FCAT Self Learning Kit SY 2021 - 2022

FERNANDEZ COLLEGE OF ARTS AND TECHNOLOGY

Baliwag, Bulacan

Subject: Financial Accounting and Reporting

Grade/Course: BSA 1/BSBA 1

Quarter and Semester: First Semester

School Year: 2021 - 2022

Name of Self Learning Kit: Financial Accounting_03

Number of Self Learning Kit: One (1)

Week Covered: Two (2)

Prepared as

SELF LEARNING KIT MODE OF DELIVERY

By:

Myrna C. Calma, CPA, Ph.D.

Associate Professor

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 Fernandez Colleges
College of Business Administration and Accountancy
First Semester, School Year 2021 - 2022

FINANCIAL ACCOUNTING AND REPORTING

MODULE 3

Worksheet, Financial Statements and Completion of the

Accounting Cycle

COURSE DESCRIPTION:
This course provides an introduction to accounting, within the context of business and
business decisions. Students obtain basic understanding of the principles and concept of
accounting as well as their applicability and relevance in the national context and learn how to
use various types of accounting information found in the financial statements and annual reports.
Emphasis is placed on understanding the reasons underlying basic accounting concepts and
providing students with an adequate background on the recording, classification and
summarization functions of accounting to enable them to appreciate the varied uses of accounting
data.

Learning Objectives:
After studying this chapter, you should be able to:
1. Describe the flow of accounting information from the unadjusted trial
balance into the adjusted trial balance and finally, into the income
statement and balance sheet columns of the worksheet.
2. Prepare accurately and in good form a ten-column worksheet.
3. Understand and appreciate the usefulness of financial statements.
4. Develop skills in the preparation of financial statements.
5. Explain how the financial statements are interrelated.
6. Explain why temporary accounts are closed each period.
7. Recognize the need for a post-closing trial balance and reversing entries
8. Prepare and post adjusting entries, closing entries and reversing entries.
9. Prepare a post-closing trial balance

Topics

1. Completing the Service Business Accounting Cycle/Process

2. Preparation of working
3. Preparation of Financial Statements

Lesson I - THE WORKSHEET

Accountants often use a worksheet to help transfer data from the unadjusted trial balance to
the financial statements. This multi-column document provides an efficient way to summarize
the data for financial statements. The accountant generally prepares a worksheet when it is
time to adjust the accounts and prepare financial statements. Note, however, that it is possible
to prepare financial statements directly from the adjusted trial balance at the end of the
accounting period if the business has relatively few accounts.

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The worksheet simplifies the adjusting and closing process. It can also reveal error The
worksheet is not part of the ledger or the journal, nor is it a financial statement It is a summary
device used by the accountant for his convenience. The basic structure the worksheet is
presented in Exhibit 6-1.
PREPARING THE WORKSHEET
The steps in the preparation of a worksheet will be illustrated using the Del Mundo Landscape
Specialist case:
1. Enter the account balances in the unadjusted trial balance columns and total the
amounts.
The numbers, titles and balances of the accounts as at Nov. 30 are lifted directly from the
ledger before the adjusting entries are prepared. The accounts are listed in the worksheet in
the order they appear in the ledger. Total debits must equal total credits, as shown in Exhibit 6-
1. Accounts with zero balances (e.g., salaries payable, interest payable, etc.) are also presented.
Listing all the accounts with their balances helps identify the accounts that need adjustments.
This practice will help ensure the achievement of completenes5 and accuracy in the adjustment
process.
2. Enter the adjusting entries in the adjustments columns and total the amounts.
When a worksheet is used, all adjustments are first entered in the worksheet. The required
adjustments for Del undo Landscape specialist were explained in the previous chapter. The
same adjustments are entered in the adjustments columns of the worksheet in Exhibit 6-2. AS
each adjustment is entered, a letter is used to identify the debit entry and the corresponding
credit entry. Note that the adjustments are not journalized until after the worksheet is
completed and the financial statements prepared.
3 Compute each account's adjusted balance by combining the unadjusted trial balance and the
adjustment figures. Enter the adjusted amounts in the adjusted trial balance columns.
Exhibit 6-3 exhibited the adjusted trial balance prepared by Combinin8 horizontally, line by
line, the amount of each account in the unadjusted trial balance columns with the
corresponding amounts in the adjustment columns. This procedure is called cross-footing. To
illustrate, the first line showed cash with a debit amount of P182,250 in the unadjusted trial
balance. There is no adjustment to the cash account so that the P182,250 is entered in the
debit column of the adjusted trial balance. On the second line is accounts receivable with a
P7,500 balance in the unadjusted trial balance; a debit of P2,500 is entered in the adjustments
columns. The resulting balance is a P10,000 debit in the adjusted trial balance.
Supplies, on the third line, showed a debit of P1,000 in the unadjusted trial balance columns
and a credit of P500 in the adjustments columns. The P500 credit l subtracted from the P1,000
debit; the result is a P500 debit in the adjusted trial balance. Lawn cutting revenues, on the
nineteenth and twentieth lines, reported a P37,500 credit in the unadjusted trial balance; and
2,250 and 2,500 credits in the adjustments columns. These three credit amounts are added,
and the P42,250 sum is entered in the credit column of’ the adjusted trial balance. This process
is followed through all the accounts. The adjusted trial balance columns are then totaled to
check the accuracy of the cross-footing.
A simple Convention to observe when extending amounts from the trial balance to the adjusted
trial balance follows:

♦ Add when the type of adjustment (debit or credit) is the same as the unadjusted balance. S

♦ Subtract when the type of adjustment (debit or credit) is different from the unadjusted
balance.

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4. Extend the asset, liability and Owners equity amounts from the adjusted trial balance
columns to the balance sheet columns. Extend the income and expense amounts to the income
statement columns. Total the statement columns.
Every account is either a balance sheet account or an income statement account. Asset,
liability, capital and withdrawal accounts are extended to the balance sheet columns. Income
and expense accounts are moved to the income statement columns. Debits in the adjusted trial
balance remain as debits in the statement Columns while credits as credits. Each account's
adjusted balance should appear in only one statement column as shown in Exhibit 6-4. At this
stage, the initial totals of the income statement and balance sheet columns are not equal.
5.Compute profit or loss as the difference between total revenues and total expenses in the
income statement. Enter profit or loss as a balancing amount in the income statement and in
the balance sheet, and compute the final column totals.
Revenues (Income Statement credit column total) P42,250
Expenses (Income Statement debit column total) 25,250
Profit ₱17,000
Profit or loss is equal to the difference between the debit and credit columns of the income
statement. The profit or loss should always be the amount by which the debit and credit
columns for income statement, and the debit and credit columns tor balance sheet differ. The
profit figure of P17,000 is entered in the debit column of the income statement and the credit
column of the balance sheet. After completion, total debits and total credits in the income
statement and balance sheet columns must equal.
The profit figure is extended to the credit column of the balance sheet because profit increases
owner's equity and increases in owner’s equity are recorded as credits. Observe that the capital
account amount of P450,000 shown in the worksheet reflects the beginning rather than the
ending balance. Additional investments and profit must be added, and withdrawals Subtracted
to arrive at the ending capital balance; this is done when the statement of changes in equity is
prepared.
ESSENCE OF FINANCIAL STATEMENTS
There are questions that the owner of a business periodically asks-How much did the business
entity earn? What is the financial condition of the business? How much is the owner's interest
in the entity today? What happened to the cash receipts? Where did cash go? Investors,
creditors, taxing authorities and other users have their own questions about the business which
need to be answered.
The financial statements are the means by which the information accumulated and processed
in financial accounting is periodically communicated to the users. Without accounting
information embodied in the financial statements, users may not be able t arrive at sound
economic decisions. The objective of financial statements is to provide information about the
financial position, financial performance, and cash flows of a entity that is useful to a wide
range of users in making economic decisions.
COMPLETE SET OF FINANCIAL STATEMENTS
An entity shall present with equal prominence all of the financial statements in a tomplete set
of financial statements. Per revised Philippine Accounting Standards (PAS No. 1, a complete set
of financial statements comprises:
1. A statement of financial position as at the end of the period,
2. A statement of comprehensive income for the period;
3. A statement of changes in equity for the period;
4. A statement of cash flows for the period;
5. Notes, comprising a summary of significant accounting policies and other explanatory
information; and
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6. A statement of financial position as at the beginning of the earliest comparative period
when an entity applies an accounting policy retrospectively or makes a retrospective
restatement of items in its financial statements or when it reclassifies items in its financial
statements.
In a nutshell, the statement of financial position (or balance sheet) lists all the assets, liabilities
and equity of an entity as at a specific date. The income statement presents a summary of the
revenues and expenses of an entity for a specific period. The statement of changes in equity
presents a summary of the changes in capital such as investments, profit or loss, and
withdrawals during a specific period. The statement of cash flows reports the amount of cash
received and disbursed during the period. Accounting policies are the specific principles, bases,
conventions, rules and practices adopted by an enterprise in preparing and presenting financial
statements. Notes to financial statements provide narrative descriptions or disaggregation of
items presented in the statements and information about items that do not qualify for
recognition in the statements.
Lesson II- PREPARING THE FINANCIAL STATEMENTS
Once the worksheet is completed, it is easy to prepare the financial statements for the account
balances have been extended to the appropriate income statement and balance sheet columns.
Most of the information needed to prepare the income statement, statement of changes in
equity and balance sheet are available from the Worksheet. The statements presented are
those of Del Mundo Landscape Specialist. Note that financial statements shall be presented at
least annually.
Income Statement
The income statement is a formal statement showing the performance of the enterprise tor a
given period of time. It summarizes the revenues earned and expenses incurred for that period
of time. The income statement for Del Mundo Landscape Specialist (refer to Exhibit 6-5) is
prepared directly from the income statement columns of the worksheet in Exhibit 6-4.

Del Mundo Landscape Specialist

Income Statement
For the Month Ended Nov. 30, 2019

Revenues
Lawn Cutting Revenues P42,250

Expenses

Salaries Expense P5,600

Supplies Expense 500
Rent Expense 7,000
Insurance Expense 2,000
Gas Expense 1,500
Advertising Expense 1,750
Depreciation Expense-Vehicles 4,500
Depreciation Expense-Equipment 1,000
Interest Expense 1,400
Total 25,250

Profit P17,000

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Information about the performance of an enterprise, in particular its profitability, is required in
order to asses potential changes in the economic resources that it is likely to control in the
future. It is also useful in predicting the capacity of the enterprise to generate cash flows from
its existing resources base.

An entity shall present all items of income and expense recognized in a period:
a) In a single statement of comprehensive income, or
b) In two statements: a statement displaying components of profit or loss (separate
income statement) and a second statement beginning with proit or loss and displaying
components of other comprehensive income (statement of comprehensive income).

In Accounting Fundamentals, the discussion zeroed in on the separated income statement

potion because the other line items comprising the statement of comprehensive income will be
tackled only in higher accounting because of their complexity.

Statement of Changes in Equity

The statement of changes in equity summarizes the changes that occurred in owner’s equity.
This statement is now a required statement. Changes in an enterprise’s equity between two
balance sheet dates reflect the increase or decrease in its net assets during the period.

In the case of sole proprietorship, increases in owner’s equity arise from additional investments
by the owner and profit during the period. Decreases result from withdrawals by the owner and
from loss for the period. The beginning balance and additional investments are taken from the
owner’s capital account in the general ledger. The profit or loss figure comes directly from the
income statement while the withdrawals from the balance sheet columns in the worksheet.

Del Mundo Landscape Specialist

Statements of Changes in Equity
For the Month Ended Nov. 30, 2019

Del Mundo, Owner’s Equity, 11/1/2019 ₱450,000

Add: Additional Investments by Del Mundo P-0-
Profit 17,000 17,000
Total ₱467,000
Less: Withdrawals 5,000
Del Mundo, Owner’s Equity, 11/30/2019 ₱462,000

Balance Sheet

The balance sheet is a statement that shows the financial position or condition of an entity by
listing the assets, liabilities and owner's equity as at a specific date. The information needed for
the balance sheet items are the net balances at the end of the period, rather than the total for
the period as in the income statement. This statement is also called the statement of financial
position.

Users of financial statements analyze the balance sheet to evaluate an entity's liquidity, its
financial flexibility, and its ability to generate profits, and its solvency. Liquidity refers to the
availability of cash in the near future after taking account of the financial commitments over
this period. Financial flexibility is the ability to take effective actions to alter the amounts and
timings of cash flows so that it can respond to unexpected needs and opportunities. This
includes the ability to raise new capital or tap into unused lines of credit. Solvency refers to the
availability of cash over the longer term to meet financial commitments as they fall due.

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In preparing the balance sheet, it may not be necessary to make any further analysis of the
data. The needed data—that is, the balances of the asset, liability, and owner's equity
accounts—are already available from the balance sheet columns of the worksheet. However,
the interim balance for owner's equity must be revised to include profit or loss and owner's
withdrawals for the accounting period. The adjusted amount for ending owner's equity is
shown in the statement of changes in equity.

Format

The balance sheet can be presented in either the report format or the account format. The
report format simply lists the assets, followed by the liabilities then by the owner's equity in
vertical sequence. The account format lists the assets on the left and the liabilities and owner’s
equity on the ri8nt. Ether balance sheet format is acceptable.

Classification

It is proper to present a classified balance sheet; that is, the assets and liabilities are separated
into various categories. Assets are sub-classified as current assets and non-current assets; while
liabilities as current liabilities and non-current liabilities. At this point, it is advisable to review
the definitions of the foregoing (refer to Chapter 3). Classifying balance sheet aids in the
analysis of financial statement data.

To make accounting information useful to decision-makers, the items in the balance Sheet may
be grouped and arranged in accordance with the following guidelines:

► Assets are classified and presented in decreasing order of liquidity. Cash is the most liquid.
Assets that are least likely to be converted to cash are listed last.

► Liabilities are generally classified and presented based on time of maturity such that
obligations which are currently due are listed first.
Although there is no prescribed format for the balance sheet, what is required is the current
and non-current distinction for assets and liabilities. Assets can be presented current then non-
current, or vice versa. Liabilities and equity can be presented current liabilities then non-current
liabilities then equity, or vice versa.

It can be observed in Exhibit 6-7 that the total assets of P577,250 in the balance sheet does not
tally with the total debits of P587,750 in the balance sheet columns of the worksheet in Exhibit
6-4.

Likewise, the total liabilities and owner’s equity do not equal the total credits in the same
exhibit.

The reason for these differences is that accumulated depreciation and withdrawals are
subtracted from their related accounts in the balance sheet but added in their respective
columns in the worksheet.

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The classified balance sheet of Del Mundo Landscape Specialist in report format is:

Del Mundo Landscape Specialist

Balance Sheet
Assets

Current Assets
Cash ₱182,250
Account Receivable 10,000
Supplies 500
Prepaid Rent 14,000
Prepaid Insurance 22,000
Total Current Assets ₱228,750
Property and Equipment (Net)
Vehicles ₱300,000
Less: Accumulated Depreciation 4,500 ₱295,500
Equipment ₱54,000
Less: Accumulated Depreciation 1,000 348,500
Total Assets ₱577,250
Liabilities & Owner’s Equity
Current Liabilities
Notes Payable ₱100,000
Accounts Payable 1,000
Salaries Payable 1,600
Interest Payable 1,400
Unearned Revenues 11,250
Total Current Liabilities ₱115,250
Owner’s’ Equity
Del Mundo, Capital, 11/30/2019 462,000
Total Liabilities and Owner’s Equity ₱577,250

Statement of Cash Flows

The statement of cash flows provides information about the cash receipts and cash payments
of an entity during a period. t is a formal statement that classifies cash receipts (inflows) and
cash payments (outflows) into operating, investing and financing receipt. This statement shows
the net increase or decrease in cash during the period and the cash balance at the end of the
period; it also helps project the future net cash flows of the entity. The discussion below gives
an overview of some important concepts involved in the preparation of the cash flow
statement.

Cash Flows from Operating Activities

Operating activities generally involve providing services, and producing and delivering goods.
Cash flows from operating activities are generally the cash effects of transactions and other
events that enter into the determination of profit or loss. This cash flow can be presented using
either the direct or the indirect method.

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Using the direct method, the entity's net cash provided by (used in) operating activities is
obtained by adding the individual operating cash inflows and then subtracting the individual
operating cash outflows.

The indirect method derives the net cash provided by (used in) operating activities by adjusting
profit for income and expense items not resulting from cash transactions. The adjustment
begins with profit followed by the addition of expenses and charges (e.g. depreciation) that did
not entail cash payments. Then, increases in current assets and decreases in current liabilities
involved in the determination of profit but which did not actually increase or decrease cash, are
subtracted from profit. Finally, decreases in current assets and increases in current liabilities are
added to profit to obtain net cash provided by (used in) operating activities.

For example, increases in accounts receivable from sale of services or goods represented an
increase in profit without the corresponding increase in cash-for it is still a receivable. Since
these revenues are already included in the computation of profit, the increase in accounts
receivable should be deducted from the profit figure.

To illustrate further, assume that salaries payable increased. Increases in salaries payable
meant that the entity did not pay the full amount of salaries expense for the period. The
expense in the income statement, for cash flow purposes, is overstated by the amount of
unpaid salaries. If expense is overstated, then profit is understated by the same amount; hence,
the increase in current liability is added to profit.

Enterprises are encouraged to report cash flows from operating activities using the direct
method but the indirect method is acceptable. Only the direct method is illustrated here. The
following are the major classes of operating cash flows using the direct method:

Cash Inflows
♦ receipts from sale of goods and performance of services
♦ receipts from royalties, fees, commissions and other revenues

Cash Outflows
♦ payments to suppliers of goods and services
♦ payments to employees
♦ payments for taxes
♦ payments tor interest expense
♦ payments for other operating expenses

Cash Flows from Investing Activities

Investing activities include making and collecting loans; acquiring and disposing of investments
in debt or equity securities; and obtaining and selling of property and equipment and other
productive assets.

Cash Inflows
♦ receipts from sale of property and equipment
♦ receipts from sale of investments in debt or equity securities
♦ receipts from collections on notes receivable

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Cash Outflows
♦ payments to acquire property and equipment
♦ payments to acquire debt or equity securities
♦ payments to make loans to others generally in the form of notes receivable

Cash Flows from Financing Activities

Financing activities include obtaining resources from owners and creditors.

Cash Inflows
♦ receipts from investments by owners
♦ receipts from issuance of notes payable

Cash Outflows
♦ payments to owners in the form of withdrawals
♦ payments to settle notes payable

Preparing General Journal

Winnie Villanueva is a painting contractor. During the month or April, she completes the following
transactions:

April 2 Invested in the business painting equipment valued at P12, 300 and
placed P71,000 in a business checking account.
3 Acquired a service vehicle costing P80, 000. Paid P50, 000 cash and
signed a note for the balance.
4 Purchased painting supplies on account for P3, 200.
5 Completed a painting job and billed the customer P4, 800.
7 Received P1, 500 cash for painting an apartment room.
10 Purchased painting supplies for P1, 600 cash.
11 Received P4, 800 check from the customer billed on April 5.
12 Paid P4, 000 check for an insurance policy for a one-year coverage.
13 Billed a customer P6, 200 for a painting job.
14 Paid the assistant P1, 500 Tor twenty-five hours' work.
15 Paid P400 for a tune-up of the service vehicle.
18 Paid for the painting supplies purchased on April 4.
20 Purchased a new ladder for P6, 000 and painting supplies for P2, 900,
on account.
22 Received a telephone bill for P600, due next month.
23 Received P3, 300 in cash from the customer billed on April 13.
24 Transferred P3, 000 to a personal checking account.
25 Received P3, 600 in cash for painting a two-room apartment.
27 Paid P2, 000 on the note signed for the service vehicle

Required: 1. Journalize the given transactions above in the GENERAL JOURNAL

2. Record also in the FINANCIAL WORKSHEET

3. Prepare TRIAL BALANCE

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ANSWER SHEET

WINNIE VILLANUEVA
Painting Contractor

GENERAL JOURNAL

Date Particulars Debit Credit

April 2 CASH IN BANK 71000

PAINTING EQUIPMENT 12300

VILLANUEVA OWNERS EQUITY 83300

# Invested in the business painting equipment

valued at P12, 300 andplaced P71,000 in a business
checking account.
3 EQUIPMENT 80000

CASH 50000

NOTES PAYABLE 30000

# Acquired a service vehicle costing P80, 000. Paid

P50, 000 cash andsigned a note for the balance.
4 PAINTING SUPPLIES 3200

ACCOUNTS PAYABLE 3200

# Purchased painting supplies on account for P3,

200.
5 ACCOUNTS RECIEVABLE 4800

PAINTING REVENUE 4800

# Completed a painting job and billed the customer

P4, 800.

7 CASH 1500

PAINTING REVENUE 1500

# Received P1, 500 cash for painting an apartment

room

10 PAINTING SUPPLIES 1600

CASH 1600

# Purchased painting supplies for P1, 600 cash.

11 CASH IN BANK 4800

ACCOUNTS RECIEVABLE 4800

# Received P4, 800 check from the customer billed

on April 5.
12 PREPAID INSURANCE 4000

CASH IN BANK

# Paid P4, 000 check for an insurance policy for a

one-year coverage.

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13 ACCOUNTS RECIEVABLE 6200

PAINTING REVENUE 6200

# Billed a customer P6, 200 for a painting job.

14 SALARIES EXPENSE 1500

CASH 1500

# Paid the assistant P1, 500 Tor twenty-five hours'

work.
15 REPAIR EXPENSE

CASH

# Paid P400 for a tune-up of the service vehicle.

18 ACCOUNT PAYABLE 3200

CASH 3200

# Paid for the painting supplies purchased on April

4.

20 PAINTING EQUIPMENT 6000

PAINTING SUPPLIES 2900

ACCOUNTS PAYABLE 8900

# Purchased a new ladder for P6, 000 and painting

supplies for P2, 900,
on account.
22 UTILITIES EXPENSE 600

UTILITIES PAYABLE 600

# Received a telephone bill for P600, due next

month.

23 CASH 3300

ACCOUNTS RECIEVABLE 3300

# Received P3, 300 in cash from the customer billed

on April 13.

24 VILLANUEVA DRAWINGS 3000

CASH IN BANK 3000

# Transferred P3, 000 to a personal checking

account

25 CASH 3600

PAINTING REVENUE 3600

# Received P3, 600 in cash for painting a two-room

apartment

27 NOTES PAYABLE 2000

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 CASH 2000

# Paid P2, 000 on the note signed for the service

vehicle

Preparing journals in financial worksheet

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Module 3
Quiz 1
From the items described below, write the LETTER of the correct answer that corresponds to
your choices in your answer sheet 1point each (total 10points )
a. Contra-account h. Cash Basis
b, worksheet i. Book Value
c. Prepaid Expense j. Deferral
d. Accrual Basis k. Closing entries
e. General ledger l. Reversing entries
f. Unearned income m. Accrued expense
g. Depreciation
1. An expense that is unpaid and unrecorded.
2. An account which is offset against another account.
3. The allocation of the cost of property and equipment to expense over its useful life.
4. The entry required at the beginning of the accounting period to simplify the recording of
regular transactions.
5. A working paper often used by accountants to summarize adjusting entries.
6. Advance cash received but not yet earned.
7. Advance payment of expenses.
8. A postponement of the recognition of an expense already paid, or of income or
revenues already received in advance.
9. It is used to classify and summarize transactions, and to prepare data for financial
statements.
10. The difference between the accumulated depreciation account and the related property
and equipment account

Quiz 2
Prepare the adjusting entries on the following for the year ending December 31, 2019:
2points each( total 10points)
1. Paid P24,000 for a 1-year fire insurance policy to start on September 1 2019. The
amount of premium was debited to Prepaid Insurance.
2. Unpaid salaries at year end P15,000.
3. The company purchased Equipment P150,000 on January 1, 2019. It has a life of 5 years
and no salvage value.
4. The supplies account showed a beginning balance of P21,740. Purchases during the year
were P45,260. At the end of the year supplies on hand amounted to P13,970.
5. Per trial balance rent income amounted to P100,000 as of the year end, 25,000 was still
unearned.

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Quiz 3

Listed below are the accounts taken from the December 31, 2020 adjusted trial balance of Go
Publishers. Prepare the closing entries. (total 5points)
Accounts receivable P 260,000
Supplies expense 710,000
Salaries expense 2,270,000
Printing revenues 8,130,000
Depreciation expense 250,000
Go, Drawings 1,500,000
Repairs Expense 10,000
Telephone expense 20,000
Utilities expense 80,000
Unearned printing revenues 210,000
Interest expense 300,000
Go, Capital 340,000

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 ACTIVITY 1
Observe the normal balances of each accounts
LENDEV ADVERTISING COMPANY
Working paper
31-Dec-11
ADJUSTED TRIAL
TRIAL BALANCE ADJUSTMENT BALANCE INCOME STATEMENT BALANCE SHEET
DR CR DR CR DR CR DR CR DR CR
CASH 40000 40000 40000
ACCOUNTS RECEIVABLE 96500 96500 96500
PREPAID RENT 6000 3000 3000 3000
OFFICE SUPPLIES 5000 1000 4000 4000
NOTES RECEIVABLE 25000 25000 25000
OFFICE EUUIPMENT 50000 50000 50000
LAND 200000 200000 200000
BUILDING 100000 100000 100000
ACC. DEP BUILDING 50000 50000 50000 50000
ACCOUNTS PAYABLE 9000 9000 9000
NOTES PAYABLE 31000 31000 31000
LENDEV CAPITAL 401500 401500 401500
LENDEV WITHDRAWAL 5000 5000 5000
ADVERTISING REVENUES 185000 9250 175750 175750
SALARY EXPENSE 90000 4500 94500 94500
RENT EXPENSE 6000 3000 9000 9000
INSURANCE EXPENSE 3000 1500 1500 1500
626500 626500
BAD DEBTS 4825 4825 4825

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ALLOWANCE FOR BAD
DEBTS 4825 4825 4825
UNEARNED ADVERTISING
REVENUES 9250 9250 9250
DEPRECIATION EXPENSE 70000 70000 70000
ACC. DEPRECIATION
OFFICE EQUIPMENT 20000 20000 20000
OFFICE SUPPLIES
EXPENSE 1000 1000 1000
SALARIES PAYABLE 4500 4500 4500
INTEREST EXPENSE 1860 1860 1860
INTEREST PAYABLE 1860 1860 1860
PREPAID INSURANCE 1500 1500 1500
UTILITIES EXPENSE 500 500 500
UTILITIES PAYABLE 500 500 500
INTEREST INCOME 9000 9000 9000
INTEREST RECEIVABLE 9000 9000 9000
105435 105435 717185 717185 183185 184750 534000 532435
NET INCOME 1565 1565
From the given working paper prepare the following: 30 points 184750 184750 534000 534000
1. INCOME STATEMENT
2. BALANCE SHEET
3 .REVERSING ENTRIES / CLOSING ENTRIES /

17
 ACTIVITY 2

ABC ENREPRISES
WORKING PAPER
31-Dec-13
ADJ TRIAL INCOME
TRIAL BALANCE ADJUSTMENTS BALANCE STATEMENT BALANCE SHEET
PARTICULARS DR CR DR CR DR CR DR CR DR CR
CASH 78750 78750 78750
ACCOUNTS RECEIVABLE 96500 96500 96500
NOTES RECEIVABLE 3000 3000 3000
PREPAID RENT 4000 3000 1000 1000
OFFICE SUPPLIES 25000 12500 12500 12500
OFFICE EQUIPMENT 50000 50000 50000
LAND 200000 200000 200000
BUILDING 100000 100000 100000
ACC. DEP. BLDG 50000 50000 50000
ACCOUNTS PAYABLE 9000 9000 9000
NOTES PAYABLE 31000 31000 31000
LENDEV CAPITAL 401500 401500 401500
LENDEV DRAWINGS 5000 5000 5000
ADVERTISING REVENUES 175750 17575 158175 158175
SALARY EXPENSE 94500 5000 99500 99500
RENT EXPENSE 9000 3000 12000 12000
INSURANCE EXPENSE 1500 1125 375 375
TOTAL 667250 667250
BAD DEBTS 4825 4825 4825
ALLOWANCE FOR BAD DEBTS 4825 4825 4825
UNEARNED ADVERTISING REVENUE 17575 17575 17575
DEPRECIATION EXPENSE 10000 10000 10000

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ACC. DEPRECIATION OFFICE EQUIPMENT 10000 10000 10000
OFFICE SUPPLIES EXPENSE 12500 12500 12500
SALARIES PAYABLE 5000 5000 5000
INTEREST EXPENSE 2000 2000 2000
INTEREST PAYABLE 2000 2000 2000
PREPAID INSURANCE 1125 1125 1125
UTILITES EXPENSE 1000 1000 1000
UTILITIES PAYBLE 1000 1000 1000
INTEREST INCOME 30 30 30
INTEREST RECEIVABLE 30 30 30
57055 57055
690105 690105 142200 158205 547905 531900
NET INCOME (LOSS) 16005 16005
REQUIRED: 20 points 16005 158205 547905 547905
1. REWRITE THE ADJUSTING ENTRIES
2. PREPARE CLOSING , REVERSING ENTRIES.

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 ACTIVITY 3

ABC Enterprises
Working Paper

ADJUSTED TRIAL
TRIAL BALANCE ADJUSTMENT BALANCE
DR CR DR CR DR CR
CASH 52,000
ACCOUNTS RECEIVABLE 71,500

PREPAID RENT 6,000 1,800

OFFICE SUPPLIES 5,000 1,250

NOTES RECEIVABLE 30,000
OFFICE EUUIPMENT 100,000

ACCOUNTS PAYABLE 62,000

NOTES PAYABLE 30,000

ABC CAPITAL 125,000

ABC WITHDRAWAL 7,500

ADVERTISING REVENUES 160,000 8,000

SALARY EXPENSE 90,000 4,500
RENT EXPENSE 12,000 1,800

INSURANCE EXPENSE 3,000 1,000

377,000 377,000
BAD DEBTS 3,575

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ALLOWANCE FOR BAD DEBTS 3,575
UNEARNED ADVERTISING
REVENUES 8,000
DEPRECIATION 30,000

ACC. DEPRECIATION 30,000

OFFICE SUPPLIES EXPENSE 1,250

SALARIES PAYABLE 4,500

INTEREST EXPENSE 1,200

INTEREST PAYABLE 1,200

PREPAID INSURANCE 1,000
UTILITIES EXPENSE 1,200

UTILITIES PAYABLE 1,200

INTEREST INCOME 600

INTEREST RECEIVABLE 600

53,125 53,125

NET INCOME

Prepare the following 50points

1. Adjusted Trial balance
2. Income Statement
3. Balance Sheet
4. Prepare the necessary adjusting entries .
5.Prepare necessary closing entries
6. Prepare necessary reversing entries from the adjusting entries.in # 4 requirement.

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 ACTIVITY 4

ABC ENREPRISES
WORKING PAPER
31-Dec-13
INCOME
TRIAL BALANCE ADJUSTMENTS ADJ TRIAL BALANCE STATEMENT BALANCE SHEET
PARTICULARS DR CR DR CR DR CR DR CR DR CR
CASH 78750 78750 78750
ACCOUNTS RECEIVABLE 96500 96500 96500
NOTES RECEIVABLE 3000 3000 3000
PREPAID RENT 4000 3000 1000 1000
OFFICE SUPPLIES 25000 12500 12500 12500
OFFICE EQUIPMENT 50000 50000 50000
LAND 200000 200000 200000
BUILDING 100000 100000 100000
ACC. DEP. BLDG 50000 50000 50000
ACCOUNTS PAYABLE 9000 9000 9000
NOTES PAYABLE 31000 31000 31000
LENDEV CAPITAL 401500 401500 401500
LENDEV DRAWINGS 5000 5000 5000
ADVERTISING REVENUES 175750 17575 158175 158175
SALARY EXPENSE 94500 5000 99500 99500
RENT EXPENSE 9000 3000 12000 12000
INSURANCE EXPENSE 1500 1125 375 375
TOTAL 667250 667250
BAD DEBTS 4825 4825 4825
ALLOWANCE FOR BAD DEBTS 4825 4825 4825
UNEARNED ADVERTISING REVENUE 17575 17575 17575
DEPRECIATION EXPENSE 10000 10000 10000

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ACC. DEPRECIATION OFFICE EQUIPMENT 10000 10000 10000
OFFICE SUPPLIES EXPENSE 12500 12500 12500
SALARIES PAYABLE 5000 5000 5000
INTEREST EXPENSE 2000 2000 2000
INTEREST PAYABLE 2000 2000 2000
PREPAID INSURANCE 1125 1125 1125
UTILITES EXPENSE 1000 1000 1000
UTILITIES PAYBLE 1000 1000 1000
INTEREST INCOME 30 30 30
INTEREST RECEIVABLE 30 30 30
57055 57055
690105 690105 142200 158205 547905 531900
NET INCOME (LOSS) 16005 16005
REQUIRED: 16005 158205 547905 547905
1. REWRITE THE
ADJUSTING
ENTRIES
2. PREPARE
CLOSING ,
REVERSING
ENTRIES.

23
“Love is patient, love is kind. It does not envy, it does not boast, it is not proud. It does not dishonor others, it is not self-
seeking, it is not easily angered, it keeps no record of wrongs. Love does not delight in evil but rejoices with the truth. It always
protects, always trusts, always hopes, always perseveres.” – (1 Corinthians 13:4-7)

“Do not be wise in your own eyes; fear the LORD and shun evil. “
(Proverbs 3:7)

“A man who asks is a fool for five minutes. A man who never asks is a fool for life.”

- END –

References:
1.Financial Accounting and Reporting for Services and Merchandisers – International Edition 2019 by Zenaida Vera Cruz-
Manuel
2. Basic Accounting – 2019 issue – by Win Ballada, and Susan Ballada, DomDane Publishers and Made Easy Books.
3. Fundamentals of Accounting – Part 1, By:Tulio, VillaBlanca, Abon, Abdon, Albay and Inigo
4. Worktext in Basic Accounting (Service and Merchandising) by:Cecilia Hugo – Macapilit
5.Fundamentals of Basic Accounting, By: Leonardo E. Aliling
6. Fundamentals of Accounting – Voume 1, By: Patricia M. Empleo
7. Intermediate Accounting Part 1-3 by Zeus Vernon B. Millan 2018 edition

Online Resources:

Open Education Resources – Accounting and Finance /Principles of Accounting (Textbook, Modules, Tests and Video
presentation of lectures)

https://guides.library.sc.edu/OER

Corporate Financia Institute -Free Accounting Course – Introduction to Accounting

https://course.corporatefinanceinstitute.com

https://www.indeed.com/career-advice/career-development/cash-vs-accrual
https://www.accountingcoach.com/blog/what-is-the-statement-of-financial-position
http://www.accountingmcqs.com/Statement-of-Financial-Position
YouTube Channels:

https://www.youtube.com/playlist?list=PLuXyIbtL4zN-21X2xN7roYVaIDTIMfRHu
Filipino Accounting Tutorial
CPA Strength
Executive Finance
Corporate Finance Institute

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