PRACTICE SET - ACCOUNTING CYCLE FOR SERVICE-TYPE BUSINESS (FABM 2)

T. JOHN KEVIN RICK B. CENTINO

Deadline: January 13, 2023

Name: Section:
Directions: Answer the following practice set below. Use a pencil for convenience.
Steps:
1. Prepare the journal entry of the following transactions.
2. Post information from the journal to the general ledger.
3. Prepare an unadjusted trial balance
4. Adjusting entries- updating the accruals, and estimations.
5. Adjusted trial balance
6. Closing Entries- Closing the nominal accounts (Income and Expenses); and withdrawals to Owner’s equity.
7. Post-closing trial balance
PRACTICE SET

RANI CONSULTATION SERVICES

Chart of Accounts
Statement of Financial Position Accounts Statement of Comprehensive Income Accounts

ASSETS INCOME
101 Cash 401 Consultation Fee
102 Accounts Receivable
103 Notes Receivable EXPENSES
104 Prepaid Rent 501 Salary Expense
105 Office Supplies 502 Utility Expense
106 Office Equipment - Computer 503 Supplies Expense
107 Office Equipment – TV 504 Interest Expense
108 Furniture and Fixtures 505 Depreciation Expense
LIABILITIES
201 Accounts Payable
202 Notes Payable
EQUITY
301 Clemente, Capital
302 Clemente, Drawings
Analyze the following transactions of RANI CONSULTATION SERVICES for December 2022.

Date Transactions
1 Ranila Clemente, an attorney, started his consultation service with the following initial investments:

Cash - P 855,000
Two Office Computers 80,000
Two Tables- 15,000
Two office chairs 18,000
Two Cabinets 32,000
Total P 1,000,000

Each laptop has an estimated useful life of 5 years, while the tables, cabinets, and office chairs all have an estimated life of 4 years.

Ranila also applied for a loan from Quantum Bank worth P 235,000, subject to 12% interest per annum. The loan is yet to be finalized.

2 Obtained the loan from Quantum Bank. Principal and interest are due after one year
3 Hired Atty. Mika Sarana. Signed a contract with Atty. Mika, promising the latter a monthly salary of P50,000
5 Paid six-month rent in advance of P60,000. Rent expense per month is P10,000
9 Acquired office supplies from Worldwide Supplies and Books for P50,000
15 Rendered service to its first customer Kari Mana and received P100,000.
18 Billed Maki Ato P150,000 after rendering services. Ato paid P50,000, the rest was supported by a promissory note.
20 Rendered service to Marina Clemente, cousin of Ranila worth P70,000. Marina is yet to pay for the service.
22 Ranila withdrew a total of P20,000 cash from the business to pay his emergency expenses.
27 Collected P35,000 as partial payment of Marina from the December 18 service.
29 Acquired office television for case presentations worth P50,000. Rani paid P30,000 as a down payment, and the balance is payable after 10 months. The
television has an estimated useful life of 5 years.
30 Paid the following expenses for the month:
Meralco – P1,000
Water District - 500
Salary of Atty. Mika 50,000

31 Paid the loan from Quantum Bank with its interest.

Considerations for adjustments:
1. Depreciation of Office Equipment- TV, Office Equipment- Computer, and Furniture and Fixtures
2. Used portion of prepaid rent to be recognized as rent expense.
3. Used office supplies to be recorded as supplies expense. The supplies on hand at the end of the month are worth P30,000.
 General Journal
December 2022
Date Account Titles and Explanation PR Debit Credit
 General Ledger
December 2022

Account No. 101 CASH

Date Explanation Debit Credit Balance

Account No. 102 ACCOUNTS RECEIVABLE

Date Explanation Debit Credit Balance

Account No. 103 NOTES RECEIVABLE

Date Explanation Debit Credit Balance

Account No. 104 PREPAID RENT

Date Explanation Debit Credit Balance

Account No. 105 OFFICE SUPPLIES

Date Explanation Debit Credit Balance

Account No. 106 OFFICE EQUIPMENT- COMPUTER

Date Explanation Debit Credit Balance

Account No. 107 OFFICE EQUIPMENT- TV

Date Explanation Debit Credit Balance
Account No. 108 FURNITURE AND FIXTURES
Date Explanation Debit Credit Balance

Account No. 201 ACCOUNTS PAYABLE

Date Explanation Debit Credit Balance

Account No. 202 NOTES PAYABLE

Date Explanation Debit Credit Balance

Account No. 301 CLEMENTE, CAPITAL

Date Explanation Debit Credit Balance

Account No. 302 CLEMENTE, DRAWINGS

Date Explanation Debit Credit Balance
Account No. 401 CONSULTATION FEE
Date Explanation Debit Credit Balance

Account No. 501 SALARY EXPENSE

Date Explanation Debit Credit Balance

Account No. 502 UTILITY EXPENSE

Date Explanation Debit Credit Balance

Account No. 503 SUPPLIES EXPENSE

Date Explanation Debit Credit Balance
 Account No. 504 INTEREST EXPENSE
Date Explanation Debit Credit Balance

Account No. 505 DEPRECIATION EXPENSE

Date Explanation Debit Credit Balance

RANI CONSULTATION SERVICES

UNADJUSTED TRIAL BALANCE
December 2022

Accoun Account Titles Debit Credit

t
Number
 Adjusting Entries
December 2022

Date Account Titles and Explanation PR Debit Credit

 Closing Entries
December 2022

Date Account Titles and Explanation PR Debit Credit

 RANI CONSULTATION SERVICES
Worksheet
December 31, 2022

Accounts Unadjusted Trial Adjusting Entries Adjusted Trial Income Statement Balance Sheet Closing Entries Post-Closing
Balance Balance Trial Balance
 Rani Consultation Services Rani Consultation Services
Statement of Financial Position Income Statement
As of December 31, 2022 For the month ended December 31, 2022