I. Identification. Identify what is described in each phrase.

1. Obligations that the company is required to pay

2. An asset account that refers to future expenses paid in advance before the services or
goods are used
3. Advance payment made by customers while goods and services are not yet delivered to
the customers
4. It is the cost of inventory available for sale after deducting the remaining inventory at
the end of the period
5. It is the statement that shows the operations of the business
6. It is the excess of the market value over the par value
7. Classification of cash paid as dividends to stockholders in the Statement of Cashflows
8. One example of non-cash expenses
9. A recording system which journalizes every transaction affecting an inventory
10. A subsidiary ledger used to record credit sales

II. Answer what is asked. Show your solution.

1. The T-account below is for the account Prepaid Expense.

Prepaid Expense
March 1, 2018 P150,600 July 31, 2018 P45,760
August 15, 2018 95,450 December 31, 2018 90,000

The balance of Prepaid Expenses on January 1, 2018 is P24,675. What is the balance of
Prepaid Expense as of December 31, 2018?

2. The cash account has a January 1, 2018 balance of P567,999.00.

During the year, the following transactions increased the cash account:
a. Company was able to collect P890,000.00 from its receivables
b. Cash sales totaled P376,897.
c. The company paid P577,000 to suppliers and for other administrative expenses.
d. The owner withdrew P50,000 for his personal expenses.

Determine the cash balance as of December 31, 2018.

3. The following are taken from the records of ABC Company for the year ended December
31, 2018:

Debit Credit
Sales 764,985
Purchase discount 6,200
Purchase returns and allowances 5,456
 Purchases 459,980
Freight In 900
Sales discount 13,100
Sales returns and allowances 4,544
Depreciation expense 25,000
Amortization expense 5,000
Salaries expense 80,000
Utilities expense 34,789
Advertising expense 2,800
Rent expense 19,000
Interest expense 6,577
Interest Income 5,444
Bad debt expense ?

Based on actual physical count, inventory balance are as follows:

Beginning balance P25,455
Ending balance 20,765

The Allowance for bad debts has a beginning balance of P5,678 while the Accounts
Receivable has a total amount of P80,000. The bad debt is 5% based on Accounts
Receivable.

Prepare a nature for expense Statement of Comprehensive Income.

4. XYZ’s Statement of Comprehensive Income shows the following balances as of

December 31, 2018:

Net sales P 111,348

Cost of goods sold (45,398)
Gross Profit 65,950
Less:
Salaries Expense 14,000
Rent Expense 10,000
Utilities Expense 4,000
Depreciation 500
28,500
Net Income P 37,450

Below is the cash ledger of XYZ Company:

Particulars Dr Cr
Owner’s Contribution P30,000.00
Rent Payment 15,000.00
Purchase of fixtures 30,000.00
 Collection of credit sales 110,773.00
Payment of salaries 13,000.00
Owner’s contribution 5,000.00
Payment to suppliers 52,000.00
Owner’s withdrawal 5,000.00
Proceeds from bank loan 30,000.00
Customer deposit 1,500.00

Prepare the Statement of Cashflows.

5. The Retained Earnings of PQR Inc. shows a January 1, 2018 balance of P199,760. The
Board of Directors distributed cash dividends of P11,000 to the stockholders. As of
December 31, 2018, the retained earnings reported a balance of P280,990.

Determine PQR’s net income for 2018.

6. ABC Incorporated was established in 2017. The corporation issued 15,000, P10 par value
shares stock at an issue price of P28 per share. On July 15, 2018, the corporation issued
500 new shares at an issue price of P35 per share. The corporation reported net income
of P56,785 and P65,780 in 2017 and 2018, respectively. Dividends of P2.15 per share
were declared and distributed to shareholders on February 1, 2018.

Prepare the 2018 Statement of Changes in Equity of ABC Inc.

--end of examination--