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PROBLEM 1The trial balance of Diana Margallo, Interior Decorator, for December 31, 2007 appears below:Diana Margallo, Interior Decorator Trial Balance December 31, 2007Cash P186, 000 Accounts Receivable 71, Prepaid Rent 19, Equipment 177, Accumulated Depreciation – Equipment P5, 500 Accounts Payable...

Description

PROBLEM 1 The trial balance of Diana Margallo, Interior Decorator, for December 31, 2007 appears below: Diana Margallo, Interior Decorator Trial Balance December 31, 2007 Cash Accounts Receivable Prepaid Rent Equipment Accumulated Depreciation – Equipment Accounts Payable Notes Payable Margallo, Capital Margallo, Drawings Professional Fees Salaries Expense Supplies Expense Utilities Expense Totals

P186, 000 71,200 19,200 177,500 P5, 500 18,000 12,000 300,000 19,000 276,300 84,100 17,000 37,800 P611, 800

P611, 800

Additional data: a. Prepaid rent is for the period October 1, 2007 to May 31, 2008. b. Depreciation rate on the equipment is 5% per year. Scrap value of P35,000. c. Salaries incurred but unpaid as of December 31, P12,000. d. The note was issued on December 11 for 30 days at 12%. e. Provision for bad debt is 5% of the outstanding accounts of customers. f. Supplies on hand, P5,000 Required: a. Prepare a 10- column worksheet for the year ended December 31, 2007. b. Prepare the closing entries. c. Prepare the reversing entries.

PROBLEM 2 The following unadjusted trial balance was prepared for Maria Jasmine as of December 31, 2008: Maria Jasmine, Park Place Unadjusted Trial Balance December 31, 2008 Account No.

Account Title

Debit

Credit

101

Cash in bank

200,000

102

Cash on hand

23,000

103

Accounts receivable

176,000

103-A

Allowance for bad debts

104

Prepaid insurance

4,800

120

Leasehold improvements

504,000

120-A

Accumulated depreciation-leasehold improvements

121

Furniture and fixtures

12-A

Accumulated depreciation-furniture and fixtures

3,000

201

Accounts payable

35,000

202

14% Notes payable

400,000

203

SS & EC Premiums payable

534

204

Pag-ibig Premiums payable

200

205

Phil Health Premiums payable

176

206

Withholding taxes payable

1,516

207

Advances from tenants

15,000

3,000

42,000 30,000

301

Maria Jasmine, Capital

302

Maria Jasmine, Personal

401

Parking Fees Income

869,157

402

Interest Income

14,000

506

Office Supplies Expense

8,000

507

Pag-ibig Premiums Expense

2,200

508

Phil Health Premiums Expense

1,926

509

SS & EC Premiums Expense

12,657

510

Rent Expense

180,000

511

Salaries Expense

186,000

512

Taxes and Licenses

18,000

513 Utilities expense TOTAL

144,500 85,500

96,000 1,528,083

1,528,083

Maria Jasmine began business two years ago on January 1, 2007 leasing the basement of Jaka Towers. The building tenants are her regular customers, come of them paying in advance. The following are data available on December 31, 2008: a.

Salary of casual employee in the amount of P4,000 has been incurred as of December 31, 2008, but remains unpaid.

b. A count of the office supplies showed P1,400 remaining on hand as at December 31. c.

Two months parking fees were received in advance from five tenants on December 1, 2008.

d. Maria Jasmine made some improvements on the basement building on January 1, 2007. Her contract runs for ten years. e.

The company took out a twelve-month insurance policy effective April 1, 2008.

f.

Maria Jasmine acquired P20,000 of the furniture and fixtures on January 1, 2007. Estimated useful life is five years, scrap value of P5,000. The balance

was acquired on June 30, 2008 with an estimated life of 5 years, no scrap value.

g. The accountant maintains an allowance for doubtful accounts equal to five percent of the outstanding account balance. h. The note issued to Philippine Bank was dated November 2, 2008 and is due January 31, 2009. i.

3% percentage tax on December gross receipts of P193,800 is due and payable.

j.

Accrue employer’s share on December payroll contributions for two employees whose monthly salary is P7,750 each.

Required: a. Prepare a 10-column working papers. b. Using the working paper as a basis, prepare the adjusting entries in good form. c. Prepare properly classifies financial statements with supporting notes. d. Prepare the closing entries and the post-closing trial balance.

TASK: Show the formula of the following: a) b) c) d) e)

Net Sales Net Purchases Cost of Goods Sold Net Income Gross Profit

Multiple Choice 1. A company received cash and issued common stock. What was the effect on the accounting equation?

2. A company purchased land by issuing a note payable. What was the effect on the accounting equation?

3. Which of the following financial statements is concerned with the financial position of an Enterprise at a point in time? A. Retained Earnings Statement.

C. Income Statement.

B. Balance Sheet.

D. Statement of Cash Flows.

4. Cash was collected from a customer on account. Which accounts were debited and credited?

5. Which pair of accounts is increased by recording a credit? A. Common Stock and Rent Expense.

C. Treasury Stock and Common Stock.

B. Cash and Accounts Receivable.

D. Notes Payable and Service Revenue.

6. Which of the following errors will cause a trial balance to be out of balance? A. A debit to Office Equipment is incorrectly debited to Office Supplies. B. The bookkeeper forgot to journalize a transaction. C. The bookkeeper forgot to post a journal entry to the ledger. D. A credit was posted to an account as a debit. 7. The Supplies account had a $360 debit balance at the end of the accounting period before adjustment for supplies used, and an inventory of $80 worth of unused supplies were on hand. Which of the following is the required adjusting entry? A. Debit Supplies $280 and credit Supplies Expense $280. B. Debit Supplies Expense $280 and credit Supplies $280. C. Debit Supplies $80 and credit Supplies Expense $80. D. Debit Supplies Expense $80 and credit Supplies $80. 8. A company sold equipment for $100,000; the equipment had cost $300,000 and had accumulated depreciation of $180,000. The company’s journal entry to record the sale of the equipment would include a A. Credit to Sale of Equipment for $100,000. B. Credit to Equipment for $120,000. C. Debit to Equipment for $300,000. D. Debit to Loss on Sale of Equipment for $20,000. 9. Which of the following should be classified as a current asset? A. Accounts Receivable. B. Accumulated Depreciation. C. Franchises. D. Land Held for Future Use. 10. Under the perpetual inventory system, in addition to making the entry to record a sale, a company would A. Make no additional entry until the end of the period. B. Debit Cost of Goods Sold and credit Inventory. C. Debit Cost of Goods Sold and credit Purchases. D. Debit Inventory and credit Cost of Goods Sold....