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Detoya Accounting Cycle

- Edgar Detoya began a tax consulting business on December 1, 2018 and invested 150,000 pesos. - Throughout December, the business paid expenses such as rent, supplies, salaries, and purchased office equipment. It also earned revenue from consulting services. - On December 31, the business recorded accrued salaries, supplies on hand, and depreciation expense for the month. It also recorded unbilled work that Detoya completed worth 10,000 pesos.
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100% found this document useful (7 votes)
14K views17 pages

Detoya Accounting Cycle

- Edgar Detoya began a tax consulting business on December 1, 2018 and invested 150,000 pesos. - Throughout December, the business paid expenses such as rent, supplies, salaries, and purchased office equipment. It also earned revenue from consulting services. - On December 31, the business recorded accrued salaries, supplies on hand, and depreciation expense for the month. It also recorded unbilled work that Detoya completed worth 10,000 pesos.
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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You are on page 1/ 17

NAME: Elma Joyce R.

Bondoc SCORE:
SECTION: ACN1 PROFESSOR: Cielo N. Dait

Problem #7
Comprehensive Problem

Edgar Detoya, tax consultant, began his practice on December 1, 2018. The
transactions of the firm are as follows:

(Step 1: Identification of Events to be Recorded.)

Dec. 1 Detoya invested ₱150,000 in the firm.


2 Paid rent for December to Recoletos Realty, ₱8,000.
2 Purchased supplies on account, ₱7,200.
3 Acquired ₱75,000 of office equipment, paying ₱37,000 down with
the balance due in 30 days.
8 Paid ₱7,200 on account for supplies purchased.
14 Paid assistant’s salaries for two weeks, ₱6,000.
20 Performed consulting services for cash, ₱20,000.
28 Paid assistant’s salaries for two weeks, ₱6,000.
30 Billed clients for December consulting services, ₱48,000
31 Detoya withdrew ₱12,000 from the business.

These following transactions were made on December 31, 2018.

a) Supplies on hand at December 31 amounted to ₱4,700.


b) Salaries of ₱1,800 have accrued at month-end.
c) Depreciation is ₱800 for December.
d) Detoya has spent 20 hours on a tax fraud case during December. When
completed in January, his work will be billed at ₱500 per hour. Note: The firm
uses the account Fees Receivable to reflect the amounts earned but not yet
billed.
(Step 2: Transactions are Recorded in the Journal).

GENERAL JOURNAL Page 1

Date Account Titles and Explanation P.R. Debit Credit


2018
Dec. 1 Cash 110 ₱150,000
Detoya, Capital 310 ₱150,000
Initial Investment.

2 Rent Expense 530 8,000


Cash 110 8,000
Paid rent for December.

Supplies 140 7,200


Accounts Payable 210 7,200
Purchased supplies on account.

3 Office Equipment 150 75,000


Cash 110 37,000
Accounts Payable 210 38,000
Acquired office equipment paying part
cash and the remaining on account.

8 Accounts Payable 210 7,200


Cash 110 7,200
Paid the supplies on account.

14 Salaries Expense 510 6,000


Cash 110 6,000
Paid assistance salaries for two weeks.

20 Cash 110 20,000


Consulting Revenues 410 20,000
Performed services for cash.

28 Salaries Expense 510 6,000


Cash 110 6,000
Paid assistance salaries for two weeks.

30 Accounts Receivable 120 48,000


Consulting Revenues 410 48,000
Billed clients for services rendered.

31 Detoya, Withdrawals 320 12,000


Cash 110 12,000
Detoya withdrew from the business.
(Step 3: Journal Entries are Posted to the Ledger.)

LEDGER

Chart of Accounts
Balance Sheet Accounts Income Statement Accounts
Assets Revenue
110 Cash 410 Consulting Revenues
120 Accounts Receivable
130 Fees Receivable Expenses
140 Supplies 510 Salaries Expense
150 Office Equipment 520 Supplies Expense
155 Accumulated Depreciation 530 Rent Expense
Liabilities 540 Depreciation Expense
210 Accounts Payable
220 Salaries Payable
Owner’s Equity
310 Detoya, Capital
320 Detoya, Withdrawals
330 Income Summary

Account Name: CASH Account Number: 110


Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec. 1 J1 ₱150,000 Dec. 2 J1 ₱8,000
20 J1 20,000 3 J1 37,000
8 J1 7,200
14 J1 6,000
28 J1 6,000
31 J1 12,000
₱170,000 ₱76,200
Balance ₱93,800

Account Name: ACCOUNTS RECEIVABLE Account Number: 120


Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec. 30 J1 ₱48,000
Balance ₱48,000

Account Name: FEES RECEIVABLE Account Number: 130


Date Explanation J.R. Debit Date Explanation J.R. Credit
Account Name: SUPPLIES Account Number: 140
Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec. 2 J1 ₱7,200
Balance ₱7,200

Account Name: OFFICE EQUIPMENT Account Number: 150


Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec. 3 J1 ₱75,000
Balance ₱75,000

Account Name: ACCUMULATED DEPRECIATION Account Number: 155


Date Explanation J.R. Debit Date Explanation J.R. Credit

Account Name: ACCOUNTS PAYABLE Account Number: 210


Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec. 8 J1 ₱7,200 Dec. 2 J1 ₱7,200
3 J1 38,000
₱7,200 ₱45,200
Balance ₱38,000

Account Name: SALARIES PAYABLE Account Number: 220


Date Explanation J.R. Debit Date Explanation J.R. Credit
Account Name: DETOYA, CAPITAL Account Number: 310
Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec.1 J1 ₱150,000
Balance ₱150,000

Account Name: DETOYA, WITHDRAWALS Account Number: 320


Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec.31 J1 ₱12,000
Balance ₱12,000

Account Name: INCOME SUMMARY Account Number: 330


Date Explanation J.R. Debit Date Explanation J.R. Credit

Account Name: CONSULTING REVENUES Account Number: 410


Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec.20 J1 ₱20,000
30 J1 48,000
Balance ₱68,000

Account Name: SALARIES EXPENSE Account Number: 510


Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec. 14 J1 ₱6,000
28 J1 6,000
Balance ₱12,000
Account Name: SUPPLIES EXPENSE Account Number: 520
Date Explanation J.R. Debit Date Explanation J.R. Credit

Account Name: RENT EXPENSE Account Number: 530


Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec. 2 J1 ₱8,000
Balance ₱8,000

Account Name: DEPRECIATION EXPENSE Account Number: 540


Date Explanation J.R. Debit Date Explanation J.R. Credit

(Step 4: Preparation of Trial Balance)

Unadjusted Trial Balance


December 31, 2018
Cash ₱93,800
Accounts Receivable 48,000
Supplies 7,200
Office Equipment 75,000
Accounts Payable ₱38,000
Detoya, Capital 150,000
Detoya, Withdrawals 12,000
Consulting Revenues 68,000
Salaries Expense 12,000
Rent Expense 8,000
₱256,000 ₱256,000
(Step 5: Preparation of the Worksheet including Adjusting Entries)

Note: It’s written in a 10-column worksheet attached.

(Step 6: Preparation of the Financial Statements.)

Statement of Financial Performance


For the Month Ended December 31, 2018

Consulting Revenues ₱78,000


Expenses
Salaries Expense ₱13,800
Supplies Expense 2,500
Rent Expense 8,000
Depreciation Expense 800 25,100
Net Profit ₱52,900

Statement of Changes in Equity


For the Month Ended December 31, 2018

Detoya, Owner’s Equity, 12/1/2018 ₱150,000


Add: Net Profit 52,900
Total ₱202,900
Less: Withdrawals 12,000
Detoya, Owner’s Equity, 12/31/2018 ₱190,900
Statement of Financial Position
December 31, 2018

Assets

Current Assets
Cash ₱93,800
Accounts Receivable 48,000
Fees Receivable 10,000
Supplies 4,700
Total Current Assets ₱156,500
Non Current Asset
Office Equipment ₱75,000
Less: Accumulated Depreciation 800
Total Non Current Asset 74,200
Total Assets ₱230,700

Liabilities and Owner’s Equity


Current Liabilities
Accounts Payable ₱38,000
Salaries Payable 1,800
Total Liabilities ₱39,800
Detoya, Owner’s Equity 12/31/2018 190,900
Total Liabilities and Owner’s Equity ₱230,700
(Step 7: Adjusting Journal Entries are Journalized and Posted.)

GENERAL JOURNAL Page 1

Date Account Titles and Explanation P.R. Debit Credit


2018
Dec. 1 Cash 110 ₱150,000
Detoya, Capital 310 ₱150,000
Initial Investment.

2 Rent Expense 530 8,000


Cash 110 8,000
Paid rent for December.

Supplies 140 7,200


Accounts Payable 210 7,200
Purchased supplies on account.

3 Office Equipment 150 75,000


Cash 110 37,000
Accounts Payable 210 38,000
Acquired office equipment paying part
cash and the remaining on account.

8 Accounts Payable 210 7,200


Cash 110 7,200
Paid the supplies on account.

14 Salaries Expense 510 6,000


Cash 110 6,000
Paid assistance salaries for two weeks.

20 Cash 110 20,000


Consulting Revenues 410 20,000
Performed services for cash.

28 Salaries Expense 510 6,000


Cash 110 6,000
Paid assistance salaries for two weeks.

30 Accounts Receivable 120 48,000


Consulting Revenues 410 48,000
Billed clients for services rendered.

31 Detoya, Withdrawals 320 12,000


Cash 110 12,000
Detoya withdrew from the business.

Supplies Expense 520 2,500


Supplies 140 2,500
Used supplies for the firm’s operations.
GENERAL JOURNAL Page 2

Date Account Titles and Explanation P.R. Debit Credit


2018
Dec. 31 Salaries Expense 510 ₱1,800
Salaries Payable 220 ₱1,800
Accrued salaries at month-end

Depreciation Expense 540 800


Accumulated Depreciation 155 800
Office Equipment Depreciation for
December

Fees Receivable 130 10,000


Consulting Revenues 410 10,000
LEDGER

Note: The accounts presented here are the accounts that have adjustments. Accounts
that is not here doesn’t have any change in their balances.

Account Name: FEES RECEIVABLE Account Number: 130


Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec. 31 J2 ₱10,000
Balance ₱10,000

Account Name: SUPPLIES Account Number: 140


Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec. 2 J1 ₱7,200 Dec.31 J1 ₱2,500
Balance ₱4,700

Account Name: ACCUMULATED DEPRECIATION Account Number: 155


Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec.31 J2 ₱800
Balance ₱800

Account Name: SALARIES PAYABLE Account Number: 220


Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec.31 J2 ₱1,800
Balance ₱1,800

Account Name: CONSULTING REVENUES Account Number: 410


Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec.20 J1 ₱20,000
30 J1 48,000
31 J2 10,000
Balance ₱78,000
Account Name: SALARIES EXPENSE Account Number: 510
Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec. 14 J1 ₱6,000
28 J1 6,000
31 J2 1,800
Balance ₱13,800

Account Name: SUPPLIES EXPENSE Account Number: 520


Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec.31 J1 ₱2,500
Balance ₱2,500

Account Name: DEPRECIATION EXPENSE Account Number: 540


Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec. 31 J2 ₱800
₱800
(Step 8: Closing Journal Entries are Journalized and Posted.)

GENERAL JOURNAL Page 1

Date Account Titles and Explanation P.R. Debit Credit


2018
Dec. 1 Cash 110 ₱150,000
Detoya, Capital 310 ₱150,000
Initial Investment.

2 Rent Expense 530 8,000


Cash 110 8,000
Paid rent for December.

Supplies 140 7,200


Accounts Payable 210 7,200
Purchased supplies on account.

3 Office Equipment 150 75,000


Cash 110 37,000
Accounts Payable 210 38,000
Acquired office equipment paying part
cash and the remaining on account.

8 Accounts Payable 210 7,200


Cash 110 7,200
Paid the supplies on account.

14 Salaries Expense 510 6,000


Cash 110 6,000
Paid assistance salaries for two weeks.

20 Cash 110 20,000


Consulting Revenues 410 20,000
Performed services for cash.

28 Salaries Expense 510 6,000


Cash 110 6,000
Paid assistance salaries for two weeks.

30 Accounts Receivable 120 48,000


Consulting Revenues 410 48,000
Billed clients for services rendered.

31 Detoya, Withdrawals 320 12,000


Cash 110 12,000
Detoya withdrew from the business.

Supplies Expense 520 2,500


Supplies 140 2,500
Used supplies for the firm’s operations.
GENERAL JOURNAL Page 2

Date Account Titles and Explanation P.R. Debit Credit


2018
Dec. 31 Salaries Expense 510 ₱1,800
Salaries Payable 220 ₱1,800
Accrued salaries at month-end

Depreciation Expense 540 800


Accumulated Depreciation 155 800
Office Equipment Depreciation for
December

Fees Receivable 130 10,000


Consulting Revenues 410 10,000

Consulting Revenues 410 78,000


Income Summary 330 78,000
Closing the income account

Income Summary 330 25,100


Salaries Expense 510 13,800
Supplies Expense 520 2,500
Rent Expense 530 8,000
Depreciation Expense 540 800
Closing the expense accounts

Income Summary 330 52,900


Detoya, Capital 310 52,900
Closing the income summary account

Gab, Capital 310 12,000


Gab, Withdrawals 320 12,000
LEDGER

Note: The accounts presented here are the accounts that have adjustments as for the
closing entries. Accounts that is not here doesn’t have any change in their balances.

Account Name: DETOYA, CAPITAL Account Number: 310


Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec. 31 J2 ₱12,000 Dec.1 J1 ₱150,000
31 J2 52,900
₱12,000 ₱202,900
Balance ₱190,900

Account Name: DETOYA, WITHDRAWALS Account Number: 320


Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec.31 J1 ₱12,000 Dec.31 J2 ₱12,000
Balance ₱0.00

Account Name: INCOME SUMMARY Account Number: 330


Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec.31 J2 ₱25,100 Dec.31 J2 ₱78,000
J2 52,900
₱78,000 ₱78,000
Balance ₱0.00

Account Name: CONSULTING REVENUES Account Number: 410


Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec. 31 J2 ₱78,000 Dec.20 J1 ₱20,000
30 J1 48,000
31 J2 10,000
₱78,000 ₱78,000
Balance 0.00
Account Name: SALARIES EXPENSE Account Number: 510
Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec. 14 J1 ₱6,000 Dec.31 J2 ₱13,800
28 J1 6,000
31 J2 1,800
₱13,800 ₱13,800
Balance 0.00

Account Name: SUPPLIES EXPENSE Account Number: 520


Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec.31 J1 ₱2,500 Dec.31 J2 ₱2,500
Balance ₱0.00

Account Name: RENT EXPENSE Account Number: 530


Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec. 2 J1 ₱8,000 Dec.31 J2 ₱8,000
Balance ₱0.00

Account Name: DEPRECIATION EXPENSE Account Number: 540


Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec. 31 J2 ₱800 Dec.31 J2 ₱800
₱0.00

(Step 9: Preparation of Post-Closing Trial Balance.)

Post- Closing Trial Balance


December 31, 2018
Cash ₱93,800
Accounts Receivable 48,000
Fees Receivable 10,000
Supplies 4,700
Office Equipment 75,000
Accumulated Depreciation 800
Accounts Payable ₱38,000
Salaries Payable 1,800
Detoya, Capital 190,900
₱231,500 ₱231,500
(Step 10: Reversing Journal Entries are Journalized and Posted.)

GENERAL JOURNAL Page 1

Date Account Titles and Explanation P.R. Debit Credit


2019
Jan. 1 Salaries Payable 220 ₱1,800
Salaries Expense 510 ₱1,800
Reversed entry for Dec.31, 2018 adjusting

entry of Salaries Expense and Salaries


Payable

Consulting Revenues 410 10,000


Fees Receivable 130 10,000
Reversed entry for Dec.31, 2018 adjusting
entry of Fees Receivable and Consulting
Revenues

LEDGER

Account Name: FEES RECEIVABLE Account Number: 130


Date Explanation J.R. Debit Date Explanation J.R. Credit
Dec. 31 J2 ₱10,000 Jan.1 J1 ₱10,000
Balance ₱0.00

Account Name: SALARIES PAYABLE Account Number: 220


Date Explanation J.R. Debit Date Explanation J.R. Credit
Jan. 1 J1 ₱1,800 Dec.31 J2 ₱1,800
Balance ₱0.00

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