AA Accounting Firm is a VAT registered entity owned and operated by Albert

Alcantara. It started operation only on December 2, 2019. The following are

transactions during the month of December 2019.

December 2 The owner invested P200,000 cash and a service vehicle worth
P100,000 to start an accounting office. (Note: Record cash
investment in CRB, and service vehicle in the Journal
Book)
December 3 Secure business permits to operate and paid P5,000.
Paid P30,000 as rental for the office in advance for three months
rental period and P20,000 as two months rental deposit.
December 4 Purchased office and accounting tables, filing cabinets, sofa and
office chairs from ABC company, P 33,600 for cash including
12% VAT. ( Use furniture & fixture account )
December 5 Paid one year fire insurance premium for P6,000.
Purchased office supplies from DEF company worth P15,000 plus
12% VAT on account.
December 6 Purchased additional office supplies for cash from DEF company,
P10,000 plus 12% VAT.
December 9 Paid in full the account due to DEF Company.
Rendered accounting services to JKL Company for cash, P30,000
plus 12% VAT
December 10 Purchased 2 units of computer from GHI company for P56,000, on
account, including 12% VAT, payable within 30 days.
December 11 A short term loan from the Bank of the Philippines Island (BPI) was
granted in the amount of P100,000, less P5,000 financing
charges. Albert Alcantara issued 1 year promissory note.
December 12 Sent money to XYZ News for advertising the opening of the office,
P7,840 including 12% VAT.
December 16 Performed tax services to MNO company on account P44,800
including 12% VAT.
Paid in full the account due to GHI company.
Paid salary of three office staffs, for the period December 1-15 for
P10,000 each. (Deductions are made at the end of the
month.)
December 18 Purchased 1 unit of Xerox machine from ABC company for P50,400
including 12% VAT. Paying a cash down payment of P30,000
and issued a promissory note for the balance.
Provided tax services to JKL company for P20,000 on account plus
12% VAT.
December 19 A client (STU company) advanced P40,000 for audit services to be
rendered 1st quarter of 2020.
December 20 The staff incurred transportation expenses for P1,500.
December 23 Rendered accounting services to MNO company for P55,000 plus
12% VAT. Receiving P25,000 cash and the balance payable
on December 27, 2019.
Paid in full the account due to ABC company.
Albert Alcantara withdrew P20,000 for personal use.
December 27 Received Meralco bill and recorded it as liability, P5,500. (Note:
Record this transaction in the journal book)
Paid telephone bill amounting to P6,000.
Collected the balance due from MNO company

Paid salary to office staffs, for the period December 16-31

Gross Salary (of three EE’s)
P30,000.00
Deductions:
SSS Payable (P1,000 x 3) 3,000.00
PhilHealth Payable (P250 x 3) 750.00
Pag-ibig Payable (P200 x 3) 600.00 (P 4,350.00)
Net Cash Payment P25,650.00

Additional Information:
1. At the end of the month, physical count of the office supplies revealed that
P5,000 had been consumed.
2. The advanced payment for rental, payment for insurance premium and
purchased of office supplies are initially recorded using the asset method.
3. Paid P2,000 for repairs and maintenance of service vehicle due to flat tire was
incurred in December 31, but no record in the book has been made until first
week of January 2020.
4. Mr. Alcantara performed an audit during the 2 nd week of December 2019 for a
financially distressed company (PQR company) for a package fee of P22,400
including 12% vat. This is not recorded by the bookkeeper because no payment is
received yet.
5. The depreciation of assets purchased are as follows
Asset Cost Salvage value Life
Furniture P 30,000 -0- 10 years
Computer 50,000 P 5,000 5 years
Xerox machine 45,000 4,500 5 years
Service Vehicle 100,000 10,000 5 years
Note: The Company adapts the policy of depreciating the asset in the month
purchased. (Full month depreciation as if the assets were purchased and used at
the beginning of the month)

For December 31, 2019, do the following:

A. Journalize the transactions using the special journals. (CDB, CRB, SJ, PJ,JE)
B. Post journal entries to general ledgers and subsidiary ledgers.
C. Prepare Trial Balance. (In good form)
D. Prepare adjusting entries.
E. Using a 10-column worksheet do the following:
 Unadjusted Trial Balance
 Adjustments
 Adjusted Trial Balance
 Balance Sheet
 Income Statement
F. Prepare Statement of Financial Position. (In good form)
G. Prepare Statement of Comprehensive Income. (In good form)
H. Prepare Statement of Changes in Equity. (In good form)
I. Prepare closing entries. (Closing entries for all temporary accounts)
J. Prepare Post Closing Trial Balance.

Legend:
CDB – Cash Disbursement Book PJ – Purchase Journal
CRB – Cash Receipt Book JE – Journal Entry
SJ – Sales Journal
 AA Accounting Firm
Chart of Accounts
Account no. Account Title
Assets
100-01 Cash
100-02 Accounts Receivable
100-03 Notes Receivable
100-04 Office Supplies
100-05 Prepaid Insurance
100-06 Prepaid Rent
100-07 Rental Deposit
100-08 VAT - Input
100-09 Office Equipment
100-09a Accumulated Depreciation - OE
100-10 Furniture and Fixture
100-10a Accumulated Depreciation - F&F
100-11 Service Vehicle
100-11a Accumulated Depreciation - SV
Liabilities Capital
200-01 Accounts Payable 300-01 Alcantara, Capital
200-02 Notes Payable 300-02 Alcantara, Drawing
200-03 Loans Payable
200-04 Utilities Payable Revenue
200-05 VAT – Output 400-01 Service Revenue
200-06 Unearned Service Revenue
200-07 SSS Premium Payable
200-08 Philhealth Payable
200-09 Pag-ibig Payable
Expenses
500-01 Taxes and Licenses 500-08 Depreciation
Expense
500-02 Advertising Expense 500-09 Rent Expense
500-03 Salary Expense 500-10 Insurance Expense
500-04 Utilities Expense 500-11 Repair and Maintenance Expense
500-05 Transportation Expense
500-06 Supplies Expense
500-07 Interest Expense