Financial Accounting 1

Accounting Cycle Exercises

August 2017

FACT PATTERN

Ms. MakaPassarlageko owns a trading company of high quality accounting books called
Accounting 101. The following were the companys transactions for 2017.

Dec 1 Ms. MakaPassarlageko invested a total amount of P100,000 to Accounting101

Paid rent in advance totaling P13,500.
Dec 2 Bought a computer costing P20,000 for administrative purposes. In order to use
cash for other business needs, the company decided to pay half of the total
amount in cash, and the other on account.
Dec 3 Bought office supplies worth P2,000 and paid in cash.
Dec 5 Hired one security guard for the store with a monthly salary of P3,000.
Dec 9 Purchased accounting books worth P95,000 FOB Shipping point, freight prepaid,
terms 2/10 n/30 on account. Transportation costs amounted to P4,000.
Dec 10 Paid P200 for newspaper advertising
Dec 11 Sold merchandise on account FOB shipping point, freight prepaid to Mr.TopOne
worth P41,200. Transportation costs amounted to P1,300.
Dec 15 Sold merchandise to Mrs. FinAccPaMore on credit FOB destination, freight collect.
Sales amounted to P33,700 and freight cost P1,100.00
Dec 16 Mrs. FinAccPaMore returned P540 worth of merchandise due to damages.
Dec 17 Received full payment from Mrs. FinAccPaMore and Mr. TopOne.
Dec 18 Paid 50% of the remaining accounts payable related to December 2 purchases.
Dec 19 Paid merchandise purchases
Dec 21 P10,000 was withdrawn by Ms.MakaPassarlageko for personal use.
Dec 27 Sold merchandise on credit to Mr. DebitCredit and Ms. AccountingCycle totaling
P85,900 FOB destination, freight prepaid. Freight costs amounted to P1,200 each.
Dec 31 Paid monthly salaries for two employees at P3,000 each.

Paid utility expense for the month worth P2,000 pesos.

Additional Information:

1. The computer has a P5,000 salvage value with a useful life of 5 years. Depreciation is
computed on a straight-line basis.
2. As at December 31, office supplies on hand was worth P750
3. The company would want to set a doubtful account worth P1,000
4. The paid balance for rent was for a 9-month period.
5. Monthly salary for the Security Guard remained unpaid as at Dec. 31. P3,000
6. Ending Merchandise Inventory was P50,000

Required:

Prepare the necessary reports to complete the accounting cycle.