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Chapter 4 Accounting 10 Ateneo Lex Short Problem 6, 8 , 9

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Presentation on theme: "Chapter 4 Accounting 10 Ateneo Lex Short Problem 6, 8 , 9"— Presentation transcript:

1 Chapter 4 Accounting 10 Ateneo Lex Short Problem 6, 8 , 9
lOng problem2 and 4 Accounting 10 Ateneo Lex

2 Short Problems Accounting 10 Ateneo Lex

3 Short Problem 1 Solution: 10,000/10 = 1,000
If equipment purchased for P10,000 on January 2, 1999 (estimated life 10 years) was charged to Repairs and Maintenance account, how much was the net income for the year 1999 understated? Solution: 10,000/10 = 1,000 10, = 9,000 -->Answer Accounting 10 Ateneo Lex

4 Short Problem 2 and 3 Use the ff. data for question 2 and 3:
The accounts below were taken from the unadjusted trial balance of Tender Heart Company as of December 31, 2001: Cash 400,000 Marketable Securities 2,000,000 Supplies 500,000 Accounts Payable 300,000 Notes Payable 200,000 Additional Information gathered for adjustment follows: The cash account includes collection in January 2002 of P200,000 account from customer who was given a cash discount of P10,000. It also includes a January 2002 cash revenue of P50,000 for services. Supplies used during the period amounted to P30,000. From the amount collected,the company paid a bank loan of P100,000 with interest of P20,000 accruing on January 2002. 2. The correct amount of current assets on December 32, 2001should be: 2, 3. The correct amount of current liabilities on Dec. 32, 2002 should be: Accounting 10 Ateneo Lex

5 Short Problem 4 The balance sheet accounts of Baby Tugs Co. on December31, 2002 follow: Cash ,000 Accounts Receivable 800,000 Supplies 1,650,000 Prepaid Expenses 250,000 Property, Plant and Equipment 8,000,000 Accounts Payable 1,250,000 Salaries Payable 250,000 Mortgage Payable 4,000,000 Tugs, Capital 5,500,000 Additional information: A P500,000 note payable to the bank, due on June 30, 2003 was deducted from cash balances. The company recorded checks of P200,000 in payment of accounts payable on December31,2002. These checks were posted dated for January 20, 0003. An advance payment of P100,000 from a customer for goods to be delivered in 2003 was deducted from accounts receivable. What is the amount of working capital (current assets less current liabilities) on December 31, 2002? ANS: 1,500,000 Accounting 10 Ateneo Lex

6 Short Problem 5 Capital 12,500 Income Summary 12500
5. After all revenue and expense accounts have been closed at the end of the fiscal year, Income Summary has a debit of P292,500 and a credit of P280,000. As of the same date, Susan Roa, Capital has a credit balance of P90,400 and Susan Roa, Drawing has a debit balance of P15,000. Journalize the entries required to complete the closing of the accounts. Capital 12,500 Income Summary 12500 What is the amount of Roa’s capital at the end of the period? Answer: 62,900 Accounting 10 Ateneo Lex

7 Short Problem 6 Accounting 10 Ateneo Lex

8 Short Problem 7 Answer: P68450 Accounting 10 Ateneo Lex

9 Short Problem 8 Accounting 10 Ateneo Lex

10 Short Problem 9 Accounting 10 Ateneo Lex

11 Short Problem 10 Answer: P274,000 Accounting 10 Ateneo Lex

12 Long Problems Accounting 10 Ateneo Lex

13 Long Problem 1 The Gerome Auto Repair Company began business operations on January 2, During 2000, the accounting records are kept on a double entry system but on the cash basis of accounting. On December 31, 2000, the trial balance prepared from these records appeared as follows: Gerome Auto Repair Company Trial Balance December 31, 2000 Debit Credit Cash P55,000 Repair Equipment 12,000 Auto Supplies Expense 980,000 Salaries Expense 90,000 Repair Expense 38,000 Office Supplies Expense 20,000 Accounting 10 Ateneo Lex

14 Mr. Gerome, Drawing 4,000____ ________ 1245000 1245,000
Long Problem 1 Utilities Expense Insurance Expense 6,000 Interest Expense 3,000 Notes Payable 45,000 Repair Income 1,100,000 Mr. Gerome Capital 100,000 Mr. Gerome, Drawing 4,000____ ________ ,000 The owner, Robert Gerome, decided to use the accrual instead of the cash basis of keeping its accounting records. Details of unrecorded accruals and other information as of December 31,2000 are as follows: Accounting 10 Ateneo Lex

15 Auto supplies on hand on December 31, 2000, at cost, P125,000.
Long Problem 1 Auto supplies on hand on December 31, 2000, at cost, P125,000. On Dec. 31, accounts receivable amounted to P25,000. On Dec. 31, salaries payable totaled P18,000. Accrued utilities expense on Dec. 31, P4,800. Auto supplies expense included supplies in the amount of P2,500 bought for the owner. He has not reimbursed the company. Included in the repair income was P5,200 deposit given by a customer for repairs to be done in 2001. Office supplies unused as of December 31, 2000, P1,200. It is estimated that repair equipment bought on July 1, 2000 would have an estimated useful life of 10 years, without scrap value. One-year insurance premium on a fire insurance policy recovering repair shop and fixed assets was taken on October 1, 2000. The notes payable balance consisting of two notes: a non-interest bearing note of P20,000, dated August 1, 2000, due on January 1, 2001; and a one year note of P25,000 dated September 1, 2000 bearing an interest of 12% (interest deducted in advance). Accounting 10 Ateneo Lex

16 Additional account titles to be used:
Long Problem 1 Additional account titles to be used: Accounts Receivable Prepaid Interest Utilities Payable Advances to Officers Accumulated Dep’n- Dep’n Expense and Employees Repair Equip. Income Summary Unused Auto Supplies Unearned Repair Income Unused Office Supplies Salaries Payable Prepaid Insurance. Required: As of December 31, 2000, prepare: 1. Adjusting entries (10 pts.) 2. Closing Entries (15 pts). Hint: Use T-accounts to arrive at your values 3. Post closing trial balance (7 pts). Accounting 10 Ateneo Lex

17 Long Problem 1 (Answer) Adjusting entries (A)
Accounting 10 Ateneo Lex

18 Long Problem 1 (Answer) Closing entries (B)
Accounting 10 Ateneo Lex

19 Long Problem 1 (Answer) Post-Closing Trial Balance (c)
Accounting 10 Ateneo Lex

20 Long Problem 2 Accounting 10 Ateneo Lex

21 Long Problem 2 Accounting 10 Ateneo Lex

22 Long Problem 2 (ANS) (incomplete)
Accounting 10 Ateneo Lex

23 Add: Net Income x --> 149625 Less: Withdrawals (50000)
Long Problem 2 (ANS) Statement of Changes in Owner’s Equity (B) Beg. Equity 290,000 Add: Net Income x --> Less: Withdrawals (50000) Ending Equity Accounting 10 Ateneo Lex

24 Long Problem 3 Cash P44,850 Accounts Receivable 81, 400
Studio Supplies 7,600 Prepaid Insurance 500 Prepaid Studio Rent 4,000 Recording Equipment 90,000 Accounting 10 Ateneo Lex

25 Accum. Dep’n: Recording Equip. P52,500 Noes Payable 16,000
Long Problem 3 Accum. Dep’n: Recording Equip. P52,500 Noes Payable ,000 Interest Payable Taxes Payable ,200 Unearned Studio Revenue 9,600 T. Ina, Capital ,000 Studio Revenue Earned ,000 Salaries Expense 18,000 Supplies Expense 1,200 Insurance Expense 1,000 Dep’n Expense: Recording Equip. 16,500 Studio Rent Expense 21,000 Interest Expense 840 Utilities Expense 2,350 Tax Expense 17,900__ _________ Total P307,140 P307,140 Accounting 10 Ateneo Lex

26 Prepare Adjusting journal entries, adjusted trial balance.
Long Problem 3 Required: Prepare Adjusting journal entries, adjusted trial balance. Prepare for the year ended December 31, 2002, an income statement, statement of changes in owner’s equity and a balance sheet. Accounting 10 Ateneo Lex

27 Long Problem 3 (Ans) Adjusting Journal Entries
Accounts Receivable Studio Revenue Earned Studio Supplies Expense 700 Studio Supplies Insurance Expense Prepaid Insurance Rent Expense Prepaid Rent Dep. Exp. - RE Acc. Dep . - RE Interest Expense Interest Payable Unearned Revenue Studio Revenue Earned Salaries Expense Salaries Payable Tax Expense Tax Payable Accounting 10 Ateneo Lex

28 Long Problem 3 (Ans) Adjusted Trial Balance
Cash Accounts Receivable Studio Supplies Prepaid Insurance 250 Prepaid Studio Rent Recording Equipment Acc. Dep. RE Notes Payable Salaries Payable Interest Payable Tax Payable Unearned Revenue Capital ,000 Revenues ,000 Salaries Expense Supplies Expense Insurance Expense Dep. Exp. RE Rent Exp Interest Exp Utilities expense Tax Expense _______ Accounting 10 Ateneo Lex

29 Long Problem 3 (Ans) Income Statement
S. Rev. Earned Less: Salaries Expense Supplies Exp Ins. Exp 1250 Dep. Exp Rent Exp Int. exp Util. Exp Tax Ex (85600) 29400 Statement of Owner’s Equity Beg. Capital Net Inc Ending Capital Accounting 10 Ateneo Lex

30 Long Problem 4 Accounting 10 Ateneo Lex

31 Long Problem 4 Accounting 10 Ateneo Lex

32 Long Problem 4 Accounting 10 Ateneo Lex

33 Long Problem 4 (ANS) Adjusting Entries
Accounting 10 Ateneo Lex

34 Long Problem 5 Accounting 10 Ateneo Lex

35 Long Problem 5 Accounting 10 Ateneo Lex

36 Long Problem 5 Required: Prepare a comparative income statement using cash-basis and the accrual basis of accounting for the year ended December 31. Using the accrual basis of accounting, prepare a classified balance sheet as of December 31. Solution guide: Do the adjusting entries for numbers 1 to 5. This will be used for the accrual basis income statement. For the cash basis, copy what is given except for the equipment and withdrawals. Prepare the accrual basis balance sheet by considering the adjusting entries. Accounting 10 Ateneo Lex

37 Income Statement (cash-basis)
Long Problem 5 (ANS) Income Statement (cash-basis) Revenues Supplies Expense 25000 Rent Expense 8400 Ins. Expense 900 Adv. Expense 2000 Utilities Expense 1600 Wages Expense (45900) Net Income Accounting 10 Ateneo Lex

38 Long Problem 5 (ANS) income statement (accrual) revenues 69750
less: supplies exp Rent Expense 7200 Ins. Expense 700 Adv. Expense 2000 Util. Expense 1600 Wage Expense 8190 Dep. Expense (42157) Net Income Accounting 10 Ateneo Lex

39 Long Problem 5 (ANS) Accounting 10 Ateneo Lex

40 Long Problem 6 Accounting 10 Ateneo Lex

41 Long Problem 6 A detail of the unrecorded accruals and other information given to you as follows: 1. Accounts Receivable of P15,200 2. A client deposited P2,400 was credited to Service Revenue 3. Accounts Payable outstanding: Purchases of Supplies P6,800 Operating expenses P7,550 4. Supplies inventory, P54,700 5. Included in the operating expenses were: a. Furniture purchased for P12,300 on December 1, 20X0. It was estimated that life of the asset is 10 years,with P300 scrap value. b. One-year insurance premium amounting to P400 for the quarter commencing October 1, 20X1. Accounting 10 Ateneo Lex

42 Cash Basis Income Statement
Long Problem 6 Long Problem 6 (ANS) Cash Basis Income Statement Revenues Less: Operating Expenses (42140) Net Income: Accounting 10 Ateneo Lex

43 Long Problem 6 (ANS) Accounting 10 Ateneo Lex

44 Long Problem 6 (ANS) Accounting 10 Ateneo Lex

45 Long Problem 6 (ANS) Accounting 10 Ateneo Lex


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