ACT1101

MIDTERM EXAM

Problem 1

Accounts Equipment Accounts Mari G,

Cash Receivable Supplies Payable Capital
Jan 1
Bal P25,000 P4,000 P5,000 P60,000 P9,000 P85,000
A (3,000) (3,000)
B 1,000 (1,000)
C 2,500 2,500
D 12,000 (12,000)
E 10,000 10,000
F (2,000) (2,000)
G (2,000) 10,000 8,000
H (1,650) 1,650
I 2,500 (2,500)
a. Paid P3,000 of the outstanding accounts payable.
b. Received P1,000 on account (part payment) from customers.
c. Purchased P2,500 worth of supplies on account.
d. Returned a defective piece of equipment that was purchased last month and received a cash
refund of p12,000.
e. Borrowed P10,000 from a supplier, to repay the loan in 30 days.
f. Paid creditor P2,000 on account (partial payment).
g. Purchased equipment for p10,000, giving P2,000 cash and promising to pay the balance in
60 days.
h. Bought supplies, paying P1,650 cash.
i. Received a P2,500 check from customer on account.

Required: Record the transactions using a financial transaction worksheet.

Problem 2
On June 30, 2018, the end of the fiscal year, the following information is available to Pau
Company’s accountant for making adjusting entries:

a. Among the liabilities of the entity is a P2,400,000 mortgage payable. On June 30, the accrued
interest on this mortgage amounted to P120,000.

Interest expense 120,000

Interest payable 120,000

b. Assume that on, July 2, a Friday, the entity, which is on a five-day workweek and pays
employees weekly, paid its regular salaried employees P192,000.

Salaries expense 115,200

Salaries payable 115,200
192,000/5 x 3 days (June 28 to June 30) = 115,200

c. On June 29, the entity completed negotiations and signed a contract to provide services to a
new client at an annual rate of P36,000. No adjusting entry

d. The supplies account showed a beginning balance of P16,150 and purchases during the year
of P37,660. The year-end inventory revealed supplies on hand of P11,860.

Supplies expense 41,950

Supplies 41,950
Expense : 16,150 + 37,660 – 11,860 = 41,950

e. The Prepaid Insurance account showed the following entries on June 30:
Beginning balance P 15,300
January 1 29,000
May 1 33,660
 The beginning balance represents the unexpired portion of a one-year policy purchased
in April of the previous year. The January 1 entry represented a new one- year policy,
and the May 1 entry is the additional coverage of a three-year policy.

Insurance expense 31,670

Prepaid insurance 31,670
Expired portion:
Beginning balance – expired P 15,300
January 1 (29,000 x 6/12, Jan to June) 14,500
May 1 (33,660/3 x2/12) 1,870
--------------------
P 31,670
============

f. The following table contains the cost and annual depreciation for buildings and equipment, all
of which were purchased before the current year:
Account Cost Annual depreciation
Buildings P 1,850,000 P 73,000
Equipment 2,180,000 218,000

Depreciation 291,000
Accumulated depreciation – Buildings 73,000
Accumulated depreciation – Equipment 218,000
73,000 + 218,000 = 291,000

g. On June 1, the entity completed negotiations with another client and accepted an advance
payment of P210,000 for services to be performed in the next year. The P210,000 was credited
to Unearned Service Revenues. No adjusting entry

h. The entity calculated that as at June 30 it had been earned P35,000 on a P75,000 contract
that will be completed and billed in August.
Accounts receivable 35,000
Service revenue 35,000

Required: Prepare the adjusting entries on June 30, 2017 ( For transactions that does not
require any adjusting journal entry, write no adjustment after the letter)

Problem 3
Presented below, together with account numbers, is the unadjusted trial balance of Camil
Company Travel Agency for the year ended December 31, 2018:

Camil Company
Unadjusted Trial Balance
December 31, 2018

No. Account Title Debit Credit

110 Cash 126,000
120 Accounts receivable 645,000
130 Prepaid rent 360,000
140 Office supplies 63,000
150 Furniture 2,175,000
155 Accumulated depreciation-Furniture 435,000
210 Notes payable 900,000
220 Accounts payable 285,000
230 Salaries payable
240 Interest payable
310 Camil, capital 1,680,000
320 Camil, withdrawals 1,200,000
410 Travel revenues 5,133,000
510 Salaries expense 3,771,000
520 Rent expense
530 Office supplies expense
540 Depreciation expense
550 Interest expense
560 Miscellaneous expense 93,000
 TOTAL 8,433,000 8,433,000

Information pertaining to Camil Company’s account is as follows:

a. On November 1, 2018, Camil paid Newhall Realtors P360,000 for six months’ rent on the
office building commencing that date.

Rent expense 120,000

Prepaid rent 120,000
360,000/ 6 months x 2 (Nov&Dec) = 120,000

b. Office supplies on hand at December, 2018 amounted to P27,000.

Office supplies expense 36,000

Office supplies 36,000
Expense: 63,000 – 27,000 = 36,000

c. Depreciation expense for the furniture amounted to P75,000 for the year.

Depreciation expense 75,000

Accumulated depreciation-Furniture 75,000

d. At December 31, 2018, P105,000 salaries have accrued.

Salaries expense 105,000

Salaries payable 105,000

e. The P900,000 note payable was issued on October 1, 2018. It will be repaid in 12 months
together with interest at an annual rate of 24%.

Interest expense 54,000

Interest payable 54,000
900,000 x 24% x 3 (Oct to Dec)/12 = 54,000

Required: Prepare the adjusting entries.

Problem 4
Transactions for the Mari G Bookstore for March 2018 follows:

March 2 Purchased merchandise on credit from Dyaryo Publishers, terms 2/10, n/30, FOB
Destination, P74,000.
3 Sold merchandise on credit to Day Book Shop, terms 1/10, n/30, FOB shipping
point, P10,000, cost P7,000.
5 Sold merchandise for cash, P7,000, cost P3,500.
6 Purchased and received merchandise on credit from Made Not Easy Bookstore,
terms 2/10, n/30 FOB shipping, P42,000.
7 Received freight bill from Darna Express from shipment received on March 6,
P570.
9 Sold merchandise on credit to Recoleksyon Books, terms 1/10, n/30, FOB
Destination, P38,000, cost, P19,000.
10 Purchased merchandise from Dyaryo Publishers, terms 2/10,n/30, FOB shipping
point, P26,500, including freight cost of P500 (freight cost was not yet
paid to the shipper).
11 Received freight bill from Darna Express for sale on March 9, P291.
12 Paid Dyaryo Publishers for purchase of March 2.
13 Received payment in full for Day Book Shop’s purchase of March 3.
14 Paid Made Not Easy Bookstore half the amount owed on the March 6 purchase.
A discount is allowed on partial payment.
15 Returned faulty merchandise worth P3,000 to Dyaryo Publishers for credit
against purchase of March 10.
16 Purchased office supplies from Olamit supplies for P4,780, terms n/10.
17 Received payment from Recoleksyon Books for half of the purchase of March 9.
A discount is allowed on partial payment.
18 Paid Dyaryo Publishers in full for the amount owed on purchase of March 10 less
return on March 15.
19 Sold merchandise to Sir Aboy Trading on credit, terms 2/10, n/30, FOB shipping
point, P7,800, cost P4,680.
 20 Returned for credit several items of office supplies purchased on March 16,
P1,280.
22 Issued a credit memo to Sir Aboy Trading for returned merchandise, P1,800.
25 Paid for purchase of March 16, ;less returns on March 20.
26 Paid freight entity for freight charges for March 1 and 11.
27 Received payment of amount owed by Sir Aboy Trading for purchase of March
19, less credits of March 22.
28 Paid made Not Easy Bookstore for the balance on the March 6 purchase.
31 Sold merchandise for cash, P9,730, cost P5,838.

Required: Prepare Journal Entries (Perpetual Inventory System and Periodic Inventory
System)

Perpetual Inventory System Periodic Inventory System

Date Particulars Debit Credit Particulars Debit Credit
Marc
h
2 Inventory 74,000 Purchases 74,000
Accounts payable 74,000 Accounts payable 74,000

3 Accounts receivable 10,000 Accounts receivable 10,000

Sales 10,000 Sales 10,000

Cost of sales 7,000

Inventory 7,000

5 Cash 7,0000 Cash 7,000

Sales 7,000 Sales 7,000

Cost of sales 3,500

Inventory 3,500

6 Inventory 42,000 Purchases 42,000

Accounts payable 42,000 Accounts payable 42,000

7 Inventory 570 Freight in 570

Accounts payable 570 Accounts payable 570

9 Accounts receivable 38,000 Accounts receivable 38,000

Sales 38,000 Sales 38,000

Cost of sales 19,000

Inventory 19,000

10 Inventory 26,500 Purchases 26,000

Accounts payable 26,500 Freight in 500
Accounts payable 26,500

11 Freight out 291 Freight out 291

Accounts payable 291 Accounts payable 291

12 Accounts payable 74,000 Accounts payable 74,000

Cash (74,000-1,480) 72,520 Cash 72,520
Inventory 1,480 Purchase discount 1,480
74,000 x 2% = 1,480

13 Cash (10,000-100) 9,900 Cash 9,900

Sales discount 100 Sales discount 100
Accounts receivable 10,000 Accounts receivable 10,000
10,000 x 1% = 100

14 Accounts payable 21,000 Accounts payable 21,000

Cash(21,000-420) 20,580 Cash 20,580
Inventory 420 Purchase discount 420
21,000 x 2% = 420

15 Accounts payable 3,000 Accounts payable 3,000

Inventory 3,000 Purchase return 3,000

16 Office supplies 4,780 Office supplies 4,780

Accounts payable 4,780 Accounts payable 4,780

17 Cash(19,000-190) 18,810 Cash 18,810

Sales discount 190 Sales discount 190
Accounts receivable 19,000 Accounts receivable 19,000
19,000 x 1%= 190

18 Accounts payable 23,500 Accounts payable 23,500

Cash 23,040 Cash 23,040
Inventory 460 Purchase discount 460
23,000 x2%=260

19 Accounts receivable 7,800 Accounts receivable 7,800

 Sales 7,800 Sales 7,800

Cost of sales 4,680

Inventory 4,680

Date Particulars Debit Credit Particulars Debit Credit

Marc
h
20 Accounts payable 1,280 Accounts payable 1,280
Supplies 1,280 Supplies 1,280

22 Sales return 1,800 Sales return 1,800

Accounts receivable 1,800 Accounts receivable 1,800

Inventory 1,080
Cost of sales 1,080
1,800 x 60% = 1,080

25 Accounts payable 3,500 Accounts payable 3,500

Cash 3,500 Cash 3,500

26 Accounts payable 861 Accounts payable 861

Cash 861 Cash 861
570+291 = 861
27 Cash 5,880 Accounts receivable 5,880

Sales discount 120 Sales discount 120

Accounts receivable 6,000 Accounts receivable 6,000

28 Accounts payable 21,000 Accounts payable 21,000

Cash 21,000 Cash 21,000

31 Cash 9,730 Cash 9,730

Sales 9,730 Sales 9,730

Cost of sales 5,838

Inventory 5,838