“HEADING”

NAME:____________________________________________ DATE:_______________
COMPANY/ POSITION:____________________________ TIME:_______________

INSTRUCTIONS:
1. This paper consists of two separate parts: a Comprehensive Problem for a
merchandising company, and a separate problem requiring adjustments.
2. There are 5 pages.
3. Please read the problem and the instructions carefully.
4. You are given 4 hours to read, comprehend, and solve the problem.
5. Use calculator and black pen only.

PART 1 – COMPREHENSIVE PROBLEM

Background
A-Plus Builders, owned and operated by Mr. Andy Villaflor, is engaged in wholesale
and retail of quality and affordable construction finishing materials for designers,
builders, landscapers and creatives. The following are the selected transactions of A-
Plus Builders for the month of January.

January 1 – Made the following initial investments:

Cash in bank P450,000
Notes receivable 9,000
Construction materials for sale 325,000
Store supplies 2,500
Furniture and fixtures 5,000
Store equipment 8,500

January 2 – Paid business licenses and permits, P1,750 by issuing Check No. 3212.

January 3 – Sold construction materials for cash to various customers, P48,000.

January 5 – Sold on account to Andrea Tan, P9,000. Terms: 2/5, n/20. Invoice No.
4112.

January 6 – Bought construction materials on account from Jippy Emporium,

P35,000. Terms: 2/10, n/30. Invoice No. 3522.

January 8 – Bought a second-hand cash register from Indie Business Machines for
P24,000. Terms: 2/4, n/15.

January 9 – Received a credit memo from Jippy Emporium for damaged merchandise
returned, P5,000.

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January 10 – Sold construction materials for cash, P23,520.

January 10 – Sold construction materials on account to Droptex, Inc., P45,000.

Terms: 2/10, n/30. Invoice No. 4113.

January 10 – Received full payment from Andrea Tan.

January 11 – Sold construction materials on account to C3 Corporation, P38,500.

Terms: P5,000 downpayment and the balance, 2/20, n/20. The
downpayment was discounted immediately. Invoice No. 4114.

January 12 – Paid Indie Business Machines in full. Issued Check No. 3213.

January 13 – Sent a credit memo to C3 Corporation for defective merchandise

returned, P1,500.

January 14 – Purchased construction materials from Desenyo Store, P28,000.

Issued Check No. 3214. Freight paid upon receipt of goods, P180.

January 15 – Issued Check No. 3125 for salaries of employees, P8,500.

January 16 – Paid Jippy Emporium in full. Issued Check No. 3126.

January 17 – Bought construction materials from:

Formaply Industries, Inc., P15,000. Issued Check No. 3217.
Royaltech Supplies, Inc., P12,000. Terms: 12 day, 6% note.
Invoice No. 4327.
Jade Hardware, P50,000. Terms: 2/10, n/30. FOB shipping
point, P500 freight prepaid. Invoice No. 8291.

January 18 – Purchase construction materials from Unified Industrial Corporation

worth P19,500. Terms: n/30.

January 20 – Received full payment from Droptex, Inc.

January 21 – Received a 12-day, 6% note from C3 Corporation in settlement of its

account.

January 22 – Bought additional store equipment for P38,000 from GH Depot. Terms:
P8,000 downpayment (Check No. 3218); the balance 5/10, n/30.

January 24 – Bought construction materials for cash, P14,200. Check No. 3219.

January 24 – Sold construction materials to Cebu Builders which immediately

deposited cash with Landbank, P84,000. Freight paid to Air Asia Cargo
on said sale, P1,200 (Check No. 3219).

January 25 – Purchased construction materials for cash, P14,200 (Check No. 3219).

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January 26 – Sold construction materials on account to:
Jerry Bunal, P4,500. Terms: 6 days, 6% note (Inv. No. 4115)
Jenny Chua, P8,000. Terms: n/10, n/30 (Inv. No. 4116)

January 27 – Sent goods worth P160,000 to CDO Construction Inc. Terms: 2/10,
n/30, FOB destination, freight of P260 prepaid. Invoice No. 4117.

January 27 – Withdrew cash of P2,000 for personal use (Check No. 3221) and
construction materials costing P5,000.

January 27 – Paid Jade Hardware in full with Check No. 3222.

January 28 – Gave a cash advance to an employee, P800, issuing Check No. 3223.

January 29 – Paid a note given to Royaltech Supplies, Inc. with Check No. 3224.

January 30 – Paid GH Depot in full with Check No. 3225.

January 30 – Issued Check no. 3226 for P7,521 for salaries, net of the following
deductions:
SSS Premiums and Medicare Contributions P114
Withholding Taxes 65
Advances to Employees 800

January 31 – Issued checks (nos. 3227 – 2338) for the following expenses:
Rent for the month to Big Realty P2,500
Electricity bill 980
Water bill 520

January 31 – Received payment from C3 Corporation for note received on the 21 st.
Deposited the whole amount immediately to Landbank.

Shown on the following page is the chart of accounts of A-Plus Builders designed by
her accountant, Ms. Chinee Torre, CPA:

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Required:
Assume that the company is using the periodic inventory system and
gross method of recording its business transactions, prepare the following
for the month of January 2018.
1. Journal entries using the General Journal
2. Journal Entries using the Combination Journal
3. Ledger entries using the General & Subsidiary Ledgers
4. Trial Balance
5. Statement of Comprehensive Income
6. Statement of Financial Position

PART 2 – ADJUSTING ENTRIES

Ace Store is completing the accounting process for the year just ended December 31,
2018. The transactions in 2018 have been journalized and posted. The following
data with respect to adjusting entries were available:

1. Office supplies inventory at January 1, 2018 was P2,500. Office supplies

purchased and debited to office supplies inventory during the year amounted
to P6,000. The year-end inventory showed P3,000 of supplies on hand.

2. Wages earned on December 2018, unpaid and unrecorded on December 31,

2018, amounted to P27,000. The last payroll was December 28, next payroll
will be January 6, 2019.

3. Three-fourths of the basement of the store is rented for P11,000 per month to
another merchant, Kane Enterprises. Kane sells comparable, but not
competitive, merchandise. On November 1, 2018, the store collected six
month’s rent in advance from Kane in the amount of P66,000, which was
credited in full to rent revenue when collected.

4. The remaining basement space is rented to Glory Store for P5,200 per month,
payable monthly. On December 31, 2018, the rent for November and
December was neither collected nor recorded. Collection is expected on
January 10, 2019.

5. Delivery equipment that cost P300,000 was being used by the store. The
equipment was estimated to have a useful life of four years and a residual
value of P6,000 at the end of four years. Assume depreciation for a full year
2018. The asset will be depreciated evenly over its useful life.

6. On July 1, 2018, a two-year insurance premium amounting to P30,000 was

paid in cash and debited in full to Prepaid Insurance. Coverage began on July
1, 2018.

7. Ace operates a repair shop to meet its own needs. Also, the shop does repairs
for Kane Enterprises. At the end of December 31, 2018, Kane did not pay for
repairs completed amounting P7,500. This amount has not been recorded as
Repairs Shop Revenue. Collection is expected on January 2019.

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 For Nos. 8 to 10:
Sales amounted to P280,000 (inclusive P100,000 on account, and exclusive
P18,000 sales returns and allowances). In Ace’s balance sheet, accounts
receivable and allowance for doubtful accounts amounted to P150,000 and
P8,000 respectively.

8. Bad debts is 10% of sales on account.

9. Bad debts is 5% of gross sales.
10. Bad debts is 8% of accounts receivable, net of allowance for bad debts.

Required:
Prepare the adjusting journal entries using the general journal.

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