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Midterm QA

The document provides accounting information for Matiyaga Law Firm for December 2022, including opening balances, transactions during the month, and various questions and answers related to the financial statements. It also includes instructions for journal entries for Malakas Fitness Center for its first two months of operations based on various documents found in a shoe box of accounting records.

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vicky manimtim
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12 views

Midterm QA

The document provides accounting information for Matiyaga Law Firm for December 2022, including opening balances, transactions during the month, and various questions and answers related to the financial statements. It also includes instructions for journal entries for Malakas Fitness Center for its first two months of operations based on various documents found in a shoe box of accounting records.

Uploaded by

vicky manimtim
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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MATIYAGA LAW FIRM

On December 1, 2022, the following accounts and balances of Matiyaga Law Firm, owned by Juan Matiyaga, attorney-
at-law, are already in existence.
Code Account Title Amount
1000 Cash ₱489,232
1010 Accounts receivable 1,781,400
1040 Office supplies 229,200
2000 Accounts payable 675,300
3000 Dumbledore, capital 1,655,228
3020 Dumbledore, drawings 1,300,000
4000 Civil legal fees earned 2,444,000
4010 Criminal legal fees earned 2,510,000
5000 Office rental expense 1,500,000
5010 Office furniture rental expense 900,000
5020 Office equipment rental expense 450,000
5030 Telephone expense 368,778
5040 Electric expense 265,918

Transactions during December 2022:


• Paid accounts payable in the amount of ₱100,000.
• Purchased office supplies for ₱23,689.
• Recorded the week’s cash receipts from customers on account ₱51,500.
• Issued a check to Juan Matiyaga to pay personal expenses, ₱170,000.
• Provided civil legal services in the amount of ₱17,500 and issued a billing slip.
• Recorded the week’s cash receipts from clients on account, ₱289,000.
• Paid accounts payable in the amount of ₱42,500.
• Provided criminal legal services to client in the amount of ₱312,000 and issued a billing slip.
• Received and paid the electric bill for the month of December in the amount of ₱18,954.
• Received the telephone bill for the month of December in the amount of ₱35,712.
What is the cash balance at the end of December? ANSWER: 474,589

What is the accounts receivable balance at the end of December? ANSWER: 1,770,400
What is the accounts payable balance at the end of December? ANSWER: 568,512
What is the net income for the period ended December 31, 2022? ANSWER: 1,744,138
What is the balance of the capital account for the period ended December 31, 2022? ANSWER: 1,929,366

Refer below for the instructions for the next three questions:

Pedro Masipag, a new employee, is not sure of the effect the following unrelated situations would have on the accuracy
of the financial statements. (A) Identify the account/s that are affected and (B) whether the Debit or Credit side of the
trial balance would have the larger total. Sample answer format: (A) Accounts receivable overstated by ₱100 (B) Larger
total- Debit side. If either requirement (A) or (B) is not applicable, write NA.

• Equipment was purchased for ₱9,000 cash. The debit was recorded properly, but the credit was omitted.
ANSWER: (A) CASH OVERSTATED BY ₱9,000 (B) LARGER TOTAL- DEBIT SIDE

• A debit to Cash for ₱250 was posted as ₱2,500; the credit was posted correctly.
ANSWER: (A) CASH OVERSTATED BY ₱2,250 (B) LARGER TOTAL- DEBIT SIDE

• A purchase of supplies on account for ₱750 was posted as a debit to Supplies and a credit to Cash.
ANSWER: (A) CASH AND ACCOUNTS PAYABLE UNDERSTATED BY ₱750 (B) N/A (N/A because
trial balance total will still be equal even if the error was made)

Page 1
Requirement: Prepare the journal entries given the below information and transactions:

Malakas Company opened a gym and fitness studio called Malakas Fitness Center at the beginning of November of the
current year. It is now the end of December, and the owner of the company is trying to determine whether he made a
profit during his first two months of operations. You offer to help the owner and ask to see his accounting records. He
shows you a shoe box and tells you that every piece of paper pertaining to the business is in that box. As you go through
the material in the shoe box, you discover the following:

1. Bank deposit slips totaling ₱7,360 for money received from customers who attended exercise classes.
2. A bill for ₱2,100 from the maintenance service that cleans the studio. The fitness center has not yet paid this bill.
3. A December 19 parking ticket for ₱200. The owner says he was in a hurry that morning to get to the fitness center
on time and forgot to put money in the parking meter.

4. A handwritten list of customers and fees for the classes they have taken. As the customers attend the classes, the
fitness center’s employee writes their names and the amount of each customer’s fee on the list. As customers pay,
the employee crosses their names off the list. Fees not crossed off the list amount to ₱2,400.
5. A credit card receipt for ₱8,000 for equipment the owner bought to use at the studio. For convenience, the owner
put this purchase on his personal credit card.

ANSWERS:

1) CASH ₱ 7,360
SERVICE REVENUE OR SERVICE INCOME OR FEES EARNED ₱ 7,360

2) MAINTENANCE OR MAINTENANCE SERVICE EXPENSE 2,100


MAINTENANCE OR MAINTENANCE SERVICE PAYABLE OR ACCOUNTS PAYABLE 2,100

3) NO ENTRY- PERSONAL TRANSACTION OF THE OWNER

4) ACCOUNTS RECEIVABLE 2,400


SERVICE REVENUE OR SERVICE INCOME OR FEES EARNED 2,400

5) EQUIPMENT 8,000 8,000


OWNER'S CAPITAL

Page2

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