REVIEWER FOR FINALS

I. TRUE OR FALSE
1. A transaction with more than one debit and/or more than one credit is called a compound entry. True
2. When a payment is received for services not rendered, no entry is recorded until that service has been
rendered. False
3. A credit signifies increases in liabilities, capital and revenues as well as decreases in assets, withdrawals
and expenses. True
4. The cost of properties acquired by direct cash purchase includes, in addition to the invoice cost, all
other expenditures necessary to put the asset in condition and location for use. True
5. In a partnership, an owner’s equity account exists for each partner. True
6. Under the principle of consistency, accountants may not clearly state any changes in financial facts on
financial statements. False
7. Another name for the journal is the Book of Original Entry. True
8. The land account and the building account may be combined into one account. False
9. When a withdrawal is made, the owner’s withdrawal account is credited and cash is debited. False
10. A cash acquisition of a laptop computer will cause total assets to increase. False
11. A payroll slip should be prepared for every payroll period if payment of salary or wage is made via a
Bank. False
12. Most accounting software is so quick and simple to use that you can skip learning accounting terms and
principles. False
13. Recording revenues when they are earned is the result of the revenue recognition principle. True
14. The start and end dates of the business fiscal year is determined by the accountant. False
15. Gross margin (income) which is the total sales minus the cost of goods sold indicates the business
sustainability. True

II. MATCHING TYPE

___B___1. DEBIT A. RESULTS IN AN INCREASE IN A LIABILITY ACCOUNT
___C___2. UNEXPIRED INSURANCE B. MAY SIGNIFY A DECREASE IN A LIABILITY OR
REVENUE ACCOUNT
___A__3. CREDIT C. HAS A NORMAL DEBIT BALANCE
___F__ 4.OWNER’S WITHDRAWAL D. OBTAIN UPDATED ACCOUNT OF CASH BALANCES
___E__5. POSTING E. ENTER TRANSACTIONS DIRECTLY INTO THE LEDGER
F. DECREASES BOTH ASSETS AND OWNER’S EQUITY

III. PROBLEMS AND SOLUTIONS

1. ARNOLD VILLANUEVA RECENTLY ESTABLISHED A BUSINESS THAT WILL OPERATE AS
VILLANUEVA CLEANING SERVICES. THE TRANSACTIONS FOR FEBRUARY 2023 ARE
PRESENTED BELOW:
Feb.1 Deposited P62,000 cash in a bank account in the name of the new company.
3 Acquired cleaning supplies on account, P21,400.
5 Acquired cleaning equipment on account, P15,600.
 6 Acquired an old service vehicle costing P47,000 for the business, paying P10,000 cash, and
financing the remaining P37,000 by issuing a note payable.
7 Paid rent on office space for the month, P7,300.
9 Received P31,800 cash for cleaning services rendered,
10 Paid for newspaper advertisement, P1,700.
12 Paid for insurance for the next six months by recording prepaid insurance P4,800.
13 Paid P9,000 on account
14 Paid miscellaneous expenses, P2,200.
15 Billed customers P18,600 for cleaning services rendered.
16 Paid salaries, P8,400.
20 Received P9,800 from customers billed on Feb 15.
22 Paid amount due on the note payable, P2,400.
25 Paid telephone expense, P900.
28 Paid salaries, P7,900.
28 Billed customers for cleaning services rendered, P22,500.
28 Withdrew P10,000 from the business.

Required:

1. Prepare the journal entries for the February transactions.

2. Post entries to the ledger accounts using account numbers for cross reference. The following
accounts will be needed: Cash (110); Accounts Receivable (120); Cleaning Supplies (130); Prepaid
Insurance (140); Cleaning Equipment (150); Service Vehicle (160); Notes Payable (210); Accounts
Payable (220); Villanueva, Capital (310); Villanueva, Withdrawal (320); Cleaning Revenues (410);
Salaries Expense (510); Rent Expense (520); Advertising Expense (530); Telephone Expense (540);
and Miscellaneous Expense (550).
3. Prepare a trial balance.
4. Prepare an income statement, and a balance sheet.

SOLUTION:

Feb. 1 Dr. Cash (110) P 62,000

Cr. Villanueva, Capital (310) P 62,000
To record the initial investment to the company.

Feb. 3 Dr. Cleaning Supplies (130) P 21,400

Cr. Accounts Payable (220) P 21,400
To record cleaning supplies acquired on account.

Feb. 5 Dr. Cleaning Equipment (150) P 15,600

Cr. Accounts Payable (220) P 15,600
To record cleaning equipment acquired on account.

Feb. 6 Dr. Service Vehicle (160) P 47,000

Cr. Cash (110) P 10,000
Cr. Notes Payable (210) P 37,000
To record the purchase of service vehicle partially paid in cash.
Feb. 7 Dr. Rent Expense (520) P 7,300
Cr. Cash (110) P 7,300
To record payment of office space rental.

Feb. 9 Dr. Cash (110) P 31,800

Cr. Cleaning Revenue (410) P 31,800
To record receipts for cleaning services.

Feb. 10 Dr. Advertising Expense (530) P 1,700

Cr. Cash (110) P 1,700
To record payment of advertising expenses.

Feb. 12 Dr. Prepaid Insurance (140) P 4,800

Cr. Cash (110) P 4,800
To record payment of insurance for the next six months.

Feb. 13 Dr. Accounts Payable P 9,000

Cr. Cash (110) P 9,000
To record payment of accounts.

Feb. 14 Dr. Miscellaneous Expenses (550) P 2,200

Cr. Cash (110) P 2,200
To record payment of miscellaneous expenses.

Feb. 15 Dr. Accounts Receivable (120) P 18,600

Cr. Cleaning Revenues (410) P 18,600
To record billings for cleaning services.

Feb. 16 Dr. Salaries Expense (510) P 8,400

Cr. Cash (110) P 8,400
To record payment of salaries.

Feb. 20 Dr. Cash (110) P 9,800

Cr. Accounts Receivable (120) P 9,800
To record collection of account for cleaning services rendered.

Feb. 22 Dr. Notes Payable (210) P 2,400

Cr. Cash (110) P 2,400
To record partial payment of note payable for service vehicle.

Feb. 25 Dr. Telephone Expense (540) P 900

Cr. Cash (110) P 900
To record payment of telephone expense.
Feb. 28 Dr. Salaries Expense (510) P 7,900
Cr. Cash (110) P 7,900
To record payment of salaries.

Feb. 28 Dr. Accounts Receivable (120) P 22,500

Cr. Cleaning Revenues (410) P 22,500
To record billings for cleaning services rendered.

Feb. 28 Dr. Villanueva, Withdrawal (320) P 10,000

Cr. Cash (110) P 10,000

Ledgers or T-Accounts

Cash (110) Villanueva, Capital (310)

Dr. Cr. Dr. Cr.
2/1 62,000 62,000
2/6 10,000
2/7 7,300
2/9 31,800
2/10 1,700
2/12 4,800
2/13 9,000
2/14 2,200
2/16 8,400
2/20 9,800
2/22 2,400
2/25 900
2/28 7,900
2/28 10,000

Total 103,600 64,600 62,000

Bal 39,000 62,000

Accounts Receivable (120) Cleaning Supplies (130)

Dr. Cr. Dr. Cr.

2/3 21,400
2/15 18,600
2/20 9,800
2/28 22,500

Total 41,100 9,800 21,400

Bal 31,300 21,400

 Prepaid Insurance (140) Cleaning Equipment (150)
Dr. Cr. Dr. Cr.
2/5 15,000
2/12 4,800

Total 4,800 15,000

Bal 4,800 15,000

Service Vehicle (160) Notes Payable (210)

Dr. Cr. Dr. Cr.
2/6 47,000 37,000
2/22 2,400

Total 47,000 2,400 37,000

Bal 47,000 34,600

Accounts Payable (220) Villanueva, Capital (310)

Dr. Cr. Dr. Cr.
2/1 62,000
2/3 21,400
2/5 15,600
2/13 9,000

Total 9,000 37,000 62,000

Bal 28,000 62,000

Villanueva, Withdrawal (320) Cleaning Revenues (410)

Dr. Cr. Dr. Cr.
2/9 31,800
2/15 18,600
2/28 22,500
2/28 10,000

Total 10,000 72,900

Bal 10,000 72,900

Salaries Expense (510) Rent Expense (520)
Dr. Cr. Dr. Cr.
2/7 7,300
2/16 8,400
2/28 7,900

Total 16,300 7,300

Bal 16,300 7,300

 Advertising Expense (530) Telephone Expense (540)
Dr. Cr. Dr. Cr.
2/10 1,700
2/25 900

Total 1,700 900

Bal 1,700 900

Miscellaneous Expense (550)

Dr. Cr.
2/14 2,200

Total 2,200

Bal 2,200

Arnold Villanueva Cleaning Services

Trial Balance
As of February 28, 2023

Dr. Cr.

Cash (110) 39,000

Accounts Receivable (120) 31,300
Cleaning Supplies (130) 21,400
Prepaid Insurance (140) 4,800
Cleaning Equipment (150) 15,600
Service Vehicle (160) 47,000
Notes Payable (210) 34,600
Accounts Payable (220) 28,000
Villanueva, Capital (310) 62,000
Villanueva, Withdrawal (320) 10,000
Cleaning Revenues (410) 72,900
Salaries Expense (510) 16,300
Rent Expense (520) 7,300
Advertising Expense (530) 1,700
Telephone Expense (540) 900
Miscellaneous Expense (550) 2,200

Totals 197,500 197,500

Totals
 Arnold Villanueva Cleaning Services
Income Statement
For the month ending, February 28, 2023

Dr. Cr.

Cleaning Revenues (410) 72,900

Salaries Expense (510) 16,300
Rent Expense (520) 7,300
Advertising Expense (530) 1,700
Telephone Expense (540) 900
Miscellaneous Expense (550) 2,200

Totals 28,400 72,900

Net Income [to Villanueva, Capital (310)] 44,500

Arnold Villanueva Cleaning Services

Balance Sheet
As at February 28, 2023

Dr. Cr.

Cash (110) 39,000

Accounts Receivable (120) 31,300
Cleaning Supplies (130) 21,400
Prepaid Insurance (140) 4,800
Cleaning Equipment (150) 15,600
Service Vehicle (160) 47,000
Notes Payable (210) 34,600
Accounts Payable (220) 28,000
Villanueva, Capital (310) 106,500
Villanueva, Withdrawal (320) 10,000

Totals 169,100 169,100

2. JASPER PANER owns the Jose Rizal Bombers, a collegiate basketball team in the Phil-Am Basketball
Association. Presented below in the November 30, 2022 trial balance representing activities from January
1, 2022 to November 30, 2022, together with the account numbers and titles:

Jose Rizal Heavy Bombers

Trial Balance
November 30, 2022

Acc. No. Account Titles Debit Credit

110 Cash P 1,129,800

120 Accounts Receivable 3,712,500
130 Uniform Supplies 31,050
140 Prepaid Insurance 0
150 Land 2,025,000
160 Training Facilities 12,750,000
170 Training Equipment 2,625,000
180 Player Contracts 11,250,000
210 Notes Payable P 1,800,000
220 Accounts Payable 4,725,000
230 Mortgage Payable 10,500,000
310 Paner, Capital 17,643,750
320 Paner, Withdrawals 1,875,000
410 Game Attendance Revenues 10,125,000
510 Salaries Expense 4,875,000
520 Advertising Exoense 400,950
530 Travel Expense 1,532,400
540 Laundry Expense 528,000
550 Medical Expense 194,550
560 Utilities Expense 1,734,000
570 Miscellaneous Expense ___ 130,500 ___________
Totals P44,793,750 P44,793,750

During the month of December 2022, the Bombers were participating in the 2022 playoffs and the
following transactions took place:
Dec 1 Acquired the contract of Alfonso Gonzales From the Negros Navigators for P 1,875,000; paying
P 225,000 on cash and financing the P 1,650,000 by issuing a note payable.
Dec 2 Collected P2,809,500 on accounts receivable from season ticket holders.
Dec 3 Settled accounts payable, P 1,657,500.
Dec 4 Paid TV advertising, P 78,600.
Dec 5 Acquired on account additional uniforms for the upcoming series with the San Alcantara
Padres, P 30,750.
Dec 9 Billed season ticket holders for the last five games, P 320,250.
 Dec 10 Paid the amount due on this date for a note payable, P 600,000.
Dec 11 Acquired insurance for the months of December 2022 to June 2023, P 215,250. Record as
prepaid insurance.
Dec 12 Acquired additional training equipment on account, P 319,500.
Dec 15 Paid player’s salaries, P 1.136,250.
Dec 17 Received P3,316,050 cash for tickets to playoff games.
Dec 19 Paid travel expenses to San Alcantara, P 558,000.
Dec 20 Paid laundry expenses, P 12,600.
Dec 23 Paid creditors, P 941,850.
Dec 25 Paid miscellaneous expenses, P 26,850.
Dec 26 Paid medical expenses, P 18,900.
Dec 27 Paid utilities expenses, P 210,450.
Dec 28 Paid player’s salaries, P 1,240,650.
Dec 30 Jasper Paner withdrew P 250,000.

Required:

1. Enter the amounts from the November 2022 trial balance into the appropriate ledger accounts.
2. Prepare the journal entries for the December 2022 transactions.
3. Post entries to the ledger.
4. Prepare a trial balance as at December 31, 2022
5. Prepare an income statement ending December 2022 and a balance sheet as at December 31, 2022.

SOLUTION:

Dec. 1 Dr. Players Contract (180) P 1,875,000

Cr. Cash (110) P 225,000
Cr. Notes Payable (210) 1,650,000
To record the acquired contract of Alfonzo Gonzales.

Dec. 2 Dr. Cash (110) P 2,809,500

Cr. Accounts Receivables (120) P 2,809,500
To record collection of receivables from ticket holders.

Dec. 3 Dr. Accounts Payable (220) P 1,657,500

Cr. Cash (110) P 1,657,500
To record settlement of accounts payable.

Dec. 4 Dr. Advertising Expense (520) P 78,600

Cr. Cash (110) P 78,600
To record payment of TV advertising.
Dec. 5 Dr. Uniform Supplies (130) P 30,750
Cr. Accounts Payable (220) P 30,750
To record acquisition of additional uniforms on account.

Dec. 9 Dr. Accounts Receivable (120) P 320,250

Cr. Game Attendance Revenues (410) P 320,250
To record billings for the last five games.

Dec. 10 Dr. Notes Payable (210) P 600,000

Cr. Cash (110) P 600,000
To record payment of due notes payable.

Dec. 11 Dr. Prepaid Insurance (140) P 215,250

Cr. Cash (110) P 215,250
To record payment of insurance for December 2022 to June 2023.

Dec. 12 Dr. Training Equipment (170) P 319,500

Cr. Accounts Payable (220) P 319,500
To record acquisition of additional training equipment on account.

Dec. 15 Dr. Salaries Expense (510) P 1,136,250

Cr. Cash (110) P 1,136,250
To record payment of player’s salaries.

Dec. 17 Dr. Cash (110) P 3,316,050

Cr. Game Attendance Revenue P 3,316,050
To record receipt of payment of tickets to the playoff games.

Dec. 19 Dr. Travel Expenses (530) P 558,000

Cr. Cash (110) P 558,000
To record payment of travel expenses to San Alcantara.

Dec. 20 Dr. Laundry Expense (540) P 12,600

Cr. Cash (110) P 12,600
To record payment of laundry expenses.

Dec. 23 Dr. Accounts Payable (220) P 941,850

Cr. Cash (110) P 941,850
To record payment made to creditors.
Dec. 25 Dr. Miscellaneous Expense (570) P 26,850
Cr. Cash (110) P 26,850
To record payment of miscellaneous expenses.

Dec. 26 Dr. Medical Expense (550) P 18,900

Cr. Cash (110) P 18,900
To record payment of medical expenses.

Dec. 27 Dr. Utilities Expense (560) P 210,450

Cr. Cash (110) P 210,450
To record payment of expenses for utilities.

Dec. 28 Dr. Salaries Expense (510) P 1,240,650

Cr. Cash (110) P 1,240,650
To record payment of player’s salaries.

Dec. 30 Dr. Paner, Withdrawal (320) P 250,000

Cr. Cash (110) P 250,000
To record cash withdrawal of Paner from the business.
 Ledgers or T-Accounts

Cash (110)
Dr. Cr.
11/30 1,129,800
12/1 225,000
12/2 2,809,500
12/3 1,657,500
12/4 78,600
12/10 600,000
12/11 215,250
12/15 1,136,250
12/17 3,316,050
12/19 558,000
12/20 12,600
12/23 941,850
12/26 18,900
12/27 210,450
12/28 1,240,650

Total 7,255,350 7,171,900

Bal 83,450

Accounts Receivable (120) Uniform Supplies (130)

Dr. Cr. Dr. Cr.
11/30 3,712,500 31,050
12/2 2,809,500
12/5 30,750
12/9 320,250

Total 4,032,750 2,809,500 61,800

Bal 1,223,250 61,800

 Prepaid Insurance (140) Land (150)
Dr. Cr. Dr. Cr.
11/30 2,025,000
12/11 215,250

Total 215,250 2,025,000

Bal 215,250 2,025,000

Training Facilities (160) Training Equipment (170)

Dr. Cr. Dr. Cr.
11/30 12,750,000 2,625,000
12/12 319,500

Total 12,750,000 2,944,500

Bal 12,750,000 2,944,500

Players Contracts (180) Notes Payable (210)

Dr. Cr. Dr. Cr.
11/30 11,250,000 1,800,000
12/1 1,875,000 1,650,000
12/10 600,000

Total 13,125,000 600,000 3,450,000

Bal 13,125,000 2,850,000

 Accounts Payable (220) Mortgage Payable (230)
Dr. Cr. Dr. Cr.
11/30 4,725,000 10,500,000
12/3 1,657,500
12/5 30,750
12/12 319,500
12/23 941,850

Total 2,599,350 5,075,250 10,500,000

Bal 2,475,900 10,500,000

Paner, Capital (310) Paner, Withdrawals (320)

Dr. Cr. Dr. Cr.
11/30 17,643,750 1,875,000
12/30 250,000

Total 17,643,750 2,125,000

Bal 17,643,750 2,125,000

Game Attemdance Revenues (410) Salaries Expense (510)

Dr. Cr. Dr. Cr.
11/30 10,125,000 4,875,000
12/9 320,250
12/15 1,136,250
12/17 3,316,050
12/28 1,240,650

Total 13,761,300 7,251,900

Bal 13,761,300 7,251,900

 Advertising Expense (520) Travel Expense (530)
Dr. Cr. Dr. Cr.
11/30 400,950 1,532,400
12/4 78,600
12/19 558,000

Total 479,550 2,090,400

Bal 479,550 2,090,400

Laundry Expense (540) Medical Expense (550)

Dr. Cr. Dr. Cr.
11/30 528,000 194,550
12/20 12,600
12/26 18,900

Total 540,600 213,450

Bal 540,600 213,450

Utilities Expense (560) Miscellaneous Expense (570)

Dr. Cr. Dr. Cr.
11/30 1,734,000 130,500
12/25 26,850
12/27 210,450

Total 1,944,450 157,350

Bal 1,944,450 157,350

 Jose Rizal Heavy Bombers
Trial Balance
As of December 31, 2022

Dr. Cr.

Cash (110) 83,450

Accounts Receivable (120) 1,223,250
Uniform Supplies (130) 61,800
Prepaid Insurance (140) 215,250
Land (150) 2,025,000
Training Facilities (160) 12,750,000
Training Equipment (170) 2,944,500
Player Contracts (180) 13,125,000
Notes Payable (210) 2,850,000
Accounts Payable (220) 2,475,900
Mortgage Payable (230) 10,500,000
Paner, Capital (310) 17,643,750
Paner, Withdrawal (320) 2,125,000
Game Attendance Revenues (410) 13,761,300
Salaries Expense (510) 7,251,900
Advertising Expense (520) 479,500
Travel Expense (530) 2,090,400
Laundry Expense (540) 540,600
Medical Expense (550) 213,450
Utilities Expense (560) 1,944,450
Miscellaneous Expense (570) 157,350

Totals 47,230,950 47,230,950

 Jose Rizal Heavy Bombers
Income Statement
For the year ending, December 31, 2022

Dr. Cr.

Game Attendance Revenues (410) 13,761,300

Salaries Expense (510) 7,251,900
Advertising Expense (520) 479,550
Travel Expense (530) 2,090,400
Laundry Expense (540) 540,600
Medical Expense (550) 213,450
Utilities Expense (560) 1,944,450
Miscellaneous Expense (570) 157,350

Totals 12,677,700 13,761,300

Net Income [to Paner, Capital (310)] 1,083,600

 Jose Rizal Heavy Bombers
Balance Sheet
As at December 31, 2022

Dr. Cr.

Cash (110) 83,450

Accounts Receivable (120) 1,223,250
Uniform Supplies (130) 61,800
Prepaid Insurance (140) 215,250
Land (150) 2,025,000
Training Facilities (160) 12,750,000
Training Equipment (170) 2,944,500
Player Contracts (180) 13,125,000
Notes Payable (210) 2,850,000
Accounts Payable (220) 2,475,900
Mortgage Payable (230) 10,500,000
Paner, Capital (310) 18,727,350
Paner, Withdrawal (320) 2,125,000

Totals 34,553,250 34,553,250