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UNIVERSITY OF THE EAST

College of Business Administration

Manila Campus

2219 C.M. Recto Ave. Manila, Philippines

BAC 415 – 1T – 1400-1500

GOVERNMENT ACCOUNTING

SFC 312

Submitted By:
ABAD, JESSE EARL B.
BAGON, JOSE CONRAD N.
CANLAS, CHRISTIAN DALE D.
FABULA, IVAN PERRY F.
GABRIEL, ROBERT DARWIN D.
LOTHO, ZACHARY PAUL
ONG, SHERMAYNNE ROSE G.
TORIBIO, FRITZ GERALD G.

Submitted To:
CLAUDIO C. AGSI, CPA, MBA, LLB (on progress)
Professor

October 16, 2019

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TABLE OF CONTENTS

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 DEF Agency
Detailed Statement of Financial Position
As Of December 31, 2018

ASSETS
Current Assets
Cash and Cash Equivalent P 474,000
Cash - Collecting Officer 12,000
Cash - Agency Deposit, Regular 468000
Cash Tax Remittance advice (6,000)
Receivables P 112,500
Accounts Receivable 125,000
Less: Allowance for Bad Debts 12,500
Net Amount 112,500
Inventories P 10,000
Office Supplies Inventory 10,000

Total Current Assets P 596,500

Non- Current Assets

Property, Plant and Equipment P 1,074,000
Buildings 1,000,000
Less: Accumulated Depreciation 400,000
Net Amount 600,000
Office Equipment 660,000
Less: Accumulated Depreciation 186,000
Net Amount 474,000

Total Non- Current Assets P 1,074,000

TOTAL ASSETS P 1,670,500

LIABILITIES AND EQUITY

Current Liabilities
Financial Liabilities P 76,500
Accounts Payable 16,000
Due to BIR 36,000
Due to GSIS 18,000
Due to PagIbig 4,000
Due to PhilHealth 2,000

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 Due to Officers and Employees 500

Total Current Liabilities P 76,500

Non-Current Liabilities
Other Payables P 188,000
Other Payables 188,000

Total Non-Current Liabilities P 188,000

TOTAL LIABILITIES P 264,500

Net Assets/Equity
Government Equity P 1,406,000
Accumulated Surplus/Deficit 1,406,000

TOTAL LIABILITIES AND EQUITY P 1,670,500

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 DEF Agency
Detailed Statement of Financial Performance
As of December 31, 2018

Financial Assistance/ Subsidy from NGAs, LGUs, GOCCs

Subsidy from National Government 965,500
Total Financial Assistance/ Subsidy from NGAs, LGUs, GOCCs P 965,500

Service Income
Permit Fees 200,000
Registration Fees 160,000
Power Supply System Fees 200,000
Landing and Parking Fees 80,0000
Other Service Income 10,000
Total Service Income P 650,000

Less Current Operating Expenses:

Personnel Services
Salaries and Wages- Regular 400,000
Personal Economic Relief Allowance (PERA) 100,000
Travelling Expenses- Local 3,500
Total Personnel Services P 503,500

Maintenance and Other Operating Expenses

Water Expense 2,000
Electricity Expense 10,000
Telephone Expenses 4,000
Janitorial Services Expenses 20,000
Security Services Expenses 24,000
Total Maintenance and Other Operating Expenses P 60,000

Non-cash Expenses
Depreciation- Buildings 400,000
Depreciation- Office Equipment 186,000
Total Non-cash Expenses P 586,000

Surplus / Deficit for the Period P 466,000

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 DEF Agency
Statement of Cash Flow
For The Year Ended December 31, 2018

Cash Flow from Operating Activities:

Cash Inflows:
Assistance and Subsidy 1, 495, 680
Total Cash Inflows P 1, 495,
680

Cash Outflows
Personnel Services 503,500
Maintenance and Other Operating Expenses 60,000
Total Cash Outflows P 563,500

Net Cash Provided by (Used in) Operating Activities P 932, 180

Cash Flows from Investing Activities

Cash Inflows:
Proceeds of PPE and Intangible Assets -
Total Cash Inflows P -

Cash Outflows
Purchase of PPE and Intangible Assets 360,000
Total Cash Outflows P 360,000
Net Cash Provided by (Used in) Investing Activities P 360, 000

Net Increase (Decrease) in Cash and Cash P 203,500

Equivalents

Cash and Cash Equivalent, January 1 270, 500

Cash and Cash Equivalent, December 31 P 474,000

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NOTES TO FINANCIAL STATEMENTS

I. General

The financial statements of DEF Agency were authorized for issue on

December 31, 2015 as shown in the Statement of Financial Statements
signed by the head of DEF Agency.

DEF Agency’s principal activities are dealing with permits, sale of

equipments to the residents and other public services.

II. Statement of Financial Position

 Basis of Accounting

The financial statements are prepared on a cash basis in

accordance with the PPSAS.

 Financial Instruments

a. Financial Assets

Financial assets within the scope of PPSAS 29, Financial

Instruments: Recognition and Measurement are generally
classified as financial assets at fair value through surplus or
deficit. DEF Agency determines the classification of its
financial assets at initial recognition.

Financial assets at fair value through surplus or deficit

include financial assets held for trading. Financial assets are
classified as held for trading if they are for the purpose of
selling or repurchasing in the near term. Financial assets at
fair value through surplus or deficit are carried in the
statement of financial position at fair value with changes in
the fair value recognized in surplus or deficit.

b. Financial Liabilities

DEF Agency’s financial liabilities include trade and other

payables, and borrowings and advances.

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 A financial liability is derecognized when the obligation under
the liability is discharged or cancelled or expires.

 Cash and Cash Equivalents

Cash and cash equivalents comprise, cash from collecting

officers, cash from agency deposit.

 Inventories

Inventory is measured at cost upon initial recognition. To the

extent that inventory was received through non-exchange
transactions (for no cost or for a nominal cost), the cost of the
inventory is its fair value at the date of acquisition.

 Property, Plant and Equipment

Recognition and Measurement

An item is recognized as property, plant, and equipment (PPE) if

it meets the following characteristics and recognition criteria as
a PPE:

The characteristics of PPE are as follows:

 Tangible items;

 Are held for use in the production or supply of goods or

services, for rental to others, or for administrative purposes;
and

 Are expected to be used during more than one reporting

period.

An item of PPE is recognized as asset if:

 It is probable that future economic benefits or service

potential associated with the item will flow to the
entity; and

 The cost or fair value of the item can be measured reliably.

After recognition, all PPE are stated at cost less accumulated

depreciation and impairment losses. All other repair and
maintenance costs are recognized as expense in surplus or
deficit as incurred.

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 Depreciation

Each part of an item of property, plant, and equipment with a cost

that is significant in the relation of the total cost of the item is
depreciated separately.

The depreciation charge for each period is recognized as

expense unless it is included in the cost of another asset.
Depreciation of an asset begins when it is available for use such
as when it is in the location and condition necessary for it to be
capable of operating in the manner intended by management.

Impairment

An asset’s carrying amount is written down to its recoverable

amount, or recoverable service amount, if the asset’s carrying
amount is greater than its estimated recoverable service
amount.

Derecognition

DEF Agency derecognizes items of property, plant, and

equipment and/or any significant part of an asset upon disposal
or when no future economic benefits or service potential is
expected from continuing use. Any gain or loss arising on
derecognition of the asset (calculated as the difference between
the net disposal proceeds and the carrying amount of the asset)
is included in the surplus or deficit when the asset is
derecognized.

III. Statement of Financial Performance

a) Revenue from Non-Exchange Transactions

Recognition and Measurement of Assets from Non-Exchange
Transactions
An inflow of resources from non-exchange transaction, other
than services in-kind, that meets the definition of an asset were
recognized as an asset if the following criteria were met:
 It is probable that the future economic benefits or
services potential associated with the asset will flow
to the entity; and
 The fair value of the asset can be measured reliably.

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 An asset acquired through non-exchange transaction is
initially measured at its fair value as at the date of
acquisition.

Recognition Revenue from Non-Exchange Transaction

An inflow of resources from a non-exchange transaction
recognized as an asset is recognized as revenue, except to the
extent that a liability is also recognized in respect of the same
inflow.

As DEF Agency satisfies a present obligation recognized as a

liability in respect of an inflow of resources from a non-exchange
transaction recognized as an asset, it reduces the carrying
amount of the liability recognized and recognize an amount of
revenue equal to that reduction.

Fees and fines not related to taxes

DEF Agency recognizes revenues from fees and fines, except
those related to taxes, when earned and the asset recognition
criteria were met.
Other non-exchange revenues were recognized when it is
probable that the future economic benefits or service potential
associated with the asset will flow to the entity and the fair value
of the asset can be measured reliably.

b) Revenue from Exchange Transactions

Measurement of Revenue
Revenue was measured at fair value of the consideration received
or receivable.

c) Employee Benefits
The employees of DEF Agency are members of the
Government Service Insurance System (GSIS), which provides
life and retirement insurance coverage.
DEF Agency recognizes the undiscounted amount of short term
employee benefits, like salaries, wages, bonuses, allowances,
etc., as expenses unless capitalized, and as a liability after
deducting the amount paid.

IV. Statement of Changes in Net Assets/Equity

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 The DEF Agency gain surplus at the end of the year compared to
the previous year. Surplus means there is an excess or gain from
the transactions (exchange or non-exchange) throughout the year.

Journal Entries

1.

Cash – MDS, Regular ₱ 1,495,680

Subsidy from National Government ₱ 1,495,680
Receipt of NCA (p.136)

2.

Salaries & Wages ₱ 400,000

PERA 100,000
Due to BIR ₱ 40,000
Due to GSIS 18,000
Due to Pag-IBIG 4,000
Due to PhilHealth 2,000
Due to Officers and Employees 436,000
To recognize expenses for salaries and wages
to be paid (p.210)

3.

Advance for Payroll ₱ 436,000

Cash – MDS, Regular ₱ 436,000
Grant of cash advance (p.197)
4.

Due to Officers & Employees ₱ 436,000

Advances for Payroll ₱ 436,000
Payment of salaries

4b.

Cash, MDS-Regular ₱ 14,000

Advances for Payroll ₱ 14,000
To return the unspent amount from the cash
advance for payroll
5.

Office Supplies Inventory ₱ 10,000

Cash, MDS-Regular ₱ 10,000
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 Receipt of Office Supplies

6.

Accounts Payable ₱20,000

Cash, MDS- Regular ₱ 20,000
Paid 50% of the Accounts Payable

7.

Office Equipment Inventory ₱ 60,000

Accounts Payable ₱ 60,000
Receipt of office equipment (p.255)

8.

Electricity Expenses ₱ 10,000

Telephone Expenses 4,000
Water Expenses 2,000
Janitorial Expenses 20,000
Security Expenses 24,000
Cash – MDS, Regular 60,000
To recognize payment of bills (p.168)

8. A

Accounts Payable ₱ 56,000

Due to BIR 4,000
Cash – MDS, Regular ₱ 60,000
To recognize payment of bills (p.168)
9.

Advances to Officers and Employees ₱ 4,000

Cash, MDS-Regular ₱ 4,000
To recognize granting of Cash Advance for
Local travel
9. A

Travelling Expenses-Local ₱ 3,500

Advances to Officers and Employees ₱ 3,500
To recognize liquidation of Cash Advance for
Local travel
9. B

Cash, MDS-Regular ₱ 500

Advances to Officers and Employees ₱ 500

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 To return the unspent amount from the cash
advance
10.

Office Equipment ₱ 300,000

Accounts Payable ₱ 300,000
Receipt of Office Equipment
11.

Accounts Payable ₱ 300,000

Due to BIR ₱ 6,000
Cash 294,000
Paid the Office Equipment
12.

Due to BIR ₱ 6,000

Cash- TRA ₱ 6,000
Remits the taxes withheld through TRA.
13.

Accounts Receivable ₱ 180,000

Power Supply System Fees ₱ 100,000
Landing and Parking Fees 80,000
To recognize issuance of fees.

14.

Cash – Collecting Officer ₱ 100,000

Power Supply System Fees ₱ 100,000
Collection of income

14. A

Cash – Agency Deposit, Regular ₱ 90,000

Cash – Collecting Officer ₱ 90,000
Deposit or transfer to BTr
15.

Cash – Agency Deposit, Regular ₱ 45,000

Cash – Collecting Officer ₱ 45,000
Deposit or transfer to BTr
16.

Cash – Collecting Officer ₱ 370,000

Other Service Income ₱ 10,000

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 Permit Fees 200,000
Registration Fees 160,000
Collection of income
16. A

Cash – Agency Deposit, Regular ₱ 333,000

Cash – Collecting Officer ₱ 333,000
Deposit or transfer to BTr
Adjusting Entries

18.1

Subsidy from National Government ₱530,180

Cash-MDS Regular ₱530,180
Unused NCA is to be reverted to BTr.
18.2

Depreciation Expense ₱ 166,000

Accumulated Depreciation ₱ 166,000
To adjust the depreciation.
18.3

Accounts Receivable ₱ 4,500

Allowance for Bad Debts ₱ 4,500
To adjust Allowance for Bad Debts

Closing Entries

19. A

Cash Treasury/Agency Deposit-Regular ₱ 466,000

Accumulated Surplus ₱ 466,000
To close Accumulated Surplus

19. B

Subsidy from National Government ₱ 965,500

Revenue and Expense Summary ₱ 965,500
To close the Subsidy from National
Government

19. C

Revenue ₱499, 500

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Revenue and Expense Summary
₱499,500
To adjust Allowance for Bad Debts

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