.00
Net Income P 487,410.00
Go, Capital 700,000.00
Less Drawings ( 1,800.00)
Owner’s Equity at the end of the year P1,185,610.00
Current Assets:
Cash On Hand and in bank 99,550.00
Notes Receivable 6,000.00
Accounts Receivable 26,400.00
Allowance for Bad Debts (2,640.00)
Prepaid Insurance 1,800.00
Supplies inventory 1,500.00

1
 Total Current Assets P 132,610.00
Plant Assets:
Land 300,000.00
Building 1,350,000
Accumulated Depreciation – Building (135,000) P1,215,000.00
Furniture & Equipment 81,000
Accum. Depn. – Furniture & Equipment (15,000) 66,000.00
Total Plant Assets P1,581,000.00 Commented [1]: Should have been PHP1.581M
Total Assets P1,713,610.00
Current Liability: Accounts Payable P 78,000
Long Term Liability: Mortgage Payable 450,000
Accounts Payable P 528,000.00
Mortgage Payable
Total Liabilities P 528,000.00
Ex 9.
Operating Investing Financing
a 50,000
b 250,000
c 80,000
d (15,000)
e
f (20,000)
g ( 50,000)
h (75,000)
i 100,000
j (80,000) ________ _______
(160,000) ( 50,000) 280,000

Cash Balance P70,000

Ex 10.
Service sales charged to customers on account for January P350,000
Cash received from cash customers for the month of Jan. 300,000
Cash received from account customers serviced in January 200,000
Expenses incurred and paid in January (38,500)
Expenses incurred in January but paid in February (70,000)
Net Income P741,500
Ex 11 Debit Credit
(1) A F
(2) A C
(3) . F A
(4) A A
(5) A C
(6) A D
(7) C A
(8) F A
(9) A A
(10) F C

12. 1) Alfresco bought candles from Ever Bright on terms of 2/10, n/30.
2) Alfresco purchased and paid for goods bought from Natures Best, P5,850.
3) Received from Phil Christian cash of P10,000 for an account that is due,
4) Alfresco paid PLDT account with a check for P4,500.

13. 1) Cash Receipts Journal

Cash 50,000
Casey, Capital 50,000
General Journal
Furniture & Fixtures 15,000
Casey, Capital 15,000
2) General Journal
Office Equipment 10,000
Accounts Payable 10,000
3) Purchases Journal
Purchases 15,000
Accounts Payable 15,000
Cash Disbursement Books
Accounts Payable 5,000
Cash 5,000
2
4) Sales Journal
Accounts Receivable 12,000
Sales 12,000
5) Cash Payments Journal
Accounts Payable 10,000
Cash 9,800
Purchase Discount 200
6) General Journal
Sales Returns and Allowances 1,000
Accounts Receivable 1,000
7) Cash Receipts journal l
Cash 5,000
Cash Sales 5,000

Sales Journal:
Cash Sales 5,000
Sales 5,000
8) Cash Payments Journal
Operating Expense 3,000
Cash 3,000
9) Cash Receipts Journal
Cash 10,000
Notes Payable 10,000
10) Cash Receipts Journal
Cash 10,000
Accounts Receivable 10,000
11) Sales Journal
Accounts Receivable 2,500
Sales 2,500
General Journal
Accounts Receivable 2,500
Notes Receivable 2,500 Commented [2]: Should have been a debit to NR and
credit to AR
12) General Journal
Office Supplies 150
Accounts Payable 150
13) General Journal
Utilities Expense 300
Utilities Payable 300
14) General Journal
Accounts Receivable 2,500
Notes Receivable 2,500
15) Purchase journal
Purchases 15,000
Cash Purchases 15,000

Cash Payment Journal

Cash Purchases 15,000
Cash 15,000

Ex 14.
Jan. 17 Accounts Payable 20,000
Santos, Capital 20,000
20 Cash 4,480
Sales 4,000
Output Tax 480
22 Output Tax 12
Cash 4,888
Sales Discount 100
Accounts Receivable 5,000
25 Utilities Expense 1,500
Cash 1,500
30 Salaries Expense 2,500
Cash 2,000
Witholding Taxes Payable 500
Equipment 7,000
Input tax 840
Cash 5,000
Accounts Payable 2,840
3
 31 Accounts Payable 5,600
Cash 5,488
Equipment 100
Input Tax 12

Cash Accounts Receivable

Jan 1 12,000.00 Jan 15 1,000.00 Jan 1 20,000.00 Jan14 11,500.00
14 11,500.00 2,000.00 9 19,040.00 22 5,000.00
20 4,480.00 25 1,500.00
22 4,888.00 30 2,000.00
30 5,000.00
30 5,488.00
15,880.00 22,540.00

Merchandise Inventory Furniture & Equipment

Jan 1 5,000.00 Jan 1 3,500.00 31 100
15 5,000.00
31 7,000.00
5,000.00 15,400.00

Accounts Payable Santos, Capital

Jan17 20,000 Jan 1 15,000.00 Jan 1 25,500.00
30 5,600 7 20,720.00 17 20,000.00
16 5,600.00
30 2,840.00
18,560.00 45,500.00

Sales Output Tax

Jan 9 17,000.00 22 12.00 Jan 9 2,040.00
20 4,000.00 20 480.00
21,000.00 2,508.00

Purchases Input tax

Jan 7 18,500.00 Jan 7 2,220.00 31 12
15 600.00
30 840.00

18,500.00 3,648.00

Salaries & Wages Utility Expenses

Jan 15 2,500.00 Jan 15 1,000.00
30 2,500.00 25 1,500.00
5,000.00 2,500.00

Sales Discount Withholding Taxes Payable

22 100.00 Jan 15 500
30 500
1,000

SANTOS COMPANY
TRIAL BALANCE
Date
Cash 15,880.00
Accounts Receivable 22,540.00
Merchandise Inventory 5,000.00
Furniture and equipment 15,400.00
Accounts Payable 18,560.00
WT Payable 1,000.00
Sales 21,000.00
Santos, Capital 45,500.00
Sales Discount 100.00
Purchases 18,500.00
Output Tax 2,508.00
Input Tax 3,648.00
Salaries and Wages 5,000.00
Utility Expense 2,500.00 _______
Total 88,568.00 88,568.00

Ex 15. CHENG COMPANY

4
 TRIAL BALANCE
Date
Cash 16,800.00
Prepaid Insurance 3,500
Accounts Payable 3,000
Unearned Income 4,200
Capital Stock 13,000
Dividends 4,500
Service Revenue 25,600
Salaries 18,600
Rent 2,400 ______
P45,800 P45,800
Ex 16:
1. Depreciation. Debit Depreciation and Credit Accumulated Depreciation
2. Bad Debts. Debit Bad Debts and Credit Allowance for Bad Debts
3. Ending inventory. Debit Merchandise Inventory End and Credit Income Summary
4. Accrued expenses Debit Expense and Credit Expense Payable
5. Unearned income Debit Unearned Income and Credit Income
6. Prepaid expense Debit Expense and Credit Prepaid Expense
7. Accrued income. Debit Accrued Income and Credit Income

Ex 17.

SHOPWISE MART
SIX-COLUMN WORKSHEET
DECEMBER 31, 2015
Trial Balance Adjustments Adjusted Trial
Balance
Debit Credit Debit Credit Debit Credit
Cash 2 2
Accounts Receivable 10 10
Allowance for Bad Debts 1 a) 1 2
Merchandise Inventory 24 b) 12 12
Office Supplies Inventory 4 c) 3 1
Store Furniture & Fixtures 7 7
Accumulated Depreciation 3 d) 1 4
Accounts Payable 3 3
Santos, Capital 26 26
Santos, Personal 5 5
Sales 42 42
Sales Returns 2 2
Advertising 3 3
Rent 7 e) 2 5
Sales Salaries 11 f) 1 12
Totals 78 78
Prepaid Rent e) 2 2
Accrued Salaries f) 1 1
Bad Debts a)1 1
Cost of Sales b)12 12
Supplies Expense c) 3 3
Depreciation Expense d) 1 1

Totals 20 20 78 78

Exercise 18:
a. Cash 600,000
Accounts Receivable 900,000
Sales 1,500,000

b. Sales Discount (800,000- 8,400

388,400/.98x.02) 800,000
Cash 808,400*
Accounts Receivable

c. Sales returns and allowances 1,800

Cash 900
Accounts Receivable* 900

a) Accounts Receivable
120,000.00 808,400.00

5
 900,000.00 900.00
210,700.00

b) 6,000/120,000=0.05 policy for maintaining allowance

Required allowance;(210,700 x .05) P 10,535

Addtl provisions (10,535- 6,000)= P4,535

c) Doubtful accounts expense 4,535

Allowance for doubtful accounts
5% of 210,700 – 6,000 4,535
Exercise 19:
ABC Co.
Sept. 1 Prepaid Advertising Expense
(4 x P10,000) 40,000
Cash In Bank 40,000

Adjusting entry:
Oct. 31 Advertising Expense 20,000
Prepaid Advertising Expense 20,000

MNO Co.
Adjusting entry:
Dec. 31 Advertising Expense 40,000
Accrued Advertising Expense 40,000

Exercise 20.
1. Loan discounted in advance:
Nov. 2 Cash 94,000
Interest Expense 6,000
Loans Payable 100,000

Dec 31 Prepaid Interest 2,000

Interest Expense 2,000
1/3 of P6,000

2. Jan 1 Interest Expense 2,000

Prepaid Interest 2,000
Entry upon maturity
Loans payable
Cash 100,000 100,000

Exercise 21:
Nov. 2 Cash 100,000
Loans payable 100,000

Dec 31 Interest Expense 4,000

Interest payable 4,000

Entry upon maturity:

Loans payable 100,000
Interest payable 4,000
Interest expense 2,000
Cash 106,000.00

Exercise 22
a. Adjusting Entries:
Depreciation Expense – Equipt. 5,572
Accumulated Depreciation- Equipt. 5,572
(29,000 – 5,000) / 4 yrs. x 4/12 x 2 units) P4,000
(10,000 – 3,000 / 6 yrs. x 10/12) 972
(1,500 – 300/6 yrs. X 3 units) 600

b. Financial Position Presentation:

Properties Plant & Equipment
Equipment 72,500
Less: Accum. Depn. – Equipt (4000+972+600+550) 6,122 66,378

6
 Exercise 23.
Adjusting Entries:
Depreciation Expense 13,767
Accumulated Depreciation – Equipment 13,767
(48,000/4= 12,000)
(7,000 / 6 yrs= 1,167)
(1,200 x3=3,600/ 6= 600)

Financial Position Presentation:

Properties, Plant & Equipment

Equipment 72,500
Less: Accum. Depn. – Equipment 19,889 52,611

Exercise 24.
a. Merchandise Inventory, Beg. P174,000
Purchases (450,000 + 255,000) 705,000
Freight In 12,500
Total Available for Sale P891.500

b. Merchandise Inventory, End (1,500 x 134,531.00

89.6875)
Income & Expense Summary 134,531.00

c. Sales (8,500 x 170) P1,445,000

Less Cost of Sales (891,500-134,531) 756,969
Gross Profit on Sales P688,031

Exercise 24.
MAY VERA NOVELTY STORE
WORKSHEET
For the year ended December 31, 2015

TRIAL BAL ADJUS MENTS INCOME STATE BALANCE SHEET

ITEMS DR CR T CR DR M DR CR
DR CR
Cash On Hand 4,400 4,400
Cash In Bank 84,500 84,500
Accts. Recvable 30,200 30,200
Merch. Invty. 38,400 38,400
Supplies on hand 2,170 (2) 1050 1,120
Prepaid ins. 2,500 (4) 1875 625
Store Equipment 17,000 17,000
Accu. Depn.-S/E 4,500 (5) 1700 6,200
Office Equipment 5,200 5,200
Accu. Depn.-O/E 1,600 (5) 260 1,860
Accts. Payable 30,900 30,900
WithholdingTaxes 5,500 5,500
Mortgage Pay 60,000 60,000
Cera, Capital 44,700 44,700
Cera, Personal 12,000 12,000
Sales 310,600 310,600
Sa. Ret/Allow. 3,000 3,000
Sales discount 3,400 3,400
Output Tax 37,300 (7)37,300
Purchases 230,300 230,300
Purch Ret./Allow. 5,000 5,000
Purch Discount 7,960 7,960
Input Tax 26,800 (7)26,800
Freight in 2,000 2,000
Sales Salaries 24,600 (6) 460 25,060
Delivery exp. 6,800 6,800
Rent exp. 6,000 6,000
Misc. Exp. 1,250 1,250
Office Salaries 13,600 (6) 210 13,810
Tel. & Teleg. 1,360 1,360
GainonSale of Land 720 7,720
Interest Expense 300 300
515,780 515,780
Adjustments:

7
 Merch.Invty End 41,600 41,600
Supplies Exp. (2) 1050 1,050
Allow.- Bad debt (3) 1,510 1,510
Bad debts (3)1510 1,510
Insurance Exp. (4) 1875 1,875
Depn.Exp-Store (5) 1700 1,700
Depn. Exp.-Off (5) 260 260
Salaries Payble (6) 670 670
Vat Payable (7)10,500 10,500
44,365 44,365 338075 372880 196,645 161,840
Net Income 34805 34805
372880 372880 196645 196,645

Exercise 25
a) Asset Method: Used plus unused= Available 850 + 950= P1,800 if purchases is only P500, then beginning
is P1,300.

b) Asset method: Expired plus unexpired=total paid= 600 + 2,400= 3,000/12= 250 per month
60/250 per month= 2.4 months; .4 x 31 = 12 days thus 2 mont5hs and 12 days will mean
that it was acquired Oct 19.

c) Accrual method: from expense of 1,800 coming from accrued end is P800= P1,000 coming from amount
paid for current salaries. If the total amount paid is P3,500 then P2,500 came from accrued beg.

d) Liability method: Earned of 2,000 plus unearned of P750 is total collections of P2,750 less current
collection of P1,600 represents past collection or unearned beg of P1,150.Or if out of 1,600. collection
unearned is P750 then the balance of 850 is considered earned. If revenue is reported as 2,000 then P1,150
came from the unearned beg.

Ex. 26

a) Service revenue 5,360

Salaries 1,650
Supplies 3,050
Miscellaneous 350
Income Summary 310

Income Summary 310

Minerva, Drawing 310

Minerva, Capital 90
Minerva, Drawing 90

b) Post closing trial balance

Cash 4,650
Accounts Receivables 5,200
Supplies 640
Accounts Payable P2,500
Unearned Revenue 200
Minerva, Capital 7,190
Salaries Payable ______ 600
10,490 10,490
c)
Unearned Revenue 200
Earned Revenue 200

Supplies Expense 640

Supplies 640

Ex 27. Manila Furniture Co. (Seller)

Cash 6000
Sales 6000

Cebu Bookstore (Buyer)

Furniture and Fixtures 6750
Cash 6750

Ex. 28. Restwell Furniture (Seller)

Sales Return & Allowances 150
Accounts Receivable 150

8
 Goods Grocery (Buyer)
Accounts Payable 150
Furniture & Fixtures 150

Ex 29 ABAKADA

Merchandise Inventory 450,000

Cash/Accts Payable 450,000

Accounts Receivable 540,000

Sales 540,000

Cost of Sales 270,000

Merchandise Inventory 270,000

Merchandise Inventory 262,500

Cash/Accts Payable 262,500

Cash or Accts Recble 174,000

Sales 174,000

Cost of Sales 87,000

Merchandise Inventory 87,000
Merchandise Inventory
Beg 174,000
b) 455,000 c) 273,000
d) 262,500 e) 87,000

End 531,500

Received Issued Balance

1/1/13 2,000 P87 P174,000
5/31/13 5,000 P91 P455,000 2,000 P87 P174,000
5,000 P91 P455,000
8/31/13 3,000 P91 P273,000 2,000 P87 P174,000
2,000 P91 P182,000
10/ 31/13 3,000 P87.5 P262,500 2,000 P87 P174,000
2,000 P91 P182,000
3,000 P87.5 P262,500
11/30/13 1,000 P87 P 87,000 1,000 P87 P 87,000
2,000 P91 P182,000
3,000 P87.5 P262,500

Count should show the ff: 1,000 from old stock P87,000, 2,000 May purchase P180,000 and 3,000 Oct
purchases P262,500

Exercise 30
Case A
Purchases 20,000
Freight In
1,500
Accounts Payable
21500
Accounts Payable 21,500
Cash 21,100
Purchase Discounts (20,000x2%) 400

Case B
Purchases 60,000
Accounts Payable 60,000
Freight In 500
Accounts Payable 500
Accounts Payable 8,500
Purchases Returns & Allowances 8,500
Accounts Payable 52,000
Cash 50,970
Purchases Discount 1,030

9
Case C
Purchases 120,000
Accounts Payable 120,000
Accounts Payable 10,000
Purchase Returns & Allowances 10,000
Accounts Payable 110,000
Cash 107,800
Purchase Discounts 2,200

Exercise 31
. a) Sept. 15 Account Receivable 90,000
Sales 90,000

16 Accounts Receivable 4,000

Cash 4,000

20 Cash 40,000
Accounts Receivable 40,000

25 Cash 52,200
Sales Discount 1,800
Accounts Receivable 54,000

30 Sales Return and Allowances 5,000

Advances from Customer 4,900
Sales Discount 100

Buyer:
Purchases 90,000
Accounts Payable 90,000
Freight In 4,000
Accounts Payable 4,000
Accounts Payable 40,000
Cash 40,000
Accounts Payable 54,000
Cash 522,000
Purchase Discount 18,000
Advances to Supplier 4,900
Purchase Discount 100
Purchase Returns 5,000

b) July 5 Equipment 100,000

Accounts Payable 50,000
Cash 50,000
15 Accounts Payable 30,000
Cash 30,000
20 Accounts Payable 5,000
Equipment 5,000
31 Accounts Payable 15,000
Notes Payable 15,000
Aug 15 Notes Payable 15,000
Interest Expense 1,112.50
Cash 15,112.50

c) Feb. 1 Equipment 14,553

Accounts Payable 14,553
10 Accounts Payable 5,000
Cash 5,000
15 Accounts Payable 9,553
Equipment 95.53
Cash 9,457.47

d) Silver Company
Sept. 15 Accounts Receivable 90,000
Sales 80,357
Output tax 9,643
16 Accounts Receivable 4,000
Cash 4,000
20 Cash 40,000
Accounts Receivable 40,000

10
 25 Cash 52,200
Sales Discount 1,607
Output tax 193
Accounts Receivable 54,000
30 Sales Returns & Allowances 4,400
Output tax 600
Advances from Customer 4,900
Sales Discount 100
Exercise 32

Period 1: Cost of goods sold should be - P520,000 ending invty over cost of goods sold under
Period 2: Invty Beg is over by 20 Ending is under by P30, cost of goods sold should be
P600,000 less P20,000 and less by P30,000= P550,000 shouold be the cost of goods sold.
Period 3 Invty beg is under by P30,000, ending invty is over by P10,000; the cost of goods sold
P420,000 plus P30,000 and P10,000 = P460,000

33.
1. f 2. c 3. b 4. a 5. e 6. d 7, c, b
34.
A.
Gross Pay SS PH HDMF Taxable Tax/mo
Alex P30,000 581.30 825.00 100.00 28,493. 1,532.14
7
Clark 24,000 581.30 660.00 100.00 22,658. 365.14
7
Bess 15,000 545.10 412.50 100.00 13,942. 0
4
871.95 1,017.50 150.00
B.
April Purchases 650,000
Input Tax 78,000
Accounts Payable 728,000

Apr-Jun Cash 1,274,000

Sales 1,137,500
Output Tax 136,500

June 30 Output Tax 136,500

Input Tax 78,000
VAT Payable 58,500

11