You are on page 1of 5

A. ADJUSTING ENTRIES.

Prepare the necessary adjusting entries for JM Merchandising for December, 2016.
1. The firm estimates that 2% of the outstanding accounts receivable is doubtful of
collection.
The outstanding
account receivable as of December 31, 2016 amounts P700,000 and the unadjusted
balance of Allowance for
doubtful accounts at the beginning of the period totals P2,000.
2. On November 1, 2016, the firm signed a 6-month advertising contract for P18,000 and
paid the full amount
in advance.
3. On March 1, 2016, the firm purchased store equipment for P80,000. At that time, the
equipment was
estimated to have a useful life of five years and a salvage value of P2,000.
4. On December 31, 2016, the firm owed salaries of P30,000 to part-time employees.
These salaries will not
be paid until January 3, 2017.
5. On October 1, the balance of Unearned Revenue totaled P36,000. This represents 4months advanced rent received from Mr. Jorge Dy for using the companys unutilized
space.

Page1

ASSIGNMENT for THURSDAY (Please solve and print a copy)

6. On December 31, 2016, an inventory of store supplies showed that items costing
P1,200 were on hand. At the beginning of the year, store supplies was P500 and during
the year, the company purchased supplies worth P7,000.
7. Merchandise Inventory per physical count on December 31, is P44,000.
B.
1. Advertising contract entered into by Julian Enterprises was recorded at P1,020,200
as Prepaid Advertising . It was a 20-month contract signed on March 31, 2016.
2. On December, 2016, Mayika Co. received P80,000 representing advance collection
of a 10% commission on sales and recorded as Unearned Commission Income.
Sales for the month amounted to P230,000.
3. On December 7, 2016, John borrowed P650,000, a 17%, 90-day note from Banco
Manila. No interest has been recorded in the books as at December 31.
4. Cris Housing charges its tenants the following rates. P500 per day for transient
occupants and P7,500 per month for permanent lodgers. As of December 31,2016,
the firm has not received any payment of its two permanent lodgers for the last
quarter of 2016.
5. An equipment was purchased on January 31, 2016 for P300,000 cash by Oriental
Trading. Based on the companys estimates, scrap value is 20% of cost and useful
life is 5 years.
6. Accounts Receivable at year-end amounting to P150,000 while Allowance for
doubtful accounts showed a balance of P10,300 before adjustments. It is LIZs
policy to record 10% of Accounts Receivable as doubtful of collection.
7. Romy Tradings inventory count of goods as at December 31,
2014, total,
P125,500.

Page1

PROBLEM SOLVING

3.
Summer Company purchased merchandise from Winter Trading. Following are the terms of sale:
The list price offered by Winter was, P86,000 less 20.
The merchandise was sold at FOB shipping point and the cost of freight was P2,400.
Winter Trading also offered Summer Company a credit term of 2/10, n/30, and the cash discount
does not apply to the shipping cost.
What is the net cost of goods purchased by Summer Company, assuming the goods
purchased was paid within the discount period?
4.
C FOUR Trading sold merchandise to 3M Enterprises amounting to P98,500 with a 50% down
payment and the balance on account. After three days, P1,250 was returned by 3M Enterprise.
If C FOUR received P22,000 as full settlement of 3Ms account, how much partial payment
was made prior to full settlement?

6.
For the fiscal year ending March 31, 2016, there were net purchases of P600,000. Merchandise
Inventory at the beginning of the period was P70,000 which had increased by P5,000 as of year
end. Freight out was P8,000. If Net sales revenue is equal to P140% of cost of sales, and Operating
Expenses is equal to 20% of Net Sales. How much is Net Profit for the year.
7.
MADONNA Company purchased a new store equipment on January 1, 2015 at a cost of
P450,000. The equipment has an estimated useful life of 5 years and an estimated salvage
value of 10% of cost.
Assuming that the company follows the straight line method of depreciation, how
much is the depreciation expense that should be recorded for the year ended 2016?
8.
Office Supplies on Hand at the start of the year amounted to P15,000. Office supplies
purchased during the year amounted to P50,000 less 10, on terms 1/10, n/30. Defective
supplies amounting to P1,000 were returned and the balance was fully paid within the discount
period.
Approximately 20% of the total supplies available were unused at the end of the end
of the year.
How much Office Supplies were used during the period?
9.
During the month of March, 2016, Amore Trading had the following cash flows:
Cash investment of the owner
P50,000
Cash received from sale of old equipment
15,000
Cash paid for operating expenses
50,000
Cash collected from customers
150,000
Cash received from interest on Investment in
5,000
Trading Securities
Cash paid for interest on loans
3,000
Cash paid for Office supplies
10,000
Cash received from interest on notes receivables
2,000
How much was the net cash inflow (outflow) from operating activities?

Page1

5.
For the year ended December 31, 2013, Healthy Trading disclosed the following information
regarding its operations:
Gross Profit
P200,000
Purchases, all on credit
75,000
Purchase Returns and allowances
10,000
Freight-in
2,000
Gross Sales
350,000
As per physical count on December 31,2016, inventory on hand amounted to P57,600. It
was determined that the company was able to sell only 70% of total goods available for sale.
How much is the Sales Returns and Allowances for the year?

10

11.

The balance of Accounts Receivable of Oriental Trading at March 31, 2016, end of accounting
period, totaled P432,800. The Accountant estimates that about 2% of the accounts receivable is
doubtful of collection. Before making the adjusting entry, the allowance for doubtful accounts
has a credit balance of P2,306. How much is the doubtful accounts expense that must be
recognized by the company as at March 31, 2016?
The Prepaid Insurance account of JMR Marketing had a beginning balance of P65,000. During
the year, an insurance premium was paid and debited Prepaid Insurance for P125,000. The
balance of the Prepaid Insurance account at the end of the year after making the annual
adjusting entry was P35,000.
What amount should be reported as Insurance Expense for the year?

12.
On March 31, 2016 MNR Company received P750,000 a 12-month promissory at 5% annual
interest in settlement of goods sold. Interest payments by the customer are made without fail
every quarter starting June 30, 2016. How much interest must be collected by MNR
Company on December 31, 2016?

Page1

FINANCIAL STATEMENTS
Design Home Furnishings is a retail store. On December 31, 2016, the firm's general
ledger contained the following accounts and balances. Adjusted Trial balance follows:
Required:
(1) Prepare a Functional form Income Statement for the year ending December 31, 2016
(2) Prepare a Statement of Changes in Owners Equity for the year ending December 31,
2016
(3) Prepare a classified, report form, Statement of Financial Position, December 31, 2016.
(4) Notes to Financial Statements:
Note 1 Net Sales
Note 5 Property, Plant and Equipment
Note 2 - Cost of Goods Sold
Note 6 Trade and Other Payables
Note 3 - Trade and Other Receivables
Note 7 Distribution Expenses
Note 4 Prepaid Expenses
Note 8 Administrative Expenses

Page1

=======================================END=============
==============================

You might also like