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Chapter 23

Problem
Assume the following transaction for a National Government Agency: (000,000s omitted)
Transactions
1. Receipt of Allotment
for:
Personal Services (PS)..
Maintenance and
Other Operating
Expenses (MOOE).
Capital outlay (CO)..
Financial Expenses (FE)
2. Receipt of Notice of
Cash
Allocation
(NCA) from DBM-

P 2,460
2,400
10,260
440
P15,600
P15,600

National Government Agency Books


Memorandum entry in
RAOCO
RAOMO
RAOPS
RAOFE

Dr.

Cr.

Cash National Treasury Modified


Disbursement System..... 15,600
Subsidy Income from National
Government

15,600

Personal Services
3. Obligation for
Personal Services,
P3,000

Memorandum entry RAOPS

4. Established a payroll
fund which is
composed of :
Regular pay
Personal Relief
Allowance (PERA)..

Payroll Fund...
Cash National Treasury
Modified Disbursement System

2,460

Salaries & Wages Regular Payroll


PERA.
Due to BIR
Due to GSIS ....
Due to PhilHealth..
Due to Pag-ibig .
Payroll Fund.
Due to BIR...

2,880
720

Less: Deductions:
Withholding tax.......
GSIS Life and
Retirement Premium
PhilHealth premiums.
Pag-ibig premiums
Net.
Accordingly, an
amount of P2,460 was
advanced by the
agencys disbursing
officer.

5. To record liquidation of
cash
advances
or
payment of salaries.

6. Remittance of salary

P2,880

2,460

720
P3,600
840
360
180
120
P2,460

840

840
360
180
120
2,460

deductions (no tax


remittance advice)
7. Obligation for
government share
representing:
Life and retirement
Insurance
Philhealth...
Pag-ibig..
8. Recording the
incurrence of
government share for
applicable salary
deduction.

P12,600

P
P

360
180
120
660

9. Remittance of
government share for
applicable salary
deduction.

Due to GSIS ...


Due to PhilHealth ....
Due to Pag-ibig ......
Cash NT MDS
Memorandum entry RAOPS

360
180
120

Life and Retirement Insurance Contribution


PhilHealth Contribution Expense.
Pag-ibig Contribution Expense
Due to GSIS..
Due to Pag-Ibig..
Due to PhilHealth
Due to GSIS
Due to Pag-Ibig
Due to PhilHealth.
Cash NT MDS.

360
180
120

360
180
120

1,500

360
180
120

660

Maintenance and Other Operating Expenses


10. Obligation of rent for
two years..
11. Payment of two
years rent..
12. Obligation for:
Electricity bill.
Telephone bill..
13. Received the
following bill:
Electricity bill
Telephone bill..
14. Payment of electricity
and telephone bills.
15. Obligation for
traveling (local)
expenses of Mr.
Miranda.
16. Grant of cash
advance to Mr. Alex
Miranda for traveling
expense.
17. Liquidation of cash
advance for travel of
Mr. Alex Miranda...
18. Adjustment of
obligation for refund
of excess advance
for traveling expense
19. Collection of refund

P180
P180
P360
60
P420
P360
60
P420

Memorandum entry RAOMO


Prepaid rent...
Cash NT MDS.
Memorandum entry RAOMO

180

Electricity expense..
Telephone expenses landline..
Accounts payable.

360
60

Accounts payable..
Cash NT - MDS..

420

180

420

420

Memorandum entry RAOMO


P24

P22

Advances to Officers & Employees


Cash NT - MDS..
Travel expenses- local....
Advances to Officers & Employees..

24

22
P2-18

Memorandum entry RAOMO


P2.4

Cash collecting officers..

2.4

24

22

20.

21.

22.
23.
24.

25.

for excess advance


from the foregoing
cash advance for
travel.
Deposit of collection
from excess
advance to Bureau
of Treasury
Issuance
of
purchase
order
(obligation) for office
supplies.
Paid the purchase
order less withholding
tax of
Issuance
of
the
following
office
supplies..
Remittance
of
withholding tax thru
TRA (tax remittance
advice)
To record obligation
for the establishment
of Petty Cash Fund
(PCF) for office
supplies (pens and
pencils not
available in the
stockroom)

26. Establishment of
Petty Cash Fund
(PCF) for MOOE..
27. Purchase of sign
pens,
ball
pens,
white board pens,
pencils thru PCF..
28. To record obligation
for
request
of
replenishment of the
PCF for P36.
29. To record
replenishment of
PCF, before the end
of the year.

Advances to Officers & Employees..

Subsidy Income from National


Government
Cash collecting officers.

2.4

2.4

2.4

Memorandum entry RAOMO


P240

P 24
P168

Office Supplies Inventory...


Due to BIR
Cash NT MDS
Office Supplies Expense.
Office Supplies Inventory.

240

Due to BIR..
Subsidy Income from National
Government..

24

168

24
216
168

24

Memorandum entry RAOMO

P42

P36

Petty Cash Fund...


Cash NT MDS.

42

42

No entry

Memorandum entry RAOMO

Office Supplies Expense.


Cash NT - MDS.

36

36

Capital Outlay
30. Issuance of purchase
order (obligation) for
office equipment
31. Receipt of office
equipment based on
invoice/delivery
receipt.
32. Payment of office

Memorandum entry RAOCO


P120

Office Equipment....
Accounts payable.

120

Accounts payable..

120

120

equipment, with a tax


of......
33. To record obligation
for construction of a
new building upon
signing of contract
34. Payment of 15% of
contract for
mobilization fee
(advances to
contractors)
amounting to
(P840 x 15%).
35. Receipt of first
progress billing for
construction of new
building:
50% of P840.
Less: Recoupment
Net Amount
36. Payment of first
progress billings,
withholding tax...
37. Presentation of final
billing: 50% of P840.
38. Final payment for
building, withholding
tax of..
39. To close the
Construction In
Progress Account to
Buildings upon turnover and acceptance
40. To record obligation
for construction of
roads upon signing of
contract amounting 41. To record the receipt
of performance
bond from (cash or
certified check)
contractor.

P12

P840

P126

P420
126
P294
P30
P420
P42

Due to BIR.
Cash-NT-MDS...
Memorandum entry RAOCO

12
108

Advances to Contractors.
Cash NT - MDS

126

Construction In Progress Buildings


Advances to Contractors
Accounts payable..

420

Accounts payable..
Due to BIR....
Cash NT - MDS.
Construction In Progress Buildings
Accounts payable.
Accounts payable..
Due to BIR.....
Cash NT - MDS........

294

Buildings..
Construction In progress Buildings

840

420
420

126

126
294

30
264
420
42
378

840

Memorandum entry RAOCO


P2,400

Cash Collecting Officer..


Performance Bonds Payable..

12

12

12

If the performance bond is in the form of surety bond, the following entry is required:
To record the receipt
of
performance
bond from (cash or
certified
check)
contractor
42. To record
remittance/deposit of
performance bond
cash to Bureau of
Treasury (BTr) thru
AGDB (Authorized

Guarantee Deposits.....
Performance Bonds Payable............

12

12

12
Due from National Government Agency (BTr).
Cash Collecting Officer.

12

12

Government
Depository Bank)
43. Payment of 15% of
contract for
mobilization fee
(advances to
contractors)
amounting to (P2,400
x 15%)..
44. Receipt of progress
billing for
construction of roads,
50% of P2,400.
Less: Recoupment
Net amount
45. Payment of bill for
the construction of
roads:
Accts. Payable..
Less: Withholding
tax.......
10% Retention
(1,200x10%)...
Net Amount
46. Presentation of final
billing for roads
50% of P2,400.
Less: Liquidated
Damages..
Net Amount ..
47. Final payment for the
construction of
roads:
Accts. Payable..
Less: Withholding
tax(P1,140X10%)
Net Amount

48.Adjustment of
RAOCO to reduce
original amount of
obligation
49.
To close the
Construction In
Progress Account to
Public Infrastructures
upon turn-over and
acceptance of the
road project:
Contract amount...
Less: Liquidated
damages
Net Cost
50.
To record refund
of retention fee for
the construction of

P360

P1,200
360
P 840

P 840

Advances to Contractors..
Cash-NT-MDS..

360

Construction in Progress Roads


Advances to Contractors
Accounts payable.

1,200

Accounts payable..
Due to BIR...
Guarantee deposits payable..
Cash-NT-MDS.

840

Construction in Progress Roads


Accounts payable.

1,140

Accounts payable..
Due to BIR...
Cash-NT-MDS.

1,140

360

360
840

84
120
636

84
120
P 636
P1,200
60
P 1,140

P 1,140

1,140

114
1,026

114
P 1,026

Memorandum entry RAOCO


P60

Public Infrastructures
Construction In Progress Roads, etc

2,340

2,340

P2,400
60
P2,340
P 120

Guarantee Deposits Payable..


Cash NT MDS.

120

120

roads.
To record receipt
of NCA for release of
performance bond..
52.
To record refund
of performance bond.
51.

Cash NT MDS...
Due from National Government (BTr)..

12
12

12

12

Performance bond payable


Cash NT MDS.

12

Performance
Payable
Guaranty
Deposits...

12
12

If the performance bond is in the form of surety bond, the following entry is required (instead of
No. 51 and 52)
To
record
release
performance
bond

the
of

To
record
obligation
for
purchase of land and
building upon signing
of contract..
54.
The
assessed
value of the land
amounted to
55.
To record the
payment of land and
building, with tax of.
56.
To
record
remittance
of
withholding
tax
without TRA:
No. 32.
No. 36.
No. 38.
Total

53.

To
record
remittance
of
withholding tax thru
TRA:
No. 45.
No. 47.
No. 55.
Total
58.
To
record
for
obligation
for
the
general repair of the
building acquired.
59.
To
record
the
receipt
of
construction materials
with
the
charge
invoice.
60.
To
record
payment of materials,
with
a
tax
of...

Bonds

12

12

Memorandum entry RAOCO


P1,800
P1,200

P
P

180

Land.
Building
Accounts payable.
Accounts payable..
Due to BIR....
Cash NT - MDS.
Due to BIR...
Cash NT - MDS.

1,200
600

Due to BIR..
Subsidy Income from National
Government..

378

1,800
84

1,800
180
1,620
84

12
30
42
84

57.

84
114
180
P 378

378

Memorandum entry RAOCO


P 840

Construction Materials Inventory


Accounts payable.

480

Accounts payable..
Due to BIR.
Cash NT MDS.......

480

480

P 480

48

48
432

61.

To
record
issuance of materials
for the construction
62.
To
record
obligation of payroll in
relation to the general
repair
To record cash
advance granted to
disbursing officer (net
of P30 withholding
tax).
64.
To
record
liquidation of cash
advance
by
Disbursing Officer
65.
To
record
the
transfer
of
CIP
account to Buildings
account
upon
completion of the
general repair.
66.
To
record
remittance
of
withholding tax for
materials and labor,
assuming that the
Notice
of
Cash
Allocation
received
was already reduced
by TRA:
No. 60.
No. 64.
Total

P 480

69. Close SING to Income


and Expense
Summary
70. Close expenses to

480

480

Memorandum entry RAOCO

P 360

63.

Adjusting Entries
66. Depreciation of the
following
Equipment.
Buildings.
Total.
67. Rent expense for the
year, P150/2 years.
Closing Entries
68. Reversion of the
Unused Subsidy
Income from
National
Government
representing NCA

Construction in Progress Building


Construction Materials Inventory..

Cash Disbursing Officer...


Cash NT- MDS...

324

Construction in Progress (CIP) Building.


Due to BIR.
Cash Disbursing Officer.

360

Building..
Construction In Progress Building..

840

Due to BIR...
Subsidy Income from National
Government..

84

Depreciation expense equipment..


Depreciation expense buildings..
Accumulated depreciation- equipment
Accumulated depreciation- buildings

6
18

Rent Expense.
Prepaid rent...

90

324

P 324

36
324
840

84

48
36
84

6
18
P 24
P 90

Subsidy Income from National


Government
Cash NT MDS.

Subsidy Income from National


Government
Income and Expense Summary.....
Income and Expense Summary..

4,386

8,698
7,360

6
18
90

4,386

8,698

Income and Expense


Summary

Salaries and Wages (#5)


PERA (#5)
Life and Retirement (#8)
PhilHEALTH Contr. Exp. (#8)..
Pag-ibig Contr. Exp. (#8)
Electricity expense (#13)
Telephone (#13)...
Travel expense (#17)..
Office supplies expense (#23 & #29).
Public Infrastructures...
Depr Exp Equipment (#66)
Depr Exp Bldgs (#66)...
Rent expense (#67).
Income and Expense Summary..
Retained operating surplus.

71.

Close Income and


Expense Summary to
Retained Operating
Surplus
72. Close Retained
Operating Surplus to
Government Equity

Retained Operating Surplus.


Government Equity

Multiple Choice Problems


1.
2.
3.
4.
5.

b
d
b
c
c

6.
7.
8.
9.
10,

d
a
d
d
b

11.
12.
13.
14.
15,

a
b
c
b
c

16.
17.
18.
19.
20.

d
a
d
a
c

21.
22.
23.
24.
25.

d
c
b
c
b

26.
27.
28.
29.
30.

a
a
b
b
d

31
32.
33.
34.
35.

b
b
c
b
d

36.
37.
38.
39.
40.

2,880
720
360
180
120
360
60
22
204
2,340
6
18
90

2,036

2,036

2,036

d
b
a
b
b

2,036

41.
42.
43.
44.
45.

b
a
c
b
d

46. d P58,800,000 = P7,000,000 + P14,000,000 + P25,200,000 + P9,800,000 + P2,800,000


47. No answer available P121,800,000
Assets:
Current assets
P 14,000,000
Investments and fixed assets
126,000,000
Other assets
___7,000,000
Total assets
P147,000,000
Less: Liabilities
__25,200,000
Government Equity
P121,800,000
48. a

49. b

Income
Less: Expenses
Personal services
MOOE
Financial expenses
Depreciation
Excess of income over expenses
I ncome:
Subsidy income from National Government
Less: Reversion of unused cash allocation
Sales

P20,000,000
7,000,000
3,000,000
5,000,000
___800,000
P 4,200,000

P 4,000,000
___500,000
P15,000,000

P 3,500,000

Less: Cost of goods sold


Rent income
Interest income
Gain on sale of assets
Income from government services
Total Income
Less: Expenses
Interest expense
Depreciation expenses
Salaries and wages
PERA
Representation allowances
Transportation allowances
Grants and donations
Rent expense
Electricity
Telephone charges
Bank charges
Excess of income over expenses
50. c

Government equity, beginning


Retained Operating Surplus:
Current operations
Adjustment of prior years
Property, plant and equipment public infrastructures
Government equity, ending

__4,000,000

100,000
800,000
10,000,000
200,000
300,000
100,000
400,000
500,000
2,000,000
800,000
___400,000

11,000,000
1,000,000
500,000
2,000,000
8,000,000
P26,000,000

_15,600,000
P 10,400,000
P10,000,000

P16,000,000
__2,000,000

18,000,000
( 3,000,000)
P 25,000,000