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Accounting 10Ateneo Lex1 Chapter 4. Accounting 10Ateneo Lex2 Short Problems.

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Presentation on theme: "Accounting 10Ateneo Lex1 Chapter 4. Accounting 10Ateneo Lex2 Short Problems."— Presentation transcript:

1 Accounting 10Ateneo Lex1 Chapter 4

2 Accounting 10Ateneo Lex2 Short Problems

3 Accounting 10Ateneo Lex3 Short Problem 1 1.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

4 Accounting 10Ateneo Lex4 Short Problem 2 and 3 2. The correct amount of current assets on December 32, 2001should be: 2, The correct amount of current liabilities on Dec. 32, 2002 should be: 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: Cash400,000 Marketable Securities2,000,000 Supplies500,000 Accounts Payable 300,000 Notes Payable200,000 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.

5 Accounting 10Ateneo Lex5 Short Problem 4 The balance sheet accounts of Baby Tugs Co. on December31, 2002 follow: Cash 300,000 Accounts Receivable800,000 Supplies1,650,000 Prepaid Expenses250,000 Property, Plant and Equipment8,000,000 Accounts Payable1,250,000 Salaries Payable250,000 Mortgage Payable4,000,000 Tugs, Capital5,500,000 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, 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

6 Accounting 10Ateneo Lex6 Short Problem 5 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. a.Journalize the entries required to complete the closing of the accounts. Capital 12,500 Income Summary12500 a.What is the amount of Roa’s capital at the end of the period? Answer: 62,900

7 Accounting 10Ateneo Lex7 Short Problem 6

8 Accounting 10Ateneo Lex8 Short Problem 7 Answer: P68450

9 Accounting 10Ateneo Lex9 Short Problem 8

10 Accounting 10Ateneo Lex10 Short Problem 9

11 Accounting 10Ateneo Lex11 Short Problem 10 Answer: P274,000

12 Accounting 10Ateneo Lex12 Long Problems

13 Accounting 10Ateneo Lex13 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 CashP55,000 Repair Equipment12,000 Auto Supplies Expense980,000 Salaries Expense90,000 Repair Expense 38,000 Office Supplies Expense20,000

14 Accounting 10Ateneo Lex14 Long Problem 1 Utilities Expense37000 Insurance Expense 6,000 Interest Expense3,000 Notes Payable45,000 Repair Income1,100,000 Mr. Gerome Capital100,000 Mr. Gerome, Drawing4,000____________ ,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:

15 Accounting 10Ateneo Lex15 a.Auto supplies on hand on December 31, 2000, at cost, P125,000. b.On Dec. 31, accounts receivable amounted to P25,000. c.On Dec. 31, salaries payable totaled P18,000. d.Accrued utilities expense on Dec. 31, P4,800. e.Auto supplies expense included supplies in the amount of P2,500 bought for the owner. He has not reimbursed the company. f.Included in the repair income was P5,200 deposit given by a customer for repairs to be done in g.Office supplies unused as of December 31, 2000, P1,200. h.It is estimated that repair equipment bought on July 1, 2000 would have an estimated useful life of 10 years, without scrap value. i.One-year insurance premium on a fire insurance policy recovering repair shop and fixed assets was taken on October 1, j.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). Long Problem 1

16 Accounting 10Ateneo Lex16 Additional account titles to be used: Accounts ReceivablePrepaid InterestUtilities Payable Advances to OfficersAccumulated Dep’n-Dep’n Expense and Employees Repair Equip.Income Summary Unused Auto SuppliesUnearned Repair Income Unused Office SuppliesSalaries Payable Prepaid Insurance. Required: Asof 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). Long Problem 1

17 Accounting 10Ateneo Lex17 Long Problem 1 (Answer) Adjusting entries (A)

18 Accounting 10Ateneo Lex18 Long Problem 1 (Answer) Closing entries (B)

19 Accounting 10Ateneo Lex19 Long Problem 1 (Answer) Post-Closing Trial Balance (c)

20 Accounting 10Ateneo Lex20 Long Problem 2

21 Accounting 10Ateneo Lex21 Long Problem 2

22 Accounting 10Ateneo Lex22 Long Problem 2 (ANS) (incomplete)

23 Accounting 10Ateneo Lex23 Long Problem 2 (ANS) Statement of Changes in Owner’s Equity (B) Beg. Equity290,000 Add: Net Incomex --> Less: Withdrawals(50000) Ending Equity389625

24 Accounting 10Ateneo Lex24 Long Problem 3 CashP44,850 Accounts Receivable81, 400 Studio Supplies7,600 Prepaid Insurance500 Prepaid Studio Rent4,000 Recording Equipment90,000

25 Accounting 10Ateneo Lex25 Long Problem 3 Accum. Dep’n: Recording Equip.P52,500 Noes Payable16,000 Interest Payable840 Taxes Payable3,200 Unearned Studio Revenue9,600 T. Ina, Capital118,000 Studio Revenue Earned107,000 Salaries Expense18,000 Supplies Expense1,200 Insurance Expense1,000 Dep’n Expense: Recording Equip. 16,500 Studio Rent Expense21,000 Interest Expense840 Utilities Expense2,350 Tax Expense17,900___________ Total P307,140P307,140

26 Accounting 10Ateneo Lex26 Long Problem 3 Required: 1.Prepare Adjusting journal entries, adjusted trial balance. 2.Prepare for the year ended December 31, 2002, an income statement, statement of changes in owner’s equity and a balance sheet.

27 Accounting 10Ateneo Lex27 Long Problem 3 (Ans) Adjusting Journal Entries Accounts Receivable4400 Studio Revenue Earned4400 Studio Supplies Expense700 Studio Supplies700 Insurance Expense250 Prepaid Insurance250 Rent Expense2000 Prepaid Rent2000 Dep. Exp. - RE1500 Acc. Dep. - RE1500 Interest Expense120 Interest Payable120 Unearned Revenue3600 Studio Revenue Earned3600 Salaries Expense590 Salaries Payable590 Tax Expense1700 Tax Payable1700

28 Accounting 10Ateneo Lex28 Long Problem 3 (Ans) Adjusted Trial Balance Cash44850 Accounts Receivable85800 Studio Supplies6900 Prepaid Insurance250 Prepaid Studio Rent2000 Recording Equipment90000 Acc. Dep. RE54000 Notes Payable16000 Salaries Payable960 Interest Payable 540 Tax Payable4900 Unearned Revenue6000 Capital180,000 Revenues115,000 Salaries Expense18540 Supplies Expense1900 Insurance Expense1250 Dep. Exp. RE18000 Rent Exp Interest Exp. 960 Utilities expense2350 Tax Expense19600_______315400

29 Accounting 10Ateneo Lex29 Long Problem 3 (Ans) Income Statement Income Statement S. Rev. Earned Less: Salaries Expense18540 Supplies Exp.1900 Ins. Exp1250 Dep. Exp18000 Rent Exp Int. exp.960 Util. Exp Tax Ex.19600(85600) Statement of Owner’s Equity Beg. Capital Net Inc Ending Capital147400

30 Accounting 10Ateneo Lex30 Long Problem 4

31 Accounting 10Ateneo Lex31 Long Problem 4

32 Accounting 10Ateneo Lex32 Long Problem 4

33 Accounting 10Ateneo Lex33 Long Problem 4 (ANS) Adjusting Entries

34 Accounting 10Ateneo Lex34 Long Problem 5

35 Accounting 10Ateneo Lex35 Long Problem 5

36 Accounting 10Ateneo Lex36 Long Problem 5 Required: 1.Prepare a comparative income statement using cash-basis and the accrual basis of accounting for the year ended December Using the accrual basis of accounting, prepare a classified balance sheet as of December 31. Solution guide: 1.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. 2.Prepare the accrual basis balance sheet by considering the adjusting entries.

37 Accounting 10Ateneo Lex37 Long Problem 5 (ANS) Income Statement (cash-basis) Revenues66000 Supplies Expense25000 Rent Expense8400 Ins. Expense900 Adv. Expense2000 Utilities Expense1600 Wages Expense8000(45900) Net Income20100

38 Accounting 10Ateneo Lex38 Long Problem 5 (ANS) income statement (accrual) revenues69750 less: supplies exp Rent Expense7200 Ins. Expense700 Adv. Expense2000 Util. Expense1600 Wage Expense8190 Dep. Expense 1667(42157) Net Income27593

39 Accounting 10Ateneo Lex39 Long Problem 5 (ANS)

40 Accounting 10Ateneo Lex40 Long Problem 6

41 Accounting 10Ateneo Lex41 A detail of the unrecorded accruals and other information given to you as follows: 1. Accounts Receivable of P15, A client deposited P2,400 was credited to Service Revenue 3. Accounts Payable outstanding: Purchases of SuppliesP6,800 Operating expensesP7, Supplies inventory, P54, 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. Long Problem 6

42 Accounting 10Ateneo Lex42 Cash Basis Income Statement Revenues Less: Operating Expenses(42140) Net Income:61460 Long Problem 6 (ANS) Long Problem 6

43 Accounting 10Ateneo Lex43 Long Problem 6 (ANS)

44 Accounting 10Ateneo Lex44 Long Problem 6 (ANS)

45 Accounting 10Ateneo Lex45 Long Problem 6 (ANS)


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