Annex L

ILLUSTRATIVE ENTRIES
RETAINED INCOME FUND

AGENCY BOOKS
Transactions Account Account
Title Code Debit Credit

ASSUMPTION: COLLECTION OF PROCESSING FEES AUTHORIZED AS SPECIAL ACCOUNT

1) Collections of following: Cash-Collecting Officers 10101010 550,000

Permit Fees 300,000 Permit Fees 40201010 300,000
Registration Fees 150,000 Registration Fees 40201020 150,000
Clearance and Certification Fees 100,000 Clearance and Certification Fees 40201040 100,000
550,000
To take up collection of
processing fees.

2) Deposit of collections to the Cash in Bank-Local Currency,

Authorized Government Depository Bank 522,500 Current Account 10102020 522,500
Cash-Collecting Officers 10101010 522,500

To record remittance of collections

to the BTr

3) Receipt of Approved Special

Budget for the Retained Income Post in the RBUD
MOOE 200,000
Capital Outlays 300,000
500,000

4) Incurrence of obligation Posting of BURS in the appropriate RBUD

MOOE 200,000
Capital Outlays 275,000
475,000

5) Receipt of delivered Office Equipment (April 1) Office Equipment 10605020 270,000

Accounts Payable 20101010 270,000

To record delivery of Office Equipment.

6) Payments of expenses
Training and Scholarship Expenses 170,000 Training and Scholarship Expenses 50202020 170,000
Transportation and Delivery Expenses 20,000 Transportation and Delivery Expenses 50209040 20,000
Total 190,000 Due to BIR 20201010 10,807
Less; Withholding tax on: Cash in Bank-Local Currency,
Training 10,807 Current Account 10102020 179,193
10% withholding tax (income) 1,700
1% withholding tax on income 1,518 To record issuance of check.
5% withholding of final tax (VAT) 7,589
Net Amount Paid 179,193

7) Payment of accounts payable Accounts Payable 20101010 270,000

Total 270,000 Due to BIR 20201010 14,464
Less: Withholding tax 14,464 Cash in Bank-Local Currency,
1% withholding tax on income 2,411 Current Account 10102020 255,536
5% withholding of final tax (VAT) 12,054
Net Amount Paid 255,536 To record payment of accounts payable.

8) Remittance of Taxes thru TRA Due to BIR 20201010 25,271

Cash in Bank-Local Currency,
Current Account 10102020 25,271

9) Recording of depreciation (9 months) Depreciation-Machinery and Equipment 50501050 38,475

Assume that Estimated Life is 5 years Accumulated Depreciation-Office Equipment 10605021 38,475
Depreciation for 9 months =
(270-000 - (270,000x 5%) / 5 x 9/12) 38,475

450
 Annex L

AGENCY BOOKS
Transactions Account Account
Title Code Debit Credit
PRE-CLOSING TRIAL BALANCE AGENCY BOOKS

Cash-Collecting Officers 10101010 27,500

Cash in Bank-Local Currency,
Current Account 10102020 62,500
Office Equipment 10605020 270,000
Accumulated Depreciation-Office Equipment 10605021 38,475
Permit Fees 40201010 300,000
Registration Fees 40201020 150,000
Clearance and Certification Fees 40201040 100,000
Training and Scholarship Expenses 50202020 170,000
Transportation and Delivery Expenses 50209040 20,000
Depreciation-Machinery and Equipment 50501050 38,475
Total 588,475 588,475
12) Closing Entries for:
a. Income accounts Permit Fees 40201010 300,000
Registration Fees 40201020 150,000
Clearance and Certification Fees 40201040 100,000
Revenue and Expense Summary 30301010 550,000
To close income accounts to Revenue
and Expense Summary Account.

b. Expense accounts Revenue and Expense Summary 30301010 228,475

Training and Scholarship Expenses 50202020 170,000
Transportation and Delivery Expenses 50209040 20,000
Depreciation-Machinery and Equipment 50501050 38,475
To close expense accounts to Revenue
and Expense Summary Account.

c. Revenue and Expense Summary Revenue and Expense Summary 30301010 321,525
Accumulated Surplus/(Deficit) 30101010 321,525
To close Revenue and Expense Summary
Account to Accumulated Surplus/(Deficit)

POST-CLOSING TRIAL BALANCE AGENCY BOOKS

Debit Credit
Cash-Collecting Officers 10101010 27,500
Cash in Bank-Local Currency,
Current Account 10102020 62,500
Office Equipment 10605020 270,000
Accumulated Depreciation-Office Equipment 10605021 38,475
Accumulated Surplus/(Deficit) 30101010 321,525
Total 360,000 360,000

451