Accounting For Government Agency

STATEMENT OF FINANCIAL POSITION
Home Office
Area X
Area Y
Cash
Accounts Receivable (net)
Due From Central Office
PPE (net)
Total
100,000.00
80,000.00
300,000.00
480,000.00
50,000.00
60,000.00
45,000.00
100,000.00
255,000.00
30,000.00
10,000.00
(15,000.00)
60,000.00
85,000.00
Account Payable
Due To Regional Office
Governmnet Equity
Retained Earnings
Total
80,000.00
30,000.00
200,000.00
170,000.00
480,000.00
40,000.00
115,000.00
100,000.00
255,000.00
25,000.00
80,000.00
(20,000.00)
85,000.00
A. SET UP NEW ACCOUNTING SYSTEM (RECIPROCAL ACCOUNTS)

Close current reciprocal accounts
H (1)
AX(2)
AY(3)
Due To Regional Office-X

Retained Earnings
45,000.00
30,000.00
Retained Earnings
Due To Regional Office-X
15,000.00
Retained Earnings
Due From Central Office
45,000.00
Due From Cental Office

Retained Earnings
15,000.00
15,000.00
45,000.00
15,000.00

Home Office
Area X
Area Y
Cash
PPE (net)
Total
100,000.00
80,000.00
300,000.00
480,000.00
50,000.00
60,000.00
100,000.00
210,000.00
30,000.00
10,000.00
60,000.00
100,000.00
Account Payable
Governmnet Equity
Retained Earnings
Total
80,000.00
200,000.00
200,000.00
480,000.00
40,000.00
115,000.00
55,000.00
210,000.00
25,000.00
80,000.00
(5,000.00)
100,000.00
B. Set new reciprocal accounts

H(4)
Due From Regional Office-X

Government Equity
Retained Earnings
170,000.00
Due From Regional Office-Y

Retained Earnings
75,000.00
5,000.00
115,000.00
55,000.00
Government Equity
AX(5)
AY(6)
80,000.00
Retained Earnings
Government Equity
55,000.00
55,000.00
Government Equity
Retained Earnings
5,000.00
5,000.00

Home Office
Area X
Area Y
Cash
Due From Regional Office
PPE (net)
Total
100,000.00
80,000.00
170,000.00
300,000.00
650,000.00
50,000.00
60,000.00
100,000.00
210,000.00
30,000.00
10,000.00
60,000.00
100,000.00
Account Payable
Governmnet Equity
Retained Earnings
Total
80,000.00
315,000.00
255,000.00
650,000.00
40,000.00
170,000.00
210,000.00
25,000.00
75,000.00
100,000.00
Home Office
245,000.00
Area X
Area Y
Government Equity
170,000.00 +
75,000.00
ILLUSTRATION:
C. The Home Office transfer P50,000 and P30,000 cash and supplies amounting to P25,000 and P15,000 to Area
X and Area Y, respectively.The home office records the transfer with the following entry:
H (7)
H (8)
Due From Regional Office-AX

Cash
Supplies
75,000.00
Due From Regional Office-AY

Cash
Supplies
45,000.00
50,000.00
25,000.00
30,000.00
15,000.00
D. Area records the following transfer of assets from the head office with the following entry:
AX (9)
AY (10)
Cash
Prepaid Expense/Supplies Expense
Government Equity
50,000.00
25,000.00
Cash
Prepaid Expense/Supplies Expense
Government Equity
30,000.00
15,000.00
E. Recognition of income and expense is recorded normally.

Recognize income on account.
Home office; P15,000
Area X; P10,000
75,000.00
45,000.00
Area Y; P5,000
H(11)
AX(12)
AY(13)
Accounts Receivable
Income
15,000.00
Accounts Receivable
Income
10,000.00
Accounts Receivable
Income
5,000.00
10,000.00
10,000.00
5,000.00
F. Expenses incurred and paid.

Home office; P10,000
Area X; P7,000
Area Y; P6,000
H(14)
AX(15)
AY(16)
Expense
Cash
10,000.00
Expense
Cash
7,000.00
Expense
Cash
6,000.00
10,000.00
7,000.00
6,000.00
G. Collection of accounts receivable:

Home Office; P3,000, P1,000 for AX Account and P500 for AY account.
Area X; P2,000, whole amount deposited to savings account (112)
Area Y; P1,000, whole amount deposited to savings account (112)
H(17)
AX(18)
AX(19)
AY(20)
AY(21)
Cash
Accounts Receivable
Due From Central Office-AX
Due From Central Office-AY
4,500.00
Cash-Collecting Officer
Accounts Receivable
2,000.00
Cash In Bank, Savings Account

2,000.00
Accounts Receivable
1,000.00

1,000.00
3,000.00
1,000.00
500.00
2,000.00
2,000.00
1,000.00
1,000.00
Area center account collected by head office

AX(22)
AY(23)
Government Equity
Accounts Receivable
1,000.00
Government Equity
Accounts Receivable
500.00
1,000.00
500.00
H. Cash remittance of collection and deposit to home office.

Area X; P1500
Area Y; P700
AX(24)
AY(25)
HO(26)
Government Equity
1,500.00
Government Equity
700.00
Cash In Bank
1,500.00
700.00
2,200.00
1,500.00
700.00
SPECIAL CASES
G. On December 30, fund transfer to Area X amounting to P700 was erroneously deposited to Area Y. This
amount was trasferred by Area Y to Area X on January 5 of the next year. P100 was also collected by Area Y
for Area X's account.
HO (27)
AX(28)
AY(29)
AX(30)
AY(31)
AY(32)

Cash In Bank
700.00

Government Equity
700.00
Cash In Bank
Accounts Receivable
700.00
700.00
700.00
700.00
100.00
100.00
100.00
Cash in Bank, Savings Account

100.00
100.00
100.00
This entries will be included with the eliminaton entries on worksheet if not yet remitted as of the balance sheet date.
Collection remitted to Head Office

AY(33)
AX(34)
Due To Regional Office-AX

Cash in Bank, Savings Account
100.00
Government Equity
100.00
100.00

HO(35)
Cash In Bank
100.00
100.00
100.00
HOME OFFICE BOOKS

Beg
7
17
26
27
35

170,000.00
75,000.00
1,000.00
1,500.00
700.00
100.00
245,700.00
2,600.00
243,100.00

Beg
75,000.00
8
45,000.00
17
500.00
26
700.00
120,000.00
118,800.00
1,200.00
AREA CENTER BOOKS
Beg
9
22
24
28
34
28
30
34
Area Center X
Government Equity
170,000.00
75,000.00
1,000.00
1,500.00
700.00
100.00
2,600.00
245,700.00
243,100.00
700.00
100.00
100.00
800.00
100.00
700.00
Beg
10
23
25
Area Center Y
Government Equity
75,000.00
45,000.00
500.00
700.00
1,200.00
29
31
33
120,000.00
118,800.00
Due To Regional Office-AX

700.00
100.00
100.00
100.00
800.00
700.00
WORKING FOR COMBINED FINANCIAL STATEMENTS
HO
DEBITS
Cash
PPE (net)
Total
CREDITS
Account Payable
Due To Regional Office
Governmnet Equity
Retained Earnings
Total
TRIAL BALANCE
AX
AY

Accounting For Government Agency

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Accounting For Government Agency

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STATEMENT OF FINANCIAL POSITION

A. SET UP NEW ACCOUNTING SYSTEM (RECIPROCAL ACCOUNTS)

Due To Regional Office-X

Due From Cental Office

STATEMENT OF FINANCIAL POSITION

B. Set new reciprocal accounts

Due From Regional Office-X

Due From Regional Office-Y

STATEMENT OF FINANCIAL POSITION

Due From Regional Office-AX

Due From Regional Office-AY

E. Recognition of income and expense is recorded normally.

F. Expenses incurred and paid.

G. Collection of accounts receivable:

Cash In Bank, Savings Account

Cash In Bank, Savings Account

Area center account collected by head office

H. Cash remittance of collection and deposit to home office.

Due From Regional Office-AX

Due From Regional Office-AY

Cash in Bank, Savings Account

Collection remitted to Head Office

Due To Regional Office-AX

Due From Regional Office-AY

HOME OFFICE BOOKS

Due From Regional Office-AX

Due From Regional Office-AY

AREA CENTER BOOKS

Due To Regional Office-AX

WORKING FOR COMBINED FINANCIAL STATEMENTS

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