EXERCISE 1

(TRUE or FALSE)
Name: Kristine Joy M. Bacani Year and Section: BSA 1-A

Date: 10/05/2021 Score: 100

Write TRUE if the statement is correct or FALSE if it is incorrect.

_________False________1. Decrease in assets may also result in decrease in liabilities

____False____________2. Liabilities is said to be as a residual claim against asset

_______True__________3. Accounts Receivable represents claims for payment of debts collectible from
other person

__________False______4. Loss from operations will be having no effect on owner’s equity

_________True________5. No liability is to be reported as current if payable beyond one year

from the Statement of Financial Position date

__________True_______6. Unsold Inventories are current assets

_______True__________7. A personal drawing of the owner is a reduction of the owner’s equity

in the business

_________True________8. The used up portion of a prepayment is an expense while the unused portion
is an asset

_________False________9. The used portion of supplies bought during the period is called Prepaid
Supplies

_________True________10. The terms receivable and prepaid connote an asset, while the terms
payable and unearned connote a liability

__________False_______11. If a receivable is collected, there will be an increase in total assets

______true___________12. Increases in asset mean increases in liabilities and/or increases in

capital ___ true______________13. Creditors have priority of claims against the business assets

___________true______14. Bad debts are considered uncollectible receivables

_______true__________ 15. Allowance for Bad Debts and Accumulated Depreciation are considered
contra asset accounts
 ACCTG 101- FINANCIAL ACCOUNTING AND REPORTING (FUNDAMENTALS) 1 | P a g e
EXERCISE 2

Preparation of Financial Statements of a Service Business

Name: Year and Section:

Date: Score:

The following are the ledger balances of “MUKBANG SERVICES” as of October 31, 2020
ACCOUNT TITLE DEBIT CREDIT

Foodie, Capital 3,014,130

Notes Payable 751,521

Building 1,219,668

Accounts Payable 410,669

Allowance for Bad Debts 63,910

Prepaid Rent 774,811

Cash 2,690,551

Income from Services 1,941,900

Promotional Expense 211,800

Accounts Receivable 689,441

Land 813, 800

SSS Payable 89,445

Bonds Payable 158,119

Salaries Expense 154,889

Office Supplies 68,390

Equipment 180,552

Interest Payable 256,894

 Accumulated 21,731
Depreciation Equipment

Mortgage Payable 731,865

Accumulated 451,821
Depreciation Building

Miscellaneous Expense 361,885

Bad Debts Expense 90,775

Notes Receivable 190,338

Salaries Payable 450,885

Loans Payable ( Non- Current) 331,900

Foodie, Personal 1,227,890

ACCTG 101- FINANCIAL ACCOUNTING AND REPORTING (FUNDAMENTALS) 2 | P a g e

Required:

Prepare the following Statements:

1. Income Statement
2. Statement of Owners’ Equity
3. Statement of Financial Position
 ACCTG 101- FINANCIAL ACCOUNTING AND REPORTING (FUNDAMENTALS) 3 | P a g e
EXERCISE 3

Preparation of Financial Statements of a Merchandising Business

Name: Year and Section:

Date: Score:

Account No. Account Title Debit Credit

10 Cash 1,441,800

11 Accounts Receivable 450,221

21 Furniture & Fixtures 54,988

30 Accounts Payable 845,005

50 Corona, Capital 1,545,056

51 Corona, Withdrawal 210,773

60 Sales 989,559
 61 Sales Discount 54,500

62 Sales Returns and 88,900

Allowances

71 Purchases 645,009

72 Freight In 14,800

73 Purchase Discount 40,764

74 Purchase Returns 34,890

and Allowances

75 Salaries Expense 190,400

76 Utilities Expense 56,500

77 Advertising Expense 90,300

78 Freight Out 71,774

ACCTG 101- FINANCIAL ACCOUNTING AND REPORTING (FUNDAMENTALS) 4 | P a g e

79 Office Supplies Expense 85,309

TOTAL 3,455,274 3,455,274

Required:

Prepare the following Statements of Corona Merchandising Company as of January 2021

4. Statement of Cost of Goods Sold

5. Income Statement
6. Statement of Owners’ Equity
7. Statement of Financial Position
“Life is not about finding yourself; life is about creating yourself- George Bernard
Shaw.

ACCTG 101- FINANCIAL ACCOUNTING AND REPORTING (FUNDAMENTALS) 5 | P a g e