You were given the following account balances of ABC Company as of November 30, 2006:

Cash 15325 Other current liabilities 4200

Accounts Receivable 8900 Loans payable 34030
Note Receivable 1500 A. capital 109895
Inventory, Jan 1 2850 Purchases 79000
Prepaid rent 10500 Sales 120000
Prepaid insurance 6000 Interest income 1300
Office supplies 1200 Salaries expense 11200
Land 85000 Transportation expense 2100
Building 100000 Advertising expense 5350
Accumulated depreciation: Bldg 4000 Travel expense 200
Office equipment 10000 Utilities expense 1500
Accounts payable 40250 Sales returns 2275
Notes payable 25000 Sales discount 1850
Purchase returns 3200 Purchase discount 1850
Allowance for bad debts 1025

You were also given the following transactions to consider:

2006 Dec 1 Sold Land with book value of P25000 for P50000 cash.
Dec 5 Made sales on account for P10000, term is 2/15, n/30
Dec 10 Purchased merchandise on cash basis. List price was P5000 and trade
discount of 20% was given by the supplier.
Dec 11 Received returned goods from Dec 5 sale. Amount was P2000.
Dec 12 Purchased office supplies on account, P12000.
Dec 16 Collected in full the receivable from the December 5 sale.

ADDITIONAL INFORMATION

1. Cash balance as of December 31, 2006 per the bank statement is P72315. Reconciling items to consider are as follows:
Outstanding checks ?
Deposit in Transit P25000
Proceeds of bank loan credited by the bank not yet taken in books P25000
Bank service charges 500
Interest on deposit not recorded by the company 1200
The company incorrectly recorded a November wage payment (part of salaries expense) at P1550. The
correct amount is P1600.
2. You were given the following information about certain inventory on account sale shipments of the company made
around late December 2006 and early January 2007 relevant for analysis.
Invoice # FOB Term Shipped Recorded Sales Price Cost
7671 Shipping Point 20-Dec 31-Dec 1000 900
7672 Destination 31-Dec 2-Jan 2500 2000
7673 Destination 25-Dec 31-Dec 1800 1200
7674 Shipping Point 31-Dec 29-Dec 4200 3100
7675 Shipping Point 31-Dec 2-Jan 9200 8000
7676 Destination 31-Dec 23-Dec 6500 5100
7677 Destination 5-Jan 6-Jan 7500 5800
7678 Shipping Point 25-Dec 3-Jan 3900 2000
7679 Destination 4-Jan 31-Dec 8600 8200
7680 Shipping Point 5-Jan 2-Jan 5000 4000
A physical inventory, taken as of the close of business on December31, 2006, shows P27380. All customers are within
a three-day delivery area of the company. Bad debts is estimated by using 2% of Sales method.
3. The building was 1 year old as of December 31, 2005 and was being depreciated at zero salvage value. Starting
January 1, 2006, the building is to be depreciated with salvage value of P6000.
4. The office equipment was acquired last July 1, 3006 and will be depreciated over two years.
5. 1/2 of prepaid rent and insurance is expired as of December 31, 2006. Office supplies on hand are P200.
6. Accrued interest on notes receivable is P500.
7. Notes payable is composed of only one promissory note issued last July 1, 2006 at 20% interest per annum.

Calculate the following (as of December 31, 2006):

a. credit total of the unadjusted trial balance _______________ i. total assets _______________
b. outstanding checks _______________ j. A. Capital _______________
c. cash _______________ k. cost of sales _______________
d. accounts receivable (net) _______________ l. total expenses _______________
e. building (net) _______________ m. bad debts expense _______________
f. equipment (net) _______________ n. inventory _______________
g. cost of goods available for sale _______________ o. net sales _______________
h. total current assets _______________ p. net income _______________
BA 99.1 Final Examination

1. You were given the following:

Company Cash Record: Unadjusted balance: Nov 30 P100000
Dec 31 120000
December receipts 50000

Per bank statement: Balance Nov 30 56500

December deposits 30000

Additional Information:
Service Charges Nov P500
Dec 750
Outstanding checks Nov 2000
Dec 5000 (including the November outstanding check of P2000)
A check for P50000 in November was recorded at P5000. The correction was made January of the following year.
The same check was encashed by the bank at the correct amount in November.
A December deposit of P20000 was recorded at p40000. The correction was made in December. The same deposit
was taken by the bank correctly.
(5pts) Compute for the adjusted book balance as of November 30. __________________
(5pts) Compute for the unadjusted book balance as of December 31. _________________

2. X Inc. started operations on January 1, 2005. The following relevant data are given for its first three years of operations.

2005 2006 2007

Sales 100000 200000 300000
Accounts Receivable 50000 75000 150000
Accounts written off 5000 100000 12000
Recovery of accounts written off 2000
Method of estimating doubtful accounts 5% of A/R 6% of A/R 5% of sales

(2 pts each) Compute for the adjusted balance of the allowance account end of 2006 and 2007.
2006 ____________________ 2007 ____________________

3. You were given the following information about certain inventory sale shipments of XYZ Company.
Invoice # FOB Term Shipped Recorded Sales Price Cost
7671 Destination 20-Oct 31-Oct 1000 900
7672 Shipping Point 31-Oct 2-Nov 2500 2000
7673 Shipping Point 25-Oct 31-Oct 1800 1200
7674 Destination 31-Oct 29-Oct 4200 3100
7675 Destination 31-Oct 2-Nov 9200 8000
7676 Shipping Point 2-Nov 23-Oct 6500 5100
7677 Shipping Point 5-Nov 6-Nov 7500 5800
7678 Destination 25-Oct 3-Nov 3900 2000
7679 Shipping Point 4-Nov 31-Oct 8600 8200
7680 Destination 5-Nov 2-Nov 5000 4000
A physical inventory was taken as of the close of business on Oct.31, the company’s balance sheet date. Al customers are
within a three-day delivery area of the company. The unadjusted balances of Sales and Inventories accounts are P2500000
and P110000, respectively.
(5pts each) Compute for the adjusted balances of Sales and Inventories. ___________________ ; ___________________

4. The financial statements of ZZ Company contained the following errors:

Ending inventory of 2003 was understated by P200. Ending inventory of 2004 was overstated by P1800. Depreciation
expense of 2003 understated by P400. Insurance of P1500 was prepaid in 2003 for the years 2003, 2004, and 2005. The
entire amount was expensed in 2003. On December 31, 2004, a fully depreciated machinery was sold for P3200 cash but
the sale was not recorded until 2005. No corrections had been made for any of these errors.

(2pts) Compute for the net effect (indicate whether under or overstatement) of these errors on the 2004 gross profit.
_____________________________
(5pts) Compute for the net effect (indicate whether under or overstatement) of these errors on the 2003 income.
_____________________________
(5pts) Compute for the net effect (indicate whether under or overstatement) of these errors on capital as of December 31.
_____________________________

5. You were given the following breakdown of X Company’s accounts receivable on December 31, 2006:

Sales to Amount Date shipped-2006 Term Date received-2006

A P100000 1-Nov Shipping point 2/10, n/30 15-Dec
B P200000 31-Aug Destination 2/10, n/60 15-Nov
C P250000 21-Nov Shipping point 5/10, 2/15, n/30 20-Dec
 D P300000 1-Sept Destination 2/10, n/30 1-Oct
In computing the bad debts, the company uses the following estimates: not yet due 2%; 1-20 days past due, 5%; 21-40 days
past due, 8%; 41-60 days past due, 10% and over 60 days, 15%. The credit period starts a day after each sale and includes
holidays.
(5pts) If the unadjusted balance of the allowance account is a debit of P5000, calculate bad debts expense to be reported for
2006. ____________________

6. XC Company discounted a note with face value of P100000 at XZ Bank. The note was received by XZ on May 1, 2006.
Proceeds was P106085 and the note was discounted at 12%. This note was issued by XX Corporation on January 1, 2006
and was to be paid on June 30, 2006.
(5pts) Determine the original rate of interest carried by the note. ____________________
(2pts) How much is the maturity value of the note? ____________________

7. On January 1, 2007, AZ Company received a NON-interest bearing note for P100000. This note is supposed to be paid
by the maker on December 31, 2007. The note was discounted by AZ with Onion Bank on July 1, 2007. The discount was
set at 12%.
(5pts) Calculate the proceeds from the discounting. ____________________

8. You were given the following purchase and sale schedule for Inventory Company.

Purchase Sale Unit Cost

Beginning 2006 2000 1.5
1-Jan-2006 5000 1.6
19-Feb-2006 3000
28-April-2006 2500 1.8
5-May-2006 3000
22-July-2006 5000 1.8
20-Sep-2006 1000
15-Nov-2006 3500 2
18-Dec-2006 500
15-Jan-2007 3000 2.1
18-Jan-2007 200

The company sells its product at P5.5 each.

(5pts) Compute for cost of goods sold for 2006 assuming weighted average inventory costing. ____________________
(5pts) Compute for gross profit of 2006 assuming FIFO. ____________________

9. Given the following transactions:

Dec 1 Purchased inventory on account for P20000, terms 2/10, n/30. P2000 was paid by AA for transporting
the inventory to the company’s store. (Payment for transport is subject to VAT)
Dec 5 Sold merchandise on account for P50000. Terms 2/10, 1/15, n/30.
Dec 6 Returned ¼ of the Dec. 1 purchase due to some defects.
Dec 7 Collected ½ of the receivable from Dec.15 purchase.
Dec 9 Paid in full the payable related to the Dec. 1 purchase.
Dec 11 Sold merchandise for cash, P15000.
(5pts) Calculate the net VAT as of end of December. Indicate if payable or asset. ______________________________

10. You were given the following account balances of ABC Company as of November 30, 2006:

Cash P 30875 Other current liabilities P 4200

Accounts Receivable 10250 Loans payable 34030
Notes receivable 2100 A. Capital 100110
Inventory, Jan 1 1750 Purchases 79000
Prepaid rent 5000 Sales 120000
Prepaid insurance 4000 Interest income 2500
Office supplies 1000 Salaries expense 25150
Land 52000 Transportation expense 2100
Building 100000 Advertising expense 5350
Accumulated depreciation: Bldg 4000 Travel expense 200
Office Equipment 10000 Utilities expense 1500
Accounts payable 40250 Sales returns 6250
Notes payable 32635 Sales discount 6250
Purchase returns 3200 Purchase discount 1850

You were also given the following transaction to consider:

2006 Dec 1 Issued check #10 for P5150 as payment for utilities expense
Dec 5 Made sales on account for P8000, term is 2/15, n/30.
Dec 10 Purchased merchandise on account for P5000, term is 2/10, n/30.
 Dec 11 Received returned goods from Dec 5 sale. Amount was P2000.

ADDITIONAL INFORMATION

1. Cash balance as of December 31, 2006 per the bank statement is P40125. Reconciling items to consider are as follows:

Outstanding checks P 6125

Deposit in transit ?
Proceed of bank loan credited by the bank not yet taken in books P 9000
Bank service charges 125
Interest on deposit 350
The company incorrectly recorded a November wage payment (part of salaries expense) at P1550.
The correct amount is P1500.

2. You were given the following breakdown of accounts receivable as of December 31, 2006:

due December 15, 2006………..…. P 1000

due December 1, 2006……………. 1500
due November 15, 2006 …………. 1750
due November 1, 2006…………… 1000
The rest are not yet due accounts.
The following are the estimates of doubtful accounts expense:
not yet due accounts 1%
1 – 15 days past due 5%
16 – 30 days past due 10%
31 – 45 days past due 20%
Over 45 days past due 30%

3. The building was 1 year old as of December 31,2005 and was being depreciated at zero salvage value. Starting Jan. 1,
2006, the building is to be depreciated at total estimated life of 10 years and salvage value of P6000.

4. The office equipment was acquired last January 1, 2006 and will be depreciated over two and a half years.

5. The company uses the FIFO cost flow method of ending inventory valuation. And you were given the following
information on inventory purchases:
UNIT COST
Beginning inventory 35 units P 50
Batch 1 200 60
Batch 2 500 62
Batch 3 400 60
Batch 4 272 62.50

During the year, the company sold 962 units of their inventory. A physical count on December 31, 2006 showed 445 unsold
units.

6. ½ of prepaid rent and insurance is expired as of December 31, 2006.

7. Office supplies on hand is P200.

8. Accrued interest on notes receivable is P210.

9. Notes payable is composed of only one promissory note issued last July 1, 2006 at 20% per annum. Maturity date is at
July 1, 2008.

Calculate the following:

(5pts) a. debit total of the December 31, 2005 unadjusted trial balance. ________________________
(5pts) b. deposit in transit as of December 31, 2006. ________________________
(5pts) c. cash to be shown on the December 31, 2006 balance sheet. ________________________
(5pts) d. accounts receivable (net of allowance) as of December 31, 2006. ________________________
(5pts) e. building (net of accumulated depreciation) as of December 31, 2006. ________________________
(5pts) f. equipment (net of accumulated depreciation) as of December 31, 2006. ________________________
(5pts) g. total current assets as of December 31, 2006. ________________________
(5pts) h. total assets as of December 31, 2006. ________________________
(5pts) i. total capital as of December 31, 2006. ________________________
(5pts) j. net income or loss for 2006 (indicate if income or loss). ________________________
(5pts) k. cost of sales for 2006. ________________________
(5pts) l. total expenses for 2006. ________________________
(5pts) m. bad debts expense for 2006. ________________________
 BA 99.1 Midterm Examination

1. Mr. A organized AZ Merchandising on January 1, 2006. You were given the company’s trial balance as of November
30, 2007:

Cash 30875 Loans payable 34030

Accounts Receivable 10250 A. capital 100110
Note Receivable 2100 Purchases 79000
Inventory, Jan 1 1750 Sales 120000
Prepaid rent 5000 Interest income 2500
Prepaid insurance 4000 Salaries expense 25150
Office supplies 1000 Transportation out 2100
Land 52000 Freight-in 5350
Building 100000 Travel expense 200
Accumulated depreciation: Bldg 4000 Utilities expense 1500
Office equipment 10000 Sales returns 6250
Accounts payable 10250 Sales discount 6250
Notes payable 32635 Purchase discount 1850
Unearned other revenue 4200 Purchase returns 3200

The following were the transactions for the month of December 2007:

Dec 1 Purchased inventory on account for P20,000, terms 2/10, n/30, FOB Shipping Point. P2,000 for freight was
paid by the vendor.
Dec 5 Paid the total payable from above purchases to the supplier.
Dec 10 Sold merchandise for P10,000. Term is FOB Destination (Freight Collect), 20% down payment, balance 2/10,
1/15, n/30. Freight was P2,000.
Dec 11 Sold merchandise on cash basis, FOB Shipping Point, Freight Prepaid. Total selling price was P2,000 and
freight was P500. (Paid by the buyer)
Dec 12 The client of Dec. 10 returned merchandise worth P2,000. P500 was charged against the receivable while a
replacement for the balance was delivered to the client.
Dec 15 The client of December 10 settled its account with the company.
Dec 22 Purchased for cash P10,000 worth of merchandise. Term is 2/15, n/30, FOB Destination. The vendor paid
freight of P1,500.
Dec 24 Sold merchandise on cash basis, FOB Destination, Freight Prepaid. List price is P3,000 and trade discount
given was 20%. Freight was P800.
Dec 24 Returned 1/5 of the Dec. 22 purchase. The supplier will refund the company in January, 2008.
Dec 26 Received some returned goods coming from the Dec 24 sale. Selling price of the received goods is P1,000 and
the customer was fully refunded for this.
Dec 27 Paid travel expenses for P2,800.
Dec 28 Received and paid the bill for electricity consumption for the month, P1,250.
Dec 29 Sold merchandise for P20,000. Term is FOB Destination (Freight Collect), 10% down payment, balance 2/10,
n/30. Freight was P5,000.

ADDITIONAL INFORMATION:
All office equipment were acquired on June 30, 2006 and is depreciable over 5 years. The company however forgot to take
up depreciation on the office equipment for 2006. The building is one year old as of beginning of 2007. ½ of prepaid rent
and ½ of prepaid insurance is expired. Interest for one year at 12% is to be accrued on notes receivable. Ending inventory
is P27,000. Bad debts is 6% of accounts receivable. Unrecorded salaries is P1,200.

Required: 1) Prepare the journal entries (one entry only for each) for the December transactions. (2 pts each)
2) Calculate the following (5 pts each) as at December 31, 2007 or for 2007, respectively:

a. Total Assets ____________________ f. Cash as of December 31, 2007 ____________________

b. A, Capital balance ____________________ g. Accounts receivable balance ____________________
h. Accounts payable balance ____________________
c. Net sales ____________________
i. Sales discount ____________________
d. Cost of sales ____________________ j. Purchase discounts ____________________
e. Net income____________________

2. A new business has the following transactions for the month: (1) Owner invested P36,000; (2) P26,000 of supplies were
purchased for cash and ½ remained unused at the end of the month; (3) P23,000 was received for payment for services
rendered by the business; (4) a salary of P10,000 was paid to an employee and (5) P30,000 was borrowed from the bank (6)
equipment worth P25,000 was bought by paying cash of P5,000 and the balance was payable in 45 days (7) a customer paid
in advance P12,000 which remain unearned at the end of the month.

Compute for total assets as at the end of the month (5 points). ____________________
Ignoring depreciation, compute for owner’s equity as at end of the month (5 points). ____________________
3. Mr. A sells home cooked meals. He purchased the following for the day: Pork=P50, Beef=P55, Fish=P30, Chicken=P95
and Shrimps=P45. Out of these purchases he made 10 pork meals, 12 beef meals, 15 fish meals, 10 chicken meals and 12
shrimps meals. He still had the following meals from yesterday’s operation: 5 pork meals, 2 beef meals, 3 fish meals, 5
chicken meals and 4 shrimp meals. Mr. A purchased the same number of items as purchased yesterday only that the price
for all items today were lower by P0.50. He made exactly the same number of meals each type today compared to
yesterday. Mr. A sells meals at the following prices: Pork=P10, Beef=P24, Fish=P11, Chicken=P13 and Shrimps=P14.
Each meal sold comes with one cup of rice costing P2 each. Unsold meals as at the end of the day (Mr. A uses FIFO) were:
Pork=2, Beef=1, Fish=1, Chicken=4 and Shrimps=5. Mr. A also pays P50 per day for stall rental. Calculate the following
(5 points each except (a)):

a. Gross profit for the day per type of meal ( 2 points each):
Pork ____________________
Beef ____________________
Fish ____________________
Chicken ____________________
Shrimps ____________________
b. Total sales for the day ____________________
c. Total cost of sales for the day ____________________
d. Net income for the day ____________________
e. Inventory as of end of the day ____________________

4. Given the following inventory shipments:

Date
Invoice Date shipped Trade Date of final
received by List price Freight Terms
# by seller discount settlement
buyer
P5,000 FOB Destination
001 11-15-07 12-15-07 20% P100,000 12-23-07
(paid by seller) 2/10, n/30
P12,000 FOB Destination
002 11-30-07 01-05-08 10% P120,000 01-17-08
(paid by seller) 2/10, 1/15, n/30
FOB Shipping Pt.
P15,000
003 12-05-07 01-06-08 15% P220,000 10% down, 01-08-08
(paid by seller)
Balance 2/10, n/30
FOB Destination
P4,000
004 12-06-07 12-25-07 -- P180,000 20% down 01-02-08
(paid by seller)
Balance, 2/10, n/30
P3,500 FOB Destination
005 12-10-07 12-15-07 5% P110,000 01-01-08
(paid by buyer) 2/10, n/30
P6,000 FOB Shipping Pt.
006 12-11-07 01-02-08 -- P210,000 12-15-07
(paid by buyer) 2/10, n/30
P8,200 FOB Destination
007 12-15-07 12-26-07 -- P150,000 01-06-08
(paid by buyer) 2/10, 1/15, n/30
FOB Destination
P7,500
008 12-25-07 01-03-08 20% P225,000 10% down, 01-10-08
(paid by seller)
Balance 1/15, n/60
P5,500 FOB Destination
009 12-29-07 01-05-08 -- P120,000 01-10-08
(paid by buyer) 2/10, n/30
P7,800 FOB Shipping Pt.
010 12-30-07 01-08-08 10% P325,000 01-16-08
(paid by seller) 2/10, n/30

a. (5 pts) If you were the buyer, how much of the above should be taken as Purchases for 2007? ____________________
b. (5 pts) If you were the seller how much of the above will be taken up as Sales for 2008? ____________________
c. (5 pts) If you were the buyer, how much of the above will be taken up as purchase discounts for 2007?
____________________
d. (5 pts) f you were the seller, how much of the above will be taken up as transportation-in for 2007?
____________________
e. (5 pts) If you were the buyer, how much of the above is to be included in Accounts payable as of December 31, 2007?
____________________
f. (2 pts each) Determine the amount received by the seller on final settlement.
Invoice 001 ____________________
002 ____________________
003 ____________________
004 ____________________
005 ____________________
006____________________
007 ____________________
008 ____________________
 009 ____________________
010 ____________________

BA 99.1
Exercise 1

July 1 Mr. A organized Company AA on this date, he invested cash of P100,000 for the business.
July 4 The business paid licenses of P500 to the city government.
July 5 The business rendered service for P2,000. The customer paid in cash.
July 8 Company AA rendered service valued at P1,500 to Mr. X. He paid the company P1,000 in cash and
said that he will pay the balance after five days.
July 10 The company bought for office supplies worth P1,200. Made a P500 down payment.
July 12 Mr. X paid the full balance of his payable to Company AA.
July 13 Company AA purchased office equipment on credit. Total acquisition cost is P3,200.
July 13 The company rendered service on credit to Mr. Q. The service was worth P1,000.
July 14 Company AA paid electricity expense for electricity consumption from July 1-14. The amount paid
was P800.
July 15 The treasurer of the company paid P1,000 to Mr. B. This was for repairs made on the car of Mr. A
which is being used by him privately.
Prepare journal entries for the above transactions. Determine the balances as of July 15 of all accounts relevant above.

BA 99.1
Exercise 2

Journalize the following transactions of Company A:

Jan 1 Mr. A invested P100,000 cash into the business. Additionally, he put in some supplies valued at P5,000.
Jan 1 Paid rent to Mr. R amounting to P12,000. This represented rent payments for January up to June 30 this
year.
Jan 5 Purchased Office Equipment with cash price of P12,000. ½ was paid in cash and the balance was
payable after two months.
Jan 6 Rendered service to Mr. X. He paid P6,000.
Jan 6 Rendered service valued at P5,000 to Mr. Z. The company received a promissory note for this. The face
value was equal to the value of the service rendered with interest of 10% per annum.
Jan 7 Company A purchased office equipment on credit. Purchase price is P5,000. In bringing the equipment
to the company, Company A paid P1,000 for insurance and another for freight charges.
Jan 8 Incurred some miscellaneous expenses equal to P1,500. Only P1,00 of this was paid as of today.
Jan 9 Mr. X (from Jan6 transaction) returned complaining of back pains. He asserts it was due to the fault of
the company. He threatens to sue but will not pursue the action if he will be refunded ½ of what he paid.
Jan 10 The company received P1,000 as advance payment for services supposed to be rendered to Mr. Y in
February.
Jan 15 Purchased on account some supplies valued at P2,000. For this, the company issued a 10% promissory
note of P2,000. This will be paid in March.
Jan 16 Company A paid P200,000 for a parcel of land to be used by the business. In addition to the price paid,
the company also paid transfer taxes of P10,000.
Jan 18 Paid P500 for transportation. Transportation expense actually incurred today was P1,000.
Jan 25 Rendered service for cash. Value of the service rendered was P2,000.
Jan 30 Paid 25% of the balance on miscellaneous expenses incurred last Jan. 8.
Jan 30 The company rendered service on credit to Mr. W. The service was worth P1,000.

BA 99.1
Exercise 3

Jan 1 Mr. A invested P100,000 into the business. The investment consisted of cash, some supplies valued at
P5,000 and a photocopying machine originally bought by A for P50,000 (a brand new similar equipment
can be purchased now for P75,000 and if this equipment is sold now, it can be sold for P35,000).
Jan 1 Paid rent to Mr. R amounting to P12,000. This represented rent payments for January up to June this
year.
Jan 3 Purchased office furniture for cast P25,200.
Jan 4 Rendered service on credit for P5,200.
Jan 5 Purchased Office Equipment with cash price of P12,000. ½ was paid now and the balance was payable
after two months.
Jan 6 Mr. A withdrew P5,000 for personal use. Mr. a intends to return the same by next month.
Jan 6 Rendered service valued at P5,000 to Mr. X. The company received a promissory note for this. The face
value was equal to the value of the service rendered with interest of 10% per annum.
Jan 8 Incurred some miscellaneous expenses equal to P1,500. Only p1,000 out of this was paid as of today.
Jan 10 The company received P1,000 as advance payment for services supposed to be rendered to Mr. Y in
February.
Jan 15 Purchased some office supplies valued at P2,000 on account. The company issued a promissory not of
P2,000, with interest of 10% for this. This will be paid in March.
Jan 18 Paid P500 for transportation. Transportation expense actually incurred today was P1,000.
 Jan 25 Rendered service for cash. Value of the service rendered was P2,000.
Jan 27 Mr. A made additional cash investment of P50,000.
Jan 30 Paid P200 of the miscellaneous expense incurred last Jan 8.

BA 99.1
Exercise

You were given the following transactions of Company A for 2006, its first year of operations:

Jan 1 Mr. A invested P100,000 into the business. The investment consisted of cash plus some supplies valued
at P 5,000.
Jan 1 Paid rent to Mr. R amounting to P36,000. This represented rent payments for January up to June next
year. The company uses the asset method in accounting for prepayments.
Jul 1 Purchased Office Equipment with cash price of P90,000. ½ was paid in cash and the balance was
payable June 30 of next year.
Aug 1 Rendered service valued at P5,000 to Mr. X. The company received a promissory note (due in one year)
for this. The face value was equal to the value of the service rendered with interest of 10% per annum.
Sept 1 Incurred some miscellaneous expenses equal to P1,500. Only P1,000 out of this was paid as of today.
Sept 10 The company received P1,000 as advance payment for services supposed to be rendered to Mr. Y next
year.
Oct 1 Purchased some supplies valued at P2,000 on account. The company issued a promissory note of
P2,000, with interest of P10% per annum. The note and interest will be paid in April 30.
Nov 15 Rendered service on account for P50,000.
Dec 5 Transportation expense actually incurred today was P1,000. Paid only p500 as of today.
Dec 15 Rendered service for cash. Value of the service rendered was P2,000.
Dec 20 Paid P200 of the miscellaneous expenses incurred last September 1.
ADDITIONAL INFORMATION:
1. Accrued salaries as of the end of the year is P1,200.
2. You found out that the company actually rendered service worth P200 to Mr. Y as of the end of the year.
3. The equipment’s estimated life is 5 years with no salvage value.
4. Doubtful accounts will be estimated using percentage of accounts receivable. The rate is 5%.
5. Supplies on hand a December 31, 2001 is P2,500.
6. It was discovered that an error was made last Dec. 15. The value of the service rendered was actually P5,000.
REQUIREMENT: Prepare the worksheet as of December 31, 2006.

BA 99.1
Exercise

Accounts receivable 34567 Supplies expense 250

Accounts payable 123890 Miscellaneous expense 990
Building 285000 Transportation expense 1250
Cash In Bank 23456 Precollected interest on notes 1250
Cash on Hand 7890 Representation expense 1400
Interest payable 285 Miscellaneous revenue 2456
Land 175000 Unearned service revenue 2480
notes receivable 12250 Salaries payable 2552
Notes payable 21000 Taxes expense 3200
Office Equipment 154500 Light & Power expense 4520
Office Furniture 25250 Other assets 6450
Prepaid rent 20000 A. Drawing 12000
Supplies 850 Salaries expense 21350
Unearned rent revenue 20000 Service revenue 124600
Unexpired insurance 1200 A. Capital 492860

You were given the following unadjusted normal account balances for XYZ Company as of December 31, 2006. You were
also given the following:
1. The Note Receivable is a 2-year note and bears an annual interest of 12%. The interest is collectible on maturity
date except for that part already pre-collected. The note was received January 1, 2006.
2. The Notes Payable of P21,000 was issued by the company last September 1, 2006. This note will mature in 3
years and total interest to be incurred by the end of the third year is P6300.
3. Prepaid rent represents rent payments for the next 20 months. The payment happened last October 1, 2006.
4. Supplies per count is worth P600 as of December 31.
5. 50% of unearned rent is to be recorded as revenue as of December 31, 2006.
6. Expired insurance for 2006 is P1000. ¼ of unearned service revenue was earned in 2006.
7. 10% of the Accounts Receivable is estimated to be uncollectible. Depreciation is at 10% of the cost of an asset.
8. Salaries of p2,800 should be accrued as of December 31, 2006.

Prepare the UNADJUSTED trial balance on December 31, 2006. Prepare the ADJUSTING JOURNAL ENTRIES as of
December 31, 2006.