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    ACC101 Practice Problem - Complete Accounting Cycle

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    JeluMV
    Kimxi started a bicycle rental business in May 2018. Throughout the month, various transactions occurred such as purchasing supplies, bicycles, insurance, and hiring employees. Journal entries were made for each transaction. An unadjusted trial balance was prepared at the end of May. Adjusting entries were then made for prepaid insurance, depreciation of assets, and accrued interest. Financial statements - including an income statement, balance sheet, and statement of owner's equity - were prepared by closing entries to the income summary account. A post-closing trial balance was prepared.

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    ACC101 Practice Problem - Complete Accounting Cycle

    Uploaded by

    JeluMV
    947 views2 pages
    Kimxi started a bicycle rental business in May 2018. Throughout the month, various transactions occurred such as purchasing supplies, bicycles, insurance, and hiring employees. Journal entries were made for each transaction. An unadjusted trial balance was prepared at the end of May. Adjusting entries were then made for prepaid insurance, depreciation of assets, and accrued interest. Financial statements - including an income statement, balance sheet, and statement of owner's equity - were prepared by closing entries to the income summary account. A post-closing trial balance was prepared.

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    PRACTICE PROBLEM 1

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    Kimxi started a bicycle rental business in May 2018. Throughout the month, various transactions occurred such as purchasing supplies, bicycles, insurance, and hiring employees. Journal entries were made for each transaction. An unadjusted trial balance was prepared at the end of May. Adjusting entries were then made for prepaid insurance, depreciation of assets, and accrued interest. Financial statements - including an income statement, balance sheet, and statement of owner's equity - were prepared by closing entries to the income summary account. A post-closing trial balance was prepared.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    947 views2 pages

    ACC101 Practice Problem - Complete Accounting Cycle

    Uploaded by

    JeluMV
    Kimxi started a bicycle rental business in May 2018. Throughout the month, various transactions occurred such as purchasing supplies, bicycles, insurance, and hiring employees. Journal entries were made for each transaction. An unadjusted trial balance was prepared at the end of May. Adjusting entries were then made for prepaid insurance, depreciation of assets, and accrued interest. Financial statements - including an income statement, balance sheet, and statement of owner's equity - were prepared by closing entries to the income summary account. A post-closing trial balance was prepared.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    of 2

    ACC101

    PRACTICE PROBLEM – COMPLETE ACCOUNTING CYCLE


    On May 2018, Kimxi established a bicycle rent business that will operate around the hilly park area
    overlooking the Han River. Families frequent the place for relaxation and bonding. During the month, the
    following transactions took place:

    2018 Kimxi withdrew from his personal savings account the amount of P200,000 and invested it
    in the bicycle rent business.
    May 1
    1 Paid one year insurance premium to Lee Insurance Co. for property insurance coverage of
    the bicycles, P96,000.
    3 Purchased supplies, P2,500.
    4 Bought ten (10) bicycles from “Bike R Us” for P75,000, paying 25% down and agreed to
    pay the balance in 30 days.
    5 Purchased furnished steel container for bicycle storage P35,000 and issued promissory note
    for the purchase.
    6 Received P 18,000 in cash for a week rentals.
    7 Made a loan from ABC Bank, P100,000 with interest of 18% payable in one year.
    8 Paid P6,000 shipping and installation costs (treated as addition to the cost of container) to
    be positioned at the main entrance of the park.
    9 Hired two maintenance person with a daily wage of P500 each.
    10 Sent billing to Dee Co. for bike rentals exclusively used by the employees during the
    scheduled company outing, P25,000.
    11 Settled 30% of the account with “Bike R Us”.
    12 Received check payment from a group of riders worth P5,000 .
    14 Paid for the repair of 3 bikes, 1,500.
    15 Paid daily wages of assistants , P5,000.
    18 Received billing from Daily Journal for newspaper advertisement, P4,000.
    20 Received P30,000 for the use of bikes for a 3-day marathon event scheduled in December.
    25 Due to increasing demand for bike riders, Kimxi brought to the business two (2) of his
    personal bikes with a cost of P19,000 each.
    27 Ordered and paid P6,000 for the cost of 3 standees to promote a bicycle amateur race.
    28 Made partial collection of P5,000 from Dee Co.
    30 Paid monthly concession fee of P7,000 to the park administration office.
    31 Paid daily wages of staff, P5,000.
    REQUIRED:
    1. Prepare journal entries for May 2018 transactions with the following account titles to choose from:
    Prepaid Insurance; Accounts Payable; Promotion expense; Supplies; Unearned Rent Income;
    Cash; Accounts Receivable; Wages Expense; Rent Income; Notes Payable; Kimxi, Capital;
    Concession Expense; Bicycle; Steel Container; Maintenance Expense;
    2. Post to General ledger or T-Accounts.
    3. Prepare Unadjusted Trial Balance directly in the worksheet.
    4. Assuming the end of accounting period is December 31, 2018, prepare adjusting entries based on the
    following data for adjustments: (Use exact computation for number of days)
    a) Adjust prepaid insurance for the amount of insurance expired.
    b) Depreciate Bicycle and Steel Container , both using estimated useful life of 6 yrs. with total scrap
    value of P12,000 for bicycle and P4,000 for Steel container.
    c) Compute and adjust accrued interest on notes payable using transaction of May 7, 2018.
    5. Complete the Worksheet.
    6. Prepare formal Statement of Comprehensive Income, Statement of Financial Position Statement of Changes
    in Owner’s Equity.
    7. Close the books by preparing closing entries and lastly, prepare Post-closing Trial Balance.

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