De La Salle University, Inc.

Ramon V. del Rosario - College of Business

ACCTBA1 - Fundametals of Accounting
2nd Term, AY 2012-2013 Dominguez,CPA
Answer Sheet SCORE
Name: Test I and II
ID No.: Test III
Section: TOTAL
Test I Multiple Choice Theories (10 points) - use scannable sheet
Test II True or False (10 points) - use scannable sheet
Test III Problem Solving and Journalizing (30 points) - use worksheet.
De La Salle University, Inc.
Ramon V. del Rosario - College of Business
ACCTBA1 - Fundametals of Accounting
Q3 - Adjustments Dominguez, CPA
INSTRUCTIONS TO THE EXAMINEE:
1 Only three (3) worksheets, calculator, ballpen and ruler are allowed at your desks. All others should be
placed at the side/platform of the room.
2 The examination is good for one and a half hours (1.5 hours).
3 Check the completeness and clarity of the questionnaire.
4 Read and follow instructions carefully. Ask questions only to the teacher.
5 You may write on any portion of the questionnaire.
6 CHEATING is a MAJOR offense, as provided for in Section 13.3.1.1 of the Student Handbook. In addition
to the major offense, anybody caught cheating will automatically receive a FINAL GRADE of 0.0.
I. Multiple Choice Theories: One (1) point each.
1 An accounting method in which revenue is recorded when it is earned and expenses are recorded when
they are incurred.
a. Unearned revenue c. Cash basis of accounting
b. Prepaid expenses d. Accrual basis of accounting
2 Adjusting entries normally involve
a. real accounts only
b. nominal accounts only
c. real and nominal accounts
d. neither real nor nominal accounts
3 The balance in an accrued revenue account represents an amount
Earned Collected
a. Yes Yes
b. Yes No
c. No Yes
d. No No
4 The purpose of adjusting entries is to
a. Prepare revenue and expense accounts for recording the transactions of the next period.
b. Apply the realization principle and the matching principle to transactions affecting two or
more accounting periods.
c. Adjust daily the balances in asset, liability, revenue and expense accounts for the effects
of business transactions.
d. Adjust the capital account for the revenue, expense and withdrawal transactions which
occurred during the year.
5 A prepaid expense can be best described as an amount
a. Paid and currently matched with earnings
b. Paid and not currently matched with earnings
c. Not paid and currently matched with earnings
d. Not paid and not currently matched with earnings
6 An unearned income can be best described as an amount
a. Collected and currently matched with expenses
b. Collected and not currently matched with expenses
c. Not collected and currently matched with expenses
d. Not collected and not currently matched with expenses
7 The accrual basis of accounting is based primarily on
a. Conservatism & revenue realization c. Consistency and matching
b. Conservatism and matching d. Revenue realization and matching
8 Which of the following is an asset account?
a. Accumulated depreciation c. Accrued taxes
b. Accrued interest income d. Allowance for doubful accounts
9 Which of the following is a liability account?
a. Allowance for doubful accounts c. Accrued wages
b. Prepaid rent expense d. Unused office supplies
10 In writing off worthless receivables, the account to be debited should be
a. Doubtful accounts expense c. Depreciation expense
b. Allowance for doubtful accounts d. Accumulated depreciation
II. True or False: One (1) point each. Shade A for true and B for false.
11 One company might depreciate a new computer over three (3) years while another company
might depreciate the samenew computer over five (5) years and both companies would not be
violating any generally accepted accounting principle.
12 A fully depreciated asset has an accumulated depreciation that always equals its depreciable cost.
13 Under the allowance method, writing off an uncollectible account affects both the Statement
of Financial Position and the Income Statement.
14 Recovery of an accounts receivable previously written off increases Bad Debts Expense
15 Failure to adjust a prepayment recorded under the asset method causes total assets and
total expenses to be overstated.
16 A one-year rent collected in advance on January 1, 2012 and recorded under the nominal
account method needs an adjusting entry at December 31, 2012.
17 Accrued interest income is a liability account
18 Accrued Rent Expense and Accrued Taxes Expense are liability accounts.
a. I and II are true c. Only II is true
b. Only I is true d. I and II are false
19 Accrued utilities expense is an income statement item
20 Accrued interest income is an income statement item
III. Problem Solving and preparation of adjusting journal entries. Two (2) points each.
21 Prior to adjustments, Supplies Expense account has a balance of P13,500. Adjustment data gathered
shows that supplies inventory on hand at year end amounted to 4,500. The amount of supplies to be shown
in the income statement should be P____________.
22 Provide the adjusting journal entry required for the transaction.
Eleanor Ong Co. pays all salaried employees on a biweekly basis. Ong Co accrues salaries expense
only at its December 31 year end. Data relating to salaries earned in December 2010 are as follows:
a. Last payroll was paid on 12/26/2010, for the 2-week period ended 12/26/2010.
b. Remaining work days in 2010 were December 29, 30 and 31, on which days there was
no overtime and holidays.
c. The recurring biweekly salaries total to P90,000
23 Assuming a five-day work week, Ong should record a liability at December 31, 2010 for accrued
salaries of P_________________.
24 Provide the adjusting journal entry to record the accrual of the Salaries Expense.
25 On July 1, 2011, Happee Sy Trading acquired an office equipment worth P620,000. The management
estimates the economic life and useful life is 5 years. Salvage value at the end of its useful life is P20,000.
The depreciation expense to be presented in Happee's 2012 Income Statement should be P_____________.
26 Provide the adjusting journal entry required for December 31, 2011.
27 The carrying value/book value of the office equipment on December 31, 2013 should be P__________.
As of December 31, 2011, Tricha Masigan Merchandising has several depreciable assets:
Date Purchased Cost Salvage Value
Equipment 2/28/2010 P 30,000 P 6,000
Furniture 12/1/2010 15,000 3,000
Machinery 11/1/2008 700,000 100,000
Building 1/31/2000 5,000,000 2,000,000
Land 1/1/2011 7,000,000 -
Bought a computer on April 30, 2009 for P30,000 with a salvage value of P6,000. Bought another
computer on July 31, 2010 for P20,000 with a salvage value of P2,000. Both computers have a useful life of 10 years.
As of December 31, 2011, compute for/prepare:
28 Depreciation Expense for Land
Prudent Company applies the conservatism principle in accounting for its accounts receivable. It estimates
that its bad debts is at 5% of outstanding accounts receivable. The valuation account has a debit balance
of P4,500 on June 30, 2011 before adjustment. During the natural business year, Prudent wrote off P10,300
of uncollectible receivables and recovered P6,750 from accounts previously written off. Accounts receivable
balance at June 30, 2011 is P987,600.
29 Provide the adjusting journal entry needed to recognize bad debts for the current year.
30 The net realizable value of Prudent's accounts receivable should be P________________.
The following data are taken from the records of Jappi Calumpag Enterprises:
Payments for rent during the year P 160,000
Accrued rent expense at the end of the year 15,000
Prepaid rent expense at the end of the year 25,000
31 The amount of rent expense that should be reported is P____________.
The following data are taken from the records of Carl Chiang Enterprises:
Collections from customers to apply on account P 144,855
Accrued income at the end of the year 45,600
Unearned income at the end of the year 35,800
32 The amount of revenue that should be reported is P____________.
The following data are taken from the records of Clarence Chua Enterprises:
Accounts Receivable, beginning balance P 82,650
Collections from customers to apply on account 345,950
Accounts Receivable, ending balance 78,550
33 The amount of revenue that should be reported is P____________.
WennaLyn Lopez Co. uses the aging analysis in determining its doubtful accounts. Accounts
receivable shows a balance of P 406,940 as of December 31, 2011, before adjustment. Analysis
of the accounts revealed the following:
Accounts Receivable Age of Accounts % of Collectibility
P 109,200 Not yet due 99%
151,800 1-30 days due 97%
31,500 31-60 days due 94%
63,640 61-90 days due 92%
33,800 91-120 days due 90%
17,000 Over 120 days due 75%
406,940
34 Assuming the Allowance for Doubtful Accounts has a debit balance of P2,240, before adjustment.
The Doubtful Accounts Expense to be reported by Lopez Co. should be P____________.
35 Assuming the Allowance for Doubtful Accounts has a credit balance of P9,560, before adjustment.
The Doubtful Accounts Expense to be reported by Lopez Co. should be P____________.
"If you are a good person and you work hard, good things will come to you..."
Dominguez, CPA
Only three (3) worksheets, calculator, ballpen and ruler are allowed at your desks. All others should be
CHEATING is a MAJOR offense, as provided for in Section 13.3.1.1 of the Student Handbook. In addition
An accounting method in which revenue is recorded when it is earned and expenses are recorded when
Prepare revenue and expense accounts for recording the transactions of the next period.
Apply the realization principle and the matching principle to transactions affecting two or
Adjust daily the balances in asset, liability, revenue and expense accounts for the effects
Adjust the capital account for the revenue, expense and withdrawal transactions which
Revenue realization and matching
Prior to adjustments, Supplies Expense account has a balance of P13,500. Adjustment data gathered
shows that supplies inventory on hand at year end amounted to 4,500. The amount of supplies to be shown
Eleanor Ong Co. pays all salaried employees on a biweekly basis. Ong Co accrues salaries expense
b. Remaining work days in 2010 were December 29, 30 and 31, on which days there was
On July 1, 2011, Happee Sy Trading acquired an office equipment worth P620,000. The management
estimates the economic life and useful life is 5 years. Salvage value at the end of its useful life is P20,000.
The depreciation expense to be presented in Happee's 2012 Income Statement should be P_____________.
The carrying value/book value of the office equipment on December 31, 2013 should be P__________.
Useful Life
(years)
6
12
12
30
-
computer on July 31, 2010 for P20,000 with a salvage value of P2,000. Both computers have a useful life of 10 years.
Prudent Company applies the conservatism principle in accounting for its accounts receivable. It estimates
that its bad debts is at 5% of outstanding accounts receivable. The valuation account has a debit balance
of P4,500 on June 30, 2011 before adjustment. During the natural business year, Prudent wrote off P10,300
of uncollectible receivables and recovered P6,750 from accounts previously written off. Accounts receivable
% of Collectibility
Joe Rogan
De La Salle University, Inc.
Ramon V. del Rosario - College of Business
ACCTBA1 - Fundametals of Accounting
Q3 - Adjustments Dominguez, CPA
Answer Key
I. Multiple Choice Theories: One (1) point each. II. True or False: One (1) point each.
1 D 11 A
2 C 12 A
3 B 13 B
4 B 14 B
5 B 15 B
6 B 16 B
7 D 17 B
8 B 18 A
9 C 19 B
10 B 20 B
III. Problem Solving and Journalizing: Two (2) points each.
21 2 points
22 Supplies 4,500 2 points
Supplies Expense 4,500
23 2 points
23 Salaries and Wages Expense 27,000 2 points
Accrued Salaries & Wages Expense/Salaries Payable 27,000
P90,000 x 3 days / 10 days
25 2 points
2012 Depreciation Expense:
P620,000 - 20,000/ 5 years 120,000
26 Depreciation Expense - Office Equipment 60,000 2 points
Accumulated Depreciation - Office Equipment 60,000
2011 Depreciation Expense:
P620,000 - 20,000/ 5 years x 6/12
27 P 320,000 2 points
Cost 620,000
Less: 2013 Accumulated Depreciation
(P600,000 x 2.5 years) 300,000
320,000
28 P 0 zero 2 points
Value of land does not depreciate
Allowance for Doubtful Accounts
29 Bad Debts Expense 57,430 2 points 4,500
Allowance for Bad Debts 57,430 10,300 6,750
57,430
30 2 points 49,380
=P 987,600 - 49,380
9,000
27,000
P 120,000
938,220.00
31
32
33
34 2
Ending bal., allowance for doubtful accounts 20,257
(P100,000 x 3%)
Accounts Receivable Age of Accounts % UncollectibleUncollectible
P 109,200 Not yet due 1% 1,092.00
151,800 1-30 days due 3% 4,554.00
31,500 31-60 days due 6% 1,890.00
63,640 61-90 days due 8% 5,091.20
33,800 91-120 days due 10% 3,380.00
17,000 Over 120 days due 25% 4,250.00
406,940 P 20,257.20
Allowance for Doubtful Accounts
Write-offs -
Beginning balance 2,240 - Recoveries
22,497.20 Doubful Accounts Expense
20,257.20 Ending balance
35 2
Allowance for Doubtful Accounts
Write-offs - 9,560 Beginning balance
- Recoveries
10,697.20 Doubful Accounts Expense
20,257.20 Ending balance
341,850
P 22,497.20
P 10,697.20
150,000
154,655